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At the time of the issue of the amended assessments on 19 July 2004 there were appeals to this Court on foot against appealable objection decisions made by the Commissioner on objections lodged by the applicant against original assessments of income tax ('original assessments') for the same years of income (Nos. N523 --- 525/2003). The Commissioner's power to issue the amended assessments in those circumstances is put in issue by the applicant and this particular issue is addressed below. The original assessments issued on 11 September 2001, that is, prior to the applicant lodging income tax returns for the years of income on 27 October 2003. The amended assessments issued on 22 July 2004, that is, after the applicant lodged income tax returns for the years of income. It is common ground that the only issue in dispute for this year is the $71,000 of taxable income as assessed by the original assessment for that year. The amended assessment for the year ended 30 June 1997 increased the applicant's taxable income over and above that assessed by the original assessment ($629,552) by $2,018,324, but only $1,866,613 of that amount is in dispute. The difference, viz., $151,711, is as a result of a return lodged by the applicant for that year. The amount of taxable income assessed by the original assessment ($629,552) is also disputed, making a total disputed amount for that year of $2,496,165. The amended assessment for the year ended 30 June 1998 increased the applicant's taxable income over and above that returned ($157,607) by $999,000 and the whole of that latter amount is in dispute. On 21 March 2005, Hill J ordered that the appeals against the appealable objection decisions in Nos. N523 --- 525/2003 and in these proceedings be consolidated and heard together and that evidence in the 2003 applications be evidence in these applications. The body of each determination refers to it being made under par 177(1)(a) rather than par 177F(1)(a), however, the applicant did not raise this as an issue. I deal with the argument of the applicant and my conclusion in relation to this issue in [49] --- [57] below. For present purposes, I merely note that this particular issue was not covered in the grounds of the applicant's notices of objection and that to rely on it he needs the leave of the Court to amend the notices of objection to include an appropriate ground. The applicant was the managing director, chairman of the board and holder of one ordinary share in ACBB during each of the years of income. The other directors and shareholders of ACBB during this period were Mr Chuan-Qiang Dong ('Mr Dong') and Mr Christopher Kaye ('Mr Kaye'). The applicant's then de facto spouse, Ms Leanne Kerin ('Ms Kerin'), was the bookkeeper and de facto financial controller for ACBB and for the applicant's personal financial affairs. Ms Helena Rule ('Ms Rule') was the accountant and tax agent for the applicant, ACBB, Georgette and Viney Pty Limited ('Viney') throughout the years of income. Mr Anthony Hutton ('Mr Hutton') was the de facto spouse of Ms Rule. New Asia was incorporated on 20 September 1995 in the Turks and Caicos Islands and was given an exemption from tax in that jurisdiction for 20 years. On or about 2 May 1996 Beresford Investments Limited ('Beresford') was incorporated in the Republic of Vanuatu. The sole registered shareholder of Beresford throughout the years of income was Mr Hutton. Viney was incorporated in Australia on 7 June 1996 and acted as the trustee of the Viney Family Trust ('Viney Trust'). Georgette was incorporated in Australia on 8 December 1992 and had two shares issued during the years of income. Throughout the years of income the applicant owned one of those shares and Ms Kerin owned the other. (The amount of a payment is nil if the consideration given by the transferee equals or exceeds the amount that would have been paid at arm's length for the transfer. The purchase of the Viney's Lane property was completed in July 1996, however, for present purposes the relevance of this transaction to the issues in these proceedings is that ACBB paid to the real estate agent (Guardian Realty) acting on the transaction the sum of $71,000 by way of deposit against the purchase price payable under the contract. It is common ground that this sum was not paid to the applicant, however, the Commissioner contends that it was paid 'on behalf of or for the individual benefit of' the applicant within par (b) of subs 108(1). The applicant disputes this contention. The applicant does not dispute that these payments were made by ACBB on the dates referred to in [10] above, the quantum of them or that the cheques were made payable to the applicant. Indeed, it is the applicant's evidence that the cheques in issue 'were drawn either in my name --- they were deposited in an account that was under my name'. The applicant did not put in evidence any statements of his personal bank account or attempt to show how the amounts paid into his personal bank account were expended. There is no evidence as to what the payments to the applicant were for --- loans, dividends, reward for services rendered or otherwise. The corresponding cheque butts contain a number of cryptic descriptions but they are not evidence of the nature and character of the payments, any more than are the 'details' appearing in ACBB's general ledger report. This was used by OMJF to purchase US$701,498 which was remitted to New Asia on or about the same date. The applicant says that this was for the purchase of goods by ACBB from New Asia. There is no doubt that the evidence supports a conclusion that ACBB purchased goods from New Asia, but there is no evidence to support a conclusion that the payment in question was for the purchase price of such goods: See too [35] below. On 8 July 1996 New Asia remitted US$510,019 to Beresford. On 17 July 1996 Beresford remitted $629,990 to Ms Rule's trust account at the National Australia Bank at Chatswood, New South Wales, and this sum was applied in various ways to complete the purchase by Viney (as trustee of the Viney Family Trust) of 17 --- 19 Viney's Lane, Dural on or about 18 July 1996. Beresford took a mortgage over the Viney's Lane property to secure an amount of $670,000 said to have been advanced by Beresford to Viney to assist Viney in the purchase of the property. The mortgage was stamped up to the full amount of the security in the sum of $2,621. It is common ground that the sum of $920,565 was not paid to the applicant, however, the Commissioner contends that, by reason of the matters referred to in [31] --- [33] above, it was paid 'on behalf of, or for the individual benefit of' the applicant within par (b) of subs 108(1). Implicit in this is that it is reasonable to assume that the difference between the $920,565 and the $629,990 has been dispersed or is retained for the benefit of the applicant. The applicant disputes this contention and the attendant implication. There is little, if any, evidence as to what this payment was for. --- They were for cable hardware items, your Honour, that were ordered by Optus Vision. There were essentially hundreds and thousands of tonnes of items that were manufactured by us in China for the Optus cable TV rollout here in Australia. --- Yes, sir. Not only were we importing it, we were in fact arranging for the manufacture of that equipment or those components. --- They were for --- well, for manufactured goods there were pre-payments, there were payments for tooling. A lot of the components were very crudely manufactured and they required constant re-tooling, constant dies. A lot of the items were bolts which had to have a stamped head and after a thousand hits on the mould you had to throw the mould away and build another mould. What did it do? Did it on sell these things to Optus, did it? --- Yes, sir. --- That's correct. --- Yes, sir. And there was no evidence to relate the payment in question to any of the purchases during this period. On 24 November 1997, Beresford remitted $999,988 to Ms Rule's trust account, which sum was credited in that account to Viney. On the same date, the amount secured by the mortgage over the Viney's Lane property was increased by $1,000,000. On 25 November 1997 the sum of $300,000 was transferred from Ms Rule's trust account to an account of Georgette with the ANZ Bank and the sum of $693,412 was transferred from Ms Rule's trust account to an account of ACBB with the ANZ Bank. On 16 February 1998 New Asia remitted $600,028 to Beresford. On 19 February 1998 Beresford remitted $599,988 to Ms Rule's trust account, which sum was credited in that account to Viney. On 10 March 1998 the sum of $100,000 was paid from Ms Rule's trust account to Georgette and on 22 April 1998 the sum of $200,000 was paid from Ms Rule's trust account to Georgette. On 21 May 1998 Viney entered into a contract to purchase a property known as 'Quorrobolong' in the Hunter Valley, New South Wales, for $550,000. The applicant sought 'bridging money' from Ms Rule to complete the purchase. On 7 July 1998 New Asia remitted $500,000 to Beresford. On 9 July 1998 Beresford remitted $499,988 to Ms Rule's trust account. On 13 July 1998 the sum of $500,000 was remitted from Ms Rule's trust account to Sparke Helmore's trust account to enable the purchase of the Quorrobolong to take place the following day, 14 July 1998. It is common ground that the sum of $2,984,643 was not paid to the applicant, however, the Commissioner contends that, by reason of the matters referred to in [35] --- [39] above, it was, to the extent of $300,000, $100,000, $200,000 and $500,000, paid 'on behalf of, or for the individual benefit of' the applicant within par (b) of subs 108(1). The applicant disputes this contention. There is no evidence as to what this payment was for although it is suggested it is 'simply a payment to Georgette which was being funded in its activities by ACBB'. It is common ground that this sum was not paid to the applicant, however, the Commissioner contends that it was paid 'on behalf of, or for the individual benefit of' the applicant within par (b) of subs 108(1). The applicant disputes this contention. There is little in the way of evidence as to what these payments were for. There is some evidence which would indicate that some of the payments were by way of loan from ACBB to Georgette. Into this category falls the payments of $120,000 on 8 July 1997, $80,000 on 18 July 1997, $100,000 on 7 August 1997, $80,000 on 12 November 1997, $200,000 on 19 December 1997 and $35,000 on 12 February 1998. The evidence that suggests these payments were by way of loan from ACBB to Georgette is slight and consists solely of extracts from the ACBB general ledger. If the payments were by way of loan, there is no evidence of the terms and conditions on which the loans were made and there is no evidence of their repayment. The character of the other payments - $30,000 on 20 August 1997, $50,000 on 4 September 1997, $50,000 on 23 September 1997, $50,000 on 30 September 1997, $60,000 on 17 October 1997, $103,000 on 3 November 1997 (of which $53,000 was paid to the applicant) and $41,000 on 20 January 1998 --- does not appear from the evidence. They do not rise above the level of being bare payments by ACBB and, as I have indicated, part of one of them was not paid to Georgette, but to the applicant himself. It is common ground that, apart from $53,000 of the $103,000 payment made on 3 November 1997, these payments were not made to the applicant, however, the Commissioner contends that they were paid 'on behalf of, or for the individual benefit of' the applicant within par (b) of subs 108(1) or, in the case of the last three payments, that these constitute payments to the applicant by force of par (a) of subs 109C(3). First, it seems clear that the funds which came into Australia from Beresford to Viney, through Ms Rule's trust account, were sourced out of New Asia --- payments which New Asia made to Beresford. Second, it seems clear, although perhaps not quite as clear, that the funds which New Asia used to fund Beresford were sourced out of ACBB --- the payments which ACBB made to New Asia. In making this consequential or secondary finding it is not necessary to show identity of money; money is fungible and precise identity is just not possible. By source of funding I mean the source which enables or facilitates such funding. The payments which ACBB made to New Asia facilitated or enabled New Asia to fund Beresford to in turn provide the loans to Viney through Ms Rule's trust account. That, in itself, carries no adverse inference from the point of view of whether the ACBB payments attract the application of ss 108 or 109C. However, the failure of the applicant to adduce any evidence --- apart from bold assertions by the applicant in the witness box --- as to what the ACBB payments to New Asia were for, make it impossible to be satisfied that they were not for the individual benefit of the applicant, with New Asia being nothing more than the applicant's collection vehicle. If the applicant had adduced evidence which enabled one to be satisfied that the ACBB payments were for stock-in-trade as asserted by the applicant, this lack of satisfaction may not have arisen. It is not as if the adducing of such evidence imposed a difficult task; there were only two relevant payments by ACBB --- one for $920,565 on 5 July 1996 and the other for $2,984,643 on 27 March 1997. This too impels the inference that the two payments were not for stock-in-trade otherwise evidence in support would surely have been adduced. Equally, it may be inferred that they were payments made to reimburse Georgette for the expenditure it incurred on the development of the Viney's Lane property; in other words, that they were made on behalf of Viney as the owner of the property. That would not necessarily support their inclusion in the assessable income of the applicant unless it was also 'on behalf of, or for the individual benefit of, [the applicant]'. The difficulty is the lack of any evidence as to the contractual relationships between or among the relevant parties in relation to the payments in question. The applicant's argument in this regard was articulated in his written submissions along the following lines. Part IVC of the Taxation Administration Act 1953 (Cth) ('the TAA') enacts the procedure whereby a taxpayer may object to an assessment: Section 175A of the 1936 Act. Where the Commissioner has made an 'appealable objection decision' in respect of a taxpayer's objection to an assessment with which the taxpayer is dissatisfied (ss 14ZU, 14ZW, 14ZY of the TAA), the taxpayer may lodge an appeal with the Federal Court (ss 14ZZ, 14ZZN of the TAA). The applicant submits that the Commissioner is not permitted to alter or vary the appealable objection decision made pursuant to s 14ZY (so as to increase the liability under the assessment in relation to which it is made) after an appeal has been instituted pursuant to s 14ZZ. Just stopping here, in the present case, the Commissioner did not purport to alter or vary the appealable objection decisions in respect of the original assessments. What he did, was issue amended assessments in respect of the years of income. The applicant submits that the plain intention of the Part IVC appeal provisions is that after the appeal has been initiated the Court shall decide on the correctness or otherwise of the decision and having decided shall act under s 14ZZP, that is, 'may make such order in relation to the objection as it thinks fit, including an order confirming or varying the decision'. Whereupon, the Commissioner must 'take such action', including amending the assessment concerned, 'as is necessary to give effect to the decision': Subs 14ZZQ(1) of the TAA. The applicant observes that s 170 expressly permits amendment of an assessment where the amendment increases liability and also where the amendment reduces liability. Subsection 170(7) authorises an amendment which is otherwise not permitted when made (a) to give effect to the decision upon any appeal or review, or (b) by way of reduction in any particular, either in pursuance of an objection made by the taxpayer or pending any appeal or review. Plainly, the applicant submits, subs 170(7) does not apply in this case. For the submission in [51] above, the applicant relies primarily, almost totally, on the decision of the New South Wales Supreme Court (Lee J) in St George Leagues Club Ltd v Commissioner of Land Tax (NSW) [1983] 2 NSWLR 399. In my view, such reliance is flawed for a number of reasons. The relevant facts in St George Leagues Club were that the Club had appealed to the court against a decision of the Commissioner on an objection against a land tax assessment. Under that assessment, the Commissioner had included two properties owned by the Club as being liable to land tax. The Club objected and the Commissioner, in deciding the objection, excluded one property and partially excluded the other. The Club appealed, but prior to the appeal coming on for hearing, the Commissioner wrote a letter purporting to vary his earlier decision on the objection by advising that both properties were wholly liable for tax as per the assessment he had earlier made. The plain intention of the appeal provisions is that after the appeal has been initiated under s 35(5), the court shall decide upon the correctness or otherwise of the Commissioner's decision and, having decided, shall act under s 37(4), that is, "may make such order as it thinks fit and may reduce, increase or vary the assessment". That section, to the extent that it refers to reducing, increasing or varying the assessment, contemplates that the court will in any of those events, by its orders, alter "the assessment" and the assessment referred to is the original assessment or, if it has been reduced by the Commissioner after considering the objection, the reduced assessment: s 37(3). The intention of s 37 is, in my view, that if the Commissioner's decision is favourable and results in reduction of the liability stated in the assessment he will then assess the tax payable and that that assessment will be before the court on the appeal. That then becomes "the assessment appealed from": s 37(3). If the decision on the objection is not favourable the original assessment is the assessment appealed from. What he did was issue amended assessments in respect of the years of income. Subject to the time limitations of s 170 of the 1936 Act, he was entitled to do this; the appeals which were extant in respect of the objection decisions on the original assessments provided no legal impediment to him doing so. The facts of the present case fall totally outside the facts under consideration in St George Leagues Club . There are other reasons why the St George Leagues Club case has no relevance in the present case including, without limitation, that it was a decision under a different enactment, an enactment where provisions only bare a resemblance to provisions of the 1936 Act in an historical context. For these reasons, this ground of appeal must be rejected. Clearly, if a company has no profits, the Commissioner could not form such an opinion. Equally clearly, the Commissioner could only form such an opinion with respect to an amount paid or credited to the extent that the company had profits. The applicant did not contend that ACBB did not have sufficient profits to support the Commissioner's formation of an opinion under s 108 in respect of the amounts in dispute in each of the years of income: See [8] above. And that is not surprising because such evidence as there was --- unsigned financial statements of ACBB for each of the years of income --- suggests that there was more than sufficient profits in each of the years of income. It is also clear from the applicant's answers to a series of questions which I put to him at the conclusion of his evidence, that ACBB had a nominal paid up capital, no borrowings and that a very substantial majority of its source of funds came from the excess of its trade receivables over its trade outgoings. I do not find that surprising because on the evidence no such argument is open. It is true that Viney purchased the Viney's Lane property as trustee of the Viney Family Trust and that the applicant was a 'general Beneficiary' thereof, but that, without more, does not lead to the conclusion that the payment by ACBB of the deposit to the vendor's agent at the time of exchange of contracts was a payment on behalf of, or for the individual benefit of, the applicant. Completion of that transaction takes the matter no further. It may well have been a payment on behalf of, or for the benefit of, Viney, but that does not make it a payment on behalf of, or for the individual benefit of, the applicant. The Commissioner's argument on this aspect cannot be accepted. And the Commissioner's argument in reliance, in the alternative, on the provisions of Part IVA, fares no better. The Commissioner's written submissions carefully avoided any statement or analysis of the tax benefit alleged to have been obtained by the applicant in connection with the alleged scheme: Cf., s 177C of the 1936 Act. It was only when pressed that counsel for the Commissioner conceded that the contention of the Commissioner, in relation to the Part IVA argument, was that, if the alleged scheme had not been entered into or carried out, it was a reasonable expectation that ACBB, instead of paying $71,000 to the vendor's agent on behalf of Viney, would have paid $71,000 to the applicant or to someone else on behalf of, or for the individual benefit of, the applicant. That is where the argument began, and that is where it finished. It cannot be accepted. There is no evidence to support it; indeed, there is no evidence which would enable one to draw any inference of such a reasonable expectation. Whatever may be taken into account in determining the conclusion to be drawn under s 177D(b) as to the dominant purpose of a person in entering into or carrying out a scheme --- the joint judgment of Gummow and Hayne JJ in Commissioner of Taxation v Hart [2004] HCA 26 ; (2004) 217 CLR 216 at [66] suggests that it goes beyond the matters in (i) --- (viii) inclusive and extends to the tax benefit obtained by reference to the hypothetical construct upon which that tax benefit is quantified --- that hypothetical construct is not determined by the matters in (i) --- (viii) of s 177D(b), but rather by the evidence, and the inferences and judgments to be drawn therefrom. I am therefore of the view that the applicant's appeal in respect of the 1996 year of income should be upheld. No other conclusion is open and none was suggested by counsel for the applicant. There is no evidence as to what the two payments by ACBB to New Asia through OMJF, the first on 5 July 1996 in the sum of $920,565 and the second on 27 March 1997 in the sum of $2,984,643 were for: See [31] --- [40] above. In the circumstances, I cannot be satisfied that the payments were not, as the Commissioner contends, made by ACBB on behalf of, or for the individual benefit of, the applicant. The applicant carries the burden of proving that the assessment is excessive: Section 14ZZO(b), TAA. In the circumstances, the applicant has not discharged that burden. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of the assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. Absent such a confining of the issues for determination, the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment, though the taxpayer is limited to the grounds of his objection. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence. The implication of such a requirement would be inconsistent with s. 190(b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail. Ltd. V. Commissioner of Taxation [(1979) 53 ALJR 362 at 366, 371, 381]; McCormack's Case [McCormack v Federal Commissioner of Taxation [1979] HCA 18 ; (1979) 143 CLR 284 at 303, 306, 323] . The present is not, however, such a case. Even if it be accepted that the respondent succeeded in proving that particular items of income were primarily derived by one or other of the companies associated with him, there remained in issue the question whether some or all of the relevant amounts had been subsequently derived by the respondent as payments in the nature of income made to him or on his behalf by that company. The payment by ACBB to Georgette on 20 June 1997 falls to be determined in the context of the ACBB payments to Georgette in the 1998 year of income. I am therefore of the view that the applicant's appeal in respect of the 1997 year of income should be upheld to the extent of the exclusion of $10,000 from his assessable income, but otherwise the appeal should be dismissed. Otherwise, the terms and conditions of such advances are not capable of being identified from the evidence. I have already referred to the evidence in this regard at [43] and [44] and my overall assessment of that evidence at [48]. There is no evidence to enable one to infer that the payments were made to discharge an obligation of the applicant to Georgette so that they might be said to be made on his behalf nor to enable one to infer that the payments were made for his individual benefit by reason, for example, of being used by Georgette for his benefit rather than for the benefit of Viney or Georgette itself. I find support for the conclusion in [68] above in the fact that ACBB did make a large number of payments to the applicant direct: See [10] above. In other words, where they were intended to benefit the applicant himself, rather than some associated entity, the payments were made to the applicant. The best manifestation of this was the payment of $103,000 made on 3 November 1997 --- $53,000 of which was paid to the applicant and $50,000 of which was paid to Georgette; the inference being that there was a real choice made as to the intended beneficiary of the payment. It follows, in my view, that none of the payments made by ACBB to Georgette fall into the assessable income of the applicant by force of ss 108, 109C and 44(1) of the 1936 Act. It remains to consider the alternative basis of assessment, namely Part IVA. The difficulty here is the same as that referred to in [62] above, namely the lack of identification of any tax benefit obtained by the applicant in connection with the alleged scheme; in short, the absence of any evidence which would enable one to hypothesise that had the alleged scheme had not been entered into, it would be a reasonable expectation that ACBB, instead of making the payments to Georgette, would have made them to the applicant or to someone else on behalf of, or for the individual benefit of, the applicant. As I there said, that is where the argument began and that is where it finished. It cannot be accepted. There is no evidence to support it and there is no evidence which would enable one to draw any inference of such a reasonable expectation. I am therefore of the view that the applicant's appeal in respect of the 1998 year of income should be upheld save for the inclusion in his assessable income of the sum of $53,000 paid by ACBB to him direct. I think the appropriate order should be that the respondent pay one-third of the applicant's costs and that the applicant pay two-thirds of the respondent's costs. | power to issue amended assessments when appeals on objections against original assessments before the court whether payments by a company are dividends paid out of profits and assessable income under ss 108/109c and 44 (1) of the income tax assessment act 1936 (cth) burden of proof alternatively whether part iva applies income tax |
The appellant's claim was rejected by a delegate of the Minister and, on review of the delegate's decision, by the Refugee Review Tribunal. 2 On the hearing of the appellant's application to the Federal Magistrates Court for judicial review of the decision of the Tribunal, the appellant relied solely on a contention that the Tribunal had failed fully to comply with s 424A of the Migration Act 1958 (Cth). The Federal Magistrate rejected this contention and dismissed the application. 3 The only issue raised on this appeal from the judgment of the Federal Magistrates Court is whether the learned Federal Magistrate ought to have allowed the appellant's application for judicial review on the basis that the Tribunal failed to comply with the requirements of s 424A of the Act. For the reasons set out below I have concluded that his Honour did not err in dismissing the appellant's application. The Tribunal rejected this aspect of the appellant's story. One of the reasons given by the Tribunal for doing so was that the appellant had received assistance from his current adviser since May 2005. The Tribunal took the view that with that assistance, and his cousin's evident ability to obtain statements from Bangladeshi political leaders, the appellant would have been able to provide evidence in support of this aspect of his story if it were available. 6 I accept the appellant's submission that the Tribunal's reference to his having assistance from his current adviser since May 2005 is to be understood as a finding that Mr Haque, the adviser who accompanied the appellant to the Tribunal hearing, had been available to give the appellant advice throughout the period between May 2005, when he applied for a protection visa, and the date of the Tribunal hearing. 7 The reasons for decision of the Tribunal do not explicitly identify the information the Tribunal relied on to make the above finding regarding Mr Haque's assistance. I accept, however, as indeed did the Minister, that whatever that information was, it was information that the Tribunal considered would be part of the reason for affirming the decision under review within the meaning of s 424A(1)(a) of the Act. It is also uncontentious that the Tribunal did not do the things specified in s 424A(1) in respect of that information. WHO CARRIED THE BURDEN OF PROOF? 9 The appellant formally submitted that the approach of the Federal Magistrate was erroneous in that the Minister carried the burden of proving that s 424A(1) did not apply to the information upon which the Tribunal based its finding that the appellant had had assistance from his adviser since May 2005 (see s 424A(3)). However, I consider it appropriate to proceed on the same basis as the Federal Magistrate, namely that the appellant carried the burden of establishing that s 424A applied to the information. This was the approach adopted by Moore J, with whom in this regard Weinberg and Allsop JJ agreed, in SZEEU v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 at [82] - [83] (see Weinberg J at [173] and Allsop J at [264]). DID THE APPELLANT PROVE THAT S 424A APPLIED TO THE INFORMATION? That file includes the appellant's protection visa application. The file reveals that the appellant's protection visa application was received by the Department under cover of a letter dated 11 May 2005 signed by Mr Haque. In this letter Mr Haque asserted that he acted for the appellant with respect to his visa application. The statement that formed part of the appellant's visa application discloses on its face that it was declared by the appellant before Mr Haque. Other correspondence on the Departmental file suggests that Mr Haque was still the appellant's adviser at the time of the delegate's decision. I am therefore prepared to proceed on the basis that it is more likely than not that the Tribunal had regard to information in the Departmental file before making its finding regarding the appellant's assistance from his adviser. 11 However, a finding that the Tribunal had regard to information in the Departmental file does not necessarily lead to the conclusion that s 424A applied to that information. If the Tribunal obtained the same information from the appellant during his Tribunal hearing, for example, s 424A(3)(b) operates to prevent s 424A applying to the information ( SZEEU v Minister for Immigration 150 FCR per Moore J at [91]). To succeed in his contention that the Tribunal failed to comply with the requirements of s 424A in respect to the information upon which its finding was based, it was necessary for the appellant to satisfy the Federal Magistrate that the Tribunal did not base its finding on information that he gave for the purposes of his application to the Tribunal. 12 It was open to the appellant to adduce evidence before the Federal Magistrates Court of what information he did, and did not, give to the Tribunal for the purposes of his application, including during his hearing. However, he did not do so. The circumstances surrounding his failure to adduce evidence of the information he gave to the Tribunal during his hearing were as follows. The Federal Magistrate had ordered that evidence of what was said at the appellant's Tribunal hearing was to be presented in the form of a transcript verified by affidavit and that a tape recording would not be received in evidence without the leave of the court obtained prior to the hearing. No transcript was tendered in the Federal Magistrates Court. When his Honour drew attention to the evidentiary problems which the appellant faced in the absence of the transcript, the appellant's counsel applied for the hearing to be adjourned to enable a transcript to be obtained. That application was refused. The appellant does not challenge the appropriateness in the circumstances of the refusal of the adjournment application. 13 It was also open to the appellant to make an application to this Court to receive on his appeal evidence additional to that adduced in the Federal Magistrates Court (see O 52 r 36 of the Federal Court Rules ). No such application was made. 14 The case sought to be made by the appellant before the Federal Magistrates Court and on appeal was that, even in the absence of evidence of what information the appellant provided to the Tribunal during his hearing, the Federal Magistrate ought to have been satisfied, on the balance of probabilities, that the information on which the Tribunal based the finding identified in [6] above was not information provided by the appellant during that hearing. In my view this case necessarily fails. 15 The written reasons for decision of the Tribunal reveal that the appellant attended his Tribunal hearing accompanied by Mr Haque who was acting as his adviser. The reasons also reveal that the circumstances in which the appellant completed his protection visa application were the subject of discussion during the hearing. In particular, the reasons record that the appellant advised the Tribunal that "[h]e had explained his refugee claims to his adviser, who had then recorded them in writing in English. " In the context, in my view, the reference to "his adviser" is to be understood as a reference to Mr Haque. The reasons for decision of the Tribunal thus tend to establish that the appellant gave to the Tribunal the information that Mr Haque was his adviser both as at the date of the Tribunal hearing and in May 2005 (ie the date of his visa application). 16 The finding of the Tribunal that Mr Haque had been available to give the appellant advice throughout the period between May 2005 and the date of the Tribunal hearing may reflect an inference drawn solely from the information identified in the previous paragraph. If it does, s 424A plainly did not apply to that information because it was information that the appellant gave for the purpose of his application to the Tribunal. 17 Even if it be assumed that the Tribunal placed weight on information in addition to that identified in [15] above in reaching its finding, that additional information may have been given to the Tribunal by the appellant for the purpose of his application or it may have come to the Tribunal from another source. Nothing before the Federal Magistrate suggested that the second of these options was inherently more likely than the first. Indeed, the following factors suggest that his Honour was right to conclude that the first option was the more likely. 18 As mentioned above, the appellant did not give evidence before the Federal Magistrates Court to the effect that he gave no relevant information additional to that identified in [15] above to the Tribunal. Nor did he seek to adduce evidence on appeal to that effect. He did not tender in the Federal Magistrates Court a verified transcript of the Tribunal hearing. Nor did he seek to adduce evidence on appeal to establish what he said at the Tribunal hearing. The appellant did not adduce evidence in either Court to explain the above forensic decisions. It is possible that cost was an impediment in the way of the appellant's obtaining a transcript of the Tribunal hearing. However, it seems unlikely that the same could be said in respect of the tape recording of the hearing or the adducing of evidence from the appellant himself. It is appropriate in the circumstances to conclude that evidence of what the appellant said at his Tribunal hearing would not have assisted his case. He has therefore failed to show that the Federal Magistrate ought to have allowed his application for judicial review on the basis that the Tribunal failed to comply with the requirements of s 424A. 20 The appeal will be dismissed. The appellant will be ordered to pay the costs of the first respondent who is now appropriately entitled Minister for Immigration and Citizenship. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | federal magistrates court dismissed application for judicial review of refugee review tribunal's decision affirming rejection of appellant's application for a protection visa whether the federal magistrate should have found that the tribunal failed to comply with s 424a of the migration act consideration of who carries the burden of proof regarding the application of s 424a whether appellant satisfied federal magistrate that the tribunal did not base its finding on information he gave for the purposes of his application where not clear precisely what information the tribunal relied on in making a finding held: appellant did not show federal magistrate should have found a failure to comply with s 424a migration |
By reason of s 483 of the Migration Act 1958 (Cth) ('the Act') as it was at the time these proceedings were commenced s 44 did not apply to a privative clause decision. It follows that to succeed the applicant must show that the Tribunal committed a jurisdictional error. He was born on 28 August 1956. He had an unhappy childhood. He left school when he was 15 years of age and he completed an apprenticeship as a boilermaker and welder. 3 The applicant arrived in Australia on 30 September 1980 and he has not left Australia since that time. He has a substantial criminal record commencing with offences committed in 1983. His last group of offences were committed in 2003. The applicant has been sentenced to terms of imprisonment of 12 months or more on a number of occasions. On 3 February 1992 the applicant was convicted of building breaking and felony, and was sentenced to nine months' imprisonment, which was, however, suspended. 2. On 18 August 1992 the applicant was convicted of 12 driving offences which were apparently committed on five different occasions. They included offences such as driving under disqualification, driving an unregistered vehicle, driving with excess blood alcohol, driving without due care, driving with inadequate lights, failing to wear a seatbelt and failing to truly answer questions. On some counts he was imprisoned for various terms of one to six weeks. 3. On 1 September 1992 the applicant was convicted of four offences, namely, enforcement of a breached bond, unlawful possession, building breaking and felony, and building breaking with intent to commit a felony. The offences were committed on four different dates. The applicant was sentenced to varying terms of imprisonment ranging from six months to a head sentence of fifteen months, with some of the terms suspended and with a non-parole period of nine months in relation to the head sentence. 4. On 11 August 1995 the applicant was sentenced to two years' imprisonment with a non-parole period of nine months, for burglary. 5. On 4 September 1995 the applicant was imprisoned for two months for driving under disqualification. 6. On 28 January 1998 the applicant was convicted of eight offences committed on six different occasions. There were five convictions for larceny, one for receiving, one for false pretences, and one for enforcement of a breached bond. The applicant was sentenced to terms of imprisonment ranging from one month to a head sentence of 12 months and 15 days, with a non-parole period in relation to the head sentence. 7. On 24 March 1998 the applicant was convicted of two counts of damaging property and two counts of being unlawfully on premises, and was sentenced to one month's imprisonment. 8. On 17 September 2001 the applicant was convicted of being unlawfully on premises and non-aggravated serious criminal trespass (place of residence), driving under disqualification and larceny. The latter two offences were committed on separate dates, and the former two offences were committed on the same date. He was sentenced to 18 months' imprisonment, which was suspended. 9. On 13 January 2003 the applicant was convicted of two counts of driving under disqualification on two different dates, and was sentenced to two months' imprisonment, which was, however, suspended. 10. On 14 May 2004 the applicant was convicted of 14 different offences, which included non-aggravated serious criminal trespass (place of residence) and dishonestly taking property without the owner's consent; larceny and unlawful possession; a separate offence of larceny; enforcement of breached bond; driving under disqualification; being unlawfully on premises; and five counts of failing to comply with the bail agreement. Most of these offences occurred on different dates. The applicant was sentenced to two years' imprisonment with a non-parole period of four months. The convictions are for a wide range of offences in addition to those referred to above. As the Tribunal member noted, many of the applicant's convictions are for driving offences. 6 The applicant has two daughters who are aged 18 years (Natasha) and 16 years (Rachel) respectively. The mother of these children is Ms Kathy Jensen, who the applicant lived with, on and off, for about 10 years. They separated when the children were aged about 8 years and 6 years respectively. The applicant maintained contact with his daughters until about two or three years ago when he lost contact. He does not know their current whereabouts. The applicant has lived in Housing Trust accommodation for the past eight years, except during periods of incarceration. The applicant has, from time to time, worked as a boilermaker and welder. 7 None of the offences for which the applicant was sentenced to a term of imprisonment of 12 months or more were committed during the applicant's first 10 years of permanent residence in this country. He was not liable to deportation under s 200 of the Act (and see s 201(b)(i)). He did, however, have a 'substantial criminal record' within s 501(7) of the Act, and on the first respondent's case, was liable to have his visa cancelled under s 501(2) of the Act. 8 The Minister for Immigration and Multicultural and Indigenous Affairs considered cancelling the applicant's visa in 2002. The applicant was sent a notice that his visa may be liable to cancellation and he made submissions to the Minister. The Minister decided not to cancel the applicant's visa, but warned him by letter dated 26 August 2002 that 'a fresh assessment will be made with a view to consider cancelling your visa if you are convicted of any further offences'. 9 As set out in [3] above, on 14 May 2004 the applicant was convicted of 14 different offences and he was sentenced to two years' imprisonment with a non-parole period of four months. By letter dated 5 April 2005, the Minister gave the applicant notice of her intention to consider cancelling his visa under s 501(2) of the Act. On 6 May 2005 the applicant made submissions to the Minister in support of his contention that his visa should not be cancelled. 10 On 2 June 2005 a delegate of the Minister decided to cancel the visa held by the applicant. The delegate proceeded on the basis that when the applicant arrived in Australia in 1980 he held a temporary visa. He proceeded on the basis that the applicant was granted a permanent entry permit on 4 January 1993 and on 1 September 1994 he was deemed to be the holder of a transitional permanent visa Class BF ('transitional permanent visa'). That came about by reason of the operation of reg 4(1) of the Migration Reform (Transitional Provisions) Regulations (Cth) (see also s 40 of the Act). The delegate addressed the cancellation of the transitional permanent visa. He said that he reasonably suspected that the applicant did not satisfy the character test and the applicant did not satisfy the delegate that he did pass the character test: s 501(2). The delegate exercised his discretion in favour of cancelling the visa and in doing so he had regard to the written direction issued by the Minister under s 499 of the Act (Direction No 21 Direction --- Visa Refusal and Cancellation under Section 501, 23 August 2001). The applicant was advised of the delegate's decision by letter dated 14 June 2005. 11 On 24 June 2005 the applicant applied to the Tribunal for a review of the delegate's decision. Before the Tribunal it was not in dispute that the applicant did not pass the character test in s 501. However, a question did arise before the Tribunal as to whether instead of, or in addition to, the transitional permanent visa the applicant held an absorbed person visa under s 34 of the Act. The Minister did not concede that the applicant held an absorbed person visa. The Tribunal member did not make a firm finding on the point although, for the purpose of considering the submissions, he proceeded on the assumption that he did. He considered the significance of the fact that the applicant may have held an absorbed person visa. The Tribunal member considered the exercise of the discretion under s 501(2) of the Act and the matters referred to in Direction No 21. On 21 September 2005 the Tribunal member decided to affirm the decision under review. First, he submits that he held an absorbed person visa, either alone or as well as a transitional permanent visa, and that the Tribunal member erred in law in failing to review the cancellation of the absorbed person visa. Secondly, he submits that the power in s 501(2) to cancel a visa cannot be used in circumstances where the power to deport in s 200 is not available because of a limitation on that section, namely that the offences leading to a term of imprisonment of 12 months or more had not been committed within the 10 year period: s 201(b)(i). Thirdly, the applicant submits that the power in s 501(2) cannot be used for the purpose of punishment and that that is what has occurred in this case. In the alternative, he submits that if the section can be used in that way, it is unconstitutional. Notices were given under s 78B of the Judiciary Act 1903 (Cth) but no Attorney-General sought to intervene. 14 At the time this appeal was argued before me, the High Court had not handed down its decision in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom . That decision has now been handed down: [2006] HCA 50 ; (2006) 81 ALJR 1 (' Nystrom '). The decision is a significant one in that it resolves a number of the issues in this case. The Minister had cancelled the respondent's transitional permanent visa and the respondent challenged that decision. He submitted that he held an absorbed person visa instead of, or in addition to, the transitional permanent visa. He submitted that the Minister's decision was invalid for jurisdictional error because the Minister had made a decision in relation to a visa he did not hold. He also argued that if he held a transitional permanent visa the Minister in cancelling that visa had erred because he had not taken into account the fact that by reason of s 501F(3) of the Act his decision would also lead to the cancellation of his absorbed person visa. The respondent also submitted that the power in s 501(2) was restricted or curtailed by the operation of s 200 and s 201 of the Act. It will be apparent from this brief summary that a number of the arguments in Nystrom were the same as the arguments put in this case. 16 By the time Nystrom had reached the High Court it was common ground that on 1 September 1994 the respondent held an absorbed person visa. As I have said, in the case before me the Tribunal member seems to have assumed that the applicant held an absorbed person visa, although he did not finally decide the point. On appeal to this Court, the Minister argued the matter on the basis that the applicant held an absorbed person visa as at 1 September 1994 without conceding that that was necessarily the case. 17 A non-citizen who falls within the terms of s 34(2) of the Act is taken to have been granted an absorbed person visa on 1 September 1994. 19 It seems to me that it is likely the applicant fell within the terms of s 34 of the Act and I am prepared to assume that he held an absorbed person visa on 1 September 1994. 20 The applicant submits that he could only hold one visa at a time and therefore he did not also hold a transitional permanent visa on 1 September 1994. 22 Both these arguments were put in Nystrom and both were rejected by the High Court. 23 Heydon and Crennan JJ (with whom Gleeson CJ agreed) reviewed the legislative history in relation to an absorbed person visa and a transitional permanent visa. In the final result, s 34(2) and reg 4(1) overlap and confer identical rights. Section 34 covers all persons who satisfy the four prerequisites in s 34(2), irrespective of whether those persons hold an entry permit, and reg 4(1) covers all persons holding permanent entry permits irrespective of whether they could satisfy s 34(2). The legislative history also shows that s 34 visas were to be subject to the power to cancel in s 501(2), contrary to Mr Nystrom's submission that s 501(2) should be read down by reference to ss 200 and 201, which will be dealt with more fully later. Sections 15, 82(2), 82(3) and 501F(3) of the Act all recognise the potential for a person to hold multiple visas under the Act. As s 34 covers absorbed persons, whether or not they had entry permits, provided they satisfied the criteria in s 34(2), and reg 4(1) covers persons who held an entry permit of the kind which Mr Nystrom held, he qualified for and acquired simultaneously each of the deemed visas under s 34(2) and reg 4(1). 25 On the authority of Nystrom the applicant's submission that he did not hold both a transitional permanent visa and an absorbed person visa must be rejected. 26 The second submission in Nystrom was that assuming the respondent held a transitional permanent visa the Minister had erred in failing to take into account the fact that by reason of s 501F(3) of the Act a decision to cancel that visa also led to the cancellation of the absorbed person visa. 27 The High Court rejected this submission. This is because there was no consideration relevant to Mr Nystrom's Absorbed Person Visa which was not relevant to and considered when the Minister cancelled his Transitional (Permanent) Visa. Thus, there has been no failure to take account of relevant considerations. Section 501F(3) confirms that conclusion. Such an approach in construing s 501(2) pays insufficient regard to the terms and legislative purpose of s 501F(3). Section 501F was introduced by the Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Act 1998 (Cth) ("the 1998 Strengthening Amendment Act"), which also introduced the character test and brought s 501 into its current form. In its terms, s 501F(3) provides that a decision to cancel a visa where a person fails the character test under s 501 "is taken" to be a decision to cancel any other visa held by the person. There is no room for discretion in the matter. The only exception applies if the other visa is within s 501F(3)(b), namely, a protection visa or a visa specified in the Regulations. The Tribunal member said that the delegate's decision was probably invalid because the delegate failed to take into consideration that the cancellation of the applicant's transitional permanent visa also led to the cancellation of his absorbed person visa. In reaching that conclusion the Tribunal member followed the reasoning of the majority of the Full Court of this Court in Nystrom v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 121 ; (2005) 143 FCR 420. In view of the High Court's decision in Nystrom that conclusion is wrong. The Tribunal member then said that he could not review the decision of the delegate which had the effect of cancelling the applicant's absorbed person visa because no application to review that 'decision' had been made by the applicant. I do not think this observation advances the matter because, as the Minister submitted, there probably was no right of review in relation to that 'decision'. Section 500 of the Act provides that there is a right of review only from the decision of the delegate under s 501. The Tribunal member went on to say that a right of review in relation to the deemed cancellation of the absorbed person visa would be of no practical utility because s 501F(3) operates to cancel that visa upon cancellation of the transitional permanent visa. I do not think I need to comment further on this reasoning because, on the reasoning of the High Court in Nystrom , the Tribunal member would not have erred if he had not taken into account the deemed cancellation of the absorbed person visa. As it happens the Tribunal member did take that into account. I find that on the facts of this matter, the considerations referred to in the Direction in relation to the exercise of discretion to cancel the absorbed person visa lead to the same issues and the same conclusions. The consequential cancellation of that visa does not therefore lead me to reach a different conclusion in reviewing the delegate's decision. In deciding that the transitional permanent visa should be cancelled the Tribunal member would not have erred if he had not taken into account the fact that would also lead to the cancellation of the absorbed person visa. As it happens, he did take that into account. The fact that there are aspects of the Tribunal member's reasons with which I do not agree does not affect those conclusions. The applicant's first submission must be rejected. The particular limitation which is not met in this case is that the offence leading to a term of imprisonment of 12 months or more must be committed within the first 10 years of the applicant's permanent residence in Australia. The applicant submits that the power in s 501(2) is a general power of the same nature and, as a matter of statutory construction, it cannot be used in a way which overcomes the limitations on the exercise of the special power in ss 200 and 201. This argument was put in Nystrom and rejected. The power under s 200, as restricted by s 201, to deport non-citizens is a power in respect of the continuing presence in Australia of non-citizens convicted of certain crimes. The power under s 501(2) to cancel a visa of a non-citizen on character grounds (based on a "substantial criminal record") and thereby remove that non-citizen is a much wider power, although it is also for the protection of the Australian community. The powers are distinct and cumulative. The criteria in respect of a person's criminal record in s 201(c) and s 501(7) are not co-extensive, although there is some overlap between s 201(c) and s 501(7)(a), (b) and (c). Criteria in s 501(7)(d) and (e) give s 501(2) a wider field of operation than that which is covered by s 201(c). A person who is subject to a deportation order is subject to discretionary rather than mandatory detention during any challenge (ss 253(8) and (9)), but will then be deported unless the Minister revokes the order. A person who has a visa cancelled is subject to mandatory detention and removal (s 189) but may apply for a protection visa (s 501E). The power in s 501(2), construed as it must be, together with ss 501(6) and (7), is not a vague or general power. The line of authority beginning with Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia , upon which Mr Nystrom relied, has no application here as there is no repugnancy between the two powers. In fact, they are consonant with each other. The Act contains two separate but consonant statutory systems for deportation and removal which operate differently, although the final outcome of removal may be the same. Section 201 does not in terms, confer on an alien any "statutory protection" from removal, consequent upon the cancellation of a visa under s 501(2). To that extent, the facts here raise the issue of the interaction between s 200, as restricted by s 201, and s 501(2), more squarely than the facts in Jia Legeng . This distinction provides no reason to reconsider the statement in Jia Legeng that s 501 contains a separate statutory power. In fact, the distinction is an illustration of the discrete nature of the powers in question. The contention that ss 200 and 201 give a person in the position of the respondent a protection or immunity from the exercise of the power conferred by s 501 is a statement of a conclusion, rather than an expression of a reason for reaching that conclusion. If there is such a reason, it must be found in a process of statutory construction. The provisions of s 501(2), on the one hand, and ss 200 and 201 on the other, are not repugnant, in the sense that they contain conflicting commands which cannot both be obeyed, or produce irreconcilable legal rights or obligations. They create two sources of power, by which a person in the position of the respondent may be exposed, by different processes, and in different circumstances, to similar practical consequences. There is nothing novel, or even particularly unusual, about that. It does not of itself mean that only one source of power is available. If, however, by reason of the apparent exhaustiveness with which one provision, or group of provisions, dealt with the position of a person such as the respondent, there were an incompatibility of a kind that required a conclusion that only one provision or group of provisions was intended to apply, then that would be a reason for accepting the respondent's contention. Again, if one provision, or group of provisions, were directed with particularity to the case of a person such as the respondent, and the other were merely of general application, the same could be said. As explained by Heydon and Crennan JJ, and also by Gummow and Hayne JJ, neither proposition can be made good when regard is had to the legislative history and context. In the result, the respondent's contention amounts to an assertion; a statement of an outcome that would be supportive of his freedom to remain in Australia, and in that sense protective of his interests, but without a convincing argument of statutory construction which sustains that outcome. Therefore, it fails. 33 The applicant's second submission must be rejected. To the extent that it does that it is said by the applicant to be invalid. The applicant refers to observations made by Spender J in Shaw v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 106 ; (2005) 142 FCR 402 at [30] - [35] . In the alternative, the applicant submits that if s 501(2) does not authorise an impermissible exercise of the judicial power and is valid, nevertheless, in this case, the power was exercised for the impermissible purpose of punishing the applicant for the criminal offences he had committed. The applicant is a non-citizen of longstanding, which I assume means that he has been in Australia for a considerable period of time. 2. The applicant has two children in Australia. 3. The applicant was the holder of an absorbed person's visa and was entitled to rely upon the nature of the visa, coupled with the protective elements of s 201 of the Act, to assume that he had been absorbed in the Australian community. 4. The applicant has no significant ties with his place of birth and would be liable to live a destitute life. 5. The applicant has been punished by the Australian courts for offences committed in Australia while present here as an absorbed person. Similar arguments to those put in this case were put to the Full Court of this Court in Djalic v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 151 ; (2004) 139 FCR 292. Section 51(xix) of the Constitution empowers Parliament to make a law providing for the deportation of aliens for whatever reason Parliament thinks fit, unless the Constitution otherwise prohibits the making of the law. Under Chapter III of the Constitution , the adjudication and punishment of criminal guilt by reason of an alleged breach of a law of the Commonwealth appertains to the judicial power of the Commonwealth and cannot be entrusted to the Executive. If, therefore, Commonwealth legislation on its proper construction, purports to authorise the Executive to impose punishment for criminal conduct, the legislation, to that extent, will infringe Chapter III of the Constitution . Whether legislation conferring power to cancel the visa or order the deportation of a non-citizen is punitive in character is to be determined by construction of the legislation, not by a consideration of the consequences of detention or removal of the individual. Accordingly, the power to cancel a visa or order the deportation of a non-citizen is not to be regarded as punitive in character merely because exercise of the power involves interference with the liberty of the individual or imposes what the individual may see as sanctions consequential on his criminal connections. Neither can detention incidental to deportation of a non-citizen be characterised as punitive merely because it involves deprivation of liberty. Legislation conferring a discretion on the Executive to cancel the visa of a non-citizen or to deport a non-citizen is not characterised as punitive if it can fairly be said to protect the Australian community. This is so even where the pre-condition that must be satisfied for the exercise of the power is the conviction of the non-citizen for a criminal offence or the imposition of a minimum period of imprisonment. Nonetheless, if in a particular case the decision-maker purports to exercise a statutory power to cancel the visa of a non-citizen or to deport the non-citizen or order to punish the non-citizen and not for protection of the Australian community or some other legitimate objective, the exercise of the power may be ultra vires the statute. Taking those matters into account did not mean that s 501(2) infringed or contravened Chapter 111 of the Constitution (at [73]-[74]). 37 It follows, in my opinion, that the applicant's submission that the power in s 501(2) infringed or contravened Chapter 111 of the Constitution must be rejected. 38 That leaves for consideration the alternative submission that it would be an invalid exercise of the power in s 501(2) of the Act to exercise it solely for the purpose of punishing the applicant for the offences he had committed and that that is what occurred in this case. The proposition may be accepted but there is no evidence that that is what occurred in this case. The Tribunal member carefully considered each of the matters in Direction No 21. Among other things, he said that he attached 'little significance' to general deterrence and he said that the consideration of the best interests of a child or children favoured an exercise in the applicant's favour. Subject to the applicant's fourth submission, which I will deal with in a moment, the Tribunal member considered each relevant matter carefully and there is simply no evidence that he exercised the power for an improper purpose. 39 The applicant's third submission must be rejected. Where a non-citizen has breached, or where there is a significant risk that they will breach this trust or where the non-citizen has been convicted of offences in Australia or elsewhere, it may be appropriate to refuse the visa application or cancel the visa held by such a person. Visa refusal or cancellation and removal of the non-citizen may be appropriate simply because the nature of the character concerns or offences are such that the Australian community would expect that the person would not be granted a visa or should be removed from Australia. Decision-makers should have due regard to the Government's view in this respect. He noted that there would be a range of views in the community as to the circumstances in which a visa for a non-citizen should be granted or cancelled. He noted that there would be a general expectation in the community that the Act would be administered fairly and humanely. I have referred above to Mr Pull's long criminal record. His offending has been frequent and regular for more than twenty years. He has been treated leniently in many instances and has been given every opportunity and encouragement to mend his ways, but did not do so. He disregarded the clear warning by DIMIA that his visa was liable to cancellation, and that further offending would lead to a fresh assessment being made with a view to consider cancelling his visa if there were future convictions. No doubt there would be sympathy for Mr Pull, particularly in view of his unhappy childhood and his desire to re-establish contact with his daughters, but taking all things into account, I think that the Australian community would conclude that he has substantially disregarded the laws of Australia, and that his conduct has been disruptive to the community and has exposed members of the community to risk and distress. The applicant was a resident of Australia for 25 years and the cancellation of his visa would mean that he would be deported to a country where he has no significant ties and is likely to lead a destitute lifestyle. 2. The applicant is a person who has two daughters who are Australian citizens and there is no evidence to suggest they will ever be able to renew their relationship with the applicant. 3. The applicant has been punished by the Australian courts for offences committed in Australia whilst present here as an absorbed person. 4. There are clear protections afforded to the applicant under s 34(2) and s 201 of the Act and the first respondent is attempting to circumvent those protections by using s 501(2). In any event, as to the first matter, the Tribunal member was undoubtedly aware of the lengthy period the applicant had been in Australia and that he had no significant ties in the United Kingdom. As to the second matter, he was aware of the fact that the applicant had two daughters and, in considering the matter of the degree of hardship which would be caused to immediate family members lawfully resident in Australia, said that it would be difficult for the applicant's daughters to travel overseas and indeed this might never occur. In other words, it was a matter he took into account. As to the third matter, I have no doubt that the Tribunal member was aware that the applicant had been punished for the offences he committed and that those offences were committed at a time when he had spent a considerable period of time as a part of the Australian community. As to the fourth matter, I would not characterise the proposed exercise of power in this way, and the relationship between s 200 and s 201 and s 501(2) was not a matter the Tribunal member was required to take into account. 44 The Tribunal member did give genuine and proper consideration to the expectations of the Australian community. 45 The applicant's fourth submission must be rejected. The applicant must pay the first respondent's costs of the appeal. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | appeal from decision of administrative appeals tribunal affirming decision of delegate of minister to cancel appellant's visa where appellant a non-citizen resident in australia since 1980 where appellant granted transitional permanent visa where appellant convicted of a large number of criminal offences in australia where minister cancelled appellant's transitional permanent visa on character grounds pursuant to s 501(2) of the migration act 1958 (cth) whether applicant held absorbed person visa whether absorbed person visa and transitional permanent visa held simultaneously whether tribunal required to consider effect of cancellation of appellant's absorbed person visa whether power conferred by s 501(2) limited by terms of s 200 and s 201 of the migration act 1958 (cth) whether s 501(2) of the migration act 1958 (cth) infringes chapter 111 of the constitution whether s 501 used for the purpose of punishment whether tribunal member properly took into account expectations of australian community. migration |
It seeks an order that pursuant to O 52 r 38(1)(a) of the Federal Court Rules that the appeal be dismissed for want of prosecution. On 27 November 2008 Mr Mapleston, who previously acted as solicitor for the appellant, ceased to act. In the notice of withdrawal filed in the Court on 4 December 2008 Mr Mapleston indicated that the appellant's last known address for service was care of Longreach Australia Pty Ltd, Level 6, 409 St Kilda Road, Melbourne. The motion currently before the Court was served on the appellant at that address on 15 June 2009. An application of this type is required to be served in the manner prescribed in O 7 r 4 (see O 52 r 2(b)(ii)). As service was effected at 2.20 pm on a Monday, the requirements of O 7 r 4 have been met. Alternatively, that address might be viewed as the appellant's last known address for service, in which case the terms of O 7 r 4(2) would similarly apply. I am therefore satisfied that service of the motion has been properly effected. The evidence for that conclusion is the affidavit of service of Martin Telley sworn 19 June 2009. Since the appeal was instituted a number of steps significant to this application were taken. On 28 October 2008 the callover hearing was adjourned by Black CJ at the request of the appellant. Then, on 27 November 2008 Mr Mapleston ceased to act as solicitor for the appellant. On 3 December 2008, in light of Mr Mapleston ceasing to act, the Court adjourned a directions hearing to settle the appeal papers. Then, on 5 December 2008 the Court wrote to the appellant requesting information about the general status of the appeal. The solicitors for the respondent have not received a copy of any response to this letter from the appellant. On 3 February 2009 the appellant failed to appear at the callover hearing before Ryan J. Thus, apart from filing and serving the notice of appeal on 3 October 2008, the appellant has taken no substantive steps to prosecute the appeal. In these circumstances it is appropriate to order that the appeal be dismissed for want of prosecution pursuant to O 52 r 38(1)(a). | whether appeal should be dismissed for want of prosecution whether service on appellant of respondent's motion properly effected practice and procedure |
The Tribunal had affirmed a decision of a delegate of the first respondent to refuse to grant a Protection (Class XA) visa to the appellant. 2 The appellant is a citizen of Nepal who arrived in Australia on 29 April 2005. On 7 June 2005 the appellant lodged an application for a protection visa with the Department of Immigration and Citizenship. On 5 August 2005 a delegate of the first respondent refused the application for a Protection visa. On 31 August 2005 the appellant applied to the Tribunal for a review of that decision. 3 The Tribunal (differently constituted) (the first Tribunal) affirmed the delegate's decision on 24 November 2005 (handed down on 13 December 2005). On 11 October 2006, upon review to the Federal Magistrates Court, the decision was quashed and the matter remitted to the Tribunal for reconsideration according to law. That remitter led to the Tribunal's decision which was the subject of the application for judicial review to the Federal Magistrates Court. He also claimed to fear persecution from the Nepalese police for his imputed political opinion, in that it was perceived by the authorities that he supported the Maoists. 5 The appellant gave evidence of his membership of the Nepal Student Union which is affiliated with the Nepali Congress Party. He said that after he completed his study and before he commenced his own business he decided to join the Nepali Congress. In 1990 he became an ordinary member of the Nepali Congress Party in which he remained active. He said that his membership of the central committee of the Nepali Congress Party led the CPN-Maoists to think that he was actively undermining that party. He was accused of giving false statements to the government which was then formed from the Nepali Congress Party and told to leave the district. Civilians at that time were asked to make donations to the Maoists. He learned that everyone else in his district gave donations to the Maoists except him. He also claimed he had been attacked by Maoists for refusing to pay donations. He said in that November 2001 in excess of 100 Maoist rebels came to his house at which they threw stones. He said they were looking for him and his family. The broke the windows and doors of the house and they looted his shop. He reported the matter to the police. 6 He said that he was not the only person attacked by Maoists. They also attacked other members of the Nepali Congress Party. 7 In December 2001, he and other members of the Nepali Congress Party moved to Kathmandu. He built a house in Kathmandu which he and his family occupied. He commenced a business in Kathmandu. 8 The appellant stated that his house was raided by the police because the appellant had rented a floor of his house to a Maoist district level leader (known as Mr Rajendra). The appellant said he did not know this person was a Maoist leader. The appellant claimed that the police suspected that the appellant knew Mr Rajendra was a Maoist. He was interrogated by the authorities as to his connection with Mr Rajendra. He claimed the authorities forced him to sign a statement that he would report to them if he were to leave the country. 9 The appellant claimed that after the Maoist leader was arrested by the authorities the leader's friends assaulted him and broke his nose. He said he was admitted to hospital unconscious. He reported the matter to the police but received no response. 10 Shortly after, Maoists invaded his house and made threats to his wife and children. They said if their leader was not released they would kill the whole family. 11 He said that he and his family decided to hide and they hid in a friend's house in Satungal, which is nine kilometres from Kathmandu city. Whilst hiding there, they decided to go to Australia. 12 The appellant claimed that he could not seek protection from the authorities because they believed he was supporting the Maoists. The appellant further claims that he fears the authorities will arrest him if he returns because he left the country without their permission. 13 He said that he does not know whether Mr Rajendra is alive or dead, or whether he is still in custody. He said if Mr Rajendra has disappeared or is dead then his followers will be angry with him. In those circumstances, if he is not arrested by the authorities it is likely that he will be kidnapped and tortured by Mr Rajendra's followers. The appellant also attended a hearing before the second Tribunal on 19 January 2007. He was assisted by a Nepalese interpreter on both occasions. 15 It is not entirely clear how the Tribunal categorised the appellant's claims. The Tribunal said, when discussing the appellant's application that it had been submitted that the appellant's fear of persecution related to his political opinion as a high profile political leader who was associated with the Nepali Congress Party and his membership of a particular social group as a businessman who was targeted by Maoists for donations. His case is essentially that he was a member of the Nepali Congress Party and he fears the Maoists essentially because he refused to pay them donations and because he is perceived to have played a part in the apprehension of his former tenant, a Maoist leader. The applicant had also claimed a fear of persecution by the authorities, but has now expressly withdrawn his claim. 18 Moreover, the Tribunal seems to have rolled up at that stage his claim that he would be persecuted by reason of his political opinion and his claim that he was a member of a particular social group which was targeted by the Maoists for donations. I will return to that. 19 The Tribunal accepted that the appellant became an ordinary member of the Nepali Congress Party in 1990 and that he was active in the affairs of the party. It accepted that he was asked for donations by Maoists which he refused to pay. It accepted that, as a consequence, he was threatened and that on one occasion his house was attacked. Despite this, the Tribunal found that there was no serious harm inflicted on him or his family and the family had been able to move back into the house shortly after. It found there was no evidence to suggest the Maoists had taken any other steps to act upon the threats levelled against the appellant. The Tribunal found, on the evidence before it, that the Maoists were primarily attacking and extorting money from rich people, and it was not satisfied the threats and attack against the appellant were essentially and significantly motivated by the appellant's political opinion or activities. 20 The Tribunal noted that the appellant had successfully relocated to Kathmandu in 2001. The Tribunal did not accept the appellant's claim that the Maoists believed he had been somehow responsible for the arrest in 2004 of one of their leaders, who was also the appellant's tenant. The appellant had claimed in his evidence that his tenant was Mr Rajendra Dhakal. However, the Tribunal had obtained an Amnesty International Report indicating that a Rajendra Dhakal from that area, who was a former Maoist leader, had been arrested in January 1999 and had not been active since. The Tribunal found the appellant's explanations far-fetched and unpersuasive, and noted that the appellant's explanation and evidence of a police conspiracy surrounding this event not only cast doubt on the credibility of the appellant's explanations in relation to this event, but also cast serious doubt on his assertion that he was assaulted by Maoists in 2004. The Tribunal held that the appellant's evidence regarding the arrest of his tenant for the reasons he provided was a concoction designed to strengthen his case. 21 The Tribunal did not accept the appellant's tenant was arrested because he was a Maoist leader or that the police led the appellant to believe that this person was Rajendra Dhakal. The Tribunal did not therefore accept that the appellant had been assaulted by Maoists because they believed he was responsible for sending their leader to jail. 22 The Tribunal had regard to the appellant's six week delay before leaving Nepal and five week delay in lodging his Protection visa application for finding that, if he had had a genuine fear of persecution, such delays would have not have occurred. 23 The Tribunal considered country information in relation to Maoists and members of the Nepali Congress Party and was not satisfied that if the appellant were to engage in the same level of political activity if forced to return to Nepal he would face harm. 24 The Tribunal accepted that the appellant's house was robbed in 2006 but not satisfied it was for a Convention reason. 25 For those reasons, the Tribunal was not satisfied that the appellant held a well founded fear of harm for a Convention reason. Particulars provided by the appellant asserted that the Tribunal failed to give the appellant an opportunity to give evidence in relation to an issue arising in the decision under review, namely whether Rajendra Dhakal was or had been in police custody or had escaped police custody. That was the sole issue relied on for the relief sought. The appellant's counsel submitted that the issue that was not put to the appellant in accordance with s 425(1) was that there were conflicting statements in the Amnesty International Report about whether Rajendra Dhakal had been arrested or was in police custody. That itself was sufficient to put the question of the arrest of Rajendra Dhakal to the applicant for him to give evidence and present argument in relation to it. The Federal Magistrate found that the Tribunal had accordingly complied with s 425: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592. As there was no jurisdictional error established, the application was dismissed. The Federal Magistrate failed to find denial of natural justice and procedural fairness in that the Tribunal did not give weight to the appellant's evidence; made a decision based on assumptions and the evidence prepared by the first respondent; "ignored to evaluate" the political situation in Nepal; was confused as to the facts; and raised irrelevant issues and ignored relevant issues. However, he has mainly repeated the facts upon which his claims were based. In that respect, the appellant has mistakenly assumed that this Court's jurisdiction includes merit review. 31 The appellant submits that he was denied procedural fairness when the Federal Magistrate "failed to hold that the Tribunal member concentrated only on one issue to discredit all other oral and written evidence in support of his claim for the protection visa. " Of course, the issue on appeal is not whether the Federal Magistrate denied the appellant procedural fairness. The issue on appeal is whether the Federal Magistrate erred in not identifying a want of procedural fairness on the part of the Tribunal. 32 The appellant also submitted that the Tribunal "asked more irrelevant question (sic) connected with the real issue. The real issue is that whether he has fear from the Maoists or not? " The appellant states "the Tribunal member ignored the cumulative effects of fear and made decision without assessing the well-founded fear from the Maoists. The first respondent contends that, in any event, there was no error in the Tribunal's approach as to whether the appellant's claimed fear was well founded. 35 The first respondent further submits that any weight to be given by the Tribunal to evidence was a matter for the Tribunal: Abebe v The Comonwealth [2004] HCA 32 ; (1999) 197 CLR 510 at [197] . 36 Finally, the first respondent submits that there was no error in the way in which the Federal Magistrate dealt with the issue of s 425 and that the appellant was properly on notice of the issue in relation to the tenant generally. The sole issue before the Federal Magistrate was whether there had been compliance with s 425 by the Tribunal putting to the appellant conflicting statements in the Amnesty International Report. The Federal Magistrate ruled against the appellant on that sole ground. The appellant has not made that ruling the subject matter of this appeal. 38 A party is not entitled to raise new grounds which were deliberately or by inadvertence not put to the Court from which the appeal is brought: Metwally v University of Wollongong [1985] HCA 28 ; (1985) 60 ALR 68 at 71. 39 If the appellant were entitled to raise these new grounds, it would mean that this Court would have to sit, as it were, as the Court at first instance to determine whether these new grounds would give rise to the relief sought in the application before the Federal Magistrate. Parliament has given the responsibility for hearing these applications exclusively to the Federal Magistrates Court. The parties, whether they are represented or unrepresented, ought to articulate all of their complaints in relation to the Tribunal's reasons in the Federal Magistrates Court so that that Court can make the appropriate findings and reach a considered decision on all aspects of the Tribunal's decision. 40 To allow the appellant to articulate these grounds on appeal would be to allow the appellant to treat this Court as a Court at first instance. Such a course of action is unsatisfactory, not only for this Court but also for the High Court which would hear any application for special leave from this decision. It would put the High Court, as it were, in a position of hearing applications for special leave from a court of first instance: SZKMS v Minister for Immigration and Citizenship [2008] FCA 499. 41 However, authority seems to suggest that I need to consider whether the grounds have merit before I determine whether I should give leave for the appellant to raise the matters: VUAX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 158. 42 The Tribunal considered the question of a well-founded fear of persecution conventionally. This adds an objective requirement to the requirement that an applicant must in fact hold such a fear. A person has a "well-founded fear" of persecution under the Convention if they have genuine fear founded upon a "real chance" of persecution for a Convention stipulated reason. A fear is well-founded where there is a real substantial basis for it but not if it is merely assumed or based on mere speculation. A "real chance" is one that is not remote or insubstantial or a far-fetched possibility. A person can have a well-founded fear of persecution even though the possibility of the persecution occurring is well below 50 per cent. It found that the appellant did not have a genuine fear of persecution. That being the case, the appellant could not satisfy the test of well-founded fear of persecution as determined by the authorities. 44 Insofar as it is submitted that the Tribunal was in error in determining the absence of fear on the part of the appellant, that was a matter for the Tribunal and not for this Court. The weight that the Tribunal put upon the evidence for the purpose of determining that issue was also for the Tribunal and not for this Court: Abebe [2004] HCA 32 ; 197 CLR 510. 45 The second ground seems to be a complaint going peculiarly to the merits or to the weight which the Tribunal put upon the evidence which gave rise to the Tribunal's ultimate decision, disguised as it were as a complaint of bias. Insofar as it is a complaint about the merits, that is not a matter for this Court: Attorney-General v Quin [1990] HCA 21 ; (1990) 170 CLR 1 at 35-36; Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham (2000) 168 ALR 407 at [67]. Insofar as it is a complaint of apprehended bias or bias, there is simply no evidence to support a claim of prejudgment. 46 Neither ground of appeal has merit. In those circumstances, I would not grant leave to the appellant to raise those matters on this appeal. 47 Although the appellant did not address the issue that was before the Federal Magistrates Court, the first respondent did so for the purpose of demonstrating that the Federal Magistrate had not erred. The issues before the Federal Magistrate were mainly directed to that aspect of the appellant's claim which dealt with Mr Rajendra. Principally, the Tribunal was concerned with "the plausibility" of the claim. Sub-issues concerned the identity of the tenant who was living in the appellant's house and his whereabouts subsequent to his leaving. The thrust of the appellant's case was that there were two persons of the same name who came from the same locality and were both lawyers who had been wanted or arrested by the police. The Tribunal thought it implausible that there were two persons by the name of Rajendra Dhaka, both of whom were lawyers from the Gorkha District. The Tribunal rightly, so the Federal Magistrate found, addressed that issue in the s 424A letter and also discharged its liability under s 425. It is clear from a reading of the s 424A letter and the transcript that the appellant was put on notice of that issue. The Federal Magistrate was right to find that the Tribunal had complied with its obligations under s 424A and s 425. 48 I raised with counsel for the first respondent a matter not raised by the appellant either before the Federal Magistrate or on appeal. It is tolerably clear from the appellant's claims and the Tribunal's reasons that apart from claiming a fear of persecution because of his political opinion, the appellant also claimed a fear of persecution by reason of his membership of a particular social group as a businessman who was targeted by Maoists for donations. I raised with the first respondent's counsel whether that matter had been appropriately addressed by the Tribunal. The first respondent's counsel accepted that the appellant had made such a claim but at the same time contended that his claim had been properly addressed by the Tribunal who was not satisfied that he was entitled to a Protection visa on that ground. 49 The Tribunal found that the appellant was asked for donations by the Maoists which he refused to pay. The findings appear to be contradictory. However, the first respondent's counsel argued that the first finding did not include in it a finding that the house had been attacked by the Maoists. That is a very generous reading of the Tribunal's reasons and a reading I would not be prepared to give to those reasons myself. 51 The Tribunal clearly found that the attack on the appellant's house was not motivated by his political opinion or activities. It did not address, it seems to me, whether the attack was motivated by his membership of the political social group as a businessman targeted by Maoists for donations. I think it ought to have addressed that question because I think on a reading of the Tribunal's reasons, notwithstanding the second finding to which I have referred above, the Tribunal was of the opinion that the attack on the appellant's house was carried out by the Maoists. 52 The first respondent's counsel argued that if that result were right the appeal had to fail for two reasons. First, the Tribunal made a finding that the robbery which was carried out during the attack on the house had not inflicted any serious harm on the appellant or members of his family. Prior to the attack the applicant and his family had managed to leave the house. Nobody was injured and they had been able to move back into the house shortly after and remained there for 25 days before moving to Kathmandu without further incident. He did not claim to have suffered significant economic loss and the Tribunal is satisfied that this was the case. Apart from the attack on his house, the applicant did not claim and there was no evidence before the Tribunal to suggest that the Maoists in Okhaldhunga had taken any other steps to act upon the threats they had levelled against him. 54 The first respondent's counsel also argued that the Tribunal had made a finding on relocation adverse to the appellant which would mean that even if the Tribunal had erred, as suggested above, the appeal would have to be dismissed. 55 The Tribunal did find that the applicant had successfully relocated himself to Kathmandu in late 2001. It found that he did not suffer any persecution after he had relocated. Indeed, in that regard it relied upon the appellant's own evidence. In those circumstances, the contention of the first respondent's counsel must be accepted. If the appellant were to return to Nepal he could live in Kathmandu without fear of persecution for his membership of a particular social group, namely a businessman who was targeted by Maoists for donations. 57 For all of those reasons, all grounds raised fail and the appeal must be dismissed. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | where new grounds raised on appeal whether it is appropriate to treat the federal court as a court at first instance whether grounds raised have any merit. whether tribunal considered particular social group claim where tribunal found no serious harm inflicted on the appellant where tribunal made a finding on relocation adverse to the appellant appeal dismissed. practice and procedure migration |
He was posted to the recruit training facility HMAS Leeuwin in Western Australia where he remained until the end of September in the following year. 2 On 24 January 2002 Mr Farnaby made a claim for compensation under the Safety Rehabilitation and Compensation Act 1988 (Cth). He alleged that while at HMAS Leeuwin he suffered physical and sexual abuse which resulted in post traumatic stress disorder (PTSD). His claim was disallowed. That decision was affirmed by the Administrative Appeals Tribunal, constituted by the Hon R J Groom (Deputy President) and Dr J Campbell (Member): Farnaby and the Military Rehabilitation and Compensation Commission [2008] AATA 603. Mr Farnaby now appeals to this Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). 3 The transitional provisions of the 1988 Act required Mr Farnaby to show that, within the meaning of the Commonwealth Employees Compensation Act 1930 (Cth), he had suffered a "personal injury by accident arising out of or in the course of his employment": s 9(1). "Injury" means "any physical or mental injury" (s 4(1)) or "disease ... due to the nature of (his) employment" (s 10(1)). 4 For the purposes of this appeal we are only concerned with Mr Farnaby's claim based on "mental injury". PTSD is a mental injury. 5 The Tribunal accepted Mr Farnaby's account of physical and sexual abuse suffered at HMAS Leeuwin. However, it was not satisfied that he had suffered mental injury or that such symptoms as he had were caused by events at HMAS Leeuwin. 7 If there was no error in the Tribunal's finding that Mr Farnaby did not suffer mental injury, then the causation issue would not arise. 8 The foregoing is of course subject to the necessity to establish that the appeal is "on a question of law" within the meaning of s 44(1) of the Administrative Appeals Tribunal Act . If he failed to hand over "protection money" or cigarettes to senior recruits he was assaulted. He was forced to run a gauntlet where senior recruits bludgeoned him with pillow cases filled with heavy boots and books. 10 On two occasions he was stripped and had boot polish applied to his genitals. On other occasions he was stripped and thrown into a cold bath and scrubbed with steel wool and scrubbing brushes. 11 Often he was pushed to the back of meal queues. If he resisted he would be assaulted, either on the spot or after meals when a group would wait for him and other recruits and assault them. 12 He suffered bruising to his face and body and an occasional bloody nose. 13 He was frequently assaulted because he was different from other recruits. He was of slim build and had a strong Yorkshire accent. 14 He did not report these assaults because he would be required to identify the assailant, which would put him at further risk. 15 Other junior recruits were treated in the same way. Injuries sustained included fractures, broken noses, smashed teeth, broken thumbs, concussion and bruising. Some were hospitalised and some attempted suicide. It was common for junior recruits to escape or attempt to escape. Generally junior recruits did not complain, for fear of reprisal. 16 The authorities at HMAS Leeuwin failed to investigate the few complaints that came to their attention. 17 Mr Farnaby was never involved in assaulting or bullying anyone else at HMAS Leeuwin, except that on one occasion, after being whipped with a wet tea towel by Mr Keith Pratt, a fellow recruit, he responded by stabbing Mr Pratt in the arm. As a result Mr Pratt had some stitches in the wound. The incident was not reported. Mr Pratt gave evidence for Mr Farnaby at the hearing. 18 The Tribunal accepted Mr Farnaby's evidence (corroborated as it was by other former recruits) as to his mistreatment at HMAS Leeuwin. This unacceptable and wrongful conduct was obviously condoned by those responsible for the well-being of these very young recruits. 19 While at HMAS Leeuwin Mr Farnaby spent weekends with a "sponsor", arranged by the Navy. The sponsor was a single man who lived with his mother. There was only one bed available, which was the sponsor's. On occasions the sponsor fondled Mr Farnaby's penis. When a passenger in the sponsor's panel van he was frequently touched by the sponsor on his leg or genital area. Once in the back of the panel van, the sponsor attempted to rape him. Mr Farnaby did not report these offences because he feared reprisals and also because the officer to whom he would have had to report and the sponsor had mutual friends. 20 Although there was no corroborative evidence, and there were variations in the accounts provided to medical practitioners about the details of the sexual assaults, the Tribunal was satisfied that Mr Farnaby did suffer sexual abuse by the sponsor as he claimed. 21 After leaving HMAS Leeuwin Mr Farnaby was posted to a number of ships. He resigned from the Navy in 1979. 22 While in the Navy Mr Farnaby became a heavy drinker and also, from about 1971 when on HMAS Supply, used marijuana and other drugs. 23 For a period from April to July 1970 he was absent without leave. He gave himself up and was sentenced to 48 days punishment, part of which was spent in the cells. In 1974 in a hotel in Hobart Mr Farnaby got into a fight with a naval lieutenant. He was court-martialled and sentenced to 28 days detention. They returned to live in England in 1970, after which there was minimal contact. He said he got on well with his father, although he was a hard man. 25 In late 1980 Mr Farnaby received a telegram to ring the international call centre switchboard. On doing so he was told his mother had died. He was shocked and saddened. He rang his sister who told him his father had committed suicide on the same day. They lived together from 1975 and married in 1981. They had two children. Mr Farnaby and his wife lived together at various places in Tasmania: Dromedary, Magra, New Norfolk and Kellevie. At New Norfolk and Kellevie Mr Farnaby built a house. They separated in 1987. 27 After his naval service, Mr Farnaby was employed as a postman until 1984, and subsequently for eight years at his father-in-law's tyre repair business in Moonah. After this he had a series of short-term occupations, as a rigger and electrical assistant at the paper mill at Boyer, a woodcutter, a part-time TAFE student, and finally in 2000-2001 as a youth worker with the Sorrell Council. The last mentioned was his last paid employment. They met by chance at the Trout Hotel in North Hobart. Ms Nalder asked him what he did for a living and he mentioned that he had served in the Navy and on HMAS Leeuwin. At Ms Nalder's suggestion, he contacted Mr Peter Nelson of the Vietnam Veterans' Counseling Service. This was either late 2001 or early 2002. Later Ms Nalder referred Mr Farnaby to Dr Michael Welch, a general practitioner. Dr Welch saw the applicant on 13 February 2002 and diagnosed a depressive disorder and PTSD. He prescribed Lovan, an anti-depressant, and referred Mr Farnaby to Dr P Nelson for psychological therapy. 29 On 11 June 2003 Mr Farnaby obtained a disability support pension for PTSD. 31 The first symptoms of his conditions were in 1981. He then experienced flashbacks to some incidents at HMAS Leeuwin. He tended to be isolated from people. Since that time, he noticed that he tended to avoid crowds and, that through the years, he has had ideas of suicide and has felt depressed. 32 He has had problems sleeping, had nightmares and been prone to angry outbursts ever since his first few weeks at HMAS Leeuwin. He has felt anxious and has abused alcohol. After HMAS Leeuwin, he had flashbacks to sexual abuse, running the gauntlet, a stabbing incident, to bashings and to harassment. These events were without a time or place. 33 He finds it very difficult to talk to people about his experiences at HMAS Leeuwin and, in particular, issues of sexual abuse. In 1981 he tried to tell his wife about these events but failed. After 2001 he had talked very little about the incidents, but prior to 2001 virtually not at all. 34 In a further statement dated 16 April 2007, Mr Farnaby gave further details of the sexual abuse by the sponsor. He acknowledged that he felt ashamed and humiliated by these events, and was resigned to never communicating the occurrence to any person. He had never talked about certain aspects of the sexual abuse prior to June 2006 and, on that occasion, it was after viewing records of a medical examination conducted by the Australian Government Health Service. 35 In oral evidence before the Tribunal, Mr Farnaby added the following. 36 The episode in the van was his first sexual experience, and was with a man he didn't know and didn't particularly like. As a consequence, Mr Farnaby said he felt scared and was terrified. 37 He first told Ms Nalder about the sponsor touching him on the groin and leg in the panel van and the instances in bed in 2002. He found it very hard to talk about such things as he felt both guilty and embarrassed. He was only able to talk about the detail of the assault in the panel van at the time of preparing his case, and more particularly in his second statement of 16 April 2007. 38 He revealed other happenings at HMAS Leeuwin slowly to Ms Nalder in 2002, then to Dr Welch and to Dr Nelson, commencing with the bullying. He had difficulty talking about the stabbing incident. 39 His symptoms included flashbacks, sleep difficulties, anxiety, depressed mood, irritability, poor concentration and forgetfulness. There had been an improvement in his complaint of lethargy. This improvement was a result of a domestic relationship over the previous four or five years. 40 In 2001 and 2002 he would rarely leave his accommodation. He spent a lot of time drinking alone in his room. At this time, and prior to meeting Ms Nalder, he did not socialise with anyone, although he used to attend a hotel each week. It was after the meeting with Ms Nalder that he realised that he needed to seek treatment. He believed that he had PTSD after seeing Dr Welch in 2002. Dr Sale diagnosed Mr Farnaby as suffering from PTSD, the latter two doctors did not. 42 The Tribunal's reasons at [86]-[135] contain an extensive summary and discussion of the medical evidence which it is not necessary to repeat. The Tribunal made findings in relation to the medical evidence at [136] et seq. The Tribunal noted that Mr Farnaby at different times gave "significant variations" in the description of his more intrusive thoughts and the events underling those thoughts. He also gave varying accounts of his alcohol intake. 43 The Tribunal noted that all Mr Farnaby's memories, recollections, dreams and nightmares relate to his experiences at HMAS Leeuwin, but there are inconsistencies, as evidenced by what he said to the medical witnesses. 44 The Tribunal noted the circumstances of his parents' return to England, the minimal contact thereafter and their deaths. 45 The Tribunal considered Mr Farnaby to be "not a reliable historian". It noted that the only naval records suggesting any symptomatology during his service was in November 1970 which stated that he then complained of having insomnia for years and was treated with Valium for a two week period. In summary, we considered Dr Burges Watson's clinical approach to be disciplined and objective. He sought other evidence from Ms Kim and Mr Farnaby's sister. That evidence allowed him to have a better understanding of relevant matters bearing in mind that Mr Farnaby was an inconsistent and vague historian. 159. We would also observe that Dr Burges Watson concluded that the onset of symptoms was in the early eighties, and associated with the deaths of his parents. This was a re-awakening of issues in Mr Farnaby associated with their departure for England in 1970. This is not, we note, a dissimilar thesis to that postulated by Dr Sale, with Dr Sale postulating a de-compensation of PTSD with a clinical onset in 1969/1970. We also note that Dr Burges Watson has raised the possibility of a personality disorder but, in the absence of more detailed material about his formative years, his time at HMAS Leeuwin and the early years of his navy service, he believed the matter could not be taken further. 160. In our opinion, Dr Burges Watson's analysis of this matter was an unhurried, thorough and objective analysis of the available material. Those were to the effect that all of Mr Farnaby's symptoms and difficulties could be accounted for by his excessive alcohol consumption. He concluded that Mr Farnaby has a difficult personality that has been influenced by his drinking, unemployment and the way he has spent his time over the years. We have found that Mr Farnaby was subjected to assaults, harassment and intimidation by fellow recruits at Leeuwin. He was also the victim of criminal sexual abuse by his sponsor. 170. The issue for determination by the Tribunal however is whether the applicant suffered a mental injury or disease as a result of the treatment he was subjected to. 171. Not everyone who is assaulted or raped suffers PTSD or some other mental condition. Dr Sale said in evidence that "in the order of" 50% of rape victims "stand a risk" of a PTSD. (Transcript page 201). When giving evidence Dr Burges Watson was asked whether everybody who experiences a severe stressor such as sexual assault goes on to have a psychiatric illness. In fact with --- there's a recent paper, admittedly it refers to females and that's slightly different, but with childhood sexual abuse it is only with very serious sexual abuse which involves physical violence and threat and full penetration that psychiatric --- subsequent psychiatric disorders are common. People with lesser sexual abuse don't develop psychiatric illness. Indeed a very high percentage of both males and females have experienced technically some form of sexual abuse in their childhood. (Transcript page 406). It was therefore necessary for us to carefully assess the evidence in order to determine, on the balance of probabilities, whether the applicant is suffering from any mental injury or disease as a result of the events at Leeuwin and the sexual abuse by his sponsor. 173. The Tribunal has carefully considered the opinions of the three very experienced psychiatrists who gave evidence as well as all of the other material before us. From our examination of all of this material, we conclude that Mr Farnaby's clinical symptoms commenced in the early 1980's, and have continued with varying degrees of intensity since. We consider that these symptoms arose as a consequence of the deaths of his parents, and a re-opening of issues resulting from the parents' departure to England in 1970. These symptoms were superimposed on a person who has a difficult personality, associated with an excessive alcohol intake and substance abuse. We are unable to conclude to the standard required that Mr Farnaby satisfies the criteria for a diagnosis of any condition including alcohol abuse, alcohol dependence, personality disorder or PTSD, or indeed for any type of mental injury or disease. 174. In reaching these conclusions, we have relied upon the opinions of the three psychiatrists but in particular, we find the opinion of Dr Burges Watson to be most persuasive. I can't say that he didn't experience what he experienced in Leeuwin, both the sexual and the physical abuse. But I don't think a post-traumatic stress disorder developed as a result of it. It may have affected his subsequent life, but I don't think he has any definable psychiatrist illness, disorder, at the present time. (Transcript page 405). 175. Mr Farnaby has had some symptoms since the early 1980's. He did not report them until 2001/2002. At that time he was treated with anti-depressants. He no longer continues on that medication. We find that any continuing symptoms are associated with his difficult personality, coupled with excessive alcohol usage. We are not satisfied on the evidence before us that the applicant's symptoms are outside the bounds of normal mental functioning and behaviour. (See Comcare v Mooi (1996) 69 FCR 439 at page 444). 176. The Tribunal finds that the applicant does not suffer from any mental injury arising out of or in the course of the applicant's employment in the Navy nor from any disease due to the nature of his employment in the Navy. 51 The Tribunal plainly adverted to the fact that Mr Farnaby lodged his claim on or about 24 January 2002; see reasons at [25]. There is no ground for thinking that thereafter the Tribunal somehow overlooked or forgot that fact. The circumstances in which Mr Farnaby came to lodge his claim assumed some importance in the narrative of events. Shortly before the lodgement he meets Ms Nalder by chance and it is then that he "first gained knowledge that he may be suffering an injury or disease as a result of his employment": at [24]. This also prompts his first medical consultation about the matter, with Dr Welch. 52 The events of late 2001 and early 2002 were also important because of the delay. The Tribunal could not consider the claim without finding that there was a "reasonable cause" for the delay in making the claim: 1930 Act, s 16(1)(i) and (ii). This the Tribunal did so find, on the basis that a failure to understand or appreciate the symptoms of an injury or disease and their cause has been recognised in earlier cases as a reasonable cause for want of a notice or a claim: see at [26] citing Banks v Comcare [1996] FCA 1490. 53 Mr Farnaby's case was that he had a mental injury, PTSD, which was a permanent, continuing condition. There was no suggestion of any major intervening event or change of circumstance between January 2002 and the time of the hearing in April 2008, or the handing down of the Tribunal's decision on 11 July 2008. In the meantime the various medical experts took Mr Farnaby's history and made their clinical observations. 54 When in [175] the Tribunal is speaking of "continuing symptoms", they are clearly referring to the same symptoms which they found to have been reported in 2001/2002, the time of lodgement of the claim. This is apparent from the opening words of the paragraph. There is no reasonable reading of the Tribunal's reasons which has them saying: "Whatever Mr Farnaby's symptoms were in January 2002, we are only concerned with his symptoms now, whether or not they are different from the 2002 symptoms". The Tribunal erred, Mr Read said, because it searched for the cause of Mr Farnaby's symptoms and failed to consider whether the HMAS Leeuwin events were a cause. 56 As already mentioned, the causation issue does not arise once it is concluded that the Tribunal has properly found that Mr Farnaby did not suffer "mental injury" anyway. 57 There is no doubt that in most areas of the law, where rights or liabilities depend on something having been caused by a particular event or circumstance, it is sufficient if the latter is a cause of the former, notwithstanding that there may be other, perhaps more important, causes. The case cited by Mr Read, Shorey v PT Limited [2003] HCA 27 ; (2003) 197 ALR 410 , a common law negligence case, is one example of this. Other examples are I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited [2002] HCA 41 ; (2002) 210 CLR 109 (damages under the Trade Practices Act 1974 (Cth)) and Gould v Vaggelas [1985] HCA 85 ; (1985) 157 CLR 215 at 236 (fraudulent misrepresentation). It may safely be assumed that the same rule would apply to compensation claims under the 1930 Act. 58 However, read as a whole it is plain that the Tribunal's reasons exclude the HMAS Leeuwin events as having any causal effect on Mr Farnaby's condition. 59 The Tribunal found that not only did Mr Farnaby not have a "mental injury", but that such symptoms as he had "arose" from the factors mentioned in [173] and, by necessary and inevitable implication, not from the HMAS Leeuwin events. A QUESTION OF LAW? 62 Whether a question of law is raised by an appeal from the Tribunal is itself a question of law. The leading authority is the judgment of Mason J, with whom Gibbs, Stephen and Aickin JJ agreed, in Hope v Bathurst City Council [1980] HCA 16 ; (1980) 144 CLR 1 at 7. However, Mason J went on to qualify that statement by pointing out that when a statute uses words according to their "common understanding", and the question is whether the facts as found fall within such words, the question is one of fact. The example his Honour cited was the decision of the House of Lords in Brutus v Cozens [1972] UKHL 6 ; [1973] AC 854 where the question raised by the applicable statute was whether the appellant's behaviour was "insulting". As it was not unreasonable to hold that the behaviour was insulting the question was one of fact. 63 The principle was applied in the context of s 44(1) by Branson J, with whom Spender and Nicholson JJ agreed, in Comcare v Etheridge [2006] FCAFC 27 ; (2006) 149 FCR 522. The issue was whether an employee had suffered an "injury" within the meaning of s 4(1) of the Safety, Rehabilitation and Compensation Act. Her Honour at [26], having pointed out that it was not suggested that the word "injury" was used in other than its ordinary or common meaning, concluded that the question was one of fact. In the present case it was accepted that the term "mental injury" was used in the same way. 64 Branson J went on to point out that a finding of the Tribunal that a particular condition of an employee's body was not an "injury" may be unlawful, and therefore subject to judicial review, because of a failure by the Tribunal to comply with the law, as for example by failing to take into account a relevant consideration: Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40 ; (1985) 162 CLR 24 at 39; Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5. 65 But such a situation does not mean, or at any rate necessarily mean, that an appeal under the Administrative Appeals Tribunal Act from such a decision of the Tribunal is " on a question of law" so as to satisfy the requirement of s 44(1). In such a case there is no question of law. The law is clear. The Tribunal must take relevant considerations into account. 66 Returning to the present case, the alleged questions in Mr Farnaby's amended notice of appeal do not show that the appeal is on questions of law. There is no doubt that, as a matter of law, the relevant time for assessing whether Mr Farnaby suffered "mental injury" was as at the lodging of his claim and that it is sufficient that his employment in the Navy was a cause of his injury (if any) even if it was not the only cause. The Tribunal's decision did not suggest the law was otherwise. 67 Strictly speaking these jurisdictional points should have been resolved at the outset of these reasons, with the result that the appeal would be dismissed without further consideration of its merits. However, given the Tribunal's factual findings, there can be no doubt that Mr Farnaby as a vulnerable young lad was badly treated by the Navy. It seemed only fair to him to affirm that, in the light of the arguments before me, the Tribunal's further finding that he did not suffer mental injury as a result, was a proper one made after a careful review of the evidence. 68 The appeal will be dismissed with costs, including reserved 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 Heerey. | appeal from administrative appeals tribunal physical and sexual abuse during naval service claim for compensation for post traumatic stress disorder whether tribunal erred in failing to consider symptoms at time of lodgement of claim rather than time of hearing whether tribunal failed to consider whether abuse was a cause, rather than the cause, of any mental injury suffered by the applicant appeal from administrative appeals tribunal whether appeal on a question of law workers' compensation administrative law |
Certain monies were advanced to the owner in accordance with the agreement. By a further agreement of 24 August 2003 (the mortgage), the owner acknowledged its then indebtedness to the plaintiff of KD 27,951,000 plus accumulating interest and costs, and agreed to mortgage the vessel to the plaintiff as security for repayment of the owner's debt to the plaintiff from time to time. The mortgage of the vessel was duly registered by the Kuwait Ministry of Communications, Maritime Affairs Department. The plaintiff claimed that the owner had failed to repay the advances made or interest in accordance with the agreement and the mortgage, although some payments had been made, so that at 31 October 2005 the owner was indebted to the plaintiff in the sum of KD 9,579,113/689 including interest. 3 The plaintiff claimed that sum plus accumulating interest, and a declaration as to the validity of the mortgage. 4 The owner's defence adopted a curious position. It admitted the existence of the two documents comprising the agreement and the mortgage, and that it had received the advances alleged by the plaintiff and had failed to repay them. Its defence was that no officer of the vessel or of the owner was authorised to sign either the agreement or the mortgage of the vessel, so it was not bound by those documents. That, it said, was the consequence of the law of Kuwait. Its claim involved it keeping the monies advanced with no obligation to repay them. 5 On 11 April 2007, I struck out that defence as an abuse of process. Until this action, and indeed during its currency, the owner had consistently and publicly acknowledged the existence of the agreement and of the mortgage of the vessel, and in any event the person who signed the agreement and the mortgage on behalf of the owner was (on the uncontested evidence) the chairman of the board of directors of the owner and authorised to sign the agreement and the mortgage under the owner's constitution: see Bank of Kuwait and the Middle East v The Ship MV "Mawashi Al Gasseem" [2007] FCA 550. The owner was given leave within a specified period to file and serve an amended or fresh defence. It has not done so. 6 Consequently, the plaintiff has now applied for a declaration that the mortgage of 24 August 2003 over the vessel in favour of the plaintiff is valid, and for judgment for KD 9,579,113/689 and accumulated interest from 1 November 2005 to 18 May 2007 of KD 1,566,670/797. Her Honour, at [44], held that the rule deems a respondent to have admitted the facts alleged in a statement of claim, but not to have conceded the entitlement to the relief sought. Order 11 r 13 of the Rules also has the effect of the owner and the vessel being deemed to have admitted the facts alleged in the statement of claim. 9 The power under O 35A r 3(2) is discretionary. In this instance, I have no hesitation in exercising that power in respect of the claim for judgment for a liquidated sum. The owner and the vessel have never disputed that the claimed sums were advanced and have not been repaid. There is now nothing to suggest that the owner or the vessel has any defence to the claim. Indeed, the owner at material times acknowledged its indebtedness to the plaintiff and to others. The calculation of interest to date has been made in accordance with the pleaded terms of the agreement and the mortgage (and which are both in evidence), and has been verified by affidavit. 10 The making of the declaratory order sought is a little more problematical. The Court has a wide discretionary power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth): see Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564 at 581-2. The circumstances in which that power may be exercised are not circumscribed by strict rules: see per Gibbs J in Forster v Jododex Australia Pty Limited [1972] HCA 61 ; (1972) 127 CLR 421 at 437. However, there has been a long held view that a declaration, a judicial act, should be made only on evidence and not simply on admissions or (as in this case) on deemed admissions: see BMI Ltd v Federated Clerks Union of Australia (1983) 51 ALR 401; Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 533; Wallersteiner v Moir [1974] 1 WLR 911 at 1029. In addition, it is appropriate to be cautious because a declaration may have effects more broadly than as between the particular litigants: Myer Queenstown Garden Plaza Pty Ltd v City of Port Adelaide (1975) 33 LGRA 70 at 82 per Wells J; Sung Li Holdings Ltd v Medicom Finance Pty Ltd (1995) 13 ACLC 955. Justice Kiefel made declaratory and injunctive orders, and imposed pecuniary penalties, under O 35A r 3(2)(c) of the Rules. The respondents had failed to comply with various interlocutory orders and their defence was struck out. 13 Justice Kiefel at [35]-[51] discussed the terms of O 35A of the Rules and their analogues in the various Supreme Court Rules for judgment in default of appearance or defence. I respectfully adopt her Honour's comments and conclusions. I do not need to repeat them. Her Honour concluded that O 35A r 3(2)(c) operates so that the allegations of fact in the statement of claim are taken to be admitted, so that the Court then has the power to grant such relief as it considers appropriate on the basis of those deemed admissions. Fairness in the conduct of litigation may require a defaulting respondent to be informed if the relief sought differs materially from that sought in the application, and for the respondent to be given an opportunity to respond to the claim for that more extensive or different relief. No such problem arises in this matter: the relief sought is that claimed in the application. Moreover, although the deemed admissions provide the basis for the relief proposed, her Honour considered that further affidavit evidence may be adduced to support the relief claimed, but not so as to alter the pleaded case: at [50]. 14 As the power in O 35 r 3(2)(c) is discretionary as to whether relief as sought should be granted, additional affidavit evidence to support the exercise of the discretion is in my view clearly admissible, subject to her Honour's qualification that it does not alter the pleaded case. 15 Considerations particular to granting declaratory relief under O 35 r 3(2)(c) were discussed by Kiefel J at [52]-[59]. Again, I respectfully adopt and agree with her Honour's views. Millett J made declaratory orders in Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 where justice to the plaintiff required it. The order however operated principally inter partes and it might be doubted whether it would be of interest to other persons. Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes (sic, constitutes) a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made ' upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the Court '. I have had regard to the background to the action, the nature of the claim (as deemed to be admitted), the apparent strength of the plaintiff's claim, the opportunity of others who may be directly affected by the declaration to have participated in the action, and the interests of fairness to the plaintiff and to others. 17 I shall briefly explain my consideration of those matters. 18 On 2 July 2005, OW Bunker & Trading Company Ltd A/S issued a writ against the vessel in matter SAD 146 of 2005. That action sought the arrest of the vessel to secure payment of US$639,379.60 for breach of contract for sale of fuel oil. The vessel was arrested by the Admiralty Marshal on 3 July 2005. Summary judgment was given in favour of OW Bunker & Trading Company Ltd A/S on 26 July 2005. On 23 August 2005, the Court ordered that the vessel be sold. The vessel and unused bunker and lubricant oil were sold on 4 November 2005. The remaining proceeds of that sale and accumulated interest, now totalling more than US$4,845,000, are held in two bank accounts administered by the Admiralty Marshal. One account holds the proceeds from the sale of the vessel (the vessel account), the other holds the proceeds from the sale of the unused bunker and lubricant oil (the unused bunker and lubricant account). 19 On 17 November 2005, an Order was made under r 73 of the Admiralty Rules 1988 (Cth) inviting claims against the proceeds of sale of the vessel as a preliminary to determining the priorities in the payment of those proceeds. Those monies were ordered to be paid out on 17 November 2005, with interest and costs fixed at AU$80,000. (2) In OW Bunker & Trading Company Ltd A/S v The Ship MV "Mawashi Al-Gasseem" SAD 146 of 2005, judgment was entered on 26 July 2005 in favour of OW Bunker & Trading Co Ltd for US$639,379.60 for the supply of fuel oil. By consent, it was paid US$433,624.56 by order of 10 November 2006 from the unused bunker and lubricants account. On 26 October 2006, I ordered that it also be paid AU$135,000 for its costs incidental to the arrest and sale of the vessel from the vessel account. The taxation of its other costs in those proceedings is outstanding. (3) In Dubai Drydocks v The Ship MV 'Mawashi Al Gasseem' as Surrogate for the Ship MV 'Mawashi Tabuk' SAD 202 of 2005, judgment was given on 20 September 2005 in favour of Dubai Drydocks for US$161,538.41 plus interest and costs for repair work undertaken on the vessel's sister ship the Mawashi Tabuk. The amount has not been paid. (4) In Quin Marine Pty Ltd ACN 007 537 439 v The Ship Mawashi Al Gasseem SAD 208 of 2005, judgment was given on 20 December 2005 in favour of Quin Marine Pty Ltd for AU$76,648.87 plus costs for goods, materials and services supplied while the vessel was seized. The amount has not been paid. (5) In Arab Shipbuilding and Repair Yard Company v Mawashi Al Gasseem SAD 257 of 2005, judgment was entered on 7 December 2005 in favour of Arab Shipbuilding and Repair Yard Company for US$136,078.00 plus interest and costs for goods and services supplied and alteration, repairs and equipping undertaken to the vessel. The amount has not been paid. (6) In Viking Enterprises Co Ltd v The Ship Mawashi Al Gasseem SAD 274 of 2005, judgment was entered on 15 December 2005 in favour of Viking Enterprises Co Ltd for JY3,324,164 plus costs for goods and materials supplied to the vessel. That amount has not been paid. (7) In BP Oil International Limited v The Ship "Mawashi Al Gasseem" SAD 275 of 2007, judgment was entered on 7 November 2005 in favour of BP Oil International Limited and BP Marine Limited for US$136,354.79 plus interest and costs for marine lubricants supplied to the vessel. The amount has not been paid. (8) In Al Mawashi Al Mukairish United Co v The Ship "Mawashi Al Gasseem" SAD 342 of 2005, the defendant gave its consent on 29 May 2006 to judgment being entered in favour of Al Mawashi Al Mukairish United Co and Al Mukairish Australia Pty Ltd for separate amounts of US$1,629,508.60 and AU$3,086,227.93 respectively for management fees and the provision of goods and services to the vessel and its sister vessel the Mawashi Tabuk. Judgment was not entered because the plaintiff in this action (the Bank of Kuwait and the Middle East) as an interested party entered an appearance and defence in those proceedings not admitting the substantial paragraphs of the statement of claim and denying that the engagements to provided goods and services were general maritime claims within the meaning of ss 4(3) of the Admiralty Act 1988 (Cth). That matter will shortly be the subject of further directions. (9) In Ahmed Ali Maintenance & Ship Repairs (LLC) v The Proceeds of the Judicial Sale of the Ship MV Mawashi Al Gasseem SAD 343 of 2005, judgment was entered on 20 December 2005 in favour of Ahmed Ali Maintenance & Ship Repairs (LLC) for US$61,737.65 plus costs for repair services supplied to the vessel. That amount has not been paid. (10) This action. That is because it appears to have been accepted (provisionally at least) that, if the plaintiff has a valid mortgage over the vessel, the plaintiff will then rank ahead of the other claims (or most of them) in the distribution of the proceeds of sale of the vessel. There will then be no amount available from the proceeds to meet those other claims. The Court is shortly to give the parties to the various proceedings the opportunity to be heard on those matters. 22 The nature of the claim as deemed to be admitted is set out above. Its apparent strength is also referred to above. The defence which was struck out was a technical one, which did not dispute the existence of the agreement or of the mortgage. Nor did it dispute that the plaintiff had made the advances claimed by the plaintiff or that the claimed amount was still outstanding. The technical defence was struck out because, in significant ways, the owner of the vessel had acknowledged the existence of a valid mortgage and of the indebtedness to the plaintiff. On the basis of the owner's own documents and its Constitution , in addition, the technical defence of want of authority appeared to have no merit. The owner did not take up the opportunity to file and serve any further defence in the light of the reasons for striking out its defence. 23 All of the plaintiffs in the other proceedings referred to have had the opportunity of appearing and participating in this action. On 9 November 2005, at a directions hearing involving all of the other plaintiffs referred to above except Al Mawashi Al Mukairish and Ahmed Ali Maintenance & Ship Repairs (LLC) (who had not yet commenced their actions), any interested person or entity was given leave to file an appearance and to participate in this action. Apart from the owner of the vessel as defendant, appearances were filed by Dubai Drydocks and by an entity called Eurasian Maritime Corporation. A notice of ceasing to act was received from the solicitors of Eurasian Maritime Corporation on 3 February 2006, and it has taken no other step in the action. Dubai Drydocks has taken no other step in the action. The action of Al Mawashi Al Mukairish has been adjourned from time to time to the same date as this action, including the date on which the present application of the plaintiff was heard. It has not sought to appear or participate in this action. I am satisfied each of the other plaintiffs knows the nature of the plaintiff's claim and its potential significance to the priority of payment of the proceeds of sale. 24 The interests of all parties are to finally deal with the proceeds of sale of the vessel as soon as reasonably practicable. Consequently, the status of the plaintiff's claim as mortgagee of the vessel should be resolved. The plaintiff is entitled to have that issue resolved quickly. It has clearly advanced the monies claimed to the plaintiff and they remain partly unpaid. That has never been contested. The agreement under which those monies were advanced and remain unpaid and the mortgage are inter-dependent documents. At a practical level, it is not possible to disconnect the mortgage from the agreement, so fairness dictates that the status of the mortgage stands or fails with the enforceability of the agreement. I have struck out the defence which challenged their enforceability as an abuse of process of the Court. 25 The effect of making the declaration sought will have an impact beyond the parties to the agreement and the mortgage. But the extent to which the impact will be felt can be limited, by restricting the declaration to the purpose of this action and to the purpose of determining the priority in which the proceeds of sale of the vessel should be applied. Those who are thereby affected have been aware of, and have had the opportunity to participate directly to oppose the plaintiff's claim or to support the owner in opposing the plaintiff's claim; they have not done so. 26 For those reasons, in the exercise of my discretion I make the following declaration: For the purposes of all proceedings against the Ship MV "Mawashi Al Gasseem" commenced in the Federal Court of Australia and pertaining to the priority in which the proceeds of sale of the said vessel should be paid out, the mortgage over the Ship MV "Mawashi Al Gasseem" in favour of the plaintiff granted by Kuwaiti Saudi Co for Livestock Meat and Fodder as the owner of the said vessel by an agreement in writing dated 24 August 2003 (the mortgage) to secure the said owner's repayment of the amounts due to the plaintiff under the facilities granted by the plaintiff to the owner under the mortgage and an earlier agreement in writing dated 27 July 2003 is valid. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | operation of o 35 r 2(2)(c) of the federal court rules whether declaration should be made on deemed admissions where declaration sought as to validity of mortgage over ship where declaration affects priority of other claims against ship where other claimants have had opportunity to intervene considerations in exercising discretion to make declaration declaration made procedure |
The Official Trustee in Bankruptcy was appointed to administer his bankrupt estate. 2 On 4 February 2008 the applicant was offered employment as an Australian Public Service employee under s 22 of the Public Service Act 1999 (Cth) (the PSA Act 1999) with the Australian Taxation Office (the ATO). 3 On 16 February 2008 he accepted that offer and on 21 February 2008 he commenced ongoing employment with the ATO. 4 It was a condition of his employment that for the first three months of the period of employment the applicant would be on probation and that his employment could be terminated during that period if the ATO were not satisfied with his work performance or behaviour. 5 On 16 May 2008 the second respondent, who is a delegate of the first respondent, terminated the applicant's employment pursuant to s 29 of the PSA Act 1999. 6 On 13 June 2008 the applicant commenced this proceeding seeking judicial review of the decision to terminate his employment pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) and for the issue of the constitutional writs pursuant to s 39B of the Judiciary Act 1903 (Cth). 7 The applicant sought a declaration that the decision was void and of no effect and that he is an ongoing Australian Public Service employee. He also sought an order for the issue of a writ of certiorari quashing the respondents' decision to terminate his employment and an order requiring the respondents to do all things necessary to enable the applicant to resume his duties as an ongoing employer with the ATO and receive his salary in that office. 8 Lastly, he sought an order that the respondents pay damages for wrongful dismissal. 9 When the applicant commenced employment he was a bankrupt as a consequence of a sequestration order made on 17 September 2007. As that is the case then the right of this action is one that vests in the Trustee pursuant to s 58 and 116 of the Bankruptcy Act . Further, as the date of bankruptcy preceded the date of the commencement of the action, the bankrupt was not competent to bring the action in the first place. Although this action vests in the trustee, it is a matter which the trustee is not inclined to take over or join in the action and respectfully leave the issue up to the respondent to decide whether they wish to seek the action to be struck out. 11 On 9 October 2008 an officer of the Official Trustee signed a notice of discontinuance but that notice of discontinuance has not been filed. 12 On 10 October 2008, with the consent of the applicant, I made an order dismissing the applicant's claim for damages for wrongful dismissal. 13 On 15 October 2008 the applicant filed an amended application pursuant to leave given on 10 October 2008. The amended application continues to seek relief under both the ADJR Act and the Judiciary Act . 14 The applicant seeks declarations and orders pursuant to s 16(1)(a) and s 16(1)(b) of the ADJR Act seeking to quash the decision to terminate his employment; a declaration since 16 May 2008 that the applicant has been an ongoing Australian Public Service employee; an order in the nature of certiorari quashing the termination of the applicant's employment with the Australian Public Service; an order in the nature of a writ of mandamus requiring the first respondent to reinstate the applicant as an ongoing employee with the ATO; and an order pursuant to s 16(1)(d) of the ADJR Act that the respondents be directed to do all things necessary to enable the applicant to resume his duties and to receive his salary and other entitlements as an ongoing employee with the ATO. 15 The respondents have objected to the competency of the application on the ground that the applicant lacks standing to bring the application because the applicant is a bankrupt. 16 The respondents have filed a motion seeking alternative orders: first, that the applicant's application for review be dismissed or, alternatively, stayed on the basis that the applicant lacks standing; and secondly and alternatively, the applicant provide security for costs. It is that notice of motion which is the subject of these reasons. I will continue to call the parties by their description in the proceeding. 17 Section 58(1)(a) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act ) provides that where a debtor becomes a bankrupt "the property of the bankrupt" vests forthwith in the bankrupt's trustee and s 58(1)(b) provides that any "after-acquired property" of the bankrupt vests as soon as it is acquired in the bankrupt's trustee. 18 Section 60(2) of the Bankruptcy Act provides that an action commenced by a person who subsequently becomes bankrupt is upon the making of the sequestration order stayed until the trustee makes an election in writing to prosecute or discontinue the action. Section 60(4) of the Bankruptcy Act provides that a bankrupt may continue an action commenced by him or her before he or she became bankrupt in respect of any personal injury or wrong done to the bankrupt. 21 Section 116 deals with property divisible among creditors which is the property of the bankrupt: s 5. 24 The respondents contended that the applicant's proceeding falls within s 116(1)(b) and thus s 58 because the proceeding involves the capacity to exercise powers in respect of property as might have been exercised by the bankrupt for his own benefit. Thus it is that the proceeding, the respondents contended, vests in the trustee. 25 They contended that the exceptions in s 116(2), and in particular s 116(2)(g), do not apply. That exception, it is contended, only applies where damages are to be assessed by reference to "the pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property": Fitzpatrick v Keelty [2008] FCA 35 at [39] - [47] and Daemar v Industrial Commission (NSW) (1988) 12 NSWLR 45. 26 In particular, the respondents relied upon a decision of the Court of Appeal in Queensland in Geia v Palm Island Aboriginal Council (1999) 152 FLR 135. In that case, the appellant, who was a bankrupt, sued the respondent for money said to be due under a contract of employment or for damages for breach of contract arising out of wrongful dismissal. The District Court Judge dismissed the proceeding on the ground that the cause of action had vested in the Official Trustee. The bankrupt appealed but the appeal was dismissed on the ground that an action for damages for wrongful dismissal (not including services actually rendered) vests in the Official Trustee. The Court of Appeal distinguished such claims from contracts for personal service which do not vest in the Official Trustee. 27 The respondents also relied upon a decision of Madgwick J in Pelechowski v NSW Land and Housing Commission [2000] FCA 233. In that case, the applicant, who was a bankrupt, applied to the Industrial Relations Court for reinstatement as a result of unlawful termination of his employment by the first respondent. Madgwick J found that the trustee had not elected to prosecute the action (s 60(2)) and so the action was deemed to have been abandoned (s 60(3)). 28 The applicant contended that the question is whether the proceeding is after-acquired property within the meaning of s 58(6). 29 The applicant contended that in Cummings v Claremont Petroleum NL [1996] HCA 19 ; (1996) 185 CLR 124 , the majority of the High Court held that the right to appeal against a money judgment was not property within the meaning of the definition in the Bankruptcy Act . Some rights created by statute can constitute property, but a right to appeal does not have the character of properly merely because it is the creature of statute. A chose in action may be the property of the person entitled to enforce it, but a liability to satisfy a judgment enforcing a chose in action is not property of the person against whom the judgment is entered. A liability is not property of the person liable. Nor is a right to appeal against a money judgment property of the judgment debtor. Nor does such a right to appeal answer the description of property divisible among creditors defined by s 116(1)(b) , namely, "the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit". (Footnotes omitted. 31 The applicant relied upon Cummings [1996] HCA 19 ; 185 CLR 124 and Griffiths v Civil Aviation Authority (1996) 67 FCR 301 , being a decision of the Full Court of this Court in which the Court held that a proceeding in the Federal Court pursuant to s 44 of the Administrative Appeals Tribunal Act to challenge a decision of the Administrative Appeals Tribunal was not property divisible among the creditors of the appellant's estate vesting in the trustee of that estate. 32 The applicant also relied upon a decision of the Industrial Relations Commission of New South Wales in Perfection Dairies Pty Ltd v Finn [2006] NSW IR Comm 137 in which the Commission comprising Wright J, Staff J and Stanton C held that employment is not property for the purpose of the Bankruptcy Act . 33 The applicant contended that the decision in Geia 152 FLR 135 was an action claiming damages on the basis of wrongful dismissal. The issue before the Court of Appeal, it was said, was not whether such an action was property within the meaning of the Act but whether the action could be said to be impliedly exempt by reason of "the common law of bankruptcy". 34 The applicant contended that insofar as the respondents relied on Pelechowski v New South Wales Land and Housing Commission [2000] FCA 233 , that proceeding had been commenced before the making of the sequestration order which meant that the action was caught by s 60(2) of the Act. To that extent, it was contended it was not in point. 35 The purpose of the Bankruptcy Act is to ensure that all of the bankrupt's property, both real and personal at the time of the sequestration order and any property acquired by the bankrupt after the sequestration order, vests in the bankrupt's trustee in order that it is available to be divided among the bankrupt's creditors. At the same time as the property vests the bankrupt's creditors lose the right to recover their debts from the bankrupt in exchange for a right to prove their debts in the administration of the bankrupt's estate: s 58(3) ; Clyne v Deputy Commissioner of Taxation [1984] HCA 44 ; (1984) 154 CLR 589 at 594. The scheme is that the bankrupt's property will be distributed equally or rateably among the bankrupt's creditors: Cummings [1996] HCA 19 ; 185 CLR 124. 36 The property of the bankrupt is the same whether it is property of the bankrupt at the time of the sequestration order or property acquired after the bankrupt's estate is sequestrated. It is, because the provisions of s 5 (property of the bankrupt) and s 58(6) (after-acquired property), the same in the sense that it is property divisible among the creditors. "Property" is defined in s 5 and has the same meaning in relation to both property at the date of the sequestration order and after-acquired property. 37 In order therefore for property of the bankrupt (including after-acquired property) to vest in the bankrupt's estate the property must be of a character which is divisible among the bankrupt's creditors or be of a character of a right or power in relation to that property that would otherwise have been exercisable by the bankrupt but for the bankruptcy. Any other property does not vest. 38 Section 60(4) is part of the scheme of the Act which excises from the bankrupt's property at the time of the sequestration order property that would otherwise be divisible among the bankrupt's creditors being any action for personal injury or wrong done to the bankrupt, the bankrupt's spouse or member of the family, or any action for the death of the bankrupt's spouse or member of the family by allowing the bankrupt to continue the action notwithstanding the sequestration order. An action of that kind must be an action in which the damages claimed are assessed by reference "to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property": Cox v Journeaux [1935] HCA 48 ; (1935) 52 CLR 713 at 721. 39 Section 116(2)(g) completes the excision from the bankrupt's estate by excluding from property divisible among the bankrupt's creditors the right to recover damages or compensation for actions of the kind in s 60(4) and specifically excludes any damages or compensation recovered for proceedings of that kind from the property of the bankrupt divisible among the bankrupt's creditors. 40 Section 60(4) and s 116(2)(g) must be understood as allowing the bankrupt to retain a right to bring action and a right to retain damages of property that would be otherwise property divisible among the bankrupt's creditors. In other words, but for s 60(4) and s 116(2)(g), an action to recover damages for personal injury or wrong done to the bankrupt or his or her family and for damages or compensation recovered would be property divisible among the bankrupt's creditors. 41 Section 116(2) also exempts other property from property divisible among the bankrupt's creditors for different reasons. Only one exception is relevant. The bankrupt is entitled to retain household property and that property which is for use by the bankrupt in earning income by personal exertion: s 116(2)(b) and (c); the idea being that the bankrupt should be entitled to live modestly and earn an income for the purpose of maintaining the bankrupt and the bankrupt's family. But an exception was absolutely necessary in order that the bankrupt might not be an outlaw, a mere slave to his trustee; he could not be prevented from earning his own living. On that principle the trustee could not sue for moneys due to the bankrupt in respect of his personal labour, and, if the bankrupt could sue for them only for the benefit of his trustee, he would really be without remedy. 43 In those circumstances, the kinds of action contemplated by s 60(4) and s 116(2)(g) do not assist in determining whether the right to bring this proceeding is property divisible among the bankrupt's creditors. This is not a proceeding of the kind contemplated by s 60(4) or s 116(2)(g). The question must be answered by reference to whether a proceeding of the kind brought by the applicant is property divisible among the bankrupt's creditors. That question must be addressed by reference to s 116(1). 44 This proceeding is for an order quashing the respondents' decision to terminate the applicant's employment by reason of a failure by the second respondent to accord the applicant procedural fairness and by the improper exercise of power. 45 He has sought relief under s 16(1)(a) and s 16(1)(b) of the ADJR Act. He will succeed only to the extent that he is entitled to have the impugned decision quashed and to have the matter remitted to the decision-maker to make a decision according to law. He cannot expect the Court to make the decision as to whether his employment should have been terminated. The purpose of judicial review is to require the decision-maker to make his or her decision in accordance with the law: Attorney-General v Quin [1990] HCA 21 ; (1990) 170 CLR 1 at 36. The merits of the decision are for the person in whom the power to make the decision reposes: Attorney-General v Quin [1990] HCA 21 ; 170 CLR 1 at 36; Abebe v The Commonwealth [2004] HCA 32 ; (1999) 197 CLR 510 at 579-580. Therefore, even if the applicant is successful, no property rights will accrue to the applicant and therefore to his estate. If he succeeds he will be given the right to have a decision which affects him made according to law. 47 True it is that the applicant has claimed relief to receive his salary. An order pursuant to para. 49 Property which is not divisible amongst the bankrupt's creditors is not property of the bankrupt which vests in the bankrupt's trustee. 50 A bankrupt's personal earnings after bankruptcy or income do not vest in the bankrupt's trustee. They are not property of the bankrupt. (1) Subject to this section, a bankrupt who is in receipt of income is entitled to retain it for his own benefit. (2) The Court may, upon the application of the trustee, order that all, or such part as the Court thinks fit, of the income of the bankrupt shall be paid to the trustee for the benefit of the bankrupt's creditors. 52 The scheme of the Act was to allow bankrupts to retain their income, after bankruptcy, for their own benefit unless the Court in the exercise of its discretion ordered that all or part be paid to the bankrupt's trustee. In those circumstances, unless an order were made under s 131(2) the bankrupt's income was not property of the bankrupt and not divisible among the bankrupt's creditors. It obviates the need which s 131(2) (before its repeal) required that the trustee apply to the Court for an order that the bankrupt pay the whole or part of the bankrupt's income to the trustee for the benefit of the bankrupt's creditors. 55 There is no need to inquire into Division 4B in detail. The Division requires bankrupts to pay a contribution which is assessed by the trustee: Subdivision D. The bankrupt must provide a statement which gives particulars of actual income and expected income in order that an assessment might be made: Subdivision E. The trustee must make an assessment as soon as practicable after the start of each assessment period: Subdivision F. The Inspector-General is given power to review the trustee's assessment: Subdivision G. Powers are given to the trustee to put in place a supervised account regime when the bankrupt has not paid the whole of a contribution when it became payable: Subdivision HA. Other powers are given for the collection of moneys. 56 The scheme in Division 4B is different from that which applied under s 131. The power to make a bankrupt pay whole or part of the bankrupt's income into the bankrupt's estate has shifted from the Court to the bankrupt's trustee. The machinery to enable the trustee to make an assessment and determine the appropriate contributions and ensure that the contributions are paid is rather elaborate. The trustee's decisions are reviewable by the Inspector-General. 57 What is important for the purpose of this application is that the Act continues to recognise, as s 131 previously did, that the bankrupt's income is not part of the bankrupt's property except to the extent that a contribution is made. If it were otherwise, there would be no need for the Division 4B machinery because the trustee would be entitled to the bankrupt's income and wages. The Act continues to recognise the principle enunciated by Dixon J in Nette v Howarth [1935] HCA 22 ; 53 CLR 55 and recognises, as the law has since 1785, that income and earnings do not form part of the bankrupt's estate: Chippendall v Tomlinson (1785) L Co Bank L 428 per Lord Mansfield at 432; and 99 ER 900 at 902. 58 In that case, the plaintiffs who were bankrupt brought an action in assumpsit for work done and labour performed as attorneys or solicitors. The defendant pleaded that the plaintiffs' estate had been assigned by virtue of the commission in bankruptcy. The assignees do not interfere, but the defence is set up by the person who has profited by the bankrupt's labour. Lord Mansfield said "The single question is, whether the assignees are entitled to the earnings of a bankrupt, and we are clearly of the opinion that they are not. The assignees cannot let out the bankrupt; they cannot contract for his labour". 59 If, after bankruptcy, the bankrupt's income became part of the bankrupt's estate by reason of the sequestration order, the bankrupt would be obliged week by week, or how so often he or she were paid, to account to the bankrupt's estate for the whole of that income. The bankrupt would not have the means to support himself or herself and his or her dependents. 60 The bankrupt's income after the bankruptcy only becomes part of the bankrupt's estate to the extent that the legislation demands. When s 131 was the law only that part of the bankrupt's income as the court ordered to be paid by the bankrupt to the trustee for the benefit of the bankrupt's creditors became vested in the bankrupt's trustee. Since s 131 has been repealed, only the assessed contributions form part of the bankrupt's estate. 61 If the bankrupt's income was regarded as property of the bankrupt and therefore property divisible among the bankrupt's creditors, the Act would not have to deal with the bankrupt's income separately. 62 In Federal Commissioner of Taxation v The Official Receiver [1956] HCA 24 ; (1956) 95 CLR 300 , the High Court was concerned with the precursor to s 131 of the Bankruptcy Act 1966 , viz s 101 of the Bankruptcy Act 1924-1950 (Cth) (the 1924 Bankruptcy Act ). In that case, the bankrupt was entitled to a sum of money from the Federal Commissioner of Taxation which represented an income refund for overpayment of taxation on income earned by the bankrupt. The income had been paid by the bankrupt's employer to the Federal Commissioner of Taxation under the Income Tax and Social Services Contribution Assessment Act 1936-1953 (Cth). The Official Receiver claimed to be entitled to the refund. 65 Whilst the sections are not the same as ss 116 and 131 of the Bankruptcy Act , they are not relevantly different from those sections. As such they would vest in the official receiver, as and when the bankrupt received them, and, subject to s. 98 , would be part of the property of the bankrupt divisible amongst his creditors. But it has invariably been held that the vesting provisions of Bankruptcy Acts must not be read literally so as to vest the whole of the personal earnings of the bankrupt in his official assignee because to do so would mean that the assignee might, in the words of Lord Mansfield in Chippendale v. Tomlinson: "let the insolvent out to hire, and contract himself for his personal labour": Williams v. Chambers. (Footnotes omitted. If the official receiver claims any part of these earnings, he must apply to the Bankruptcy Court for an order. He must intervene in this specific manner. In the absence of such an order the bankrupt is free to dispose of the whole of these earnings. 69 He then discussed the manner in which the Commissioner of Taxation received the sum and how the Commission became obliged to pay that sum to the bankrupt. 3d. really is a right to receive money which the bankrupt earned. How else did he acquire the right to payment of that sum? It is not the price of an article sold by him, or an instalment of the rent of a house let by him, or a dividend on shares owned by him. His right to payment arises because, and only because, he worked for a remuneration which is found, on a contingency which was contemplated throughout, not to have been paid to him in full. For these reasons I am of opinion that the sum in question does represent personal earnings of the bankrupt, and that the respondent has no right in respect of that sum unless he can obtain an order under s. 101 of the Bankruptcy Act . 70 The English authorities and Australian authorities diverge in that the English authorities adopted the view that the bankrupt's earnings did form part of his estate "save only what is necessary for his support": In re Roberts [1900] 1 QB 122 at 129. 71 Even so however, in Affleck v Hammond [1912] 3 KB 162 at 165, Vaughan Williams referred to these earnings as personal earnings. In that case, the Court of Appeal held that a bankrupt was not obliged to give security for costs in a suit for unpaid commission because the bankrupt was not a mere nominal plaintiff. The commission earnings were his "personal earnings" and did not pass to his trustee in bankruptcy. 72 Section 131 has been repealed. However, the Bankruptcy Act still contemplates that income earned after the bankrupt's bankruptcy does not vest in the bankrupt's trustee: Re Gillies [1993] FCA 289 ; (1993) 115 ALR 631 at 636-637. Whilst the trustee may require the bankrupt to make contributions out of the bankrupt's income, the Bankruptcy Act contemplates that those contributions will be made out of income in the hands of the bankrupt not the trustee. 73 The position therefore is no different from the position when s 131 was part of the Bankruptcy Act or s 101 part of the 1924 Bankruptcy Act . The bankrupt's income, after bankruptcy, does not vest in the bankrupt's trustee. 74 If the bankrupt's income does not vest in the trustee, it must be because it is not property or at least property divisible among the bankrupt's creditors. 75 In those circumstances, the trustee cannot sue for wages or income due to the bankrupt because those wages or that income have not vested in the trustee: Williams v Chambers [1847] EngR 300 ; (1847) 10 QB 335; 116 ER 130. Indeed, even if the Court ordered (under the repealed s 131) or the trustee assessed contributions payable by the bankrupt to the trustee, no right to recover that sum or those sums vests in the trustee against the employer. The liability to pay that sum or those sums is imposed upon the bankrupt. 76 The right to seek a review of the respondent's decision to terminate the applicant's employment remains with the applicant. The trustee has no interest in seeking a review of that decision. The trustee, for example, could not ensure that if the decision were reversed that the applicant would resume employment. If the trustee was interested in the proceeding and brought the proceeding and the decision was quashed as the applicant seeks in this proceeding, there would be no property in the result which would be divisible among the applicant's creditors. The right to seek an order quashing the decision of the respondent to terminate the applicant's employment is not a right which can be exercised beneficially for the creditors, even in circumstances where the applicant seeks the further orders which may result in a sum of money being paid to him by way of compensation. Whether if the bankrupt received compensation that money would become after-acquired property for which he would have to account to his trustee does not need to be determined on this application: see Chippendall v Tomlinson (1785) L Co Bank L 428; 99 ER 900. 77 The holding that an application of this kind is not property of the bankrupt which vests in the trustee is consistent with the decision of the Full Court of this Court in Griffiths v Civil Aviation Authority 67 FCR 301 where the Full Court held that an appeal to the Federal Court on a question of law from the decision of the Administrative Appeals Tribunal in relation to conditions imposed upon a bankrupt on aviation licences was not property of the bankrupt which vested in the trustee. It is these rights which fall within the definition of "property" in s 5 and the enforcement of which by action are stayed by s 60(2) upon a person becoming bankrupt. To interpret "property" for the purposes of s 5 in this way avoids the injustice of denying to the bankrupt the power to exercise a right in which the trustee has no interest and the exercise of which cannot operate adversely on the property of the bankrupt or the administration of the bankrupt's estate. The right of Mr Griffiths to appeal to this Court from the decision of the Tribunal and his right to appeal from the judgment of Kiefel J are such rights and did not vest in the Official Trustee upon acquisition by Mr Griffiths. Neither Mr Griffiths' appeal from the Tribunal to the original jurisdiction of this Court, nor his appeal from the order of Kiefel J to the Full Court is incompetent in consequence of his bankruptcy. 79 I also agree, with respect, with the decision of the Full Bench of the New South Wales Industrial Relations Commission in Perfection Dairies Pty Ltd v Finn [2006] NSW IR Comm 137. In that case, the appellant before the Commission had summarily dismissed the respondent from employment for wilful misconduct. A Commissioner had ordered the respondent be reinstated and that the appellant pay the respondent an amount which equated to the remuneration he would have received but for the dismissal. One of the issues raised on that appeal was whether the respondent, as an undischarged bankrupt, had standing to bring the application for reinstatement. Whatever legal "interest" an employee has in his or her employment, it is not a property interest. In any event, it seems clear from reference to the relevant statutory provisions and the case law that, although the expression "property", and cognate expressions such as "the property of the bankrupt" and "after acquired property", are to be construed in a very wide sense, the bankrupt's employment is not considered "property" for the purposes of the Bankruptcy Act . Indeed, all the pertinent indications in the statute and the case law are to the opposite effect. For example, there are a number of references in the Bankruptcy Act to "property divisible among the bankrupt's creditors" (see, for example, s 58(6) and the definition of "the property of the bankrupt" in s 5) ; it could not seriously be suggested that the bankrupt's employment, or the bankrupt's rights as to his or her employment could be divisible among the creditors. Indeed, the statute recognises that it is most desirable that the bankrupt be able to earn income during the course of the bankruptcy and also contemplates the likelihood that a bankrupt who was an employee prior to the bankruptcy would continue to be in employment. The references we have cited from division 4B of the statute, including the references to ss 139L and 139U are also in point. In particular, we do not detect in the scheme of the Australian statute any provision which would be at odds with the observation in the judgment of the English Court of Appeal in Ex part Vine ; re Wilson, where reference was made to the necessary exception to the property of the bankrupt being divisible amongst his creditors, "in order that the bankrupt might not be an outlaw, a mere slave to his trustee; he could not be prevented from earning his living". 80 Madgwick J's decision in Pelechowski v NSW Land and Housing Commission [2000] FCA 233 addressed only the question whether the action was for a personal injury which was the only live issue because of the provisions of s 60(2). The action in that case was commenced before the sequestration order was made and was caught by s 60(2). Section 60(2) catches all actions not excepted by s 60(4). There was no question in that proceeding whether income, wages or earnings payable to the bankrupt after bankruptcy was property of the bankrupt or property divisible among the bankrupt's creditors. 81 In Geia v Palm Island Aboriginal Council 152 FLR 135 the bankrupt sued for damages for breach of contract or for moneys due and payable under a contract of employment. The bankrupt sought $109,692.30 in relation to a contract of employment which was for three years but which was terminated by the employer some weeks before the bankruptcy. The argument before the lower Court was whether the action was one falling within s 116(2)(g). That was rejected by the District Court Judge and not pursued in the Court of Appeal. In that court, the bankrupt argued that the cause of action was exempt under the "common law of bankruptcy". We have mentioned above that it is conceded that no such moneys are in issue in this case, where the plaintiff says he has a right to damages, or to be paid at the agreed rate past the date when his employment was terminated. In that case his Honour held that although s 131(1) which had entitled "a bankrupt who is in receipt of income" to retain it for his own benefit had been repealed, Div 4B "rests upon the continuing assumption that the income of the bankrupt does not vest in the trustee". We are in respectful agreement with that view; but it does not, of course, bear upon the question whether a cause of action for breach of a contract which would, if carried out, have produced income for the bankrupt vests in the trustee. 83 Geia v Palm Island Aboriginal Council 152 FLR 135 was a case about a claim for damages, not a case about a claim for loss of wages. As such, it does not address the issues raised in these reasons. 84 The application to dismiss or stay the applicant's proceeding on the ground that the applicant lacked standing is dismissed. 85 The respondents sought, if their first application was dismissed, security for costs. 86 Section 56 of the Federal Court of Australia Act 1976 (Cth) empowers the Court to make an order for security for costs. The power is discretionary but it must be exercised judicially: s 56(2). 87 The general rule is that where the applicant is a natural person he or she will not be required to provide security for costs merely because he or she is impecunious: Pearson v Naydler [1977] 3 All ER 531 at 533 per Megarrey VC. That said, however, it is necessary to have regard to the circumstances of the case generally to determine whether the case is an appropriate one for an order for security for costs. 88 The applicant is a bankrupt. After his bankruptcy he obtained employment with the first respondent and during the course of his bankruptcy his employment with the first respondent was terminated. 89 Although there is no direct evidence, having regard to the proceeding itself, it may be inferred that the applicant has not been employed since his employment was terminated on 16 May 2008. 90 That would establish that he is impecunious but, as I have said, impecuniosity itself is not a bar to bringing a proceeding: Barton v Minister for Foreign Affairs [1984] FCA 89 ; (1984) 2 FCR 463 ; James v ANZ Banking Group Ltd (No 1) (1985) 9 FCR 442 ; Knight v Beyond Properties Pty Ltd [2005] FCA 764. 91 Apart from the fact that the applicant is apparently impecunious, no other ground is advanced for making an order for security for costs: O 28 r 3. 92 It was contended that I should not infer, in the absence of evidence, that an order for security would not stifle the action. It may be, the respondents contended, that the applicant has the support of a third party especially in circumstances where, as it was the case, the applicant was represented on this application. 93 It is true, as the respondents contended, that the applicant has not put anything before the Court by way of positive evidence that would establish that if an order for security were made that would stifle the action. I do know, however, of his personal circumstances which I have recounted. I also know that the respondents contended that if the matter were to go to trial the respondents' costs would be in the order of $21,500. 94 I can infer, without any further evidence, that the applicant would not be in a position to provide security for costs of that order himself. 95 The respondents have not identified any other party who might provide that security. In my opinion, if the order were made in the amount of the estimated costs or a significant part of the estimated costs, the proceeding may well be stifled. 96 There is a further relevant matter. The application has been brought for the purpose of quashing a decision which gave rise to the termination of the applicant's employment. If the applicant succeeds in his complaints part of his impecuniosity from May 2008 may well have been caused by the respondents. It would be inappropriate for the respondents to rely upon their own actions for the purpose of defeating the applicant's proceeding. 97 I am not prepared to make an order for security for costs. 98 The notice of motion must be dismissed. 99 I will hear the parties as to costs but there seems to be no reason why the respondents should not pay the applicant's costs. I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | interlocutory application brought by respondent sought that applicant's application for review of decision terminating employment under public service act 1999 (cth) be dismissed or stayed grounds that applicant was a bankrupt and lacked standing whether s 60(2) of the bankruptcy act 1966 (cth) applied to stay proceeding whether proceeding was property within meaning of s 116 and s 5 of bankruptcy act 1966 (cth) application dismissed interlocutory application control over person and property of bankrupt bankrupt's trustee had filed notice of discontinuance whether bankrupt's application for review of decision under public service act 1999 (cth) amounted to property divisible among creditors within meaning of bankruptcy act 1966 (cth) discussion of division 4b of part vi of bankruptcy act 1966 (cth) bankrupt's personal earnings or income after bankruptcy do not vest in trustee right to seek review of respondent's decision to terminate employment remains with applicant applicant has standing application dismissed application for security for costs natural person will not have to provide security for mere reason of impecuniosity no other ground for application advanced application dismissed administrative law bankruptcy practice and procedure |
2 An application has now been made to the Court for a further extension of time to hold a meeting of creditors. The application is made under s 447A(1) of the Act rather than under s 439A(6). This is because there is ample authority for the proposition that the power to order an extension of time for convening a meeting under s 439A does not extend to authorising a subsequent extension under that section: see for example Henry Walker Eltin Group Ltd (Administrator Appointed) (2005) 54 ACSR 383 at [1] per Hely J. However, the decision of Hely J in Henry Walker Eltin is also authority for the proposition that there is power under s 447A of the Act to further extend the convening period, notwithstanding that an earlier extension has already been granted. 3 The reasons why the furthered extension is sought are recorded in an affidavit of Mr Chamberlain sworn on 13 January 2009. In short, the affidavit discloses that the steps required by the Registered Clubs Act 1976 (NSW) and the Registered Clubs Regulation 1996 (NSW) were duly taken, but that when the period for expressions of interest expired on 15 December 2008, only one club had contacted Mr Chamberlain in relation to the proposal. Mr Chamberlain has been advised that the club which approached him is now considering various options which require a little time for consideration. 4 Perhaps more importantly for the purposes of the present application, Mr Chamberlain has now received a number of inquiries from other sporting clubs which may lead to other options for the Club to amalgamate. Because the convening period ordered by the Court was due to expire tomorrow, Mr Chamberlain does not consider that he and the Committee of Inspection will have sufficient time to consider and respond to the various inquiries made by the relevant sporting clubs. 5 Mr Chamberlain also considers that if he were required to report to creditors by 15 January 2009 on their various options, he would not be in a position to adequately address the options for amalgamation and would not be able to make a recommendation to creditors of the Club as to what would be in their best interests. 6 Importantly, on 9 January 2009, Mr Chamberlain convened a meeting of the Committee of Inspection and sought the Committee's approval for an application to the Court for a further extension of time of the convening period until 16 February 2009. The Committee resolved unanimously that Mr Chamberlain be at liberty to make the application. 7 Mr Chamberlain has put before the Court evidence which demonstrates that the Club has traded profitably since his appointment so that creditors generally will not be prejudiced by a further extension of time to 16 February. 8 The authorities which deal with the principles applicable to an extension of time to convene and hold a second meeting of creditors have been considered in a number of cases, commencing with the decision of Young J in Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 at 612. 9 The basic principles are reflected in an observation by Barrett J in Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10] . His Honour there observed that the function of the Court on an application under s 439A is to strike an appropriate balance between the expectation that the administration would be a relatively speedy and summary matter, and the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders. This statement also reflects the object of Pt 5.3A which is stated in s 435A of the Act. A further principle which is relevant is that the impact of the prolongation of the administration may have on persons whose claims are affected by the statutory moratorium arising from Pt 5.3A of the Act. 10 Although the present application is not made under s 439A, but under s 447A, it seems to me that the principles which I have stated above should also inform the exercise of the discretion to further extend the time for convening a meeting. I am satisfied in accordance with those principles that the proper exercise of my discretion is to grant the further extension of time which is sought. I will therefore make orders in terms of [1] to [4] of the draft orders which I will sign and date, and place with the Court papers. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | application to further extend period for convening creditors' meeting balance between quick administration and need for sensible and constructive actions to maximise creditors' and shareholders' returns company trading profitably since administrator appointed further extension granted corporations |
The vessel had been time chartered by her owners to Inui Steamship Company Limited (Inui) and then time chartered to BHPB. On 12 October 2004 BHPB sub-chartered the vessel purportedly to New Century International Leasing Co Ltd (NCI) following negotiations between BHPB's shipbroker, the second respondent, Braemar Seascope Pty Ltd (formerly known as Seawise Australia Pty Ltd) (Seawise), and the first respondent, Cosco Oceania Chartering Pty Ltd (Cosco), the shipbroker whom BHPB believed was acting for NCI. The vessel was delivered into charter service on 14 October 2004, not to NCI but to Nera Shipping Co Ltd (Nera). Nera paid only a small proportion of the hire. BHPB seeks to recover the balance, together with ballast and other charges, from Seawise or Cosco. The quantum of the claim is US$1,063,316.19. The facts which give rise to the claims are fairly straightforward and, for the most part, uncontroversial. The events occurred in various locations, both in and outside Australia, but all the times are recorded as local. BHPB has a division called Handy Pacific Chartering which purchases and sells freight on behalf of the BHP Billiton group. The group is one of the world's largest users of dry dock shipping. The division has two sections, chartering and operations. Mr Elsworth worked on the chartering side and Mr Reker in operations. On 30 September 2004 Mr Elsworth sent an email to several shipbrokers with whom BHPB had dealings, including Seawise, advising that the Global Hawk would become "open" (ie available for hire) on 12 October 2004 at the port of Lianyungang and requesting the brokers to "propose suitable candidates for the ... business". On the previous day Mr Bartlett, a broker at Seawise, had been told by Mr Liu of Cosco that NCI was looking for a ship of 3,900 metric tonnes to take a cargo of bituminous coal in mid October. When Mr Bartlett received BHPB's email he got in touch with Mr Liu enquiring whether NCI was interested in employing the Global Hawk. Several emails then passed between Seawise and Cosco, the upshot of which was that on 5 October 2004 Cosco made a "firm" offer for the Global Hawk for the account of "New Century International Leasing Corp" for delivery at Lianyungang and redelivery in Singapore or Japan. Following further emails between Seawise and Cosco, and a discussion between Mr Bartlett and Mr Elsworth, several important emails were exchanged on 11 October 2004. Owners advising if can do hire payment in full up front then would be no problem to fix. Suggest forward chartrs firm offer along with chrtrs full style/background to develop. Please advise if we can do subs within today. " At 1238 hours Mr Liu emailed "Jacky" (Jacky Cao), a person purportedly acting on behalf of NCI and passed on the request by Seawise that the charterers make a firm offer for the Global Hawk in a format prepared by Seawise. Meantime chartrs kindy asking briefly back ground and list of recent fixtures of chrtrs. Pls advise. Mr Liu emailed that information to Seawise at 1453 hours. The information was then emailed to BHPB at 1503 hours. International Trading, from 1995 to 2004, NCIL has signed and implemented various leasing contracts amounting to a total of USD1100 million USD and RMB4.2 billion yuan with a sum total of more than RMB 12 billion leasing assets and in total USD400 million USD international trading. BHPB had not previously dealt with NCI. Accordingly, Mr Elsworth wanted to be satisfied about NCI's credit-worthiness. When he read the email it appeared to Mr Elsworth that NCI was, at face value, a credit-worthy organisation. In particular Mr Elsworth noted that NCI had "registered capital" of $15 million, was involved in the shipping industry and "appeared [to be] a major firm in China, a conglomerate [involved in] various activities. " Mr Elsworth also commissioned an independent report concerning NCI from Lloyd's MIU Company Research (usually referred to as MRC). Mr Elsworth did not receive the report until 13 October. The report gave NCI a clean bill of health. Mr Bartlett and Jacky then continued the negotiations. Their negotiations resulted in the vessel being "fixed on subs" (ie a fixture subject to certain conditions being met by NCI). The main terms of the fixture were set out in an email from Seawise to Jacky sent at 1910 hours. The email records that the fixture was for the account of NCI Leasing, the vessel was to be delivered at Lianyungang on 11 October 2004, the hire was US$24,500 per day and that the "full voyage time charter hire [was] to be paid in advance on delivery. " Notwithstanding that the terms of the fixture had been agreed, at 2212 hours Mr Bartlett emailed Mr Elsworth that NCI wished to take delivery of the vessel at the Port of Xingang on 12 October 04. In due course this was agreed, subject to the payment of a ballast bonus of US$40,000. Later in the afternoon the conditions were lifted with the result that the vessel was now "fixed clean. " Once the Global Hawk was fixed clean Mr Reker took over the management of the vessel. The first thing Mr Reker did was send a message to the Master of the Global Hawk. The intention is to load steel billets in Xingang for a discharge in Vietnam. FYG delivery time and bunkers will be at pilot station Xingang, can you pls get underway and proceed there are normal sea. Pls send me a copy of sub-chrtrrs voyage orders when rcvd. Please acknowledge. At 1744 hours Jacky asked that the "first load port" be changed to Qinhuangdao. BHPB agreed and at 2147 hours Mr Reker advised the Master of the change. At 2154 Mr Bartlett circulated an 'amended clean recap' reflecting the agreed changes to the terms of the charter. Earlier in the day, when the Global Hawk had been fixed clean, Mr Bartlett handed over the Global Hawk file to Ms Hendricks. Ms Hendricks was one of two operations administrators in Seawise's operations department. Once a charter is fixed the operations department assumes responsibility for all operational issues. At 2104 hours Ms Hendricks emailed Mr Reker advising that she would "obtain from the charterers a copy of the voyage orders for your [Mr Reker's] records. " Ms Hendricks explained that the fixture to NCI was a spot fixture and she wanted to make sure the voyage orders went to BHPB so that they were aware of the cargo to be carried. We, welcome you, your officers and crew to join us and working together to achieve mutual benefit. We wish you all runs in luck. On the second page of the instructions there was this statement: "Upon delivery, please advise us ([email protected]) and Chtrs Messrs NERA shipping (email: [email protected]) the date, time (both in gmt & local time) and bunkers remain onboard. " This was followed by detailed instructions concerning the cargo and sailing. There are two things to notice about the voyage instructions. First, the charterer is identified as Nera Shipping Ltd. Second, the operator is identified as Super Shipping of Hong Kong. There is no evidence what the Master thought upon receipt of instructions from Nera. Because he had been expecting to receive voyage instructions from NCI, it may have come as a surprise that the instructions had come from another organisation. If the Master was surprised, he did not say anything to Mr Reker. Mr Reker acknowledged he would have seen the email from the Master as soon as he arrived at work that morning. Mr Reker said he did not regard the voyage instructions as being particularly important. In fact he asserted he did not always receive voyage instructions for vessels BHPB let out on charter "so that's how important they are to me in that respect. " Importantly Mr Reker said he does not recollect reading the instructions. This was for the reason that his only interest in the voyage instructions was to pass them on to Inui. He explained: "[Inui are] a small company as far as I know, they're very protective of their vessels, they like to know what's going on with sub-charterers. When it's in our direct hands, they are always confident that it's in good hands. When it's sub-chartered, they've always had a little bit of a --- they've had a habit of asking for voyage instructions from the sub-charterer. " In court, Mr Reker's attention was drawn to the references in the voyage instructions to Super Shipping and Nera Shipping. He said that if he had noticed those names it would not have caused him any concern "because this could just be an arm of NCI just like BHP has many arms, different operating arms. It could, itself, also could be a sub-charterer again of NCI, for all I know. Super Shipping, yes that --- yes. Again, that falls into the same category. " Mr Reker sent the voyage instructions to Seawise at 0812 hours. Ms Hendricks also said she has no recollection of reading them. Her function was to send the voyage instructions to Inui, which Ms Hendricks did by forwarding them to Inui's representative, Nishi San. While she was not able to recall reading the voyage instructions, Ms Hendricks did concede that she probably did read them. Her practice was to look at every document that came across her desk, some more carefully than others, dependent upon its contents. I accept Ms Hendricks' evidence that she did not pay much attention to the voyage instructions because she only received them to send to Inui. Shortly after she received the file Ms Hendricks drew up the charterparty. For this purpose she used the amended clean recap of 12 October. The amended clean recap indicated that the charterer was NCI. The draft charterparty was prepared on that basis. At 1506 hours Ms Hendricks emailed Jacky at Nera Shipping nominating the surveyor for the on-hire bunker and condition survey. The email stated: "In the m/time for good order sake can we pls have your full style together tphone/fax nbrs, etc." Ms Hendricks wanted this information because Seawise had not previously dealt with NCI and she needed Jacky's out of hours contact details in case there was an urgent need to call him. Ms Hendricks said she only requested "full style" details when dealing with new people. The full style details were sought from Jacky because the documents in the file showed him to be the PIC (person in charge). Accordingly, Ms Hendricks thought he was the "agent, contact for the charterer NCI. " It is possible that the email was sent to Jacky at [email protected] because Ms Hendricks noticed in the voyage instructions that this was his email address. It is equally possible that Ms Hendricks obtained Jacky's email address from emails he sent to Mr Bartlett on 11 or 12 October. At 1525 hours Jacky replied to the full style request in an email entitled "RE: GLOBAL HAWK/NCI LEASING CP 12/10/04 --- VSL ITENERARY" stating: "Please find our full style asf: Nera Shipping Co., Ltd." Ms Hendricks did not send the full style email to BHPB. She did not do so because the information was only required by Seawise, it being the shipbroker's role to deal with issues arising out of the charterparty. The Master sent a confirming delivery notice to Nera Shipping, Super Shipping and BHPB. The notice read: "Please be noted TT M/V Global Hawk arvd Qinhuangdao P/STN at 0230L/14TH (GMT1830/13TH) and was delivered to chtr Messrs Nera Shppg as per c/p. " While the terms of the fixture were that NCI would pay the hire in advance of delivery, it is standard practice to prepare and send the first hire invoice on the day of delivery. One reason is that bunkers cannot be surveyed until delivery. Payment usually takes 24 to 48 hours to be transacted through the banking system. At 1058 hours Mr Reker sent the first hire invoice to Seawise for delivery to NCI. The invoice was in the sum of US$669,533.96 comprising US$392,000 for hire, US$247,545 for bunkers, US$40,000 for the ballast bonus plus miscellaneous expenses of US$788.96, less commissions. The invoice was not paid. Nor were the amounts included in invoices raised between 29 October 2004 and 15 November 2004 in relation to further amounts owing under the charter. On 27 November 2004 the vessel was redelivered into the possession of BHPB. BHPB then issued the final invoice to NCI in the sum of US$353,514.47. Because the amounts due were not paid, BHPB commenced arbitration proceedings against Nera in London. On 18 May 2005 BHPB received an award in its favour for US$1,063,316.19. Save for one payment of US$120,000, the award has not been satisfied. BHPB must succeed in its claim against Cosco on several of the pleaded causes of action. The damages recoverable are not the same under each cause. In respect of some, defences of (what I loosely describe as) contributory negligence and apportionment, which Cosco has pleaded, are not available. The cause of action most beneficial to BHPB, and the one it presses first, is breach of warranty of authority. The cases establish that where a person (the first person) falsely represents that he has authority to act on behalf of another person in a particular transaction and the person to whom the representation is made (the second person) is induced to act on the faith of the representation and suffers loss, the second person may recover the amount of the loss from the first person in an action for breach of a collateral contract. It matters not that the first person acted in good faith, believing he had the authority which he purported to have. See generally Bowstead and Reynolds on Agency (18th ed 2006) 541; Chitty on Contracts, (30th ed, 2008) vol 2 65; Dal Pont, The Law of Agency (2 nd ed 2008) 697; Collen v Wright (1857) 8 E & B 647. The action is based on collateral contract: Penn v Bristol & West Building Society [1997] EWCA Civ 1416 ; [1997] 1 WLR 1356. The first element of the cause of action which BHPB must establish is that Cosco represented it had authority to act on behalf of NCI. There is no doubt this is the effect of the emails from Cosco to Seawise. Mr Muller, a shipbroking expert called by Cosco, acknowledged that shipbrokers rely on statements made by fellow brokers. He explained that the essence of the relationship between brokers is captured in the motto of the Baltic Exchange: "Our word our bond". Mr Muller all but acknowledged that when a shipbroker is negotiating as an intermediary between shipowner and charterer, the shipbroker is deemed to warrant that he has the full authority of the principal to contact on the terms of the offer that he makes or accepts. Mr Harvey, who appeared for Cosco, accepted his client had represented to Seawise (and therefore to BHPB) that it was acting for NCI. But he says there is no evidence the representation was false, at least up to the point Mr Bartlett was asked to, and did, deal directly with Jacky. Mr Harvey suggests that Jacky may have changed principals (from NCI to Nera) around 11 October 2004 when there was the change in the port of delivery from Lianyungang to Xingang. In my view there is more than enough evidence from which to infer that Jacky had never acted for NCI. For one thing NCI appears to be a reputable organisation. Jacky, on the other hand, is a rogue. From June 2004 or thereabouts Jacky had been using Cosco's services in an attempt to charter a vessel for a variety of charterers other than NCI. Among the charterers for whom he was purporting to act were Hunan Walin International Shipping and Full Young Shipping Ltd. The negotiations for a charter got nowhere. Some fell through when hire was not paid in advance. Others did not go ahead because Jacky told Cosco that money had been remitted to the owner and it turned out it had not. When one considers what transpired with the Global Hawk, and with the other vessels Jacky attempted to charter, it is impossible to avoid the conclusion that Jacky was involved in several fraudulent schemes to charter a vessel without making payment until, if at all, the voyages were completed and money had come in. Secondly, Jacky appears to have first mentioned to Cosco that he represented NCI around June 2004. It is notable that this was when a number of his other dealings had turned sour. Thirdly, there is nothing, apart from assertions of authority by Jacky, to tie him to NCI in relation to his dealings with the Global Hawk. Indeed, in an email of 3 November 2004, Jacky dismissed any such link. By its defence, Cosco denies it had ever acted on behalf of NCI. Implicit in this denial is that Jacky, the only person with whom Cosco was dealing, was not representing NCI. To make out its warranty of authority claim BHPB must also show it was induced to act on the assertion that Cosco represented NCI by engaging in conduct which, but for the assertion of authority by Cosco, it would not have entered into. BHPB's pleading on this aspect is obscure. It alleges that Cosco had warranted it was acting on behalf of NCI. It alleges that in breach of that warranty Cosco was not authorised to act on behalf of NCI. But it says nothing about the respect in which it was induced to act. No point, however, has been taken about this potential deficiency in BHPB's pleading, apart from a comment by counsel during closing submissions. Whatever is said in the pleadings, it is an inescapable conclusion that BHPB (through Seawise) was induced to enter into the charterparty in the belief that the arrangements were with NCI. Having not dealt with NCI previously, BHPB had satisfied itself that NCI was a reliable party to do business with prior to entering into the charterparty. The identity of NCI --- and, therefore, Cosco's authority to represent NCI --- was important to BHPB in its decision to enter into the charterparty. It is true, as Mr Harvey points out, that the charterparty was concluded during negotiations between Seawise and Jacky, at which point BHPB (through Seawise) was relying on Jacky being the representative of NCI. No doubt Seawise was of that view because Cosco said that Jacky acted for NCI. But the true or effective cause of the problem which has arisen here is Cosco's representation that it was authorised to act for NCI and it was on that basis Seawise concluded the fixture with Jacky. In this connection reference should be made to Firbank's Executors v Humphreys (1886) 18 QBD 54. The cause of action is established even if the plaintiff enters into a transaction with another person: see also Penn v Bristol & West Building Society [1997] EWCA Civ 1416 ; [1997] 1 WLR 1356. As regards causation, if Cosco had actual instructions from NCI to enter into a charterparty Seawise would not have concluded the charterparty with Jacky and the vessel would not have been delivered to Nera. Cosco's failure to hold the authority which it warranted caused the loss that BHPB has suffered. That the vessel was delivered prior to the payment of the first hire in accordance with the usual practice, does not affect this conclusion. So far as quantification of the loss is concerned, it is to be determined on the contractual measure. In a case where the plaintiff is induced to enter into some form of contract, the normal measure of damage is what the plaintiff would have recovered under that contract. That is to say, the measure of damage is arrived at by considering the difference in the position the plaintiff would have been in had the representation been true and the position he actually is in, in consequence of it being untrue: Firbank (1886) 18 QBD 54 , 60. In this case the damage is the amount which BHPB has lost in being unable to recover from NCI the balance due under the charterparty. Moving to the first of the statutory causes of action, s 53(bb) relevantly provides that a corporation shall not "in trade or commerce, in connexion with the supply or possible supply of goods of services or in connexion with the promotion by any means of the supply of goods or services (bb) ... falsely represent that a particular person has agreed to acquire goods or services. " There are several references to 'goods or services'. There is a question whether the 'goods or services' referred to in the preamble may be different from the 'goods or services' mentioned in subparagraph (bb). Section 53(bb) was introduced by the Trade Practices Revision Act 1986 (Cth). The Explanatory Memorandum (at para [88]) states that s 53(bb) "is directed at such practices as a person asserting a right to payment for goods or services that the person falsely asserts have been ordered by a recently deceased person. " This suggests that ordinarily the various references are to the same 'goods or services'. In my view, however, s 53(bb) can be breached where the 'goods or services' the subject of the representation are different from the 'goods or services' referred to in the preamble. First, it is notable that subparagraph (bb) does not refer to 'those' goods or services (or words to similar effect suggesting that the goods or services must be the same). Second, the preamble refers to the promotion of goods or services, which contemplates future agreement regarding goods or services. In contrast subparagraph (bb) refers to 'goods or services' which a person 'has agreed' to acquire, which contemplates a concluded agreement. The 'goods or services' the subject of future and concluded agreements might well be different. Third, given that s 53(bb) aims to protect consumers, there is no reason to confine its operations to instances where the 'goods or services' are the same. The type of misconduct which s 53(bb) seeks to deter can easily involve different 'goods or services'. In my opinion, Cosco has contravened s 53(bb) by falsely representing that it was supplying shipbroking services to NCI. That representation induced BHPB to conclude the hire with Jacky. BHPB seeks to recover the loss it has suffered under s 82 or asks for compensation under s 87. The measure of damages which BHPB is entitled to recover under s 82 is similar to the measure of damages recoverable in an action in deceit: Marks v GIO Australia Holdings Ltd [1998] HCA 69 ; (1998) 196 CLR 494 , 512. In certain circumstances, it may be possible to recover more under s 87 ( For the Good Times Pty Ltd v Coltern Pty Ltd [2007] NSWSC 807 , [243]). This, however, is not a case where that could occur. Thus, BHBP's loss is to be measured by comparing BHPB's actual position with the position it would have been in but for Cosco's breach of section 53(bb). If not for the breach, in October 2004 BHPB would have had a vessel for hire in a reasonably buoyant market. Mr Elsworth did say the vessel may have ballasted to Australia, but more likely it would have been let at around the same hire as had been agreed with NCI which, according to the evidence, was at a reasonable rate. It would, however, have taken some days to fix the vessel and to have it delivered to a new charterer. Mr Everton, an expert called by BHPB, said the time the vessel would have been unemployed was 2 to 3 days, possibly less. Even in a buoyant market it may have been necessary for there to be an alternative charter. There is no doubting that Cosco has contravened s 52. It represented to Seawise that it was acting for NCI when it was not. The representation induced, first, the negotiations and, second, the agreement with Jacky. As a result, BHPB suffered damage. So much was not seriously in dispute, apart from a minor argument about causation. Cosco's liability in negligence is also not seriously disputed. However, the damages to which BHPB is entitled for Cosco's breaches of s 52 and negligence raise more contentious issues. One issue is whether BHPB is partly responsible for its loss. Cosco relies on s 82(1B) of the TPA, which relevantly provides that where a claimant makes a claim under s 82(1) in relation to economic loss caused by the defendant's contravention of s 52 , damages are to be reduced to the extent which the court thinks just and equitable having regard to the claimant's share in the responsibility for the loss and damage. Cosco argues that BHPB is partly responsible for its loss and that BHPB's damages for its s 52 claim should be reduced accordingly. The principal reason why BHPB is responsible for its loss, Cosco argues, is that BHPB negligently delivered the vessel to Nera, notwithstanding that Mr Reker had earlier received the voyage instructions which should have alerted him to the fact that something was amiss. I have already mentioned that Mr Reker said he did not read the voyage instructions with any care. I rather suspect that Mr Reker looked at the voyage instructions more carefully than he conceded. But I am convinced he did not appreciate from anything contained in the instructions that the vessel had not been chartered by NCI. And I am not satisfied (although with a little hesitation) that Mr Reker should have appreciated that something was wrong. Cosco also argues that BHPB is partly responsible for its loss because when Mr Reker received the delivery notice specifying Nera as the charterparty, BHPB should have taken steps to terminate or withdraw from the charter. Again, I am not convinced that Mr Reker should have appreciated that something was wrong merely because of the reference in the delivery notice to Nera. As he said, there might easily have been a subcharter. Accordingly, s 82(1B) has no application. Similarly, Cosco's defence (which was orally put) of contributory negligence to BHPB's negligence action must also fail. For the sake of completeness on this issue, I should address an argument raised by BHPB that it could seek relief under s 87 for its s 52 claim and so avoid s 82(1B) because that section does not apply to claims under s 87. I cannot accept this argument. BHPB's claim for damages under s 82 and compensation under s 87 are essentially for the same loss. To obtain a compensation order under s 87 where damages under s 52 might be limited by s 82(1B), would be to use s 87 to circumvent the operation of s 82(1B). The power of a court to make an order under s 87 is discretionary. It would not be an appropriate exercise of that discretion to allow the section to be used in this way. The remaining statutory cause of action is based on s 53(d) , which provides that a corporation shall not in trade or commerce "represent that the corporation has a sponsorship, approval or affiliation it does not have". Once again the representation relied upon is that Cosco was NCI's shipbroker. That is a representation about the existence of an agency relationship, an arms length commercial dealing. Such a relationship does not imply any sponsorship, approval or affiliation, which is a connection of a different character. BHBP claims that (1) Seawise breached its retainer with BHPB and (2) Seawise was negligent. As regards the contract claim, BHPB contends that Seawise breached a number of implied terms of its retainer. The first implied term alleged is that Seawise would bring to BHPB's attention or pass on information which Seawise became aware which was relevant to the negotiations of the terms of the proposed charterparty, the proposed charterer and the fixing of the charterparty. The second implied term alleged is that Seawise was required to bring to BHPB's attention or pass on all information of which Seawise became aware which was relevant to the operation and performance of the charterparty. The third implied term alleged is that Seawise was to exercise reasonable care and skill in carrying out the services provided for in the retainer. Seawise concedes the first and third terms alleged by BHPB but denies the second term. The first issue is whether the retainer contains the alleged implied terms. Many contracts are entered into on a casual basis. Without the addition of terms, the contract could not be fulfilled or the parties' rights adequately protected. In particular types of contracts certain terms are readily implied to fulfil what the law regards as the normal expectations of the parties. So, for example, in contracts involving buyers and sellers, the courts have implied terms as to quality and fitness. In contracts for the provision of services the courts have implied an obligation that the supplier will carry out the service with reasonable care and skill. In the case of a contract for the supply of professional services the courts hold the supplier must exercise the degree of care and skill which is to be expected of a professional man of ordinary competence and experience. Speaking very loosely, terms will be implied into a given class of contract (for convenience this is sometimes referred to as terms implied as a matter of law) if the implication is "necessary": Byrne v Australian Airlines Ltd [1995] HCA 24 ; (1995) 185 CLR 410 , 450. Terms will also be implied on an ad hoc basis to cure an omission. The implication of a term as a matter of factual inference in a particular case is governed by the principles in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266. BHPB's putative implied terms fall into the former category. That is to say, BHPB has identified obligations which, on its argument, should be imposed in all shipbroking contracts. The case for the first and second alleged implied terms (imposing obligations on Seawise to pass on information), is certainly a bold one, for which there is no authority and, so far as my researches show, finds no support from textbook writers. And, in my view, no such terms need exist. They are not necessary given there is an implied obligation that the shipbroker must carry out its services with reasonable care and skill (ie the third implied term, conceded by Seawise). Put another way, whatever might be required by the test of "necessity" for the purpose of the implication (and it may not be necessary to link the putative term to the essential functioning of the contract), it is not satisfied here. Seawise's concession is erroneous, in my opinion. This brings me to the allegation that Seawise failed to exercise reasonable care and skill in carrying out its post-fixing services. I observe that the alternative claim for breach of duty has no greater content than the obligation which is owed under the contract, the consequence being that the disposition of one cause of action will dictate the outcome of the other. There is little evidence concerning the type of post-fixing services Seawise was required to perform. BHPB contends in its pleadings that the services related to "the operation and performance of the charterparty", which I take to mean that Seawise had been retained to oversee the charterparty for its duration. But the evidence does not support a finding to this effect. To be sure, the parties anticipated that Seawise would draw up the charterparty and attend to its execution. Andrew Jamieson in Shipbrokers and the Law (1977) at 115 observes that a shipbroker's services do not come to an end once the fixture is made. "In this respect, although not usually included in its own, the shipbroker's first post-fixture service is to draft the [charterparty]. " As I have said, that was one of the first steps Ms Hendricks embarked upon. That, however, seems to be part of the work to be performed under a retainer to fix a vessel. Jamieson goes on to say (also at 115) that: "In addition to ensuring that the agreement is properly recorded the shipbroker will maintain an interest in its fulfilment. This is not merely because their remuneration is linked to its performance. A professional service is important in terms of client goodwill and the hope of future business. The nature and extent of post-fixture services provided will vary according to the particular market and the requirements of the individual client. " I am not sure what to make of this. If all it means is that the post-fixture services are to be determined by what the parties agreed, including what they are taken to have agreed by reason of local custom, there can be no objection. That is just to say that the parties' obligations are to be found in their contract. If, on the other hand, it means that the broker's obligation exists independently of the contract, I do not agree, although I accept that some services may voluntarily be performed. However that may be, BHPB's case in essence is that Seawise should have picked up the possibility that the Global Hawk had not been chartered by NCI and that the person who had taken possession of the vessel was not a sub-charterer from NCI. This, according to BHPB, would have been evident to a reasonably prudent shipbroker who looked sufficiently closely at the voyage instructions and the full style email. To support this contention BHPB relies upon the evidence of Mr Everton, who has broad-ranging experience in the shipping industry, shipbroking in particular. Mr Everton's central thesis, set out in a written report, is that Seawise failed to act with reasonable skill and care. For the purpose of his report Mr Everton was requested to look at the voyage instructions, Seawise's email of 13 October 2004 to Jacky with a request to provide "your details" and Jacky's response to that email. Mr Everton was asked to state what enquiries a reasonably prudent broker would have made in light of those documents. In his answer Mr Everton referred only to the full style email and said the email "would have caused concern to a reasonable and prudent shipbroker. It was quite clear that the broker had authority from BHPB to conclude a fixture of the Global Hawk with New Century International Leasing Corp and all the correspondence to this point refers to a fixture with these charterers. Negotiations were largely handled by 'Jacky' who had been identified as an employee of or connected with the charterers. And yet in response to a simple request for the full details of the charterer's style 'Jacky' responds with information that they are not New Century International Leasing Corp, but were in fact Nera Shipping Co Ltd. ... On receipt of this email I would have expected a reasonable and prudent shipbroker to have replied immediately to 'Jacky' and seek clarification and correction of what should have been obvious with a clear error; identifying the wrong charterer of the vessel". Mr Everton modified his stance considerably during cross-examination by Mr Scotter, who appeared for Seawise. First of all Mr Everton acknowledged that Cosco had made clear to Seawise that "Jacky" had authority to speak on behalf of NCI and that it was reasonable for Seawise to accept what it had been told. This forced Mr Everton into the position that it was not simply the full style email that should have alerted Seawise to a problem about the identity of the charterer but a combination of the voyage instructions which had been sent by Mr Reker and the full style email. Mr Everton said: "I think the combination of these two in the broker's mind would have raised doubts and certainly opened up a line of inquiry, fruitless or not. " Having moved away from his initial position Mr Everton acknowledged that the situation Seawise was in was "a very difficult area" and that "perhaps I'm drawing too much out of that [full style email], I don't know". In the end, the best Mr Everton could come up with was that the combination of the voyage instructions and full style email "would have led to [his] suspicions being aroused" and that his "curiosity would have been aroused about who exactly Nera Shipping were". It is evident from Mr Everton's evidence that what he thought a reasonable shipbroker should do in the circumstances was heavily dependent on the shipbroker being familiar with both the voyage instructions and the full style email. In other words, his evidence assumed that Seawise should have considered carefully the contents of the voyage instructions. I cannot accept the premise. Mr Reker sent the voyage instructions to Ms Hendricks for the sole purpose of them being passed on to Inui. Mr Reker did not expect that Seawise would examine them. I accept Ms Hendricks may have read the voyage instructions. She at least must have looked at them to ascertain what they were. But she had no reason (and no obligation) to consider the instructions in any detail and, given her lack of recollection of their contents, I doubt she did anything more than pay cursory attention to the instructions. She cannot be criticised in that regard. Nor can it be said that Seawise (through Ms Hendricks) breached its duty to take care for having failed to look closely at the voyage instructions. That task was beyond its remit. Nor do I accept that Ms Hendricks (or anybody else at Seawise) should have been put on notice of something untoward simply from the contents of the full style email. First, Ms Hendricks sought the information so that she had an after hours contact. In my view there is nothing in the email to alert her to any problem. The yardstick of reasonable practice I would adopt in this case is not the standard articulated by Mr Everton, who conceded that "it is a very difficult area" and that the issue is "grey", but that of Mr Reker, a person with much greater experience than Ms Hendricks, who looked at the voyage instructions and was not alerted to any problem. At various times, Mr Reker said he would not in any event have been concerned by the reference in the voyage instructions to Nera as the charterer. If that would not alert Mr Reker to a problem, it is difficult to see why the reference to Nera in the full style email should put Seawise on notice, particularly in circumstances where Seawise had been advised to deal with Jacky. Put another way, Mr Reker, who had far greater experience with charterparties than Ms Hendricks, carried out his duties with adequate care and diligence and BHPB is not entitled to expect more of Seawise. I rather think Mr Reker is of the same view. He said that Nera could have been a related company to NCI, or could have been a sub-charterer. When asked whether Seawise should have been aware whether there was any such sub-charter, Mr Reker answered "No, because there's another broker there as well, there's Cosco. Cosco may have been aware of it. Seawise, not necessarily, of a fixture as such, no" For the sake of completeness I note that with the finding that Seawise did not breach its retainer and was not negligent, there is no separate basis upon which to make any order for contribution or apportion liability as between Seawise and Cosco as sought by Cosco in its cross-claim. It will be necessary for BHPB to elect which cause of action it will take to judgment and in what currency and amount. The parties should also file written submissions on costs. | warranty of authority shipbroker purportedly acting for one party but actually acting for another measure of damages misleading conduct damages recoverable under s 82 whether possible to avoid operation of s 82(1b) by claiming compensation under s 87 shipbroking contract implication of terms no implied obligation to provide copies of documents relating to charterparty implication of term requiring broker to exercise reasonable skill and care whether term breached "sponsorship, approval or affiliation" whether agency relationship constitutes approval or affiliation agency trade practices admiralty words and phrases |
During that period Pinot was the registered proprietor of a number of properties in Mosman Park, a suburb of Perth. Pinot derived rental income from the properties. Following an audit into Pinot's taxation affairs, the respondent (the Commissioner), acting pursuant to s 167 of the Income Tax Assessment Act 1936 (Cth), issued to Pinot notices of assessment for each of the taxation years referred to above. Pinot lodged objections to each of the assessments for each of the relevant taxation years. By notices of decision on objection dated 8 February 2007, the Commissioner disallowed Pinot's objections in full. On 5 April 2007, Pinot commenced this proceeding by appealing against each of the notices of decision on objection. Pinot contended that each of the decisions should be varied by "allowing the Applicant's objection to the extent of excising" from Pinot's taxable income the amount assessed. During the interlocutory process which ensued, I made an order referring the parties to the proceeding to mediation before a Registrar of this Court. A mediation conference was held before a Registrar of this Court on 23 January 2009. The mediation conference was adjourned to 19 March 2009. On that date the mediation conference was adjourned again and it resumed on 31 March 2009. The mediation did not result in the parties agreeing to settle the proceeding. The proceeding was listed for trial on 30 July 2009. At the commencement of the trial on 30 July 2009, counsel for Pinot advised the Court that Pinot did not intend to advance any case in support of the appeal. However, counsel for Pinot said that Pinot wished to lead evidence in relation to the question of costs. On 30 July 2009, I made orders dismissing the appeal against the objection decisions. I also made directions for the filing of evidence on costs and adjourned the hearing of the question of costs. At the hearing in relation to the question of costs, Pinot contended that I should make orders that the applicant pay the Commissioner's costs up to and including 31 December 2008 to be taxed if not agreed, but that there should be no order for costs incurred after that date. Pinot's contention was that the Commissioner had acted unreasonably after 31 December 2008 by rejecting the offers of compromise which it had made. Pinot referred to three offers of compromise including two which had been made during the course of the mediation conference referred to above. The third was contained in a "without prejudice" letter dated 23 July 2009, referred to below. In paras 15-20 of his affidavit, Mr Romano sets out in detail the terms of the offer that Pinot made during the course of the mediation conference held on 23 January 2009 and on 31 March 2009. The affidavit also describes what occurred at the mediation conference on 19 March 2009. In addition, the affidavit referred to and exhibited the "without prejudice" letter on 23 July 2009 written by Wilson & Atkinson, Pinot's solicitors, to the Australian Government Solicitor, the Commission's solicitor, which sets out the details of a proposed compromise. The Commissioner contended that the evidence was inadmissible because s 53B of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) precluded the admission into evidence of anything said during the course of a mediation conference ordered by the Court. It followed said the Commissioner that paras 15-20 of Mr Romano's affidavit were inadmissible. In opposition to the contentions of the Commissioner, Pinot relied upon s 131(2)(h) of the Evidence Act 1995 (Cth). In Silver Fox , the parties to that proceeding had entered into a mediation agreement. A mediation had been conducted pursuant to that agreement at which offers to compromise the proceeding had been made. The express terms of the mediation agreement imposed confidentiality obligations upon the mediator and upon the parties. One of the terms stated that any settlement proposal made during the course of the mediation would not be tendered as evidence in any proceedings relating to the dispute. The applicants before Mansfield J sought an order for indemnity costs. The applicants argued that in light of offers of compromise which had been made, the justice of the case required that the applicants have their costs on an indemnity basis. In support of this contention, the applicants relied upon two affidavits of their solicitor. One of those affidavits referred to a mediation conducted by the parties and sought to disclose the offers and counteroffers which had been made during the course of the mediation before it broke down. The applicants contended that, notwithstanding the express terms of the mediation agreement, evidence of the proceedings at the mediation, was admissible by s 131(2)(h) of the Evidence Act . Mansfield J accepted that the mediation agreement provided that evidence of the terms of any settlement offers made during the course of the mediation was not to be led. Clearly, it is in the public interest that negotiations to explore resolution of proceedings should not be inhibited by the risk of such negotiations influencing the outcome on those primary issues. It is equally in the public interest that negotiations should be conducted genuinely and realistically. The effect of s 131(2)(h) is to expose that issue to inspection when costs issues only are to be resolved. There is no apparent public interest in permitting a party to avoid such exposure by imposing terms upon the communication, whether by use of the expression "without prejudice" or by a mediation agreement. The decision in Silver Fox was considered by Brereton J in Tony Azzi . In Tony Azzi , a party to the proceeding, Volvo, also sought to adduce evidence of offers that were made during the course of a mediation on the question of whether one party should pay costs on an indemnity basis. The mediation in that case had been conducted by the Honourable TR Morling QC pursuant to an order made by Bergin J referring the matter to mediation under the Civil Procedure Act 2005 (NSW). Objection was taken to the admission into evidence of offers made during the course of the mediation. Brereton J upheld the objection on the grounds that the admissibility of that evidence was precluded by the terms of s 30(4) of the Civil Procedure Act . Neither in The Silver Fox Co nor in Mount Thorley Operations was there any applicable equivalent of Civil Procedure Act , s 30(4). In those circumstances, it may well be that evidence of offers made at the mediation or conciliation conference can be admitted. The evidence that Volvo seeks to adduce of the offers made at the mediation is evidence of something said in a mediation session. The present costs application is a proceeding before a court. By reason of the Civil Procedure Act , s 30(4)(a) , that evidence is not admissible, and I reject it. (Original emphasis. In the course of his reasons in Silver Fox , Mansfield J referred to three other cases decided in this Court. These were: Marks v GIO Australia Holdings Limited (No 2) (1996) 66 FCR 128 ; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 3) (2002) ATPR 41-901 ; and Australian Competition and Consumer Commission v Black On White [2002] FCA 1605. Each of these cases dealt with "without prejudice" communications. None of these cases dealt with the communication of offers of compromise made during the course of a Court ordered mediation. Further, in Silver Fox , Mansfield J did not deal with the mediation conference in that case on the basis that it was a mediation conference to which s 53A and s 53B applied. It followed that there was no consideration of the relationship between s 53B of the Federal Court Act and s 131(2)(h) of the Evidence Act in Silver Fox or in any of the three cases referred to by Mansfield J. The provisions of s 53B of the Federal Court Act and s 30(4)(a) of the Civil Procedure Act are substantially to the same effect. More particularly, both statutes preclude "anything said" during the course of a mediation conference from being admissible in a court proceeding. Accordingly, the observations of Brereton J in Tony Azzi are equally applicable to the construction to be afforded to s 53B of the Federal Court Act. In my view, the provisions of s 53B of the Federal Court Act can be reconciled with s 131(2)(h) of the Evidence Act on the basis that s 131(2)(h) applies to "without prejudice" communications other than those communications which are made during the course of a mediation conference to which s 53B applies. As I have said, the mediation conference in this case was convened pursuant to an order of this Court. It follows that s 53B of the Federal Court Act applies and anything said during the course of that conference is inadmissible in this proceeding. Accordingly, paras 15-20 of Mr Romano's affidavit are inadmissible. The only evidence as to the making of an offer to compromise by Pinot which is, therefore, admissible is the letter of 23 July 2009, a "without prejudice" letter from Pinot's solicitors to the Commissioner's solicitor. This letter contains a proposal in relation to the settlement of three proceedings in this Court to which the Commissioner is a party. These proceedings are this proceeding and two other taxation proceedings to which persons related to Pinot, are parties. The letter proposes that there be a lump sum payment made to the Commissioner in order to settle all three proceedings. The letter also proposes that the payment be made by a bank cheque within "14 days following the settlement of the sale of [the named property]". There are also proposals in the settlement letter relating to the means by which the property referred to is to be listed and offered for sale. The letter also refers to serious health issues affecting each of the two related parties and expresses the view that settlement would be consistent with the "good management rule" in the Code of Settlement Practice issued by the Commissioner. There is also a reference made to observations by the Full Court in Grofam Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1997) 97 ATC 4656 to the effect that there was much to be said for the Commissioner considering settling taxation proceedings in appropriate cases. There was evidence from Mr Timothy Burrows on behalf of the Commissioner that, consequent upon the dismissal of Pinot's appeal, the total taxation liability of Pinot, including the shortfall penalty, and general interest charge was, at the relevant time, $617,572.27. Although the award of costs is in the discretion of the Court, ordinarily costs follow the event, with the consequence that a successful litigant will usually be awarded costs. However, there are circumstances when, in the exercise of the Court's discretion, the Court may not make the usual orders as to costs. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation ( Jones v McKie [1964] 1 WLR 960 ; [1964] 2 All ER 842 ; Bostock [1900] 2 QB 616 at 622, 625, 627); unnecessarily protracts the proceedings ( Forbes v Samuel [1913] 3 KB 706) ; succeeds on a point not argued before a lower court ( Armstrong v Boulton [1990] VR 215 at 223); prosecutes the matter solely for the purpose of increasing the costs recoverable ( Hobbs v Marlowe [1978] AC 16) ; or obtains relief which the unsuccessful party had already offered in settlement of the dispute ( Jenkins v Hope [1896] 1 Ch 278). Further, it was said that the Commissioner did not act in accordance with the "good management rule" in the Code of Settlement Practice and acted contrary to his obligation to act as a model litigant. In my view, the conduct of the Commissioner cannot be characterised as unreasonable because he declined to settle the proceeding on the basis of the offer contained in the "without prejudice" letter of 23 July 2009, and made no counteroffer. I say this for the following reasons. The Commissioner has been wholly successful in the proceeding. This means that the assessments stand and Pinot is consequently liable for the sum referred to by Mr Burrows in his affidavit. It is simply not possible to assess whether the offer made in the 23 July 2009 letter was such that, when compared to the result, the Commissioner's refusal to accept the offer was so unreasonable as to result in him being deprived of costs in the exercise of the Court's discretion. This is because the offer was not an offer confined to settling this proceeding. Rather, it was an offer to settle this proceeding in conjunction with, and as part of, a composite settlement with two other proceedings and the attendant tax liability of Pinot and the two related parties. Although the letter contains some detail of how the settlement consideration is derived, there are only lump sum amounts allocated in respect of costs, interest and penalty. Further, the offer does not provide for the settlement of this proceeding or Pinot's overall tax liability as a separate option. Also, payment of the settlement consideration is contingent upon the sale of a property at an unspecified time in the future. In addition, the Commissioner's position in not making any counteroffer has been vindicated by the result. I also reject Pinot's contention that I should exercise the Court's discretion to withhold costs from the Commissioner on the basis that he has, by his conduct, failed to act in accordance with the "good management rule" or as a model litigant. First, in my view, it is doubtful that any such defaults would, in any event, even if established, without more, result in the discretion being exercised to deprive the Commissioner of his costs. Secondly, it cannot be said that in declining to accept the offer of 23 July 2009 the Commissioner failed to act in accordance with the "good management rule" or as a model litigant, any more than it could be said that the Commissioner acted unreasonably. Further, although compassionate considerations may from time to time, as a practical matter, weigh with the Commissioner in determining how to deal with the taxation liability of a taxpayer, the question of whether the Commissioner has acted with compassion, is not, without more, a relevant factor in considering whether he has acted unreasonably or failed to act as a model litigant in the conduct and settlement of litigation. Appendix B to the Legal Services Directions 2005 (Cth) which describes the Commonwealth's obligation to act as a model litigant, makes no reference to the Commonwealth having to have regard to compassionate considerations which may affect the other party to the litigation. It follows, that in this case, the costs should follow the event. I will order that Pinot pay the costs of the proceeding (including the costs of this hearing as to costs) to be taxed. I will not order that the costs of this costs hearing be paid on an indemnity basis as the Commissioner sought. Pinot's argument was weak but not so devoid of merit as to justify an order for indemnity 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 Siopis. | parties attended a court ordered mediation conference whether evidence of communications of offer of compromise made at the mediation conference admissible on the question of costs. whether commissioner acted unreasonably in not accepting offer of compromise obligation on commonwealth to act as a model litigant whether compassionate considerations a relevant factor. evidence costs |
Remit the matter to a Judge of the Federal Court of Australia for further hearing in accordance with the reasons of this Court. The original hearing went off on the basis that I was obliged to hold that the bankruptcy notice was invalid because of the decision in Australian Steel Co (Operations) Pty Ltd v Lewis [2000] FCA 1915 ; (2000) 109 FCR 33. Two issues arise. It is submitted that there is now no power to extend the period relying upon the decision of the Full Court in Re Young; Ex parte Smith (1985) 5 FCR 204. It is submitted that there could be no use of the slip rule to cure the problem such as occurred in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, applied in circumstances such as these in Re Howell; Ex parte Deputy Commissioner of Taxation (1996) 70 FCR 261. 7 It is submitted by counsel for the applicant creditor that the case falls squarely within the proviso to s 52(4) as the petition was dismissed. It is submitted that the reasoning of the Full Court in Deputy Commissioner of Taxation v Clyne (1984) 4 FCR 156, particularly per Toohey and Wilcox JJ at 158, confirms that conclusion. 8 The orders of the High Court and the passage of the judgment which relates to them contemplate that the matter will proceed to a hearing of the case, although there is no indication that the present issue was present to the minds of the Court. As pointed out in the passage from the judgment of Toohey and Wilcox JJ in Deputy Commissioner of Taxation v Clyne (above) somewhat anomalous results occur whichever view is taken where a petition comes on for hearing nearly two years from its date. That may be an accident of history. 9 I have no difficulty in agreeing with the submission of counsel for the applicant creditor that the decision of the Full Court in Re Young; Ex parte Smith (above) is not in point. It did not deal with the problem occasioned by the dismissal of a petition, when that dismissal is subsequently set aside on appeal. Nonetheless, the question remains as to the effect of the order of the High Court setting aside the dismissal. On one view, it is as if the dismissal had never occurred (cf Rangott v Marshall (above) at [29]). Thus, there is an argument that, as the dismissal never occurred, the proviso to s 52(4) was not met and the petition has lapsed. 10 In my opinion, the section should not be read in that fashion as it would, in many cases, frustrate the appeal provisions. As this case illustrates, it takes time to dispose of appeals. An order extending a petition which has been dismissed could hardly be made in the meantime. It is, no doubt, for this reason that that point was not taken up either by the Full Court of this Court or by the High Court, notwithstanding invitations to do so by counsel for the applicant creditor. That conclusion is consistent with the reasoning of the Full Court in Deputy Commissioner of Taxation v Clyne . In other words, in my opinion, 'dismissal' in s 52(4) means dismissal in fact, whether or not subsequently set aside (cf Yilmaz v Minister for Immigration and Multicultural Affairs [2000] FCA 906 ; (2000) 100 FCR 495). 11 The second issue arises out of an application by the creditor to amend the petition by amending the date of the alleged date of bankruptcy. Amendment is sought pursuant to s 33 of the Act. The petition alleged a failure to comply on or before 24 April 2004 with the requirements of a bankruptcy notice served on the respondent debtor on or about 1 April 2004. Counsel for the applicant creditor submits that close examination of the relevant Regulations and authorities in relation to service and compliance with a bankruptcy notice indicates that the better view is that service would be deemed to have occurred on 5 April 2004 requiring compliance on or before 27 April 2004. The solicitor for the respondent debtor does not challenge that conclusion. He rather submits that, given the seriousness of the consequences of bankruptcy, no amendment can or should be made at this late stage in such an important respect. 12 In my opinion, an amendment should be allowed having in mind authorities such as MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 and Re Pinkerton; Ex parte BG Textiles Pty Ltd (in liq) (1984) 4 FCR 64. The amendments are to deal with the debateable result of the effect of the Regulations upon undisputed primary facts as to service. The amended petition would plainly refer to precisely the same set of events as did the original petition. There is no room for misunderstanding or misleading the respondent debtor. There is no evidence led on behalf of the respondent debtor or any suggestion made on his behalf that any prejudice flows from the amendment. The amendment, however, should not include the words in parenthesis starting with 'or on' down to 'in this paragraph'. There being no prejudice, I would order that the amended petition need not be served again. 13 I am satisfied that the requirements of s 43 and s 44 of the Act have been established on the evidence. (2) make a sequestration order against the estate of Matthew Lambert. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | whether creditor's petition lapsed by virtue of s 52(4) of the bankruptcy act 1966 (cth) where petition dismissed within 12 months but dismissal set aside on appeal after 12 months practice whether late amendment of petition should be permitted bankruptcy bankruptcy |
The ship and the unused bunker and lubricant oil was sold on 4 November 2005 by the Marshal. The proceeds of sale were deposited in two separate interest bearing bank accounts named "Admiralty Marshal - Sale of the MV Mawashi Al Gasseem" (the ship account) and "Admiralty Marshal - Sale Bunkers and Unused Lubricant on MV Mawashi Al Gasseem" (the bunker account). The sum of US$5,750,000 was deposited into the ship account, and US$535,162.35 was deposited into the bunker account again. 2 It is now time to address the final payment of the moneys presently held in those accounts. 5 Each of the entities with a judgment against the ship has been given an opportunity to make written or oral submissions in respect of the final disposition of the funds now held in the ship account and in the bunker account including the priority with which those amounts should be paid. The only entity which has made any submission as to the priority of payment out is Bank of Kuwait and the Middle East. It claims the whole of the remaining proceeds of the two funds. It does so because it is a mortgagee of the ship: see Bank of Kuwait and the Middle East v The Ship MV "Mawashi Al Gasseem" (No 2) [2007] FCA 815. The English practice should be followed in Australia. There was no submission that I should do otherwise. The order of priorities is stated in Meeson N, Admiralty Jurisdiction and Practice (1993). It is there said (at 159-161) that, although there is a well-settled order of priorities which is regularly applied by the Court, this order is only a prima facie ranking. The determination of priorities is an equitable jurisdiction and in theory the Court exercises its discretion afresh in the circumstances of each case. In practice, the court follows the well-settled order of priorities and then considers whether there are any particular circumstances where justice requires it to disturb that prima facie order. The overall framework of priorities is said to be straightforward. The marshal's charges and expenses will include the expenses incurred in effecting the arrest, in maintaining the arrest, for example in paying port dues or for the cost of a shipkeeper and supplies required to maintain the ship whilst under arrest. Also included will be any other expenses authorised by the Court to enable the ship to be sold for the best possible price. All these costs were incurred by the original plaintiffs. There are no maritime liens involved in the present case. As all the potentially affected parties have had an opportunity to make submissions as to whether the normal priority rules should apply, and some including the Bank of Kuwait and the Middle East have accepted that they should apply, and none has submitted that they should not apply, in the exercise of my discretion, I determine that those principles should apply. 8 In accordance with those principles, those who have a judgment against the ship have agreed to the Admiralty Marshal's charges and expenses having been paid as a first charge on the proceeds of sale and in priority to any other claim. The charges and expenses include the Marshal's expenses incurred in effecting the arrest, in maintaining the arrest, and in supplies to maintain the ship whilst under arrest and to secure its sale for the best possible price. There is no dispute as to the amounts paid to the Marshal having properly been treated as a first charge on the proceeds of sale held in the ship account. Hence, the Admiralty Marshal has been paid either directly or in reimbursement to the plaintiff for advances made to the Marshal's account by the plaintiff on account of expenses to be paid by the Marshal the sum of US$547,484.20. There were six separate orders made for payment of, or reimbursement of, the Marshal's expenses. They were, as necessary, converted into US$ at the time of payment as the ship account and the bunker account were established in US$. Those amounts were paid from the ship account. 9 The costs of the plaintiff relating to the arrest of the ship and its sale, totalling US$104,463 were ordered to be paid on 26 October 2006 and duly paid out of the ship account. Again, that was done with the agreement of those having claims against the ship, and reflect the second priority in accordance with the principles referred to. 10 At an early point, all potentially affected parties also agreed with the payment from the ship account of the claims of the master and crew for outstanding salary and wages against the ship, it being accepted that they were maritime liens which should have a priority over all other types of claim, including costs. That is the third priority in the principles referred to. Those claims are the amounts recovered in the action of Alcantara Jr (SAD 201 of 2005) included in the table above. Those payments also were duly made. They were made from the ship account. 12 As the above observations of Sheppard J indicate, the fourth priority of claims, ahead of other in rem claims, will be claims by the mortgagee. As noted, I have determined that the Bank of Kuwait and the Middle East does have a mortgage over the ship securing the advances made to the ship and its owners by the Bank of Kuwait and the Middle East. Its mortgage, although its validity was determined by the law of Kuwait (see The "Angel Bell" [1979] 2 Lloyd's Rep 491 at 495), is treated in the priority sequence on the same basis as a domestic mortgage. See Jackson DC, Enforcement of Maritime Claims (4th ed, LLP London, 2005) p 581. There has been no submission that I should not follow that principle. 13 The mortgage of the Bank of Kuwait and the Middle East has been declared to be a valid mortgage for the purposes of all proceedings against the vessel commenced in this Court and pertaining to the priority in which the proceeds of sale of the ship should be paid out. The secured sum, as the judgment in favour of the Bank of Kuwait and the Middle East shows, is very much in excess of the balance of the funds held in the ship account. 14 I therefore order that the Marshal pay out to the Bank of Kuwait and the Middle East, as soon as practicable, the balance of the amount held in the ship account. That amount may differ slightly from the amount referred to in [11] above, by any additional interest and bank fees. 15 The plaintiff's original claim on the bunker account was to recover the unpaid purchase price of two quantities of bunker oil supplied to the ship under the Danish law of contract. Judgment was entered in that action for US$639,379.60 with interest by Finn J on 26 July 2005. Subsequently, by agreement of the interested parties, I ordered that a fixed amount of US$433,624.56 be paid to the plaintiff from the bunker account. That amount was less than the judgment amount, but it is not necessary to explore the parties' reasons for their agreement. That sum was duly paid from the funds in the bunker account. I also ordered that the costs of the plaintiff in relation to that claim be paid out of the bunker account. Agreement has been reached that those costs be AU$80,000, so they should be paid to the plaintiff from the bunker account before the balance of the moneys in the bunker account is applied in accordance with these reasons for decision. 16 The balance of the moneys, including interest, in the bunker account, after conversion and payment of that sum, as at 2 August 2007, will be US$60,932.91. Again, by the time of payment of that balance it may vary a little by any further interest and by any bank fees. 17 In my view, the balance of the moneys in the bunker account should not be paid out to the Bank of Kuwait and the Middle East as a priority above other in rem claims against the ship. That is because I do not consider that the property attached by its mortgage secures the oil in the bunkers of the ship. The mortgage of a "ship" included such articles, without needing to have regard to its "appurtenances" also mortgaged under the instrument in question. 19 On the other hand, the submissions of the Bank of Kuwait and the Middle East acknowledge that there are decisions concerning the construction of ship mortgages to the effect that the word "ship" does not include the bunkers and further that the word "appurtenances" in the description of the secured property also does not include the bunkers: see The "Eurosun"and "Eurostar" [1993] 1 Lloyd's Rep 106 per Sheen J at 111; The "Honshu Gloria" [1986] 2 Lloyd's Rep 67; The "Pan Oak" [1992] 2 Lloyd's Rep 36. The text referred to above, Meeson at [10.73], also makes a similar comment based upon those decisions. Nevertheless I cannot refrain from observing that there is something unreal in the concept of a bank manager being willing to accept an unspecified and variable amount of fuel oil as security for a loan, particularly when that fuel oil may be sold by the shipowners to charterers. If the lenders intended to accept fuel oil as part of their security, prudence would have dictated that the wording of the mortgage would include a reference specifically to fuel oil and that the deed of covenant would include a covenant not to sell the oil to a charterer. Whilst it is correct to say that those terms distinguish its mortgage from those considered in The "Eurosun"and "Eurostar" [1993] 1 Lloyd's Rep 106, I do not consider that the distinction enhances the contention. 23 The words "component", "appendage", and "annexe" do not in their natural meaning extend to the bunkers, because each has the feature of being a physical part of or of being physically attached to or a functioning feature of the ship. It is not necessary, nor usual, that the bunkers to be part of the property of the ship owners. They are commonly the property of the charterers. Most lenders do not contemplate lending more than the value of their security and would not want to look to variable security which would depend upon the quantity of oil in a ship when the ship is arrested, and upon whether the ship is on charter. For these, and perhaps many other reasons the bunkers are not usually part of the security for a mortgage. The Bank of Kuwait and the Middle East is entitled to participate in that distribution to the extent that its judgment remains unsatisfied after it has received as a priority payment on the balance of the funds remaining in the ship account secured by its mortgage. 25 The amounts to be paid out proportionately cannot presently be calculated with exactitude. That is because, firstly, the amount of the claim of the Bank of Kuwait and the Middle East upon which its proportion of the balance of the bunker account cannot be precisely known until the amount it receives from the ship account is known, and, secondly, because the precise amount available in the bunker account for distribution will only be known when a final date for payment is determined. 26 I therefore order that the funds remaining in the bunker account, after payment of the plaintiff's costs as ordered in [15] above be paid out by the Marshal as soon as reasonably practicable to each of Dubai Drydocks, Quin Marine Pty Ltd, Arab Shipbuilding and Repair Yard Company, Viking Enterprises Co Ltd, BP Oil International Limited and BP Marine Ltd, Ahmed Ali Maintenance & Ship Repairs (LLC), Bank of Kuwait and the Middle East and Al Mawashi Al Mukairish United Co and Al Mukairish Australia Pty Ltd pro rata in accordance with their respective judgments, save for the judgment in favour of the Bank of Kuwait and the Middle East, which is to be reduced for the purpose of the pro rata payment by the amount it receives from the ship account pursuant to the order made in [14] above. The pro rata calculation should be made on the basis that each judgment includes interest, calculated at the rate specified in the judgment from the judgment to two days before the payment out or, if no such rate was so expressed, in accordance with the Federal Court Rules (simply for the purpose of enabling a precise calculation to be made). Currency conversions are necessary for three of the judgments which are not expressed in US dollars, as the bunker account is in that currency. The conversions should also be made two days before payment out for the purposes of the pro rata calculation. I have made no allowance for costs on any judgment. They have not been taxed, and it is desirable that the balance of the funds in the bunker account should be paid promptly. The amounts involved do not warrant the expense of taxation or the delay that would involve. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | priority of claims in rem against ship over proceeds of sale of ship and sale of bunkers whether mortgage over ship includes fuel oil in bunkers ship component appendage annexe admiralty words and phrases |
2 On 3 May 2006 I published reasons in relation to the orders made on 28 April 2006. In the course of the hearing of the application, Counsel for the Respondents to the application made a request for the return to the solicitors for the Second Respondent of all those documents delivered to the Federal Court pursuant to the order of his Honour Justice Spender on 15 November 2005. 3 Those documents comprise 7 boxes of documents filed in conjunction with the Affidavit of Mr Bruce Virgo which are the documents delivered into the possession of the independent supervising solicitors consequent upon execution of an Anton Pillar Order. In the course of the hearing of the primary application, I said that I would give consideration to the request for the return of the documents. On 28 April 2006 I also made directions orders by consent which require the Second Respondent to give discovery of documents by 4.00 pm 26 May 2006. 4 In order to enable discovery to take place in conformity with the timetable, the documents in question have been returned to the solicitors for the Second Respondent. 5 An order had been prepared making provision for the return of the documents delivered to the court in accordance with the order of Spender J. However, that order has not been formally made and accordingly I propose to dispose of the application for the return of the documents by making an order in the following terms in order to regularise the re-delivery of the documents to facilitate completion of discovery. The order is that the solicitors for the Second Respondent shall have leave to take possession of all documents produced to the court pursuant to the order of his Honour Justice Spender on 15 November 2005 to be held in the custody and control of the solicitors for the Second Respondent pending the trial of the action or earlier order. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood J. | application for leave to secure re-delivery of documents delivered up pursuant to an anton pillar order. practice and procedure |
The Tribunal had affirmed a decision of a delegate of the first respondent dated 18 May 2004 wherein the delegate refused the grant of a protection visa to the appellant. 2 At the hearing of this appeal I indicated that I would order that the first respondent's name be amended to "Minister for Immigration and Citizenship", and that the Refugee Review Tribunal be added as a second respondent to these proceedings. He arrived in Australia on 15 February 2004 and applied for a protection visa on 18 March 2004. The appellant claimed to have well-founded fear of persecution on the basis of his membership of the Bangladesh Awami League. The appellant claimed that he came to the attention of the Bangladesh Nationalist Party (BNP) as a student activist in 2001. His claims indicated he suffered assaults and economic penalties by BNP thugs and that a number of false charges had been filed against him since he had left Bangladesh. 4 On 8 June 2004, the appellant made an application to the Tribunal for review of the delegate's decision. The Tribunal at that time ("first Tribunal") affirmed the delegate's decision of 18 May 2004. On 14 November 2005 in the Federal Magistrates Court, that decision was remitted by consent to the Tribunal, differently constituted, for reconsideration. It is the second Tribunal decision that is now on appeal before me. It had regard to the audio tape of the first hearing and summarised the key points of his oral evidence. The Tribunal then considered the oral evidence provided at the hearing before it and the documentary evidence provided by the appellant. 6 The Tribunal in its decision noted that the appellant referred to being mentally disturbed at both hearings, but that the appellant did not provide any medical advice to indicate that he had any form of psychological impairment, nor did it appear that he had sought medical attention. The Tribunal was satisfied from its observations that the appellant was competent to give evidence. The appellant had said on several occasions that he did not want to talk about the past and claimed that he could not recall the chronology and details of his claims. The Tribunal did not draw adverse conclusions from minor discrepancies regarding dates but it was not satisfied that the appellant's reticence was attributable to any medical condition. Rather, the Tribunal found it was an attempt to deflect the Tribunal's scrutiny of his claims. 7 The Tribunal found the appellant was a witness of low credibility on a range of matters; it noted the appellant made assertions which on closer examination proved to be misleading, incomplete or internally inconsistent. 8 The Tribunal accepted that the appellant was an Awami League participant, but viewed with scepticism the appellant's claims that he held a number of portfolios and responsibilities in the party. The Tribunal found the fundamental premise of this claim was misleading as the appellant's evidence at the second hearing was that he had obtained a contract six months after the BNP government came to power contradicting his earlier claim and which indicated that the appellant did not suffer serious harm, nor was he targeted because of his political opinion. 11 The Tribunal found the appellant's evidence concerning the false charges against him was incomplete and vague. 12 In considering the appellant's future conduct the Tribunal found that, should he return to Bangladesh, he would be able to resume contacts with his party colleagues because the mere fact of support for the Awami League did not give rise to a real chance of persecution. 13 Finally, the Tribunal was not satisfied that the appellant's claim that he lived in an area of high level criminality was enough to establish persecution for a Convention reason. Before Smith FM the appellant was represented by counsel who filed an amended application on 28 June 2006 which raised three grounds of appeal. Of these grounds of appeal, ultimately only one ground was pursued at the hearing. 15 The appellant claimed that he had provided the Tribunal with contact details of his friend who had in turn provided him with information and documents concerning alleged false charges lodged against the appellant in Bangladesh. The Tribunal had the opportunity to contact this person, but chose not to do so. The appellant claimed that the circumstances existing in the present case created a duty on the Tribunal to make its own enquiries. Its failure to do so amounted to jurisdictional error. 16 The reliance by the appellant's Counsel's on Azzi v Minister for Immigration and Multicultural Affairs [2002] FCA 24 ; (2002) 120 FCR 48 to support this ground was, in the Federal Magistrate's opinion, inappropriate because it was a case where the weight of authority was clearly against the appellant. His Honour noted that this case indicated the need for exceptional circumstances to arise before a duty to investigate arose. The Federal Magistrate found that the appellant's circumstances were completely lacking in features which might support the exceptional duty referred to in Azzi . The Tribunal specifically informed the appellant that it did not intend to initiate any post-hearing approaches and the appellant did not suggest what evidence the particular witness could provide to answer his case. Further, there would have been obvious difficulties in relation to obtaining and giving weight to any evidence obtained from such a witness. 17 Accordingly the Federal Magistrate dismissed the application. Jurisdictional error by affirming the decision of the Tribunal that the appellant did not have a well-founded fear of persecution. 2. Lack of procedural fairness in the proceedings of the Tribunal in that it did not give the appellant a reasonable opportunity to respond to independent evidence that Awami League activists were able to live in Bangladesh without being persecuted for involvement in political activities and membership of that party without becoming a victim of violence. 3. The Tribunal and the delegate had not dealt with a key component of the appellant's claims, namely the harassment for his political views. 4. The Tribunal failed to consider: the risk of persecution that forced the appellant to leave Bangladesh; the appellant was a credible witness; failing to judge whether persecution of Awami League members occurs under the existing regime; that the opponent political activists are specific targets of the fundamentalist political party Jamat e-Islam and the BNP who have formed a coalition. 5. Legal error by asserting the appellant did not have a genuine fear of persecution for a Convention reason and did not take into consideration the threat to the appellant's life or liberty that he would experience on return to Bangladesh. 6. The Tribunal fell into error by asserting that the appellant need not maintain his membership of the Awami League. The Tribunal erred in finding that the applicant's oral evidence and the advice in his letter of 12 February 2006 provided incomplete and vague information with respect to charges against him. In making its finding, the Tribunal ignored the contents of the charge document and the Tribunal's reasoning was illogical. 2. The Tribunal relied on independent country information adverse to his case without putting the information to him and without giving him an opportunity to comment, and accordingly denied the appellant procedural fairness. 3. The decision of the Tribunal was not a bona fide attempt to act in the course of the Tribunal's authority. 4. The Federal Magistrate erred in not finding that there was a lack of procedural fairness in the proceedings of the Tribunal, in that the Tribunal did not give the appellant a reasonable opportunity to answer the independent evidence in the possession of the Tribunal that a person like him will not face any harm in Bangladesh or could live without being a victim of violence in Bangladesh. 5. The Federal Magistrate erred in not finding that the Tribunal had not dealt with a key component of the appellant's claim namely, that he would face selective harassment as a member of a political group in Bangladesh. 6. The Federal Magistrate erred in not finding that the Tribunal made findings which were not available to it on the evidence concerning whether the appellant was a victim of physical harm and was genuinely fearful of his safety. The appellant was legally represented by counsel in the Court below. 2. The appellant has not sought to explain why the new grounds were not raised in the Court below. 3. In respect of the new grounds, the law in respect of those grounds was settled and not in a confused or fluid state at the time that the matter was heard by Smith FM in September 2006. 4. When these matter are weighed in the balance with the interests of the Court in maintaining the integrity of the appeal process, the interests of other litigants whose appeals require hearing and determination, and the broad public interest in efficient judicial administration, it is not expedient and in the interests of justice to allow the new grounds to be argued and determined. Further, I accept submissions 1-3 of the respondent as factors militating against the Court granting leave to the appellant to raise new grounds of appeal. 22 With respect to the fourth submission of the respondent that the grounds of appeal have little or no prospects of success, it is appropriate to consider each ground briefly in order to assess prospects of success. This ground of appeal is broad, and not particularised. Affirming the decision of the Tribunal does not of itself raise jurisdictional error. 24 Further, in the absence of submissions as to jurisdictional error by the appellant, the decision of the Tribunal that the appellant did not have a well-founded fear of persecution for a Convention reason is a finding on the facts, and not available to be challenged in this Court. 25 Accordingly, there are little or no prospects of success in respect of this ground of appeal. 27 In my view, this ground misrepresents the findings of the Tribunal. First, the Tribunal did not find that the appellant was an activist; it found that he was a low-level Awami League supporter. Second, the Tribunal did not find that "AL activists were able to live in Bangladesh without being persecuted for involvement in political activities and membership of that party without becoming a victim of violence" --- rather the Tribunal found that "although AL activists and leaders are subject to sometimes harsh treatment by the BNP-led government, the Tribunal is not satisfied that the mere fact of support for or association with the AL, a well-established and large party represented in parliament and operating legally, gives rise to a real chance of persecution ". 28 The finding that the appellant was a low-level Awami League supporter, and not an activist, was clearly a finding of fact not open to review in this case. The independent country information identified by the appellant was referred to by the Tribunal as confirming the Bangladeshi government's poor human rights record; noting violence as a "pervasive element in the country's politics including action by security forces against opposition activists"; and noting the Awami League as one of Bangladesh's largest political parties and currently forming the main opposition. In my view, there are little or no prospects of success in respect of this ground of appeal. He implied that he did not see much point in doing so while in Australia. The Tribunal accepts that he may wish to resume such contacts if he returns to Bangladesh ". 37 Accordingly, it seems clear that the Tribunal did not make the assertion the appellant contends. In my view, there are little or no prospects of success in respect of this ground of appeal. 40 Accordingly, the appeal should be dismissed with costs. The name of the first respondent be amended to Minister for Immigration and Citizenship. 2. The Refugee Review Tribunal be added as a second respondent to these proceedings. 3. The appeal be dismissed. 4. The appellant pay the costs of the first respondent. | appeal from a federal magistrate grounds of appeal not raised below whether expedient and in the interests of justice that new grounds be raised migration |
They are husband and wife. The husband arrived in Australia on 24 March 2006. His wife had preceded him, arriving in Australia on 6 January that year. They both applied for protection visas on 5 May 2006. Those applications were refused by a delegate of the Minister on 15 July 2006. 2 The appellants applied to the Refugee Review Tribunal (the Tribunal) on 17 August 2006 for review of the delegate's decision. By a decision, which was made on 5 October 2006, the Tribunal affirmed the delegate's decision. The appellants then applied to the Federal Magistrates Court seeking judicial review of the Tribunal's decision under s 476 of the Migration Act 1958 (Cth) (the Act). On 18 July 2007 the learned federal magistrate found no jurisdictional error had been made by the Tribunal and dismissed the application. 3 On 7 August 2007 the appellants filed a notice of appeal from the judgment of the Federal Magistrates Court. 4 In the Tribunal's reasons for decision the husband's claims are summarised. Between 1991 and 2002 the husband carried on business in China as a carpenter. He said that he was forced to close that business because of corrupt officials. These officials forced him to make furniture and other products but did not pay for them. From 2003 he worked as a labour contractor. 2. In the middle of 2004 he was approached by a Mr W, a police officer at the Public Security Bureau. Mr W asked him to do some work for a restaurant and nightclub to be operated by Mr W's relative, Mr Z. The husband reluctantly agreed to do the work and organised 23 carpenters from his village and other villages to work on the project. 3. Although the husband was paid 10% of the contract fee in advance he was not paid the balance. 4. In January 2006 Mr W and policemen entered his home at night claiming they had been informed there were Falun Gong materials hidden there. They used this as a pretext to remove the husband's commercial documents, including those relating to his contract with Mr Z. 5. Mr Z subsequently refused to pay the husband unless he could produce the contract. Mr W denied that he had ever removed such a document from the husband's home. 6. The husband organised the 23 carpenters to go to Mr Z's restaurant and demand the money. He repeatedly requested Mr Z to make payment. 7. In February 2006 the husband organised the 23 carpenters and their families to set up a roadblock outside Mr Z's restaurant and nightclub demanding payment. Shortly afterwards, police, led by Mr W, surrounded the group and removed the roadblock. 8. In the evening of the same day Mr W and other police officers attended the husband's home and denounced him for planning anti-government political demonstrations. He was taken to the Public Security Bureau and detained for a week. He said that, during that period, he was beaten by Mr W and other policemen. He said he was forced to sign a statement confessing to planning anti-government political demonstrations. 9. The husband claimed that, after his release, he was regarded as a person with anti-government ideologies who had not given up his protests against government. Mr W and other policemen visited his home and monitored his daily activities. 10. He said that he fears returning to China because he could be harmed there. At that hearing the appellants appeared and both gave oral evidence. Although they had a migration agent the migration agent evidently did not attend the hearing. Given that they had to present their evidence through an interpreter, this is somewhat surprising. The Tribunal, in its reasons, set out in detail the evidence that was given by the appellants at the hearing. It also referred to evidence from other independent sources about corruption in the People's Republic of China. 6 In its findings and reasons the Tribunal accepted the husband's evidence that, prior to 2003, he had been approached by various officials seeking donations from him or who withheld payments for work he performed. The Tribunal accepted that, although the corrupt officials asked him to do work without pay, he had enough money to support his family. It found that the work he performed for corrupt officials did not give rise to a significant economic hardship which threatened his capacity to earn a livelihood. Any fines that he was required to pay did not remove his ability to earn enough to support himself and his family. He was able to save enough money to enable his son to study in Australia. The request for payment of fines, so the Tribunal found, did not amount to serious harm for the purposes of the Act. 7 The Tribunal accepted the husband's claim that he had performed work for Mr Z and that he had been introduced to Mr Z by Mr W. It accepted that Mr W was employed by the local police. It also accepted that the husband was not paid the full fee for the work he performed. It also accepted that he attempted to obtain payment from Mr Z by going to his premises on a number of occasions and demanding it. However, the Tribunal did not consider that withholding money for work performed would necessarily amount to persecution. 8 The Tribunal accepted the husband's claim that Mr W and other police officers visited his home in January 2006 to remove commercial documents from those premises. The Tribunal also accepted that neither of the appellants was a member of, or had any involvement in, Falun Gong. The police who came to their home were aware of the husband's lack of involvement with Falun Gong. They did not impute any political opinion or religion to the appellants. 9 The Tribunal found, based on the husband's own evidence, that the police visit in January 2006 and their harassment resulted from his commercial dispute with Mr Z. The events of January 2006 did not relate to any of the matters in the Convention Relating to the Status of Refugees 1951 done at Geneva on 28 July 1951 (the Refugee Convention). The Tribunal found that the actions of the police in February 2006 dispersing the roadblock had nothing to do with the Refugee Convention. It found that the appellant had confirmed he was engaged in a criminal activity and had destroyed private property. In dispersing the people making up the roadblock the police did not act illegally, nor were they acting in a discriminatory way by reference to one of the Convention grounds. 10 The Tribunal did not accept the husband's claim that he was detained by police and mistreated while in detention. His claims with respect to detention and harm inflicted on him were said to be vague and general. He had not provided any evidence to support them. It is not clear what evidence he could have provided, but that is not a matter on which this Court could interfere with the finding of the Tribunal. The husband also provided the Tribunal with a copy of a document which he said was a warrant for his arrest. The Tribunal did not accept that the arrest warrant was genuine. 11 The Tribunal accepted that the husband may have been told by police that setting up a roadblock outside Mr Z's premises was an anti-government activity but, in so doing, they were enforcing a law of general application. The Tribunal rejected the husband's claim that he had signed a confessional statement that he had been involved in anti-government activities. It rejected his claim that police continued to harass him after his release from detention. It did not accept that he was of any continuing interest to Chinese authorities. He was able to depart the country freely. The Tribunal found, on the basis of independent information, that if he had been of continuing interest to the authorities it would have been harder for him to leave China. 12 The Tribunal concluded that the husband was of no interest to Chinese authorities and was unlikely to be subject to persecution if he were to return to China. It accepted that, in certain circumstances, exposing corruption could attract an imputation of a political opinion. In this case, however, it found that the husband's claims of persecution did not come from opposition to official corruption. His claim was he suffered harm as the result of a commercial dispute. The actions of corrupt officials were, at all times, directed to gaining financial benefit from the husband. The husband did not express opposition to official corruption. His complaints were about non-payment. The Tribunal did not consider that exposure of corrupt practices in China could be perceived as a challenge to State authority. 13 The Tribunal did not consider the evidence of the wife to be particularly helpful. 14 In their application under the Act the appellants set out a number of grounds which were put before the Federal Magistrates Court. The first ground related to the Tribunal's failure to comply with its obligation under s 424A of the Act. The second ground alleged that the Tribunal failed to comply with its obligation under s 425 of the Act. 15 The federal magistrate, in her judgment, rejected both of these grounds and there is no point in my repeating those reasons here. There was also a contention that the Tribunal had failed to properly consider the husband's claims so far as they were framed by reference to actual or perceived anti-government political ideologies. 16 In the notice of appeal the appellants say that the federal magistrate was wrong in finding that the Tribunal had acted properly in its findings. They say that both the Tribunal and the Federal Magistrates Court wrongly characterised the appellants' claim as harm resulting from a commercial dispute. Neither the Tribunal nor the federal magistrate had considered properly and fairly that the core of the appellants' claim was "basic human rights". 17 In expanding on that contention, the appellants said that their basic human rights had been ruined by a corrupt communist dictatorship. They explained this by the fact that they had to close the shop because they could not get rid of corrupt officials. They also said that the basic human rights of the 23 carpenters had also been ruined. They explained this by reference to the non-payment for the work and the subsequent removal of commercial documents from the appellants' home. Thirdly, when they tried to assert their basic human rights the husband was alleged to have been anti-government. Among other things, Mr W and his policemen had continued to harass the husband after his release from detention. 18 In the notice of appeal the appellants say it is incorrect to treat the case as a matter of a commercial dispute. They contend that the husband has been regarded as a person with anti-government attitudes, police often visited his home questioning or monitoring his daily activities, he was required to report anti-government activities to the Public Security Bureau, and it was impossible for him to have a normal life. 19 There is no doubt that official corruption in any country is a cancer at the heart of government. There is no doubt, also, that innocent individuals may suffer economic harm as the result of corrupt activities by government officials. Harassment of individuals by corrupt officials is also a serious problem for individuals affected by it. However, the Refugee Convention does not afford general protection against corrupt activity nor against economic harm caused by such activity. As was acknowledged in the Tribunal's reasons there may be circumstances in which opposition to official corruption can lead to persecution for alleged anti-government attitudes. In this case, however, the Tribunal's findings of fact did not permit characterisation of any harm suffered by the appellants as harm related to a Refugee Convention ground. 20 The complaints about the Tribunal's decision which were made to the Federal Magistrates Court were somewhat different from those raised in this Court. Essentially, the appellants say that the Tribunal did not recognise or accept that they were the subject of persecution on account of alleged political beliefs or opinions. The way in which the Tribunal analysed the evidence and came to the conclusion that Mr W and his supporters were not persecuting the appellants for political reasons does not disclose any jurisdictional error on the part of the Tribunal. 21 Having reviewed the reasons for decision of the Tribunal and the federal magistrate, I am not satisfied that there is any basis upon which this appeal should be allowed. The appeal will therefore be dismissed with costs. I will fix costs in the agreed sum of $2,800. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . | judicial review protection visa claims of harassment and detention by corrupt officials whether persecution whether persecution for a ground under the refugee convention no basis for appeal appeal dismissed. migration |
I stood over the motion in order to give further consideration to the wider issues involved ( Australian Prudential Regulation Authority v Rural & General Insurance Limited (ACN 000 007 492) (Subject to Deed of Company Arrangement) [2005] FCA 1548). 2 In 2003 and 2004, Australian Prudential Regulation Authority (APRA) was proceeding in this Court seeking to wind up Rural & General Insurance Limited (as it then was) (Rural & General) pursuant to s 462(3) of the Corporations Act 2001 (Cth). Rural & General was represented by solicitors and counsel and actively opposed the winding up. APRA had earlier appointed Peter John McCarthy of the accountancy firm of Ernst & Young to make an investigation in respect of the company under s 52 of the Insurance Act 1973 . In the course of the proceeding several sets of documents were subpoenaed from McCarthy and his firm and a significant volume of documents was produced. Stephenson was the Managing Director of Rural & General and was actively involved in instructing solicitors and counsel. Leave to discontinue the proceeding was granted on 17 March 2004 following the execution by Rural & General of a Deed of Company Arrangement on 15 March 2004. The documents produced on subpoena on behalf of McCarthy and his firm should have been returned promptly. Due to an administrative oversight they were not. 3 Stephenson is the applicant in proceedings in the Administrative Appeals Tribunal (AAT) against APRA appealing against APRA's decision to disqualify him under s 25A of the Insurance Act 1973 . On 15 June 2005 he signed a statement in connection with that proceeding to which were annexed a number of documents, being copies of communications which passed between McCarthy and officers of APRA prior to the disqualification. Stephenson wishes to rely upon those communications to contend that the decision to disqualify him was affected by extraneous considerations. APRA took exception to the use of those documents contending, amongst other things, that they had been obtained as a result of inspection of documents produced to this Court in the course of the winding up proceeding in breach of the implied undertaking as to proper use of such documents. 4 As the subpoenaed documents remained in the custody of the Court, this led to the present motion by Stephenson for leave to inspect those documents. The motion was later amended to include alternative relief that he have leave to use the particular exhibits concerned in the AAT proceeding or that he have leave to the extent required to seek production from APRA of APRA's copies of those documents for use in the AAT proceedings. I made clear when the matter came on for hearing that I would not grant inspection of the documents, although I did make an order granting leave to use one of the documents in question. I was satisfied that it had been sufficiently deployed in public to justify its use in the proceedings under all of the circumstances. 5 The evidence is that the other documents were received by the solicitors currently acting for Stephenson from the solicitors who acted for Rural & General in the winding up proceeding. As orders permitting inspection and copying were made in that proceeding, it can be assumed that the copies were regularly made. There is little doubt that those who inspected and copied the documents were subject to an obligation to the Court to use them, and the information disclosed in them only for the purposes of the winding up proceeding pursuant to the implied undertaking usually described by reference to the decision of the House of Lords in Harman Appellant v Secretary of State for the Home Department Respondent [1983] 1 AC 280. I am also satisfied that the circumstances surrounding the obtaining of the copies of the documents would have been known to Stephenson and the solicitors acting for him in the AAT proceedings, whether or not all of the implications were understood. In any event, those implications are understood now and he and they are plainly bound by the implied undertaking. Hence, the prudent course of seeking to be relieved from the consequences of it. 6 It is well established that the implied undertaking can, in appropriate circumstances, be released or modified by the Court. There are many cases discussing the exercise of that power in differing circumstances, a recent example being the decision of the Full Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) ALR 283; [2005] FCAFC 3 at [31] ---[33]. (See also, for example, Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) [1995] HCA 19 ; (1995) 183 CLR 10 per Brennan J at 36---37; and the authorities cited in British American Tobacco Australia Services Ltd v Cowell (No 2) [2003] VSCA 43 ; (2003) 8 VR 571 at [52] . That ruling applies to the future and not to the past. Furthermore, it is not intended in any way to bind the AAT as to any ruling it may have to make about the use of the documents in question nor to indicate any implicit view on that topic. Further, I do not intend to relieve those involved in any breach of the undertaking from responsibility. 8 On the one hand, it is argued that the documents are confidential and would not normally be available to a party such as Stephenson. It was only the use of the compulsory processes of the Court which brought them to light and that should not advantage Stephenson. The value of the implied undertaking would be diminished if these orders are granted, particularly as use in breach has already occurred. Breach should not be rewarded. On the other hand, it is contended that the use of documents is necessary for the proper pursuit of a legitimate appeal concerning a matter seriously affecting the livelihood and reputation of Stephenson and there is no inherent quality about the documents protecting them from disclosure where appropriate. 9 The documents concerned have an apparent relevance to the matter before the AAT, in the sense that that term is used in the judgment of Moffitt P in National Employers' Mutual General Insurance Association Ltd v Waind and Hill [1978] 1 NSWLR 372, although I cannot conclude that they are central to that case or that they will ultimately be considered as significant, or even admissible, by the AAT. There is no doubting the importance of the appeal against a disqualification of this kind to the individual concerned. Those matters in themselves may not be sufficient to counter the powerful considerations referred to on behalf of APRA. The factor which, in my opinion, makes the circumstances special enough to warrant not prohibiting use of the documents is the connection between the two proceedings. In a practical sense, the investigation under the Insurance Act 1973 led to both the winding up proceeding and to the disqualification. Again, in a practical sense, there could well be an overlap between the factors which would have been relevant to a contested winding up hearing and those likely to be relevant to a contested hearing as to disqualification. Furthermore, the reality is that, in pursuing an appeal against disqualification in these circumstances, it is more than likely that the very documents would have been subpoenaed for production regardless of any knowledge obtained through the winding up proceeding. It would be unfortunate if material which would have come to light in that way were precluded from use by reason of the documents having come to the attention of the solicitors for Stephenson by virtue of the apparent breach of the implied undertaking. 10 I am therefore disposed to make an order along the lines of Order 2 in the amended notice of motion. However, neither McCarthy nor Ernst & Young have been heard. Whilst I appreciate that all that could have been said against the proposed order is likely to have been said on behalf of APRA, they are necessary parties as they produced the documents. They should be joined, and have the opportunity of appearing and opposing the proposed orders. The matter will stand over enable to that to be done. I should indicate that I propose to order that Stephenson should pay the costs of APRA, and any other party that appears, on a solicitor client basis. He is seeking an indulgence. APRA was quite entitled to put what it did in the circumstances as an interested party and as a contradictor. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | motion by a third party for access to subpoenaed documents for use in other proceedings and for release from implied undertaking practice and procedure |
2 The facts are these. 3 On 21 December 2004, Ms Burgess made a claim for compensation in respect of severe depression which she said she had first noticed on 29 September 2004 which she said arose out of her employment with the Department of Defence. On 19 February 2005, Comcare accepted liability in respect of Ms Burgess's depressive disorder and made payments of compensation to her from 29 October 2004 until 18 October 2006. On 28 February 2007, Comcare determined that for the period 19 October 2006 to 18 January 2007, Ms Burgess was entitled to compensation payments of $842.05 per week being 75% of her normal weekly earnings. The phrase 'normal weekly earnings' has a particular meaning under s 8 of the SRC Act. Ms Burgess's compensation payments had been reduced, consistent with the provisions of the SRC Act, from 100% to 75% of her normal weekly earnings as she had been in receipt of compensation payments for more than 45 weeks. At present she is not receiving payments from this Department. This is because the Departmental Australian Public Service Act, Code of Conduct, Delegate suspended her without pay with effect from 18 October 2006. This suspension is still in effect. It is my understanding that the Delegate is obliged to regularly review the matter and that one of these reviews would be undertaken in the relatively near future. Comcare advised Ms Burgess that having regard to the advice from Comcare by the letter of 27 March 2007 '... it appears that had you not been incapacitated for work, you would be receiving the weekly amount of zero from 18 October 2006 to present due to your current suspension from employment without pay'. I find that you are entitled to incapacity at the rate of $842.05 (75% of your NWE --- Normal Weekly Earnings ) from 28 August 2006 to 17 October 2006 and at the rate of $0.00 from 18 October 2006 to 18 January 2007. 7 These facts recited at [3] to [6] are drawn from a statement of agreed facts between the parties. If Ms Burgess had not been incapacitated for work, having returned to work fulltime prior to 18 October 2006, from 18 October 2006 she would not have been paid since she was suspended from her employment from 18 October 2006. 9 The statutory provisions are these. 10 Part II of the SRC Act provides for 'Compensation'. Division 1 addresses compensation in respect of injuries (see particularly s 14(1) as to an injury resulting in incapacity for work), property loss or damage and medical expenses. Division 2 addresses compensation for injuries resulting in death and Division 3 addresses compensation for injuries resulting in incapacity for work by reference to particular formulas for the calculation of the amount of compensation. Section 19(1) provides that the section applies to an employee who is incapacitated for work as a result of an injury. Subject to Part II, 'Comcare is liable to pay compensation to the employee, in respect of the injury, for each week during which the employee is incapacitated ... of an amount calculated using the formula: (Adjustment percentage x NWE) --- AE)' (s 19(3)). The Adjustment percentage in the case of Ms Burgess is 75%. The term 'AE' is the greater of an amount per week that an employee is able to earn in suitable employment or the amount per week that an employee earns from any employment undertaken by the employee during the relevant week. The amount thus determined is subtracted from the adjusted normal weekly earnings. That term takes its meaning from s 8 of the SRC Act and by operation of s 8(1) the normal weekly earnings of an employee struck during the 'relevant period' prior to an injury is calculated according to the formula (NH x RP) + A where 'NH' is the average number of hours worked in each week by the employee in employment during the relevant period; 'RP' is the employee's average hourly ordinary time rate of pay during the relevant period and 'A' is the average amount of any allowance payable to the employee in each week. For the purpose of calculating the normal weekly earnings of an employee before an injury, the reference to the 'relevant period' is a reference to the latest period of two weeks before the date of the injury during which the employee was continuously employed by the Commonwealth (s 9(1)). 11 The parties agree that having regard to s 8(1) and s 9(1) of the SRC Act, the normal weekly earnings of Ms Burgess in the period 18 October 2006 to 18 January 2007 were $1,122.73. However, the normal weekly earnings are subject to a potential reduction by operation of s 8(10) of the SRC Act. The hypothetical question arises in the present circumstances, that is, in circumstances where Ms Burgess has continued to be employed by the Commonwealth (although suspended). The subsection asks, what is the amount per week of the earnings that Ms Burgess would receive were she not incapacitated for work? Because Ms Burgess was suspended from employment without pay with effect from 18 October 2006, the amount per week of the earnings that Ms Burgess would receive were she not incapacitated for work is demonstrated to be zero. The subsection then asks, does the amount of Ms Burgess's normal weekly earnings before injury exceed that amount? If so, the normal weekly earnings of Ms Burgess are to be reduced by the amount of the excess. In this case, the excess is the entirety of the normal weekly earnings since Ms Burgess would have received nothing due to her suspension without pay. The application of s 8(10)(a) in conjunction with s 8(1) and s 19(3) of the SRC Act thus brings about the expected result, it is said, that an employee incapacitated for work cannot receive compensation each week for earnings he or she would not have received in any event. The statutory mechanism for bringing about that result is the reduction of 'normal weekly earnings' struck in the two week period prior to injury (derived by the preceding subsections of s 8) by the amount of the excess beyond that which would have been the earnings of the employee. In a case where the earnings would have been nothing, the normal weekly earnings, for the purposes of the formula, are, in consequence, reduced to nothing. 13 The respondent says that s 8(10)(a) is simply not engaged in the present circumstances for the reason that the subsection can only operate in circumstances where the normal weekly earnings of Ms Burgess are capable of being compared with (so as to determine whether any relevant reduction should occur) 'the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work'. Since Ms Burgess, by reason of the suspension, did not receive in any relevant week any amount of earnings, there can be no relevant comparison. In other words, the subsection assumes, at its centre, that the employee is in receipt of earnings and invites a comparison between the quantum of those earnings and the amount of normal weekly earnings determined by operation of the earlier subsections of the section. Normal weekly earnings are then to be reduced by the amount of the excess (if any); the quantum of the term 'NWE' is thus determined and inserted into the formula in s 19(3) and the amount of compensation is thus determined. 14 The Tribunal concluded that this contention on behalf of Ms Burgess is correct; set aside Comcare's decision of 3 April 2007 ([5] of these reasons); and substituted a decision that Ms Burgess was entitled to compensation under s 19 of the SRC Act at the rate of $842.05 from 18 October 2006 to 18 January 2007 (being 75% of normal weekly earnings). The starting point is the recognition that a statutory provision has to be construed in its context so that it is consistent with the language and purpose of all of the provisions of the statute ... Section 19 of the SRC Act (together with s 14) creates the entitlement to be paid compensation for incapacity for work. The incapacity that Ms Burgess has had accepted by Comcare remains; it has not been removed by her suspension from work. The construction contended for by Comcare treats her as being no longer entitled to receive compensation for that incapacity by reference to events that are unconnected to the injury. The merit of the argument advanced by Comcare may be tested in this way. Let it be assumed that on 18 October 2006 Ms Burgess's employment had been terminated rather than merely suspended. Ms Ford accepted that in that event, Ms Burgess's entitlements would fall to be considered under s 8(10)(b) of the SRC Act and that there would not, in such a case, be a reduction to nil of her entitlements. It seems odd, to say the least, that Ms Burgess should be in a worse position when she has been suspended pending investigation than she would have been had her employment been terminated as the result of an investigation. And the same is true if she had herself terminated the employment. I do not regard s 8(10) of the SRC Act as having any operation in the present situation. Its function is to cater for the cases where, through unusual variations, the employees normal weekly earnings were artificially high or to prevent the employee receiving a windfall. Bortolazzo v Comcare provides an illustration. There, pre-injury, the employees had been receiving shift penalties. As a consequence of a restructure by their employer, there were no longer any duties that required shift work. The approach of the Tribunal in determining entitlements by reference to the salary without shift penalty was approved by Heerey J on the employees' appeal to the court. His Honour said [in relation to s 8(10)(a)] this: '....The underlying policy is that an injured employee should not be worse off during the period of incapacity as a result of work related injury. However, it follows conversely that the injured employee should not be better off'. I do not regard the construction for which Comcare contends to be consistent with the structure and purpose of the SRC Act. And I do not accept that Ms Burgess is 'better off' as a result of her work related injury if she were to continue receiving compensation after being suspended without pay. Rather I consider that she is being compensated for an accepted lack of capacity for employment which remains regardless of the steps taken by her employer unrelated to her incapacity. I accept, as well, Mr Murdoch's second argument as demonstrating that the subsection can have no application in a case such as the present. On the literal interpretation for which Comcare contends, s 8(10) of the SRC Act is not engaged here. As Mr Murdoch put it, there is no comparator. The paragraph requires that there be earnings of an amount that have been received. Where there are no earnings there is no amount and nothing has been received. ... It seems to me to strain the language of the paragraph to say that an amount of earning was received when no amount of earning was received. To paraphrase, whatever may be the elasticity of the expression 'the amount per week of the earnings that the employee would receive' it does not, and cannot, accommodate the case where no amount would be received. In my view effect is given to the purpose of the SRC Act (Acts Interpretation Act 1901 (Cth), s 15AA) by construing it as not having operation in a case such as the present. 17 As a result, Ms Burgess is not, in the view of the Tribunal, 'better off' in the sense contemplated by Heerey J in Bortolazzo v Comcare (1997) 75 FCR 385 by receiving compensation payments for something she has actually lost (ie. capacity for work) even though she would not have received any weekly earnings from the relevant date had she not been incapacitated. The Tribunal in reaching its view of the proper construction of s 8(10)(a) also relied upon a perceived anomaly arising out of differential treatment had Ms Burgess's employment 'ceased'; found assistance in the judgment of their Honours in Federal Commissioner of Taxation v Ryan [2000] HCA 4 ; (2000) 201 CLR 109; and concluded that the subsection is not enlivened where no 'comparator' earnings were received by Ms Burgess. 18 The applicant says the Tribunal erred in adopting each of these approaches to the construction of s 8(10). 19 The SRC Act provides for a statutory compensation regime in respect of an injury suffered by an employee if the injury results (among other things) in incapacity for work. The regime is compensatory. The expression of that compensation for incapacity for work is found in a formula that adjusts (according to a range of considerations) normal weekly earnings determined immediately prior to the injury so that an incapacitated employee receives compensation for lost earnings or at least a statutory proportion of those lost normal weekly earnings during each week the incapacity endures. Because the regime is compensatory, the determination of normal weekly earnings (as the foundation for the ultimate calculation of the compensatory payment) is to be reached having regard to whether the statutory calculation (according to s 8(1) to s 8(9) of the SRC Act) of normal weekly earnings is greater than the amount an employee would have received had he or she not been incapacitated for work by reason of the injury. If the normal weekly earnings so determined exceed those earnings, normal weekly earnings are reduced by the amount of the excess. An employee (subject to the adjustments incorporated within the formula) ought not, as a matter of statutory purpose, to be better off by way of compensation than he or she would have been had incapacity not resulted from the injury . 20 In principle therefore, if the employee has been suspended from employment without pay, there are no weekly earnings lost by reason of incapacity to be compensated according to the formula. Had the incapacity not arisen, the employee would not have received any earnings and put simply, there would be nothing that might be the subject of compensation. Because the expression of the compensation for incapacity is determined according to a formula that takes account of earnings (founded upon adjusted normal weekly earnings), it seems difficult to accept that compensation under the Act for incapacity for work as a result of an injury is anything other than truly compensatory. That being so, there seems no reason according to principle, why s 8(10)(a) ought not to be construed in a way that recognises that normal weekly earnings must be reduced to nil if the employee would, absent incapacity, have received no earnings. 21 The amount of compensation is to be determined however according to the content of the express terms of the SRC Act. 22 The appellant says this in-principle approach to answering the hypothetical question posed by the subsection reflects an orthodox application of the language of the subsection and is consistent with the purpose of the SRC Act. 23 The respondent however, identifies another meaning as to the true purpose of the subsection. The respondent says the subsection contemplates a contract of service --- an employment contract between the Commonwealth and Ms Burgess, and assumes that Ms Burgess is receiving an amount per week by way of earnings as an incident of that employment. Since Ms Burgess is suspended from employment without pay she cannot receive any amount per week of the earnings referable to the contract. Since there are no earnings referable to the contract, the assumption fails and the subsection has no role to play because its foundation fails. It therefore cannot operate to effect a reduction of the normal weekly earnings for the purposes of the formula contemplated by s 19(3) of the SRC Act. 24 In other words, the subsection does not comprehend within its terms a circumstance where the employee 'continues to be employed by the Commonwealth' but is suspended from that employment without pay. The subsection assumes continuity of employment and the receipt of earnings and therefore a continuity of performance of the contract. 25 It seems to me that s 8(10)(a) contemplates a circumstance in which an employee (that is, relevantly here, 'a person who is employed by the Commonwealth', s 5(1) SRC Act) 'continues to be employed by the Commonwealth' in the sense that such a person continues to provide service to the Commonwealth and correspondingly continues to receive earnings from the Commonwealth. In those circumstances, s 8(10)(a) seeks to compare the normal weekly earnings (as determined) with the quantum of those corresponding earnings and reduce the normal weekly earnings for the purposes of the s 19(3) formula by the amount of the excess. 26 Had the legislature intended that suspension of employment would bring about a reduction of normal weekly earnings to nil for the purposes of a formula quantifying the amount of weekly compensation under s 19(3) during a period of incapacity for work, the legislature would have expressly provided for that result. It did not do so. Although Ms Burgess continues to be employed by the Commonwealth in the sense that the contract of employment is 'on foot' and employment has not been terminated nor 'ceased' (see s 8(10)(b)), the continuity of employment contemplated by s 8(10)(a) is continuity of provision of service and receipt of earnings not simply a subsisting employer/employee relationship. A suspension of employment is not an event contemplated by the section as an element of its operation or purpose. Its purpose is to strike a comparison of pre-injury normal weekly earnings (otherwise determined by the earlier subsections of s 8) with continuity of earnings that would have been received based upon Ms Burgess's provision of service and receipt of earnings. 27 Accordingly, having regard to the express terms of the SRC Act, s 8(10)(a) does not operate so as to effect a reduction in normal weekly earnings otherwise determined in accordance with the earlier subsections of s 8 of the SRC Act, for the purposes of the formula contemplated by s 19(3). 28 The following further observations ought to be made. In the result, it is not necessary to give consideration to the utility, in the question to be determined in this proceeding, of the observations of their Honours in Commissioner of Taxation v Ryan (supra). Nor is it necessary to give consideration to the remaining grounds identified by the Tribunal in its reasoning to support the orders made by the Tribunal. As to the first question, had I formed the view that s 8(10)(a) is enlivened and operates in circumstances where an employee has been suspended from employment, I would conclude that the phrase 'the amount per week of the earnings that the employee would receive' includes an amount of zero. Had the subsection operated, the hypothetical question posed by the subsection would necessarily involve answering the question of whether the employee would receive earnings had the employee not been incapacitated for work. The answer to that question might be earnings or no earnings. The subsection is not prevented from operating simply because the employee has failed to earn an amount ( Ryan v Federal Commissioner of Taxation (1997) 148 ALR 88 at 98 per Spender J; Commissioner of Taxation v Ryan [2000] HCA 4 ; (2000) 201 CLR 109 at [87] per Callinan J). 30 As a result, the appeal must 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 Greenwood. | consideration of an appeal from the administrative appeals tribunal concerning the construction of s 8(10)(a) of the safety rehabilitation and compensation act 1988 (cth) ('src act') consideration of whether s 8(10)(a) operates so as to effect a reduction in an employee's 'normal weekly earnings' for the purposes of a compensation formula contained in s 19(3) of the src act, in circumstances where an employee has been suspended from employment administrative law |
2 The defendant applied under s 459G to set aside the statutory demand on the ground that there was a genuine dispute between the parties about the existence or amount of the debt, the subject of the demand. 3 On 11 July 2008 Registrar Christie determined that there was a genuine dispute in relation to part of the debt but found that there was an admitted amount as that term is defined in s 459H of the Corporations Act in the amount of €72,500. 4 She found that the defendant had paid one instalment pursuant to the agreement which existed between the plaintiff and the defendant in the sum of €2,013.88 and concluded that the final substantiated amount was €70,486.12. She made an order varying the statutory demand by substituting for the amount of the debt claimed the sum of €70,486.12. 5 On 6 August 2008 the plaintiff commenced this proceeding pursuant to s 459P of the Corporations Act seeking an order that the defendant be wound up in insolvency under the provisions of the Corporations Act . 6 The plaintiff relied upon the defendant's failure to pay the amount of the amended demand or to secure or compound that amount within seven days of the order made by Registrar Christie on 11 July 2008: s 459F(2)(a)(ii). 7 The plaintiff has not complied fully with its statutory obligations in relation to the proceeding. It failed to file a Form 519 with the Australian Securities and Investments Commission (ASIC) as required by s 470(1). The failure to file the Form 519 was due to the oversight of the plaintiff's solicitor. It would be appropriate if an order is made, as sought by the plaintiff to extend the time for lodgement of the Form 519 to and including 17 September 2008, which is the date upon which the form was filed. 8 The plaintiff has failed to comply with two other obligations. The liquidator has failed to include the hourly rates in the liquidator's Consent to Act Form 8 as required by r 5.5 of the Corporations Rules 2003 (SA). The originating process also did not annex to it a copy of the order made by Registrar Christie on 11 July 2008, as required by s 459Q(b) of the Corporations Act . Neither of those failures by the plaintiff are such that it could be said that the defendant was caused a substantial injustice and, in those circumstances, s 467A would operate to prevent the dismissal of the application. 9 On 26 September 2008 the defendant entered into administration and Nicholas Cooper and Andrejs Strazdins were appointed joint and several administrators. The company entered into administration in accordance with a resolution of the director of the defendant, Jurgen Peuckert, on 25 September 2008. The resolution appointing the administrators was a consequence of the director concluding that the company was insolvent or likely to become insolvent at some future time. 10 The defendant has applied to adjourn the plaintiff's application pursuant to s 440A(2) of the Corporations Act . It relies on two affidavits sworn by Mr Nicholas Cooper, the first sworn on 30 September 2008 and the second sworn on 3 October 2008. 11 In the first affidavit, Mr Cooper says that the defendant's sole director, Mr Peuckert, is prepared to assist with the company's business during the period of administration. He says that two third parties have expressed interest in purchasing the defendant's business and Mr Peuckert would formulate a Deed of Company Arrangement involving the defendant continuing to trade and for the defendant's business to be sold. Mr Cooper has offered his opinion that, for those reasons, there would be a benefit in the voluntary administration continuing. 12 Mr Cooper deposed in that affidavit that he had not then had the opportunity to carry out extensive investigation and inquiries regarding the financial position of the defendant so could not say that it was in the interests of the creditors for the company to continue under administration rather than be wound up. 13 In his second affidavit, Mr Cooper has said that the defendant has traded during the period of administration by supplying stock on hand to its customers. In the week that the company has been in administration, the company has made sales of $3,647.33 from which it has derived a gross profit margin of approximately 50%. 14 Mr Cooper has exhibited a valuation performed by MGS Valuations Pty Ltd which has valued the defendant's plant and equipment at $56,565 on a market value for existing use basis and $43,165 on an auction value basis. 15 Included in the defendant's plant and equipment is a 2007 Mercedes Sprinter which had been valued by MGS Valuations Pty Ltd at $50,000 for existing use and $40,000 on an auction realisation value. In fact, that motor vehicle is subject to finance in favour of BMW Financial Services Australia Pty Ltd. In those circumstances, the value of the defendant's plant and equipment not subject to finance is $6,565 on a market value for existing use basis and $3,165 on an auction value basis. 16 The defendant, apparently, has debtors of $14,924. The defendant's stock is recorded at a cost price of $82,101, but valued at $30,000 on a market value for existing use basis and $2,000 on an auction value basis. The defendant has cash at the bank of $2,624.65. 17 The defendant's liabilities are said to be $225,764, but that is to overstate the unsecured liabilities by $43,000, which is the debt owed to BMW Financial Services Australia Pty Ltd, which is secured over the Mercedes Sprinter. The plaintiff is by far the largest creditor of the defendant and is identified by Mr Cooper as being owed $123,282.85. The Australian Taxation Office is owed $27,329.25 and the defendant's accountants $14,685. 18 Mr Cooper has said in his second affidavit that he has formed the opinion that the defendant's creditors will secure a greater return by way of the administration continuing, than if the defendant was wound up. (2) During the administration the defendant will be able to trade on and generate profit as previously referred to in his affidavit. (3) In the event that the defendant is wound up it is extremely unlikely that the defendant will be able to trade on without the support of the employees of the defendant and Mr Peuckert. (4) During the administration I am confident that there are good prospects that the defendant's business will be able to be sold as a going concern. 19 Section 440A(2) of the Corporations Act provides that the Court should adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the best interests of the company's creditors for the company to continue under administration rather than be wound up. 20 The plaintiff holds 70% of the defendant's issued share capital. The defendant supplies goods manufactured by the plaintiff in South Australia pursuant to a supply agreement between the plaintiff and defendant. On 1 April 2008 the plaintiff terminated the defendant's exclusive right to distribute the plaintiff's goods in Australia. 21 On 2 October 2008 the plaintiff advised the defendant that it would continue to make deliveries until a new distributor was appointed in Australia but only upon the basis that payment was made in advance. 22 On 3 October 2008 the defendant's director wrote to the plaintiff complaining of the plaintiff's failure to support the defendant and bringing this application for the appointment of a liquidator. He said in his letter that the plaintiff's action in stopping supply would "kill" the company within two weeks. 23 The plaintiff, thus, is the major shareholder, the major creditor and the supplier of the defendant. It seems to me clear that the plaintiff will not support the defendant. Moreover, the plaintiff intends not to provide further goods to the defendant, except upon the terms mentioned above. It is unlikely in those circumstances that the defendant could, as Mr Cooper has suggested, trade on. Mr Cooper has deposed that he has arranged for the defendant's business to be advertised for sale and there are two persons interested in the purchase of the business. He has exhibited the advertisement which he inserted in the newspaper and that seeks expressions of interest for the purchase of the defendant's business. The company supplies handles, latches, dual lighting, ventilation fixtures and other accessories to manufacturers of buses, coaches and aeroplanes. The following assets are offered for sale: intellectual property plant and equipment stock. The defendant can now only obtain its stock from the plaintiff on the basis that the defendant pays in advance for that stock. 25 It seems to me, having regard to the plaintiff's stated position, that the defendant really has no ongoing business or at least no saleable business. 26 There is no evidence as to how the defendant could continue to trade without the plaintiff's support. Indeed, the inference must be that it could not. There is no evidence that the defendant could pay for any of the stock in advance or at all. I am not therefore persuaded that the creditors would receive a better or earlier dividend by the administration continuing, rather than the company being liquidated: Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456. At the very highest, from the defendant's point of view, the defendant's case is one of speculation rather than of possibilities which is not sufficient to engage section 440A: Deputy Commissioner of Taxation v Yates Security Services Pty Limited (1997) 26 ACSR 629. Pursuant to s 1322(4) of the Corporations Act 2001 (Cth) the time for lodgement of the ASIC Form 519 be extended to 17 September 2008. 2. Prima South East Pty Ltd ACN 091 805 855 be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth). 3. Christopher Robert Powell, an official liquidator be appointed liquidator of the company. 4. The plaintiff's costs be taxed and reimbursed in accordance with s 466(2) of the Corporations Act 2001 (Cth). I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for winding up registrar determined there was a genuine dispute about existence or amount of debt owed under s 459g of corporations act 2001 (cth) defendant company had entered into administration defendant applied to adjourn application pursuant to s 440a(2) plaintiff was major shareholder, supplier and creditor of defendant no evidence that defendant could continue to trade without plaintiff's support application granted plaintiff had failed to fully comply with statutory obligations failures did not cause a substantial injustice to defendant s 467a operated to prevent dismissal of application corporations practice and procedure |
The registration was accepted by the delegate of the Registrar of Trade Marks (s 33). Registration was and is opposed by the applicant, Pfizer Products Inc, a United States corporation and a member of the Pfizer group of companies. I shall refer to both the applicant and the group as 'Pfizer'. 2 Pfizer is the registered proprietor of a number of marks comprised of or including the word 'VIAGRA'. 864135 for "VIAGRA" in respect of goods in class 5 including: "Analgesics, biological preparations for medical purposes, candy for medical purposes, capsules for pharmaceutical purposes, chemical preparations for pharmaceutical and medical purposes, dietetic beverages adapted for medical purposes, dietetic foods adapted for medical purposes, dietetic substances adapted for medical use, digestives for pharmaceutical purposes, glucose for medical purposes, herbal preparations, medicinal herbs, herb teas, medicinal infusions, medicinal drinks, medicinal oils, hops (extracts of-) for pharmaceutical purposes ... medicinal tonics, (and) vitamin preparations ...". The relevant provisions in Div 2 are s 57 which, for present purposes, provides that registration may be opposed on the grounds in ss 42, 43 and 44 of the 1995 Act and s 60, which is a separate ground of opposition. The delegate found that the opponent had not made out any of the grounds of opposition with the consequence that the mark would proceed to registration. This is an appeal pursuant to s 56 from that decision. The appeal is a hearing de novo ( Blount Inc v Registrar of Trade Marks [1998] FCA 440 ; (1998) 83 FCR 50). The Court stands in the shoes of the Registrar but decides the issue judicially (cf New England Biolabs Inc v F Hoffman-La Roche AG [2004] FCAFC 213 ; (2004) 141 FCR 1). There is a live issue as to how that is to be judged. Pfizer submits that it is to be established as any other matter is to be established in civil proceedings of an administrative character. Karam relies upon a line of authority which, it is submitted, establishes that an opposition should be upheld only if the Court is satisfied that the trade mark should clearly not be registered. 7 The provisions of the 1995 Act were examined by the Full Court in Registrar of Trade Marks v Woolworths Ltd [1999] FCA 1020 ; (1999) 93 FCR 365, particularly in the judgment of French J with whom Tamberlin J agreed. The case concerned the acceptance stage of the proceedings rather than an opposition. This is a shift from the position under the previous law whereby the onus was on the applicant to establish registrability --- Jafferjee v Scarlett [1937] HCA 36 ; (1937) 57 CLR 115 at 119 and 126. In respect of the 1955 Act see Advanced Hair Studio of America Pty Ltd v Registrar of Trade Marks (1988) 10 IPR 583 at 587 (King J). This shift reflects recommendation 4A of the Working Party's 1992 Report that "[t]he legislation should be expressed in terms which make it clear that there is to be a presumption of registrability when examining an application for registration". It brings the Australian law into line with the approach taken internationally as expressed in the European Communities' Directive on Trade Mark Laws (December 1988), the TRIPS agreement and developments in the United Kingdom and New Zealand. This will have an impact upon the way in which the Registrar approaches the question whether a mark proposed for registration is deceptively similar to others. The condition of refusal of an application is that the Registrar is satisfied that there are grounds for rejection. If not so satisfied the Registrar must accept the application. Unless the Registrar thinks that the proposed trade mark is likely to deceive or to cause confusion then all other things being equal, the application must be accepted. Subject to such weight as it gives the Registrar's decision, the Court is placed in the same position in its approach to evaluation of deceptive similarity. This issue of the interaction between the judgment about deceptive similarity and the stage in the process at which this judgment is made will be considered further below. The decision to reject an application regularly made must now be based upon positive satisfaction that a ground for rejecting it is made out. There is no suggestion in the judgments that there is any special high onus to be satisfied, even at the acceptance stage. However, it is now well entrenched from the authorities to which reference will be made that the presumption of registrability is also to be applied in the setting of opposition to registration and, in particular, to the application of s 55 in a s 56 appeal. Whatever doubts there may be as to the correctness of that approach, the words of s 55 can accommodate it and I will apply it. 9 The inspiration for Karam's position is to be found in Lomas v Winton Shire Council [2002] FCAFC 413 ; (2003) AIPC 91-839. That was an application to the Full Court pursuant to s 195(2) for leave to appeal against a single judge decision on an appeal from the Registrar of Trade Marks. Leave to appeal was granted and the appeal was upheld. The presence of s 195(2) suggests that a parallel should be drawn with the scheme of appeals in opposition proceedings under the Patents Act 1990 (Cth). On that basis, on appeal under s 56 , the Court should consider whether the trade mark should clearly not be registered. Only if so satisfied should the Court decide to uphold an opposition. An unsuccessful opponent would always have the opportunity to bring an expungement proceeding if the opposition proceeding fails. In an expungement proceeding, the validity of a trade mark can be fully explored. That is a reason for concluding that there should not be a full exploration of the prospective validity of a trade mark on an appeal in an opposition proceeding. Those considerations emphasise the need for the Full Court, before refusing leave to appeal pursuant to s 195(2) of the Act, to be satisfied that a decision by a single judge upholding an opposition is undoubtedly correct. In the present context, that means that Winton and the Company must establish that Ms Lomas was not the owner of the Trade Mark as at the Priority date, at least on the balance of probabilities. On one view, they may be required to establish that she was clearly not the owner see para [17] above. Emmett J was one of the members of the Court. It is to be noted that the point had not been argued, and that the obiter dicta was tentative. Emmett J considered the nature of such appeals. The purpose of pre-grant opposition proceedings is to provide a swift and economical means of settling disputes that would otherwise need to be dealt with by the courts in more expensive and time consuming post-grant litigation; that is, to decrease the occasion for costly revocation proceedings by ensuring that bad patents do not proceed to grant (see Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742 ; (1999) 92 FCR 106 at 112 [19] ; [1999] FCA 742 ; 163 ALR 761 at 766---767 [19]). It is a good thing to have some process by which patents that are obviously invalid will not be allowed to clutter the register (see McGlashan v Rabett [1909] HCA 85 ; (1909) 9 CLR 223 at 229. I consider that, before the Court would uphold an opposition to the grant of a patent, the Court should be clearly satisfied that the patent , if granted, would not be valid . That, however, is not to say that an opponent should not be permitted appropriate opportunity to lead evidence-in-chief as to the facts that are designed to demonstrate, with the requisite degree of clarity, that a patent, if granted, would not be valid. Again, the matter had not been raised by the parties but the Judge sought and received submissions. Bennett J applied the reasoning of Emmett J in F Hoffman-La Roche AG in relation to opposition proceedings under the Patents Act 1990 (Cth) to trade marks opposition proceedings. Bennett J also relied upon the report of the Working Party to Review the Trade Marks Legislation (July 1992), paragraph 1.3.4. Bennett J said that adopting the test from F Hoffman-La Roche AG was consistent with the approach that was taken by the Full Court in Registrar of Trade Marks v Woolworths Ltd [1999] FCA 1020 ; (1999) 93 FCR 365 at 371---372 where it referred to the 'presumption of registrability' under the 1995 Act. As I have pointed out, the judgments in Woolworths provide no support for a special high onus in opposition proceedings or for opposition proceedings being summary in nature. In the substantive decision by Bennett J, the various grounds of opposition were rejected without any reference to a special onus. The reference to onus in par [129] seems to refer to the ordinary onus of establishing a ground. Neither of the two authorities cited-- Woolworths and Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1953) 91 CLR 592--refer to any special onus. In the last sentence of par [130] Bennett J finds a lack of satisfaction on the ordinary basis and on the 'clearly not be registered' basis. 12 Not long afterwards, I was confronted with the same issue in Clinique Laboratories Inc v Luxury Skin Care Brands Pty Ltd [2003] FCA 1517 ; (2003) 61 IPR 130; (2004) AIPC 91-957. I indicated that I found it difficult to see how s 55 could be read in the manner contended for by Karam in this case and briefly explained that view. I did not need to form a final view about that for the purposes of that case as I found that the grounds of opposition had not been established on either basis. 13 Kenny J referred to the issue in McCorquodale v Masterson [2004] FCA 1247 ; (2004) 63 IPR 582; (2004) AIPC 92-033. In the substantive portion of the judgment Kenny J did not refer to the application of any special high onus. The latter two cases were dealing with a slightly different point and, in any event, may have impermissibly borrowed from patent law. There was no reference to Clinique. 16 In Health World Ltd v Shin-Sun Australia Pty Ltd [2005] FCA 5 ; (2005) 64 IPR 495; (2005) AIPC 92-059, Cooper J noted Clinique but expressed agreement with Bennett J's analysis and reasoning in Torpedoes, however, as he was satisfied that the applicant did not make out its grounds of objection on the balance of probabilities, it was not necessary to apply the higher standard. 17 Lander J was confronted by these authorities in Kowa Company Ltd v NV Organon (2005) 223 ALR 27; (2005) 66 IPR 131; (2005) AIPC 92-131. However, there is authority of the Full Court directly on point. French J said that there is a presumption of registrability; that Jafferjee no longer is relevant; that the Court must apply the same legal criteria as the Registrar; that because of the obligation imposed by s 33 the application must be accepted unless the Court is satisfied that the application has not been made in accordance with the Act or there are grounds for rejecting it; and that the decision to reject must be made upon positive satisfaction that the ground has been made out. It was not mentioned in Woolworths and was plainly obiter dicta without the benefit of argument in Lomas . Accepting that there is a presumption of registrability says nothing as to the standard of proof and does not carry with it an obligation to 'clearly' establish a ground of opposition. In Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd [2003] FCA 901 ; (2003) 132 FCR 326, Bennett J followed Lomas . In that case, neither party had raised the test at the hearing but were given the opportunity to file written submissions. Other judges have followed Torpedoes . Some judges of the Court have expressed reservations about the Lomas test as applied in an appeal from an opposition. Despite his Honour's own reservations, he considered that he was bound to follow those decisions that applied the test expounded in Lomas. The authors of Shanahan's Australian Law of Trade Marks & Passing Off (3rd ed, 2003) also question the drawing of a parallel between opposition proceedings under the Act and under the Patents Act . They note that the Full Court in Renaud expressed the view that so far as possible there should be uniformity in the court's approach for leave to appeal in the area of intellectual property as a whole but the authors expressed some doubt whether an applicant for a trade mark is in the same position as an applicant for a patent. 21 The fundamental difficulty with Karam's argument is that it is inconsistent with the language of s 55. Whether a ground of opposition has been 'established' is a conventional concept requiring no particular elucidation. In my opinion, there is no basis upon which the section can be read as 'the extent (if any) to which any ground on which the application was opposed has been clearly established', particularly where that implication changes the practical operation of the section by imposing a special high onus of proof. It is also worth noting that the construction favoured in Torpedoes is not rooted in the words of the section at all. The precise finding in that case was that the opposition 'should be upheld only if the Court is satisfied that the trade mark should clearly not be registered' (at [22]). With all respect, that test is not to be found in the statute. I cannot find anything in the structure or content of other provisions of the 1995 Act that would point to reading s 55 other than according to its ordinary meaning. 22 In my opinion, it is not permissible to put a gloss on the clear words of the section by reference to extrinsic material. In any event, the extrinsic material does not support Karam's argument. The discussion of the Working Party Report by Lander J in Kowa Company Ltd (at [128]---[136]) adequately discloses the difficulty. Furthermore, it can be taken that implementation of the recommendation of the Working Party about the bringing of opposition proceedings in trade marks into agreement with those applicable to patents 'where appropriate' was effected, so far as was regarded as appropriate, by the 1995 Act and Regulations made under the 1995 Act. In my opinion, borrowing further from the field of patents in this respect is impermissible, to adopt the word used by Finkelstein J. Trade marks and patents are different species of intellectual property and have a different history. A general desire for uniformity cannot control construction of the statute governing each. It is also to be noted that the approach of Emmett J in F Hoffman-La Roche AG did not represent established patent practice at the time of the Working Party Report. It was novel when handed down in 2000, long after the 1995 Act had been enacted, and is still controversial. 23 It is also anomalous that, when it comes to amendment of the Register by order of the Court pursuant to Div 2 of Pt 8 of the 1995 Act on grounds similar to those involved here, there is no hint of the application of any special onus, although in such a situation the mark has actually been registered. An opponent could bring proceedings immediately after grant on that basis. It is difficult to see how any estoppel or other principle could prevent this occurring if opposition is a summary proceeding decided by reference to a special high onus (cf Miller v University of New South Wales (2003) 200 ALR 565 ). The opportunity for oppression of an applicant at the hands of a well-resourced commercial opponent is obvious. Before there can be an appeal pursuant to s 56, the mark has been accepted and then has survived a contested opposition. A delegate has delivered reasons for rejecting the grounds of opposition. The Court is to give respect to the opinion of the delegate ( Registrar of Trade Marks v Woolworths Ltd per French J at [33]). Where, as in this case, the grounds of opposition are essentially matters of degree calling for judgment, it is difficult to see much scope for arguing successfully that the trade mark is clearly bad where it has survived such scrutiny. 26 I am faced with the clear words of the statute, on one hand, and the opinions of various judges, on the other. There is no binding Full Court authority. I cannot find any instance where a single judge has actually applied the higher standard. In my opinion, in this case, comity does not demand that I depart from my view as to the meaning of the statute. 'The fundamental responsibility of a court when it interprets a statute is to give effect to the legislative intention as it is expressed in the statute' per Mason J in Babaniaris v Lutony Fashions Pty Ltd [1987] HCA 19 ; (1987) 163 CLR 1; cited with approval by Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ in John v Federal Commissioner of Taxation [1989] HCA 5 ; (1989) 166 CLR 417 at 439. I will, therefore, approach the matter on the basis that the opponent has to establish a ground of opposition, although not clearly establish such a ground, whether in a summary fashion or otherwise. There is an obvious overlap between the three and it is useful to briefly note the relationship between them. What is the difference between s 44 and s 60? In the present case, the marks are not substantially identical, therefore, the issue is deceptive similarity. Section 60 depends upon the opponent's mark having acquired a reputation in Australia by virtue of which the use of the trade mark applied for would be likely to deceive or cause confusion because of the deceptive similarity between them. Section 44(1) refers to deceptive similarity between the applicant's mark and a mark registered by another person in respect of similar goods. In other words, the comparison is between mark and mark, not between mark and reputation. Where does s 43 fit it in? The focus of this section is a connotation or secondary meaning of the mark applied for which would make the use of the trade mark in respect of particular goods likely to deceive or cause confusion. There is a plethora of authority concerning s 44 and s 60. There is little authority as to s 43. 29 Silverstein dealt with the history, advertising and promotion of the product, advertising expenditure, sales of the product, trade mark registrations and, in relation to the reputation of VIAGRA, attached a representative sample of articles mentioning the product which have appeared in various United States publications with international circulations from newspapers, magazines and medical publications. Glover dealt with the history of VIAGRA, advertising of the product in Australia, the sales of the product bearing the trade mark in Australia, Australian trade mark protection and the reputation of VIAGRA. A good deal of material was produced in relation to reputation including market research, radio transcripts, media reports covering print and electronic media and the internet. Evidence also establishes that Pfizer is the only owner of a trade mark registration class 5 for a mark containing the '-AGRA' suffix. The product in relation to which Pfizer uses the trade mark was the first oral treatment for erectile dysfunction, both in Australia and internationally. 'VIAGRA' is an invented word. The product was launched in Australia in September 1998. 30 The delegate, having considered that material, was satisfied that the VIAGRA marks were very well known in Australia and enjoyed a considerable reputation, both literally and for the purposes of the 1995 Act. I can only agree. Karam does not dispute that conclusion as such. However, it is submitted that the reputation relates to a particular medical treatment for a particular medical condition available only on prescription from pharmacies. It is submitted for Pfizer that the reputation of VIAGRA is not limited to that strict core but has gained a wider reputation as being associated with sexual health and performance generally, including enhancement of sexual performance on the part of both males and females and the reputation is not limited to a prescription by medical practitioners available only in pharmacies. Counsel for Pfizer has pointed to examples in the material produced by Glover which would support such a wider reputation. 31 The evidence warrants a conclusion that the trade mark 'VIAGRA' is associated with a substance taken orally for enhancement of penile erection for the improvement of sexual performance as well as curing of penile dysfunction. I would not conclude that it would be generally understood that the product VIAGRA is only available on prescription from pharmacies and I would not limit the reputation of the mark in that way. 32 Pfizer also relied upon an affidavit of Sarah-Jane Armstrong, who gave evidence of purchasing the following listed drugs from various chemists around Sydney --- PANAMAX, PANADOL, DISPRIN, ASPALGIN, NUROFEN, PANAFEN, CODOX, CODIS and CODALGIN. 33 Karam sought to rely upon the evidence of Ron Klein, a market research consultant. That research was not proved beyond a bare statement of result. 35 I rejected the evidence as I said I would follow the recent decision of Heerey J in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2006) 228 ALR 719. I said I would give reasons in this judgment. On reflection, it is sufficient as to the matter of principle involved, to say that I am unable to distinguish the issue here from that dealt with by Heerey J. As I was not, and am not, of the view that his decision was clearly wrong, it is appropriate that I follow it as a matter of comity in order that there be consistency of approach to this issue. In the present case, there is the further difficulty that the market research relied upon is not properly proven and, even if it were, it is not easy to see how the results can be transposed from one example to another. 36 Karam initially sought to rely upon evidence from a solicitor giving an account, partially based on hearsay, of the effect of the Therapeutic Goods Act 1989 (Cth) and the administration of the system provided by it. That attempt was not persisted in. I am prepared to take notice of the fact that a complementary medicine, once listed, can be sold over the counter through various distribution channels not limited to pharmacies and advertised without any particular restrictions as to distribution. 37 The parties also referred to various dictionary definitions. In my opinion, there is sufficient similarity between the marks and between the goods with which each would be associated to lead to that result. 39 It is submitted for Karam that marks must be compared as a whole without meticulous comparison and that it is the visual impact which is important, having in mind the products and the cause of trade. The words do not look alike. Because VIAGRA is so well known it would be readily distinguished from HERBAGRA. Reference was made to CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42; (2000) AIPC 91-640; (2001) ATPR 41-793; [2000] FCA 1539 at [52] ; Cooper Engineering Company Proprietary Limited v Sigmund Pumps Limited [1952] HCA 15 ; (1952) 86 CLR 536 at 538; Gardenia Overseas Pte Ltd v The Garden Co Ltd (No 2) (1994) 29 IPR 485 at 493; (1994) AIPC 91-096; Arista Ltd v Rysta Ltd [1943] 1 All ER 400; (1943) 60 RPC 87 at 108. 40 It was put by counsel for Karam that the market for both products is primarily that of men seeking remedy for erectile difficulties, although there may be a sub-market comprised of men who do not suffer from erectile difficulties but nevertheless seek a means to improve their sexual performance. The users of both products are likely to be men of all ages and from all walks of life. A substantial proportion of these men are likely to have psychological and/or physical problems that cause the erectile difficulties. Many are likely to be in their middle age or beyond that age range. It is submitted that where the commonality of characteristics diverges is that the VIAGRA product is a prescription drug and, therefore, will be sought out by men who are seeking a medical solution to their problem. The HERBAGRA product will be available over the counter in shops selling herbal remedies, such as health foods stores, chemists and supermarkets. It is likely to be purchased by men who are interested in alternative remedies and are seeking a 'natural' cure for their erectile problem or a non-pharmaceutical enhancement of their sexual performance. 41 Overall it was submitted on behalf of Karam that, when the nature of the relevant consumer was considered, as well as their likely knowledge and familiarity with VIAGRA and the significant visual differences between the two marks, there would be no reasonable likelihood of a substantial number of members of the relevant class of consumers being confused in the relevant sense. It was submitted that to refuse the application as a result of the use of the suffix '-AGRA' would be to give a practical monopoly to the applicant of all words conveying the same idea by the use of that suffix. Conveying the same idea is not sufficient to create a deceptive resemblance ( Cooper Engineering at 538---539). 42 In my opinion, these submissions under-estimate the impact of the aural similarity between the words by virtue of the suffix '-AGRA'. It forms a clear link between the marks which is not explained in any way as 'AGRA' has no relevant meaning. To see invented words such as this is to invite attention to the sound as well as the sight, even if the sound is, as it were, heard silently. In any event, the sound is used in discussion about the product for sale, ordering the product for sale, and so on. ( Berlei Hestia Industries Limited v The Bali Company Inc [1973] HCA 43 ; (1973) 129 CLR 353 at 362. ) 43 I do not agree that the fame of VIAGRA would help to distinguish the marks. It would rather cause HERBAGRA to strike a chord with the consumer as to a link with VIAGRA. The deception or confusion need not persist until the point of purchase ( Hack, Re Application to Register a Trade Mark (1940) 58 RPC 91 at 103---104; Southern Cross Refrigerating Co per Kitto J at 595---596 ; Campomar Sociedad Limitada and Another v Nike International Limited and Another [2000] HCA 12 ; (1999) 202 CLR 45 at [83] ). 44 In my view, many potential purchasers would not know that VIAGRA is only available on prescription. Even if they did, there would be no reason for the ordinary consumer to reject the idea that there might be a complementary or herbal version of the prescription drug. 45 The complaint about granting a monopoly of the word 'AGRA' is of little substance. It is an invented word with no meaning in this context. To suggest that it conjures up the name of an Indian city or the famous waterfalls at Niagara, or that it has some connotation in agri business is irrelevant. It is not descriptive in any relevant sense. 46 A submission for Karam which is closer to the reality of the present circumstances is that some people would see HERBAGRA as a cheeky take off of VIAGRA. That was a, perhaps the, reason for the decision of the Delegate on this point. The authority relied upon for this proposition is the decision of Lehane J in McIlhenny Co v Blue Yonder Holdings Pty Ltd formerly t/as Tabasco Design (1997) 149 ALR 496; (1997) 39 IPR 187. That was a s 52 and passing off case concerning the use of the well known word 'Tabasco' (associated with a pepper sauce) in connection with a business designing and constructing exhibition stands. The far more likely conclusion is, I think, that, without any association or permission the designer has--as the fact is--perhaps cheekily used a name which, by reference to its only other known use, conjures up "hot" associations. First, the question arising in relation to misleading or deceptive conduct contrary to s 52 or passing off is different from that arising under s 60. Secondly, the application of a well known trade mark to quite dissimilar goods is a very different question to that which arises here. It may be that some of the more sophisticated members of the public with marketing experience would understand that it is either likely or possible that a local entrepreneur was endeavouring to appropriate for itself and trade off part of VIAGRA's reputation. Lehane J referred to a number of those authorities in McIlhenny at (1997) 149 ALR 504---505; (1997) 39 IPR 195---196. In my opinion, such persons would not be representative of the public at large. 48 For the sake of completeness I should add that, although I am clear in my own mind as to the proper result, in view of the reasoned decision of the Delegate to the contrary and the earnest submissions on behalf of Karam, I could not find that the elements of s 60 were established clearly or beyond doubt if such a standard is required. If the reputation of the VIAGRA mark is to be taken into account for the purposes of s 44, then it would follow for the reasons given in relation to s 60 that HERBAGRA is deceptively similar to VIAGRA because it so nearly resembles that other that it is likely to deceive or cause confusion (s 10). It was sought on behalf of Karam to use reputation to assist in distinguishing the marks but, in my view, the reputation of VIAGRA increases the chance of confusion and deception. 50 I am by no means satisfied that it is appropriate to take reputation into account for the purposes of the comparison relevant for s 44. The orthodox view is that what is compared is the lawful use in the future of each mark across the goods for which it is registered rather than being tied to what has happened in the past ( Berlei Hestia per Mason J at 362; MID Sydney Pty Ltd v Australian Tourism Co Ltd (1998) 90 FCR 236 at 245---246). Section 60 brings in reputation. I am not persuaded that what was said by French J in Woolworths at [61] is sufficient to alter the test for s 44. There is support for the use of reputation in connection with infringement ( CA Henschke & Co v Rosemount Estates Pty Ltd at [51]; Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 48 ALR 511; (1983) 1 IPR 265; (1983) 77 FLR 139 per Lockhart J at 151, Franki J at 141 and Neaves J at 163). It is not clear that, if correct, this is to be imported into s 44 (cf NEC Corporation v Punch Video (S) ). 51 If the comparison is to be made without taking into account the existing reputation of VIAGRA, the similarity between the marks consists in a common suffix with no relevant meaning or connotation. Some would wonder whether the goods had the same source, but others would wonder whether the goods were of the same characteristics or had a common active ingredient. The evidence shows that it is not uncommon to have such goods sold in chemist shops with common prefixes or suffixes. If reputation were not taken into account, I would not be satisfied that Pfizer's mark would be deceptively similar to VIAGRA. I would certainly not be clearly satisfied that that was so. It was enacted pursuant to Australia's obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). In the 1995 Bill (and Act) cl 42(2) of the 1994 Bill was replaced by what is now s 43 of the 1995 Act. The likelihood of deception or confusion must flow from the secondary meaning inherent in the mark itself. It is apparent that the underlying purpose of s 43 is a similar purpose to that lying behind ss 52 , 53 and 55 of the Trade Practices Act 1974 (Cth). It is to prevent the public being deceived or confused as to the nature of the goods offered by reason of a secondary meaning connoted by the mark in question, rather than, for example, deception by reason of similarity with other marks ( TGI Friday's Australia Pty Ltd v TGI Friday's Inc [2000] FCA 720 ; (2000) 100 FCR 358 at [43] ; McCorquodale v Masterson at [25]---[26]). Section 43 might well prevent the registration of HERBAGRA for classes of goods with no connection with herbal ingredients. An implication of sponsorship or association might qualify as such a secondary meaning or connotation, but I am not persuaded that the mark itself has that secondary meaning here. The application to register the trade mark should be refused. Karam should pay Pfizer's costs of this appeal and of the opposition proceedings before the Delegate. | trade marks 'viagra' reputation in australia 'herbagra' deceptively similar to and likely to deceive or cause confusion appeal allowed trade marks whether reputation should be taken into account in relation to s 44 of the trade marks act 1995 (cth) if not, marks not deceptively similar trade marks mark not likely to deceive or cause confusion because of connotation trade marks standard of proof in appeal from opposition proceedings opponent must establish ground of opposition no need to 'clearly' establish ground intellectual property intellectual property intellectual property intellectual property |
It is convenient to repeat that history here. The plaintiffs' Substituted Statement of Claim lodged 4 September 2007 can be divided into claims made on behalf of the first plaintiff, Pearl Coast Divers Pty Ltd (In liquidation) ("Pearl Coast") and claims made on behalf of the second plaintiff, Liquid Investments (WA) Pty Ltd ("Liquid"). It should be noted that this pleading contains both in its heading and in the text of the statement of claim the purported substituted parties. That is obviously premature. Whilst acknowledging that difficulty, it is nonetheless convenient for present purposes to refer to its contents in these reasons. Causes of action arising pursuant to s 82 of the TPA are personal and cannot be assigned: Salfinger v Niugini Mining (Australia) Pty Ltd (No. 3) [2007] FCA 1532 at [110] and the cases cited therein, in particular, Park v Allied Mortgage Corporation Ltd (1993) ATPR Digest 46-105. By parity of reasoning, claims arising pursuant to s 79 of the FTA cannot be assigned. The Deed of Assignment is therefore not capable of assigning the TPA and FTA causes of action to Mr Sharp and understandably the defendants oppose any order substituting Mr Sharp for Pearl Coast in relation to those causes of action. The defendants do not dispute that the Deed of Assignment is capable of assigning the causes of action in contract to Mr Sharp, or that he may be substituted as the first plaintiff in respect of those causes of action. For some considerable time there have been differences of judicial opinion as to whether Part 2F.1A has application to a company in liquidation. In BL & GY International Co Ltd v Hypec Electronics Pty Ltd [2001] NSWSC 705 ; (2001) 164 FLR 268 Einstein J in obiter expressed the view that Pt 2F.1A does not so apply. In Carpenter v Pioneer Race Pty Ltd (in liq) [2004] NSWSC 1007 ; (2004) 211 ALR 457 Barrett J concluded that it does apply. Indeed, his Honour said that the question should now be regarded as settled, pointing to the considerable support for this view in a number of judgments of this Court. In one of these, Kamper v Applied Soil Technology Pty Ltd [2004] NSWSC 891 ; (2004) 50 ACSR 738 Einstein J at [10]-[11] having considered the authorities, including that of Barrett J in Charlton v Baber [2003] NSWSC 745 ; (2003) 47 ACSR 31 , was persuaded that his earlier view in BL & GY International was wrong. More recently, Siopis J, in Promaco Conventions Pty Ltd v Dedline Printing Pty Ltd [2007] FCA 586 ; (2007) 159 FCR 486 in what I consider, respectfully, to be a most persuasive judgment concluded that Part 2F.1A did not apply to a company in liquidation. Despite this, his Honour was not able to conclude that he had a high enough degree of assurance necessary to characterise the series of earlier contrary decisions at first instance as 'plainly wrong', as required by the test in Australian Securities and Investments Commission v Marlborough Gold Mines Ltd [1993] HCA 15 ; (1993) 177 CLR 485. Since then the New South Wales Court of Appeal has recently delivered judgment in Chahwan v Euphoric Pty Ltd [2008] NSWCA 52 which is directly on point. Tobias JA (Beasley and Bell JJA concurring) concluded, after full argument and very detailed reasons, that Part 2F.1A of the Act does not apply to a company in liquidation. This judgment is of course highly persuasive and, in my respectful opinion, is correct. In those circumstances I decline to follow earlier judgments of single judges of this and other courts which reached a contrary conclusion: Roach v Winnote Pty Ltd (in liq) [2001] NSWSC 822 ; Brightwell v RFV Holdings Pty Ltd [2003] NSWSC 7 ; Charlton v Baber [2003] NSWSC 745 ; (2003) 47 ACSR 31 ; Kamper v Applied Soil Technology Pty Ltd [2004] NSWSC 891 ; (2004) 50 ACSR 738 ; Carpenter v Pioneer Park Pty Ltd (in liq) [2004] NSWSC 1007 ; (2004) 211 ALR 457 ; Scuteri v Lofthouse (2006) VSC 317. The plaintiffs submit that, in the alternative, the Court should determine the application, in the inherent power of the Court. The defendants are opposed to any consideration of this alternative basis for the relief sought because it was not originally argued on that basis. However the circumstances here are somewhat unusual given that the decision in Chahwan was delivered after argument on the motion but prior to judgment. It is likely, I think, that reliance would have been placed on the Court's inherent jurisdiction if Chahwan had been delivered before the hearing of the present motion. In any event, the parties have delivered fulsome written submissions going to the alternative basis and, in my view, it is in the interests of justice that I consider these. There is clear authority that the Court retains the inherent power in the course of a winding up of a company to permit proceedings to be taken in the name of a company by contributors and creditors: Russell v Westpac Banking Corporation [1994] SASC 4479 ; (1994) 12 ACLC 278 ; Aliprandi v Griffith Vintners Pty Ltd (in liq) (1991) 6 ACSR 250 ; Magarditch v Australia & New Zealand Banking Group Ltd (1999) 32 ACSR 367. It is necessary upon such an application for the plaintiff to demonstrate an arguable case for the relief sought in the litigation. The test has been put in different ways. McLelland J referred to the requirement that the proposed action to be taken in the company's name "has some arguable foundation": Aliprandi v Griffith Vintners Pty Ltd (in Liq) at 252. The Full Court in Vagrand Pty Ltd (in Liq) v Fielding (1993) 41 FCR 550 at 556-557 said that a plaintiff was required to satisfy the Court that the claim had a solid foundation and would give rise to serious dispute. The Full Court in Magarditch [69] said that the principle required the plaintiff to determine whether there was a serious claim under real dispute and in so determining to have regard to the quality and strength of the proposed case. The Court at [71], citing with apparent approval Russell v Westpac Banking Corporation [1994] SASC 4479 ; (1994) 12 ACLC 278 at 281, said that even in a case where there be no drain on the assets of the company there is nevertheless a responsibility on the Court to see that any action taken in the company's name under the Court's authority is not vexatious or merely oppressive. The Court considered that, in practice, it may be that there is very little to distinguish the approaches in Aliprandi and Vagrand. It is necessary therefore to consider the merits of the TPA and FTA claims. This flowed from the proposition articulated by Gummow J in Scarel Pty Ltd v City Loan & Credit Corporation Pty Limited (1998) 12 ACLR 730 at 733 that the ordinary rule is that the liquidator is the appropriate person to decide whether the company should commence proceedings, subject to review under the statutory provisions. His Honour considered that if the liquidator is of the view that the proposed litigation is soundly based, but he cannot pursue it because of an absence of funds, the Court will be more disposed to permit proceedings by a contributory in the company's name than in circumstances where he has decided that there is no reasonable foundation to bring proceedings. His Honour then referred to Partnership Pacific Ltd v Aliprandi (1990) 4 ACSR 51 where Cole J said that for an application to succeed more must be shown than that the liquidator's position is protected by an indemnity. Austin J [46]-[48] observed that the two cases indicate that the Court is entitled to have the assistance of the liquidator in making its assessment as to whether an arguable case has been demonstrated and that the Court will normally give weight to the liquidator's view. The defendants submit that there is no evidence that the liquidators have considered the merits of the claims at all. Certainly there is no direct evidence from the liquidators. However it is important, in my view, to consider the totality of the circumstances which emerge from the evidence, including any inferences which may properly be drawn. Pearl Coast has no realised or realisable assets which would be exposed should the action fail. The liquidators do not oppose the application. By the Deed of Assignment, Pearl Coast at the instance of the liquidators, transferred and assigned any cause of action it had against any of the defendants to Mr Sharp. This was done to prevent the creditors from being subject to any further costs in relation to the action. It is evident from the recital to the Deed of Assignment that Mr Sharp informed the liquidators as to the causes of action. It was agreed that, in the event of success in the litigation, after the payment of legal fees and disbursements, that the next $250,500 would be paid to Pearl Coast with any balance then going to Mr Sharp. Plainly, the liquidators are unwilling to prosecute the proceedings. There is no direct evidence that any consideration was given to the liquidator, subject to being indemnified, causing Pearl Coast to continue with the application. It would however, as a matter of inference, be surprising if such a course had not been considered. In his 23 January 2008 affidavit [18] Mr Rumsley said that Mr Jones, one of the liquidators, told him that Pearl Coast did not have funds to pursue the claims and that he had, as liquidator, not been able to obtain any funding to enable the claims to be pursued. This strongly suggests that Mr Jones considered that the claims, including the TPA and FTA claims, were arguable. If he had thought otherwise, I would have expected him to have told Mr Rumsley when the claims were discussed between them. I also do not think he would have attempted to obtain funding unless he thought the claims had merit. The defendants further submit that Mr Jones consented only to Pearl Coast prosecuting the TPA and FTA claims against Cossack but not against the personal defendants. They also contend that the liquidators wrongly assumed that there could be no liability on the part of Pearl Coast but rather assumed that the plaintiff would be Mr Sharp in a personal capacity. This submission derives, it seems to me, from an unduly literal reading of the relevant correspondence which I will now consider. The plaintiff's solicitor, Mr Alan Rumsley, wrote to Mr Jones, one of the joint liquidators by email dated 19 November 2007 and advised him that an application had been made under s 237 of the Corporations Act for leave for Mr Sharp, as a shareholder, to bring the claims in respect of the TPA and FTA on behalf of Pearl Coast. The letter sought confirmation that the liquidators had received notice of the application and did not oppose it and foreshadowed that this information would be provided to the Court. Mr Jones replied by email dated 27 November 2007. He referred to a telephone discussion which had taken place between himself and Mr Rumsley following the email of 19 November, in which he had been told that his consent was needed to bring claims against Cossack under the TPA and the FTA. Mr Jones also confirmed that Cossack was without funds and was not in a position to meet any adverse costs orders which a Court might make in the event that the litigation was unsuccessful. He then noted his consent for Mr Sharp to make a claim against Cossack under the TPA and FTA, provided that neither the joint liquidators personally nor Pearl Coast were liable for any costs of the plaintiffs or the defendants. However it is correct that no mention was made of the claims against the other defendants. This email is somewhat equivocal. It seems clear enough however that Mr Jones was directing his attention to the application under s 237 of the Corporations Act and indicating that the liquidators did not oppose the application. I do not think that when his email is read together with the email of Mr Rumsley, that Mr Jones was under any misapprehension as to the fact that the application, in relation to Mr Sharp, was in the context of a derivative action. I also consider that although only claims against Cossack are referred to that the consent extended to all the TPA and FTA claims which Pearl Coast had, including those against the second and third defendants. In para 8 of Mr Sharp's affidavit sworn 23 January 2008, he refers to a telephone conversation with Mr Rumsley in November 2007 in which he was told that counsel, Mr Clifford, had advised, in effect that a derivative action needed to be brought in respect to the TPA and FTA claims. The claims were not limited merely to those against Cossack. Further, Mr Sharp said that Mr Rumsley told him that he (Mr Rumsley) would have to speak to the liquidators "in respect to this change". I infer that the email of 19 November 2007, sent by Mr Rumsley to Mr Jones and followed up by the phone conversation to which I have referred, both occurred as a result of the conversation between Mr Sharp and Mr Rumsley. Mr Jones' consent to Pearl Coast bringing the TPA and FTA claims against Cossack was a rolled up way of referring to the claims against all of the defendants. The claims against each are significantly interdependent. In any event, I think it unlikely that the liquidators would have been in a position, in the circumstances of this case, to add anything to the bank of information presently available to the Court as to the merits of the action. That is because in relation to the trade practices claims, their success or failure will largely depend upon the basis of evidence to be given by Mr Sharp. In this case the Court is able to make its own assessment of whether the evidence, presently before it, gives rise to a serious dispute. I also believe that the claims set out in the Substituted Statement of Claim are claims that all have reasonable prospects of succeeding. In relation to the claims from the 17 December 1999 agreement, the evidence of the Defendants is that they did not comply with the requirement to transfer the tags and relied upon a failure by Pearl Coast to catch 80% of the quota to issue a termination notice and not comply with the terms of the agreement. The number of tags provided to Pearl Coast by Cossack meant that Pearl Coast could not catch 80% of the quota, 26,000 Pearl Oysters. I verily believe that the Defendants do not have a defence to the claims from that agreement. It was because of my belief that the claims of Pearl Coast have reasonable prospects of success, that I agreed to the claims being transferred to me in June 2005 and paid $17,310 for costs ordered by Justice Lander and $3,995.87 interest on those costs, so that the action could be continued against the Defendants. Paragraphs [12]-[16] concern the claims in contract pleaded at paragraphs [45]-[58] of the Substituted Statement of Claim and are not relevant to the present application which concerns the TPA and FTA claims. As pleaded in the Substituted Statement of Claim, the TPA causes of action and FTA causes of action arose prior to the December 1999 contract and prior to the events referred to in paragraphs 12 to 16 of Mr Sharp's Affidavit. Accordingly, paragraphs [11] and [17] are the only conceivable ones which could refer to the statutory claims. Objection is taken to them as being statements of belief the grounds of which are not stated. I am not prepared to uphold the objection. Paragraphs [3], [4], [11], [12], [15], [16], [17], [21], [24], [25] and [29] in the Substituted Statement of Claim, which are relevant to the statutory causes of action, set out the personal involvement of Mr Sharp in the alleged events. I take the basis of his belief to be his position as a director of Pearl Coast and his personal involvement in that capacity in the events which are pleaded. Further, as a director of Pearl Coast, Mr Sharp was in a position to depose to the truth of the allegation at para [28] which concerns the content of a facsimile message, as well as the allegations of loss and damage at paras [37] and [40]. The statutory causes of action are not complex either factually or legally. The alleged facts which Mr Sharp deposes to being true and correct, if accepted at trial, would arguably establish the pleaded representations. No affidavits on the merits in opposition were filed. I am satisfied that there are serious claims under real dispute in respect of the statutory claims made against each of the defendants: Magaraditch [69]. The other causes of action in contract will be brought by Mr Sharp as assignee but the evidence will be the same as if no assignment had taken place. It will involve the dealings between Pearl Coast and the defendants. The statutory claims therefore sit in litigation with a wider context. They are closely related to the contractual claims. Broadly, the TPA and FTA claims concern alleged representations made by the relevant defendants concerning pearling operations off the north-west coast of Western Australia. The so-called "Anzac Pearl Representations", are illustrative of the interrelationship. It is pleaded that representations were made in September or October 1997 by Brady and Cossack to, relevantly, Pearl Coast, through Mr Sharp that if, amongst other things, Pearl Coast were to purchase a vessel known as the "Anzac Pearl", Cossack would finance its purchase and re-fit. It is further alleged that if Pearl Coast purchased this vessel then Cossack would engage Pearl Coast to fish the "Cossack Quota". It is then pleaded that, in reliance upon the pleaded representations, Pearl Coast entered into an agreement with Cossack in relation to the purchase of the "Anzac Pearl" and catching the "Cossack Quota" in or about late December 1997 or early January 1998. This is referred to as the "1997 Agreement". It is the alleged breach of the 1997 Agreement which forms part of the contractual claims. This cross-over occurs in respect to other pleaded representations and related contractual claims. It would, I think, be very artificial in these circumstances, to see Pearl Coast's claims in contract proceeding against the same defendants but not the statutory claims. It is only by reason of the ineffectual assignment, so far as concerns these latter claims, that the plaintiff has been driven to make this application. In this case, however, Pearl Coast has no assets and creditors will be no worse off in that even if the application fails and adverse costs orders are made, there is no distribution to creditors to be diluted by the defendants' costs entitlements. Neither Pearl Coast nor the liquidators are at risk in this respect. Nonetheless the position of the defendants is a matter going to the exercise of the Court's discretion: Cadima Express Pty Ltd (in liq) v DCT [1999] NSWSC 1143 ; (1999) 33 ACSR 527 at [49] . The liquidators do not oppose the application so long as neither they nor Pearl Coast are liable for any adverse costs orders. Mr Sharp has already paid from his own funds in excess of $21,000 on behalf of Pearl Coast, by way of costs and interest on those costs so that the action could proceed. By clause 4 of the Deed of Assignment it was agreed that Pearl Coast would not be liable for costs in connection with the action. I infer from this that Mr Sharp would be personally liable. That of course is no comfort to the defendants who, if successful, would likely obtain a costs order against Pearl Coast which in practical terms would be of no value. First, there should be an order that Mr Sharp indemnify Pearl Coast against costs and expenses incurred, including any adverse costs orders, provided however that, in the event that Pearl Coast succeeds in recovering damages or other monies through the derivative action, he may apply to the Court for reimbursement of the expenses he has met. See by analogy Carpenter v Pioneer Park Pty Ltd (in Liq) [2004] NSWSC 1007 ; (2004) 211 ALR 457 at [39] . Second, there should be an order that Mr Sharp indemnify the defendants in respect of any costs ordered as against Pearl Coast and which are not satisfied. Mr Sharp should also provide security for these costs. Order 13 r 2(6) permits an amendment to alter the capacity in which a party sues if the new capacity is one which that party had at the date of the commencement of the proceeding or has since acquired. Liquid claims damages under the TPA and the FTA caused by its asserted reliance upon representations pleaded in the Substituted Statement of Claim as the "Continuing Representations". It pleads that upon such reliance it purchased certain residential properties in the Perth metropolitan area between 1999 and 2001 and that in and after mid 2001, it entered into contracts to purchase further residential properties in the metropolitan area subject to finance approval. In his affidavit sworn 23 January 2008, Mr Sharp deposes that Liquid was created, in effect, for the sole purpose of acting as the trustee for the Sharp Family Trust and that Liquid was so appointed under the Sharp Family Trust Deed executed on 16 April 1998. Mr Sharp also deposes that the only activity which Liquid undertook was to act as trustee of the Sharp Family Trust. He says that it was in this capacity that Liquid purchased the properties identified in para 65 of the Substituted Statement of Claim and entered into contracts to purchase the properties identified in para 68 of the Substituted Statement of Claim. He also says that it was in its capacity as trustee of the Sharp Family Trust that Liquid commenced these proceedings by application dated 31 August 2004. He deposes that on 8 September 2005, he was appointed as the trustee of the Sharp Family Trust in place of Liquid and a copy of the minutes of the meeting so appointing him are in evidence. Liquid, it appears, was deregistered on 27 October 2005, not long after Mr Sharp's appointment. The defendants contend that Mr Sharp must first establish that Liquid has or had a claim against the defendants in its capacity as trustee of the Sharp Family Trust. It is only when this is established, they submit, that the Court can consider whether or not it should substitute Mr Sharp for Liquid. They contend that Mr Sharp has failed to establish such a claim on the part of Liquid in its capacity as trustee. It points to Order 4 rule 4(1)(b) of the Federal Court Rules which provides that when a party sues in a representative capacity, a statement of that fact shall be contained in the application. The application filed did not contain such an assertion of fact. Neither did the amended Statement of Claim filed on 29 November 2004 nor the further amended Statement of Claim filed on 15 February 2005. However in the Substituted Statement of Claim filed 4 September 2007 (but which suffers from the defects to which I have already adverted) that shortcoming is sought to be rectified. The defendants submit that there is nothing before the Court to show that Liquid was acting as a trustee of the Sharp Family Trust at all relevant times. That is not so. As I have already identified, Mr Sharp has sworn an affidavit in which he says that the sole purpose for the incorporation of Liquid was so that it could act as trustee for the Sharp Family Trust and further that it only ever acted in that capacity. Vintage Developments Pty Ltd v GHD Pty Ltd (No 2) [2006] FCA 1437 involved a successful application to amend the capacity in which an application and statement of claim had been filed from "Errol Investments Pty Ltd" to "Errol Investments Pty Ltd as Trustee for the Shellharbour Unit Trust". Evidence was adduced of minutes of a meeting of the company resolving that the contract to purchase land would be executed by the company in its capacity as trustee of the Shellharbour Unit Trust as well as a contract for the sale of land that in one place, at least, referred to the purchaser as Errol Investments Pty Ltd as Trustee for the Shellharbour Property Trust. The judge was satisfied that the reference should have been to the Shellharbour Unit Trust. It is contended by the defendants that if Liquid was acting in its capacity as trustee of the Sharp Family Trust when it carried out the actions pleaded in paras [59]-[72] of the Substituted Statement of Claim, then it should have copies of the minutes of meetings, recording decisions to purchase properties, copies of the contracts for the sale and purchase of the properties referred to in the Substituted Statement of Claim, bank documents recording the application for facilities to be provided to Liquid, in its capacity as trustee of the Sharp Family Trust, relating to the property acquisitions and other tax and trust records. No such evidence has been put before the Court in this case. I do not consider this to be fatal to the application. Mr Sharp has deposed, in effect, that Liquid was incorporated as a sole purpose vehicle and never acted other than in its capacity as trustee of the Sharp Family Trust. There was no cross-examination upon his affidavit. He was at all material times, the sole director and shareholder of Liquid. I am satisfied, for present purposes that the position is as deposed to by him. There was certainly nothing inherently improbable about his assertions nor are they inconsistent with any document which is before the Court. Liquid is deregistered. Mr Sharp was appointed trustee in its place nearly seven weeks prior to its deregistration. Liquid is not practically the "party" referred to in O 13 r 2(6). I infer that it was by some oversight that the proceedings were not brought by Liquid in its capacity as trustee. Had that occurred, then Mr Sharp would simply be seeking to be substituted for Liquid because he had been appointed as the new trustee on 8 September 2005. I regard Mr Sharp as, in effect, being the "party" for the purposes of O 13 r 2(6). There will be an order that Mr Sharp, as trustee for the Sharp Family Trust, be substituted as the second plaintiff. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | substitution of individual assignee of non-trade practices claims as first plaintiff substitution of personal trustee for corporate trustee as second plaintiff application under s 237 of the corporations act 2001 (cth) to bring derivative action in name of first plaintiff in respect of trade practices claims first plaintiff company in liquidation whether pt 2f.1a of the act has application to a company in liquidation alternatively application to bring derivative action under inherent power of court. company created for the sole purpose of acting as trustee of a family trust company deregistered substitution of new trustee in the proceedings order 13 rule 2(6) federal court rules 1979 (cth). corporations practice and procedure |
The respondent to the appeal is the Commissioner of Taxation. The applicant's appeal to this Court is limited to an appeal on a question of law: Administrative Appeals Tribunal Act 1975 (Cth) s 44(1). 2 The decision appealed against is the following order of the Tribunal. The respondent disallowed as deductions certain expenses incurred by the applicant in each of those years. I will refer to these as 'the disputed expenses'. It disallowed a claimed deduction of $17,204 for the 1997 year, $12,765 for the 1998 year, and $6,058 for the 1999 year. 4 On 19 April 2002 the respondent disallowed the applicant's objections to each of the amended assessments and the applicant then applied to the Tribunal for a review of those decisions of the respondent. 5 The Tribunal held that the disputed expenses were allowable deductions, but it also held that they were tax benefits to be cancelled in part under Part IVA of the Income Tax Assessment Act 1936 ('the Act'). 6 The Tribunal's approach differed from the respondent's approach in this respect. The Tribunal found that the applicant had made certain cash outlays in the 1997 year ($2,204), 1998 year ($5,400) and the 1999 year ($6,000) respectively. The respondent had cancelled the whole of the tax benefits in the respective years: 1997 year ($17,204), 1998 year ($12,765) and 1998 year ($6,058). The Tribunal decided that this was inappropriate and, exercising the power in s 177F of the Act, it directed that the tax benefits be cancelled to the extent that they were not represented by cash outlays. 7 It was common ground before the Tribunal that there was a scheme and that the disputed expenses were tax benefits within Part IVA of the Act. The applicant's principal contention on appeal was that the Tribunal member erred in law in concluding that by reason of the provisions of s 177D of the Act the scheme was one to which Part IVA applied. The project was established in June 1997. The project involved investors known as 'growers' being offered a licence to cultivate, tend, manage and maintain grapes and vines on an area of vineyard, and to harvest and sell the grapes from these vines. Austvin Vineyards Ltd --- the manager. 2. Coldridge Development Pty Ltd --- the landowner. 3. Inteq Custodians Ltd --- the trustee. 4. Austvin Management Pty Ltd --- the vineyard manager. 5. Austvin Finance Pty Ltd --- the lender. 6. Australian Vintage Ltd --- the grape purchaser. 11 A prospectus for the project was issued and on 21 April 1997 it was lodged with the Australian Securities Commission. It was registered by the Commission. The prospectus is dated 18 April 1997 and it expired on 30 June 1997. It provided that no applications could be received prior to 6 May 1997 and that no growers' interests would be allotted or issued pursuant to any applications received after 27 June 1997. The offer included the option of a loan to finance the licence and management fees. One hundred and forty two hectares of vineyard was offered subject to a minimum aggregate subscription of seventy-one hectares. The minimum subscription for each participant was two vine plots or 0.4 of a hectare. The vineyard is located in the Riverland District of South Australia. He was contemplating his retirement in the year 2000 when he turned sixty years of age and the likely fall in his disposable income. He was minded to make investments during the last three years of his employment with a view to such investments producing an income stream for his family and himself in his retirement. He was attracted to the project for a number of reasons, including the fact that he saw it as a growth industry, the proposed development of the vineyard appeared to be a state-of-the-art development and it involved a contract for the sale of grapes and was long term. The project is structured to include the option of a limited recourse loan which, if utilised, will enable entry to the project for a cash outflow of only $2,204 before 30 June 1997 whilst entrants should qualify for a tax deduction of $17, 204 for that year. It also requires entry into a grape sales agreement to sell the produce from your vineyard interest to our parent company, Australian Vintage Ltd, which is one of Australia's foremost wine producers. The applicant gave evidence before the Tribunal that he considered the financial projections in detail and what an investment in the project would mean for him in terms of a return over the life of the project. He gave evidence before the Tribunal that although taxation implications were a factor to be taken into account in the investment, he was more concerned to see whether the viticultural project was 'a soundly based long term commercially viable project'. 16 The applicant decided to participate in the project. He completed an undated application form in which he applied for licence and management agreements for two 0.2 hectare vineplots pursuant to the project deed made on 1 April 1997 (as amended) between the manager and the trustee. By signing the application form, the applicant agreed that he was bound by the terms of the project deed. He directed the trustee to distribute the purchase price for grapes in terms of the project deed. He certified that, as he was accepting the loan offer, he had read the standard loan offer document included within the prospectus and that he understood that by making the interest payment he would be accepting the loan offer made, and would be bound by the terms of the loan offer document. 17 On 19 June 1997 the applicant executed a power of attorney whereby he appointed the trustee to be his attorney, and granted him certain powers including the power to execute the licence and management agreement and the grape sales agreement. On that day he sent the manager the completed application form, the power of attorney and a cheque for $1,000, payable to the trustee, for licence fees in respect of two vineplots. On the same day, he also accepted the loan offer by sending the manager a cheque payable to the lender in the amount of $1,204 ($602 for each vineplot) representing prepaid interest for the period to 30 June 1998. 18 It is convenient at this point to set out the important features of the licence and management agreement, the loan offer and the grape sales agreement. Under the agreement, the manager grants to the grower from 27 June 1997 to 28 June 2012 the non-exclusive right for the grower to enter onto two vineplots (numbers V10022, V10021) to cultivate, tend, manage and maintain the grapes (being the grapes harvested from the vineplots) and the vines (being the grapevines located on the vineplots) and carry out the services (as defined) and to harvest and sell the grapes. The schedule to the agreement provides that the number of vines contained in each vineplot is at least 264 per plot. Under the agreement, the grower appoints the licensor to be the manager to provide the services (as defined) and manage the grower's interest comprised in the vineplots and the grower's business for the term, being the period from 27 June 1997 to 28 June 2012, and the manager accepts the appointment. By the agreement, the manager is to have the day-to-day management and conduct of the grower's business. 20 Under the agreement, the grower must pay a licence fee to the licensor. The fee must be paid on or before 30 June each year for the year in advance. The licence fee to be paid on or before 30 June 1997, 1998 and 1999 is $500. For 2000 and subsequent years, the licence fee is $500 per year as adjusted at the time that payment is due by the CPI for the movement of that index from 30 June 1997. The moneys may be paid by crossed 'non-negotiable' cheque made payable to the trustee on account of the project or bearer and sent to the registered address of the licensor. 21 Under the agreement, the grower is to preserve and maintain the vineplot in a proper and efficient state of cultivation in accordance with Australian Industry Standard Viticultural Practice as applied by the viticultural industry in South Australia, and immediately prior to 28 June 2012 the grower is to complete all work that would ordinarily or necessarily be required to be completed having regard to the time of year, to properly prepare the vineplot for the next vintage. The grower is not to assign or transfer his interest or grant any licence affecting the vineplot during the term of the agreement. 22 The manager is to be paid a management fee and the agreement provides that the fee is to be paid on or before 30 June of each year for the year in advance. The lender also agrees to lend to the borrower the interest payable under the offer except for the sum of $602 for each vineplot, representing pre-paid interest for the period to 30 June 1998, on or before 30 June 1997. 25 The offer provides that so long as the primary instalment amounts are paid by the borrower, the liability of the borrower to pay the money payable is limited to payment of the primary instalment amounts. Under the agreement, the grower agrees to sell to the buyer, and the buyer agrees to purchase from the grower in each vintage year all grapes that meet the grape quality standards set out in the agreement, and the buyer may in its absolute discretion purchase grapes that do not meet these standards. The market rate is the rate applicable to the Vintage Year at the time the Grapes are delivered to the Buyer as determined by the South Australian Wine Grape Utilisation and Pricing Survey published in or about September of the relevant Vintage Year by the Department of Primary Industries of South Australia or if that publication is discontinued, a corresponding publication as determined by the Manager and advised to the Buyer and Grower. 28 Grapes which do not meet the standards referred to in the grape sales agreement fall within the terms of clause 7.1(b) of the licence and management agreement which provides that the manager will harvest the grapes at its absolute discretion and will use its best endeavours to sell the grapes on terms that the manager reasonably considers are the best terms obtainable and will require the buyer or buyers to pay the purchase price for the grapes to the trustee to hold for and to distribute to the grower under the terms of the project deed. 29 The term of the grape sales agreement is from 27 June 1997 to 31 December 2012. 30 These then are the key features of the licence and management agreement, the loan offer and the grape sales agreement. The loan offer is accepted by a grower paying to the lender the sum of $602 per vineplot on or before 30 June 1997. As I have said, the applicant accepted the offer by paying to the lender the sum of $1,204, being prepaid interest for two vineplots and, in addition, he sent to the manager the completed application form, the power of attorney and a cheque for $1,000 payable to the trustee for licence fees in respect of two vineplots. 31 At that time, the total cash outlay by the applicant was $2,204. 32 It was common ground before the Tribunal that none of the agreements entered into by the applicant was a sham and that they were entered into with the intention that they bind the parties according to their terms and that they were implemented as such. 33 Under the project, 710 vineplots were licensed, and growers accepted the loan offer for licence and management fees in respect of 705 vine plots. 34 It was accepted before the Tribunal that the payment by the lender of licence and management fees borrowed by growers involved 'round-robin' arrangements. These transactions originated in a loan of $5,287,500 from the manager to the lender (R7-T1/652). The ledger accounts for the manager and the lender show further loans to the lender of $3,525,000 in 1998 and $1,364,880 in 1999 (R7). The yield in tonnes per hectare would be nil in 1998, 1 tonne in 1999 and 25 tonnes in 2003, and remain at that level until the conclusion of the 2012 grape season. The typical grower will have a marginal tax rate of 48.5 per cent. The interest rate charged on the loan from the lender will remain at 11 per cent throughout the term of the loan. 4. The consumer price index will increase by three per cent per annum over the term of the licence and management agreement. 5. The market price for grapes to be sold pursuant to the grape sales agreement with the grape purchaser will increase by 12 per cent per annum over the term of that agreement from a base price of $933.75 per tonne for 1997. Where the loan facility was not utilised, the projected internal rate of return was 17 per cent, providing a projected total after-tax surplus cash flow of $78,556. The risks and liability identified in the prospectus are agricultural risks, financial risks, managerial risks and tax risks. 37 In his 1997 income tax return, the applicant claimed as allowable deductions from his assessable income amounts totalling $17, 204 pursuant to the general provisions of s 51(1) of the Act. Before the Tribunal, the respondent submitted that the deductions claimed by the applicant were not proper deductions because the applicant was not conducting a business, they were capital outgoings incurred by the applicant as a passive investor in the manager's business, and, in relation to the management fees for the first two years of the viticulture project, they were excessive and incurred in order to obtain the disputed deductions. The Tribunal member considered the provisions of s 51(1) of the Act in relation to the deductions claimed for the income year ended 30 June 1997 and the provisions of s 8-1 of the 1997 Act in relation to the deductions claimed for the income years ended 30 June 1998 and 30 June 1999 respectively. 42 The Tribunal member considered whether the applicant was carrying on a business from the vineplots since they were licensed to him on 27 June 1997. The Tribunal member referred to the fact that in June 1997 growers in the project obtained licences over an area of approximately 140 hectares of the Coldridge Vineyard known as 'Coldridge North'. Each of them contracted with the manager to manage the area on their behalf in accordance with the licence and management agreement. Coldridge North is a small vineyard and the Coldridge Vineyard project located in the same area consists of approximately 327 hectares. A witness before the Tribunal gave evidence that he managed the whole vineyard, including the growers' vineyard, using management procedures that are 'reasonably common'. He gave evidence that the growers' vineyard was an integral part of the Coldridge Vineyard project served by the same staff using the same plant and equipment and a single irrigation system. Seven varieties of grapes are grown across the viticulture project vineyard. 43 Another witness before the Tribunal member gave evidence that the cost of ownership and operation of a basic set of vineyard equipment, if purchased new and fully depreciated over four years, would typically require a minimum vineyard area of approximately 25 hectares. 44 The Tribunal member found that the applicant had been carrying on the business of growing and selling wine grapes since 19 June 1997 when he executed the documents and made the relevant payments. So the Tribunal finds that the disputed expenses, including the annual licence and management fees are not outgoings of capital for the purpose of s 51(1) or s 8-1(2)(a), to acquire an interest in a business conducted by the manager. The viticulture project involves the seasonal growing, harvesting and sale of wine grapes over a 15 year period pursuant to the rights and obligations contracted for by the applicant or the trustee on his behalf. The Tribunal member noted that the applicant had derived assessable income from the sale of wine grapes in each year since 2000 and has been making a gross profit from his wine growing business before interest since 2001. He noted that if the viticulture project continues to perform according to prospectus forecasts the applicant will make a substantial profit from his business. The Tribunal finds that the answer is no because although the disputed fees may have been disproportionate to the services they bought, they, together with the other expenses incurred by the applicant, were not disproportionate to the assessable income that was expected to flow to the applicant from the viticulture project. They were incurred by the applicant in genuine transactions at arm's length in the course of his acceptance of the offer to participate in the viticulture project contained in the prospectus. In these circumstances the amount of the disputed fees and the applicant's subjective motivation in relation to their income tax treatment are irrelevant to their characterisation for the purposes of s 51(1) of the Act or s 8-1 of the 1997 Act. 48 None of the above matters are issues on the appeal. 49 The issue on the appeal relates to the application of Part IVA of the Act. I will refer to this as 'the scheme'. 52 Before the Tribunal the respondent formulated two alternative schemes for the purposes of Part IVA which the applicant conceded were schemes for the purposes of Part IVA but denied that the disputed expenses were tax benefits in connection with the alternative schemes. It is not necessary to refer to these alternative schemes because the Tribunal member decided the matter by reference to the scheme described in [51] above. 53 There was no dispute before the Tribunal and the Tribunal member found that the disputed expenses were tax benefits obtained by the applicant in connection with the scheme for the purposes of s 177(C)(1)(b) and s 177(D)(a) of the Act. 54 Before the Tribunal, the respondent put an alternative submission, which was ultimately accepted by the Tribunal, to the effect that the tax benefits obtained in connection with the scheme might, in the proper exercise of the discretion under s 177F(1), be confined to the difference between the deductions claimed by the applicant and his cash outlays. 55 The Tribunal member commenced his reasons dealing with the application of Part IVA by making some general observations about the operation of s 177D(b) of the Act. He noted that the decision-maker under s 177D(b) was required to come to a conclusion as to the dominant purpose of the relevant party in entering into or carrying out the scheme and that he or she is required to do so solely by reference to the matters identified in s 177D(b)(i)-(viii) inclusive. Those matters do not include the relevant party's subjective purpose or state of mind. He noted that that meant that there was no inconsistency between a finding that the purpose of a person lay in the pursuit of commercial gain in the course of carrying on a business and a finding that the dominant purpose was to enable the relevant taxpayer to obtain a tax benefit. 56 It is important to note one aspect of the structure of the reasons of the Tribunal member. He considered the rival contentions and matters of common ground in relation to each of the matters in s 177D(b). Later, he examined each of them again and set out his critical findings in relation to each matter. I will summarise his critical findings but his reasons must be read as a whole and his earlier discussion must not be overlooked. 57 The Tribunal found that as far as the grape producer and its professional advisers were concerned, the principal purpose of those persons was not to enable the applicant to obtain tax benefits. Various facts were indicative of the project's commercial viability and a prevailing business purpose to obtain profits. The Tribunal member's reasons focus on what he called the applicant's 'principal objective purpose' in entering into the scheme having regard to the matters in s 177(b)(i)-(viii) inclusive. 58 The first matter the Tribunal member considered was the manner in which the scheme was entered into or carried out. He found that the applicant borrowed the relevant licence and management fees and interest cost of the loan save for an initial outlay of $2,204, and this was done in circumstances where the pre-payment of the licence and management fees by the lender on behalf of the applicant involved a 'round-robin' arrangement and the applicant's liability under the loan offer was limited to the primary instalment amounts per vineplot. That meant, said the Tribunal member, that the lender recovered the balance of the loan from the proceeds of the sale of the applicant's grapes and the applicant's liability for the primary instalments was funded by the income tax saved by deducting the disputed expenses which it was accepted were tax benefits in connection with the scheme. The Tribunal member said that these facts objectively indicated a prevailing purpose on the applicant's part to obtain tax benefits. He said that he did not think that this finding was 'diminished' by the fact that the applicant was a man of means, that he did not claim the relevant tax refunds at the earliest opportunity, that he participated in the project at the minimum level, that the promotional material did not over-emphasise the tax benefits, that the 'round-robin' arrangements were legally effective and that the limited recourse loan was a commercially sensible option for the applicant in his circumstances. 59 The second matter the Tribunal member considered was the form and substance of the scheme. He identified two areas where he said that there was a material difference between the form and substance of the scheme. First, although the genuineness of the relevant arrangements was uncontested, they related to extant vineplots which the evidence established were brought into existence some time after the contracts were made. Secondly, and, the Tribunal member said, more significantly, the formal arrangements by which the applicant conducted his business of growing wine grapes, including the limited recourse loan, had the practical effect of a passive investment which, but for the tax benefits, would ordinarily have been cast in a different legal form. The Tribunal member found that these distinctions between the form and substance of the scheme pointed to a prevailing purpose on the part of the applicant to obtain tax benefits. 60 The third matter the Tribunal member considered was the time at which the scheme was entered into and the length of the period during which the scheme was carried out. The Tribunal member found that the fact that the disputed expenses were incurred towards the end of the year preceding the commencement of the project indicated a purpose of obtaining tax benefits. He said no such inference could be drawn from the length of the period during which the scheme was to be carried out which he said pointed to a predominantly commercial purpose. 61 The fourth matter the Tribunal member considered was the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme. The Tribunal member said that in relation to this matter the applicant was entitled to the tax benefits that accrue from the income tax deductibility of the disputed expenses, a result that 'unequivocally indicates a dominant purpose of obtaining those benefits which exceed his disbursements in respect of the viticulture project'. 62 The fifth matter the Tribunal member considered was any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme. He said that the viticulture project was commercially viable and had been successful to the date of the hearing and that he had no reason to doubt that it will proceed to a successful conclusion in 2012. The Tribunal member said that it was implicit in the reasons for judgment of Nicholson J in Calder v Commissioner of Taxation 59 ATR 655 (' Calder at first instance') at [106] that the decision-maker must find whether, at the point of entry, the commercial benefits were certain or uncertain as against the certainty of the tax benefits incorporated in this scheme. The viticulture project is managed as an extension of the grape purchaser's wine growing operations and as such is not subject to risks of failure beyond those ordinarily associated with a vineyard business. On the other hand, according to the prospectus projections, the applicant would begin to derive after tax returns in 2007 ie after 10 years. This projection at the time of entry into the scheme would indicate a prevailing purpose on the part of the applicant to obtain the tax benefits. The Tribunal member found that the connection which arose when the applicant entered into the scheme between the applicant and the grape producer, including the companies created to implement the scheme, was not a connection of the nature contemplated by s 177(b)(vi). 64 As far as the seventh and eighth matters in s 177D(b) were concerned, the Tribunal member found that there were no other consequences for the purposes of s 177D(b)(vii) or connections for the purposes of s 177D(b)(viii), and the fact that there were no such consequences or connections was neutral in applying the test in s 177D(b). By participating in the project, the applicant was carrying on the business of growing wine grapes and he had a discernable commercial or business purpose in entering into the scheme to achieve the further purpose of providing for his retirement. 2. The findings in paragraph 1 do not decide the question whether, for the purposes of s 177D(b) of Part IVA of the Act, the applicant entered the scheme for the purpose of obtaining tax benefits. At the same time simply to show that the applicant obtained tax benefits does not show that Part IVA applies and the question always is whether the terms of the Act apply to the facts and circumstances of the particular case. 3. The question is whether the applicant entered into the scheme predominantly to obtain tax benefits based exclusively on the objective matters listed in s 177D(b)(i) to (viii) and without reference to the applicant's subjective motives for entering into the scheme. I have already referred to his reasoning and the order he made in [2] and [6] above. The challenge raised by the second question of law formulated by the applicant is no longer pressed and it can be put to one side. It is simply a statement of a question the Tribunal member was required by the relevant statute to determine. The Tribunal member decided the question adversely to the applicant, but simply to restate the question is not to state a question of law raised on the appeal. 70 The questions of law said by the applicant to be raised on the appeal are to be gleaned from the grounds of appeal and the oral and written submissions of the applicant. I summarise the main submissions made by the applicant. First, it is submitted by the applicant that the Tribunal member failed to take into account as relevant considerations the fact that the applicant was a man of means, he had a longstanding interest in the viticultural industry and he invested in the project at the minimum level. Secondly, it is submitted by the applicant that the Tribunal member erred in law in holding that the six matters he identified (see [58] above) did not negate or 'diminish' his conclusion that the dominant purpose was to obtain tax benefits in connection with the scheme. Thirdly, it is submitted by the applicant that the Tribunal member erred in concluding that according to the projections the applicant would not begin to derive after-tax returns until after ten years and that led him not to give proper and genuine consideration to the commercial benefits to be derived by the applicant from the scheme. Fourthly, it is submitted by the applicant that irrespective of the fate of the previous submission, the Tribunal member did not give proper and genuine consideration to the commercial benefits to be derived from the scheme and, in particular, the fact that the prospectus forecast healthy commercial returns. 71 There were some other points raised by the applicant which I will deal with in the course of dealing with his submissions. 72 Before considering these submissions in the context of each of the matters in s 177D(b) , it is appropriate to make some general observations. 73 Section 177D(b) requires the decision-maker to consider the eight matters referred to in the paragraph, and those matters alone, and to decide on the balance of probabilities if a certain conclusion would be drawn: Peabody v Commissioner of Taxation (1993) 40 FCR 531 (' Peabody ') at 541 per Hill J (Ryan and Cooper JJ concurring); Calder v Federal Commissioner of Taxation (2005) 61 ATR 267 (' Calder ') at 290 [91]. The conclusion to be drawn is, in this case, as to the relevant taxpayer's purpose and by reason of s 177A(5) that means his or her dominant purpose. A relevant taxpayer may have more than one purpose and one of his or her purposes may be to obtain commercial benefits. However, if, having regard to the matters in s 177D(b) , his or her dominant purpose is to obtain a tax benefit in connection with the scheme, then Part IVA applies even if one of the relevant taxpayer's other purposes is to obtain commercial benefits: Commissioner of Taxation v Spotless Services Ltd [1996] HCA 34 ; (1996) 186 CLR 404 (' Spotless ') at 415-416; Commissioner of Taxation v Hart [2004] HCA 26 ; (2004) 217 CLR 216 (' Hart ') at 227 [16] per Gleeson CJ and McHugh J; Commissioner of Taxation v Sleight [2004] FCAFC 94 ; (2004) 136 FCR 211 (' Sleight ') at 229-230 [67] and 238-239 [113] per Hill J (with whom Hely J agreed); Calder at 291 [92]) . The question is to be determined objectively in the sense that the question is not as to the relevant taxpayer's subjective intention and purpose: Spotless at 421-422, 424; Hart at 233 [37], 243 [65] per Gummow and Hayne JJ; Peabody at 542; Calder at 291-292 [96]. What these propositions mean in this case is that the applicant's subjective purpose in entering into the scheme, even if a commercial one, is not of itself relevant. Furthermore, a decision-maker may conclude, after having regard to the matters in s 177D(b) , that the applicant had a commercial purpose in entering into the scheme but that will not assist him if it is otherwise concluded that his dominant purpose in entering into the scheme was to obtain a tax benefit in connection with the scheme. 74 The authorities establish that in relation to the matters in s 177D(b) in any particular case one matter may be decisive and in another case it may only be after a careful weighing of all matters that a conclusion can be drawn. Furthermore, some factors may be neutral, others may point towards a commercial purpose but the conclusion drawn from a consideration of all matters may support a conclusion of a dominant purpose to obtain tax benefits in connection with the scheme ( Sleight at 229-230 [67]; Calder at 290 [91]). The applicant submits the Tribunal member should have found that the six matters negated a finding of a prevailing purpose of obtaining tax benefits, or at the least diminished it. 76 It is important to appreciate the reasoning of the Tribunal member. He identified features relevant to the manner in which the scheme was entered into or carried out. He decided, after considering those features, that a conclusion of a dominant purpose of obtaining tax benefits should be drawn. With respect, the Tribunal member's use of the word 'diminished' is not entirely felicitous, but I think, reading his reasons as a whole, it is clear what he meant. I do not think he was saying the six matters should not be considered or should not be weighed in the balance. In my opinion, all the Tribunal member was saying was that weighing them in the balance they did not dissuade him from reaching the conclusion that, in relation to the manner in which the scheme was entered into or carried out, the applicant's prevailing purpose was to obtain tax benefits in connection with the scheme. 77 I reject the submission that the Tribunal member should have concluded that the six matters negated a conclusion of a dominant purpose of obtaining tax benefits. 78 Three of the matters were undoubtedly matters to be taken into account, namely, the fact that the applicant did not claim the relevant tax benefits at the earliest opportunity, the fact that the prospectus did not overemphasise the tax benefits, and the fact that the limited recourse loan was a commercially sensible option for the applicant. The applicant paid $1,204 to the lender on 19 June 1997 and $5,400 to the lender in late September 1997. 2. The applicant paid tax on his income for the year of income ended 30 June 1997 of $99,975.40. 3. The applicant lodged his taxation return on 6 April 1998 and received a refund of $9,174.84 on 9 April 1998. They are made relevant to that consideration by the broad terms of the criterion in s 177D(b)(i). He found that they did not objectively support such an inference. The fact that they might support an inference that Mr Calder was seeking commercial returns does not, on the authorities previously discussed, exclude the possibility that they would be neutral in relation to the question whether there was a dominant purpose of seeking a tax benefit. He also submitted that, by law, the promoters of a scheme were required to provide in a prospectus information as to the tax benefits available by way of allowable deductions under the Act. A report dealing with the tax implications of the project and an investigating accountant's report meeting the reporting requirements were therefore included in the prospectus. But, as has already been noted, a commercial purpose may be entirely consistent with the existence of a dominant purpose of securing a tax benefit. The latter not being indicated from the prospectus, it would seem that it was, in that sense, that his Honour regarded the prospectus as neutral. He cannot be said to have erred in that conclusion. Both of these matters are matters the Tribunal member took into account. On no view are they strong enough to outweigh the conclusion reached by the Tribunal member that the prevailing purpose was the obtaining of tax benefits. The applicant also referred to the fact that he had a longstanding interest in the viticulture industry and that he carefully considered the forecast commercial benefits of the scheme before taking up the offer. These are not matters specifically referred to by the Tribunal member when setting out his conclusions in relation to the manner in which the scheme was entered into or carried out. He did refer to the latter when summarising the evidence which the applicant gave. 83 Both matters are matters of fact and are not in themselves matters of subjective purpose or intent. However, in my opinion, they are not matters which fall within any of the eight matters in s 177D(b) and the Tribunal member was not bound to take them into account. 84 As to the fact that the round-robin arrangements were legally effective, the applicant's submission as it was developed was that the round-robin arrangements were irrelevant to purpose because the applicant was unaware of the arrangements or, in the alternative, if relevant, they did not support a conclusion of a dominant purpose of obtaining tax benefits. 85 The round-robin arrangements were the arrangements whereby the manager lent money, being the management fees for 705 Vineplots, to the lender who, on behalf of the growers paid it to the trustee who then paid it to the manager. This occurred in late June 1997 and then in each of the two following years. 86 There is no doubt that, as the Tribunal member found, the round-robin arrangements were legally effective: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471 at 486-487 [46] - [47] . The applicant gave evidence that he was not aware of the round-robin arrangements, but the Tribunal member did not make a finding as to whether the applicant was or was not aware of the arrangements. He referred to the applicant's evidence without disapproval and it is appropriate for me to proceed on the basis that the applicant was not aware of the arrangements. They were the persons referred to in s 177D; not some unidentified advisors. There is no point in making a finding about what would be concluded concerning the purpose of an advisor unless that purpose is then attributed to a relevant person. It is reasonably clear that, albeit in a slightly elliptical fashion, Hill J was doing that. He was justified in doing so. As was mentioned above, it is to be expected that those who participate in a complex, international, commercial transaction will be concerned about its tax implications, and will seek expert advice. Attributing the purpose of a professional advisor to one or more of the corporate parties in the present case is both possible and appropriate. In some cases, the actual parties to a scheme subjectively may not have any purpose, independent of that of a professional advisor, in relation to the scheme or part of the scheme, but that does not defeat the operation of s 177D. If, in the present case, there had been evidence which showed that no director or employee of any member of the Group had ever heard of s 79D, that would not conclude the matter in favour of the taxpayer. One of the reasons for making s 177D turn upon the objective matters listed in the section, it may be inferred, was to avoid the consequence that the operation of Pt IVA depends upon the fiscal awareness of a taxpayer. However, on appeal in Commissioner of Taxation v Cooke (2004) 55 ATR 183 the Full Court of this Court did not agree. Upon that footing, her Honour accepted the submission of the respondents that those transactions could not be part of any scheme, and purported to apply the dictum of Blanshard J of the New Zealand Court of Appeal in Commissioner of Inland Revenue v BNZ Investments Limited (2001) 20 NZTC 17 at [103] to the effect that a taxpayer's ignorance of the arrangements the subject of an income tax avoidance scheme renders the New Zealand anti-avoidance legislation unavailable to the New Zealand revenue authority. However as was pointed out in Howland-Rose at [134], Part IVA of the Tax Act is distinguishable from the New Zealand legislation in that regard. Thus in Federal Commissioner of Taxation v Consolidated Press Holdings Ltd [2001] HCA 32 ; (2001) 207 CLR 235, in the joint judgment of Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ at [95], it was pointed out that "[o]ne of the reasons for making s 177D turn upon the objective matters listed in the section, it may be inferred, was to avoid the consequence that the operation of Part IVA depends upon the fiscal awareness of a taxpayer". On appeal to the Full Court of this Court, the taxpayer submitted that the round-robin arrangements should have been ignored because the taxpayer was not aware of them. The subjective purpose of the taxpayer and, indeed, the taxpayer's awareness of the relevant provisions of the law, his fiscal awareness, are not material to determining the question of purpose. The issue that arises is whether the way in which the entities associated with the promoters of the scheme deal with their funds may be relevant to determining the taxpayer's purpose. So a taxpayer may execute the relevant application form and agreements without reading them. That does not mean that the taxpayer is taken to be unaware of them and that the contents of the agreements are to be disregarded in assessing purpose under s 177D. It would be open to a taxpayer to make inquiry as to how the funds which the taxpayer is contributing will be dealt with as between, for example, lender and manager. That is an inquiry which the taxpayer would be entitled to make having regard to the liability that he or she has assumed to pay the manager's fees. The absence of such inquiry and lack of awareness of the way in which the funds were actually processed does not mean that those factors are to be disregarded in the objective assessment of purpose under s 177D any more than the unread details of the contracts which constitute the framework of the scheme. That lack of awareness being irrelevant to his Honour's proper consideration of this aspect of the execution of the scheme, this ground must fail. The weight he placed on the matter is unclear but ultimately that was a matter for him, and the applicant's case is not advanced by referring to another case where a Judge said that he was not inclined to place a great deal of weight on the round-robin arrangements Sleight at 232 [77] per Hill J). 91 The Tribunal member did not err in law in his approach to the manner in which the scheme was entered into or carried out, and the conclusions he reached in relation to that matter were reasonably open to him. He said that that difference pointed to a prevailing purpose on the part of the applicant to obtain tax benefits. 93 The applicant criticised this reasoning on two grounds. First, he submitted that the Tribunal member's finding, that the practical effect of the scheme from the applicant's point of view was that of a passive investment, was inconsistent with his earlier findings in connection with the question of whether the expenses were necessarily incurred in carrying on a business for the purpose of gaining or producing income or losses of capital or of a capital nature. In that context, the Tribunal member found that the applicant was, through a manager, conducting a business of growing and selling grapes from the vineplots licensed to him and the expenses were not outgoings of capital. Secondly, the applicant submitted that there was no basis upon which the Tribunal member could conclude that, but for the tax benefits, the passive investment would ordinarily have been cast in a different form. 94 I reject both these submissions. I start with the alleged inconsistency of findings. The findings to the effect that the applicant was conducting a business and the expenses were not losses of capital, or of a capital nature, were made in the context of the issues raised under s 51(1) of the Act and section 8-1 of the 1997 Act. The context in which s 177D(b)(ii) operates is quite different. The reference to the substance of the scheme in that paragraph enables the decision-maker to examine what, in practical terms, the applicant was required to do. The answer to that question is that he was required to do no more than what would be required of a passive investor. As to the other criticism, it was open to the Tribunal member to conclude that ordinarily, but for the tax benefits, the investment by the applicant would have been cast in a different form. 95 The approach taken by the Tribunal member in relation to this matter was consistent with the approach taken in decisions of this Court. In form there is an option whether to farm alone or to employ the management company. There is a management agreement and financing and interest payments. The form, involving prepayment of management fee and interest is, it may be concluded readily, designed to increase the taxation deductions available to an investor. The substance is, however, quite different. As senior counsel for the Commissioner put it, in substance the investor is a mere passive investor in what, once the tax features are removed, is a managed fund where no deduction would be available, or perhaps an alternative characterisation of the substance of the scheme is an investment in shares in the Land Company which at the expiration of 15 years is to own the tea tree plantation. Rather the particular shape the investment took was clearly fashioned in a way that would maximise the tax deductions. They were geared up by the loan agreement with up front interest payments. But for the tax deductions the form the investment might be expected to take would clearly relate more to the substance of what happened. Rather than a loan with prepaid interest where the loan was to be repaid out of the investor's profit share without recourse (achieved through the indemnity agreement) the substance is that the investor was to receive only a lesser share of profit over the term of the loan agreement. The loan allowed, also, the prepayment of the management fee and the deduction which emanated from that. Section 177D(b)(iv) --- the results in relation to the operation of this Act, that but for this Part, would be achieved by the scheme. He did challenge the Tribunal member's conclusion that that result 'unequivocally indicates a dominant purpose of obtaining those benefits which exceed his disbursements in respect of the project'. Simply to show that a taxpayer has obtained a tax benefit does not show that Pt IVA applies. With these considerations in mind, it is sometimes said that it is necessary to read Pt IVA in a way that will not bring "ordinary" transactions to tax. It is obvious that the content of such a proposition turns entirely upon what is meant by "ordinary". The Tribunal member was addressing one of the eight matters in s 177D(b) and the conclusion he drew that, but for Part IVA, the applicant would enjoy tax benefits by way of the income tax deductibility of the expenses was undoubtedly correct. He said that that supported the conclusion that the applicant's prevailing purpose was to obtain tax benefits in connection with the scheme, but he did not say that it was decisive. There is no error in that approach. Section 177D(b)(v) --- any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme. The income received by the applicant from the project to the date of the hearing before the Tribunal had exceeded $31,000 and was within 2.5 per cent of prospectus forecasts after seven years. The Tribunal member found that if the project continued to perform according to prospectus forecasts, the applicant will make a substantial profit from his business. 102 The Tribunal member said that the matter must be considered as at the date the scheme was entered into and he referred to the reasons of Carr J in Sleight at 255-256 [223]-[224]. The applicant did not take issue with that approach. 103 The applicant's first submission in relation to the Tribunal member's reasons in relation to this matter was that he had made an error in concluding that, according to the projections, the applicant would begin to derive after tax returns in 2007, that is, after 10 years. The applicant submitted that this was wrong and that the projections indicated after tax-returns after six years. As I understand the projections, the applicant is right in the sense that after about six years there are after-tax returns before repayments of the loan are taken into account. If repayments of the loan are taken into account there are only after-tax returns after 10 years. 104 I have no doubt that the Tribunal member did not misunderstand the effect of the projections. However, in those years, the structure of the loan resulted in neutral cashflows to the participant who, after meeting his loan obligations was to be paid enough only to meet anticipated tax obligations. Only 10 years after the project commenced, in 2007, was the applicant first to obtain after-tax returns from the vineyard. The fact is that the applicant took up the loan offer and, taking into account repayments of the loan, it would only be after 10 years that the project would be cashflow positive by reason of revenue received from the project itself. 107 The applicant's second submission is that the Tribunal member erred in relying on the reasons for judgment of Nicholson J in Calder at first instance for the proposition that a decision-maker must weigh the certainty of tax benefits against the certainty or uncertainty of commercial benefits. 108 The applicant submitted that that proposition was not embraced by Nicholson J in Calder at first instance. In one sense that is not the question because, if it is a correct proposition, whether it was embraced by a Judge in one case is not to the point. As it happens, I think Nicholson J did embrace it by implication in Calder at first instance and, properly understood, it is clearly an appropriate matter for the decision-maker to consider. 109 The applicant seemed to suggest that the Tribunal member was saying that once a conclusion was drawn that commercial benefits were uncertain, a conclusion that the prevailing purpose was obtaining tax benefits must follow. The Tribunal member was not saying that. He said a decision-maker was entitled to consider the certainty of tax benefits and the certainty or uncertainty of commercial benefits and that was not an impermissible approach. I do not see any error in the approach of the Tribunal member. The tax benefits are certain or almost certain and it is not erroneous to consider as against that the certainty or uncertainty of commercial benefits. 110 The applicant's third submission was that the Tribunal member failed to give proper and genuine consideration to the commercial benefits associated with the scheme. In particular, he emphasised that the internal rate of return utilising the loan offer was 60 per cent and not utilising the loan offer was 17 per cent. The Tribunal member was alive to the commercial benefits associated with the scheme, including the projected rate of return. It seems to me that the Tribunal member weighed up the relevant matters and reached a conclusion in relation to a case where the answer was not as obvious as it has been in other cases. The conclusion he reached was a conclusion reasonably open to him. 113 The appeal must be dismissed and the applicant must pay the respondent's costs. I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | income tax tax effective investment schemes appeal by taxpayer from decision of administrative appeals tribunal where taxpayer invested in viticulture project where scheme included round robin arrangement regarding management and licensing fees and loan where taxpayer had discernable commercial purpose for entering into scheme whether tribunal member ignored relevant factors in finding that relevant person had a dominant purpose of obtaining tax benefit whether tribunal member failed to proper and genuine consideration to commercial benefits of scheme consideration of factors in s 177d(b) of the income tax assessment act 1936 (cth). taxation |
On 29 May 2007, I made orders dismissing the application in this proceeding, reserving questions of costs and giving directions about the filing of written submissions and the hearing of argument in relation to issues of costs. At that time, I also published reasons for judgment, very substantial in length, dealing with the principal issues in the proceeding. See Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794. It is convenient to refer to that judgment in these reasons for judgment as Leahy Petroleum . 2 The proceeding in which that judgment was given involved allegations by the applicant, the Australian Competition and Consumer Commission ("the ACCC"), of contraventions of s 45(2) of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act ") by a number of corporations engaged in retail selling of petrol in and around the City of Geelong. The corporations were alleged to have entered into, and to have given effect to, a series of arrangements or understandings that contravened s 45A of the Trade Practices Act , because they contained provisions for the fixing, controlling or maintaining of prices of petrol. In addition, a number of natural persons were alleged to have been involved in the contraventions. The corporate respondents are identified in Leahy Petroleum at [57]. Their respective relationships with the natural person respondents are set out in Leahy Petroleum at [64]. For ease of reference, in these reasons for judgment, I propose to refer to the corporate respondents by their abbreviated names, in the same way as I referred to them in Leahy Petroleum . Similarly, I propose to refer to the natural person respondents by their names. The orders I make will reflect the way that the ACCC and the various respondents are described in the title to the proceeding. 3 The power of the Court to award costs is conferred specifically by s 43(1) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act "). The effect of s 43(2) of the Federal Court Act is that, in a case such as the present, the award of costs is in the discretion of the Court. Courts have developed rules or principles to guide the exercise of the discretion in particular cases. Foremost among these is the rule or principle that costs should follow the event, ie. a party successful in litigation should be entitled to recover costs from an unsuccessful party. Similarly, there is a rule or principle that, when costs are awarded, they are normally awarded on a party-party basis. Costs calculated on a party-party basis do not provide anything like full compensation to the successful party for the expenditure incurred in prosecuting or defending the case successfully. Courts have therefore developed rules or principles to guide the exercise of the discretion in exceptional cases, so that costs calculated on a more compensatory basis, right up to a full indemnity, can be awarded if the circumstances justify such an order. Rules and principles are very helpful in determining whether an order for the payment of costs should be made at all, or what the basis of the calculation of costs ordered should be. They are not binding, however, and it must be recognised always that the Court exercises discretionary powers in relation to awarding costs, including the extent to which they should compensate the successful party for actual expenditure. 4 The ACCC and several of the respondents have submitted consent orders in relation to costs. There is no reason not to make those orders. In relation to other respondents, the ACCC accepts in general that it should be required to pay the costs of the successful respondents who contested the proceeding, in the application of the rule or principle that costs follow the event. There are some respondents who entered into agreements with the ACCC during the course of the proceeding, prior to its trial, which agreements obliged those respondents to make full admissions as to contraventions of s 45(2) of the Trade Practices Act , to consent to orders being made against them, including orders for pecuniary penalties, declarations and injunctions, in some cases to give evidence on behalf of the ACCC at the trial, and to submit to orders that they pay costs to the ACCC. For reasons that I gave in Leahy Petroleum , at [962], I declined to make findings in accordance with the admissions made pursuant to those agreements. The ACCC has recognised that, in view of this, and of its lack of success despite the evidence given by some respondents pursuant to those agreements, it ought not to attempt to enforce the agreements so far as they obliged the parties to them to submit to orders for costs in favour of the ACCC. Some of those respondents have contended that they should be entitled to orders for costs against the ACCC, on the basis that such costs should follow the event. The ACCC has contended that there ought to be no order as to costs as between it and the successful respondents who were parties to such agreements. It is therefore necessary to resolve that issue. 5 In addition, some of the respondents who contested the proceeding have asked the Court to order that the ACCC pay their costs on an indemnity basis, or on some other basis that would compensate them more fully than party-party costs, for their expenditure on legal costs, either in respect of the entire proceeding, or in respect of part of it. Various arguments have been advanced in support of these applications, and various times during the trial have been advanced as appropriate points from which indemnity costs should be ordered in favour of different respondents, if they are not to receive indemnity costs in respect of the entire proceeding. It is also necessary to resolve these issues. Similarly, on 21 June 2007, the ACCC and Alan Shuvaly filed a consent order to the effect that there should be no order as to costs as between those parties. The proposed order is based on the assumption that, at some point, Brumar ceased to be responsible for Mr Dalton's costs. Mr Dalton still wishes to claim his costs after that date. It seems to me that the order needs reframing, to express the true intent of those who have consented to it. I propose to make a consent order that will reflect the situation, and not prejudice Mr Dalton in respect of the period after the date on which Brumar ceased to be responsible for his costs. 8 On 25 July 2007, the ACCC and Colin Williamson filed a consent order, bearing that date, to the effect that the ACCC pay the costs of the proceeding incurred by Mr Williamson, to be assessed on a party-party basis. An order by consent reflecting this agreement will be made. 9 In addition, the ACCC provided to the Court copies of correspondence between its solicitor and the liquidator of Leahy. In that correspondence, the ACCC sought the views of the liquidator on issues of costs. The ACCC invited the liquidator to consent to an order that there be no order as to costs as between the ACCC and Leahy. On the basis that a final meeting of members and creditors of Leahy had been held on 20 October 2006, the liquidation had been finalised, and the liquidator had requested that Leahy be deregistered, the liquidator did not believe that he was in a position to sign a consent to such an order. It would follow that the liquidator of Leahy would not be in a position to ask the Court for an order for costs in favour of Leahy. Neither would there be any other mechanism by which Leahy could apply for such an order. In the circumstances, it may be accepted that Leahy does not seek costs and that therefore no order for costs should be made as between the ACCC and Leahy. I have referred to these agreements in Leahy Petroleum at [133]-[136]. Mr Carmichael and Mr Warner each agreed to consent to orders in the terms of, or in similar terms to, those sought against them in the application in its original form. These included an order that the respondents pay the ACCC's costs of and incidental to the proceeding. Mr Heikkila's agreement was in a different form. In it, the ACCC agreed to accept costs of $5,000 from Mr Heikkila in respect of the proceeding. It should also be noted that Alan Shuvaly entered into an agreement with the ACCC similar to that entered into by Mr Carmichael and Mr Warner, but Mr Shuvaly has sought an order by consent involving no order as to costs as between himself and the ACCC. 11 Much of the argument about whether the ACCC should be ordered to pay the costs of Mr Carmichael, Mr Warner and Mr Heikkila, or whether there should be no order as to costs between the ACCC and each of those respondents, was concerned with issues of contract law. Attempting to approach the issue in this way is unproductive. There can be little doubt that there was implicit in each agreement to pay the ACCC's costs a term that each of the respondents so agreeing would pay his own costs of the proceeding. This is not to say a great deal, however. The parties to each of the agreements acted on the assumption that the case would have a particular outcome. The agreement by each of the relevant respondents to pay his own costs of the proceeding rested on that assumption. Once that assumption is falsified, it is impossible to say that the parties would have been of a unified view as to what should happen in relation to the costs of those respondents. More than likely, they would have disagreed, as they now do. In those circumstances, it is impossible to find that each of the agreements contained an implied term that either party to it would pay the other's costs, or that costs would lie where they fell. 12 Nor does the application of other principles of contract law assist in the resolution of the question whether orders for costs should be made in favour of the respondents who entered into costs agreements. The power of the Court to award, or to refrain from awarding, costs is not dependent upon what the parties concerned have agreed. It is therefore pointless to seek to determine whether the agreements have failed for want of a subject-matter, and whether they could or should be set aside, as was suggested by counsel for Mr Heikkila. The same applies to suggestions that the Court should now attempt to determine whether the relevant respondents entered into agreements under duress (given that they lacked the resources necessary to defend the proceeding properly) or in consequence of a misrepresentation by the ACCC (to the effect that it had the evidence necessary to prove the case against them). 13 The question remains whether costs should follow the event, so that the ACCC should be ordered to pay the costs of Mr Carmichael, Mr Warner and Mr Heikkila, in the application of the usual principle, or whether there is something in the circumstances of the case that would warrant departure from that principle. The researches of counsel, and my own researches, have not revealed the existence of any authority that is of great assistance. The nearest is perhaps Hickman v Berens [1895] 2 Ch 638. In that case, the plaintiff applied to set aside an agreement to compromise a proceeding, on the ground that no consensus had existed as to the basis of the agreement. An official referee declined to set aside the agreement. Kekewich J dismissed an appeal from the official referee's decision. The Court of Appeal allowed an appeal from the judgment of Kekewich J. The order of Kekewich J. must be discharged, and there must be no costs of either side, either of the appeal to him or of the appeal to us. We take that to be as near justice in the matter of costs as is possible. The Court has simply declined to give effect to the agreements, so far as they committed the relevant respondents to consenting to orders of the Court. In the light of that, the ACCC, properly in my view, has accepted that it should not seek to enforce those agreements in so far as they require consent to orders for, or the actual payment of, the ACCC's costs. It appears to me that there were mistakes on both sides in relation to the agreements. I do not know what the ACCC's cooperation policy (in accordance with which it is said that the agreements were made) says in detail. It does seem to me, however, that the ACCC needs to be more aware of the disparity that may exist between itself and opposing parties with whom it proposes to enter into agreements of this kind, in terms of the resources available to contest litigation. The legal costs of defending a proceeding may be so great as to induce respondents to be more ready than they should to concede all that the ACCC claims against them, when the claims may in truth be unfounded, or some good defence may exist. In addition, the ACCC needs to recognise that large-scale litigation often has a profound effect on the lives of people who are caught up in it, an effect much greater than that suffered by those who manage large corporations caught up in similar litigation. The present case is a good example of the need for caution in accepting total capitulation. On the other hand, there was no obligation on the part of any respondent to enter into an agreement with the ACCC as to the outcome of the case. Each of Mr Carmichael, Mr Warner and Mr Heikkila opted to do so, after receiving legal advice. One alternative was to play no significant part in the trial, as Colin Williamson did. He will now be the beneficiary of an order that the ACCC pay his costs of the proceeding as a successful respondent. Another possible option might be to defend the case in person, perhaps with some coaching from a legal adviser. In the present case, without the oral evidence of Mr Carmichael, Mr Warner and Mr Heikkila, the ACCC's case would have depended even more on the circumstantial evidence, particularly the alleged relationship between telephone calls and petrol price increases, than it did. A detailed analysis of that data, together with evidence produced by the cross-examination of such other witnesses as the ACCC called would have made clear some of the weaknesses of the ACCC's case. 16 Plainly, the result of the case has falsified the assumption on which the ACCC and each of the relevant parties entered into the agreements, namely that there had in fact been unlawful price-fixing in the Geelong petrol market. In the circumstances, the justice of the case seems to me to require that there be no order as to costs as between the ACCC and the parties who entered into the agreements. It is significant that this view appears to have commended itself to both the ACCC and Mr Shuvaly, who have consented to an order that no order for costs be made as between them, despite the fact that there was an agreement between them that dealt with the question of costs. It must be recognised that an appropriate case will only be one in which the circumstances justify the Court in departing from the usual rule that costs awarded will be calculated on a party-party basis. It is impossible to provide a comprehensive definition of what is an appropriate case. In Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234, Sheppard J set out principles that his Honour derived from the authorities. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion. The principle is derived from Calderbank v Calderbank [1975] 3 All ER 333. A party may set up a situation in which an award of indemnity costs is possible by making a reasonable offer of compromise in what is described as a "Calderbank letter", containing the terms of the offer and signifying that the letter will be relied upon to found an application for costs on an indemnity basis in the event that it turns out that the offer ought to have been accepted. To some extent, O 23 of the Federal Court Rules now codifies the circumstances in which refusal of an offer of compromise will found an application for indemnity costs. The area of law has become beset by technicality, much of which appears to me to be unnecessary. Arguments were raised in the present case about whether letters written by one party or another did or did not fit within what the authorities would regard as a Calderbank letter. In particular, it was said that there must be a true offer to compromise, involving the giving of something, and not merely a demand that the other party capitulate. I am by no means certain that this is a universal rule. Whatever the terms of any letter, or other means of conveying an offer of compromise, the question at heart must remain whether the unsuccessful party to the case pursued it unreasonably, having regard to the circumstances at any particular time. It is to be emphasised that the costs discretion is broad and is to be exercised in circumstances that will vary considerably from case to case. Whilst the criteria used in analogous circumstances will be of assistance it is simply wrong...to use such criteria as rules or tests governing the exercise of the discretion. Thus, an "imprudent" refusal or a "plainly unreasonable" refusal to accept an offer of settlement might, having regard to all the circumstances of the case, warrant the making of an order for indemnity costs if it is "just" to do so...However, such circumstances merely offer examples of where indemnity costs are ordered. Likewise, in some situations a conditional offer may be less likely to attract the Court's discretion to order indemnity costs than others. Much will depend upon the reasonableness of the offer and of [ sic ] the reasonableness of the conduct of the other party in refusing it having regard to all the circumstances of the case. Plainly, the ACCC's investigators, and its legal representatives, were too carried away by the supposed correlation in the data the ACCC had collected between telephone calls and petrol price increases. Insufficient attention was given to the question whether such a correlation really existed, particularly in the light of the occasions recorded in the data summary, known as Annexure B, on which there were telephone calls without price increases, and on which there were price increases without telephone calls. I refer particularly to the analysis in Leahy Petroleum at [844]-[869], an analysis of the kind that should have been done prior to the commencement of the case, or at the very least prior to the trial, and should not have been left to the Court. It is most unfortunate that the leader of the ACCC's investigating team remained unaware of the ACCC's own report, entitled Reducing Fuel Price Variability (to which I have referred in Leahy Petroleum at [91]-[99] and [118]) until she was being cross-examined during the trial. If the investigators had taken into account the fact that the sawtooth pattern of movements in the retail price of petrol was common in Australia, and the various possible reasons advanced by the ACCC for that pattern, two things might have followed. They might not have made the assumption, which the principal investigator was reluctant to abandon in the witness box, that the only likely cause for such a pattern was collusion between petrol retailers. The investigators might also have been prepared to consider the possibility of a relationship between prices in the Geelong petrol market and those in the Melbourne petrol market. They might have taken a less Geelong-centric view than they appear to have taken. See generally Leahy Petroleum at [90]-[118]. 21 It must be remembered that the ACCC prepared and pleaded its case without the knowledge, or even the expectation, that it would have available to it the evidence of Ian Carmichael, Michael Warner, Alan Shuvaly and Eino Heikkila. These four respondents only agreed to give evidence after the proceeding had been instituted. In its preparation for the trial, the ACCC gave far too little attention to the inconsistencies between the evidence that those witnesses were to give, and did in fact give, and the data in Annexure B. It only emerged in the course of the oral evidence that those witnesses had not been given an opportunity to examine the data before they went into the witness box, thereby exposing them to cross-examination as to the inconsistencies. When I drew attention to this, pointing out that it was bound to lead to additional cross-examination, counsel for the ACCC resorted to putting a handful of selected occasions to some of the subsequent witnesses, and inviting them to speculate as to how the data on those occasions might fit with their general recollections. This was a wholly inadequate attempt to deal with the relationship between the circumstantial evidence and the oral evidence. It appears to me to stem from a belief that the supposed correlation between telephone calls and petrol price increases was strong enough to make the case for the ACCC, irrespective of what the other evidence might have been. 22 Two other inadequacies of the ACCC's case appear to have resulted from the same belief. One was the failure to lead evidence of the evolutionary origins of the alleged arrangements or understandings, particularly in circumstances in which there did not appear to have been sufficient time during which, or any pattern of events from which, the arrangements or understandings might possibly have evolved. See Leahy Petroleum at [150]-[177]. The ACCC's investigators and representatives appear to have taken the view that the data in Annexure B would justify the Court in making findings that effect was given to arrangements or understandings, and would thereby justify findings that those arrangements or understandings existed, irrespective of the effect of the oral evidence. The other inadequacy was the failure of the ACCC's legal representatives to make any serious attempt to grapple with an essential element of an arrangement or understanding, labelled for convenience as "commitment". This inadequacy is dealt with in Leahy Petroleum at [940]-[949]. The ACCC's case on this aspect required acceptance of the proposition that changes in the prices of petrol resulted from the implementation of arrangements or understandings, and that therefore such arrangements or understandings, including the requisite element of commitment, must exist. 23 It is clear that closer attention to the content of the available evidence, and to its relationship with the elements that the ACCC was required to prove, in order to establish contraventions of s 45(2) of the Trade Practices Act , might well have led to the conclusion that the prospect of a successful outcome for the ACCC was not great enough to warrant the expenditure of money involved in the proceeding. Further, the need for such close analysis became greater as the trial advanced, with the inconsistencies between the circumstantial evidence and the oral evidence, and the absence of evidence about significant elements, becoming progressively more apparent. To make these criticisms is not to conclude the question whether costs should be awarded other than on a party-party basis, however. The criticisms do not necessarily establish the proposition that it was unreasonable for the ACCC to commence the proceeding in the first place, or to pursue it to its end. 24 The ACCC is a statutory body, established by s 6A of the Trade Practices Act . It has a number of functions conferred on it, including functions of a regulatory nature. By s 77(1) of the Trade Practices Act , the ACCC may institute a proceeding in this Court for the recovery on behalf of the Commonwealth of a pecuniary penalty. The provisions for contravention of which pecuniary penalties may be imposed are listed in s 76. They include s 45. The ACCC is the only possible applicant for a pecuniary penalty. By other provisions of the Trade Practices Act , the ACCC may apply for other kinds of orders under the provisions of that Act, although its capacity to do so is not always exclusive of the capacity of other persons to apply for particular orders. For instance, under s 80(1) , the ACCC or any other person may apply for an injunction in respect of a contravention of a number of provisions, including s 45. It is apparent that the ACCC has cast upon it significant responsibilities on behalf of the public, to ensure as far as practicable that there is compliance with the provisions of the Trade Practices Act . When the ACCC has commenced and pursued a proceeding in respect of alleged contraventions of a provision of the Trade Practices Act , and there is no suggestion that it has acted with any ulterior motive, the Court should not be quick to award costs against it on anything other than the usual party-party basis when the ACCC has suffered a loss in the proceeding. Excessive readiness to force the ACCC to compensate the winning party to a greater extent than the normal party-party costs incurred might operate as a deterrent to the ACCC against bringing proceedings in the exercise of its public functions. 25 There were some suggestions in argument that orders for indemnity costs against the ACCC might be appropriate because it had failed in some respects to act in accordance with the model litigant policy of the Commonwealth of Australia. In my view, considerations as to whether there has been compliance with that policy are irrelevant to questions of indemnity costs. The model litigant policy has been adopted by the Australian Government as a guide to the manner in which it and its agencies should conduct themselves in litigation, so as not to take advantage of the superiority of resources for litigation, which the Commonwealth often has when compared with those against whom it is litigating. The policy is of significant value to parties against whom the Commonwealth is involved in litigation, and to the courts in which that litigation is conducted. To use lapses in compliance with the policy as a ground for awarding indemnity costs against Commonwealth agencies might have the result that the Commonwealth abandoned the policy. This would be detrimental to the public good. 26 With these considerations in mind, I return to the question of the reasonableness of the ACCC's actions in commencing this proceeding, and in pursuing it to its end. There is not a line, much less a clear line, between having a sound basis for litigation and acting unreasonably in pursuing litigation. Rather, there is a gap, perhaps a substantial one, between having a sufficiently good case to commence and continue proceedings, even if they turn out to be unsuccessful, and having acted so unreasonably as to warrant the award of indemnity costs, or of costs on a basis other than the usual one. It appears to me that this case falls within that gap. It cannot be said that the prospect of success was non-existent, or so slight as to make it unreasonable for the ACCC to commence the proceeding. The ACCC was in possession of more than just the data that found its way into Annexure B. It also had the cooperation of some operators in the Geelong petrol market, even before it commenced the proceeding. It is true that the ACCC did not then give sufficient attention to the detail of the data it possessed, or to the substance of what those cooperating with it might be able to say in evidence. It would be a rare case, however, in which any party proposing to commence litigation would be able to look at the material available to it as if it were a judge doing so at the end of a trial. I am not in a position to say that, at the time it commenced the proceeding, the ACCC ought reasonably to have taken the view that it could not succeed at all. Nor could I find that those responsible for making the decision to commence proceedings were simply motivated by the desire to take a chance, to hit and hope. It seems clear that they believed that they could succeed. It turned out that they were mistaken. 27 Once the conclusion is reached that the ACCC did not act unreasonably in commencing the proceeding, it becomes extremely difficult to determine a point in the conduct of the proceeding at which it ought to have abandoned the enterprise. During the interlocutory stages, some respondents ceased to oppose the proceeding, and began to cooperate. Again, it is possible to be critical of the ACCC for having failed to give sufficient attention to the substance of the evidence that those cooperating parties might give, and to the difficulty of matching that evidence to the data in Annexure B. The situation was not so clear-cut, however, as to justify a finding, with the benefit of hindsight, that the ACCC acted unreasonably in continuing. The difficulty of characterising the case as a losing one from the ACCC's point of view is borne out by the fact that some respondents felt the need to give evidence in their own defence. United Fuels and United Retail called a substantial body of evidence and Garry Dalton gave evidence in his own defence. If it had been obvious that the ACCC could not succeed at all, it is unlikely that these parties would have prolonged the trial, and increased the expense of it, by taking those steps. 28 It is true that, at various points in the trial, I made comments that reflected the tentative views I had that the case was not proceeding in the way the ACCC had opened it, and that I could see difficulties in the evidence, particularly in the inconsistencies between the oral evidence and the circumstantial evidence in Annexure B. These comments cannot be taken as indicating that the ACCC was bound to lose. Indeed, the length of the reasons for judgment in Leahy Petroleum (967 paragraphs), and the detailed analysis of the evidence they contain, are inconsistent with the proposition that it was obvious that the ACCC would lose. 29 For these reasons, it cannot be said that the case is generally one appropriate for indemnity costs, or for the award of costs on any basis other than the usual party-party basis. There is an exception to this proposition that needs further attention. 30 In relation to the alleged arrangement or understanding known as Arrangement No 8, the ACCC set itself a more difficult task in proving the existence of an arrangement or understanding, and that effect was given to it, than was the case with any other alleged arrangement or understanding in the proceeding. Arrangement No 8 was the only tripartite arrangement or understanding alleged. Each of the three parties it was alleged to involve, Apco, Liberty and Andrianopoulos, was a discount retailer of petrol. Each of Liberty and Andrianopoulos had only one petrol outlet in the Geelong retail petrol market area. Apco had a number of such outlets. Each of the three had a significant number of other petrol outlets in other parts of Victoria. Annexure B contained information about a very large number of telephone calls passing between Alan Shuvaly of Liberty and Christos Andrianopoulos of Andrianopoulos, as well as a substantial number of calls between Peter Anderson of Apco and either Mr Shuvaly or Mr Andrianopoulos. It would have required an extremely Geelong-centric view to assume that all of these calls related to retail prices of petrol in the Geelong petrol market. This is especially so as the number of occasions on which the ACCC was prepared to allege that effect was given to Arrangement No 8 was quite small, when compared with the number of occasions on which it alleged that effect was given to some of the other alleged arrangements or understandings. Further, the occasions on which it was alleged that effect was given to Arrangement No 8 diminished in number significantly during the course of the trial. From the outset, Arrangement No 8 was far from the strongest aspect of the ACCC's case. In order to bolster it, the ACCC called Mr Shuvaly to give evidence, pursuant to the agreement to which I have referred between the ACCC and Mr Shuvaly, in [11] of these reasons for judgment and [135] of Leahy Petroleum . Mr Shuvaly gave evidence on the 12th, 13th and 14th days of the trial, Wednesday, 31 August, Thursday, 1 September and Friday, 2 September 2005. The evidence is summarised in Leahy Petroleum in [231]-[245]. It did not go well for the ACCC. In fact, as is described in [238]-[241], counsel for the ACCC sought, and were granted, leave to cross-examine Mr Shuvaly about a prior inconsistent statement. The cross-examination was largely ineffective. 31 After another witness had followed Mr Shuvaly into the witness box on 2 September 2005, shortly before adjourning the proceeding at the end of the day, I raised with counsel for the ACCC the difficulty of establishing the existence of Arrangement No 8, and particularly the necessary element of commitment, by reference to Mr Shuvaly's evidence. I invited counsel for the ACCC, in conjunction with senior people from the ACCC, to give serious consideration to the way in which the case was put, because I was concerned about the expenditure of money involved. 32 The trial resumed on the following Wednesday, 7 September 2005. Counsel for the ACCC therefore had sufficient time to consider the transcript of Mr Shuvaly's evidence, in the light of the relatively slight circumstantial evidence in relation to Arrangement No 8. In my view, they ought at that time to have realised that Mr Shuvaly's evidence would not assist them to prove the existence of Arrangement No 8 and that, in a number of significant respects, the evidence was inconsistent with the existence of an arrangement or understanding of the kind alleged as Arrangement No 8. In the light of the relatively scant circumstantial evidence on which the ACCC felt able to rely in suggesting that effect was given to Arrangement No 8, by the 15th day of the trial, 7 September 2005, the ACCC ought to have realised that Arrangement No 8 was not going to be proved. 33 It must be remembered that, much earlier in the trial, the ACCC had abandoned its claims against Pegasus and the individual respondents associated with Pegasus, having realised that it could not prove the case against them. In the course of argument on the issues of costs, counsel for the ACCC referred to this abandonment as demonstrating the ACCC's preparedness to act responsibly. They informed me that the decision to abandon the Pegasus claims was taken because the ACCC had nothing but the circumstantial evidence on which to rely. In my view, with respect to Arrangement No 8, by the 15th day of the trial the ACCC was in an even worse position with respect to Arrangement No 8 than it had been with respect to the Pegasus claims. It was able to point to substantially fewer occasions on which the circumstantial evidence might have given rise to the conclusion that effect was given to Arrangement No 8 than was the case with the Pegasus claims. Once Mr Shuvaly had completed his evidence (in the absence of any other available witness to bolster the claims against Apco, Liberty and Andrianopoulos), the ACCC had no oral evidence on which it could rely in relation to Arrangement No 8. Indeed, such oral evidence as existed tended to disprove the existence of such an alleged arrangement or understanding, and tended therefore to be inconsistent with the allegations that effect was given to such an arrangement or understanding. 34 The appropriate course for the ACCC to have taken would have been to announce on the 15th day of the trial, 7 September 2005, that it abandoned all claims with respect to Arrangement No 8. This would have meant that any involvement of Andrianopoulos and Christos Andrianopoulos, and of their legal representatives, would have been unnecessary from the 16th day of the trial onwards. In my assessment, the failure of the ACCC to take such a course warrants the award of indemnity costs to Andrianopoulos and Christos Andrianopoulos on and after 8 September 2005, the 16th day of the trial. It should not have been necessary for the legal representatives of Andrianopoulos and Christos Andrianopoulos to continue to participate in the trial, by cross-examining witnesses and making submissions. The case in respect of Arrangement No 8 had become futile. For the ACCC to continue to pursue it in the circumstances was entirely unreasonable. On 13 September 2005, after the conclusion of the evidence, shortly before adjourning to enable addresses to be prepared, I commented to counsel for the ACCC that the ACCC's case was 'pretty weak' on Arrangement No 8. Counsel for the ACCC should already have realised that that was the case. 35 An award of indemnity costs in favour of Andrianopoulos and Christos Andrianopoulos raises the question of the costs of other parties to the alleged arrangement or understanding that is Arrangement No 8. As I have said in [6] of these reasons for judgment, the question of costs as between the ACCC and Liberty and Mr Shuvaly has been resolved by consent. Apco and Mr Anderson were necessarily represented throughout the rest of the trial, after the 15th day, because Apco was also alleged to have been a party to an arrangement or understanding with Leahy, described as Arrangement No 1. In the circumstances, it would be far too difficult a task for the taxing officer to separate the additional costs of Apco and Mr Anderson having to defend themselves in relation to Arrangement No 8 from those incurred in relation to Arrangement No 1. For these reasons, there should be no award of indemnity costs to Apco or Mr Anderson in respect of Arrangement No 8. For the reasons I have given in [10] of these reasons for judgment, there will be no order as to costs as between the ACCC and Leahy. For the reasons I have given in [11]-[17] of these reasons for judgment, there will be no order as to costs as between the ACCC and Ian Carmichael, Michael Warner and Eino Heikkila. The ACCC will be ordered to pay the costs of Apco, United Fuels, United Retail, Andrianopoulos, Peter Anderson, Garry Dalton and Christos Andrianopoulos. Those orders for costs will be on a party-party basis, with the exception of the costs of Andrianopoulos and Christos Andrianopoulos on and after 8 September 2005, which will be on an indemnity basis. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | dismissal of proceeding whether costs should follow event some parties entered into agreements to submit to orders, including orders as to costs orders not made in accordance with those agreements whether losing party should pay costs of parties who had entered into those agreements indemnity costs whether losing applicant should pay costs on basis other than party-party losing party a public regulatory authority whether indemnity costs should be ordered based on failure to adhere to commonwealth's model litigant policy whether and when applicant should have realised it could not succeed whether case instituted or pursued unreasonably costs costs |
At such times he was also an Australian Building and Construction Inspector appointed pursuant to s 57 of the Building and Construction Industry Improvement Act 2005 (Cth) (the "BCII Act"). The applicant seeks declaratory orders, pecuniary penalties and other relief in connection with admitted breaches by the first respondent ("Mr Powell"), the third respondent ("Mr McDonald") and the fourth respondent ("the CFMEU") of s 170MN of the WR Act, by the CFMEU of s 178 of that Act and by Mr Powell, the second respondent ("the CFMEUW") and the CFMEU of s 38 of the BCII Act. The maximum penalty, in the case of a corporation, was $33,000 and, in the case of a natural person, $6,600. In the case of a corporation, the maximum penalty was $49,500. "person", in relation to a contravention of a civil penalty provision, includes an industrial association. (2) For the purposes of this Part, a person who is involved in a contravention of a civil penalty provision is treated as having contravened that provision. However, pursuant to s 2, ss 36, 37 and 38 commenced on 9 March 2005. Sections 48 and 49, which were part of Chapter 7, commenced on 12 September 2005. The relevant conduct in this case occurred in August 2005. There is a question as to whether, for present purposes, ss 48 and 49 apply to the conduct which is said to have contravened s 38. I will return to this matter at a later stage. It will assist in understanding the case if I give a broad outline of the relevant circumstances. 11 The Ravensthorpe Joint Venture was a joint venture between two engineering companies to manage the design and construction of a processing plant and associated infrastructure in connection with a nickel mine at Ravensthorpe in the southern coastal region of Western Australia. It was a very large project. The CFMEUW was an industrial organization registered pursuant to the provisions of the Industrial Relations Act 1979 (WA) (the "State Act"). The CFMEU was an organization for the purposes of both the WR Act and the BCII Act. Mr Powell was a member and an employed organizer and agent of both the CFMEU and the CFMEUW. Mr McDonald was a member and an employed officer and agent of both organizations. 13 The CFMEU and the CFMEUW were, at all material times, parties to certified agreements which prescribed the terms and conditions of employment for their members working at the Ravensthorpe site. 14 All of those agreements were certified on 12 August 2005. STEP 2: If the matter is unable to be resolved the employee and/or the job representative will discuss any grievance with the Employer's staff member responsible for industrial relations. If the matter remains unresolved then it will be brought to the attention of the Employer's senior site representative, who shall attempt to resolve the matter. STEP 3: In the event of such discussions not resolving the grievance the employee or the job representative may involve a union official from the Relevant Union, who will meet with the Employer's senior site manager and participate in direct discussions in an attempt to resolve the matter. If the matter remains unresolved, the job representative and union official shall advise and involve the State Secretary of the Relevant Union who shall attempt to resolve the matter. STEP 4: If the matter still remains unresolved, the Employer shall notify the Chamber of Commerce and Industry representative who may convene a meeting of the Employer, the union official concerned and other relevant persons and attempt to resolve the matter(s) concerned. STEP 5: Emphasis will be placed on an agreed settlement of the matter however, if the grievance remains unresolved, the Employer or the Relevant Union may jointly or individually refer the matter to the Australian Industrial Relations Commission for conciliation in accordance with the Workplace Relations Act 1996 as amended. STEP 6: While the above steps are being followed no industrial action shall be taken. It is agreed that the matter may be referred to the Australian Industrial Relations Commission at any stage of the procedure. 4.5.2 Commitments to Grievance Resolution Process NOTE 1: The Employer acknowledges that as discussions proceed during this procedure it may be necessary to report back to, or gain instruction from, the Employer's workforce where the grievance involves the wider workforce. However, where such meetings are required, the Relevant Union agrees to minimise disruption and will obtain the agreement of management about timing, duration and the venue for the meeting, otherwise work will continue as normal. Agreement from management will not be unreasonably withheld. Any meeting held, which has not been agreed to by the Employer will be deemed to be a breach of the contract of employment of the employees concerned. NOTE 2: The Employer or its representatives will make themselves available upon the request of the employee or the job representative so as to quickly deal with the grievance However, all Parties need to understand that the process of discussion and consultation takes time. NOTE 3: If a union official of the Relevant Union makes themselves available to participate in the grievance resolution procedure at short notice then the provision of 24 hours written notice as per clause 7 1 of this Agreement may be wavered by agreement of the Employer. NOTE 4: The Employer will ensure that all activities during operation of the procedure are in accordance with safe working practices. NOTE 5: Sensible time limits will be allowed for the carrying out of all on site steps in this procedure however, this will not prevent the Employer and/or the Relevant Union from notifying the matter to the Australian Industrial Relations Commission for conciliation at any stage. 4.5.3 Sensible Time Limited to be Allowed Sensible time limits shall be allowed for each step and work shall continue as it was prior to the matter being raised. No Party will be prejudiced as to any final settlement by the continuance of work. Matters associated with employee performance and termination of employment shall be progressed in accordance with the Employer's disciplinary procedures. However, these procedures do not prevent an employee from seeking any redress under the Workplace Relations Act 1996 . The steps in this Section shall not apply to any bona fide safety concern which will be dealt with in accordance with subsection 6.1 of this Agreement. The First Strike action was the conduct which constituted the alleged breach of s 170MN of the WR Act by Mr Powell, Mr McDonald and the CFMEU and the breach of s 178 by the CFMEU. The Second Strike action constituted the alleged breach of s 38 of the BCII Act by Mr Powell, the CFMEUW and the CFMEU. Messrs Powell and McDonald addressed an authorized meeting of about 150 workers, including such members. Mr McDonald referred to the proposed legislation. Somebody asked whether the certified agreements relating to the Ravensthorpe site were in place. Mr McDonald said that he believed that most of them were. He also said that he had heard that there were "issues" at the site, and that those issues could only be discussed if they were raised by employees. 17 Those attending the meeting then discussed the claims amongst themselves, but in the presence of Messrs Powell and McDonald. In particular, they discussed the possibility of industrial action and the length of any such action. Somebody moved that they strike for 48 hours. The motion was carried on a show of hands. Mr McDonald said "I declare the motion carried" or words to that effect. He also said that the "company" would "take you all to the Commission" and that, "You run the risk of being called up to give evidence and face prosecution and jail if you fail to answer questions", or words to that effect. Neither Mr Powell nor Mr McDonald otherwise attempted to discourage the proposed industrial action. Acting on behalf of CFMEU and CFMEUW members, the two men informed management that strike action was to be taken. 18 All CFMEU and CFMEUW members who were employed by the employers failed to attend for, or perform, work for a period of 48 hours. Such action was not authorized and was taken for the purpose of supporting or advancing the claims. Neither the CFMEU nor the CFMEUW had previously pursued those claims. Following the meeting Mr Powell raised "certain issues underlying" the claims with the employers and with the Chamber of Commerce and Industry which acted as employers' representative. Reinstatement of the two AGC employees was pursued in correspondence and negotiations. CFMEUW subsequently pursued that matter in the Western Australian Industrial Relations Commission. All other claims were resolved shortly after the First Strike action. 19 It is agreed that Mr Powell and Mr McDonald were "parties to or concerned in the First Strike action" acting on behalf of the CFMEU, as its agents or employees, "and within the scope of their authority from the CFMEU, whether actual or apparent. 20 It followed (and is agreed) that Mr Powell, Mr McDonald and the CFMEU contravened s 170MN of the WR Act by engaging in industrial action for the purpose of supporting or advancing claims against employers during the operational period of a certified agreement. Such conduct was also in breach of the dispute settlement procedure clauses in the various certified agreements and so in breach of s 178 of the WR Act. It is agreed that the CFMEU thereby breached s 178. During that meeting the workers raised the question of reinstatement of the two former employees. In Mr Powell's presence they discussed the possibility of taking industrial action in support of the claim for reinstatement and the length of any such action. Somebody moved that there be a 24 hour strike. The motion was carried on a show of hands. Mr Powell said: "I declare the motion carried", or words to that effect. He then conveyed the decision to the employers, acting on behalf of CFMEU and CFMEUW members. Members of the CFMEU and CFMEUW who were employees of AGC, amounting to approximately 20 workers, failed to attend for and perform work in connection with the Ravensthorpe Mine Site for a period of 24 hours on 25 August 2005. 36. The actions referred to in paragraphs 33 to 35 ("Second Strike action") were not authorised by AGC. 37. The Second Strike actions included failure to attend for and perform "building work" within the meaning of the BCII Act 38. Thus, the CFMEU and CFMEUW engaged in the Second Strike action. 41. By reason of the matters above, Mr Powell, and the CFMEU and the CFMEUW each contravened s 38 of the BCII Act. As a result of the First Strike action, approximately 400 workers, of which approximately 150 attended the First Meeting, did not attend for and perform work at the Ravensthorpe mine site for a period of 48 hours commencing on 17 August 2005. The balance of the workers made a decision to leave the Site some hours after the First Meeting and after McDonald and Powell had left the Site. Little meaningful work was undertaken at the Ravensthorpe Mine Site on 17 and 18 August 2005. However, as it happened, there was inclement weather during that period which may have impacted on the ability to undertake meaningful work on the site. As a result of the Second Strike action, approximately 20 AGC employees did not attend for and perform work at the Ravensthorpe Mine Site for a period of 24 hours commencing on 25 August 2005. No work was undertaken by AGC employees at the Ravensthorpe mine site on 25 August 2005. The first strike action and second strike action caused delay and disruption to a major public project. The latter section imposed the relevant penalties and, with s 75, conferred jurisdiction on the Court. I permitted the parties to make submissions in writing concerning that matter. In preparing the statement of agreed facts, the parties had apparently acted upon the basis that s 49 applied so as to permit these proceedings. The applicant has maintained that position, and I do not understand the respondents to have submitted otherwise. However, in their written submissions, the respondents submitted that s 48 did not apply to these proceedings as it was not in force at the time of the Second Strike action. Relevantly, subs 48(2) provided that a person who was involved in a contravention was to be treated as having contravened it. Such involvement was defined in terms which are frequently found in the criminal law and, in recent years, in statutes imposing civil penalties or other civil liability. In the absence of all necessary admissions, one might have expected the applicant to have relied upon subs 48(2) to demonstrate Mr Powell's liability for his involvement in strike action taken following the meeting of 24 August 2005 and that of the CFMEU and the CFMEUW. 25 Sections 48 and 49 were both located in Chapter 7 of the BCII Act. Section 2 of that Act provided that the chapter was to commence on the date of Royal Assent. If, as has been assumed, s 49 applied to the Second Strike action, it is difficult to see why s 48 should not also have applied. However the respondents submitted that the decision of Le Miere J in Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 164 IR 375 established that s 48 did not apply to conduct occurring prior to 12 September 2005, although his Honour appears to have accepted that s 49 did apply. 26 The applicant accepted that s 48 had no application for present purposes but asserted that the respondents had admitted the alleged contraventions, and that the precise basis for treating Mr Powell, the CFMEUW and the CFMEU as having contravened s 38 was not in dispute. The applicant also submitted that the common law concerning accessorial liability would fill any "lacuna" caused by the absence of a provision such as s 48. 27 The respondents have not sought to withdraw any of the admissions contained in the statement of agreed facts. I propose to dispose of the matter upon the basis of such facts. However, in identifying the seriousness of the conduct alleged against each respondent it will be necessary to say something about accessorial liability. Because the question has been ventilated at length, I will first address the question of whether s 49 applied to the conduct of the first, second and fourth respondents in connection with the Second Strike action. As the applicant has not relied upon s 48, it is not necessary to consider its application for present purposes. That approach to s 49 was based upon a series of decisions which commenced with In re A Solicitor's Clerk [1957] 1 WLR 1219. The case concerned legislation which prohibited the continued employment as a solicitor's clerk of a person who had previous convictions for offences of dishonesty. The relevant legislation had, at one stage, applied to a solicitor's clerk who was convicted of larceny, embezzlement, fraudulent conversion or any other criminal offence in respect of money or property belonging to, or held by, the solicitor who employed him or her, or any client of such solicitor. The Act was amended so that it applied to a solicitor's clerk who had been convicted of larceny, embezzlement or fraudulent conversion of any money or property, regardless of who owned or controlled it. The question was whether the amendment applied to a clerk who had been convicted of such an offence prior to the amendment. But in my opinion this Act is not in truth retrospective. It enables an order to be made disqualifying a person from acting as a solicitor's clerk in the future and what happened in the past is the cause or reason for the making of the order, but the order has no retrospective effect. It would be retrospective if the Act provided that anything done before the Act came into force or before the order was made should be void or voidable, or if a penalty were inflicted for having acted in this or any other capacity before the Act came into force or before the order was made. This Act simply enables a disqualification to be imposed for the future which in no way affects anything done by the appellant in the past. 29 In La Macchia v Minister for Primary Industries (1986) 72 ALR 23 , the Full Court considered a provision pursuant to which the relevant minister might cancel a fishing licence if the holder were convicted of certain offences. That section took effect from 31 August 1985. On 13 June 1985 one joint licence holder was convicted of a relevant offence. On 14 October 1986 the minister decided to cancel the licence. The question was whether or not the minister was entitled to do so upon the basis of a conviction recorded prior to the commencement of the legislation authorizing such cancellation. The first is the argument that, in relying upon a power in section 9A(3A) which did not exist at the time of the conviction of Mr La Macchia, a penal power was exercised retrospectively. There are two answers to this contention. The first is that the Minister was not exercising a penal power even though cancellation imposed a hardship on the applicants by depriving them for a time of their ability to fish commercially. Cancellation is not part of the penalty a Court of Petty Sessions may impose. It is part of the scheme of the Act which seeks to control commercial fishermen in their fishing activity. Rock lobsters are a valuable common property resource and activities damaging the resources are hard and costly to police. The power of cancellation is an important aspect of the system of control and should be seen in that light. Secondly, while the Minister could not have given notice prior to the sub-section coming into operation, he was not constrained thereafter to rely upon a conviction that itself occurred after the sub-section came into operation. The commission of an offence, whether before or after 31 August 1985, is a circumstance warranting the giving of a notice under sub-section (3A). The order does not have retrospective effect simply because it relies upon conduct that occurred before the power existed ... . 30 Finally, in The Commonwealth v SCI Operations [1998] HCA 20 ; (1998) 192 CLR 285 , at 309 McHugh and Gummow JJ referred with apparent approval to an observation by Jordan CJ in Coleman v Shell Company of Australia (1943) 45 SRNSW 27 at 30-31. In some cases, it has been said that it would give a retrospective operation to a statute to treat it as impairing an existing right or obligation or creating a new right or obligation ... . On the other hand it was said ... that an Act is retrospective if it provides that as at past date the law shall be taken to have been that which it was not. It is not retrospective because it interferes with existing rights. Most Acts do. There is no presumption that interference with existing rights is not intended; but there is a presumption that an Act speaks only as to the future. Similarly it has been said that an amendment of a section in an Act makes it retrospective in its original form but not retrospective so far as it is new ... . Upon a consideration of the authorities, I think that as regards any matter or transaction, if events have occurred prior to the passing of the Act which have brought into existence particular rights or liabilities in respect of that matter or transaction, it would be giving a retrospective operation to the Act to treat it as intended to alter those rights or liabilities, But it would not be giving it a retrospective operation to treat it as governing the future operation of the matter or transaction as regards the creation of further particular rights or liabilities. 31 The applicant submitted that these cases demonstrate that to apply s 49 to conduct occurring prior to 12 September 2005 would not mean that it had retrospective effect, the section merely speaking "as to the future". However, it is at least arguable that the effect of s 49, upon its commencement on 12 September 2005, was to impose a penalty on past conduct which had not previously attracted such a penalty. In any event, the question of intended retrospective effect is a matter of construction. 32 The BCII Act is somewhat different from the legislation considered in the cases to which I have referred. On its face, it was intended to have some retrospective effect. By fixing 9 March 2005 as the commencing date for ss 36, 37 and 38 Parliament clearly intended to proscribe conduct which was, at the time of its commission, lawful. The question is whether, as a matter of construction, Parliament intended to impose a pecuniary penalty upon persons who had, prior to the enactment of s 38, engaged in conduct which was proscribed by that section. Given the clear intention to render such conduct unlawful, it is difficult to avoid the inference that Parliament intended that such conduct attract the prescribed sanctions. Subject only to the possibility that one should start with the presumption against retrospectivity, the natural wording of s 49 suggested that it applied to all breaches of s 38, whether they occurred before or after 12 September 2005. The clear intention (in s 38) to proscribe conduct with retrospective effect offers a firm basis for concluding that the sanctions prescribed by s 49 were to attach to all infringing conduct occurring after the commencement of s 38. It was at least implied on behalf of the respondents that the intention may have been to allow a period of grace before the imposition of penalties took effect. Such an approach seems unlikely. It is more likely that Parliament realized that because the legislation (including s 38) would not actually take effect until the date of Royal Assent, there could be no proceedings prior thereto. 33 In any event, there is extrinsic material which suggests that the intention was that such civil penalties be attracted by conduct occurring on and after 9 March 2005. Many certified agreements in the building and construction industry are due to expire later in the year. The retrospective character of this Bill will ensure that unions that take unlawful industrial action prior to the nominal expiry date of these and other existing agreements in the coming months, will be subject to the sanctions and greater penalties provided by the BCII Bill. Likewise parties who are affected will be able to seek damages to recover any losses they suffer. The remainder of the provision of this Bill will take effect on the day on which this Act receives the Royal Assent. From this day forward, industrial action taken by unions to pursue the early negotiation of new agreements would not only be unprotected but also unlawful. If unions or other parties take unlawful industrial action they will be subject to civil penalty. This clause mirrors the penalty clause in the previous version of this Bill. 35 There may be a degree of ambiguity as to the meaning of the expression "From this day forward". However, when read with the explanatory memorandum, it is clear that the intention was to impose penalties upon conduct which occurred after introduction of the Bill and before receipt of the Royal Assent. I have referred to some of the earlier versions of the Bill. One version, received in the Federal Court library in Brisbane on 14 March 2005 (presumably the Bill introduced into the House on 9 March 2005) provided, in cl 2, that Chapter 6 take effect on 9 March 2005. Chapter 6 of that draft contained cll 73 and 74, which are now ss 37 and 38. Given the clear intention disclosed in the Explanatory Memorandum that conduct occurring after 9 March 2005 be subject to the sanctions prescribed in the Act, there is no reason to read the words of s 49 other than in accordance with their ordinary meaning. Section 49 imposed civil penalties upon persons who acted in breach of s 38 on or after 9 March 2005. He relied particularly upon the decision in Giorgianni v The Queen [1985] HCA 29 ; (1985) 156 CLR 473 per Gibbs CJ at 480 and per Mason J at 492. Although it was said, ..., that there is a difference between the four words (aids, abets, counsels, procures) used in the section, and that each word must be given its ordinary meaning, it is apparent that the ordinary meaning of some at least of those words overlaps and that sometimes the words are used in particular combinations or as a phrase which is to be considered as a whole ... . When used in relation to felonies, the words "aid and abet" describe the action of a person who was present at the commission of the offence and took some part therein (who was called the principal in the second degree as well as an "aider and abettor"), whereas "counsel and procure" described an accessory before the fact who was not present at the commission of the offence ... . The usage was not always uniform or discriminating. The distinction between principals in the first and second degree and between principals and accessories now generally has no legal importance ... . No similar distinction was drawn in the case of misdemeanours, and at common law, in cases of misdemeanour, anyone who, in the case of a felony, would have been a principal in the second degree, or an accessory, was a principal offender and was treated as if he had taken the same path as the active perpetrator of the facts constituting the offence ... . The reason for mentioning those matters, which are now largely of historical interest, is that statements in the authorities regarding the mental state necessary to constitute a person an accessory before the fact in the case of a felony will apply equally to a person who has counselled or procured the commission of a misdemeanour. Further, it will be found that statements which refer to the knowledge and intention necessary to make a person an aider and abettor will often be equally applicable to a person who has counselled or procured the commission of the offence. Russell on Crime, 12th ed (1964), p 151, states that "the bare minimum" which is necessary to constitute a person an accessory before the fact is that his conduct should indicate "(a) that he knew that the particular deed was contemplated, and (b) that he approved of or assented to it, and (c) that his attitude in respect of it in fact encouraged the principal. ..." There is a strong body of authority which supports the view that knowledge of the facts is necessary before a person can be made liable as a secondary party for the commission of an offence. He need not actually know that an offence has been committed, because he may not know that the facts constitute an offence and ignorance of the law is not a defence. In England the approach has been taken that those terms, as they occur in section 8 of the Accessories and Abettors Act 1861 (UK) ... should be treated as four separate words and, so far as possible, be given their ordinary meaning ... . This approach has attracted some criticism ... . In any case, it has no application to the construction of the same terms as they appear in s 351. Once it is acknowledged that those terms are merely declaratory of the common law, it is to the common law concept of secondary participation, and not to the ordinary meaning of the words themselves, that regard must be had. In felony at common law the terms "aid" and "abet" are generally used to refer to the conduct of a principal in the second degree, or one who is present at the commission of the offence by the principal offender while the terms "counsel" or "procure" are generally used in relation to the conduct of an accessory before the fact, or one who is absent at the time of the commission of the offence ... . In substance, however, there appears to be no distinction between a principal in the second degree and an accessory before the fact beyond the question of presence. In misdemeanour, where no attempt has been made to classify the parties to an offence, each of the four terms is employed to refer to the conduct of a secondary participant. But the terms are descriptive of a single concept. In this regard, I would adopt the observation of Cussen ACJ in R v Russell ..., as being applicable to secondary participation in misdemeanour. 39 I have cited these passages at some length because the applicant assumed that these cases establish that the various statutory provisions relating to parties to offences reflected the position at common law in connection with torts. However, in Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department [1998] 1 Lloyd's Rep 19 the Court of Appeal rejected that proposition. See, in particular, the judgment of Stuart-Smith LJ at 35-36 and that of Hobhouse LJ at 42-46. Hobhouse LJ identified three categories of conduct by a person other than the actual perpetrator which might attract criminal liability. 40 His Lordship concluded, at 46, that only conduct which fell into either the first or the third category would constitute a tort at common law. In other words, at common law, aiding, abetting, counselling and procuring was not a basis for tortious liability. On appeal to the House of Lords (reported at [2000] 1 AC 486) the decision of the Court of Appeal was upheld, although on slightly different grounds. Their Lordships observed that the criminal law might not offer a good guide to accessorial liability in tort. See the speech of Lord Wolfe MR at 496-500 (Lord Slynn, Lord Steyn, Lord Clyde and Lord Millett agreeing). 41 In Thompson v Australian Capital Television Ltd [1996] HCA 38 ; (1996) 186 CLR 574 the High Court considered accessorial liability in tort. 42 As with the decision in Credit Lyonnais these propositions were largely based upon the decision of the Court of Appeal in The "Koursk" [1924] P 140. Sargant LJ ... accepted the proposition that persons are joint tort feasors when their "respective shares in the commission of the tort are done in furtherance of a common design" so that those who "aid or counsel, direct, or join" in commission of the tort are joint tort feasors ... . 43 It was not necessary for his Honour to consider whether there was any inconsistency between the two propositions or to state any preference as between them. 44 This case is not a suitable vehicle for further exploration of any distinction between accessorial liability in crime and in tort. It is sufficient to say that there may be dangers in seeking to apply decisions as to common law accessorial liability in crime when considering accessorial liability in tort. Assuming that there is a difference between the position in crime and that in tort, there is a further policy question as to which should be adopted in proceedings for civil penalties. Again, it is neither appropriate nor necessary that I consider that matter further. In para 17 it is agreed that Mr McDonald and Mr Powell were parties to, or otherwise concerned in, such unlawful action. In para 23 it is agreed that both men were parties to, and concerned in, the First Strike action on behalf of the CFMEU (as agents or employees) and within the scope of their authority from the CFMEU, whether actual or apparent. Paragraph 23 appears to lay a basis for reliance upon s 349(2)(a) of the WR Act to which I have previously referred. In other words, para 23 asserts the basis for the CFMEU's liability for the actions of Mr McDonald and Mr Powell. In para 24 it is agreed that the CFMEU should be ''taken to have engaged in the First Strike action". Finally, in para 25 it is agreed that Mr McDonald, Mr Powell and the CFMEU contravened s 170MN. 46 Mr Powell and Mr McDonald's involvement was their attendance at, and conduct of, the relevant meeting and, perhaps, the subsequent notification to management of the proposed strike. The CFMEU was liable to a penalty in connection with that conduct by virtue of the relationship between the two men and that organization. The conduct of the employees was unlawful by virtue of its having occurred during the term of the certified agreements and being for the purpose of supporting or advancing claims against employers in respect of the employment of employees whose employment was subject to such agreements. It is agreed that Mr McDonald and Mr Powell's conduct constituted a breach by the CFMEU of those agreements. Clearly, the conduct which constituted this breach was substantially the same as that which constituted the breach of s 170MN. The parties agree that the Second Strike action satisfied those requirements. However it is necessary to say a little about them. However the conduct identified in paras (b) and (c) may have been the conduct of others. It refers to "a ban, limitation or restriction on the performance of work, or on the acceptance of or offering for work". The central meaning of the term "ban" in the industrial, as in its ordinary usage, is to "prohibit or interdict": the Macquarie Dictionary. Communication between persons or an organization and persons is essential to a "ban". And while the notion of "limitation" or "restriction" may have a meaning related to manner of actual performance of work, that meaning is picked up in par (a) of the definition. Under par (b) it extends to the communication of a limitation or restriction. Communication picked up under pars (b) and (c) must no doubt purport to be at least hortatory, if not authoritative and binding, upon the person or persons to whom they are directed. In the ordinary course such communication will be verbal whether oral, written or in electronic form. Being intended to affect or affecting the performance of work, it is industrial action because of its instrumental character. Notwithstanding that it is communication it falls within the terms of the definition. Such conduct is capable of constituting a "ban, limitation or restriction on the performance of building work" if its purpose is to prevent or deter or discourage employees from performing building work and it purports to be at least hortatory, if not authoritative and binding, upon the person or persons to whom it is directed. In this way relevant building industrial action may be committed by a person other than an employer or employee. However para (a) would only have applied if the relevant action were taken by the CFMEU. I proceed upon the basis that para (b) applied. 55 In para 34 it is agreed that the strike on 25 August 2005 was unlawful industrial action, and that Mr Powell, in conducting the meeting and taking the vote, "aided the workers to engage in" such unlawful industrial action in contravention of s 38. Paragraph 36 seems to assert that the actions referred to in paras 33 to 35 were not authorized by AGC. Those actions included the raising of issues at the authorized meeting held on 24 August 2004. It is not clear to me that such matters were necessarily unlawful. I proceed upon the basis that the relevant unlawful industrial action was the failure to attend for work, or to perform work, on 25 August 2005, and that Mr Powell "aided" the workers to engage in such action by his conduct at the meeting. It is agreed that he thereby contravened s 38. It is also agreed that the CFMEU and the CFMEUW engaged in such action and similarly contravened s 38. Whatever the true state of the law may be with respect to accessorial liability at common law, it is not necessary for me to take that matter further, given these admissions. As much appears to be established by the decision of the Full Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72. Accepting that decision as I must, I observe only that considerable care must be exercised in so doing, particularly where the regulator is a party to the proceedings. Such "views" must be more than bald assertions of the desired outcome in a particular case, or of the regulator's policy. One would expect some factual basis to be demonstrated for the views so advanced. A respondent might expect an opportunity to test the views and the facts upon which they are allegedly based. In other words, it may be necessary for the regulator to provide admissible lay and expert evidence. The Court cannot treat a statement as relevant if it is really only an opinion or statement of preferred outcome. I do not understand this issue to loom large in the present case. 58 The applicant's submissions deal in some detail with the purpose of the WR Act and the BCII Act, pointing to various reasons for treating breaches of industrial legislation as relatively serious. I doubt, however, whether such considerations are of particular relevance in a case such as this where the relevant conduct was limited in scope and effect. All legislation which prescribes penalties, criminal or otherwise, has the purpose of deterring conduct which is deemed to be undesirable. The important point is that the penalty be sufficiently substantial to act as an appropriate deterrent, having regard to matters which may tempt persons to infringe. The penalty must also be proportionate to the infringing conduct. 59 I infer that the First Strike action substantially disrupted work on the Ravensthorpe project. It lasted for 48 hours and involved about 400 workers. It may be, however, that little work would have been done at that time in any event. Weather conditions were unfavourable. No attempt was made to negotiate with the employers prior to taking industrial action. Such pre-emptive action may be attractive to workers and unions. Minimal notice of industrial action probably maximises disruptive effect. It is said that the contraventions "were in manifest defiance of the law". That may be so. However the statement of agreed facts demonstrates that neither Mr Powell nor Mr McDonald directly instigated any discussion concerning strike action. It may be that they deliberately created a situation from which such action was calculated to emerge, but there is no evidence to that effect. 60 There is nothing oppressive about requiring parties in an industrial relationship to adhere to the law. Where the parties have agreed upon dispute resolution procedures there is nothing oppressive about insisting upon their complying with the terms of such agreement. The strike action was quite arbitrary. The absence of any prior negotiations concerning the claims suggests that they may not have been the real, or sole, reason for the strike. The Second Strike action was, in some senses, less serious than the First Strike action. It involved a shorter stoppage and fewer employees. However all striking workers were employed by AGC. It probably aggravated any consequences of the earlier strike. 61 I have previously referred to the decision in Leighton. That case involved alleged breaches of s 38 of the BCII Act. The three respondents were, I understand, the CFMEU, the CFMEUW and Mr McDonald, although this is not entirely clear from the report of the case. Mr McDonald conducted meetings at which industrial action was considered. The relevant industrial action was the holding of the meetings during working hours and subsequent bans and strikes. I note that there were eighteen infringements by the CFMEU and five by the CFMEUW. Mr McDonald committed sixteen infringements. The industrial action extended over a longer period of time than did the presently relevant conduct. 62 The respondents have other industrial "background". The applicant pointed to the decision in Cruse v CFMEU [2007] FMCA 1873. In that case the CFMEU was found to have breached s 38 in connection with an unlawful strike lasting two and a half days. In Australian Competition and Consumer Commissioner v CFMEU [2006] FCA 1730 ; [2007] ATPR 42-140 all four of the present respondents were found to have engaged in secondary boycott action by preventing or hindering the supply of concrete to a site by forming a picket line at the gate. Both Mr McDonald and Mr Powell have had their rights of entry revoked or suspended because of their conduct in connection with the exercise of such rights. The applicant asserts that the CFMEU has, on numerous occasions, been found to have contravened other provisions of industrial legislation involving coercive behaviour and false and misleading statements, advising or organising action with intent to coerce an employer and breaching orders. Unfortunately, save in the case of the Leighton matter, I was not told whether this conduct occurred before or after that with which I am present concerned. In Leighton , the relevant conduct occurred in March 2005. Normally, only conduct preceding that in question is taken into account in fixing penalties. In any event, although the respondents have apparently engaged in prior industrial misconduct, I have insufficient information to justify my according great weight to such misconduct. 63 The respondents submitted that in a large organisation such as the CFMEU, with autonomous state branches, it is not necessarily appropriate to treat conduct by all branches throughout the country as relevant past conduct for the purpose of fixing a penalty in connection with the unlawful conduct of one branch. There is substance in that submission. Whether previous misconduct is relevant to fixing a penalty is a question of logic. In some cases a pattern of conduct across the country may suggest a nationwide plan of action or a national culture of misconduct. In other cases it may appear that a particular branch or geographical region has acted alone in adopting a plan of action or has developed a particular culture. It was also submitted that past conduct cannot operate so as to increase the penalty beyond that which is appropriate to the misconduct in question. That proposition may be correct, but it should not be taken as implying that past misconduct is irrelevant to the fixing of penalty. 64 The respondents submitted that "... prior contraventions of industrial legislation per se should not be taken into account when assessing prior conduct. What should be relevant is prior breaches of provisions which contain the same elements in the case under consideration. " I do not accept that proposition. On the criminal side, it has never been suggested that only previous convictions for offences similar to that charged are relevant to sentence. Rather, a sentencing court looks to the general record of conduct of the relevant offender, his or her attitude to the law as disclosed by such conduct, apparent attempts at rehabilitation and similar considerations. Repeated conduct of a particular kind may lead to an identified need to provide some particularly persuasive form of deterrent against similar future misconduct. 65 The applicant conceded that the respondents' admissions in the statement of agreed facts have avoided the unnecessary expense, time and effort associated with a lengthy trial. However these proceedings were commenced on 30 November 2006. The admissions were made on 14 January 2008. They were certainly not made at an early stage. 66 The respondents submitted that on each occasion the first and third respondents had entered the site for the purposes of a lawful meeting. This seems to have been the case. At each meeting workers raised matters of concern and decided upon the action to be taken. In connection with the First Strike action Mr McDonald warned the workers of the consequences. The only involvement of the respondents was conducting the meetings, taking the votes, advising the employers of the proposed action and subsequent negotiation. Although 400 people went on strike after the First Strike action only 150 workers had been at the meeting. 67 It was said that notwithstanding the delay in making the relevant admissions "the respondents should be given the full value of the utilitarian discount and the discount for contrition of up to 35% on sentence ...". It is very difficult to speak of the "full value of the utilitarian discount and the discount for contrition". It is not clear to me that the volume of industrial prosecutions has been such as to produce a standardised approach to the problem. In any event I am not sure that I should treat the admissions as an act of contrition rather than as a commercial or tactical decision. However I keep them in mind in fixing the penalties. 68 The respondents also submitted that it was relevant to penalty that the Second Strike action was not unlawful action at the relevant time, the BCII Act not having been proclaimed until 12 September 2005. This fact creates a rather uncomfortable situation for the Court. Parliament made it clear that s 38 was to have retrospective effect. The Government gave early warning of its intention to seek such retrospective effect. However the Government cannot, itself, outlaw conduct by executive decree. Citizens should not have to regulate their conduct by reference to the non-binding views of the Government. However the Court must take into account the fact that Parliament has enacted s 38 with retrospective effect. 69 The respondents submitted that both strikes related to disputed matters raised at the first meeting, and that they should be treated as one course of conduct. I am inclined to the view that there were two separate incidents, the First and Second Strike actions. They should be dealt with separately, but the overall penal effect must also be considered. Further, the CFMEU's breach of s 178 was constituted by virtually the same facts as was its breach of s 170MN. 70 The penalties imposed in Leighton offer a convenient starting point for present purposes. Because of the more extensive misconduct in that case, the penalties in this case should be lower. In Leighton the relevant conduct was all contrary to s 38 of the BCII Act. For that reason, and because the maximum penalty for such a breach is higher than those for the WR Act infringements, I will commence by considering the penalties for the infringements of s 38. Mr McDonald was not involved in this aspect of the case. 71 In Leighton the penalty imposed on Mr McDonald was $30,000 against a maximum penalty of $22,000 for each infringement. The applicant suggested that in this case a penalty of $2,500 should be imposed on Mr Powell. The respondents suggested a penalty of $1,000, fully suspended for a period of six months. In other words no penalty would be payable in the event that Mr Powell behaved himself for that period. This approach may have been partially motivated by the view that there was really only one course of unlawful conduct. I find it difficult to take such an indulgent view of Mr Powell's conduct, given that he had some previous history of disobedience to industrial law, and that, as I infer, the second strike imposed additional disruption upon AGC. The substantial penalty imposed upon Mr McDonald in Leighton also dictates something more than a merely nominal penalty in this case. The two unions also have previous histories of industrial misconduct. For each of them the maximum penalty is $110,000. In Leighton the CFMEUW was treated as being less involved in the contraventions than was the CFMEU. This may have reflected the fact that the CFMEU had acknowledged eighteen contraventions whilst the CFMEUW had acknowledged only five. The Court imposed a penalty of $30,000 upon the CFMEUW for those five infringements. In this case, the applicant suggested a penalty of $20,000 for each union. The respondents submitted that a penalty of $5,000, fully suspended, was appropriate. I do not agree. There was nothing trivial about the misconduct in question. I see no real basis for distinguishing between the CFMEU and the CFMEUW. 72 The applicant's recommendation of a penalty of $2,500 for Mr Powell is, in my view, at the lower end of the appropriate range. I adopt it, subject to any adjustment which may be necessary after I have considered the appropriate penalty for him in connection with the First Strike action. The penalties imposed on the CFMEU and CFMEUW should be roughly equivalent to that imposed upon Mr Powell but adjusted, having regard to the higher maximum penalty. I see no reason for treating the two unions as being more or less culpable than was Mr Powell. Subject to the possibility of adjustment for overall effect I fix the penalty at $12,000 in each case. 73 I turn to the First Strike action. It led to a two day strike and involved a much larger number of men, serving a wider range of employers, than did the later strike. It was, in that sense, more serious. On the other hand, in the case of Mr McDonald, it was the only action in which he was involved. The maximum penalties under the WR Act are substantially lower than those under the BCII Act. For Messrs Powell and McDonald the maximum penalty for a breach of s 170MN is $6,600. The maximum for the CFMEU is $33,000. In the case of a corporation, the maximum penalty for a breach of s 178 is $49,500. It is important to keep in mind that the conduct constituting the CFMEU's breach of s 170MN was the same as that constituting its breach of s 178. 74 It is convenient to commence with the CFMEU's contravention of s 178. The applicant submitted that the penalty should be $5,000. The respondents submitted that there should be no penalty or a fully suspended penalty. This was upon the basis of its submission that I should impose a penalty of $5,000, suspended for six months, in connection with its breach of s 170MN. Such an approach is misconceived. It is true that virtually the same conduct constituted the breach of s 170MN and that of s 178. However the maximum penalty for a breach of s 178 is substantially higher than that for a breach of s 170MN. In my view the applicant's figure of $5,000 is, again, towards the lower end of the appropriate range, given that it represents slightly more than 10% of the maximum, a proportion roughly equivalent to that which I have imposed in connection with the s 38 offences. I fix the penalty at $5,000, again, subject to an overall review of the total effect of all of the penalties. 75 With respect to the s 170MN infringement, were I fixing a penalty for the CFMEU upon the basis that its conduct had infringed that section rather than s 178, I would have been inclined to impose a penalty of, again, slightly over 10% of the maximum of $33,000, say about $3,500. That would be a total of $8,500 for the two infringements. To take that approach would, however, be effectively to impose two penalties for substantially the same conduct. It is reasonable to impose some additional penalty, given that the CFMEU not only contravened the statute, but also the agreements to which it had voluntarily become a party. To recognise that the same conduct constituted the two infringements, with the additional factor of disregard for the certified agreements, I fix the penalty for the breach of s 170MN at $1,000. 76 Turning to Messrs Powell and McDonald, the applicant submitted that in Mr Powell's case, the penalty should be $2,500 and in Mr McDonald's, $4,000. The respondents submitted that each should receive a penalty of $1,500 of which two-thirds should be suspended for a period of six months. The distinction between the treatment of Mr McDonald and that of Mr Powell is presumably based upon Mr McDonald's involvement in the Leighton matter and the rather more serious circumstances surrounding the revocation of his entry permits as compared to those surrounding the suspension of Mr Powell's permits. As I have said, it may be unfair and unwise to place much reliance upon the latter matter, given absence of any knowledge concerning the dates of the relevant misconduct. With regard to the Leighton matter, I must keep in mind the fact that Mr McDonald had not been dealt with for such conduct at the time of the First Strike action. However I am inclined to accept that Mr McDonald has a somewhat worse record than does Mr Powell. 77 I do not accept that Mr Powell's infringement of s 170MN (with a maximum penalty of $6,600) should attract the same penalty as his infringement of s 38 of the BCII Act (with a maximum penalty of $22,000). It is true that the first strike was more serious than the second. More employers and employees were involved, and the strike was for two days rather than one. On the other hand, Mr Powell engaged in the Second Strike action knowing that he had previously engaged in the First Strike action, and probably intending to aggravate the effects upon AGC of the earlier strike. These considerations will be best reflected by my imposing a penalty of $1,000 upon Mr Powell in connection with the First Strike action. In the case of Mr McDonald, a penalty of $1,500 is appropriate. I also see no reason for suspending any of the penalties. I accept that there is jurisdiction to make a declaration as to infringement of legislation and to do so upon agreed facts. However declaratory relief will generally be granted only if there is some possible utility in doing so. In the present case the imposition of penalties appears to have been the primary system prescribed by the relevant legislation for infringements thereof. It is not immediately clear to me that any further vindication is necessary. Nor do I see any way in which declarations would assist in future enforcement of the legislation or public education concerning such legislation. The courts have always been cautious about granting such relief and remain concerned that the efficacy of declaratory relief not be undermined by misuse. On 17 and 18 August 2005, Michael Powell, Joseph McDonald and the CFMEU each contravened section 170MN of the Workplace Relations Act 1966 (Cth) by engaging in industrial action, for the purposes of supporting or advancing claims against a number of employers contracted to provide services at the Ravensthorpe Mine Site in respect of the employment of a number of employees whose employment was subject to applicable certified agreements which bound the CFMEU, were in operation, and had not passed their nominal expiry dates. On 17 and 18 August 2005, the CFMEU breached certified agreements which covered employees at the Ravensthorpe Mine Site and bound the CFMEU, by failing to comply with the dispute settlement procedure clause of those certified agreements. On 25 August 2005, Mr Powell, the CFMEUW and the CFMEU each contravened section 38 of the Building and Construction Industry Improvement Act 2005 (Cth), by engaging in unlawful industrial action. This, by itself, deprives those proposed declarations of any efficacy, given that the penalties which I have imposed sufficiently recognize the respondents' misconduct. Each of the three proposed declarations impliedly asserts that the various employees who went on strike acted unlawfully. Whilst that fact may have been established as between the parties to these proceedings, those employees have not had the opportunity to be heard. Given the absence of any specific benefit to be derived from the declarations, I doubt the appropriateness of making declarations which carry that implication. 82 Finally, I return to the question of accessorial liability. At least in the case of the s 38 breaches, I am unpersuaded that the liability of the CFMEU or the CFMEUW is clearly demonstrated on the agreed facts. To make the declarations against them might well create misleading perceptions as to accessorial liability in this area of the law. The position may have been otherwise had s 38 been relied upon, or had the matter been fully argued by reference to the common law. 83 I decline to make the declarations sought by the applicant. The respondents have not submitted to the contrary. There will be no order as to costs. I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. | unauthorized industrial action breach of dispute resolution agreement appropriate penalties declaratory relief retrospective application of the building and construction industry improvement act 2005 (cth) industrial relations |
Resolution of this issue determines the priority date of the claims in the specification for application 855. This, in turn, determines whether the claimed invention is patentable. The "further complete application for a patent" (conventionally referred to as the "divisional application") is application 855 filed on 12 August 2004 and advertised as accepted on 29 June 2006. If the requirements of s 79(1)(b) of the Act are met, then cll 3.12(1)(c) and 3.12(2C) of the Patents Regulations 1991 (Cth) apply so that the priority date of the claims in application 855 is the date that would have been the priority date of those claims if included in the specification for application 364. Questions of novelty and inventive step are then assessed by reference to that earlier date (s 18(1)(b) of the Act). The invention concerns a "vertical skein of hollow fiber membranes and method of maintaining clean fiber surfaces for the purpose of microfiltration". Microfiltration is the filtration of particles from solution using membranes with very small pores. All documents in issue refer to "fibre" as "fiber" which I accordingly adopt. Before the Commissioner's delegate, Memcor Australia Pty Limited (Memcor) opposed the grant of a patent on numerous grounds which the delegate rejected. In this appeal Memcor contended only that s 79B(1)(b) of the Act is not satisfied as the purported divisional application (application 855) is not for a patent for an invention "falling within the scope of the claims of the accepted specification" (that is, the accepted specification for application 364). Accordingly, the only issue in this appeal is whether or not application 855 is for a patent for an invention falling within the scope of the claims of the accepted specification for application 364. The specifications relate to a vertical skein of hollow fiber membranes and method of maintaining clean fiber surfaces. The skein is used in liquid-liquid microfiltration processes to remove micron, sub-micron and larger suspended solids such as organic molecules, emulsified organic liquids and colloidal or suspended solids, usually from water. A gas-scrubbed assembly substantially as herein described with reference to the accompanying drawings. Claim 1 defining the invention in the specification for application 855 is as follows: A microfiltration membrane device, for withdrawing permeate from a multicomponent substrate, said membrane device including a multiplicity of hollow fiber membranes, or fibers, unconfined in a shell of a module; a first header and a second header disposed vertically spaced apart relationship with opposed faces at a fixed distance; said first header and said second header having opposed ends of each fiber sealingly secured therein with potting resin, all open ends of said fibers open to a permeate discharging face of one or both headers; permeate collection means to collect permeate sealingly connected in open fluid communication with the or each permeate discharging face; means to withdraw said permeate; said fibers, said headers and said permeate collection means together forming part of an integrated combination of elements and adapted to be all submersible below the surface of the substrate with the fibers oriented essentially vertically; each of said fibers have a length from 0.1% to less than 5% greater than the fixed distance so as to permit restricted displacement of an intermediate portion of each fiber, independently of the movement of another fiber; and, through passages passing through the lower of the first and second headers, the through passages having first openings adapted to discharge bubbles into the substrate above the lower header and having second openings in communication with a plenum below the lower header, the plenum adapted to be connected to a source of a pressurized gas; wherein said fibers are subjectable in use to a trans-membrane pressure differential in the range of 0.7 kPa to 345 kPa created by applying a suction to the permeate collection means, and, said fibers are spaced apart to a desired lateral spacing between fibers by said potting resin, to as maintain the ends in closely spaced apart relationship. Each specification contains a consistory clause which includes paragraphs in the same terms as claim 1 of the claims defining the invention. First, Memcor submitted that the device in the claims of the accepted specification for application 364 is limited to a microfiltration device in use. Specifically, the device is one which, in use, withdraws permeate "substantially continuously" when, amongst other things, the fibers are "in said substrate" and the headers are "within said substrate", with the fibers being subject to a "transmembrane pressure differential in the range from 0.7kPa (0.1 psi) to 345 kPa (50 psi)". By contrast, application 855 involves a microfiltration device not in use. It involves a device per se (or "on the shelf"). Important process elements ("substantially continuously", components being in or within "said substrate" and fibers "subject to" a transmembrane pressure differential) are missing. Second, important restrictions on the device in the claims of the accepted specification for application 364 are not present in application 855. In the latter the device is "for withdrawing permeate from a multicomponent substrate". (2) In the former the fibers must be "swayable in said substrate". In the latter there is no such requirement. The reference to the fibers having a length to "permit restricted displacement of an intermediate portion of each fiber, independently of the movement of another fiber" is broader than the fibers being "swayable". (3) In the former the headers must be "within said substrate". In the latter this requirement is missing. All that is required in the latter is that the headers are "adapted to be all submersible below the surface of the substrate". (4) In the former the opposing terminal end portions of each fiber are secured in the headers with potting resin. Further, all open ends of the fibers extend from a permeate-discharging face of at least one header. In the latter the opposed ends of each fiber are secured in the headers with potting resin, with all open ends of the fibers open to a permeate discharging face of one or both headers. (5) In the former the permeate collection means is sealingly connected in open fluid communication with a permeate-discharging face of each of the headers. In the latter permeate collection means is sealingly connected in open fluid communication with the, or each, permeate discharging face. (6) In the former there must be a "vertical skein" which the glossary in the specification defines as "an integrated combination of structural elements including (i) a multiplicity of vertical fibers of substantially equal length; (ii) a pair of headers in each of which are potted the opposed terminal portions of the fibers so as to leave their ends open; and, (iii) permeate collection means held peripherally in fluid-tight engagement with each header so as to collect permeate from the ends of the fibers". In the latter there is no reference to the vertical skein but the fibers, headers and permeate collection means together form part of an integrated combination of elements and are adapted to be all submersible below the surface of the substrate with the fibers oriented essentially vertically. (7) In the former each of the fibers must have substantially the same length. In the latter this requirement is missing. The fibers need only have a length from 0.1% to less than 5% greater than the fixed distance between the headers. (8) In the former the fibers are subject to a transmembrane pressure within a certain range. In the latter the fibers are subjectable in use to that transmembrane pressure. (9) In the former the fibers of each header are spaced apart to a desired lateral spacing between fibers by potting resin which extends over only each terminal portion of the fibers near their ends, so as to maintain said ends in a closely spaced apart relationship. In the latter the fibers are spaced apart to a desired lateral spacing between fibers by potting resin, to as maintain the ends in a closely spaced apart relationship. Third, claim 1 in the specification for application 855 refers to through passages passing through the lower of the first and second headers, the through passages having first openings adapted to discharge bubbles into the substrate above the lower header and having second openings in communication with a plenum below the lower header, the plenum adapted to be connected to a source of a pressurized gas. There is no equivalent reference in the claims of the accepted specification for application 364. Memcor submitted that the primary focus should be on claim 1 in each specification as these are the broadest claims. According to Memcor, the above analysis of claim 1 in each specification disclosed that the claims in the specification for application 855 are significantly different from, and thus not within the scope of, the claims of the accepted specification for application 364. Memcor asked why the patentee would have changed the text between the two claim sets if not to establish a broader scope of monopoly, contrary to the scheme of the Act. Memcor submitted that claims 15 and 16 (referred to in decision of the delegate of the Commissioner) are of no assistance. Claims 15 and 16 are omnibus claims. As such, and contrary to the delegate's approach, they are narrow claims to specifically disclosed embodiments as they appear in the drawings accompanying the specification ( Raleigh Cycle Co Ltd v H Miller and Co Ltd (1948) 1 All ER 308 at 313-314, 319 and 320-321). In this case the specific embodiments as illustrated by the drawings are limited by features which are not present in the claims in the specification for application 855 (in particular, each of the drawings show the open ends of the fibers extending from the permeate-discharging face rather than being flush with that face). Memcor supported these submissions by reference to the evidence of Professor Vicki Chen of the University of New South Wales' School of Chemical Sciences and Engineering. Professor Chen obtained a PhD in chemical engineering from the University of Minnesota in 1988. In addition to her current university post, Professor Chen is the Director of the UNESCO Centre for Membrane Science and Technology which is a leading academic research centre in the field of membrane technology. She is the author and co-author of numerous articles about, and has extensive experience in the field of, membrane technology. This is a different mode of operation from one in which permeate is withdrawn substantially continuously as stated in the accepted specification for application 364 (implying that, in this mode, the withdrawal ceases only for such actions as back-flushing to remove fouling from the fibers). (2) The device in application 855 has fibers capable of restricted displacement, which is a term including but not limited to a capacity of fibers to be swayable. The device in the accepted specification for application 364 is narrower as it requires the fibers to be swayable in the substrate. Restricted displacement would include bowing or any other horizontal displacement of fibers from the centre position including displacement by mechanical means. (3) The device in application 855 permits one of the headers to sit above the substrate whereas the claims of the accepted specification for application 364 require both headers to be immersed in the substrate. (4) The device in application 855 permits the fibers to be secured within the headers and does not require them to protrude from the permeate-discharging face of the headers as in the claims of the accepted specification for application 364. This protrusion is a product of the novel method for forming the composite header described in the accepted specification of application 364. The reference in the claims of the accepted specification for application 364 to the potting resin extending over only each terminal portion of the fibers near their ends reinforces that the accepted specification for application 364 is different from application 855 in which the ends of the fibers need only be held in a closely spaced apart relationship by the potting resin. (5) The device in application 855 does not include a reference to the vertical skein, which is a defined term in the glossary of the accepted specification for application 364. This difference (having regard to the definition of vertical skein) means that the headers and fibers of the device in application 855 need not be submersed and permeate need not be collected from both headers of that device. (6) The additional description in application 855 with respect to the through passages means that the mechanism for generating bubbles for scouring the surface of the fibers is integrated into the header assembly. This feature is not present in the claims of the accepted specification for application 364. The respondent, GE Betzdearborn Canada Company (GE), submitted that the invention defined by the claims in the specification for application 855 falls within the scope of claim 1 of the accepted specification for application 364. Alternatively, the invention falls within the scope of claims 15 or 16 of the claims of the accepted specification for application 364 (the omnibus claims). GE disagreed with Memcor's approach to the textual differences between the two claim sets and to the construction of the omnibus claims. It is not necessary that there be an identical claim of the same scope in application 364 for application 855 to satisfy that test. (2) Memcor and Professor Chen were assiduous to read the sets of claims with an eye to purported difficulties intended to take the claims in application 855 beyond the scope of claims in the accepted specification for application 364, irrespective of whether any person skilled in the art would so read the claims in 1995 (the relevant date by reason of application 364 claiming priority through two earlier US patents filed in 1995 and 1996). This focus on the meaning of different words, as opposed to the meaning of the claims, was inappropriate. (3) Contrary to Memcor's submission, each claim defines a microfiltration membrane device incorporating various features. Neither defines a device in use only. The words on which Memcor relies (such as "for withdrawing permeate substantially continuously...") connote only a use for which the device is suitable. Memcor's submissions attempt to convert a patent for a device into one for a use. (4) The words "substantially continuously" in claim 1 of the accepted specification for application 364 do not constitute a limitation. They identify a purpose for which the device is suitable. In any event, a person skilled in the art (such as Dr Richard Baker, the expert witness called by GE) would understand that the device defined in claim 1 of the specification for application 855 also is suitable for withdrawing permeate substantially continuously. (5) The word "swayable" in claim 1 of the accepted specification for application 364 means the capacity of the fibers for side-to-side displacement of their intermediate portion by reason of their excess length. Read in the context of the specification as a whole, a person skilled in the art would understand the fibers in the device claimed in application 855 also to be swayable in the substrate. The claims for the device in application 855 require a configuration permitting restricted displacement of the intermediate portion of the fibers independently of the movement of another fiber. Bowing, as referred to by Professor Chen, is permanent. Professor Chen's references to mechanical displacement and to ceramic fibers (which are suitable only for inside-out movement of substrate, as opposed to outside-in movement as in the device) are inapplicable. (6) The "said substrate" in claim 1 of the accepted specification for application 364 is notional substrate for filtration of which the device is suitable. Claim 1 of the specification for application 855 requires the components of the headers, fibers and permeate collection means to be an integrated combination of elements adapted to be submersible below the surface of the substrate. Since both claims are to devices rather than the manner in which they are used, it follows that in both cases the device is adapted so that the headers can be within the substrate. (7) Consideration of claim 1 in the context of the whole of the specification accepted for application 364 discloses a distinction between the concepts of fibers extending from and protruding through a permeate-discharging face. The former refers to the extension of the fibers through the header and the substrate to the opposing header. The latter refers to the novel method of creating a composite header which results in the ends of the fibers protruding from the header into the permeate collection means. As Dr Baker explained, the specification refers to both the conventional and novel method for creating headers and describes the method of securing the fibers in the header as not "narrowly critical". This observation also disposes of Memcor's focus on potting resin extending over only each terminal portion of the fibers near their ends. (8) The terms of the claims in the accepted specification for application 364 disclose that both or only one of the headers may have a permeate-discharging face. Memcor's submission that the device in application 364 must have two permeate-discharging faces gives primacy to the definition of "vertical skein" in circumstances where the context makes clear that the definition is inapt (as it is elsewhere in the specification). Consistent with Dr Baker's evidence, a person skilled in the art would understand claim 1 to encompass permeate withdrawal from one or both of the headers. On the same basis, the reference to the "integrated combination of elements" in claim of application 855 is within the scope of the device defined in claim 1 of the accepted specification for application 364. (9) Fibers which satisfy the excess length prescription identified in claim 1 of application 855 will be of substantially the same length. (10) The passage in claim 1 of the specification for application 855 in respect of through passages has the effect of substantially narrowing the claim. As to the omnibus claims, GE submitted that there was no authority for a proposition that such claims should be read as if they replicated all other claims but narrowed to the specific embodiments in the drawings. Rather, such clauses constitute claims for the preferred embodiments of the invention understood in the light of the drawings. While some cases involve a narrow construction of omnibus clauses, the scope of any particular clause must depend on the context of the specification in which the clause appears and the nature of the descriptions or drawings to which the clause refers ( Lewis v Hall (2005) 68 IPR 89 ; [2005] FCAFC 251). In the present case, claim 15 of the accepted specification for application 364 refers generally to the description and the drawings. The drawings are schematic and thus the scope of the claim cannot be defined by the appearance of the drawings ( Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 91). Both the description and the drawings cover a number of different embodiments of the invention, including (for example) an embodiment involving the withdrawal of permeate from one header only and an embodiment with fibers protruding through and extending from a permeate-discharging face. Variations between these embodiments are within the scope of claim 15. The device disclosed in the claims for application 855 are within the scope of claim 16 of the accepted specification for application 364 (essentially for the same reasons given by the delegate of the Commissioner of Patents who relied on clause 16 to found his decision rejecting Memcor's opposition to the grant). GE supported these submissions by reference to the evidence of Dr Baker. Dr Baker is a senior researcher and former president of Membrane Technology and Research, Inc. After obtaining his PhD in Physical Chemistry in 1966 from Imperial College London, Dr Baker moved to the United States where he has been involved with various corporations researching and developing membrane technologies. In common with Professor Chen, Dr Baker is the author or co-author of numerous papers in this field. Nevertheless, in a membrane device permeate must be withdrawn as it is produced. If not withdrawn, permeation stops because the pressure in the chamber becomes the same as that in the feed solution. (2) "Swayable" means side-to-side displacement permitted by the excess length of the fibers. The term is used in the specification to distinguish the device as claimed from devices in which the fibers vibrate because they are taut. The claims for application 855 require the fibers to "have a length from 0.1% to less than 5% greater than the fixed distance so as to permit restricted displacement of an intermediate portion of each fiber, independently of the movement of another fiber". Hence, nothing is lost by reason of the deletion of the reference to the fibers being swayable. (3) The phrase "all open ends of said fibers extending from a permeate-discharging face of at least one header" indicates fibers sealed in a resin block (the header) so that fluid in the fibers can flow to a collection chamber whereas fluid outside the chamber cannot. "Extending from" involves a fiber going completely through the resin so that the ends of the fibers open from a permeate-discharging face. This is consistent with the fact that the specification refers to conventional headers (in which the ends of fibers are flush with the face). (4) The phrase "permeate collection means...sealingly connected in open fluid communication with a permeate-discharging face of each of said headers" means that the upper, lower or both headers can have a permeate-discharging face. The specification contemplates withdrawal of permeate from one or both headers. If only one header withdraws permeate, the other need not have a permeate-discharging face. (5) "Vertical skein" is not a technical term in this field. The definition on one reading suggests that permeate must be withdrawn from both headers but that is not reflected in the terms of the specification. Moreover, people in the industry in 1995 would have understood the desirability of withdrawing permeate from one or both headers. It is of no consequence to the invention whether permeate is withdrawn from one header or both. (6) Based on the process by which the fibers are potted as described in the specification and the methods known to the art it is unlikely that the fibers could be other than substantially the same length. (7) All membrane systems must be subject to a transmembrane pressure differential in order to function. (8) Fibers are potted in a header in a closely spaced apart relationship in order to create an effective seal to prevent substrate from flowing between the inside of the membranes without passing through the membrane wall and thus contaminating the permeate. If the fibers touch each other a leak can occur so it is necessary for the fibers to have resin between them over their terminal portions near the ends. Accordingly they agreed that: - (i) the hearing under s 60(4) of the Act was a hearing de novo, (ii) Memcor, as the applicant opposing the grant, bore the onus of proof, (iii) Memcor's onus was to satisfy the Court that, if granted, the patent would be invalid, (iv) while it was appropriate for the Court to accord respect to the views expressed by the Commissioner's delegate, particularly where the delegate has relevant technical knowledge or experience, the evidence before the Court in the present case was different from that before the delegate, and (v) specifications are not to be read in the abstract but in light of common general knowledge and "the state of the art and the manufacture at the time" ( Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001] 207 CLR 1 ; [2001] HCA 8 at [24] ). Memcor emphasised the policy of the Act to guard against "claim broadening" (evidenced by, for example, ss 79B and 102 of the Act) and the need to construe claims having regard to that policy. Memcor also stressed: - (i) the status of a patent as a public document marking out the field of a monopoly ( Flexible Steel Lacing Company v Beltreco Ltd (2000) 49 IPR 331 ; [2000] FCA 890 at [70] ), (ii) the need for the territory of the monopoly to be marked out with reasonable clarity by the claim construed fairly in the light of the relevant prior art ( Rodi & Weinberger AG v Henry Showell Ltd [1969] RPC 367 at 391-392), (iii) the important aphorism in patent law that what is not claimed is disclaimed ( Walker v Alemite Corporation [1933] HCA 39 ; (1933) 49 CLR 643 at 656-657 citing Fellows v Thomas William Lench Ltd (1917) 34 RPC 45 at 55), and (iv) the need to recognise that patentees have their own reasons for casting their claims in particular terms about which the Court may not speculate, thus confirming the need for caution in accepting any suggestion that an apparent limitation upon a claim "is merely the product of a slip of the pen" ( Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd [1991] FCA 434 ; (1991) 103 ALR 239 at 256). They further have pointed out that the claims have a particular function to discharge. With every word of this I agree, but I desire to add something further in regard to the claims in a specification. The function of the claims is to define clearly and with precision the monopoly claimed, so that others may know the exact boundaries of the area within which they will be trespassers. Their primary object is to limit, and not to extend, the monopoly. What is not claimed is disclaimed. The claims must undoubtedly be read as part of the entire document, and not as a separate document. Nevertheless, the forbidden field must be found in the language of the claims, and not elsewhere. It is not permissible, in my opinion, by reference to some language used in the earlier part of the specification to change a claim which by its own language is a claim for one subject-matter into a claim for another and a different subject-matter, which is what you do when you alter the boundaries of the forbidden territory. A patentee who describes an invention in the body of a specification obtains no monopoly unless it is claimed in the claims. As Lord Cairns LC said, there is no such thing as infringement of the equity of a patent: Dudgeon v Thomson . The prima facie meaning of words used in a claim may not be their true meaning when read in the light of such a dictionary, or of such technical knowledge, and, in those circum-stances, a claim, when so construed, may bear a meaning different from that which it would have borne had no such assisting light been available. That is construing a document in accordance with the recognised canons of construction. However, I know of no canon or principle which will justify one in departing from the unambiguous and grammatical meaning of a claim and narrowing or extending its scope by reading into it words which are not in it, or which will justify one in using stray phrases in the body of the specification for the purpose of narrowing or widening the boundaries of the monopoly fixed by the plain words of a claim. It, and it alone, defines the monopoly, and the patentee is under a statutory obligation to state in the claims clearly and distinctly what is the invention which he desires to protect. But where the construction of a claim when read by itself is plain it is not in my opinion legitimate to diminish the ambit of the monopoly claimed merely because in the body of the specification the patentee has described his invention in more restricted terms than in the claim itself. GE emphasised that the applicant in opposition proceedings bore an onus heavier than in ordinary civil proceedings. The purpose of opposition proceedings is to provide a "swift and economical means of settling disputes that would otherwise need to be dealt with by the courts in more expensive and time-consuming post-grant litigation...by ensuring that bad patents do not proceed to grant" ( Genetics Institute Inc v Kirin-Amgen Inc (1999) 92 FCR 106 ; [1999] FCA 742 at [19] ). Consistent with this policy and the availability of subsequent revocation proceedings, GE noted references in various decisions to the effect that the Court must be "practically certain" or "clearly satisfied" that a patent granted on the application would be invalid ( Genetics Institute at [17]; E I Du Pont de Nemours & Co v ICI Chemicals & Polymers Ltd (2003) 128 FCR 392 ; [2003] FCA 291 at [25] ; Austal Ships Pty Ltd v Stena Rederi Aktiebolag (2005) 66 IPR 420 ; [2005] FCA 805 at [6] ; and F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 ; [2000] FCA 283 at [67] ). GE also referred to authority to the effect that a claim should be given a construction which makes the invention workable in preference to one according to which the invention may not do so ( Pfizer Overseas Pharmaceuticals v Eli Lilly & Co (2005) 225 ALR 416 ; [2005] FCAFC 224 at [250] ). But as a whole it is made up of several parts which have different functions. The claims mark out the legal limits of the monopoly granted. The specification describes how to carry out the process claimed and the best method known to the patentee of doing that. Although the claims are construed in the context of the specification as a whole, it is not legitimate to narrow or expand the boundaries of monopoly as fixed by the words of a claim, by adding to those words glosses drawn from other parts of the specification. If a claim is clear and unambiguous, it is not to be varied, qualified or made obscure by statements found in other parts of the document. It is legitimate, however, to refer to the rest of the specification to explain the background of the claims, to ascertain the meaning of technical terms and resolve ambiguities in the construction of the claims. See Flexible Steel Lacing Co v Beltreco Ltd [2000] FCA 890 ; (2000) 49 IPR 331 at [73] - [75] (Hely J). In so far as a view expressed by an expert depends upon a reading of the patent, it cannot carry the day unless the court reads the patent in the same way. Claims identifying an apparatus "for" a particular purpose have been said to create "considerable difficulty" as there must be "some limit to the extent to which such a claim can be construed as covering apparatus not intended for that purpose, or designed to work otherwise" (T.A. Blanco White. Patents for Invenstions & The Protection of Industrial Designs . 5 th ed. London: Stevens & Sons (1983) at 2-117). In the present case I am satisfied that the claims in the accepted specification for application 364 are for a device not a device in use. The opening words of claim 1 are "[a] microfiltration membrane device". There follows, between two commas, a description of the process for which the device is suitable ("for withdrawing permeate substantially continuously..."). After the second comma, the opening sentence of claim 1 returns to the device ("said membrane device including"). The natural and ordinary meaning of this sentence is to define the invention as a device suitable for a purpose rather than as a device only when used for that purpose. The list which follows the words "said membrane device including" involves features of the device, not the method. The words "in said substrate" and "within said substrate" refer back to the multicomponent liquid substrate in line 3 of the opening paragraph to claim 1. That substrate is the substance from which the device withdraws permeate. The words "in said substrate" and "within said substrate" do not limit the invention to the device when immersed in the substrate. They describe the conditions under which the device will operate for withdrawing permeate substantially continuously from the substrate. The concluding paragraph to claim 1 ("wherein said fibers are subject to a transmembrane pressure differential...") also describes those conditions. Contrary to Memcor's submissions, the descriptions of the conditions under which the device is suitable for withdrawing permeate do not indicate that the claim is limited to a device having certain "essential constructional and operational features in combination". As GE submitted, they indicate the capability of the device for which the claim is made to operate in a particular mode. This construction of claim 1 arises from the ordinary meaning of the language of the claim. Accordingly, it is unnecessary to refer to the balance of the specification to resolve any ambiguity in this regard. Nevertheless, it is apparent that this construction is also consistent with the balance of the specification. Specifically, the background to the invention (p 1 line 5) describes the invention as a device (a membrane device) and a method (to maintain clean fibers). Operation of the system (p 15 line 25ff) is described separately from components forming the device (the vertical skein, the fibers, the headers and the gas scrubbed assembly commencing at p 10 line 5). This construction of claim 1 is also consistent with the approach in The Raleigh Cycle Coy Ld v H Miller and Coy Ld (1946) 63 RPC 113 at 137. Claim 1 of the specification for application 855 is also for a device described as a microfiltration membrane device. That claim describes the use for which the device is suitable (withdrawing permeate from a multicomponent substrate). Accordingly, and leaving aside Memcor's other grounds of opposition, I do not accept that claim 1 of the specification for application 855 does not fall within the scope of the claims of the accepted specification for application 364 by reason of the latter being for a device in use and the former for a device per se. In its submissions to the contrary, Memcor relied on the evidence of Professor Chen. Professor Chen considered that a "substantially continuous" operation of the device was one in which there was prolonged continuous filtration with periodic back-flushing (a description with which Dr Baker agreed). Professor Chen, however, also considered that this description did not include alternative modes of operation such as relaxation or intermittent filtration (in which filtration may be paused without back-flushing). Dr Baker considered that other regular cyclical operations in addition to back-flushing would also be "substantially continuous". There are a number of difficulties with Memcor's approach to this issue. First, and as discussed above, I consider the words "for withdrawing permeate substantially continuously from a multicomponent liquid substrate" to be a description of the function for which the device is suitable rather than a limitation on the scope of the invention. Consistent with the evidence of Professor Chen and Dr Baker as people skilled in the art, the device in claim 1 of the specification for application 855 is also suitable for that purpose. Second, back-flushing itself, as the evidence of Professor Chen and Dr Baker disclosed, is a form of intermittent operation. Third, nothing in the claims of the accepted specification for application 364 indicate that the words "substantially continuously" authorise a cessation of the withdrawal of permeate for the purpose only of back-flushing. Fourth, and as Dr Baker said, the device withdraws permeate "substantially continuously" because such withdrawal is necessary for the difference in pressure required to make the device function. Finally, the omission of the word "liquid" from the description of the "multicomponent liquid substrate" in this part of claim 1 in the specification for application 855 is immaterial. "Substrate", as used throughout the specification, refers to a liquid. Indeed, the definition of "substrate" in the glossary to the specification makes this clear, it being defined as "multicomponent liquid feed". For these reasons the omission of the words "substantially continuously" in claim 1 of the specification for application 855 does not place the invention therein disclosed outside the scope of the claims of the accepted specification for application 364. With the relevant statutory provision in mind, it is apparent that the required comparison is not between a claim in which the words "said fibers being swayable in said substrate" are included (claim 1 of the accepted specification for application 364) and a claim in which those words are excluded (claim 1 of the specification for application 855). Rather, the whole of each claim must be considered. When that is done the significance of other aspects of the claims are revealed. Specifically, both claims have in common requirements (amongst other things) that: - (i) the fibers be hollow fiber membranes, (ii) the fibers be oriented vertically between two headers, and (iii) the fibers each have a length between 0.1% to less than 5% greater than the fixed distance between the headers "so as to permit restricted displacement of an intermediate portion of each fiber, independently of the movement of another fiber". Professor Chen's concern was that these common elements, nevertheless, might not limit the device in application 855 to one in which fibers are swayable in the substrate. Professor Chen referred to the capacity for certain types of material (such as ceramic fibers) to bow and for a means of mechanical displacement to be used. Dr Baker did not share these concerns. I prefer the approach of GE and Dr Baker to this issue. In particular, and as GE submitted, the evidence indicates that ceramic fibers, if capable of bowing, would displace once only, in a single direction. This is inconsistent with the requirement that the fibers permit restricted displacement of an intermediate portion of each fiber. Further, Professor Chen's evidence did not indicate the existence of any practical mechanical means known in the art of achieving restricted displacement of only the intermediate portions of fibers independently of the movement of another fiber. For these reasons I consider that the invention in application 855 does not fall outside the scope of the claims of the accepted specification for application 364 by reason of the omission in the former of the reference to "said fibers being swayable in said substrate". Claim 1 of the specification for application 855 refers to the headers "disposed vertically spaced apart relationship". The latter also requires "said fibers, said headers and said permeate collection means together forming part of an integrated combination of elements and adapted to be all submersible below the surface of the substrate...". Consistent with the conclusions reached above, I accept GE's submission that the "said substrate" in claim 1 of the accepted specification for application 364 is notional, in the sense that it is part of the description of the function for which the device is suitable, rather than a limitation on the patented device. In both cases the device is adapted to be submersible in the substrate. Accordingly, claim 1 of the specification for application 855 does not fall outside the scope of the claims of the accepted specification for application 364 on the ground of this difference. Claim 1 of the specification for application 855 refers to the open ends of the fibers being "open to a permeate discharging face of one or both headers". Memcor and Professor Chen considered that the former described a header in which the fibers protruded from the permeate-discharging face. This, they said, was consistent with the novel potting method described in the specification (in which fibers are fixed in a fugitive lamina which is then removed) and the drawings which show the fibers passing through and protruding from the permeate-discharging face of the headers (such as figures 2, 4, 9, 4, 15, 16 and 17). Memcor said that the alternative approach of Dr Baker (in which claim 1 of the accepted specification for application 364 includes an embodiment of the invention in which the open ends of the fibers are flush with the permeate-discharging face) was thus incorrect. GE (and Dr Baker) observed that the phrase "extending from" could be contrasted with that of fibers which "protrude through a permeate-discharging face" as referred to in claim 4 of the accepted specification for application 364. According to GE, when the specification refers to the protrusion of fibers into the permeate collection area, it uses the word "protrude" and where it refers to the fibers extending from the permeate-discharging face of a header into the substrate towards the other header, it uses the word "extend". They also noted that the specification refers to both the novel and conventional method for potting fibers. The specification says that the potting method used is not "narrowly critical". The choice depends on the materials of the header and the fiber and the cost of using a method other than potting. In the conventional method the open fiber ends are open to, and flush with, the permeate-discharging face. Dr Baker considered that it made no commercial sense to exclude from claim 1 the conventional potting method. Although I accept Memcor's submission that Dr Baker's recourse to commercial sense is of no assistance in the present case, GE's other submissions about this issue are persuasive. I consider the reference to the fibers "extending from a permeate-discharging face" in claim 1 of the accepted specification for application 364 to be ambiguous, particularly when read with claims 4, 9 (which deals with the novel method of creating a header and, like claim 4, refers to fibers "protruding from an aft face of said header") and 13 (which refers to fugitive lamina having an aft face through which fibers protrude and a fore face through which fibers extend vertically"). These references to fibers "protruding" are generally consistent with the use of that word in the text of the specification (for example, at p 19 line 30 --- p 20 line 1, p 21 lines 29-30, p 22 line7, p 23 line 21-22, p 28 lines 11-13, p 35 lines 1 to 5, p 38 lines 20-25, and p 41 line 15). Consistent with Dr Baker's evidence and GE's submissions, I consider the better view is that the reference in claim 1 of the accepted specification for application 364 to "all open ends of said fibers extending from a permeate-discharging face of at least one header" does not refer to the protrusion of the fibers from the permeate-discharging face into the permeate collection chamber. Rather, it refers to the open ends of the fibers extending from the permeate-discharging face of at least one header in the vertically spaced-apart relationship identified (in other words, through the substrate and towards the other header). I do not accept Memcor's submission that the extension can only be a "jutting out" from the permeate-discharging face itself. To the contrary, the words "extending from" a permeate-discharging face, considered in the context of the claims and specification as a whole, suggest an extension of the fibers in a vertical alignment from the permeate-discharging face through the resin block forming the header and in the direction (be it up or down) of the other header. The reference in claim 4 to the fibers protruding through a permeate-discharging face of each header in a range from 0.1mm to 1cm does not indicate that any different construction is required. Memcor argued that claim 4 was a sub-set of claim 1 and that a harmonious reading of the claims thereby required the fibers in claim 1 to protrude through the permeate-discharging face of the headers. In my view, however, the common position of the parties that claim 1 is the broadest of the claims supports a contrary conclusion. Claim 1 does not require any protrusion (which is a consequence of the novel potting method) because it encompasses both the conventional and novel methods of constructing a header (consistent with the body of the specification). Claim 4 is narrower because it requires the fibers to protrude through the permeate-discharging face of the header (a result of using the novel potting method). Claim 3 confirms this interpretation because it refers to fibers extending downwardly through a permeate-discharging face (that is, through the face into the substrate and towards the other header). Hence, if GE's approach to its meaning is adopted, the specification is consistent and harmonious in defining a single invention. I also do not accept that the later reference in claim 1 to the potting resin extending only over each terminal portion of the fibers "near their ends" supports Memcor's approach to this issue. As discussed below, the requirement is that the fibers be open to the permeate-discharging face but spaced apart because contact between the fibers, as a person skilled in the art such as Dr Baker knew, would risk contamination of the permeate with the substrate. Claim 1 of the specification for application 855 also requires all open ends of the fibers to be open to a permeate-discharging face of one or both headers. Further, it requires the headers to be disposed in a vertically spaced-apart relationship and the fibers to be oriented essentially vertically between the headers. Accordingly, I consider that this difference between the two claims is immaterial. Claim 1 of the specification for application 855 does not fall outside the scope of the claims of the accepted specification for application 364 on the ground of this difference. Claim 1 of the specification for application 855 refers to "permeate collection means to collect permeate sealingly connected in open fluid communication with the, or each, permeate discharging face". According to Memcor, the requirement of the former is for the ends of fibers to be open to the permeate-discharging face of each header; otherwise there could be no "open fluid communication". I do not accept Memcor's submissions on this issue. The item in question is the permeate collection means. It is that means which is to be sealingly connected in open fluid communication with the permeate-discharging face of each of said headers. The said headers are the first and second header disposed in the vertically spaced-apart relationship. However, as the third sub-paragraph discloses, the open ends of the fibers have to extend from a permeate-discharging face of "at least one header". Contrary to Memcor's approach to this issue, there is ambiguity in this respect in claim 1 of the specification. The ambiguity should be resolved by recognising that the device has two headers disposed in a vertically spaced-apart relationship. However, either or both of the headers may be used to collect permeate. If a header is to be used to collect permeate then it must have a permeate collection means, sealingly connected in open fluid communication with a permeate-discharging face. This construction best resolves the ambiguity in claim 1 of the accepted specification for application 364 as it: - (i) gives effect to the statement in the third sub-paragraph of the claim to a permeate-discharging face "of at least one header", (ii) recognises that the focus of the fourth sub-paragraph is the permeate collection means, (iii) gives work to the words "of each of said headers" by reading those words as requiring the relevant connection in open fluid communication whenever a header is to be used to withdraw permeate, and (iv) is consistent with the balance of the specification which expressly contemplates withdrawal of permeate from a single header only (for example, p 37 lines 7-15). Contrary to Memcor's submission, this construction does not have the effect of meaning that there is no open fluid communication. The open fluid communication is between the permeate collection means and the permeate-discharging face of the header with which that means is sealingly connected. Further, and as explained below, the reference to "vertical skein" in the sixth sub-paragraph of claim 1 of the accepted specification for application 364 does not lead to a contrary conclusion. Finally, this construction is consistent with Professor Chen's evidence to the extent that she agreed that the device permitted permeate collection from either or both of the headers. Accordingly, the reference to the "permeate collection means to collect said permeate sealingly connected in open fluid communication with the or each permeate discharging face" in the specification for application 855 is within the scope of claim 1 of the accepted specification for application 364. As noted, the glossary to the accepted specification defines a vertical skein as "an integrated combination of structural elements including (i) a multiplicity of vertical fibers of substantially equal length; (ii) a pair of headers in each of which are potted the opposed terminal portions of the fibers so as to leave their ends open; and, (iii) permeate collection means held peripherally in fluid-tight engagement with each header so as to collect permeate from the ends of the fibers". Claim 1 of the specification for application 855 refers to "said fibers, said headers and said permeate collection means together forming part of an integrated combination of elements and adapted to be all submersible below the surface of the substrate with the fibers oriented essentially vertically". The accepted specification for application 364 explains the function of the glossary as defining the terms "used in the parent case" (p 1 lines 15-16). The parties did not refer to "parent case" (as opposed to "patent case", a US term for patent application). Thus I proceed on the basis that the intended reference is to the "patent case", as Memcor submitted. Memcor contended that the requirement for a vertical skein, which was missing from claim 1 of the specification for application 855, meant that application 855 is for invention which does not fall within the scope of the claims of the accepted specification for application 364. Amongst other things, the definition of "vertical skein" requires permeate collection means held peripherally in fluid tight engagement with each header. Memcor and Professor Chen considered that this reinforced the requirement for permeate to be collected from both headers. The experts agreed that the term "vertical skein" has no special or technical meaning in the field of microfiltration. Once this meaning is given to the references to the said fibers, said headers and said permeate collection means in the sixth sub-paragraph, it is apparent that the reference to a vertical skein in that paragraph cannot incorporate the definition in the glossary by reference. This is one indication that GE's submission that the reference to "vertical skein" is not intended to incorporate the definition in the glossary is to be preferred. There are other indications which support GE's submission. First, the claims use words which are defined in the glossary in circumstances where the glossary would make the words in the claims unnecessary. For example, the first sub-paragraph of claim 1 refers to "a multiplicity of hollow fiber membranes, or fibers...". The glossary, however, defines "fibers" as "used for brevity to refer to hollow fiber membranes". Had it been intended that the glossary apply uniformly to all words used in the claims which also appear in the glossary, the reference in claim 1 to hollow fiber membranes would have been unnecessary. Similarly, the glossary defines "substrate" as "multicomponent liquid feed" whereas claim 1 refers to a "multicomponent liquid substrate". If the definition of "substrate" is inserted into "multicomponent liquid substrate" then again the resulting phrase is bordering on meaningless. Second, and as GE submitted, the specification uses the words "vertical skein" or "skein" when describing an array inconsistent with the definition. Hence, the accepted specification for application 364 (p 10 lines 16-20), when discussing the vertical skein, refers to a "skein" (itself defined in the glossary to mean a vertical or cylindrical skein or both) involving permeate collection from one header only. Yet the definition of vertical skein refers to permeate collection means held in fluid-tight engagement with each header. The same observation may be made about the reference to skein at p 37 lines 7 to 15. To the same effect, the specification (p 2 line 26) refers to "the skein" when in fact the reference is to the array in an article by Yamamoto (K. Yamamoto et al, "Direct Solid-Liquid Separation Using Hollow Fiber Membrane in an Activated Sludge Aeration Tank", Wat Sci Tech . vol 21. Brighton (1989) pp 43-54) which is discussed in US Patent No 5,248,424 involving a single header. Other examples of such inconsistency are readily apparent. Accordingly, a "header" is defined in the glossary to mean a body (relevantly) formed from a natural or synthetic resinous material. Yet claim 2 refers to a device in which the "header" is a mass of synthetic resinous material only. Claim 8 refers to a "vertical zone" (p 56 line 5) in a context which discloses that the vertical zone is the zone of bubbles surrounding each fiber. The glossary has two terms for this concept (the "zone of confinement" or "bubble zone") yet the claim uses neither defined term. Third, the glossary appears before the claims in the specification. This fact must be considered in conjunction with the preamble which refers to the glossary providing meanings for terms used in the specification in the approximate order in which they appear to define their meaning in the context in which they are used. This suggests, consistent with the discussion above, that the claims, when using terms defined in the glossary, are not to be read as if they literally incorporated the defined terms. Once this construction is applied, it is apparent that there is no material difference between a requirement in the accepted specification for application 364 that "said fibers, said headers and said permeate collection means together forming a vertical skein wherein said fibers are essentially vertically disposed" and a requirement in application 855 that "said fibers, said headers and said permeate collection means together forming part of an integrated combination of elements and adapted to be all submersible below the surface of the substrate with the fibers oriented essentially vertically". The latter is within the scope of the former. Memcor noted that this requirement was missing from the specification for application 855 and submitted that it would permit fibers of different lengths to be used, thereby broadening the scope of the monopoly. I disagree. Both specifications require the fibers to be from 0.1% to 5% greater than the fixed vertical distance between the two headers in order to permit the necessary sway or restricted displacement of an intermediate portion of each fiber independently of the movement of other fibers. It seems to me that the specified range of 0.1% to 5% greater than the fixed vertical distance itself ensures that each fiber is of "substantially" the same length. Moreover, nothing in the balance of the specification suggests any method of attaching fibers to a header in such a way as to result in fibers not having substantially the same length. All of the methods described indicate a result in which the fibers will be basically the same length. This requirement also seems inherent within the device which involves two headers at a fixed distance apart (oriented vertically). For these reasons, I do not consider that the omission of the phrase "having substantially the same length" from claim 1 of the specification for application 855 means that the invention falls outside the scope of the claims of the accepted specification for application 364. The differential range nominated is the same in each specification. I have recorded my conclusion that the device in the accepted specification for application 364 is for a device suitable for a particular purpose rather than a device in use. Consistent with that conclusion, I see no material difference between the two descriptions. This conclusion is reinforced by the use of the word "wherein" in each of the claims. The device in each specification is one suitable for the purpose of substantially continuous withdrawal of permeate when the device, in use, is subject to a particular pressure differential. Claim 1 of the specification for application 855 says the fibers are "spaced apart to a desired lateral spacing between fibers by said potting resin, to as maintain the ends in closely spaced apart relationship". This issue is connected with Memcor's (and Professor Chen's) position with respect to the fibers having to protrude from the permeate-discharge face of the headers. Professor Chen considered that the reference to the potting resin being near the ends of the fibers confirmed the requirement of protrusion. I do not accept this approach. Consistent with the submissions of GE and the evidence of Dr Baker, I consider that the concluding paragraph of claim 1 effectively requires the fibers to be separated by the potting resin, with the potting resin near but not over the open ends of the fibers. Claim 1 of the specification for application 855 also requires the fibers to be spaced apart by the potting resin and all open ends of the fibers to be open to a permeate-discharging face. This latter requirement would also only permit potting resin near, rather than over, the ends of the fibers. Accordingly, I do not characterise the omission of the words "which extends over only each terminal portion of said fibers near their ends" from claim 1 of the specification for application 855 as introducing any material difference when compared to claim 1 of the accepted specification for application 364. I accept GE's submission that, properly construed, this phrase imposes an additional limitation on the device in application 855. In other words, the scope of the monopoly claimed is narrowed rather than expanded by this reference. The requirement for through passages restricts the means by which the gas creating the bubble zone around the fibers is created. It follows that this restriction does not mean that the invention in application 855 is outside the scope of the claims of the accepted specification for application 364. As Memcor itself submitted, speculation about the patentee's intentions is impermissible. There are many possible explanations for the textual differences. Nevertheless, the question remains that posed by s 79B(1) of the Act, specifically (given Memcor's grounds of opposition), s 79(1)(b). I consider that the construction I have adopted satisfies the requirements emphasised by Memcor for a harmonious reading of the claims, consistent with the requirement that the claims define a single invention only (s 40(4) of the Act). I am aware that I have not referred to each point made by Professor Chen and Dr Baker in supporting their competing opinions. The reason for this is that, as both parties observed, the experts frequently strayed into the ultimate question of the proper construction of the claims which is a matter for the Court. Insofar as GE submitted that Professor Chen's evidence should be rejected because of a pre-existing relationship with Memcor, I should record my conclusion rejecting that submission. Nothing in the evidence indicated any basis upon which to cast doubt on Professor Chen's independence. I recognise that my reasons are not the same as those of the delegate of the Commissioner of Patents. The delegate considered that two claims in the accepted specification for application 364 were not covered by the claims of the specification for application 855 (first, that the open ends of the fibers extend from a permeate-discharging face and second, the reference to the vertical skein). The delegate based his conclusion of patentability on claim 16 rather than claim 1. As both parties observed, the evidence before the delegate was not the same as the evidence in this proceeding. Accordingly, the weight to be given to the delegate's reasons is less than might otherwise be the case. Further, the delegate stated only that application 855 "did not cover" the identified features. For the first feature, the delegate gave no reasons. For the second, the delegate appears to have relied on the lack of any reference to fibers of substantially equal length in the definition of vertical skein. For the reasons given above, I am satisfied that neither difference is material in the context set by the terms of s 79B(1)(b). I have not dealt with the dispute between the parties about the omnibus claims (claims 15 and 16). It is unnecessary to do so because I accept GE's primary case about claim 1 of the specifications. That is, the invention in claim 1 of the specification for application 855 falls within the scope of claim 1 of the accepted specification for application 364. If it be necessary to say so, I also consider that the particular conclusions reached mean that claim 1 of the specification for application 855 falls within the scope of claims 15 and 16 of the accepted specification for application 364. The references in claims 15 and 16 to a microfiltration membrane device or gas-scrubbed assembly "substantially as herein described with reference to the accompanying drawings" is sufficiently broad to encompass the invention claimed in application 855. It follows that cl 3.12(1)(c) to the Regulations applies to determine the priority date of each of the claims in the specification for application 855. On that basis, the Commissioner's delegate was correct to dismiss Memcor's opposition and direct the sealing of the application. Accordingly, the appeal should be dismissed with costs. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | patents divisional application whether divisional application within the scope of the claims in the parent application intellectual property |
It arises in somewhat unusual circumstances. The applicants are presently in the course of a two-day hearing before Lloyd-Jones FM in which they seek orders that examination summonses issued to the bankrupt, Mr Terry Donald Hill, and to Ms Rose, Mr O'Neill and Mr Nicholas Eddy be discharged. The applicants also seek orders before Lloyd-Jones FM that certain subpoenas be set aside and seek an inquiry into the conduct of the respondent, Mr Piscopo, who is the trustee in bankruptcy of Mr Hill. This order is sought under section 179(1) of the Bankruptcy Act 1966 (Cth) and, indeed, the applicants in the proceeding before the Federal Magistrate seek the removal of Mr Piscopo from the office of trustee. The applicants seek leave to appeal from two interlocutory rulings made by the learned Federal Magistrate this morning. These rulings are as follows: A decision to permit a question in cross-examination of Mr Hill which is said to be part of a proposed line of questioning of Mr Hill as to his examinable affairs. The refusal of the Federal Magistrate to grant an adjournment of the proceedings to have the matter determined in the Federal Court. The substance of the applicants' argument this morning before me is that to permit the present line of cross-examination being pursued before the Federal Magistrate would render the entire application before the Federal Magistrate nugatory. This is because it would achieve the very purpose that the applicants seek to prevent on their application to set aside the examination summonses. The ground on which the application before the Federal Magistrate is made is that the trusteeship is being used to oppress Mr Hill and his wife as well as his lawyer, Mr O'Neill, and his former lawyer, Mr Eddy. Certain other bases for the allegation of abuse of process are set out in Section A of the particulars of abuse of process which are relied upon in the Federal Magistrates Court. It is well established that, ordinarily, a trial of a matter will not be interrupted in order to permit a party to seek leave to appeal to determine an interlocutory question which would have the effect of interrupting the hearing of the matter. However, there is force in Mr Marshall's proposition that there may be special circumstances in this case, namely, that if the cross-examination is to be conducted in a way which would render the proceeding before the Federal Magistrate nugatory, there may be an exception to the ordinary rule. Mr Dubler SC, who appears for the trustee, submitted this morning that his cross-examination is not being used for that purpose. It is, of course, impossible for me to determine one way or the other whether the competing contentions are correct. That is one of the reasons for the ordinary rule that the ruling on such objections is a matter to be determined by the trial judge. However, given the circumstances of this case and the urgency in which the application is brought this morning, it seemed to me to be appropriate to ask Mr Dubler to give an undertaking which would enable the matter to proceed this afternoon before the Federal Magistrate. The undertaking which Mr Dubler is prepared to give is that he will not permit the cross-examination of Mr Hill to amount to a dress rehearsal of the examination summons. Mr Dubler, also, fairly offered to seek an order from the Federal Magistrate that the transcript of his cross-examination of Mr Hill be kept confidential to the parties and their legal advisors and that it not be disclosed without leave of the Federal Magistrates Court. It seems to me that these are appropriate undertakings to be given as a condition for my refusal of leave to appeal. I will therefore, upon the undertakings to the Court that have been offered by Mr Dubler, refuse the application for leave to appeal. There will be no order as to costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | leave to appeal from interlocutory rulings of federal magistrate application before federal magistrate to set aside examination summonses parties in course of two day hearing line of questioning permitted by federal magistrate in cross-examination said to render application nugatory by achieving purpose applicants seek to prevent on their application to set aside examination summonses application for leave to appeal dismissed undertakings given by counsel for respondent not to permit cross-examination before federal magistrate to amount to dress-rehearsal of examination summons and to seek confidentiality order leave to appeal |
Notices of Assessment in respect of those years of income were issued on 29 October 2002 and served on Mr Jewiss on 30 October 2002 (the Notices). He did not pay the income tax on or before the due date specified in the Notices. By notice of objection dated 28 September 2004, Mr Jewiss objected to each of the Notices. The Deputy Commissioner of Taxation (the Commissioner) by decision of 10 August 2005 disallowed each of the objections. 2 In the meantime, the Commissioner brought proceedings in the District Court of South Australia on 14 February 2003, seeking recovery of the outstanding taxation debts the subject of the Notices, together with interest charged on the outstanding tax (the District Court proceedings). 3 It is the nature of Mr Jewiss' defence and counterclaim in the District Court proceedings, and allegations in the proceedings in this Court, which give rise to the present motion. That application is under Pt IVC of the Taxation Administration Act 1953 (Cth) (the TAA). It is presently listed for hearing to commence on 11 December 2006. I shall call those appeals "the Assessment Appeals". There is no issue as to the validity of the Assessment Appeals, nor as to their continuance. 5 In the Assessment Appeals, however, Mr Jewiss, however, did not let matters rest there. In response to the Commissioner's Statement of Facts, Issues and Contentions filed in accordance with Court directions in relation to the Assessment Appeals, on 19 May 2006 Mr Jewiss filed a Statement of Facts, Issues and Contentions. It related to the issues arising on the Assessment Appeals. However, in the course of doing so, and in the course of the subsequent directions hearing, Mr Jewiss said that he may wish to attack the Notices because they were invalid by reason of improper conduct on the part of certain officers of the Commissioner. On 13 June 2006 I directed that, if he wished to amend his Application to allege that the assessments were invalid on such a ground, he should do so by a specified time. He did not do so. On 30 June 2006 I extended the time for him to amend his Application, if he wished to do so, to 7 July 2006. He did not do so, but filed a "Statement of Claim". In an unsatisfactory way, that document seemed to suggest improper conduct on the part of officers of the Commissioner, leading to the invalidity of the assessments. On 18 July 2006, at a further directions hearing, I made an order extending the time within which Mr Jewiss could file and serve an Amended Application and an Amended Statement of Claim to allege the invalidity of the Notices by reason of purported improper conduct on the part of officers of the Commissioner to 11 August 2006. At that time, it was pointed out that the document filed on 7 July 2006 was quite inadequate and unsatisfactory. 6 On 15 August 2006 Mr Jewiss filed an Amended Application and an Amended Statement of Claim. Those documents were confined to his claim that the Notices were invalid by reason of impropriety on the part of officers of the Commissioner. They attracted further criticism from the Commissioner that the allegations were not sufficiently precise as to be able to be responded to. Accordingly, on 21 August 2006 Mr Jewiss was given leave to file and serve by 4 September 2006 a Further Amended Application and a Further Amended Statement of Claim which responded more particularly to the apparently legitimate concerns of the Commissioner. He did not file any Further Amended Application or any Further Amended Statement of Claim within that time. On 17 October 2006, Mr Jewiss purported to file a further document called "Amended Statement of Claim", but he had no leave to do so and did not seek that leave. That was pointed out to him at a directions hearing. That document is in largely the same terms as the Amended Statement of Claim, and if it were the current document expressing Mr Jewiss' claims it would be dismissed for the same reasons as those for making orders on the Notice of Motion. 7 On 15 September 2006, that is a little time after the expiry of the last period by which Mr Jewiss could file and serve a Further Amended Application and a Further Amended Statement of Claim in relation to the validity of the Notices, the Commissioner by Notice of Motion applied for summary judgment in respect of the matters pleaded in the Amended Application and the Amended Statement of Claim filed on 15 August 2006. The Motion is brought pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) and to O 20 r 2 of the Federal Court Rules . Alternatively, the Commissioner seeks orders under O 16 r 11 that the whole of the Amended Statement of Claim be struck out as disclosing no reasonable cause of action, and as having a tendency to cause prejudice, embarrassment or delay in the proceedings, and as otherwise being an abuse of process. The Motion also seeks in the further alternative an order that Mr Jewiss provide security for costs to the Commissioner under O 28 r 5 of the Federal Court Rules . 8 That Motion was listed for hearing on 20 November 2006. AN ADJOURNMENT? He did not attend the hearing. He sent a letter to the Court indicating that he would be unable to do so because of illness. There is no further medical evidence to indicate his ongoing incapacity for work after 20 November 2006, or more importantly, any medical evidence stating that he was unfit to appear in Court on 20 November 2006 to conduct the proceedings or to appear in Court to support any application for an adjournment: see e.g. the remarks of Middleton J in MZXJN v Minister for Immigration and Multicultural Affairs [2006] FCA 1624 at [13] - [14] , adopting the words of Lindgren J in NAKX v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1559. There is no detailed medical report from any medical practitioner. 10 In those circumstances, I determined to proceed with the hearing of the Motion of the Commissioner, and to give Mr Jewiss the opportunity to respond to the submissions of the Commissioner by 1 December 2006. He has been notified of that decision, and has been provided with a copy of the Commissioner's written submissions and of the transcript of my remarks in respect of his imputed adjournment application. The balance of the transcript of the hearing was, as usual, available for purchase by Mr Jewiss. 11 Mr Jewiss has made no further submission. 12 In those circumstances, in my view it is appropriate to deal with the Motion on the material now before the Court. It is then submitted that the facts relied upon by Mr Jewiss were the same in substance as those he now asserts in the Amended Application and in the Amended Statement of Claim, so that the resolution of those claims adversely to Mr Jewiss in the District Court proceedings gives rise to an estoppel in these proceedings. In addition, the Commissioner contends that it is an abuse of the process of the Court to attempt to re-litigate those issues, which have been decided against him. ... Thirdly acted through its officers, servants or agents with the intent to injure the defendant in his business and reputation. The plaintiff its officers, servants or agents have acted recklessly carelessly (sic) in the extreme to the extent of quasi criminality against the defendant with the extent (sic) to injure the defendant in his reputation and with intent to injure or destroy his lawful business. 5. The plaintiffs (sic) by its officers servants or agents have acted in a manner against servants or agents of the defendant which amounts to common assault with threats against the defendants (sic) servants or agents. 6. The plaintiff has failed to disclose to the defendant in spite of his many repeated requests for information on what manner or on what documents, writings or other papers the figures or sums purported to be the income of the defendant the amounts of income alleged to be earned by the defendant supported the assessment made against [him]. 16 The Commissioner filed a Reply and Defence to the Counterclaim on 24 April 2003. On 1 October 2004, the learned District Court judge ruled that, notwithstanding s 177 of the ITAA, Mr Jewiss could attack the Notices on the ground that they were issued in bad faith. Then, his Honour conducted a voir dire hearing on whether bad faith as alleged was made out. On 14 October 2004, the District Court judge ruled that the allegations of bad faith were not made out, so that the Notices were admissible on the Commissioner's claim. His Honour published reasons for that ruling. 18 It is not necessary to refer in detail to the evidence given on that voir dire hearing. Mr Jewiss gave evidence in support of his allegations, including communications with officers of the Commissioner, of the "raids" when documents were seized and the like. I find that the far-ranging complaints contain no evidence of conduct that could be treated as 'bad faith' on the part of the Deputy Commissioner of Taxation. I find that there is no evidence that the relevant assessments were made in 'bad faith'. 55. Accordingly, it is unnecessary to decide whether the assessments should be excluded because they were made in 'bad faith' because there is no evidence of 'bad faith' on the part of the Deputy Commissioner. 56. Importantly, there is just no evidence which implicates the Deputy Commissioner of Taxation or the Australian Taxation Office. It is unnecessary to determine whether the matters of which evidence was given occurred or not, because taken at its highest the evidence does not implicate the plaintiff. For example, it does not matter whether a 'Mr P' made a threat or not if there is no connection between the plaintiff and the income tax assessments. By itself, the threat does nothing to establish that the plaintiff was biased against Mr Jewiss. Having admitted into evidence the certificates issued pursuant to s 177 of the ITAA, his Honour concluded that those certificates were conclusive evidence of the due making of the Notices, and that the amount and all particulars of the Notices were correct. His Honour confirmed that he rejected the defence of impropriety in the making of the assessments and his dismissal of the counterclaim. I accept that exhibits P4 and P5 are evidence of the defendant's tax related liability. Without descending to deal with each ground seriatim I reject the grounds of the Defence. The allegations are far reaching, but there is simply no evidence which supports the Defence. I also dismiss the counterclaim which is unsupported by evidence. Both defence and counterclaim were effectively abandoned by the defendant after I ruled that the issue of bad faith had already been resolved by the decision on the voir dire. 23. I have already given reasons which explain my ruling that the assessments were not made in bad faith. 20 Mr Jewiss appealed to the Full Court of the Supreme Court of South Australia. The notice of appeal specifically asserted that the voir dire decision that the officers of the Commissioner did not act in bad faith and did not abuse their power, was erroneous. On 30 November 2005 the Full Court of the Supreme Court dismissed the appeal. Duggan J (with whom Perry ACJ and Anderson J agreed) held that there was no connection established between the alleged improper conduct of the officers of the Commissioner in the investigation process and those officers who carried out and made the relevant assessments. Their Honours also rejected other complaints going to the validity of the assessments, including those in support of the Counterclaim. ... The additional matters relating to bad faith which the appellant claims he was prevented from raising at the trial suffer from the same difficulty as those which were raised at the trial. No connection was established between the alleged conduct and the conduct of the officers who carried out the relevant assessments. 23. The remainder of the complaints relate to issues which go to the merits of the assessments ... It should also be noted that the appellant has challenged the assessments in other proceedings which are presently before the Federal Court on appeal. The allegations in support of the counterclaim were the same as those put forward to establish bad faith on the part of the ATO. The counterclaim was dismissed on the ground that it was unsupported by the evidence. 27. The grounds of appeal do not appear to contest the dismissal of the counterclaim. The trial judge commented in his judgment that the defence and counterclaim were effectively abandoned by the appellant after the finding that the issue of bad faith had been resolved by the decision on the voir dire. 28. I think it would have been appropriate for the judge to raise the issue of the counterclaim during the discussion he had with the appellant which is quoted above. However, the evidence which the appellant wished to call at the trial has now been identified in detail and, in my view, it could not have established the basis for a successful claim of the nature pleaded in the counterclaim. That application for special leave to appeal was heard and dismissed on 5 September 2006. Gummow J, in giving reasons for the decision of himself and Heydon J refusing special leave to appeal, said that there were no prospects of success on any appeal to the High Court. 22 It was the final disposition of the District Court proceedings on 5 September 2006, and coincidentally the elapse of the last date by which Mr Jewiss may have amended the Amended Application and the Amended Statement of Claim in these proceedings which cleared the way for the Commissioner's present Motion. 23 As can be seen, the proceedings in the District Court and the appeal processes, including the special leave application to the High Court, were running in tandem with the proceedings in this Court which included both the Assessment Appeals under Pt IVC of the TAA, as well as the more general allegations of invalidity of the Notices. The operation of s 177 of the ITAA, which treats the Notices as conclusive evidence of the amount of the assessments and the particulars specified therein, does not apply to the Assessment Appeals brought under Pt IVC of the TAA. As noted, they are presently listed for hearing commencing 11 December 2006. If that issue is not resolved in the Commissioner's favour, issues then arise as to whether Mr Jewiss has a reasonable prospect of success in prosecuting the claims as expressed in the Amended Application and the Amended Statement of Claim; whether, alternatively, all or parts of the Amended Statement of Claim should be struck out as being improperly pleaded and embarrassing so that the proceedings outstanding should simply be the proceedings under Pt IVC of the TAA; and alternatively and ultimately whether there should be an order for security for costs against Mr Jewiss. 27 Section 31A(2) provides that the Court may exercise that power if the Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting the proceeding or the relevant part of the proceeding, and s 31A(3) explains to a degree when a proceeding should be found to have no reasonable prospect of success. 28 Section 31A commenced operation on 1 December 2005. It applies only in relation to "proceedings commenced on or after the commencement day": see item 44 of Sch 1 to the Migration Litigation Reform Act 2005 , and item 7 of that Act which inserted s 31A into the FCA Act. The Commissioner has submitted that s 31A applies in this instance because the Amended Application and the Amended Statement of Claim were filed only on 15 August 2006, and that the assertion in this proceeding seeking to invalidate the Notices by reason of improper conduct on the part of officers of the respondent was first made only by the "Statement of Claim" filed on 7 July 2006. The effect of the "Statement of Claim" first filed on 7 July 2006 would appear, by O 13 rr 3(3) and 3A of the Federal Court Rules , to operate from that day as a proceeding commenced on or after that day: see Tepperova v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1147 at [27] . I do not need, however, to decide that question. 29 In my judgment, the Amended Application and the Amended Statement of Claim should be dismissed, whether one applies the test prescribed by s 31A of the FCA Act, or whether one applies O 20 r 2 of the Federal Court Rules , as explained in General Steel Industries . In my view, there is simply no real question to be tried on the issues raised by the Amended Application and by the Amended Statement of Claim in the circumstances of this matter. 30 It is appropriate first to advert briefly to the statutory background or context in which the assessments came to be made and the Notices issued. Section 166 of the ITAA requires the Commissioner to make an assessment of the taxable income of a taxpayer and of the tax payable thereon. If the Commissioner is not satisfied with the tax information provided by the taxpayer in the tax return furnished by the taxpayer, the Commissioner is empowered by s 167 to make an assessment of the amount upon which, in the Commissioner's judgment, income tax ought to be levied. Section 174(1) then requires that a notice of assessment of the tax to be paid be served on the taxpayer. Section 175 provides that the validity of any assessment shall not be affected by reason that any of the provisions of the ITAA have not been complied with. Relevantly to the District Court proceedings, for the reasons which are referred to above, s 177 provides that the production of the Notices under the hand of the Commissioner is conclusive evidence of the due making of the assessment, and (other than in respect of proceedings under Pt IVC of the TAA by a review or appeal relating to the assessment) is also conclusive evidence of the amount and particulars of the assessments as being correct. The procedure to be followed by a taxpayer dissatisfied with an assessment is the objection and appeal process available under Pt IVC of the TAA. 31 In Briglia v Commissioner of Taxation [2000] FCA 443 at [6] , Kenny J pointed out that, although s 177(1) of the ITAA may operate to preclude a Court from examining the validity of an assessment once a notice of assessment is tendered, it can only operate provided there has been a bona fide attempt by the Commissioner to exercise the power of assessment, the attempt to exercise the assessment power relates to the subject matter of the ITAA, and the exercise of the assessment power is reasonably capable of reference to the Commissioner's power of assessment. That expression of the limitations upon the apparent scope of s 177(1) is derived from the observations of Dixon J in R v Hickman; Ex parte Fox [1945] HCA 53 ; (1945) 70 CLR 598 at 614. It is clear from Deputy Commissioner of Taxation (Cth) v Richard Walter Pty Ltd [1995] HCA 23 ; (1995) 183 CLR 168 that s 177(1) does not, and cannot, deprive the High Court of its constitutional jurisdiction, and to the extent to which this Court is conferred with such jurisdiction under s 39B(1) of the Judiciary Act 1903 (Cth) cannot deprive this Court of its jurisdiction under that provision. The so called Hickman principles, based upon the decision in Hickman , and which formed the basis of Kenny J's observations in Briglia , were considered by the High Court in Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2 ; (2003) 211 CLR 476. I do not think it is necessary to explore whether the result of the decision in Plaintiff S157/2002 is to explain the application of the Hickman principles in a way which may broaden the capacity of the taxpayer to challenge the due making of an assessment notwithstanding s 177(1). That is simply because, in my view, on any analysis of the allegations made by Mr Jewiss in the Amended Application and in the Amended Statement of Claim, they cannot establish relevantly a failure on the part of the Commissioner in the due making of the assessments. 32 There is a clear parallel between the allegations in the Amended Application and the Amended Statement of Claim and the allegations made in the District Court proceedings. 33 The Amended Application asserts that the Notices were issued for a particular purpose, namely "to close down the accounting practice of the applicant and to make the applicant bankrupt by virtue of a fraudulent excessive assessment". 34 There are three general categories of allegation. 35 The first overall category of allegation concerns the seizure of materials at Mr Jewiss' premises. It is asserted that certain officers of the Commissioner entered the office of Mr Jewiss without duly authorised written authority and took documents from that office without having or producing a written authority to do so. It asserts that following the search and seizure of material on that occasion, the premises were sealed and the locks were changed, so that Mr Jewiss' staff could not enter the premises and so that clients were intimidated and Mr Jewiss was embarrassed. 36 The second general category of conduct alleged is that the issue of the Notices was an abuse of power because they were constructed from records by a "deliberate series of contrived events designed to place the applicant in an invidious financial position". 37 The third category of allegation is that the subsequent debt recovery was pursued vigorously to the intent of making Mr Jewiss bankrupt, and so denying him the opportunity of presenting his rights of objection and appeal. That third general assertion may be dealt with at this point. It cannot be correct. Mr Jewiss has exercised his rights under Pt IVC of the TAA to challenge the disallowance of the objections to the Notices. Those challenges are listed for hearing commencing on 11 December 2006. Mr Jewiss has not been prevented from exercising those statutory rights. Moreover, that impugned conduct occurred after the Notices were issued, and so cannot lead to the Notices having been issued in bad faith. 38 The Amended Statement of Claim simply expands upon those categories of allegations. 39 It refers again to the search and seizure of documents from Mr Jewiss' office on 29 May 2002 when, he claims, the officers concerned behaved in an aggressive manner and without a duly executed written warrant. Reference is made to a circumstance prompting the investigation, namely the association of Mr Jewiss with a former officer of the Commissioner, but the reason underlying the investigation of Mr Jewiss' records in my view is not a relevant matter at all. Whatever the reason for the investigation, it is the issue of the Notices which is impugned for bad faith. Further assertions are made about the way in which the investigation on the occasion of the search and seizure of documents was carried out, generally asserting aggressive behaviour on the part of the relevant officers. It is said that their aggression was "inexcusable, intimidating and excessive". The Amended Statement of Claim also asserts that access was had to a computer without Mr Jewiss' knowledge, and the computer was unlawfully removed from the office. It asserts that the documents removed from the premises should have been photocopied, and the copies taken. It is then further claimed that neither Mr Jewiss nor any of his clients were given any opportunity to claim legal professional privilege in respect of any of the documents in that office which were then taken. It is further claimed that, during the investigation and seizure over several days, the powers of search and seizure under ss 263 and 264 of the ITAA were exceeded because locks were changed at the premises and doors were taped so as to preclude access for work purposes during the search and seizure. The Amended Statement of Claim is somewhat repetitive, but that is the essential nature of the allegations concerning the search and seizure in the investigation into Mr Jewiss' affairs. 40 The second general category of claim is also expanded in the Amended Statement of Claim. It asserts that the Notices were constructed in a fraudulent way because those who engaged in the assessments were informed of "flaws in the information they were accessing in the records" which had been seized, and the Notices were made without full discussion with Mr Jewiss or members of his staff. It is asserted that the Notices were made upon the basis of officers of the Commissioner knowing that the assessments were being made on flawed records. 41 The Amended Statement of Claim also expands on the third category of allegations in the Amended Application by asserting, perhaps as evidence of the intention to harm Mr Jewiss, that the process of serving the default summonses upon him has been aggressive and "adversarial". Part of that conduct involved a garnishee order that had been placed on Mr Jewiss' bank account; part is the taking advantage of s 177 of the ITAA to enforce recovery; and part by denying him access to certain seized information "on grounds of national security". There is also a general assertion that the Commissioner through an officer tended somehow to interfere with the course of justice by making a threat to Mr Jewiss in an inappropriate way. Whether or not those things are true, they all post-date the issue of the Notices. They are not shown (or suggested) to have been undertaken by the officer or officers who issued the Notices. They are not therefore capable of providing evidence that the Notices themselves were issued in bad faith. 42 As to each of those categories of allegations, including the "raid" on 29 May 2002, those matters (including that the raid was an abuse of power) were specifically raised in the District Court proceedings. In his Defence and Counterclaim in the District Court proceedings, Mr Jewiss asserted that the assessments were made without proper investigation and fraudulently in an attempt to destroy his lawful business activities. He asserted that the assessments were made in reliance upon documentation obtained in the search which were not his reliable business records, but had some other character, and that the officers of the Commissioner who made the assessments were aware of that. That is, he positively asserted that the assessments were made fraudulently, and with the intent of precluding him from carrying on his business. Mr Jewiss specifically made complaint as to the conduct of officers of the Commissioner in the course of the investigation and search. He specifically complained that the Notices were issued by officers who were aware that they were acting upon records which were not reliable. He specifically complained that the officers of the Commissioner involved made threats to Mr Jewiss and his employees. The Commissioner put all those allegations in issue. 43 During the voir dire hearing, as the reasons of the learned judge indicate, Mr Jewiss' assertions included the assertion of conduct engaged in relation to him by reason of his association with a former officer of the Commissioner, a threat to his life, and the conduct engaged in during the search at his offices. Evidence was given by Mr Jewiss as well as by one of his employees about the circumstances of that search. She also gave evidence about the garnishee order in relation to Mr Jewiss' bank account. 44 As noted earlier, the learned judge, having reviewed the whole of the evidence, rejected the assertion of bad faith. I find that there is no evidence that the relevant assessments were made in 'bad faith'. Accordingly, it is unnecessary to decide whether the assessments should be excluded because they were made in 'bad faith' because there is no evidence of 'bad faith' on the part of the Deputy Commissioner. His Honour observed that there was simply no evidence to support the claim that that information was unreliable. 46 Having rejected those contentions, and having admitted into evidence the Notices s 177 of the ITAA precluded the challenge to their accuracy or to their status. The allegations are far reaching, but there is simply no evidence which supports the Defence. I also dismiss the counterclaim which is unsupported by evidence. Both defence and counterclaim were effectively abandoned by the defendant after I ruled that the issue of bad faith had already been resolved by the decision on the voir dire. I have already given reasons which explain my ruling that the assessments were not made in bad faith. It is also apparent that the appeal to the Full Court of the Supreme Court concerned both the final judgment and the voir dire hearing. It is not necessary to refer to the grounds of appeal. As Duggan J recorded in his reasons at [7], on the hearing of the appeal the Commissioner was content to allow the appeal to proceed on the assumption that there was a limited right to challenge the admission of the notices of assessment on the ground that the assessments were an abuse of power and were made for improper purposes. It is clear from the reasons of Duggan J that the complaints made by Mr Jewiss in the District Court proceedings, and maintained on appeal, included complaints about the conduct of officers of the Commissioner during searches of his premises, the use or mis-use of flawed information, and inappropriate motivation for the making and issuing of the Notices. Duggan J recorded the complaints about the conduct of ATO officers as including irregularities in the course of the searches of Mr Jewiss' premises, the wrongful seizure of documents to which legal professional privilege attached, the seizing of documents knowing that they were not related to Mr Jewiss' financial affairs, the use of that information, the refusal by officers to return documents, the issuing of the Notices knowing that they were calculated on the basis of income wrongfully attributed to Mr Jewiss, the imposition of penalties on the basis that Mr Jewiss was a non-cooperative taxpayer when this was not the case, publication of a record of conversation with Mr Jewiss, the making of threats to carry out unlawful acts against Mr Jewiss, and oppressive conduct including applying for garnishee orders and other orders restricting Mr Jewiss' movements. His Honour concluded that those matters, apart from having been rejected at the hearing, did not establish a connection between the alleged conduct and the conduct of the officers who made the relevant assessments and issued the Notices. There remained complaints relating to the merits of the Notices, and which s 177 of the ITAA precluded the District Court judge from reviewing (and which can be reviewed in the extant part of these proceedings). 48 In my judgment, the matters which Mr Jewiss now raises in the Amended Application and in the Amended Statement of Claim correspond with the allegations made in the District Court proceedings, including on his appeal to the Full Court of the Supreme Court of South Australia. It would be an abuse of the Court's processes to permit Mr Jewiss to re-litigate in this proceeding the same matters that have previously been determined by the District Court: cf Shumack v Commissioner, Australian Federal Police [2005] FCA 1476 at [4] . There is no prospect of Mr Jewiss now succeeding on those claims because they have already been decided adversely to him. 49 The parties in the District Court proceedings and in this proceeding are the same. The allegations generally under the umbrella of bad faith are the same. They relate to the circumstances of and conduct at the search of Mr Jewiss' premises, conduct subsequent to the raid in respect of Mr Jewiss, and use of documents which are allegedly known to be false in making the assessments and issuing the Notices. Those issues were all raised by Mr Jewiss in the District Court proceedings. They have been resolved adversely to him. There is no reason why he should be permitted to re-litigate those matters. It is in precisely such circumstances that the Court in other matters has found there to have been an abuse of process of the Court and to have exercised the power to have dismissed the proceedings: see e.g. Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers appointed --- in Liquidation) (1993) 115 ALR 377 at 398. I accept that, in many cases where the claim is made that there is an estoppel by judgment or an issue estoppel or an Anshun-type estoppel, it is more appropriate for those issues to be determined on pleadings rather than by the summary dismissal of proceedings. But I consider that this case is a clear one, where Mr Jewiss has previously raised and had a full opportunity to ventilate the very matters which he has sought to raise by way of his Amended Application and Amended Statement of Claim and those issues have been determined against him. There is no reason why he should be given a further opportunity to re-ventilate those issues in the present proceeding. 51 In this matter, I do not think there is scope for the Anshun principle to be applied, simply because in my judgment the issues now sought to be raised by Mr Jewiss are the same issues as those he sought to raise in the District Court proceedings and upon which an adjudication adverse to those claims has been made. It is not a matter of him raising matters now which he did not, but could have, raised in the earlier proceedings (cf Anshun at 602-604). It is simply a matter of him now making the same allegations. Perhaps to a minor degree Mr Jewiss now asserts the availability of further or different evidence in support of those allegations than that which he adduced at the hearing before the District Court, but that is to a degree speculative. Even if it were so, the issues themselves have been determined. They have been determined adversely to Mr Jewiss. 52 For those reasons, in my judgment, the claim in the Amended Application and the Amended Statement of Claim have no prospect of success. They have already been decided against Mr Jewiss. Those claims are therefore an abuse of process and should be dismissed. 53 I also accept the contentions of counsel for the Commissioner, that in significant respects the allegations now, and previously made, by Mr Jewiss could not give rise to invalidity of the assessments and of the Notices. The power of search and seizure exists under s 263 of the ITAA. It is not a power which is to be construed in the same way as a search warrant. It does not require routinely the production of a written authority to support the exercise of the power. There was no obligation to produce the written authority in support of the search unless requested, and no request was made (s 263(2)). The fact that Mr Jewiss was not present when the search was carried out does not support any suggestion that it was an improper investigation. The way in which that part of the investigation was carried out was not itself capable of affecting the validity of the assessments or of the Notices. The complaint of the lack of opportunity to assert legal professional privilege in respect of the seized documents is not supported by any evidentiary allegation. It is simply a general allegation which is not made out. It does not in any event go to the validity of the Notices. In addition, as noted above, there is nothing to connect the decision-making process in respect of the Notices with those involved in the search and seizure processes or the method of their implementation. 54 The second category of allegations are those concerning the quality of the information upon which the Notices are based. Mr Jewiss' assertions are not supported by any evidence, but, even accepting his assertions that he informed the relevant officers of the Commissioner that they were proposing to consider unreliable information procured from his custody, those assertions would of themselves not demonstrate even on a prima facie basis that the relevant officers then acted in bad faith in proceeding to make the assessments and to issue the Notices on the basis of the material they had. 55 The third category of allegations, as mentioned above, relates to conduct of other officers of the Commissioner after the issue of the Notices. They are not claimed to be the same officers who issued the Notices. As those allegations stand, they could not support a conclusion that the assessments were made and the Notices were issued in bad faith. 56 I therefore dismiss those parts of Mr Jewiss' claim which are expressed in the Amended Application and in the Amended Statement of Claim. His originating application, that is the Assessment Appeals, invokes the power available under Pt IVC of the TAA to challenge the accuracy of the assessments and the Notices. That is still on foot and is listed for hearing on 11 December 2006. 57 Mr Jewiss should pay the costs of and incidental to the claims made in the Amended Application and the Amended Statement of Claim and the earlier version of those claims made in the "Statement of Claim" filed on 7 July 2006, as well as the costs of the directions hearings on 13 June 2006, 30 June 2006, 18 July 2006 and 21 August 2006, and the costs of and incidental to the Commissioner's Notice of Motion of 15 September 2006. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | proceedings instituted by applicant under part ivc of the taxation administration act 1953 (cth) applicant filed amended application and amended statement of claim alleging fraud and improper conduct of commissioner and officers in relation to the issuing of assessment notices same issues raised and determined adversely to applicant in proceedings in state courts application by commissioner for summary dismissal of amended application and amended statement of claim abuse of process |
A third overlapping claim, the Kuyani-Wilyaru Native Title claim (SAD 27 of 2006) has been discontinued with a fresh application being foreshadowed. If that application is made, that claim will overlap the above three claims. The common area of overlap in the Kokatha claim of the three existing and one foreshadowed claims is, by comparison, a relatively small though by no means insignificant area which has in this proceeding been called "Overlap Area 20". That common area is the only part of the Arabunna claim that overlaps any of the Kokatha claim. 2 On 8 September 2005 Mansfield J made orders under s 67(1) of the Native Title Act 1993 (Cth) establishing the overlap proceeding. A consequence of these orders was that a part of the Barngala and Arabunna claims was split off from each of those claims respectively and was brought within the overlap proceeding. During the directions proceedings at which the orders were made it was indicated to his Honour that the Arabunna might, at a later date, seek to have that part of its claim which overlapped the Kokatha claim excised from the Kokatha claim. Mansfield J indicated his intention was to include the Arabunna overlap in the Kokatha claim. His Honour later observed that he proposed to leave the matter in mediation with the National Native Title Tribunal to the extent of the Arabunna overlap. 3 On 9 March 2006 the Arabunna filed the present motion seeking an order that that portion of their claim which overlaps the Kokatha claim be excised from the hearing of that claim and be dealt with during the hearing of their own claim. No party to the overlap proceedings other than the State of South Australia opposes the motion. If successful the motion will not only restore Overlap Area 20 to the Arabunna claim and excise it from the Kokatha overlap proceedings, it will require that the claims of all of the Overlap Area 20 claimants be determined in the Arabunna claim (SAD 6025 of 1998). 4 The Orders of Mansfield J and the present motion invoke the jurisdiction of the Court under s 67 of the Native Title Act . Fully informed decision-making and finality in respect of determinations relating to the same area are central to it: see also s 13(1) and s 61A(1). This said the section provides no real guidance in making orders under s 67(2) though it is unsurprising that it does not given the varying circumstances that can attend overlap claims. Nonetheless, its purpose seems clearly to be tied to facilitating the orderly and efficient administration of justice where claims overlap: see e.g. Bodney v Western Australia [2001] FCA 297 at [2] . 7 In opposition to the claim, the State points out that (i) while at least the Kokatha claim will be resolved under the present arrangements, no single one of the three or possibly four claims will be resolved in its entirety if the motion is successful; (ii) a lack of funding does not excuse an applicant from pursuing an action it brought and neither the Kokatha nor the Barngarla claimants are funded; (iii) Overlap Area 20 is significant to other claimants; (iv) for the Kokatha proceedings to be the subject of a fully informed decision (it being the only full claim being prepared for trial) the whole of its factual matrix should be before the Court especially as material relating to Overlap Area 20 might well inform decision-making relating to the contiguous area which is the subject of overlapping claims between the Kokatha and Barngarla claimants as also the prospective Kuyani-Wilyaru claimants. 8 I mean no disrespect to the parties in outlining their contentions in short form as I am of the view that the motion should be dismissed. First, the entire Kokatha claim and the overlapping claims were selected for determination by this Court from some number of Native Title claims as part of the process of claims management in South Australia. It is in the process of preparation for trial in July 2007. The entire Arabunna claim is not in preparation for trial. I consider Mansfield J's orders establishing the overlapping proceedings were not casually made. They were made to effectuate the imperative of s 67(1) in the context of dealing with the Kokatha claim. A fair reading of the transcript of the directions hearing of 8 September 2005 in my view supports this conclusion. It is the case that it was then foreshadowed that an excision motion might be made. I do not consider that that is of any present significance. 9 Secondly, in his affidavits Mr Kenny, the solicitor for the Arabunna, deposed to what he considers to be the prospects of mediation and settlement of the Overlap Area 20 claims. He considers that a consent arrangement could be reached. In his third affidavit he also deposed to a settlement offer having been made by the Kokatha claimants and the likelihood of this being accepted if this motion is unsuccessful. I would note in passing that there has been only one attempt to mediate with the Arabunna notwithstanding the clear intent of Mansfield J's orders in relation to mediation of the Arabunna overlap as noted earlier. In my view, far from the prospect of settlement of Overlap Area 20 being a reason justifying its excision, it provides strong support for its retention as part of the full Kokatha claim, the moreso as the Kokatha claim itself may well be settled in relation to the other claimant groups in any event. 10 Thirdly, the funding issue is one common to all of the present claimant groups. At earlier directions hearings in this matter I have indicated my view that a lack of funding cannot be relied upon to freeze proceedings otherwise appropriate for and requiring resolution. I have equally expressed my regret at the misfortune faced by applicants because of the funding arrangements being as they are. Whatever the justifications for the policies of the Executive Government in relation to funding native title claims, those policies cannot paralyse the processes of the Court once its jurisdiction has been invoked. In saying this I am not unmindful that claimant groups may well find themselves in a position of utmost difficulty in preparing for trial and that this may well jeopardise their prospects of proceeding in any event. While the Arabunna contend they will be prejudiced by having to prepare for a trial one year hence, I do not consider their position in this respect to be materially different from that of the other two claimant groups. 11 Fourthly, while the Arabunna assert Overlap Area 20 is of special significance to them, it is also part of the other claimants' claim area. It is in my view inappropriate at this stage to venture any view on the relative significance of the area to the rival claimants. 12 Finally, and in my view of particular importance, I consider that the retention of the Arabunna claim in the Kokatha overlap proceedings is both desirable and necessary, not only for the informed case management reasons I gave earlier concerning Native Title claims in South Australia, but also because I consider that the evidence given by all of the various claim groups in relation to Overlap Area 20 may well inform or assist in casting light on issues that might arise in relation to lands contiguous to Overlap Area 20 where the other claimant groups and prospectively the Kuyani-Wilyaru have overlapping claims. Consistent with what I consider to be one of the policy imperatives informing s 67(1) (i.e. informed decision-making) it does not seem to me to be appropriate, or desirable, by acceding to this motion, to foreclose the opportunity of deriving possible assistance from material relevant to the Overlap Area 20 claim in making determinations in the remainer of the Kokatha overlap proceedings. I say "possible assistance" for this reason. Preparation for trial in this matter is at an early stage and, given the paucity of materials filed so far (tenure material apart) and the slight amount of preservation evidence taken, it would be quite inappropriate to require or expect the various parties to discountenance at this stage the possibility of such assistance being there. 13 For the above reasons, I dismiss the notice of motion of 9 March 2006. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | notion of motion overlap proceedings party seeking to excise portion of their claim from overlap exercise of discretion s 67 of native title act 1993 (cth) lack of available funding significance of area to claimant group prospects of mediation and settlement relevant factors in exercise of the discretion efficient administration of justice native title practice and procedure |
The Notice advised that the general meeting would be held at 35 Great Eastern Highway, Rivervale, Western Australia 6103 on Thursday 26 March 2009 at 11am (WDST). The Explanatory Memorandum that accompanied the Notice had also been settled by Mr Remta in his capacity as chairman of the board of directors. The joint venture was established to develop a mining operation over the tenements to mine, market and sell gold to implement exploration programmes for gold and uranium. ● Tenements in the Peak Hill mineral field --- E52/2086 and 2087. ● $1,200,000 in exploration funds to be expended on the combined tenement package. ● Aurium to fund the first $1,000,000 in a gold processing plant design and development in the event an economic resource is identified. ● Access for exploration by the agreement with Jidi Jidi People. ● Exploration results to date and the design of the next, ongoing exploration programme. Since the inception of the joint venture the Company has contributed approximately $727,365.00 leaving a balance of $474,635 to be spent over the next 12 months. Despite quite substantial work having been carried out under the joint venture, no signs of viable gold or uranium have been found and it was considered on geological advice that any future expenditure towards establishing the presence of those two minerals would probably be futile. Part of the work consisted of hyperspectral airborne survey and data analysis which led to the discovery of high and medium grade iron ore outcrops over a significant strike length. The host banded iron formation is a magnetite chert similar to the Pilbara host rocks containing the large iron ore deposits that have been exploited over the past 40 years. Initial field exploration identified some 100 kilometres of prospective strike along the 3 banded iron and granule iron formations in the Peak Hill area. Two of the targets are the Robinson Range and the Millidie Creek formations running through the joint venture tenements. Shareholders are referred to the announcement by GPN on 23 December 2008 regarding the particulars of samples taken from the joint venture tenements held by GPN. Ministerial authority to explore for iron on the joint venture tenements has already been obtained by GPN and an application for similar authority has been made with respect to nearby Mt Padbury tenements also held by GPN. The hyperspectral survey results for both the joint venture tenements and the Mt Padbury area have identified iron and general base metal targets which it is proposed will be followed by substantial drilling programs on both the Peak Hill and Mt Padbury tenements. Regrettably none of this work will be of benefit to Aurium since the Peak Hill joint venture is limited only to gold and uranium and as already mentioned, no viable presence of those two minerals has been identified. The variations are evidenced by heads of agreement between GPN and Aurium dated 17 February 2009[. km. In addition the joint venture has been extended to cover exploration for and exploitation by mining or sale of all minerals and commodities (except manganese) instead of being limited to gold and uranium. The participating interest of Aurium under these new joint venture arrangements will be 30% while the remaining 70% interest will be with GPN. The term of the joint venture has been extended to 31 March 2016. All of the directors of Aurium attended the board meeting, namely, Mr Peter Remta, Chairman, Mr Terry Quinn, Mr Thomas Percy, Mr Peter Benson and Mr Edward Saunders. Mr Graham Anderson, the Company Secretary, also attended, particularly to take the minutes of the meeting. While some issues have been raised by the plaintiff shareholders concerning the accuracy of the minutes of the meeting of the board of 17 February 2009, as entered in the company's minute book, I am satisfied as explained below that the minutes as entered are substantially accurate. At the meeting of the board on 17 February 2009, which was held at 2:15pm (WDST), when the matter for discussion concerning the variation of the joint venture with GPN was raised, immediately following an outline of the proposal to vary the existing joint venture by Mr Remta, Mr Remta relevantly declared an interest due to the fact that he was a director (indeed chairman of the board) of each of Aurium and GPN. Mr Quinn then declared an interest because of his shareholding in GPN through a company known as Jamora Nominees Pty Ltd (Jamora); and Mr Benson also declared an interest by reason of his indirect interests, including through a company known as Millcrest Pty Ltd (Millcrest), which held shares in GPN and some GPN shares held personally. As a result, the board, following discussion of the proposed variation to the joint venture by the remaining directors Mr Saunders and Mr Percy, resolved (in substance) as follows: To vary the terms of the Joint Venture in the terms of the heads of agreement to include both Mt Padbury and Peak Hill tenements, for Aurium to have the obligation to contribute and pay $550,000 of expenditure under the Joint Venture, and to issue GPN a total of 35,000,000 shares in AGU [Aurium]. That the heads of agreement be signed by any two directors on behalf of Aurium. That the Company Secretary be authorised to give a notice of a general meeting to the shareholders of Aurium for 26 March 2009. The plaintiffs initially sought permanent relief under s 23 of the Federal Court of Australia Act 1976 (Cth) or in the alternative, s 1324 of the Corporations Act 2001 (Cth) by way of declaration or alternatively orders that: until further order, the Company not act on any resolution to be put at the Meeting; in the alternative to 1, the Company be restrained until further order from holding the Meeting. The applications of the plaintiffs were supported by an affidavit sworn by Carol Norma Hardie, director of Grand Enterprises Pty Ltd, the first named applicant. She deposed to the fact that she was also authorised by Amy Elizabeth Taylor, sole director and secretary of the second named applicant, to make the affidavit on her behalf as well. Ms Hardie complained about a number of things, including: In the event, the applications came on for a first hearing before me at 11:30am on 26 March 2009, a time at which the general meeting had already commenced. Before the proceeding before me that day was concluded, the result of the vote of the general meeting on the resolution became available to senior counsel for the company, and was announced to the Court (and the plaintiffs). It appeared that, by a considerable margin, the resolution had been passed as proposed in the Notice. In the event, senior counsel for the company gave an undertaking on behalf of the company that, in light of the other orders or directions then proposed, the company would not act on the resolution of the meeting until further order of the Court. As a consequence, on 26 March 2009, I made the following orders: The hearing of the application, dated 26 March 2009, for an interlocutory injunction is adjourned to 7 April 2009 at 10.15am. The parties forthwith lodge a Minute of proposed programming directions. There be liberty to apply on 24 hours notice. Costs of today be in the cause. The outcome of the Extraordinary General Meeting of the respondent held 26 March 2009 not be published. Later the parties agreed that this status quo should be maintained until the final hearing of the application for permanent relief, which was listed for 5 May 2009. Prior to the hearing, the plaintiffs were given leave to amend the application to impugne the validity of the resolution made by the general meeting as well as the validity of the board resolutions made on 17 February 2009. The validity of the board resolutions was attacked on the basis that the three directors who declared an interest at the directors' meeting had failed to withdraw from the meeting when the relevant matter was considered, contrary to s 195(1) of the Corporations Act 2001 . At the hearing only two issues remained for consideration, namely: Whether the plaintiffs are entitled to the permanent relief sought on the basis of the failure of the company to provide full information on material matters relevant to the resolution proposed for consideration at the general meeting. Whether the plaintiffs are entitled to relief on the basis of the invalidity of the relevant resolutions passed at the meeting of the board on 17 February 2009. The earlier issues identified by the plaintiffs concerning the issuance of 500,000 shares in the company on 23 March 2009, one day before the deadline for acceptances of proxies for the meeting, and the refusal of the chairman of the company to allow the plaintiffs to inspect proxies lodged by shareholders for the meeting, fell away and were not pursued by the plaintiffs. It is well understood that a fiduciary is under an obligation not to promote his or her personal interest by making or pursuing a gain in circumstances in which there is a conflict or a real or substantial possibility of a conflict between his or her personal interests and those of the persons whom he or she is bound to protect: Hospital Products Limited v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 , Mason J at 103. Accordingly, a director owes a fiduciary duty to the company (and in some situations to a shareholder) to avoid the advancement of his or her personal interests over those of the company (and in some situations of a shareholder). As a fiduciary the interest of a director in relation to a corporation may in some cases be measured in terms of a financial profit that a director might stand to earn. In other cases the question of profit may not be in issue, but a director may have a conflict of duties owed to different entities. It is for that reason that the authorities and texts usually draw a distinction between a "profit rule" and a "conflict of interest rule": see discussion in Austin RP, Ford HAJ and Ramsay IM, Company Directors, Principles of Law and Corporate Governance (LexisNexis Butterworths Australia, 2005) at para 8.20; Finn PD, Fiduciary Obligations (The Law Book Company Ltd, 1977) Ch 21 , Ch 22. Nonetheless, there is a tendency to conflate the two rules and for a complainant simply to assert that a fiduciary has a "conflict of interest" without specifying more. The profit rule is perhaps clear enough. Finn calls this the "conflict of duty and interest": Finn (1977) Ch 21. A director as a fiduciary has an obligation not to allow a conflict between his or her duty to the company and his or her personal interests. Accordingly, a director should not use his or her position as director to derive an unauthorised benefit. The conflict of interest rule, which Finn calls a "conflict of duty and duty" (Finn (1977) Ch 22) , obliges a director to avoid a conflict of the duty owed to the company with a duty owed to some other person: see for example, Transvaal Lands Co v New Belgium (Transvaal) Lands & Development Co [1914] 2 Ch 488. This conflict rule has particular application in circumstances where a person is a director of two companies which have common dealings. Thus, where a person finds themselves in the position that Mr Remta found himself in, in this case, as a director of each of two companies negotiating a transaction, a conflict of the duty the director owes to each company arises: see R v Byrnes [1995] HCA 1 ; (1995) 17 ACSR 551 at 562. In recognition of his or her obligations when in a position of conflict, a fiduciary will necessarily take steps to avoid or remove the conflict, principally by making disclosure of a relevant interest to those to whom they owe the duty or by acting in a way that avoids the conflict. In relation to a person who is a common director of two companies that have dealings, disclosure of the interest will often be enough to remove the conflict, although it is suggested that in some circumstances the common director may be obliged to avoid voting on the transaction or even taking part in negotiations in order to avoid the conflict: Jenkins v Enterprise Gold Mines NL (1992) 6 ACSR 539 ; Finn (1977) para 583; Austin et al (2005) para 8.26. No doubt each case depends on its particular facts. In this case, Mr Remta disclosed his interest to the board and did not vote on the resolution before the board on 17 February 2009. Each party to the negotiations understood and accepted the role Mr Remta played. No suggestion has been made that in this case Mr Remta should not have been involved in negotiations concerning the variation of the joint venture between Aurium and GPN. No doubt there were good commercial reasons, accepted on each side, for him to do so. Against this general law background, the terms of a company's constitution and the requirements of the Corporations Act 2001 come into play. So far as the constitution of the company is concerned, it may attenuate the fiduciary duty a director owes under the general law by making it less onerous. Quite separately from the general law and corporate constitutional requirements, the Corporations Act 2001 , by s 191(1) , specifically provides that "a director of a company who has a material personal interest in a matter that relates to the affairs of the company must give the other directors notice of the interest", unless subs (2) applies, and s 195(1) requires the director not to vote and not to be present while the matter is being considered. In other words, the fiduciary duty must be met by positive action in these settings by force of statutory enactment. (However, these provisions do not apply to a proprietary company that has only one director: s 191(5) , s 195(1A)(b)). Section 191 is the successor of a provision which was enacted to overcome constitutional clauses which gave such wide dispensation to the directors as to be unacceptable in the interests of members and creditors: Austin et al (2005) at para 8.29. The operation of s 191(1) is not subject to any contrary provision in the constitution. Rather, under s 193 , s 191 has effect in addition to and not in derogation of any provision in the company's constitution restricting a director from having a material personal interest in the matter and related concerns. (1A) For an offence based on subsection (1), strict liability applies to the circumstance, that the director of a company has a material personal interest in a matter that relates to the affairs of the company. Note: For strict liability, see section 6.1 of the Criminal Code . In other words, even though s 191(4) has the effect that contravention of the s 191(1) duty to notify other directors of a relevant interest does not affect the validity of a resolution of the board, for example, that is not to say that the conduct giving rise to such contravention might not contravene any general rule of law regarding conflicts of interest or requirements in the company's constitution concerning conflicts of directors. Note: For strict liability, see section 6.1 of the Criminal Code . Section 195(3) enables a director to be present and vote with the approval of the Australian Securities and Investment Commission (ASIC). In this case it appears that none of the relevant directors Mr Remta, Mr Quinn and Mr Benson had given a formal written standing notice about their interests. A standing notice under s 192 does not need to be in writing. However, that the three directors declared interests at the meeting on 17 February 2009, and succinctly explained the reasons for doing so, is undoubted and seems to have been well understood by the other directors. The plaintiffs say that, on the facts of this case, none of the exemptions to the operation of s 195(1) of the Act apply and that, by reason of the failure of Mr Remta, Mr Quinn and Mr Benson to then absent themselves from the board meeting on 17 February 2009, the resolutions then purportedly passed by the board are invalid, thus affecting the power of the members in general meeting to deal with the agenda items set out in the Notice of Meeting. The plaintiffs note that in Mott v Mount Edon Gold Mines (Australia) Ltd (1994) 12 ACSR 658, Owen J expressed the view in obiter dictum that a breach of the former s 232A(1) (the precedessor to s 195 of the Corporations Act 2001 ) of the former Corporations Law (Law) was a "procedural irregularity" to which s 1322 of that Law applied, such that breach did not spell invalidity. The plaintiffs submit that the better view is that a contravention of s 195(1) of the Corporations Act 2001 will not amount to a procedural irregularity if the requirement is deliberately ignored or the directors have tried to do something which the Corporations Act 2001 does not authorise. This submission appears to ignore s 195(5) of the Corporations Act 2001 , to which I will return. As to what transpired at the meeting of the board of directors of 17 February 2009, some of the relevant factual events have been set out above in the introduction. I have already mentioned that I consider the minutes of that meeting as entered into the minute book of the company to be substantially accurate. The meeting was a relatively informal one, in that it appears that at the meeting directors talked amongst themselves and then came together as appropriate to deal with agenda items. Mr Anderson, the Company Secretary, explained that he is in fact the company secretary of ten listed companies. The boards of some of these companies proceed to deal with business in meetings in an informal way, like Aurium's did here, while others act with more formality. He explained that sometimes formal resolutions are not put but it is plain nonetheless, from the course of discussion, that the board resolved to adopt particular resolutions. He ordinarily, in such cases, takes direction from the chairman of the board or a director who had the carriage of a particular matter to confirm the resolutions made by the board. He did that in this case by taking the direction of the chairman of the board, Mr Remta, following the meeting. Some attack was made by counsel for the plaintiffs on the evidence of Mr Remta concerning what happened at the directors' meeting. It was suggested that there were some inconsistencies suggested by earlier drafts of the minutes of the board meeting and the evidence of Mr Remta as to the order in which things happened. In my view, having regard to Mr Remta's evidence, Mr Saunders' evidence, Mr Anderson's evidence, the documentary record including the draft minutes and the final minutes as entered in the company's minute book, and the evidence of the other directors (apart from Mr Percy who did not attend to give evidence), the sequence of the events was substantially as follows. The joint venture variation agenda item was introduced. Mr Remta briefly outlined the nature of the agenda proposal, which involved a variation of the existing joint venture between the company and GPN. Mr Remta took the running on this agenda item as, since his appointment as chairman and director of the company in September 2008, it had been clear to him (and the other directors and it seems GPN too) that the joint venture currently in place between the company and GPN was not serving the company (or GPN) well. Following this outline, Mr Remta indicated an interest in the matter as he was not only chairman of directors of the company but also chairman of directors of GPN. At that point, each of Mr Quinn and Mr Benson, by reason of direct and/or indirect interests in or in entities that hold shares in GPN, also declared an interest. The meeting then proceeded to consider the agenda item through a discussion between the remaining directors, namely Mr Saunders, who effectively acted as the chair of the meeting, and Mr Percy. They then in substance adopted the resolutions outlined above. In so finding, I have paid particular regard to the evidence of Mr Saunders, who had no apparent interest in the agenda item before the board. He confirmed the sequence of events outlined above. He explained that he and Mr Percy discussed the agenda item before adopting the resolutions. He positively stated that the directors who had declared interests did not participate in those proceedings. He also indicated that having regard to the nature of those interests he did not personally believe that Mr Quinn and Mr Benson needed to declare any interests because the nature of the interests they disclosed were as shareholders in GPN and a variation of the joint venture could only affect them in the same way as it would affect any other shareholder in GPN. I should add that it seems that both Mr Benson and Mr Quinn disclosed their respective interests in terms in which they had ritually done at other, earlier board meetings. So far as the interest declared by Mr Remta is concerned, he declared an interest on the basis that since September 2008 he had been a director and chairman of the board of each of the company and GNP and therefore might be considered in a position of conflict. He otherwise held no shares directly or indirectly in either company and in that sense apparently did not stand to gain financially. On the face of it, the conflict rule rather than the profit rule seemed to govern his disclosure. While something of an attack was launched against Mr Remta in cross examination concerning any shareholding that he might have had indirectly through his son, I am satisfied on the basis of the evidence led that Mr Remta does not have any such interest. Indeed, counsel for the plaintiffs having cross examined Mr Remta in that regard did not positively submit that the Court should find otherwise. The evidence concerning Mr Benson's interests is as follows: The evidence concerning Mr Quinn's interests is as follows: For the purposes of s 191(1) and s 195(1) of the Corporations Act 2001 the respective duty to notify and the restrictions on voting are imposed by reference to the test whether or not a director has a "material personal interest in a matter that relates to the affairs of the company". This expression is not defined in the Corporations Act 2001 . Nor are any of the component expressions, such as "material" and "interest". However, as noted above, there is a considerable body of law dealing with the question of conflict of interest of fiduciaries under the general law in equity. In McGellin v Mount King Mining NL (1998) 144 FLR 288 , Murray J in the Supreme Court of Western Australia was required to consider the meaning of the expression "material personal interest" as it appeared in s 232A of the former Corporations Law , which was in similar terms to s 195(1) of Corporations Act 2001 . 'Material' in this context, I think, means that the interest involves a relationship of some real substance to the matter under consideration or the contract or arrangement which is proposed. In that way the nature of the interest should be seen to have a capacity to influence the vote of the particular director upon the decision to be made, bearing in mind that both the article and the section are concerned with that aspect of a director's fiduciary duties which relates to the resolution of conflict of interest which must, of itself, be of a real or substantial kind. The interest with which both the article and the section are concerned should be of a kind as to give rise to a conflict of that character. If that test is met, it seems to me not to matter that the nature of the interest may be described as direct or indirect, or vested in interest or contingent. It is the substance of the interest, its nature and capacity to have an impact upon the ability of the director to discharge his or her fiduciary duty which will be important. In so finding, His Honour, at 305, did in fact have regard to whether that interest was enjoyed directly or indirectly and whether it was too remote or contingent. The director was held to have a material personal interest because the matter under discussion at the board meeting involved the company issuing shares to him to reimburse him for contributions he had made towards meeting the cost of mining exploration work undertaken by the company. The important point to note here is that an assessment of the materiality of a personal interest is not made in some generalised way, but in relation to "the matter that relates to the affairs of the company", or as Murray J put it at 304, "to the matter under consideration or the contract or arrangement which is proposed". As an exercise in textual interpretation of the statutory expression, the word material would appear to be important, as Murray J suggests, and appears to convey the idea that the interest must be of some substance or value, rather than merely a slight interest; that is, an interest of small value can be taken without further inquiry, and does not cross the materiality threshold: see also Austin et al (2005) para 8.30. This view is also entirely consistent with the general law as explained by Mason J in Hospital Products [1984] HCA 64 ; 156 CLR 41 at 103, to the effect that restitutionary remedies are not available for a breach of the conflict rule when the interest of the fiduciary is "remote or insubstantial". See also Finn (1977), para 472; Austin et al (2005), para 8.23. The concept of a material personal interest also rather suggests that, on the face of it, the section does not apply to a conflict of duty and duty, where the director has a conflict of duties but the interest at stake is an interest of someone else, such as a beneficiary of a trust of which the director is trustee, or a company of which the director is also a director. While equity may assist to prevent this conflict, it may not be because a "personal" interest is being preferred. However, in both of those situations additional facts no doubt can lead to the conclusion that the director has a personal interest --- for example, where the trust operates to support the director's family and therefore reduces his or her obligation to provide support from other funds; or where a director's position as a director of another company involves substantial executive remuneration for performance-related remuneration: Austin et al (2005) at para 8.30. Austin et al (2005) at para 8.30 also suggest that the words "personal interest" suggest that where the proposal under consideration would promote the company's interests rather than the director's personal interest, s 191 is not attracted, and refer to Kriewaldt v Independent Direction Ltd (1995) 14 ACLC 73. However, in some such circumstances, a matter under discussion might both promote the company's best interests and advance a personal interest of the director, as a matter of fact. In this case, Mr Benson plainly has an "interest in a matter that relates to the affairs of the company". This is because (a) he holds some shares in GPN directly and on the face of it, has an indirect interest in some other GPN shares as well as Aurium shares and (b) the proposed variation of the joint venture between Aurium and GPN is "a matter that relates to the affairs of the company", namely Aurium. Given that the shares he directly owns (with his wife) represent 0.03% of the issued capital of GPN, that holding, which may be considered a "personal interest" cannot be considered an interest in the matter which has a realistic capacity or propensity to influence the director's decision in the administration of the company's affairs. In short, it is insubstantial and cannot be considered a "material" personal interest. As to the 7.57% holding of Millcrest in the issued capital of GPN, Millcrest is controlled by the father of Mr Benson. There is no suggestion on the evidence that Dr Colin Benson acts at the say-so of his son. I do not consider it can be said that this holding is a "personal" interest enjoyed by Mr Benson. To the extent Mr Benson has an indirect interest in GPN through Millcrest I consider it to be insubstantial. I also consider the indirect interest in Aurium to be in the same category. As to the shares held by Mr Benson as trustee for his three daughters, and the shares held by Stock Market Research Pty Ltd, the company in which Mr Benson has a 25% holding of the issued capital, I consider these also are too insubstantial (and also too remote in the case of Stock Market Research Pty Ltd), to be considered "material". There is also a question whether the shares held by Mr Benson as trustee for the three daughters, can constitute a material "personal" interest. However, given that the inference is that the children are minors, and Mr Benson has a general responsibility, if not at law then by reason of love and affection, to provide for them, any advantage they might receive might also be considered a personal interest in the hands of Mr Benson. Nonetheless I consider the relevant interest is so small that it cannot be considered material. Taken cumulatively, I do not consider that the shares held by Mr Benson (and his wife) (0.83% of the issued capital of GPN), the shares held by Mr Benson for his three daughters (considerably smaller percentage again), the 25% interest Mr Benson holds in a company that holds about the same percentage of shares in GPN as the children hold in GPN, the indirect interest in GPN shares through Millcrest/Fotis, or the small indirect interest in Aurium shares suggest that Mr Benson holds a material personal interest in the matter of the consideration by Aurium of the variation of the existing joint venture agreement between the company and GPN. Further, it is necessary to consider the nature of the interest "in the matter that relates to the affairs of the company" in order to determine whether Mr Benson's interest, such as it is, is a material personal interest in that matter. That matter is the variation of an existing joint venture agreement between the company and GPN. This is not a case, such as that dealt with by Murray J in McGellin 144 FLR 288 , where the director had a very personal interest in the issuance of the shares under consideration, but rather involves a quite indirect benefit, if it be a benefit at all, under the joint venture agreement. The joint venture agreement, as varied, no doubt would be of benefit to the two companies. The essence of the proposed variation is outlined in the Explanatory Memorandum at para 7 above. GPN provides more ground for exploration (to Aurium's advantage), the parties agree that a wider range of minerals (all but manganese) are to be explored for (arguably also of advantage to Aurium), Aurium contributes a further $550,000 to the joint venture (part of the consideration flowing to GPN), and in further consideration thereof the former 50/50 interest of the companies alters to 70/30 in favour of GPN. Aurium also issues 35,000,000 (more than 15% of the total) shares in Aurium to GPN as part of the consideration for the variation. As noted in parenthesis, benefits flow in both directions, but none is to the advantage of any individual shareholders, including Mr Benson and Mr Quinn. While the joint venture variation no doubt has some value in prospect to Aurium and GPN, the value of that agreement to Mr Benson is that, together with all shareholders of GPN and Aurium, eventually, depending on the outcome of the joint venture exploration of mining tenements, he (or the relevant shareholding entities) might see a flow of dividends or increase share value. Under the existing joint venture, the company and GPN undertake exploration for certain minerals (gold and uranium). Under the varied joint venture, all minerals (with the exception of manganese) can be explored for. Depending on the outcome of exploration, each of the joint venturers might materially benefit. If they do, all shareholders of each of the companies might expect material benefits to follow, possibly in terms of dividends or more likely through mining agreements and increased share market value. But such material financial benefits are, to say the least, utterly speculative at this point both for the two companies and certainly for the individual shareholders. All in all, in these circumstances, taking into account the nature of the matter that relates to the affairs of the company (the proposed variation of the existing joint venture) and the relatively limited extent of Mr Benson's interests in GPN and Aurium, I consider it unrealistic to suggest that Mr Benson has that degree of control that his interest (in either GPN or Aurium) can be considered a "material" personal interest in the matter that relates to the affairs of the company. Therefore, in my view, it matters not whether Mr Benson at the board meeting on 17 February 2009, declared that he had an interest --- which he seems to have done out of an abundance of caution in a ritual way --- as there was no need for him to do so. It follows, in my view, that Mr Benson was not required under s 195(1) of the Corporations Act 2001 not to be present while the joint venture matter was being considered at the director's meeting. In any event, by virtue of s 191(2)(a)(iii) , s 191(1) does not apply to an interest that relates to a contract the company is proposing to enter into that is subject to approval by the members and will not impose any obligation on the company if it is not approved by the members. The heads of agreement leading to the variation are expressly conditional on the issue of shares by the company to GPN as consideration for the variation, being approved by the shareholders of the company by 15 April 2009 or such later date as agreed on by the parties. Accordingly, either the variation agreement, or that part of it which constitutes a contract to issue the shares, was required to be approved by the shareholders. Accordingly, s 191(1) did not apply to the consideration by the directors of that matter. So far as the indirect interest of Mr Benson in Aurium, the company itself, is concerned it also appears to me that that was not an interest which required notification under s 191(1) , by reason s 191(2)(a)(i). That is because the relevant interest is one that arises because the director is a member of the company (Aurium) and is held in common with other members of the company. The shareholding in question is of ordinary shares, not a special class of shares. It seems to me in these circumstances, this particular exemption applies to the Aurium interest. In my view, like observations may be made in respect of the interests disclosed by Mr Quinn to his fellow directors at the board meeting on 17 February 2009. Mr Quinn's relationship with GPN is quantatively different to that of Mr Benson in that Mr Quinn has a demonstrated indirect interest in GPN through Jamora which holds 4.2% of the issued capital. Jamora also holds 6.78% of the issued capital of Aurium. In each case, the relevant interests in GPN are relatively small. If one were to use the Corporations Act 2001 provision as a guide, Mr Quinn is not a substantial shareholder in GPN. Note: For relevant interest , see section 608. In my view, having regard to the size of the shareholding of Jamora in GPN (less than a substantial holding), taking into account the fact that Jamora also holds 6.78% of the issued capital in the company, and taking into account also the nature of the matter which relates to the affairs of the company, I am not satisfied that Mr Quinn has a material personal interest in that matter such that he was obliged to disclose his interest in that matter pursuant to s 191(1). It follows that Mr Quinn was not obliged under s 195(1) of the Corporations Act 2001 not to be present at the meeting of directors which considered that matter. In any event, as in the case of Mr Benson, I also consider that by reason of s 191(2)(a)(iii) Mr Quinn did not need to give notice of his interest under s 191(1). It also seems to me that so far as Mr Quinn's interest in Aurium is concerned, as in the case of Mr Benson, the exemption in s 191(2)(a)(i) applies, which means that interest is not one in respect of which notification must be given to other directors under s 191(1). As to the interest disclosed by Mr Remta, by reason of him being the common chairman of each of the company and GPN, while he may have had an interest --- because of a potential conflict --- it is difficult to see what "personal" interest he held at material times. He is not shown to be a person with any shareholding in either GPN or Aurium. I have rejected the suggestion that he may have had such an interest by reason of his son's holding. It is not shown, for example, that his son is a dependent minor or otherwise dependent on Mr Remta or that Mr Remta has any legal or other obligation to provide for his son, such that any general interest he might have in the relevant matter could be considered a material personal interest. In those circumstances, I consider that Mr Remta did not have a "personal" material interest in a matter that relates to the affairs of the company, for the purpose of s 191(1) , at the directors meeting on 17 February 2009. While it might be said that to the extent that Mr Remta as chairman of GPN and Aurium receives remuneration or other benefits, he has an interest in the matter that might be considered personal, there is a paucity of evidence before the Court to establish whether or what the nature of the chairman's remuneration or other benefits or incentives are in the case of Mr Remta. While it might be thought, under general principles, that Mr Remta, by reason of his common chairmanship of the two companies has a realistic capacity or propensity to influence the director's decision in the administration of the company's affairs, the evidence fails to establish that his interest is a "personal" interest for the purposes of s 191(1). Of course, this would not mean that Mr Remta does not have a duty to avoid any conflict of interest under the general law, as explained above. In any event, regardless of whether or not s 191(1) or s 195(1) may have been breached by a director, as noted earlier, a contravention of either section does not affect the validity of any resolution. In the result, I find that the resolutions which I have found were passed by the board on 17 February 2009, as entered in the company's minutes book, concerning the variation to the joint venture agreement, are not invalid. For these reasons, the case of the plaintiffs, to the extent it relies upon breach of s 195(1) of the Corporations Act 2001 , fails. 11.20 A director who has a personal interest in a matter that relates to the affairs of the Company must give to the other directors notice of the interest unless such interest falls within the exception of Section 191(2) of the Corporations Act . The nature of this interest must be disclosed by the director at a directors' meeting as soon as practicable after the relevant facts have come to his knowledge and such director must comply with the requirements of Sections 191 , 192 and 195 of the Corporations Act . 11.21 Subject to the requirements of Sections 191 and 192 of the Corporations Act , a standing notice that a Director has an interest in any matter shall be a sufficient disclosure under this Clause as regards the interest of the Director in any transactions relating to the matter and after such standing notice it shall not be necessary for such Director to give a special notice relating to any particular transaction relating to that matter. In this regard, Art 11.20 may be contrasted with Art 15.15 of the company's constitution considered in the McGellin 144 FLR 288 at 302, which expressly provided that the director making the declaration should not vote "on any resolution relating to a contract or arrangement through which that Director has directly or indirectly a material interest". Here, Art 11.20, having specified that an interest which is of a material personal kind, should be disclosed, then expressly provides that following disclosure such director must comply with the requirements of s 191 , s 192 and s 195 of the Corporations Act 2001 . In other words, the constitution of the company here, so far as voting and presence at the meeting is concerned, depends for its efficacy on the operation of s 191 , s 192 and s 195 of the Corporations Act 2001 . Having regard to the my findings above concerning the alleged contravention of s 191(1) of the Corporations Act 2001 , there is no basis for finding that there has been any relevant contravention of the constitution of the company by the relevant directors. The parties are in general agreement about the underlying principles in relation to disclosure by directors to shareholders in such circumstances, but disagree about their application to the facts of the case here. Directors are under a duty to make full disclosure of facts within their knowledge which are material to enable the members to determine upon their actions including whether or not to attend the meeting: Bulfin v Bebarfalds Limited (1938) 30 SR (NSW) 423 at 424. The fiduciary duty is a duty to provide such material information as will fully and fairly inform members of what is to be considered at the meeting and for which their proxy may be sought. The information is to be such as will enable members to judge for themselves whether to attend the meeting and vote for or against the proposal or whether to leave the matter to be determined by the majority attending and voting at the meeting ... A proper discharge of the duty may require that the directors take reasonable steps to ascertain relevant information for communication to members if that information is not known to the board. Directors must not consciously refrain from seeking relevant information or turn a blind eye to relevant material in order to avoid placing before members information which may contradict or qualify any particular position taken or advocated by the directors or a majority of them. The shareholders must be enabled to have an understanding and form a judgment upon such business (footnote omitted). Where directors take it upon themselves to urge or recommend that members exercise their powers in general meeting in a particular way (as they have implicitly done in this case) it is an incident of the fiduciary obligation of directors that adequate information be provided (footnote omitted). In Buttonwood Nominees 10 ACLR 360 , the plaintiffs applied for an interlocutory injunction to prevent the shareholders at a general meeting voting upon an allotment of shares because of the association between three directors of the company and the "outside" company. The application failed because Young J considered the association was too ephemeral. To my mind it does not meet either test. As only Mr Remta's was, the information supplied to shareholders was insufficient to enable shareholders to make an informed decision whether or not to attend the meeting and how to vote on the proposed resolution. The plaintiffs say, secondly, that even if Mr Benson and Mr Quinn did not have an obligation to disclose their interests to the meeting of the board on 17 February 2009 (whether under the general law, the company's constitution or the Corporations Act 2001 ), the fact that both Mr Benson and Mr Quinn declared an interest in the matter that related to the affairs of the company that was the subject of the Notice of General Meeting, should have been disclosed to the shareholders. In other words, the plaintiffs say that the fact that these two directors made a disclosure to the board of directors, when they dealt with the same agenda item, should have been disclosed in the Notice to shareholders regardless of whether or not either had an obligation to make such disclosure. For the reasons given above in relation to the alleged breach of s 195(1) of the Corporations Act 2001 as to why I do not consider either Mr Benson or Mr Quinn have a "material personal interest" for the purposes of s 191(1) of the Corporations Act 2001 , I do not consider, on the facts of this case, there is a conflict or a real or substantial possibility of a conflict between the respective personal interests of Mr Benson and Mr Quinn and the interests they owe to the company or the shareholders. To put it another way, as did Mason J in Hospital Products [1984] HCA 64 ; 156 CLR 41 at 103, I consider the interests of each Mr Benson and Mr Quinn in GPN and Aurium to have been insubstantial and/or remote in the context of this case. This suggests then that there was no need for the directors to make a disclosure of the insubstantial or remote interests of Mr Benson and Mr Quinn to shareholders in the Notice. Further, the evidence does not disclose that the directors' Benson and Quinn or the directors as a whole deliberately withheld information they thought to be material. Nor did they withhold information in this regard in respect of which, in my view, a disinterested onlooker would say, 'Of course it is most material'. It is also worthy of note in this regard, as a measure of industry expectation, that the Notice issued to shareholders was obliged to comply with the ASX Listing Rules 14.1 and 14.11. The notice itself contains a usual "voting exclusion" statement in accordance with these rules. The statement is required to be set out in the notice as part of the specific information required by those rules, where Listing Rule 7.1 is involved --- that is to say where the issue exceeds 15% of capital. But relevantly there is an exception in the Listing Rules to the exclusion of votes in favour of any "holder obtaining a benefit solely in the capacity of a holder of ordinary securities". In this case that effectively was the position in relation to Mr Benson and Mr Quinn and the relevant entity through which they derived shareholding interests in GPN and Aurium. It is difficult to identify any other form of benefit that is not speculative, insubstantial or remote. As I found above, such interests as they have are member interests shared in common with all other members and not personal benefits. Under the Listing Rules they were entitled to and did vote at the Aurium General Meeting. The Notice of Meeting and proxy form also complied with ASX Listing Rules 14 and 7 in identifying the interest of Mr Remta as chairman and contained the necessary clear statements of his voting intentions, including on undirected proxies. This allowed for the chair's full proxy voting. As to the second argument put by the plaintiffs, that the fact that Mr Benson and Mr Quinn made a disclosure of their interest at the board meeting --- regardless of their obligation to do so --- should have been disclosed to the shareholders in the Notice of General Meeting, I consider that would be a case of requiring the provision of too much information and would only serve to confuse shareholders. In Killen v Marra Developments Ltd [1979] ACLD 608 , Kearney J pointed out that shareholders can have a problem by being given too much information, as will not having sufficient information. It seems to me that if directors at a board meeting, ritually or out of an abundance of caution --- as here --- disclose to their fellow directors that they have an interest (or may have an interest) in a matter and then refrain from voting in relation to that matter, and the matter subsequently has to go before a meeting of shareholders for approval, to advise the shareholders of the earlier disclosure may be considered to introduce something of a "red herring" into the decision-making exercise of a shareholder. The fact the unnecessary disclosure was made does not assist a shareholder in making voting decisions. I find then that it was not necessary for the directors to ensure the Explanatory Memorandum contained advice to members of the fact that Mr Benson and Mr Quinn had disclosed an interest in the subject of the proposed resolution at the board of directors meeting on 17 February 2009. I do not consider such information was necessary for the shareholders to make an informed decision on the issues to be decided at the general meeting of shareholders. While some attack was made by counsel for the plaintiffs on the terms of the Explanatory Memorandum more generally, the principal complaint of the plaintiffs is that the Notice should have mentioned Mr Benson's and Mr Quinn's interest or the fact that they had made a disclosure about their interest to the directors. I consider that overall the Explanatory Memorandum contained sufficient information to enable a shareholder to make an informed decision whether or not to attend the meeting and how to vote on the proposed resolution. I would dismiss the application of the plaintiffs. The Court therefore orders that: The plaintiffs' application is dismissed. The plaintiffs pay the defendant's costs, including each appearance in the Court, as taxed, if not agreed. I certify that the preceding one hundred and twenty-four (124) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | directors validity of resolutions of board fiduciary duty profit rule and conflict of interest rule director's duty to disclose material personal interest in a matter that relates to the affairs of the company interests of directors insubstantial and/or remote in context of case no need to make disclosure information not withheld corporations |
2 Associated with the proposed joinder, he also moves for leave to file a second further amended application and a further amended statement of claim. 3 Beyond Productions Pty Ltd is associated with the first respondent, Beyond Properties Pty Ltd, and the second respondent, Beyond International Ltd, and there is no objection to its joinder as sixth respondent. There will be an order for its joinder accordingly. I will refer to the three Beyond companies collectively as 'Beyond'. 4 The existing five respondents, who are represented by the same firm of solicitors, Phillips Fox, oppose the joinder of S & S and Wiley. Mr Knight's allegations are as follows. 6 Mr Knight, also known as 'Bowvayne', is an internationally acclaimed writer who is, and at all material times has been, involved in the writing of novels and the development of television programs. 7 Beyond comprises three Australian companies that are involved in the production and distribution of television programs. 8 The third respondent, Discovery Communications Inc ('Discovery'), is a foreign corporation that carries on business as a distributor of television programs and pay television broadcaster, and operates the 'Discovery Channel' in Australia. 9 The fourth respondent, the Special Broadcasting Service Corporation ('SBS'), is a statutory corporation that carries on business as a national free-to-air television broadcaster. 10 The fifth respondent, Foxtel Management Pty Ltd ('Foxtel'), is an Australian company that carries on business as a pay television broadcaster. 11 Since 1988, Mr Knight has continuously carried on, in Australia and internationally, a business of, inter alia , writing novels and developing, writing, producing and selling television programs all concerning the investigation of myths, under or by reference to the name and (common law) mark 'MYTHBUSTERS'. Mr Knight gives particulars of his reputation overseas and in Australia, and concludes that he has a valuable and substantial reputation in Australia and elsewhere in the name and mark 'MYTHBUSTERS'. 12 Mr Knight promoted in Australia and elsewhere, including to Beyond, the concept of a series of half-hour television programs to be called 'MYTHBUSTERS'. 13 Without Mr Knight's authority, Beyond has produced, promoted and distributed a television series concerning the investigation of myths entitled 'MYTHBUSTERS'. In addition, Beyond has licensed, authorised or permitted Discovery, SBS and Foxtel to broadcast and promote, or to procure the broadcasting and promotion of, the series in Australia and elsewhere, and they have in fact done so. 14 Mr Knight asserts that the conduct described has given rise to various misrepresentations in contravention of s 52 of the Trade Practices Act 1974 (Cth) ('the TP Act') and to various forms of passing off, by Beyond, Discovery, SBS and Foxtel. 15 The motion to join S & S and Wiley arises from the alleged publication by them in Australia and elsewhere without his authority of two books which include the word 'MYTHBUSTERS' in their titles: in S & S's case the book, Mythbusters: the Explosive Truth Behind 30 of the Most Perplexing Urban Legends of All Time ('the S & S book'), and in Wiley's case the book Mythbusters: Don't try this at home ('the Wiley book'). 16 Mr Knight claims that by doing so, S & S and Wiley have also made misrepresentations in contravention of s 52 of the TP Act and engaged in various forms of passing off. 17 Mr Knight became aware of the publication of the two books in about mid to late 2005. He says that, in August 2005, he first saw the S & S book on the Amazon.com Internet site which stated that it was due to be released on 25 October 2005. He says that, on 26 October 2005, he ordered the S & S book which was delivered to him in November 2005. There is also evidence that the S & S book is being sold in a Dymocks bookstore in George Street Sydney. 18 Mr Knight learned of the Wiley book on 28 January 2006 when a staff member of the Angus and Robertson bookstore in Adelaide told him that it was due to be released in bookstores within seven days from that date. On 30 January 2006, a staff member in the Dymocks bookstore in George Street Sydney told him that the Wiley book would be available within seven to ten days. It cannot be said that Mr Knight 'ought to have' joined S & S and Wiley as respondents. The publishing of the two books by them represented causes of action quite separate from those alleged against Beyond, Discovery, SBS and Foxtel, which all related to the television series. Indeed, the two books were published after the proceeding was commenced (the post-commencement accrual of the causes of action against the publishers does not itself defeat Mr Knight's motion: see Federal Court Rules O 13 r 2 (7), (8), (9)). 20 I turn, then, to O 6 r 2. Paragraph (a) of r 2 is directed primarily to a person who is contemplating commencing a proceeding in the Court. It informs that person as to whom he or she may join as co-applicants or as respondents. 21 A person cannot be made an applicant without his or her consent: O 6 r 8(2). 22 If there is a dispute over whether a person who has been joined as an applicant or respondent falls within para (a), there may be a challenge of wrongful joinder. 23 Addition of parties requires leave of the court, at least because it requires amendment of the application, and, since an application is not a pleading (see the definition of 'pleading' in FCR O 1 r 4), amendment of it always requires leave under O 13 r 1 (contrast the limited right to amend a pleading without leave under O 13 r 3). 24 Accordingly, even where the criteria of para (a) of O 6 are satisfied, an applicant needs the Court's leave to add respondents (or applicants). 25 Rule 2 (b) does not in terms limit the circumstances in which the Court may grant leave. Even if para (b) were limited to para (a) cases, para (b) would still have work to do: the Court might refuse leave because of considerations arising from the applicant's failure to join the parties at the outset, any delay of the applicant in seeking leave, the state of progression of the proceeding, any disruption likely to arise from the addition of parties, and other discretionary factors. That is to say, the Court may be persuaded, in the exercise of its discretion, to leave the applicant to the necessity of commencing a fresh proceeding. 26 In fact, in Bishop v Bridgelands Securities Ltd (1990) ATPR--- SS41 -060 Wilcox J held that para (b) was not limited by reference to para (a) of r 2. I respectfully agree. Nonetheless, the first inquiry will always be whether the terms of para (a) are satisfied. If so, the Court will proceed to consider discretionary factors of the kind mentioned above. If not, the Court may still be persuaded in the particular circumstances of the case to exercise the discretion by granting leave, as happened in Bishop v Bridgelands, above. 28 If a separate proceeding were brought by Mr Knight against S & S and Wiley, it appears that some common questions of law and fact would arise in that proceeding and the present proceeding (see para (i) of r 2(a)), namely, questions relating to Mr Knight's reputation in Australia in connection with the name 'MYTHBUSTERS'. Apparently this will be a strongly contested issue in this proceeding. It may be, however, that even in relation to this issue, there would be differences between the two proceedings, one proceeding relating to Mr Knight's reputation with television viewers and the other relating to his reputation with the buyers and readers of books. 29 The rights to relief claimed in the two proceedings would clearly not be 'in respect of or arise out of the same transaction or series of transactions': cf Payne v Young [1979] HCA 39 ; (1980) 145 CLR 609. The evidentiary fields which would be covered by Mr Knight's claim against Beyond, Discovery, SBS and Foxtel in connection with the television series, and that covered by his claim against S & S and Wiley in connection with publication of the two books, would, it seems, be quite different. 30 The inconvenience to the two groups of respondents of having to participate in a hearing in which a substantial number of the issues and a substantial part of the evidence would be no concern of theirs, must be weighed against the inconvenience to Mr Knight of having to prove his reputation (or reputations) in separate proceedings. 31 In my view, the weighing exercise favours the respondents. Mr Knight would not have been entitled under O 6 r 2 to join the publishers as respondents in this proceeding initially, and he should not be allowed to do so now. 32 The respondents also oppose the joinder of S & S and Wiley on the basis that they did not publish the books in Australia. It is put that, on the evidence, they published the books in the United States of America and the books must have been imported into Australia by and from entities not related to S & S or Wiley. The respondents rely on a 'Brand Licence Agreement' between S & S and Discovery Licensing Inc, by which Discovery Licensing Inc granted to S & S the right to use certain trade names, trade marks, logos and copyrighted material of the Discovery Channel program 'MYTHBUSTERS' to develop, publish, sell and distribute a 'MYTHBUSTERS' fan book in the United States, its territories and possessions and Canada. According to an affidavit sworn 24 February 2006 of Emily Remes, Vice President and Deputy General Counsel of S & S, S & S has not been licensed the right to sell or authorise the sale of the S & S book or of any other 'MYTHBUSTERS' fan book in Australia and has not done so. 33 There is also in evidence a brand licence agreement between Wiley and Discovery Licensing Inc dated 23 March 2005 under which Discovery Licensing granted Wiley the right to use certain trade names, trade marks and logos of the Discovery Channel program 'MYTHBUSTERS' to develop, publish, sell and distribute a 'MYTHBUSTERS' book in the United States its territories and possessions and Canada. 34 Counsel for the respondents agreed that her objection to the joinder as outlined above was in substance a submission that joinder would be futile because no reasonable cause of action would be disclosed and the proceeding would be liable to be summarily dismissed as against S & S and Wiley under FCR O 20 r 2. 35 I do not accept the submission. The question of the liability of S & S and Wiley for the alleged TP Act contraventions and for passing off raises factual and legal issues which are appropriately left to a final hearing. As I understood her, counsel for the respondents does not submit that S & S and Wiley do not carry on business within the Commonwealth and can not be served here: see FCR O 8 r 1(e). Generally speaking, the source, higher up the distribution chain, of an 'instrument of deception' is liable for passing off: see C Wadlow, The Law of Passing Off , Sweet & Maxwell, London, 1995 at 4.44 --- 4.52 and cases there cited. On the evidence before me on this motion, I am not in a position to know with sufficient confidence that S & S and Wiley are excepted from this general principle. However, as noted earlier, Mr Knight will have leave by consent to add Beyond Productions Pty Ltd as sixth respondent. He will also have leave to file and serve a second further amended application and a further amended statement of claim. The permitted amendments will not include those proposed relating to claims against S & S and Wiley. If, contrary to present indications, it transpires that there will be sufficient evidentiary overlap between the two proceedings, it will be open to Mr Knight or any other party to move for an order that they be heard together. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | parties application for leave to join additional respondents substantive application seeking relief in respect of alleged contraventions of s 52 of trade practices act 1974 (cth) and for passing off allegation by applicant of reputation in australia in connection with common law mark 'mythbusters' existing claim relating to production of 'mythbusters' television series proposed new claim relating to publishing of two 'mythbusters' books no connection between publishers of books sought to be added as respondents, and existing respondents issue of applicant's reputation in australia common to both television series claim and books claim federal court rules o 6 r 2 whether rights to relief 'are in respect of or arise out of the same transaction or series of transactions'. practice and procedure |
The second respondent in the appeal, Canberra International Airport Pty Ltd, filed a notice of motion, dated 14 May 2008, seeking an order that the appellant give it discovery of a document that it alleges was sent to Queanbeyan City Council on or about 20 March 2008. It is necessary to briefly set out the background to the proceedings which provides the context in which the question of preliminary discovery has arisen. 2 In August 2007, a single judge of this Court dismissed an application by the appellant for judicial review of conduct associated with the development of what is known as an Australian Noise Exposure Forecast ("ANEF"): The Village Building Co Ltd v Airservices Australia [2007] FCA 124. The appellant owns land near Canberra airport, Tralee station, which it proposes to develop as residential blocks. Its capacity to do so may be curtailed by the development of a plan for the future use of Canberra airport based on an ANEF that the first respondent, Airservices Australia, is proposing to endorse. 3 The appellant appealed against the August 2007 decision. The appellant filed its notice of appeal on 3 September 2007. On 2 October 2007, Gyles J made an order, on the appellant's application, restraining the first respondent from endorsing any draft ANEF for Canberra airport until 2 November 2007: The Village Building Co Ltd v Airservices Australia [2007] FCA 1547. This order was made on the basis of the appellant undertaking to "take no further steps to advance the rezoning of Tralee based on the current Australian Noise Exposure Forecast (ANEF)". 4 The hearing of the appeal took place on 29 October 2007. Before judgment was given by the Full Court, an issue arose about whether the appellant should be restrained from engaging in certain conduct pending that judgment. The appellant write forthwith to the New South Wales Department of Planning requesting that the Department take no further steps to consider or process its application of 21 November 2007 until judgment is given in the appeal and requesting the Department to provide a written undertaking to do so to both the appellant and the second respondent within seven days of this judgment that it will not do so. If the Department gives the undertaking referred to in order 1, the appellant shall file an affidavit evidencing receipt of the correspondence and do so within 24 hours of its receipt. If no affidavit of the type referred to in order 2 is filed within eight days of the date of this judgment, the appellant shall withdraw within 24 hours thereafter its application lodged on or about 21 November 2007 with the Department requesting that the determination of the rezoning application for South Tralee be dealt with under Part 3A of the Environmental Planning and Assessment Act 1979 (NSW). In essence, the second respondent contended that injunctive relief was necessary to ensure that the appellant continued to comply with an undertaken that was given to the Court on 2 October 2007 (and allegedly continued on 29 October 2007). In the result, however, I considered such an order unnecessary and declined to make it: Village Building Co Limited v Airservices Australia [2008] FCA 247 at [10] . I indicated in my reasons for judgment of 7 March 2008 that there exists real doubt as to whether the appellant, at the hearing of the appeal, continued or renewed the undertaking that it had previously given on 2 October 2007. Notwithstanding these observations, it remains the second respondent's case that the appellant had given (or continued) an unambiguous undertaking at the hearing of the appeal on 29 October 2007. 6 On 10 April 2008, a Full Court of this Court dismissed the appeal: The Village Building Co Limited v Airservices Australi a [2008] FCAFC 57. 7 Based on the description of a document referred to in an article published in the Canberra Times newspaper , the second respondent contends that there is reasonable cause to believe that the appellant has committed a contempt of court. The second respondent has requested a copy of the relevant document from the appellant, and although the appellant has admitted the existence of the document, it has refused to provide a copy of it to the second respondent. 8 The second respondent filed an affidavit of Neville John Topfer in support of its notice of motion for discovery. The modified plan reconfigured the 2000 proposed residences so that none would lie in areas where the forecast noise would exceed planning standards, and all homes would be noise insulated. It has long been the case that breach of an undertaking given to the Court is contempt in the same way as is a breach of an injunction, although, importantly, contempt will not be found unless the terms of the undertaking are clear and unambiguous. 11 One possible problem facing the second respondent is that the use of the phrase 'prospective respondent' in O15A Rule 6 contemplates that discovery under this rule can only be obtained prior to the institution of substantive proceedings. This point was made by Tamberlin J in Ricegrowers Co-operative Ltd v ABC Containerline NV (1996) 138 ALR 480 where (at 484) his Honour said "[a]fter proceedings have been commenced the rule ceases to apply. After commencement, of course, in the ordinary process of discovery, additional facts may come to light which would provide a basis for other relief and it would then be open to the plaintiffs to seek leave to amend the pleadings so as to claim such relief. " (See also Hooper v Kirella Pty Ltd [1999] FCA 1584 at [37] per Wilcox, Sackville and Katz JJ). It is true that that is so only because the proceeding may be commenced against the owners of a vessel without identifying them. But the proceeding has been commenced and regularly commenced. In my opinion once that has occurred, the rule ceases to be applicable. Even though they should be brought in the proceedings out of which the contempt is said to have arisen: O 40 r 5, the application and charge alleging contempt is itself a separate proceeding. Northrop J had to consider whether the legislative predecessor of s347, s197A of the Conciliation and Arbitration Act 1904 ("C & A Act"), limited the Federal Court's power to award costs. His Honour concluded that an application made by notice of motion alleging contempt of Court in relation to proceedings for the deregistration of an organisation brought under the C & A Act, was a separate proceeding taken under s31 of the Federal Court Act and thus s197A had no application. That conclusion has been affirmed by a Full Court in Cooke v Goodhew (1989) 91 ALR 447 at 458 per Sheppard J, 464 per Wilcox J and 474 per Gray J: see also Gregory v Phillip Morris Ltd (1987) 74 ALR 300. However Northrop J's conclusion in Viner, supra, turned on the special nature of contempt proceedings which are criminal in character and have historically been treated as proceedings separate from the proceedings which gave rise to the contempt. For reasons which will become apparent shortly, it is unnecessary to determine whether the expression "right to obtain relief" comprehends an application alleging contempt and seeking a penalty. Further, the words "or may have" cannot be ignored. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. Indeed O 15A r 5 "expressly contemplates" what once might have been castigated as "fishing". (Other citations omitted. It does not require the applicant for discovery to establish a prima facie case. But this case is unusual. The litigation in contemplation does not involve the vindication of private rights. To the contrary. For reasons which follow, I believe I am able to assess whether the proceedings will succeed. I do so, not as an impermissible assessment of the strength of the applicant's case, but rather as an assessment of whether there is a case at all. It is necessary for me to do this in order to determine whether, objectively, the respondent has reasonable cause to believe it has or may have a right to obtain relief. I am satisfied that it does not because any contempt proceedings are doomed to fail. I have reached this conclusion after further consideration of the transcript of the appeal and notwithstanding the observations I made in my earlier judgment referred to at [5] above. 16 To explain this conclusion, it is necessary to set out some principles governing contempt proceedings and to analyse, in a little more detail, what was said by senior counsel for the appellant during the hearing on 29 October 2007. As noted earlier, contempt arising from an alleged breach of an undertaking will not be found unless the terms of the undertaking are clear and unambiguous. This issue was comparatively recently considered by a Full Court in Universal Music Australia Pty Ltd v Sharman Networks Ltd [2006] FCAFC 41 ; (2006) 150 FCR 110. 17 In Universal Music Australia the Court had to consider whether an order (said to have been breached in a way that involved a contempt) was so ambiguous that it was devoid of any legal meaning and incapable of giving rise to liability on a charge of contempt. The leading judgment was given by Branson J. Her Honour referred to the earlier Full Court judgment in Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117. Branson J noted that Microsoft v Marks involved an appeal from a dismissal of a contempt proceeding instituted by Microsoft alleging a breach by Mr Marks of an order of the Court. The leading judgment was that of Beaumont J, with whom Lehane J agreed, and Lindgren substantially agreed while making certain observations of his own. That being so, and since the question whether Microsoft had, in fact, consented was put in issue in the contempt proceedings, it must further follow that any attempt by Microsoft to move for contempt for alleged breach of such an order must have failed. In any event, this outcome probably follows from an application of the general observations made in Witham on the relevance of the criminal standard of proof; there is a doubt as to the meaning of order 1(a) in an important respect, and ... that doubt is a reasonable one. First, it is not clear precisely what his Honour intended to convey by describing order 1(a) as 'equivocal' and 'ambiguous'. Secondly, it is not clear whether his Honour was (a) intending to lay down a principle of law or (b) acknowledging a problem of proof. His Honour's reference to the question of whether Microsoft had consented having been put in issue by the alleged contemnor indicates that his Honour regarded order 1(a) as providing a possible foundation for a charge of contempt. If the order were not capable as a matter of law of founding a charge of contempt it would be immaterial whether the question of Microsoft's consent had been put in issue. I therefore conclude that relevantly the ratio decidendi of Microsoft v Marks is that an appeal from a dismissal of a charge of contempt will fail for want of proof if the order alleged to have been disobeyed is, on its proper construction, of uncertain application in the circumstances giving rise to the alleged disobedience. Her Honour appears to accept that an order or undertaking may be so uncertain, as a matter of construction, such that it is incapable of sustaining a finding of contempt, although that was not so of the order in that case. 19 In the present case, counsel for the appellant was asked, during the hearing of the appeal, a question about an undertaking his client had given Gyles J on 2 October 2007. Orders that the first respondent by itself, its servants and agents be restrained until 5.00 pm on Friday 2 November 2007 or further order from endorsing any new draft ANEF for Canberra International Airport. Adjourns the motion for a stay to the commencement of the appeal. Orders that costs are reserved. The reference to "the order which is 863" is a reference to the order made by Gyles J which I have just set out. GRAHAM J: Mr Martin, you offer to continue your undertakings to the court that were set out in the order which is 863, you won't try and secure the rezoning of your land, or take any step in that direction? MR MARTIN: No, your Honour, that undertaking is continued. BRANSON J: But is that a matter under the control of your client? I thought you told me it wasn't. MR MARTIN: It's a matter taken up by Queanbeyan Council. BRANSON J: Your client's undertaking might be neither here nor there. MR MARTIN: Well, we're certainly prepared not to take any further steps as to what consultative process or what involvement is required for us in relation to that rezoning. I can't positively give your Honour an answer. BRANSON J: It seems to me that it might be an undertaking with no real substance. MR MARTIN: Well, the undertaking as to damages is certainly not, your Honour, and I suspect there are steps that we can take to advance the rezoning by way of agitating with the council that the rezoning should be progressed. It's not a matter which the council takes in a vacuum so to speak. We will consult with those that are going to be affected by the rezoning and keep them informed as to what the process is and no doubt some impetus can be given by those parties that will benefit from it, or are directly affected by it. The matter can be progressed or not progressed at the insistence of the land owners that are affected by that decision. MOORE J: Well, if that's all you want to say, Mr Martin, on this last point we might just ask Dr Griffiths what his instructions are and what submissions he wishes to make. DR GRIFFITHS: My instructions are, your Honour, that we don't wish to be heard on this matter. We see it primarily as a matter of concern, if it is of any concern, for the second respondents. So we don't wish to be heard. MOORE J: Ms McCallum. MS McCALLUM: Your Honours, I'm instructed to seek that the injunction be discharged. Your Honours probably won't want to make a decision about that this afternoon, but we would ask that if your Honours MOORE J: Well, I'm not sure that --- I'm sorry to interrupt, but I'm not sure that that's right. I thought the order was that the injunction would operate until today, so it's not a question MS McCALLUM: I'm sorry, that's quite right, but I'm just saying your Honours might want to reserve for a BRANSON J: Until Friday of this week. MS McCALLUM: short period or at least withdraw to consider it. I have only just now been made aware of a letter which the council has sent to the second respondent which indicates that the process of considering the rezoning is continuing. May I tender that on the application to continue the injunction. Regrettably I only have two copies, but perhaps BRANSON J: While that is coming up, Ms McCallum, I wonder if I might ask Dr Griffiths something. Dr Griffiths, your client hasn't instructed you to be heard on this DR GRIFFITHS: Yes. BRANSON J: that it wishes to be heard on this, is that the same as saying that they don't propose to take the further steps until the appeal court brings down a judgment? Because if that is their position we might be wasting our time worrying about it? DR GRIFFITHS: That is my --- I will seek confirmation --- but that is my understanding of the position, your Honour. Yes, your Honour, my instructions are that my client doesn't propose to endorse --- give its final endorsement to this, pending any decision --- pending the decision by this Court. MOORE J: Is that sufficient --- I'm sorry. MS McCALLUM: I do apologise, your Honour. MOORE J: Is that sufficient for your purposes, Mr Martin? MR MARTIN: Yes, that is sufficient, your Honour. MS McCALLUM: On that basis the injunction shouldn't be continued, it should be a matter between BRANSON J: Exactly, that's why we asked the question. MOORE J: Well, it will --- unless someone wishes to have it varied --- it will simply cease to have effect on Friday. MS McCALLUM: Thank you, your Honour. There's one further matter, I apologise for imposing further on the goodwill of the court, but very quickly. I didn't say anything about the proper approach to the notice of contention, but I don't submit that if the court were to be persuaded that there is no matter, that the court wouldn't then proceed to decide the substantive issues. There's some treatment of that issue in your Honour Justice Branson's decision in Merbank, but we don't put the proposition that the court should first consider the jurisdiction issue and determine that, and if just upholding it in our favour decide no other issue. An expedient course might be to consider all issues in the alternative. If the court pleases. BRANSON J: It has been my understanding of what you said, your client won't move to take any steps to endorse unless and until everyone is placed on notice. That is either there will be a judgment or if your client's do wish to move, they wouldn't move without giving notice to everybody. DR GRIFFITHS: Indeed, your Honour, that's an appropriate gloss perhaps on what I put, yes, your Honour. BRANSON J: All right, it's just that we've taken no formal undertaking but we need to know where you stand. Nothing will happen unless everybody gets plenty of notice first. DR GRIFFITHS: Is put on notice and then if our learned friends wish to move again for relief. MR MARTIN: Could I just inquire what sort of notice is contemplated in that? DR GRIFFITHS: Five working days, your Honour. More time than we had to digest the appeal books in this case, your Honour. MOORE J: Well, if there is nothing further we will reserve judgment and adjourn. There is, however, an immediate problem in proceeding on that basis. The undertaking given to Gyles J was to operate until the hearing of the appeal. It is, of course, inconceivable that at the hearing of the appeal an undertaking was being given which would have by then been spent. It may be accepted that immediately before the question from Graham J there had been a discussion about what should happen until judgment was given. However what was said by Mr Martin did not expressly advert to the period for which the undertaking was given. However, even assuming that what was said at that point in the transcript was intended to be a re-proffering of the undertaking for an extended period, the discussion which followed cast considerable doubt on whether the undertaking was accepted by the other parties. 22 Nor is it apparent that the putative undertaking was accepted by the Court. A superior court of record, such as the Federal Court, possesses the power to accept, or to decline to accept, an undertaking that is being proffered. The issue of a Court's acceptance of undertakings was considered by the High Court in Thomson Australian Holdings Proprietary Limited v The Trade Practices Commission [1981] HCA 48 ; (1980-1981) 148 CLR 150. In that matter the trial judge accepted an undertaking given by one of the parties that went beyond the terms of an injunction that could be made under s 80 of the Trade Practices Act 1974 (Cth). The High Court ultimately determined that the parties could not confer power on the Federal Court to accept an undertaking where the effect of the undertaking was to restrain conduct which the Court has no power to restrain. As in the case of a consent order, there is no reason for thinking that the court should as a matter of discretion refuse to accept an undertaking merely because it will cause damage to a third party who is a defendant, if it involves no infringement of that party's rights, and it is within power, capable of enforcement and in conformity with legal principle. 23 In my view, Branson J's comment "[ b ] ut is that a matter under the control of your client? I thought you told me it wasn't ", which immediately followed Mr Martin's intimation that the undertaking might continue, demonstrates that it would have been apparent, at least in the mind of one member of the Full Court, that there existed real doubt as to whether the undertaking being discussed was capable of being accepted by the Court, given that, on one view at least, it operated on circumstances that were largely out of the appellant's control. This is reinforced by her Honour's further comments " [y]our client's undertaking might be neither here nor there " and " [i]t seems to me that it might be an undertaking with no real substance ". 24 After Mr Martin referred to the undertaking, the focus of the discussion moved quickly from what the appellant might do pending judgment to what the first respondent in the appeal, Airservices Australia, might do pending judgment. It is to be recalled that the regime put in place by Gyles J was an injunction restraining Airservices Australia from endorsing a new ANEF (the injunction operating until 2 November 2007) together with the undertakings of the appellant. By the conclusion of the discussion in the passage quoted above, counsel for Airservices Australia had indicated that it would give notice to the parties if it proposed to take steps to endorse the ANEF. This intimation may, or may not, have been an undertaking. However, irrespective of how the statement might be characterised, it altered materially the structure of the regime determined by Gyles J on 2 October 2007. No longer was Airservices Australia restrained from endorsing a new ANEF, coupled with an undertaking from the appellant not to take further steps to advance the rezoning of Tralee based on the then existing ANEF. Airservices Australia could endorse a new ANEF as long as it gave notice. It is tolerably clear that this arrangement had in contemplation that there might be a further application for injunctive relief pending judgment by the Full Court if Airservices Australia gave the requisite notice. It was in contemplation that if such an application was made, it would raise for consideration what the parties could or could not do pending judgment of the Full Court. However it cannot be said, in my opinion, that a necessary element in that arrangement was that the appellant would take no steps to secure the rezoning of Tralee under the existing ANEF until judgment was given. Indeed, counsel for the second respondent, Canberra International, adverted to the fact that the process of considering the rezoning was continuing. 25 In my opinion, in any contempt proceedings the Court would have to reject the suggestion that, in these circumstances, the appellant gave an undertaking (of a character that, if breached, would found a finding of contempt) in the same terms as noted by Gyles J on 2 October 2007, or modified as to duration, which was accepted by the other parties and the Court. It is for this reason that I think that any contempt proceedings against the appellant are doomed to fail. In the result, a precondition to the making of an order for preliminary discovery has not been met and the application should be dismissed. 26 I conclude by referring to one further matter. There has been ongoing litigation between the parties to this appeal for some time and it can be reasonably assumed that it will continue unrelentingly. For my part, I cannot see what proceedings may be brought by either of them which would resolve, conclusively, the dispute (in the broadest sense) between them. It is more likely that there will be further litigation, which might be characterised as battles, while the war will continue unabated. I raised with the parties the question of whether there should be further mediation (there was unsuccessful mediation some years ago). Neither are opposed to an order for mediation, although in subsequent correspondence to my associate, the parties do not appear to be optimistic that mediation will resolve the underlying dispute between them. However, notwithstanding this lack of optimism, the subject of the broad dispute between the parties (concerning both their immediate commercial interests as well as the wider public interest in both the need for residential land in the area and the need for an airport capable of meeting future demands) is sufficiently important, in my opinion, to order mediation. I propose to do so. 27 The application for preliminary discovery is dismissed. I reserve the question of costs. I will address that matter when the mediation has been concluded. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | allegation of contempt application for preliminary discovery to enable party to determine whether contempt proceedings should be instituted whether the court accepted a party's undertaking whether party resiled from an undertaking given to the court whether undertaking given to court was ambiguous procedure |
The appellant was represented at the hearing before the Federal Magistrates Court but not in this appeal. Before the Federal Magistrates Court the appellant's representative submitted that the Tribunal failed to consider the evidence of a Mr Sharma that the Tribunal had obtained as part of a response to a request by the Tribunal for information from the Department of Foreign Affairs and Trade ( DFAT ). The Federal Magistrate concluded that the Tribunal had considered Mr Sharma's evidence as required and, in consequence, dismissed the appeal ( SZKUS v Minister for Immigration & Anor [2009] FMCA 727 at [9] ). The appellant's notice of appeal challenges the Federal Magistrate's reasoning process in [9] of his Honour's reasons for judgment. While the details of the challenge are not easy to follow it is clear enough that the appellant claims that the Federal Magistrate was in error in finding that the Tribunal "did not ignore the comments made by Mr Sharma". On my review of the available material, this is a real issue requiring detailed examination. He arrived in Australia on 12 November 2006 and applied for a Protection (Class XA) visa on 20 December 2006. The appellant claimed that he was a member of the Indian National Lok Dal ( INLD ) political party. In 2000, the INLD came to power in the district of Haryana. The appellant said that by September 2000 he was the block officer within the party and was involved in organising various activities for politicians within the party and collecting donations on its behalf. When the INLD lost power to the Congress Party in late February to early March 2005 the appellant claimed that he was attacked and beaten by a group of persons, two of whom he recognised a members of the Jai Singh Rana group. The attackers demanded the money he had collected as part of his work collecting donations for the INLD. The appellant said that he informed the police of the incident; however, the police were suspicious of his use of the money and they searched his house and took him into custody where he was beaten by the police. The appellant was later released without charge and went into hiding. These facts, claimed the appellant, gave rise to the appellant having a well-founded fear of persecution if he were to return to India. The Minister's delegate refused to grant the appellant a protection visa on 19 March 2007. The Tribunal affirmed the decision on 12 June 2007. The appellant appealed to the Federal Magistrates Court. On 19 September 2007 the Court made consent orders setting aside the Tribunal's decision and remitting the matter to the Tribunal for determination in accordance with law. By letter dated 2 October 2007 the Tribunal invited the appellant to provide any further information he wished in support of his application for review. It also invited the appellant to appear at the hearing by letter dated 5 October 2007. The hearing took place on 2 November 2007. On 3 December 2007 the appellant submitted a newspaper cutting to the Tribunal. The cutting referred to the appellant as a block member for the INLD who was beaten by members of the ruling Congress Party who demanded that the appellant hand over the donations he collected for the INLD. Further, that the appellant was taken to a police station by the members of the Congress Party where the police also tortured the appellant. On 8 January 2008 the Tribunal contacted DFAT and asked it if it could confirm that: - (i) the newspaper article had been published, and (ii) the reported incident took place. This newspaper is a local Hindi language publication f the state of Haryana. Mr Sharma checked the electronic records of the newspaper for 1 March 2005 that were kept in his office and verified that such an article was published on that day. Mr Sharma read the article over telephone and the details matched the Hindi language record attached to the RRT request. DFAT will advise once it has been received. The former Minister, Mr Om Prakash Chautala of the Indian National Lok Dal party had lost the election during this period and the Congress party had taken over. Mr Sharma stated that [applicant] had been a party worker (Administration Officer) for the Indian National Lok Dal and it was his responsibility to collect contributions for the party. [Applicant] had apparently collected between INR 1,00,000 to INR 2,00,000 from the residents of Nilokheri, Haryana and deposited it into the party account. Mr Sharma stated that after the election results were announced the Congress party had attempted to acquire the money collected by [applicant]. Mr Sharma further stated that apparently [applicant] was not willing to hand over the party funds and was forcibly taken to a local police station where he was beaten in the presence of a local Member of Legislative Assembly (MLA). Mr Sharma stated that he had been advised that [applicant] was not able to hand over any funds at the time, and as a consequence the police had demanded that [applicant] provide INR 2,00,000 within few days to the Local MLA. Since that day, [applicant] whereabouts have been unknown to people in the town. If a case was registered, then the police would be obliged to take action. The parents of [applicant] were also present and they requested Mr Chautala to investigate the matter and verify the whereabouts of their son [applicant]. Mr Gajraj Singh, Assistant Sub Inspector and Mr Ram Mehr, Inspector were requested to verify if such an incident took place in 2005. The police officers stated that no such incident was recorded with the police station and declined to provide or verify any further information. This article referred to the same incident as the first article with a comment by Kanwal Jai Singh Rana, described as the "newly elected consular of Nilokheri area", that the ruling party would "never spare" the appellant. The Tribunal was concerned that DFAT's inquiries might have revealed the appellant's identity to the police. It asked DFAT for details of the inquiries made. The Tribunal also asked DFAT to revisit the question whether the incident took place. To further validate the information in relation to the subject, post checked with the website of "The Tribune" newspaper, a widely published publication in the states of Haryana and Punjab. Post checked the archived news articles on Tribune's website for February and March 2005. No information of such an incident was found, however the articles published during that period did provide detailed information about the political party change over in Haryana. Mr Malik stated that he had been employed with the Hindi language publication of "The Tribune" in Karnal, state of Haryana for the last 20 years. Mr Malik was questioned about whether he had any knowledge of any disputes between the two political parties, INLD and Congress, in 2005 during party change over and where an INLD party worker was forcefully taken to the police station. Mr Malik was not able to recollect any such incidents. Mr Malik further stated that he personally did not report on such incidents nor did he hear about it from his colleagues working for other printed media. Mr Malik commented that "Dainik Sandhya Vyom Kesh Times" is "not a valued newspaper and is not in demand by the residents at all". As per Mr Malik, "The Dainik Sandhya Vyom Kesh Times" is published once in two or three days with the circulation of maximum 300 copies. Mr Sangwan claimed to have been involved with INLD party since 1991. Mr Sangwan was question about the timing of when the Congress party took over in Haryana. Mr Sangwan responded that the Congress party took over in March 2005 although he could not recollect the exact date. Mr Sangwan was then question if he was aware of an incident in 2005 in Karnal, Haryana and nearby districts where one of the INLD party workers was beaten by the Congress party workers and was forcibly taken to the local police station. Mr Sangwan confidently stated that no such incident took place. Mr Sangwan also spoke to other INLD party workers to recollect if such incident took place and finally verified that there was no such incident. The District Public Relations Office is a local state body responsible for control of the mass media in the region. Dr Prakash was questioned whether he had any knowledge of an incident in Karnal, Haryana and nearby districts in Haryana where one of the party members of INLD was beaten by the Congress workers and was forcibly taken to the local police station in 2005. Dr Prakash responded that he was not aware of such an incident. Dr Prakash also verified with some of his staff members about the incident and stated that none of his staff were aware of it. The appellant responded by letter dated 28 February 2008. In his letter the appellant said that the police would not have made a report of the incident because they acted in favour of the ruling party and he was the victim of the police. The Tribunal wrote to the appellant again on 7 April 2008 about DFAT's further response and invited the appellant's comment. In a letter of 28 April 2008, the appellant requested an extension of time to obtain information from overseas. The Tribunal declined this request on 29 April 2008. On 27 May 2008 the Tribunal affirmed the delegate's decision to refuse the appellant a protection visa. In so doing the Tribunal identified the first newspaper article and said the article had been referred to DFAT to confirm whether it was published and the incident alleged in the article occurred. The Tribunal referred to DFAT's response to the two questions (that the article had been published but the Karnal police station had no record of the incident). The Tribunal also identified the second newspaper cutting submitted by the appellant, as well as its communications requesting the appellant to comment on DFAT's first response. Among other things a reporter for a widely published newspaper in the states of Haryana and Punjab advised that he did not report on such incidents or hear about it from his colleagues. He also said that the newspaper that published the applicant's article is a local evening newspaper in Karnal which is "not a valued newspaper and is not in demand by the residents at all". Based on the appellant's oral evidence at the hearing, the Tribunal did not accept that the appellant worked for the INLD. The Tribunal did not accept that the Congress Party would have any interest in the appellant. The Tribunal found unconvincing the appellant's evidence about going into hiding following the attack by the police. The Tribunal was also sceptical of the appellant's evidence about his lost passport and migration agent. Under the heading "Cumulative findings on credibility" the Tribunal said these matters individually would not have led it to make an adverse finding about the appellant's credibility. However, cumulatively, these matters led the Tribunal to conclude that the appellant was not a credible witness and that he was not involved in politics and did not work for the INLD as claimed. The Tribunal's reasons then refer to the heading "Corroborative evidence". While the Tribunal accepts that the newspaper articles appeared in the local Karnal newspaper, the Tribunal does not accept that the articles report on incidents that actually occurred. This is because despite repeated enquiries DFAT was unable to obtain information to verify that the reported incidents occurred. The Tribunal prefers the evidence provided by DFAT than the evidence provided by the applicant and gives greater weight to the view it has formed about the applicant's credibility than the documents that the applicant has provided. The Tribunal found also that the police did not deny the appellant protection or detain or mistreat the appellant. The Tribunal concluded that the appellant did not have a well-founded fear of persecution if he returned to India by reason of his political opinions or activities. Sharma and which is reproduced at SCB 6. It is simply not true that, "... DFAT was unable to obtain information to verify that the reported incidents occurred. " As stated above (paragraph 7), Mr Sharma gave information to DFAT which was corroborative of the applicant's claims, the more so because it went well beyond that in the newspaper article submitted by the applicant. However, if the Tribunal gets such information, the Tribunal must have regard to that information in making the decision on the review. It actually sought to verify them. It was unable to verify them and decided to prefer the evidence provided by DFAT to that provided by the applicant, which would have included Mr Sharma's comments because the Tribunal noted and accepted his direct evidence that the article had been published by his newspaper. It seems to me that the Tribunal merely preferred direct evidence, albeit of a negative, than the hearsay evidence and supposition provided by Mr Sharma. I am satisfied that the Tribunal did give the DFAT report, on the conversations with Mr Sharma, genuine consideration of the type described by Black CJ. The Tribunal is not obliged to make reference to every piece of evidence; Minister for Immigration v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323. I think that if one considers the second articulation of Question A found at [CB 18] it will be reasonably clear that the Tribunal had read what Mr Sharma had said and it was those statements that it wanted to be checked by the methods of consultation therein suggested. The application is dismissed. The Minister submitted that it should be inferred that the Tribunal had regard to the information from Mr Sharma. The Tribunal referred to its request to DFAT for information. Mr Sharma's material was provided as part of DFAT's response to the Tribunal's first question, namely, whether the article was published in the newspaper and not whether the incident occurred. The Tribunal said that it accepted that the article had been published but DFAT had been unable to verify that the incident occurred. This was correct. The Minister submitted that, in referring to its preference for the evidence provided by DFAT to that provided by the appellant, the Tribunal should be understood as considering Mr Sharma's material. Mr Sharma's material was part of the information DFAT provided to the Tribunal and thus, by implication, must have been considered given the Tribunal's reliance on the DFAT information. The fact that the Tribunal did not refer expressly to Mr Sharma's material relevant to the occurrence of the incident is not fatal. It had no obligation to do so. It may be that some evidence is irrelevant to the criteria and some contentions misconceived. Moreover, there is a distinction between the Tribunal failing to advert to evidence which, if accepted, might have led it to make a different finding of fact (cf Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [87] - [97] ) and a failure by the Tribunal to address a contention which, if accepted, might establish that the applicant had a well-founded fear of persecution for a Convention reason. The Tribunal is not a court. It is an administrative body operating in an environment which requires the expeditious determination of a high volume of applications. Each of the applications it decides is, of course, of great importance. Some of its decisions may literally be life and death decisions for the applicant. Nevertheless, it is an administrative body and not a court and its reasons are not to be scrutinised 'with an eye keenly attuned to error'. Nor is it necessarily required to provide reasons of the kind that might be expected of a court of law. But that is an inference not too readily to be drawn where the reasons are otherwise comprehensive and the issue has at least been identified at some point. It may be that it is unnecessary to make a finding on a particular matter because it is subsumed in findings of greater generality or because there is a factual premise upon which a contention rests which has been rejected. Where however there is an issue raised by the evidence advanced on behalf of an applicant and contentions made by the applicant and that issue, if resolved one way, would be dispositive of the Tribunal's review of the delegate's decision, a failure to deal with it in the published reasons may raise a strong inference that it has been overlooked. I have done so mindful of the fact that the appellant bears the onus of proof and of the principle that the "reasons of an administrative decision-maker are meant to inform and [are] not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed" ( Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272). Mr Sharma's material does read as if it is based on information and belief rather than first-hand knowledge of the events in question. I do not consider that fact, however, relieved the Tribunal of its obligation to consider Mr Sharma's material as part of the information it had obtained. The quality of the material, in terms of it being based on first or second-hand knowledge, would be relevant to the weight to be given to it by the Tribunal but not to the Tribunal's obligation to have regard to the material as required by s 424(1). Once the potential second-hand nature of the material is put to one side, it is apparent that the information from Mr Sharma was important to the appellant's claims. In his visa application the appellant claimed that he was a block leader for the INDL and, after the change of government in Haryana, had been attacked by members of the new ruling party in connection with the donations he had collected for the INLD. He said that when he went to the police station the police attacked and threatened him instead of dealing with his complaint because they too were in favour of the ruling party and wanted the donations the appellant had collected. The newspaper article referred to the appellant as having been the victim of the incident he described in his claim because of his membership of the INDL "from the Nilokheri block". The only difference between the appellant's description of the incident and that in the article is that the appellant said he went to the police himself after recovering in hospital. The article said that the appellant was forcibly taken to the police by the members of the ruling party who had attacked him. In his claim the appellant said he met Jai Singh Rana at the police station when he was beaten and threatened by the police. Consistent with the appellant's claim, the article said that the police had tortured the appellant in front of the "local MLA Jai Singh Rana". DFAT ascertained that the article had been published by a local newspaper on 1 March 2005. DFAT spoke to Mr Sharma, the editor of the paper, who then provided the additional material quoted in [7] above. Mr Sharma's additional material also corroborated the appellant's claims. Because this material was corroborative of the appellant's central claim of being a member of the INDL who had been subject to harassment by political opponents and unable to obtain police protection it was relevant to the Tribunal's assessment of the appellant's credibility and the existence of the appellant's claimed fear of persecution. The Tribunal's decision does not expressly refer to any aspect of the information from Mr Sharma relevant to the occurrence of the incident. In its summary of DFAT's first response (which included the information from Mr Sharma) the Tribunal said that the newspaper editor (Mr Sharma) confirmed publication of the article but the police had no record of the incident. The Tribunal, however, made no reference to the fact that, in the information it had requested from DFAT, Mr Sharma did more than confirm publication of the article. Mr Sharma gave detailed information about the events in question which was consistent with the claims made by the appellant in his visa application. The lack of a police record, to which the Tribunal did refer, was also consistent with the appellant's claims and the information provided by Mr Sharma because both referred to the fact that, when the appellant went (or was taken according to Mr Sharma) to the police, the police did not deal with the appellant's complaint but attacked and threatened him in front of the local member for the ruling party. In dealing with the second response from DFAT in answer to its further request for information, the Tribunal said that no information to support the appellant's claims was found. In fact, in its second response, DFAT repeated the information obtained from Mr Sharma and obtained information confirming that Mr Sharma's newspaper was a local evening paper albeit with a small circulation and apparently not well-regarded. In reaching its conclusions the Tribunal accepted publication of the articles on which the appellant relied but did not accept that the incident therein described occurred. It did so on the basis that DFAT had been unable to verify that the incident had occurred and, according to the Tribunal, it preferred DFAT's evidence to that of the appellant. The difficulty is that this reasoning process strongly suggests that, in the Tribunal's mind, DFAT's evidence about whether the incident occurred did not include the information from Mr Sharma. If the Tribunal had treated DFAT's evidence as including that from Mr Sharma then its statement that it preferred DFAT's evidence to that of the appellant makes no sense as Mr Sharma's material supported the appellant's claims. There are other indications consistent with the inference that the Tribunal did not have regard to the information from Mr Sharma relevant to the occurrence of the incident. DFAT provided Mr Sharma's information in that part of its response dealing with the first question of publication of the article and not in the part dealing with the second question whether the incident occurred. The Tribunal mentioned that the editor of the newspaper (Mr Sharma) had confirmed the fact of publication (the first question) but did not refer to any of the other things he said relevant to the occurrence of the incident (the second question). When dealing with that second question, the Tribunal mentioned only the information that DFAT provided in response to that particular question (that is, the lack of any police record). In other words, because DFAT provided all information from Mr Sharma under its response to the Tribunal's first question (whether the article was published) and not under its answer to the second question (whether the incident occurred) the Tribunal appears not to have considered Mr Sharma's information as relevant to the second question. This example of the common human tendency to compartmentalise information is readily understandable given the way in which the Tribunal structured its questions and DFAT provided its answers. The context of the questions and answers thus also supports the inference I have drawn that the Tribunal did not consider Mr Sharma's information insofar it concerned the occurrence of the incident. These considerations also support my divergence from the conclusion that the Federal Magistrate reached. The Federal Magistrate inferred that the Tribunal had considered the information provided by Mr Sharma as to whether the incident occurred because it "sought to verify" that information (at [9]) by its further inquiry to DFAT. In my view, however, the Tribunal did not seek to verify Mr Sharma's information about whether the incident occurred. It sought to verify the information from the police to the effect that there was no police record of the incident. This was the information DFAT provided in response to the Tribunal's second question about whether the incident occurred. Taking all of these matters together I am satisfied that an inference can and should be drawn that the Tribunal failed to have regard to the information from Mr Sharma about the occurrence of the incident described in the newspaper article. Accordingly, I disagree with the conclusion of the Federal Magistrate that the Tribunal should be understood as having sought to verify (and thus must have considered) Mr Sharma's comments. The Tribunal contravened its obligation under s 424(1) of the Migration Act . This is a jurisdictional error. The appeal to be allowed and the decision of the Tribunal to be set aside and I so order. | where tribunal obtains information pursuant to s 424(1) migration act 1958 (cth) obligation to consider information obtained whether tribunal considered information obtained migration |
The relief sought was the preservation of the assets of all the defendants and a restraint on the disposition of any of those assets. The Commission further sought orders against the first and second defendants restraining them from applying for passports or leaving Australia. On 11 and 12 February 2009 I made orders operative for a very short time restraining the defendants from disposing of their assets and restraining the first and second defendants from leaving Australia. On 13 February 2009 I made further orders restraining the defendants from disposing of their assets and restraining the first and second defendants from leaving Australia pending further order. That order contained provisos allowing for the defendants to pay operating and living expenses up to a maximum amount per week. I also allowed for the payment of legal costs for the defendants. Those orders were continued in a modified form on 26 February 2009 and on 12 March 2009 until 4.00pm on 19 March 2009. On 12 February 2009 the Commission filed an amended originating process in which it applied pursuant to ss 459 and 464 of the Corporations Act 2001 (Cth) ("the Corporations Act ") for an order to wind-up the tenth defendant, Elite Wealth Builders Pty Ltd and also applied for the appointment of a provisional liquidator of the tenth defendant. On 26 February 2009 the Commission filed a further amended originating process in which it applied to wind-up each of the third to tenth defendants and also applied for the appointment of a provisional liquidator of the third to tenth defendants. That application was made pursuant to ss 459 and 461 (k) of the Corporations Act . I heard submissions on behalf of the Commission that a provisional liquidator should be appointed to each of the third to tenth defendants and I heard submissions on behalf of the second, seventh and tenth defendants opposing the appointment of a provisional liquidator to the seventh and tenth defendants. I was satisfied on the material placed before me, having regard to the submissions of the Commission, that the grounds for the appointment of a provisional liquidator of the third, fourth, fifth, sixth, eighth and ninth defendants had been made out and that there was a reasonable prospect that a winding-up order would be made at the final hearing on the grounds relied upon by the Commission. Accordingly, I ordered that Simon Wallace-Smith be appointed provisional liquidator of each of those companies. I reserved my decision on the Commission's application to appoint a provisional liquidator of the seventh and tenth defendants and also reserved my decision on whether I should make further restraining orders in relation to the first and second defendants. I have had regard to these principles and authorities in preparing these reasons and reaching my conclusions. The power is a broad one and circumstances will vary greatly. Commercial affairs are infinitely complex and various and it is inappropriate to limit the power by restricting its exercise to fixed categories or classes of circumstances or fact. There was also a considerable body of evidence led by the Commission that there were numerous instances of inter-company transactions and loans involving substantial sums of money which were not documented. As I observed in my earlier reasons for judgment on 13 February 2009 when I put in place a number of restraining orders, all the corporate defendants in this proceeding, at relevant times, were controlled, or had involved in their activities, one or both of the first defendant, Mr Clestus Weerappah, and the second defendant, Ms Andrea Hawkins: Australian Securities and Investments Commissions v Weerappah [2009] FCA 164. I set out in those reasons for judgment a summary of relevant parts of evidence which was given by Ms Hawkins and Mr Weerappah. However, those affidavits, particularly in the light of other evidence relied upon by the Commission, still leave significant doubt and concern in my mind as to the credibility of Ms Hawkins' explanation for a number of those financial transactions, particularly those transactions which have not been documented properly or at all. The background to the commencement of this proceeding by the Commission is set out in my earlier reasons for judgment and I do not repeat that background. It should be read in conjunction with these reasons for judgment. I turn to the defendants in respect of which I have already appointed a provisional liquidator. The third defendant, Bennett Street Developments Pty Ltd was not the subject of any submissions although it was represented by counsel. The third defendant is the trustee of the Bennett Street Property Trust. Evidence led by the Commission discloses that although money was obtained from investors in that Trust, the moneys obtained were not deposited with the third defendant. Mr Andrew Price, a Senior Manager with the Commission, has sworn affidavits in which he sets out a number of matters which raise serious issues as to that the third defendant and Mr Weerappah may have misled investors in the Bennett Street Property Trust, that they failed to deal properly with the funds of unit holders in the Bennett Street Property Trust and that they may have misappropriated those funds. There is also material which demonstrates that the third defendant has failed to maintain properly or at all, appropriate financial and banking records. In those circumstances, I considered it necessary and appropriate that a provisional liquidator be appointed of the third defendant for the purpose of enabling an independent person to investigate its activities and records and also to ensure that no further funds of it are dissipated. The fourth defendant, Altitude Property No 1 Pty Ltd (Controller Appointed) did not oppose the appointment of a provisional liquidator. It is the trustee of the Bennett Street Unit Trust which it appears has raised money from the public. There is evidence that Westpac Banking Corporation has recently appointed itself as Controller of the fourth defendant pursuant to a mortgage over a property at 25 Bennett Street, Balwyn. On 2 February 2009 a director of the fourth defendant, Mr Stephen Lewis, sent an email to Mr Weerappah in which he said that there was no funding available to make payments due to Westpac Banking Corporation under the mortgage to it and that the property had to be sold. It would appear that the fourth defendant is insolvent and having regard to the manner in which it received funds from Bennett Street Property Developments Pty Ltd, it is desirable that a provisional liquidator be appointed to it to ensure that its affairs may be properly investigated. The fifth defendant, My Building No 1 Pty Ltd, was represented by counsel who announced that it had no opposition to the Commission's application. It is the registered proprietor of the property situated at 81 Lorimer Street, Port Melbourne. There is evidence that the mortgagee of the property either has repossessed, or is about to repossess, the property on the basis that there is default under the mortgage. There is therefore evidence that the fifth defendant is likely to be insolvent and also that its affairs have not been conducted in a proper manner. For example, on 16 January 2004 Mr Dale Robertson signed an ASIC form lodging a charge granted by the fifth defendant in favour of Dollarforce Financial Services Pty Ltd. Mr Robertson was not a director of the fifth defendant on that date. There is also considerable doubt about a Deed of Release dated 20 November 2003 between Alamanda Property Investments No 2 Pty Ltd (of which Mr Weerappah was the sole director) and the fifth defendant (of which Mr Weerappah was the sole director) whereby Alamanda Property Investments No 2 Pty Ltd forgave a debt owed to it by the fifth defendant of $2,479,235.12. There are a number of problems about this release. Mr Lewis, a director of Altitude Property Limited, said in the course of an examination under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") that the release occurred around 2006. Mr Price's searches of the Commission's records disclose that there was no company named Alamanda Property Investments No 2 Pty Ltd on 20 November 2003 and that that company only came into existence on 15 January 2004. There is also an issue about an event when the fifth defendant drew $1.4 million from a loan secured against the property at 81 Lorimer Street, Port Melbourne to pay Alamanda Property No 2 Pty Ltd in circumstances where it does not appear that that company is entitled to that payment. For all these reasons I considered it desirable and necessary that a provisional liquidator be appointed of the fifth defendant in order that its affairs may be properly investigated by an independent person. The sixth defendant, Altitude Property Limited, did not object to the appointment of a provisional liquidator. The Commission has led a considerable body of evidence which discloses a number of serious issues about the conduct of the affairs of the sixth defendant. It is a public company. It issued a prospectus to the public to subscribe for shares in it on 6 October 2006 which appears to have contained misleading information in relation to the purchase of all the outstanding units in the Darling Street Unit Trust which was on offer. The prospectus stated that that cost would be $1.8 million but it did not disclose that the sixth defendant had already agreed to pay further consideration to Alamanda Property Investments No 2 Pty Ltd. Mr Weerappah, in the course of cross-examination on 11 February 2009, agreed that the sixth defendant agreed to pay Alamanda Property Investments No 2 Pty Ltd incentive payments if the value of the property purchased from it increased and that there was no maximum amount of such incentive payments. Mr Weerappah agreed that there was no reference to the incentive payment agreement in the prospectus which he had signed. He said that he believed that all the material was given to the solicitors but he was "very shocked" if the matter of the incentive payments was omitted. According to evidence led by the Commission the last incentive payment of approximately $1.4 million was paid by the sixth defendant in or about July 2008. It appears that that payment was obtained from the drawdown of a loan facility the sixth defendant had with Australian Securities Limited. Two of the three directors of the sixth defendant have given evidence in s 19 of the ASIC Act examinations that they did not authorise or agree to the payment of $1.4 million. It will be recalled that all the shares in My Building No 1 Pty Ltd are owned by the sixth defendant and that My Building No 1 Pty Ltd acts as the trustee of the Darling Street Unit Trust, all of the units of which are owned by the sixth defendant. In the events which occurred the Commission has also led evidence that the books, records and financial accounts of the sixth defendant have a number of inconsistent entries in them which require further investigation. The Commission has obtained a document which appears to be a minute of a meeting of the sixth defendant's directors on 25 November 2008 in which two of the directors express their "grief and disappointment" that Mr Weerappah had not made them aware that entities owned and controlled by the sixth defendant were entering into arrangements without their consent or agreement. In a s 19 of the ASIC Act examination Mr Weerappah denied attending that meeting. I was therefore satisfied that it was appropriate and necessary to appoint a provisional liquidator of the sixth defendant in order that an independent person could properly investigate its affairs both in relation to financial and property matters. I consider the eighth defendant, Lewmac Investments Pty Ltd ("Lewmac"), and the ninth defendant, Ivory Property Group Pty Ltd, together. The necessity for the appointment of a provisional liquidator of each of these defendants arises out of an apparent transaction entered into on 26 September 2006. The ninth defendant is a trustee company and acts as trustee of the Ivory Property Trust. Members of the public subscribed for units in this Trust. According to Mr Weerappah, the ninth defendant entered into a contract to purchase the property at 107 Riversdale Road, Hawthorn from the eighth defendant on 26 September 2006. The purchase has not been completed and, curiously, caveats were not lodged in respect of the purchase until 28 January 2009, which is more than two years and four months after the agreement was said to have been entered into. The caveats claim an interest on behalf of the ninth defendant pursuant to an agreement dated 26 September 2006. The Commission has obtained a copy of that agreement which does not have any operative provisions. It purports to have been made between the eighth defendant as vendor and the ninth defendant as purchaser. It contains recitals which refer to four other or separate contracts of sale dated 5 July 2006 but after the words "NOW THIS AGREEMENT WITNESSETH" there is no further text. The Commission has also led evidence in relation to another purchase by the ninth defendant of a property from Dollarforce Financial Services Pty Ltd. That purchase remains uncompleted. A caveat was only lodged in relation to it on 28 January 2009 and, again, there is an agreement between Dollarforce Financial Services Pty Ltd and the ninth defendant which contains no operative provisions. Mr Price has produced financial accounts of the ninth defendant which disclose as a current asset, a receivable of $1,538,922 being an unsecured loan to Dollarforce Financial Services Pty Ltd. The Commission contends that this loan was a serious breach of trust by the ninth defendant. Having regard in particular to the property transactions to which I have referred, I considered that it was appropriate and necessary that a provisional liquidator be appointed to each of the eighth and ninth defendants to enable an independent person to investigate the affairs and transactions of each of those companies and if necessary, take preventative steps to protect and preserve any further interests they may have. I turn to the relief sought against the second, seventh and tenth defendants by the Commission. For the reasons to which I shall refer I am satisfied that both those purposes are made out in relation to the seventh and tenth defendants and that there is a reasonable prospect that a winding-up order will be made in relation to the seventh and tenth defendants at the final hearing on the basis that it is just and equitable to do so and that Elite Wealth Builders Pty Ltd may well be insolvent and particularly if a number of the transactions to which I refer are impugned. The Commission also seeks the continuation of restraining orders against the second defendant, Ms Hawkins, in relation to disposal of assets and applying for a passport or leaving Australia. The Commission seeks the appointment of a provisional liquidator of the seventh defendant and the tenth defendant on the grounds, generally, that they have received funds to which they are not entitled, which funds have arguably been obtained from funds subscribed by investors in various of the entities, trust companies and projects under the previous control of Mr Weerappah or Ms Hawkins and that they have entered into transactions whereby they have received monies to which they are not entitled. The relevant amounts or transactions are as follows. The seventh defendant ("Retail Treasury") received $330,000 from Twentieth Green Pty Ltd to which it was not entitled. A Purchase Agreement dated 1 May 2008 has been produced upon which Ms Hawkins and Elite Builders rely but the Commission contends that such document has been backdated and is ineffective. Ms Hawkins has filed affidavits in which she explains how each of these transactions, and the receipt of such funds, arose and contends that Elite Wealth Builders, as well as herself, was entitled to receive those funds and that none of them fall into the category of either funds which belong to, or can be traced as belonging to, or being subscribed by, investors in other companies, trusts or entities. Elite Wealth Builders and Ms Hawkins acknowledge that the amounts referred to by the Commission have in fact been received by them but say that they are entitled to retain those amounts which were not received by them improperly. A significant asset now possessed by Elite Wealth Builders is the right to receive trailing commissions to which Dollarforce Financial Services Pty Ltd had been entitled in the past. The Commission has been conducting an investigation in relation to the activities of the defendants and, in particular, that Dollarforce Financial Services Pty Ltd may have operated an unregistered managed investment scheme. According to the Commission, a number of investors invested money with Dollarforce Financial Services Pty Ltd in circumstances where their funds appear to have been dissipated. As a result of Mr Price's investigations, he believes that Dollarforce Financial Services Pty Ltd and its related companies raised about $20 million from about 200 investors without complying with relevant provisions of the Corporations Act . Dollarforce Financial Services Pty Ltd was placed into liquidation pursuant to a creditor's voluntary winding-up on 16 December 2008. It appears that Dollarforce Financial Services Pty Ltd has substantial liabilities. Ms Hawkins has given evidence that on 1 May 2008 Elite Wealth Builders purchased from Dollarforce Financial Services Pty Ltd its loan book, that is to say its customer list and the rights to the trailing commissions to which Dollarforce Financial Services Pty Ltd had previously been entitled. Ms Hawkins relies upon a Contract of Sale which is dated 1 May 2008. That Contract of Sale provided for a purchase price of $150,000 payable by a deposit of $1,000 on the signing of the contract and the balance to be paid over the ensuing nine months but not to exceed 31 March 2009. Mr Price has been unable to identify from Elite Wealth Builders' bank account records at Westpac Banking Corporation covering the period 14 May 2008 to 14 January 2009 any payments from Elite Wealth Builders to Dollarforce Financial Services Pty Ltd recording the payment of monies payable under the contract. Ms Hawkins has given evidence that $1,000 was paid on the signing of the contract but there is no documentary evidence in support of that statement. Ms Hawkins has produced a "Quickbooks extract" which records a number of financial transactions said to have been carried out by Elite Wealth Builders. There is no evidence which verifies the manner in which that Quickbooks extract has been prepared. The Quickbooks extract purports to evidence, or identify money apparently paid to or on behalf of Dollarforce Financial Services Pty Ltd. Ms Hawkins says that it shows that since 1 May 2008 Elite Wealth Builders paid $140,822.93 to Dollarforce Financial Services Pty Ltd "by way of paying DFS staff, rent, invoices, credit card payments and other expenses over a period of time". Ms Hawkins says that the payments detailed in the Quickbooks extract are corroborated by entries in Westpac Banking Corporation account statements of Elite Wealth Builders which have been produced by Mr Price. However, the bank statements do not corroborate that a number of the payments were either made for or on behalf of Dollarforce Financial Services Pty Ltd or, more importantly, that any of them are referable to payments made under the Contract of Sale. The Commission now contends that the Contract of Sale was not in fact entered into or dated on 1 May 2008 but was rather backdated to that date around 11 December 2008. As a liquidator of Dollarforce Financial Services Pty Ltd was appointed on 16 December 2008, if the Contract of Sale was only executed within a few days before that date, the backdating will have a significant effect on claims the liquidator may have in relation to the assets of Dollarforce Financial Services Pty Ltd. Mr Price has given evidence that in the course of his investigation he used forensic software to analyse documents relating to Elite Wealth Builders. The use of this software generated reports in relation to documents stored on a hard drive. Mr Price produced a report relating to an email sent on 11 December 2008 from "Clestus Weerappah" to "Ms Liz Clegg". The Commission submitted that I should infer that the Contract of Sale dated 1 May 2008 was not in fact signed and executed on that date but was rather created on 11 December 2008 and falsely backdated. An examination of the contract attached to the email of 11 December 2008 shows that there are differences between it and the Contact of Sale dated 1 May 2008 upon which Ms Hawkins relies. This comparison of the two documents suggests to me that there is a strong inference that the Contract of Sale dated 1 May 2008 was not in fact dated on that date but that the contract was only finally prepared and engrossed and signed on or shortly after 11 December 2008. Counsel for Ms Hawkins drew my attention to the fact that in the forensic software report relating to the email of 11 December 2008 and its attachment there is stated opposite the words "last printed" the words "Monday, 27 October 2008 3:15:00 PM EST". Counsel submitted that this entry demonstrated that the contract attached to the email of 11 December 2008 could not have been printed for the first time on that date but had certainly come into existence earlier, for example, on or before 27 October 2008. Counsel for the Commission was unable to explain that entry in relation to the date 27 October 2008. Counsel for Ms Hawkins submitted that the forensic software report was unreliable and could not provide an accurate report as to the date of creation of the Contract of Sale as it could not both be created in December 2008 and last printed in October 2008. I am not able to make a final determination as to whether the document upon which Ms Hawkins relies dated 1 May 2008 is genuine or has been backdated or is capable of being set aside by the liquidator of Dollarforce Financial Services Pty Ltd or as to what the reference to 27 October 2008 on the forensic software report means. One explanation for that date may be that the document attached to the 11 December 2008 email was last saved on that date but had earlier been printed on the last previous occasion on 27 October 2008. Even if I assume that the document had been printed on 27 October 2008 so that it did not come into existence for the first time on 11 December 2008, that still leaves open the inference that the Contract of Sale dated 1 May 2008 was in fact backdated because there was a draft of it in existence, not yet signed and indeed, not finalised as to its text or terms on 27 October 2008. Nevertheless, I consider that in all the circumstances there is a very strong inference that the Contract of Sale dated 1 May 2008 was backdated and only signed and executed within five days or so of a liquidator of Dollarforce Financial Services Pty Ltd being appointed. Certainly the inference I can draw from the email of 11 December 2008 is that Mr Weerappah was asking Ms Clegg to look at the draft contract and to consider whether it was alright for it to be executed. Counsel for Ms Hawkins submitted that there was nothing in relation to the documentation to support the proposition that whatever Ms Clegg was being asked to cast her eye over had anything to do with the contract dated 1 May 2008 as opposed to the draft document being used as "a template for something else". I do not consider that the terms of the email of 11 December 2008 are suggesting that the document be used for a template for anything other than the contract for the sale of the business referred to in it. Counsel for Ms Hawkins submitted that there was another inference which was equally open, given the content of the email, which was that the document was being "bandied around for any number of purposes". But no particular purpose was advanced by counsel. Counsel for Ms Hawkins submitted that there was evidence that Ms Hawkins or Elite Wealth Builders had made payments to Dollarforce Financial Services Pty Ltd after 1 May 2008 of the order of $143,000 and he posed the question --- why would someone be paying that money pursuant to a contact that had not been executed? There is a short answer to that question which is that the payments upon which Ms Hawkins relies are not identified in the Quickbooks extract as payments made pursuant to, or by reference to, the Contract of Sale dated 1 May 2008. Those payments consist of a considerable number of payments relating to Dollarforce Financial Services Pty Ltd. But they are not stated to be referable to, or payments in relation to, the contract dated 1 May 2008. I have already referred, in par [31] of my earlier reasons for judgment, to Ms Hawkins' inability to distinguish which company in the group of companies with which she was involved, is entitled to receive, or obliged to pay moneys, or discharge liabilities of other companies in the group. I am not satisfied that the amount of $140,822.93 shown in the Quickbooks extract upon which Ms Hawkins relies relates to moneys which at the time they were disbursed by Elite Wealth Builders were in reduction of, or were intended to be in reduction of, any amount payable as the purchase price under a contract of sale for the purchase of a business from Dollarforce Financial Services Pty Ltd. If those payments were so intended by Ms Hawkins or Elite Wealth Builders, why would the Quickbooks extract show a payment of $15,729.90 on 21 August 2008 in relation to Dollarforce Financial Services Pty Ltd recorded as "Loan Dollarforce (to cover wages)"? Why would the extract show a payment of $824.25 on 25 August 2008 recorded as "Loan Dollarforce --- Telemarketing"? I make similar observations in relation to the amounts of $6,087.15 on 16 October 2008 recorded as "Loan Dollarforce --- Payment of DFS wages", $2,202.00 on 20 October 2008 recorded as "Loan --- DFS Sam Pays" and $271.04 on 1 December 2008 recorded as "Loan DFS - Corp Executive Office CEO". The description of these payments as "Loans to Dollarforce" is quite inconsistent with Ms Hawkins' proposition that the component amounts of the $140,822.93 were in fact, or were intended to be, payments in reduction of an amount owing to Dollarforce Financial Services Pty Ltd by Elite Wealth Builders under the contract of sale of Dollarforce Financial Services Pty Ltd's business. The issues relating to the Contract of Sale are such that the benefits and the receipt of trailing commissions to which Elite Wealth Builders claims to be entitled, and which will continue to be paid should be under the control of an independent person until the Commission concludes its investigation and its application to wind-up Elite Wealth Builders is determined. It is important that those benefits and commissions not be dissipated and that they should be preserved and controlled by an independent person, someone other than Ms Hawkins whose track record in relation to the management of companies and the manner in which they enter into, and record, significant financial transactions is less than satisfactory. For that reason alone it is appropriate and necessary, consistently with the principles and authorities to which I have referred, to appoint a provisional liquidator of Elite Wealth Builders. I appreciate that such an appointment is a drastic step and that it will be a most significant intrusion into Elite Wealth Builders' commercial affairs. Nevertheless, I have weighed those considerations with the nature and consequences of the financial transactions to which I have referred in these reasons, with which Ms Hawkins has been involved. I am satisfied that the public interest and the necessity to protect the interests of investors in the companies controlled by Mr Weerappah and Ms Hawkins requires that control of Elite Wealth Builders be taken out of the hands of Ms Hawkins and placed in the hands of an independent person. According to Mr Price's investigations Elite Wealth Builders received the sum of $267,000 from My Building No 1 Pty Ltd, the fifth defendant, between 18 July 2008 and 28 August 2008. Ms Hawkins said that according to Elite Wealth Builders' Quickbooks books of account the amount received was $263,188.58. For present purposes, the difference between the two amounts is of no consequence. Ms Hawkins contends that she lent $200,000 to My Building No 1 Pty Ltd on 28 March 2006. She also contends that the amount of $263,188.58 was repayment of that loan together with interest. As with many of the transactions under consideration in this proceeding these financial transactions are not documented or corroborated in any way. There is evidence that $200,000 was deposited into the account of My Building No 1 Pty Ltd with Westpac Banking Corporation on 28 March 2006 but there is no documentation which records the source of that deposit. The Quickbooks extract relied upon by Ms Hawkins is dated 15 February 2009. Ms Hawkins has not produced any record of the initial making of the loan of $200,000 or of the terms of the loan. There is therefore considerable doubt as to whether Elite Wealth Builders is entitled to retain this amount. I therefore consider that this is another transaction which needs to be investigated by an independent person to determine whether the amount of $263,188.58 is the subject of a claim by My Building No 1 Pty Ltd. The desirability of preserving the assets of Elite Wealth Builders to ensure that they are not dissipated if such a claim is made is another reason to appoint a provisional liquidator of Elite Wealth Builders. Elite Wealth Builders received amounts totalling $115,000 from Lewmac on 12 and 17 June 2008, 10 July 2008 and 4 September 2008. Ms Hawkins contends that the amounts totalling $115,000 were received by Elite Wealth Builders in part satisfaction of an amount due in respect of a debt due by it to Mr Weerappah who assigned the debt to Ms Hawkins. This financial transaction, again not corroborated or documented in any way is said by Ms Hawkins to arise out of the development of a property at 107 Riversdale Road, Hawthorn by Lewmac. According to Ms Hawkins the following events occurred. Lewmac was using BuildRite Developments Pty Ltd ("BuildRite") to develop a property. BuildRite became financially unstable and Mr Weerappah borrowed $1 million of which he directed that the lender disburse $600,000 directly to BuildRite. Mr Weerappah made that payment on behalf of Lewmac in order to ensure that BuildRite completed the construction of the property at 107 Riversdale Road, Hawthorn. At this point a debt of $600,000 was owed to Mr Weerappah by Lewmac. Mr Weerappah assigned this debt to Ms Hawkins and she instructed Lewmac to pay the money to Elite Wealth Builders. No documentation has been produced by Mr Weerappah or Ms Hawkins in relation to the terms of the payment of the $600,000 or the assignment of the debt or the instruction to pay the money to Elite Wealth Builders. Mr Weerappah said that BuildRite approached him as a director of Lewmac and indicated it had underquoted on the contract for the construction of the property at 107 Riversdale Road, Hawthorn and that it would be unable to complete the development without an increase in the contract price. Mr Weerappah agreed to increase the amount payable to BuildRite by $600,000. No documentation was produced by Mr Weerappah in relation to this transaction. Ms Hawkins' explanation and Mr Weerappah's explanation for the payment by Lewmac to BuildRite is contradicted by Mr Robert Walpole, a Director of BuildRite, now in liquidation. According to Mr Walpole, in 2006 Mr Weerappah expressed an interest in investing in BuildRite and Legal Entity Developments Pty Ltd, another development company of which Mr Walpole and Mr David Hanna were directors. Mr Walpole and Mr Hanna discussed with Mr Weerappah an investment of $1.2 million. As a result of those discussions documentation was prepared to document the investment. The initial agreement was that Mr Weerappah's interests would purchase a one third interest in Mr Walpole's companies and business for $1.2 million. Mr Weerappah transferred $600,000 to BuildRite. Mr Walpole disputes what Mr Weerappah says was the reason for the payment of the $600,000. He says that the $600,000 was part payment of the $1.2 million that Mr Weerappah had agreed to pay for a 25% share in BuildRite and a 33% share in Legal Entity Developments Pty Ltd. (The amount of the interests agreed to be purchased apparently changed. ) In April 2007 BuildRite received a further $200,000 from Mr Weerappah. BuildRite received a total of $2,261,513 from Lewmac in relation to the construction of the development. Nevertheless, there is a strong case made out, based on Mr Walpole's evidence and the email dated 22 January 2007 that the $115,000 Elite Wealth Builders received from Lewmac is recoverable by it from Elite Wealth Builders. There is also considerable doubt that there was any proper or effective assignment by Mr Weerappah to Ms Hawkins in respect of what he says is a debt due to him by Lewmac, if in fact that debt existed. Ms Hawkins produced a Quickbooks account extract for Lewmac as at 24 February 2009 which she says records that Lewmac owes her $635,979.41 which she contends is the outstanding part of the $600,000 paid by Mr Weerappah to BuildRite plus interest. Ms Kohary, a Financial Investigator in the financial accounting practice of the Commission, who has sworn affidavits in which she analyses records of the defendants obtained by the Commission, has examined the books and records of Lewmac including its general ledgers as at 30 June 2007, 30 June 2008 and 31 December 2008. Ms Kohary says there is no loan account in the general ledgers for Ms Hawkins, that is to say, there is no debt recorded in the general ledgers as being owed to Lewmac by Ms Hawkins. The characteristics of this transaction are such that it provides a further reason why a provisional liquidator should be appointed to Elite Wealth Builders in order to ensure that an independent person can investigate this and the other transactions and ensure that the assets and funds presently held by Elite Wealth Builders are not dissipated whilst this investigation is undertaken. I turn to the submission of the Commission that Retail Treasury, the seventh defendant, received $330,000 from Twentieth Green Pty Ltd to which it was not entitled. Retail Treasury was previously owned by Dollarforce Financial Services Pty Ltd and controlled by Mr Weerappah as its sole director. It appears that Retail Treasury owns units in the Twentieth Green Unit Trust and the Rose Anna Unit Trust which have valuable assets. Mr Ross Booth was engaged by Mr Weerappah in or about August 2008 and companies controlled by him to reconcile and put in order the financial accounts of the various entities which Mr Weerappah controlled. Mr Booth said that during one of his meetings with Mr Weerappah on or about 2 and 3 September 2008, Mr Weerappah told him that Retail Treasury was due to receive $1.2 million in the current financial year. The evidence is inconsistent as to the circumstances in which Ms Hawkins acquired the shares in, and control of, Retail Treasury. In the course of a s 19 of the ASIC Act examination on 6 February 2009, Ms Hawkins said that she did not buy the company but took it over from Mr Weerappah because he no longer wanted, or needed, the company and she did. In the course of Mr Weerappah's s 19 of the ASIC Act examination on 6 February 2009, Mr Weerappah said that he had no need for Retail Treasury from a few years ago and that Ms Hawkins was after an entity and "we transferred it across at the time". Mr Weerappah said that he did not believe that there was any consideration paid by Ms Hawkins for Retail Treasury. Ms Hawkins, in an affidavit sworn on 24 February 2009, said that when she said in the s 19 of the ASIC Act examination that she did not purchase Retail Treasury, she was referring to the period of time, that is, 2006. Even if I accept this explanation for her answer in the examination on 6 February 2009, it still remains that she said that she took over Retail Treasury from Mr Weerappah without saying that she paid for it. In her affidavit sworn on 24 February 2009, Ms Hawkins responded to a number of the issues and evidence raised by the Commission. In relation to her purchase of Retail Treasury she said the following. Mr Weerappah borrowed $1 million from Traditional Values Management Limited (pursuant to a Loan Facility Agreement dated 25 January 2007). Mr Weerappah used $600,000 of that loan to pay a debt owed to BuildRite by Lewmac (this characterisation of the payment is contested by the Commission) and agreed to lend Ms Hawkins the remaining $400,000 so that she could purchase Retail Treasury from Dollarforce Financial Services Pty Ltd. On 25 January 2007, $375,000 was deposited into Dollarforce Financial Services Pty Ltd's bank account. At the time Mr Weerappah and Ms Hawkins agreed that he would lend her $400,000, she had expressed an interest in purchasing all the shares in Retail Treasury from Dollarforce Financial Services Pty Ltd. She believed the value of those shares to be between $300,000 and $400,000. Eventually they settled on a figure of $330,000 for the purchase of all the issued shares in Retail Treasury from Dollarforce Financial Services Pty Ltd. Ms Hawkins then said "the purchase price of $330,000 had already been (more than) deposited into the account of DFS by way of the $375,000 obtained from TVM". None of these financial transactions referred to, and relied upon, by Ms Hawkins are documented in any way. In relevant material respects Ms Hawkins' evidence is not corroborated and, indeed, is inconsistent in relation to her purchase of the shares in Retail Treasury. Her evidence in the s 19 of the ASIC Act examination (and also Mr Weerappah's evidence in the s 19 of the ASIC Act examination) is quite inconsistent with her paying $330,000 for the purchase of the shares in Retail Treasury. At this point of time I am not prepared to accept Ms Hawkins' uncorroborated and undocumented evidence in relation to the financial transactions she relies upon in relation to the purchase of the shares in Retail Treasury. Again, I refer to her inability to identify the manner in which particular payments have been made to, for or on behalf of, or by various companies in the group of defendants with which she was involved with Mr Weerappah. There is therefore a significant issue to be determined, namely whether Ms Hawkins is entitled to be the owner of the shares in Retail Treasury and the identity of the person entitled to the benefit of the assets held by it in the two trusts. In these circumstances, I consider that it is appropriate and necessary that an independent person be appointed to investigate this issue and that steps be taken to ensure that the assets of Retail Treasury are not dissipated. Accordingly, I consider it appropriate to appoint a provisional liquidator of Retail Treasury. There is a further issue which, in my view, warrants the appointment of a provisional liquidator to Retail Treasury. Retail Treasury has no bank account and it is therefore, not easy to identify financial transactions which involve moneys coming to and being paid by it. According to the records analysed by Ms Kohary, units in the Twentieth Green Unit Trust and the Rose Anna Unit Trust were purchased by Retail Treasury not from money that came from it but rather from other companies in the Dollarforce group. Ms Kohary has identified that $94,500 for that purchase came from Ivory Property Group Pty Ltd, the ninth defendant. As that company was a trustee company it was not open to it to use its funds in this way. I should also point out that even if Ms Hawkins did pay Dollarforce Financial Services Pty Ltd $330,000 to acquire the shares in Retail Treasury and accordingly acquire the benefits of the two unit trusts held by that company, the commerciality and justification for the amount of that payment is in question. The relationship between Mr Weerappah and Ms Hawkins was such that the transaction was not an arms length transaction. The consideration of $330,000 appears to be totally inadequate. For example, in April 2008 amounts totalling $330,000 were deposited into the Dollarforce Financial Services Pty Ltd's bank account and in January 2009, amounts totalling $360,000 were deposited into Elite Wealth Builders' bank account. The consequence is that the liquidator of Dollarforce Financial Services Pty Ltd may be able to set aside that transaction on the basis that Mr Weerappah entered into that transaction as a director of Dollarforce Financial Services Pty Ltd in breach of his duty to Dollarforce Financial Services Pty Ltd and that Ms Hawkins was privy to and part of that breach of duty. I am satisfied that it is necessary that an independent person be appointed to investigate these transactions involving Retail Treasury and the unit trusts it owns and the payments paid to Elite Wealth Builders to determine whether there has been misappropriation of funds which should properly belong to Dollarforce Financial Services Pty Ltd or other companies or persons. I am also satisfied that a provisional liquidator should be appointed to Retail Treasury to ensure that its assets are not dissipated. The manner in which Ms Hawkins has been involved in the earlier financial transactions of Dollarforce Financial Services Pty Ltd and the other defendants and her explanations for those financial transactions which have not been documented properly or at all, lead me to the conclusion that she should not continue to be in control of Retail Treasury whilst its affairs are being investigated by the Commission and whilst there are live issues as to whether it is in possession or control of funds and assets which properly belong to other persons or which can be traced as belonging to other persons. There are also significant doubts as to whether Ms Hawkins was entitled to receive $62,000 from Dollarforce Financial Services Pty Ltd and $10,000 from Altitude Property No 1 Pty Ltd. There is also significant doubt as to whether Elite Wealth Builders was entitled to receive $33,000 from Alamanda Pty Ltd and $32,000 and $35,000 from Elite Equities Pty Ltd. Ms Hawkins says that Alamanda Pty Ltd entered into a contract with Elite Wealth Builders to provide various services to it including accounting and administration for a number of companies. Ms Hawkins says that the payment of $33,000 relates to an invoice for those services being rendered to Alamanda Pty Ltd. No invoice or document relating to that contract was produced. Ms Hawkins did produce a Quickbooks extract purporting to show the amounts owing by Alamanda Pty Ltd to Elite Wealth Builders. The amount of $30,000 is recorded as "Start up capital" and the amount of $3,000 is recorded as "Loan --- Alama". Ms Hawkins says that Elite Equities Pty Ltd entered into a contract with Elite Wealth Builders to provide various services for it. Ms Hawkins says that the payment of $32,000 relates to an invoice for those services being rendered to Elite Equities Pty Ltd. No invoice or document relating to that contract was produced. Ms Hawkins produced a Quickbooks extract purporting to show the amounts owing by Elite Equities Pty Ltd to Elite Wealth Builders. The amount of $20,000 is recorded as "Transfer of F..." and the amount of $12,000 is recorded as "Transfer of F..." It is not necessary, having regard to the findings I have made in relation to the other transactions to analyse these transactions further, other than to say they support the proposition that a provisional liquidator should be appointed to Elite Wealth Builders pending further investigation of the transactions involving Mr Weerappah, Ms Hawkins and Elite Wealth Builders. I therefore propose to make orders appointing a provisional liquidator of Elite Wealth Builders and Retail Treasury and orders restraining Ms Hawkins and Mr Weerappah from applying for passports or leaving the country. I will hear from the parties as to whether I should make any further and, if so, what orders restraining Mr Weerappah and Ms Hawkins from disposing of their assets. I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | application to appoint provisional liquidator discretionary considerations for appointment of provisional liquidator. corporations |
The application was made on 28 February 2006. In addition to the winding up order, the Deputy Commissioner seeks an order that Mr Hugh Sutcliffe Martin, an official liquidator, be appointed as liquidator of the company and an order that the company pay the Deputy Commissioner's costs on a party and party basis. The application is supported by an affidavit. The basis of the application is the alleged insolvency of the company and the allegation of insolvency is grounded on the failure by the company to comply with a statutory demand: s 459C of the Corporations Act . 2 The application was listed for hearing before a Registrar of the Court on 29 March 2006 at 9.30 am. 3 Mr Martin was appointed the administrator of the company under Pt 5.3A of the Corporations Act by the directors on 7 March 2006. On 29 March 2006 at 9.00 am, Mr Martin convened a meeting of the creditors of the company. Two creditors attended, one of whom was the Deputy Commissioner. The creditors resolved that the company be wound up under s 439C of the Corporations Act and Mr Martin thereby became the liquidator of the company. 4 The Deputy Commissioner appeared before the Registrar on 29 March 2006 at 9.30 am and she maintained her application for an order winding up the company in insolvency. The application was adjourned to 12 April 2006 so that it could be advertised and other documents filed. It was adjourned on 12 April 2006 to 19 April 2006 because of a query about the due and proper service of the liquidator's consent. 5 The application came before the Registrar on 19 April 2006. The Deputy Commissioner indicated that in addition to the orders set out in the application, she was seeking an order under s 482 of the Corporations Act that the creditors' voluntary winding up be terminated. Pursuant to s 35A of the Federal Court of Australia Act 1976 (Cth) and r 16 and Schedule 2 of the Federal Court (Corporations) Rules 2000 , a Registrar may exercise certain powers in the Corporations Act , but the power in s 482 is not one of them. 6 The Registrar considered that she did not have the power to make an order under s 482 and so she referred the application to a Judge of this Court. 7 The application came before me on 28 April 2006 and, on the application of the Deputy Commissioner for a short adjournment, again on 1 May 2006. By this time the Deputy Commissioner had put forward a further argument and that was that there was no need for an order terminating the voluntary winding up and that I could simply make an order winding up the company in insolvency. 8 The advertising and other requirements of the Corporations Act have been complied with and the liquidator consents to an order that the company be wound up in insolvency. He consents to acting as the liquidator under the proposed orders. The Australian Securities and Investment Commission is aware of the application and has not sought to make submissions. 9 Two questions arise. Should an order be made winding up the company in insolvency, having regard to the fact that the company is already in voluntary liquidation? If the answer to the first question is yes, is it necessary to first make an order terminating the voluntary winding up? 10 Because of the importance of the second question to the Registrar's jurisdiction to make the orders sought in this and similar cases, I propose to deal with the second question first. 11 The Deputy Commissioner's application is made under s 459P of the Corporations Act and she seeks an order under s 459A that the company be wound up in insolvency. Under s 467B , the company may make an order under ss 233 , 459A , 459B or 461 even if the company is being wound up voluntarily. It seems to me that s 467B contemplates an order winding up a company in insolvency even though the company 'is already being wound up voluntarily'. 13 I note that there was no suggestion in various authorities I have considered that an order terminating the voluntary winding up was necessary. 14 In Citrix Systems Inc v Telesystems Learning Pty Ltd (in liq) (1998) 28 ACSR 529, Moore J made an order that a company be wound up in insolvency in circumstances where it was being wound up voluntarily, and there was no suggestion that an order terminating the voluntary winding up was necessary. 15 In Re Green (as liq of Australian Resources Ltd (in liq) (2004) 52 ACSR 452, Barrett J made an order that the company be wound up in insolvency in circumstances where it was the subject of a creditors' voluntary winding up arising from a voluntary administration under Pt 5.3A and there was no suggestion that an order terminating the voluntary winding up was necessary. 16 In the circumstances, the Registrar's lack of power to make orders under s 482 is no obstacle to her power to make an order winding up the company in insolvency. 17 A court will not make an order winding up a company in insolvency in circumstances in which the company is already the subject of creditors' voluntary winding up unless there is good reason to do so: Carter (as liq of New Tel Ltd (in liq)) v New Tel Ltd (in liq) (2003) 44 ACSR 661 per Austin J at 663(5); Re Green (as liq of Australian Resources Ltd (in liq)) (supra) per Barrett J at 453 [5]. The reason for this is that, in the ordinary case, there is little practical difference between a creditors' voluntary winding up and a form of winding up imposed by order of the court. 18 In the authorities, various reasons for making an order in such circumstances have been put forward and held to be sufficient. One reason which has commonly been put forward is that a change of liquidator is desirable. That reason will be sufficient if the liquidator has not given the appearance of being independent: Citrix Systems Inc v Telesystems Learning Pty Ltd (in liq) (supra) per Moore J at 535-537, but, on the other hand, a mere desire to replace a liquidator is not sufficient: Re Green (as liq of Australian Resources Ltd (in liq)) (supra). The fact that an insurance policy responding to claims for insolvent trading by directors may cover such claims only if the liquidator is appointed by the court may be a sufficient reason: Re Green (as liq of Australian Resources Ltd (in liq)) (supra), as may the fact that a charge or certain dispositions of property may only be challenged if the court has ordered the company to be wound up under s 459A: Carter (as liq of New Tel Ltd (in liq)) v New Tel Ltd (in liq) (supra). 19 None of those circumstances are present in this case, nor is it suggested by the Deputy Commissioner that an order of the court winding up the company in insolvency will provide a benefit to the general body of creditors of the company. Clearly, there may be circumstances, other than those I have discussed, which could provide a sufficient basis for an order winding up the company in insolvency even though it is already the subject of a voluntary winding up. However, the Deputy Commissioner frankly conceded that the only matters she could point to were the fact that there was no objection to the order sought and that it would enable her to recover the costs of the application. The fact that there is no opposition to the proposed order cannot, to my mind, be a good reason for making the order; nor can the desire to recover costs, although I appreciate that the Deputy Commissioner made her application some days before the company was placed into administration and then later into voluntary liquidation. 20 I see no good reason to make an order that the company be wound up in insolvency in circumstances where it is already in voluntary liquidation. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Mr N Parkyn appeared on 1 May 2006. | referral from registrar of application under s 459p of corporations act 2001 (cth) for order that company be wound up in insolvency under s 459p where company already subject of creditors' voluntary winding up where applicant also sought order terminating voluntary winding up under s 482 whether registrar has power to make order under s 482 whether order under s 482 necessary before making order under s 459a reasons for making order under s 459a in such circumstances held, order under s 482 not necessary before making order under s 459a registrar's lack of power to make order under s 482 therefore no obstacle to registrar making order under s 459a in circumstances, no good reason to make order under s 459a application dismissed. corporations |
At the same time I made orders for the filing and serving of further evidence upon which the applicant proposed to rely and for the filing and serving of further evidence by the respondents in reply. In the events that happened, the applicant put on no further evidence and, in consequence, nor did the respondents. When the matter came on for hearing, there was no appearance by or on behalf of the applicant. No prior communication was received by the Court explaining the applicant's failure to appear and no apology or explanation was subsequently tendered. The respondents were represented by Ms Eastman of counsel. The respondents relied on two affidavits sworn by Ms Janine Lynette Smith on 26 May 2006 (filed 29 May 2006) and on 26 July 2006 (filed 27 July 2006). The respondents also relied on three paragraphs ([34] --- [36]) of an affidavit of the applicant sworn 24 May 2005 and to the documents, or some of them, comprising Annexure 'Z' thereto. In the face of the orders I made on 28 July 2006, in particular, the order dismissing the applicant's motion, notice of which was filed on 13 December 2005, only the orders sought in [1] and [4] of the respondents' notice of motion, namely, that the remaining parts of the applicant's substantive application ([A4] and [A6]) be dismissed or permanently stayed and that the respondents be released from the undertakings made to the Court on 8 June 2005, were pressed on the hearing; the orders sought in [2] and [3] of the respondents' notice of motion were not pressed. (ii) On 5 July 2005 the applicant provided the respondents with a proposed amended application. (iii) On 24 August 2005 I heard the applicant's motion seeking leave to amend the application and the respondents' motion seeking to strike out part of the application and opposing leave to amend the application. (iv) I determined the motions by reference to the proposed amended application. On 22 September 2005 I determined that all of the applicant's application be struck out, other than that contained in [A4] and [A6] in the proposed amended application. To review the decision made, and/or conduct engaged in, by the second respondent, on 5 May 2005, pursuant to a specific delegation issued on that day by the first respondent under section 41A of the SRC Act to direct the applicant, under subsection 36(3) of the SRC Act to attend a psychiatric assessment "for the additional purpose of assessing the applicant's capability to undertake a rehabilitation program within the meaning of the SRC Act". [This decision is presently the subject of an application for review to Comcare pursuant to subsection 38(2) of the SRC Act] '. (vii) On 18 October 2005 Branson J stood over the leave to appeal application to allow the applicant to make an application to me to be allowed to re-plead the claims in relation to ss 39B(1) and (1A) of the Judiciary Act 1903 (Cth). These were the claims that had been previously in [B1] of proposed amended application. Upon the applicant's undertaking, on 48 hours notice to the respondents, to approach Edmonds J to seek leave to file a further amended application, a copy of which is to be provided to the respondents within 14 days of today's date, this application is stood over to a date to be fixed. (x) On 11 November 2005 the respondents wrote to the applicant observing that, in their opinion, the proposed amended application was not consistent with the leave granted by Branson J, did not comply with the Federal Court Rules , included claims that were struck out by myself and raised fresh matters which are not included in the application considered by me. The applicant was invited to provide a re-pleaded application by 14 November 2005. (xi) On 5 December 2005 the applicant emailed a proposed notice of motion to the respondents. The second respondent notify the applicant of any objections to the new material in the Amended Application by 13 December 2005. The applicant file and serve any further amended application which he will seek to rely upon within 14 days of 13 December 2005. The matter be re-listed for directions at 9:30 am on Tuesday, 7 February 2006. He also sought to join Comcare as a third respondent to the proceedings. This motion was in the same terms as the motion emailed on 5 December 2005. (xiv) On 14 December 2005 the respondents notified the applicant of their objections to the form of the application proposed by the applicant. The respondents' letter set out the reasons why they opposed leave being granted to amend the application in the form proposed in the document provided on 3 November 2005. (xv) On 15 December 2005 the applicant's notice of motion was dealt with in part, but the question of leave to re-plead was adjourned to a date to be fixed. (xvi) The applicant did not file and serve any amended application within a further 14 days, i.e., by 28 December 2005. (xvii) When the matter came before me on 7 February 2006, I directed the applicant to file and serve any amended application upon which he relies as a consequence of my orders of 15 December 2005 by 7 March 2006. (xviii) The applicant did not then file or serve any amended application. (xix) When the matter came before me on 14 March 2006 I directed the applicant to file and serve any amended application upon which he relies by 4 April 2006. (xx) The applicant then did not file or serve any amended application. (xxi) When the matter came before me on 18 April 2006, the matter was stood over to 9 May 2006 by consent. By this time the applicant had attended Dr Smith. Dr Smith had provided a copy of his report in relation to the applicant's fitness to return to work. The applicant wanted to have the opportunity to consider the report and then indicate what he would seek to do in relation to his proposed amended application. (xxii) When the matter came before me on 9 May 2006, I directed the respondents to file and serve any motion in relation to striking out the proceedings. (xxiii) On 7 June 2006 the motion was listed for hearing. I ordered that the motion be adjourned to 22 June 2006. I ordered the applicant file and serve any evidence in reply by 16 June 2006. The applicant has failed to comply with these orders. (xxiv) On 28 July 2006 I dismissed the applicant's motion, notice of which was filed on 13 December 2005 leaving the outstanding paragraphs, [A4] and [A6], in the proposed amended application to be determined. So far as the order sought in [4] of the respondents' notice of motion is concerned, I indicated during the course of the hearing that I could see no reason why the respondents should not be released from the undertakings they gave the Court on 8 July 2005 and accordingly that I would make such an order. While argument on the order sought in [1] of the respondents' notice of motion, at least in relation to the decision/conduct sought to be reviewed under [A4], was largely confined to matters going to the discretion the Court has under para 10(2)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the AD(JR) Act') to refuse to grant an application, it was conceded by counsel for the respondents that the decision/conduct sought to be reviewed under [A6], at least standing alone, could not be dealt with on the same basis. To dispose of it on a final basis it would be necessary to review the decision/conduct in terms of the grounds relied on in the application and the particulars provided in support of those grounds. This leads to the problem outlined below. One of the difficulties with the applicant's case has always been the architecture of his application. The grounds upon which the applicant seeks review of decisions made or conduct engaged in and particulars of those grounds has always been articulated on a holistic basis, that is, by reference to the decisions made or conduct engaged in as set out in [A1] to [A6] of his application, rather than by reference to specific grounds in respect of each decision made, or conduct engaged in, which is sought to be reviewed. In consequence of the orders I made on 24 August 2005, [A1], [A2], [A3] and [A5] no longer exist and it is not possible to discern whether the applicant seeks review of the remaining decisions/conduct --- those in [A4] and [A6] --- in reliance on all or only some of the grounds stated; moreover, it is difficult, if not impossible, to discern whether all or only some, if any at all, of the particulars given relate to the grounds now sought to be relied on in the review of the decisions/conduct in [A4] and [A6]. Only Comcare has such a power pursuant to section 57 of the SRC Act. So far as any such "common law" powers are available to the respondents pursuant to section 16 the OHS Act, there is no reasonable basis for their exercise in the circumstances of the applicant's case. The respondent's have not established that its actions are necessary or that the terms of its briefing are reasonable. This material was prepared prior to any consideration of applying subsection 36(3) and has not been updated to address this at all. The respondents' draft letter to the doctor of 17 March 2005 was changed without further reference to the applicant, and sent to the doctor, along with the material objected to by the applicant, on 16 May 2005. The respondents' first attempt to exercise this power to require the applicant to attend a medical assessment was on 5 May 2005, when the applicant had been certified fit to return to work on and from 17 January 2005. Employers do not have the arbitrary right to interfere with the person and mind of an employee or to subject them to invasive and prejudicial procedures, particularly where the true purpose is contrary to the interests of the employee. This occurred prior to the determination of the applicant's claim to Comcare. She attempted to procure the applicant's consent to undergo such an examination by hiding the illegality and inappropriateness of this from him. This "evidence" was deliberately and inappropriately "skewed" to serve the commercial interests of AGS and the personal interests of the second respondent and others over their statutory duties to the applicant. The deponents the second respondent chose to consult, and obtain testimonial evidence from in favour of Dale Watson. Denying the applicant access to workplace during this period, while Dale Watson was present in workplace and permitted to freely consult herself and other witnesses. The first respondent, actually or constructively had knowledge that they would be used for improper purposes by the second respondent, and to delay the applicant's return to active duties. Notifying the applicant his salary had been ceased from 16 May 2005 on 27 May 2005, but not advising him that an overpayment had been recovered from his Comcare entitlement. She is not a qualified medical practitioner, therefore, her own opinions as to the applicant's fitness to return to work are not relevant. That the applicant had, at least by 21 February 2005, raised issues as to the bona fides of both herself and Dale Watson, the legality of her own conduct and the process of reporting to Comcare in respect of his claim. The respondents have misrepresented to their doctor the material which was briefed to the applicant's doctor, and propose to include material which was available, but which the applicant was not given opportunity to give to his treating doctor when he was requested to do report for same purpose. The respondents have taken "punitive" measures against the applicant, outside scope of his terms and conditions of employment, without due process, for defaults on part of respondents and their agents. There is no evidence, in particular, expert medical evidence, to support these conclusions. These facts as relied on by the second respondent do not exist. The second respondent refuses to acknowledge, or give reasons for the decisions/conduct set out in paragraphs A1- A3 above. The 'conduct engaged in' sought to be reviewed is not specified. The applicant's original application indicates that at the time of its filing on 30 May 2005 this decision was the subject of an application for review by the applicant to Comcare pursuant to subs 38(2) of the SRC Act. On 21 September 2005 Comcare made a decision under subs 38(4) of the SRC Act affirming the second respondent's decision and on 25 November 2005 the applicant filed an Application for Review of Decision in the Administrative Appeals Tribunal ('the AAT') being file number N2005/1558, pursuant to subs 64(1) of the SRC Act. The application seeks the review of decisions by Comcare and the second respondent. On 23 December 2005 the applicant agreed to discontinue the AAT proceedings. The applicant did not discontinue the AAT proceedings and on 4 May 2006 advised the AAT that he wished to proceed with the application. The respondents submit that with respect to an application before this Court to review the second respondent's decision of 5 May 2005 to direct the applicant to attend a psychiatric assessment under subs 36(3) of the SRC Act, the proceedings in the AAT make adequate provision for this decision to be reviewed on its merits: see Comcare v Sassella [2001] FCA 1514 ; (2001) 34 AAR 142. In the circumstances, the respondents submit that it would be appropriate for the Court to exercise its discretion under subs 10(2)(b) of the AD(JR) Act and refuse to grant this part of the application. I am of the view that the applicant's application to review the decision made and/or conduct engaged in by the second respondent as detailed in [A4] of the proposed amended application should be refused on discretionary grounds namely, that adequate provision is made by a law other than the AD(JR) Act under which the applicant is entitled to seek review by the AAT of that decision made and/or conduct engaged in and the applicant has, indeed, sought that alternative review. Section 55ZA is found in Part VIIIB of the Judiciary Act and is concerned with the establishment and the functions of the Office of the Australian Government Solicitor ('the AGS'). Schedule 1, cl (za) of the AD(JR) Act excludes decisions under Part VIIIB of the Judiciary Act from review. I agreed with the respondents' submissions that these decisions were excluded from AD(JR) Act review. In the amended application the applicant deleted his application for review of the s 55ZA decisions with respect to the AD(JR) Act. He sought to have the decision reviewed under Part B of the proposed amended application with respect to review under s 39B of the Judiciary Act . However, these parts of the proposed amended application were also struck out. Review is now sought of the decision of the first respondent made on 5 May 2005, pursuant to s 41A of the SRC Act, to delegate to the second respondent, who is an employee of the AGS, all of her powers as a rehabilitation authority under Part III of the SRC Act, in relation to the applicant, who is also an employee of the AGS; a review is also sought of the conduct of the second respondent, or such other persons involved, in procuring this obligation from the first respondent. The decision made and/or conduct engaged in sought to be reviewed in [A6] is anterior to the decision made and/or conduct engaged in sought to be reviewed in [A4]; indeed, the decision made and/or conduct engaged in sought to be reviewed under [A4] is predicated upon a decision (presumably a lawful one) made of the type sought to be reviewed under [A6]. However, for the reasons given in [19] --- [25] above, I have indicated that I would refuse the application in so far as it seeks review of a decision made and/or conduct engaged in under [A4]. In the circumstances, the utility of undertaking a review of the decision made and/or conduct engaged in under [A6] is called into question. The particulars provided in support of grounds (1) --- (4) inclusive make no reference to the decision and/or conduct sought to be reviewed under [A6]; accordingly, and contrary to the initial assumption in [10] above, I have taken the view that grounds (1) --- (4) inclusive are not relied on in relation to the applicant's application to review the decision/conduct in [A6]. The same observation is applicable to the particulars provided in support of grounds (5), (9) and (10)], (11) and (12), (13) and (14), (15) and (16). Presumably these grounds are not relied on in relation to review of the decision/conduct sought to be reviewed under [A6]. The first respondent, actually or constructively had knowledge that they would be used for improper purposes by the second respondent and to delay the applicant's return to active duties. Nor is there any evidence that the decision is infected by the second respondent's use of the delegation to delay the applicant's return to active duties and, even if there were, there is no evidence that the first respondent actually or constructively had knowledge that the delegation would be so used. Moreover, there is no evidence that the conduct of the second respondent, or some other unidentified persons, 'procured' this delegation from the first respondent and even if there were, the conduct sought to be reviewed is not identified. In the absence of such identification, it is impossible to come to any view as to whether, in relation to such unidentified conduct, the grounds of review in (6) --- (8) inclusive are made out. The applicant must pay the respondents' costs. In the circumstances, it is unnecessary to make any order of the kind sought in (1) of the respondents' notice of motion. However, as already indicated, I will make an order of the kind sought in (4) of the respondents' notice of motion. | judicial review of administrative decision making decision pursuant to s 36(3) of the safety rehabilitation and compensation act 1988 (cth) discretion of court under s 10(2)(b) of the administrative decisions (judicial review) act 1977 (cth) where review in another tribunal is being pursued decision pursuant to s 41a of the safety rehabilitation and compensation act 1988 (cth) administrative law |
An amended minute of the proposed orders was filed on 3 April 2007 together with written submissions. The Court also heard oral argument in relation to the proposals on that day. These defendants seek the release of funds presently under the control of Court appointed receivers or subject to asset preservation orders to meet legal expenses incurred, or likely to be incurred, by Mr Carey and associated companies. 2 Order 1 of the minute, which relates to pending proceedings in the Supreme Court of New South Wales by QBE Insurance (Australia) Ltd (QBE) and the contingent liability of Mr Carey to that company, is not pursued. Paragraphs 5 and 6 of the minute propose variations to orders made on 5 February 2007 in relation to Richstar. They are minor variations to existing orders which covered legal costs and disbursements incurred in respect of interlocutory applications up to 22 December 2006. The variations cover legal work done and disbursements incurred in relation to the same interlocutory application and applications for funding in respect of it since 22 December 2006. The proposed variations empower the receivers of Richstar to authorise those additional payments subject to agreement or taxation by a Registrar of the Court. The variations were not contentious and orders giving effect to them were made by consent on 3 April 2007. 3 There remain in contention the orders proposed in [2], [3] and [4] of the minute. They deal with two distinct issues. Paragraphs 2 and 3 seek the release of $50,000 to enable Richstar to defend proceedings commenced against it in the Supreme Court of Western Australia by Keypoint Developments Pty Ltd (Keypoint) and Keyworld Investments Pty Ltd (Keyworld) and for the purpose of issuing a third party notice against the corporate receivers of Richstar. Paragraph 4 seeks the release of $300,000 from the funds of Healthcare Properties to the solicitors for that company for the purpose of applying that money to the provision of legal services, including accounting services (if any) and all necessary disbursements in relation to a variety of matters set out in an affidavit sworn by Mr Carey on 28 March 2007. For the most part those matters do not relate to the affairs of Healthcare Properties. They would include legal costs incurred by Mr Carey. 4 For the reasons that follow the variations proposed in [2], [3] and [4] of the amended minute of proposed orders are refused. It relates to proceedings commenced in the Supreme Court of Western Australia on 3 November 2006. Two companies, Keypoint, which is the ninth defendant in these proceedings, and Keyworld have commenced those proceedings against Richstar. Keypoint and Keyworld allege that they entered into contracts for the purchase of five pieces of land in Queensland in 2005. According to the statement of claim filed with the writ, Allan Frank Carey, the brother of Norman Carey, acting in his capacity as sole director of Keypoint, Keyworld and Richstar, decided that Richstar would lend Keypoint and Keyworld the funds necessary to effect settlement of the property purchases. Allan Frank Carey resigned as a director of all three companies in 2006 and was succeeded by Norman Carey's sister, Karen Sandra Carey-Hazell, in each case. The loan agreement is said to have been formalised in writing by a letter from Richstar to Keypoint on 20 March 2006. 6 According to the statement of claim, Keypoint demanded the advance from Richstar orally and in writing between 21 and 26 April 2006 following the appointment of the receivers. The receivers refused the demands. Richstar is thereby said to have breached the loan agreement entered into with Keypoint and Keyworld. The statement of claim itself gives no particulars of the amount to be advanced or the terms and conditions of the advance. However, in her affidavit in support of the proposed order Ms Carey-Hazell contends that there was, prior to the appointment of receivers, "a legal obligation on the part of [Richstar] to advance up to $3,000,000 to [Keypoint] and Keyworld Pty Ltd ... to assist these companies in the purchase of each of the properties ...". 7 Keypoint and Keyworld claim to have suffered loss and damage as a result of the alleged breach of the loan agreement. The loss and damage asserted exceeds $8.5 million. Richstar proposes to issue third party notices against the Court appointed receivers on the basis that they repudiated the pre-receivership contract. The action, it may be noted, is brought by two companies of which Ms Carey-Hazell is sole director, against a company of which she is also sole director. 8 The letter relied upon in the statement of claim appears to be that which is annexed to an affidavit sworn 12 April 2006 by Karen Carey-Hazell. The letter is addressed to Ms Carey-Hazell as "Ms K Carey" at Keypoint. It was purportedly signed by "Frank Carey" as director of Richstar. An acceptance of the offer contained in the letter was represented by the common seal of Keypoint applied in the presence of Ms Carey on 6 April 2006. 9 According to Australian Securities and Investments Commission (ASIC) records, Allan Frank Carey ceased to be a director of Keypoint on 20 March 2006, while Karen Carey was appointed as its director on 17 March 2006. The records also show that Allan Frank Carey ceased to be a director of Keyworld on 12 April 2006, while Karen Carey was appointed as its director on the same day. ASIC records show Allan Carey ceased to be a director of Richstar on 12 April 2006. According to Mr Raymond Ellis, Ms Carey was appointed as a director of Richstar on 17 March 2006 although this does not appear on the ASIC records for Richstar. 10 The amount of the facility offered in the letter is said to be $3 million. Its purpose is stated to be "... to assist the Borrower with funding for property based projects". Its term is 12 months with interest at 3% above the business overdraft rate of the Commonwealth Bank. The security required is "... a fixed and floating charge over the assets and undertakings of the Borrower in favour of Richstar Enterprises Pty Ltd". The offer was to expire "... on 13 April 2006 unless accepted or revoked prior to that date". 11 In an affidavit, which was sworn on 1 August 2006, one of the receivers, Brian McMaster referred to the circumstances of the alleged loan agreement. His staff were unable to find any board minute recording the loan resolution said to have been made by Allan Frank Carey as director of Richstar and Keypoint. A forensic examination of Westpoint Group computer records held on the Redchime computer system by Calvin Wills, an Information Technology specialist employed by KordaMentha, was outlined by Mr McMaster. That outline supports an inference that the loan approval letter relied upon by Keypoint and referred to in Karen Carey-Hazell's affidavit was not created until 11 April 2006. 12 Mr Wills' searches of the Redchime computer system disclosed a Microsoft Word document entitled "Project Loan Facility - $2,000,000" dated 6 April 2006. The first four pages (being five pages in total) of the document were substantially the same as the loan approval letter although they referred to a loan for $2 million rather than $3 million. The last page was an undated and unsigned "Extract of Resolutions of the Board of Directors of Keypoint Pty Ltd" for a loan of $2,700,000. The document was first saved on 22 April 2005 and last saved on 6 April 2006 by Raymond Ellis, the finance manager of both Keypoint and Richstar. 13 The second document identified by Mr Wills was a Microsoft Word document entitled "Richstar to Keypoint $2.0m loan.doc". It was dated 20 March 2006. It was substantially the same as the loan approval letter although it referred to a loan for $2 million rather than $3 million. The document was first saved to the Corporate Defendant's file system on 5 April 2006 and last saved on the same day by Mr Ellis. 14 The third document was a Microsoft Word document entitled "Project Loan Facility - $3,000,000" dated 20 March 2006. The first four pages (being five pages in total) were an exact match of the loan approval letter. The last page was an undated and unsigned "Extract of Resolutions of the Board of Directors of Keypoint Pty Ltd" for a loan of $2 million. The document was first created on 11 April 2006 and last saved on the same day by Mr Ellis. 15 Mr Wills informed Mr McMaster that based upon the above information the third document bearing the $3 million loan amount was created from the first document bearing the $2 million loan amount through the process of a user opening the original document, making changes to the loan amount, and selecting the "Save As" option to store the new version on the Redchime file system. Each of these documents was exhibited to Mr McMaster's affidavit. 16 Mr McMaster also exhibited an email located by Mr Wills from Mr Ellis' account to "Frank Carey" on 6 April 2006 attaching a document entitled "Project Loan Facility - $2,000,000". Place original in the mail --- thanks. Karen has already signed the acceptance here in Perth. It constitutes an offer for a loan of $2 million and otherwise differs in some respects textually from the loan approval letter relied upon in this case. 17 It is not necessary for present purposes to make concluded findings about these matters. It is sufficient to say that the evidence supports an inference that the loan approval letter relied upon by Keypoint and referred to in Karen Carey-Hazell's affidavit in support of the present application did not come into existence until after the date it bore. If created after 30 March 2006 it would have post-dated freezing orders made by Siopis J on that date. There is doubt about the genuineness of the loan transaction relied upon by Keypoint and Keyworld. I also note from other evidence referred to in the submissions on behalf of the receivers that there was, in any event, a paucity of relevant information available to them. As the receivers point out in their submissions, at the time of making his decision Mr McMaster had been appointed for one week, had not been given access to the books and records of Richstar and was solely reliant on limited information selected by Messrs Carey and Ellis. He had discovered that Richstar had transferred $875,000 to Keypoint after the freezing orders by Siopis J had been made and that that money had not yet been returned to Richstar. He was not the receiver of Keypoint and did not at that stage have any power to investigate the affairs of Keypoint. I have reviewed the information that you have provided me. Based on that information I do not consider that it is Richstar's ordinary course of business to lend money to others. In any event, $2 million represents almost all of Richstar's cash assets. I do not accept that lending such a large proportion of a company's cash assets on one transaction would, on any view, be in the ordinary course of a company's money lending business. Accordingly, I do not accept that the payment of approximately $2 million is an acceptable payment in accordance with the terms of the Orders. The action is brought by two companies of which Ms Carey-Hazell is sole director against another company of which she is sole director. The statement of claim alleges a loan agreement made by Allan Frank Carey, initially effectively with himself, in his three capacities as sole director of each of the companies purporting to act on behalf of each of them. It is said to have been "formalised in writing by a letter from Richstar to Keypoint dated 20 March 2006". 20 The action brought in the Supreme Court has evidently been brought for the purpose of enabling a claim to be made through the third party proceedings against the corporate receivers. Given the common directorship of the plaintiffs and the defendant, Ms Carey-Hazell's conflict of interest is obvious as is the associated risk that the plaintiffs and the defendant in the Supreme Court proceedings will not be at arms length. Quite apart from that concern, on the face of it the receivers appear to have been acting entirely within the scope of their duties under the Court orders by which they were appointed. ASIC and the receivers may recover the costs of resisting those orders from Richstar. No funds are to be made available to meet the costs of bringing that application. 22 Order 4 seeks to apply $300,000 out of funds held by Healthcare Properties to enable Mr Carey and others to meet legal expenses associated with various aspects of these and other proceedings. It is said, in effect, that the transaction costs of obtaining specific approvals for particular expenses is such that there are economies to be achieved by simply creating a pool fund from which legal expenses can be met. The difficulty is that the proposed fund is comprised of moneys held by Healthcare Properties. The underlying assumption of the application seems to be that they are, in effect, Mr Carey's moneys as he is the controller of that company. 23 As senior counsel for ASIC pointed out in oral submissions, Norman Carey is the sole director of Healthcare Properties, the sole shareholder of which is Westpoint Financial Services Pty Ltd. He is the sole director and sole shareholder of that company. There is also evidence that Westpoint Financial Services is the sole unit holder of the Healthcare Property Trust. It seems that that Trust is effectively controlled by Mr Carey. However, the only basis upon which the Twelfth Defendant's funds are subject to s 1323 orders is, so it is said, that I am the ultimate beneficiary of those funds. I do not for instance understand the Plaintiff's case against that company to be based on it having done anything wrong or it having in effect any creditors or aggrieved parties. Rather, it is said that I may ultimately be made personally liable in this action and therefore funds which I may be able to access should fall within the purview of s 1323 orders. (e) Without the s 1323 orders I would be able to access the Twelfth Defendant's funds to inter alia pay necessary legal and other expenses. Absent any other creditors of Healthcare Properties, it is open to Mr Carey's receivers to agree to a modest pool sum being available to meet ongoing legal costs associated with these proceedings such as the obtaining of advice or the sending of letters provided that individual accounts do not exceed some specified threshold requiring their approval. That is a matter for the receivers to consider and perhaps to discuss with Mr Carey's representatives. The proposed variation of the orders sought in respect of Healthcare Properties is refused. The amount is far too great and, in any event, the orders sought would not achieve the desired result because of the effect of the receiver orders against Mr Carey in their application to trust property of which he is the effective controller. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | receiver orders asset preservation orders corporations act 2001 (cth) s 1323 application for variation of orders as release of funds to meet legal costs of one company subject to receiver orders defending proceedings brought by related companies controlled by the same director alleged breach of loan agreement proposed third party notice against receivers for refusing to approve loan payment application refused application for release of funds from one company to create pool available for legal expenses of companies' controller and other purposes application refused corporations |
The application is made on two distinct bases. The first is that certain paragraphs of the Amended Statement of Claim do not disclose a reasonable cause of action and should be struck out on that basis. The second is that aspects of the Amended Statement of Claim are not properly pleaded and should be struck out, with leave to re-plead. The first and second applicants are suppliers of fruit trees; the third applicant is the owner of various rights under the Plant Breeder's Rights Act 1994 (Cth) ('the PBR Act') for some of the trees supplied by the first two applicants. The respondents are three brothers and their companies. The respondents are collectively fruit growers and fruit wholesalers. The Amended Statement of Claim alleges, in effect, that the first, second and fifth respondents ('the brothers') control, either alone or in combination, the activities of the third and fourth respondents. The respondents' business is conducted from properties at Swan Hill. The Amended Statement of Claim annexes a list of 15 properties owned variously by the brothers or the third respondent. 3 These proceedings were instituted on 9 December 2005 by an application ('the Application') and a statement of claim. The causes of action relied upon by the applicants are essentially threefold. First, the applicants allege breaches of various non-propagation agreements made between the second applicant and Fortunato Vittorio (Fred) Siciliano ('Fred') and Bruno Joseph Siciliano ('Bruno') in 1993 and 1995, and between the first applicant and Fred and Bruno in 1999 and 2000. The second cause of action is based on an allegation that the third respondent knowingly procured and induced Fred and Bruno to breach one or other of the non-propagation agreements. The third cause of action is a claim by the third applicant that the respondents have infringed its rights under the PBR Act. 4 The statement of claim was amended on 20 March 2006 pursuant to consent orders which I made on 8 March 2006. The Application has not been amended from its original form. In these reasons, I have addressed the matters raised by the notice of motion in a way that focuses on the issues that emerged during submissions as the crucial points of difference between the parties. In short, the allegation is that a corporation alleged to be controlled by one or more of the brothers induced breaches of contract by Fred and/or Bruno. 8 The pleaded facts indicate a very close working relationship between the brothers and their two companies, extending from the ownership of the land through the conduct of an orchard business to the wholesaling of the fruit produced by the orchard. It is apparent from the Amended Statement of Claim that the brothers conduct, and have at all relevant times conducted, their business in close cooperation with each other. It is also apparent that the precise role played by the two corporate entities is not precisely fixed, or at least, the boundaries of their conduct is not precisely clear. The basis of the applicants' complaint is essentially that the allegations do not disclose a reasonable cause of action, having regard to the absence of material facts supporting the allegation of wrongful interference with the contractual obligations of Fred and Bruno. 9 The standard to be applied before a pleading is struck out is that the claim must be 'so clearly untenable that it cannot possibly succeed': General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 at 130. I am conscious that this is an early stage of the proceeding. Bearing in mind what the Amended Statement of Claim states concerning the relationship between the brothers and their companies, I am not prepared to conclude at this stage that the claim of wrongful interference with contractual rights is so untenable that it cannot possibly succeed. 10 As to the question whether or not the claim is properly pleaded, in my view there is no deficiency in the pleading: the material facts are pleaded and particulars are provided in support of the claim. It is simply a question of whether the facts alleged and the particulars provided make out a tenable claim. I am satisfied that the claim is sufficiently arguable that it should not be struck out. The attack on this part of the pleading was based on submissions which, at least to some extent, involved a misapprehension of what is required by the rules of pleading and the authorities. In the first place, the respondents submitted (by reference to the paragraph concerning the Rich Lady plant breeder's rights allegations) that allegations in paragraphs 34 to 38 were in the nature of conclusions of law. In my opinion, that characterisation is not apposite. Paragraphs 34 to 38 make allegations of material fact, and are expressed in language which reflects the facts required to be established under ss 3, 11 and 53(1)(a) of the PBR Act, in order to establish an infringement of plant breeder's rights. That does not mean that what is alleged is a conclusion of law. 12 Secondly, the respondents appeared to contend that the pleading must set out primary facts, rather than any kind of conclusionary fact. Again, the respondents' contention misunderstands the relevant principles of law. 13 Order 11 r 2(a) of the Federal Court Rules ('the Rules') requires that a pleading shall contain only 'a statement in summary form of the material facts on which the party relies, but not the evidence by which those facts are to be proved'. The purpose of pleadings is to define the issues and to inform the other parties of the case that they must meet: Dare v Pulham [1982] HCA 70 ; (1982) 148 CLR 658 at 664. In distinguishing between material facts and evidence, the pleader must choose an appropriate level of generality in which to express the material facts that is consistent with the purposes to be achieved by the pleadings. 14 The Rules do not compel the pleader to adopt so detailed an approach to the identification of material facts that it would unduly lengthen or complicate a pleading, or, to use the language of Burchett J in Scott v Beneficial Finance Corporation Ltd (unreported, Burchett J, 14 December 1996), throw up 'an impenetrable forest of detail'. A statement of claim is not defective merely because it pleads what might be said to be conclusions of fact at a higher level of generality than the primary facts that must be proved by evidence. So much clearly appears from the decision of French J in Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (1991) 217 ALR 171 at 173; see also BWK Elders Australia Pty Ltd v Westgate Wool Co Pty Ltd (No 2) [2002] ATPR 41-860 at 44,748 [15] per Mansfield J. 15 In my opinion, the Amended Statement of Claim is not defective by reason that it adopts the language found in s 11 of the PBR Act in order to plead the material facts at an appropriate level of generality. I reject the respondents' principal contention that the plant breeder's rights allegations are not pleaded generally in a way that discloses the material facts. 16 There is, however, an aspect of the plant breeder's rights claims that is, in my view, deficiently pleaded. The Amended Statement of Claim alleges a contravention of plant breeder's rights in respect of three different plant varieties: paragraphs 34 to 38 relate to the Rich Lady peach; paragraphs 41 to 45 relate to the Arctic Star nectarine; and paragraphs 48 to 52 relate to the Earliqueen plum. The allegations concerning the Spring Giant apricot are not founded on the PBR Act but are wholly contractual in nature; those allegations are not presently relevant. 17 Essentially the same structure is adopted in the Amended Statement of Claim for each group of paragraphs alleging an infringement of plant breeder's rights. It is therefore convenient to take one paragraph as an example. On that basis, the claim is made that Fred, either alone or in conjunction with his brothers or the other respondents, propagated (on dates unknown) at least 201 Rich Lady peach trees. 19 In my view, the particulars as pleaded are capable of supporting the allegations in subparagraphs (a), (b) and (e) of paragraph 34. However, I have concluded that they do not support the allegations in subparagraphs (c) and (d). Subparagraphs (c) and (d) effectively allege that the respondents commercialised propagating material by offering it for sale or selling it to others, rather than by using it themselves in the course of their orchard and wholesale fruit business. 20 Similar comments can be made about the structure of other paragraphs to which I referred in paragraph [16] above, perhaps even more strongly. Paragraphs 41 to 45, which relate to the Arctic Star nectarine, are supported by particulars that the fourth or fifth respondent, or one or more of them, have sold fruit of the Arctic Star nectarine variety. Reliance is placed on a purchase of such fruit by a Mr Tony Wilcox at the West Melbourne Wholesale Fruit and Vegetable Market. In the case of the Earliqueen plum variety, the allegation pleaded in paragraphs 48 to 52 is similar: the particulars state that the fourth or fifth respondent, or one or more of them, have sold fruit of the Earliqueen plum variety. Reliance is placed on an Earliqueen plum fruit tray found at a Safeway Supermarket in Donvale in December 2005. 21 In my view, the particulars supporting the allegations relating to the Arctic Star nectarine and the Earliqueen plum are capable of supporting the allegations of infringement by way of producing or reproducing protected material, conditioning that material for the purposes of propagation and stocking it: subparas (a), (b) and (e). However, the particularised facts lend no support to the allegation that the respondents commercialised material by offering or selling the relevant protected material to others: subparas (c) and (d). After discovery or other interlocutory steps, the applicants may be able to allege facts that would be capable of supporting an allegation that the respondents have offered or sold protected material to others, but at the present stage I have concluded that subparagraphs (c) and (d) in paragraphs 34 to 52 inclusive are not supported by the particulars given. In the absence of support from particulars, they should be struck out of the Amended Statement of Claim. 22 In reaching this conclusion, I have taken into account the provisions of O 58 r 27 of the Rules. 23 Mr Caine, senior counsel for the applicants, referred me to several authorities dealing with a like provision to O 58 r 27(1) concerning patent pleadings: see s 117 of the Patents Act 1990 (Cth) and Dart Industries Inc v David Jones Ltd [1990] AIPC 90-689 (' Dart v David Jones' ); and Dart Industries Inc v Grace Bros Pty Ltd (1990) 18 IPR 87 (' Dart v Grace Bros' ). 24 In Dart v David Jones , King J considered the sufficiency of a pleading and particulars of patent infringement which alleged that the plaintiff retailer had possessed for sale, offered for sale, offered for supply, sold or supplied certain press type sealed containers. His Honour referred to the equivalent provision of the Industrial Property Rules (Vic) and concluded that the particulars were adequate, having regard to the pre-discovery stage of the proceedings: at 36,412-36,413. His Honour concluded that the particulars were sufficient to apprise the other side of the nature of the case they had to meet. King J added that, on the face of it, a marketing company such as David Jones should know what it has sold, or should have access to records from which such information may be ascertained: at 36,414. 25 In Dart v Grace Bros, another case involving a retailer, the defendants argued that the particulars alleging the instances of sales of goods were inadequate. Marks J held that it was appropriate, given the early stage of the pleading, to accept the adequacy of the particulars that had been given. In reaching this conclusion, his Honour referred to the fact that more detailed information was not in the possession of the plaintiff, but it was clearly within the possession of the manufacturers and retailers of the products. In addition, Marks J observed that defendants failed to put on affidavit that they did not deal in the subject goods at the relevant time. His Honour noted that defendants were well aware that 'they and they alone hold the key to the solution of the problem whether they deal in these goods or not': at 89. 26 In my view, there are distinctions between the above authorities and the present case. The principal allegation against the respondents is that they have grown trees of the relevant varieties in the course of their orchard and wholesale fruit business and that they have sold fruit of the relevant variety. The facts particularised go no further than raising a case of that kind. While the relevant particulars can support (at least to the necessary threshold stage in a pleading) the allegations in, for instance paragraphs 34(a), (b) and (e), they do not lend any support to the allegations in paragraphs 34(c) and (d). Accordingly, I propose to strike out the unsupported subparagraphs (c) and (d) in paragraphs 34 to 52 of the Amended Statement of Claim. 27 Mr Hess, senior counsel for the respondents, argued that the other allegations of infringement of plant breeder's rights were not supported by material facts. It was argued that the particulars merely identify that trees have been found in existence at the properties and, in the case of Arctic Star and Earliqueen, provide some factual material indicating sales. In my view, a sufficient case is raised by the allegations that have been pleaded and the facts that have been particularised. The respondents' attack on the other aspects of the pleadings concerning contravention of plant breeder's rights therefore fails. The respondents argued that some illogicality or inconsistency arose because paragraphs 4, 5 and 8 of the Amended Statement of Claim allege that each of Fred, Bruno and Tony are and were at all relevant times in effective control of fourth and fifth respondents. Mr Caine submitted that there was no logical inconsistency in alleging that each of the brothers was in effective control of the two companies. Be that as it may, Mr Caine indicated that if pleading requires some attention, it would be appropriate to address this matter by adding some words to paragraphs 4(f), 5(e) and 8(e) of the Amended Statement of Claim, to the effect that the relevant individual was in effective control 'either alone or in conjunction with his brothers'. I consider that the additional words suggested by Mr Caine may assist the clarity of the pleading; however I decline to make a specific finding that the pleading as it stands is illogical or inconsistent in this regard. 29 It was also submitted that there were deficiencies or pleading inadequacies in relation to the allegations of breach of contract in the Amended Statement of Claim. I do not accept these submissions. The breach of contract claims are pleaded at an appropriate level of generality, and the particulars are capable of supporting the allegations. 30 Two other complaints were raised by the respondents, but seemed to disappear in the course of argument. One of these appeared to be based on a misapprehension of the references in the Amended Statement of Claim to 'further inspection' as references to a further inspection of the respondents' orchard properties, rather than an inspection of documents. On my reading, the references are to further inspection of documents and Mr Caine confirmed that that is so. This removes the respondents' complaint. However, it should be noted that Mr Caine reserved his clients' rights to make a further application for physical inspection should the need arise. There is no doubt that the applicants have that right under the PBR Act and under the Rules. 31 The other complaint was, I think, largely resolved during the course of argument. The respondents complained that the Amended Statement of Claim has assumed the existence of a licence, authority or consent from the third applicant to propagate 580 Rich Lady peach trees. I do not think that is what the Amended Statement of Claim does, and in any event, this complaint was not pressed in argument. The respondents submitted that the Amended Statement of Claim and the Application, taken together, do not allow the respondents to identify precisely the relief that is sought by each applicant against each respondent. Mr Hess submitted, perhaps a little highly, that it was impossible to work out what relief was sought in what respect. In my view, it is possible to reasonably infer from the Application what relief is sought against which party and by which applicant. On the other hand, a respondent should not have to divine or infer the relief sought by the various applicants against the various respondents, as it should be spelt out in the application. I would add that if those matters are spelt out in the application, they do not need to be spelt out in the statement of claim. 33 Mr Caine indicated that, for other reasons, the applicants will seek leave to amend the Application. The other reasons concern the need to make a minor amendment to the current form of the Application. He suggested that if leave were granted, the applicants would clarify, by making appropriate amendments to the Application, what relief is sought by which applicant against which respondent. In my view, those amendments should be made and I will grant the necessary leave to enable that to be done. I will order that notice of motion dated 19 April 2006 filed by the respondents be otherwise dismissed. 35 As to costs, I will order that the respondents pay 75 per cent of the applicants' costs of and incidental to the notice of 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 Young. | application to strike out statement of claim whether claims properly pleaded whether claims so untenable that they cannot possibly succeed whether particulars sufficient to support allegations in statement of claim whether appropriate level of generality of pleadings whether pleadings illogical or inconsistent whether pleadings identify specific relief sought by each applicant against each respondent plant breeder's rights provision of particulars of infringement whether material facts and particulars pleaded are capable of supporting claims whether pleadings specify manner of infringement and provide instances of each type of alleged infringement practice & procedure intellectual property |
The claims arise out of transport that he undertook between various prisons and courts, and a period of detention in the Charlotte Management Unit of Port Phillip Prison. 2 Between 17 July 1998 and his release on 5 March 2004, the applicant, Mr Rainsford, was a prisoner of the State of Victoria. At various times, he was held at three different prisons: Port Phillip Prison, Ararat Prison and Barwon Prison. 3 Pursuant to s 4 of the Corrections Act 1986 (Vic), any person detained in prison is deemed to be in the custody of the Secretary to the Department of Justice (Secretary). The Secretary appoints the Commissioner of the Office of Correctional Services: Corrections Act s 8A(1). The Office of the Correctional Services Commissioner (OCSC) is responsible for sentence management of all prisoners in Victoria, a function that is performed by its Sentence Management Unit, which has a delegate located in each prison. Pursuant to s 21(1) of the Corrections Act , the Governor of a prison is responsible for the welfare of prisoners held within that prison. 4 The Department of Justice is an emanation of the State and shares its legal identity for the purposes of the DDA. 5 The State has entered into a Prison Services Agreement with Australian Correctional Facilities Pty Ltd (ACF) for the provision of correctional services at Port Phillip Prison. In accordance with the Prison Services Agreement, ACF subcontracted the operation and management of Port Phillip Prison to Group 4 Correction Services Pty Ltd. Group 4 Correction Services Pty Ltd is now know as GSL Custodial Services Pty Ltd (GSL), the second respondent. 6 In this proceeding, Mr Rainsford makes claims under the DDA in respect of two matters. The first concerns transport he was required to undertake between the various prisons at which he was housed, and between those prisons and courts in Melbourne. He claims that he was discriminated against in respect of a back injury, in that he was required to travel in prison transportation vans for up to two hours without the opportunity to properly stretch and exercise his back. I will call this claim the 'transport claim'. The second claim, which I will call the 'Charlotte Management Unit claim', concerns a period of 9 days in September 2001 in which Mr Rainsford was held in a cell in the Spine area of the Charlotte Management Unit at Port Phillip Prison. The discrimination alleged again concerns his back injury and is said to consist of a failure to provide him with adequate opportunities to stretch and exercise his back and the provision of a low bed which he could not make without further aggravating his back. 7 The State is a respondent to both claims; GSL is a respondent to the Charlotte Management Unit claim only. At the hearing, the two respondents were separately represented but their interests did not differ. Counsel for the State made submissions in respect of the transport claim and relied on the submissions of counsel for GSL in respect of the Charlotte Management Unit claim. It is therefore convenient for most purposes to refer to them as the respondents, even when only the transport claim is being discussed. Where it is necessary to distinguish between the two, I will refer to them as the State and GSL. They were resolved adversely to Mr Rainsford and led to him instituting proceedings both in this Court and the Federal Magistrates Court. 9 The first proceeding was commenced in this Court against the State and concerned the transport claim only. It was remitted to the Federal Magistrates Court on 28 September 2001. In the Federal Magistrates Court McInnis FM delivered judgment on 28 November 2001 dismissing Mr Rainsford's application on the grounds that the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (HREOC Act) and the DDA did not bind the State of Victoria: Rainsford v Victoria [2001] FMCA 115. Subsequent to this order, the HREOC Act was amended retrospectively to bind the State. Mr Rainsford appealed to the Full Federal Court which, by consent, ordered that the appeal be allowed and the matter remitted to the Federal Magistrates Court. 10 The second proceeding was filed in the Federal Magistrates Court on 8 November 2001 against both current respondents. It concerned the Charlotte Management Unit claim and was consolidated with the proceeding remitted from the Full Federal Court. The combined proceeding was heard before Bryant CFM in September 2003. In June 2004, before she had delivered judgment, the Chief Federal Magistrate was appointed Chief Justice of the Family Court. Regrettably, the matter had to be reheard before a different Federal Magistrate, Raphael FM. That hearing took place on 26---27 August 2004 and was, pursuant to a direction made by the Federal Magistrate, a hearing of certain separate questions. Raphael FM answered the two separate questions adversely to Mr Rainsford and, in consequence of those unfavourable answers, dismissed the entire proceeding: Rainsford v Victoria [2004] FMCA 707 ; (2004) 184 FLR 110. 11 Mr Rainsford then appealed to the Full Federal Court which unanimously found that the separate questions posed by Raphael FM were inappropriate to answer because they relied on facts that had not been found or agreed between the parties: Rainsford v Victoria [2005] FCAFC 163 ; (2005) 144 FCR 279. The Full Court remitted the matter back to the Federal Magistrates Court. 12 Finally, on 6 December 2005, after hearing submissions from counsel, Walters FM determined that it was appropriate to transfer the proceeding to this Court. No party objected to this course. 13 I must also mention a related proceeding. In September 2001, Mr Rainsford commenced a related proceeding in the Supreme Court of Victoria seeking judicial review of the decision to move him to the Charlotte Management Unit. That proceeding was dismissed on 23 November 2001. It is not challenged in this proceeding, and nor could it be. I mention it only because some of the affidavit evidence given in that proceeding has been put in evidence before me. He was operated on by Mr Jensen, a neurosurgeon, in December 1996, for a disc prolapse in the L5/S1 area. Mr Rainsford gave evidence that Mr Jensen advised him that he should undertake a stretching and exercise regime to guard against back pain and minimise the risk of aggravating his condition. Ordinarily, he does this regime daily. 15 On 9 April 1999 Mr Rainsford was sentenced in the County Court of Victoria to a period of imprisonment of 5 years and 9 months with a non-parole period of 4 years. The conviction was for assault with intent to rape and two counts of wilful and obscene exposure. 16 In early 1999, while in prison on remand, he was examined by a visiting orthopaedic surgeon, Mr Rush, who provided him with a medical certificate noting that he was not fit to undertake work involving lifting more than 10 kg or repetitive bending. Prior to obtaining the certificate, he had done several months of manual labour in prison. 17 Mr Rainsford was seen by an orthopaedic surgeon, Dr Phillips, for medico-legal purposes on 3 March 2000. In his report of the same day, Dr Phillips noted that Mr Rainsford's condition appeared to have deteriorated since his operation. He offered two possible diagnoses for this deterioration. The first was a further prolapse of the back, the second was post-operative scarring. He recommended that further tests be carried out to determine which of these alternatives applied. 18 A CT scan was conducted on 26 April 2000 and an MRI scan on 11 August 2000. There was some disagreement as to the interpretations of these scans. The MRI scan noted that as well as some scarring at the L5/S1 where the surgery had taken place there was a mild to moderate disc bulge at T12/L1. The CT scan, on the other hand, made no mention of a secondary disc bulge. In his oral evidence, Dr Phillips preferred to rely on the MRI scan's reference to a bulge at T12/L1, but Dr Dohrmann, a neurosurgeon called by the respondents, gave evidence that in his opinion an MRI scan of a patient who has undergone back surgery is unreliable and that the CT scan should be preferred. 19 During his time in prison, Mr Rainsford was examined by a number of medical practitioners as part of an outpatients clinic that was available at least one day per week. It appears that all of the medical staff at Port Phillip Prison were provided by St Vincent's Correctional Health Service. There is no suggestion that any of them was an employee of either respondent or that the respondents were directly responsible for their actions; Mr Allgood, then the General Manager of Ararat and Langi Kal Kal prisons, gave evidence that they were contractors of the State. St Vincent's Correctional Health Service kept medical files for prisoners. These were separate from the Individual Management Plan (IMP) files maintained by the respondents and were not accessible to the respondents. The contents of the medical files were only accessible to medical staff and prison authorities were only aware of information on medical files if it had been separately provided to them, for example if a certificate had been placed on a prisoner's IMP file. Medical certificates in evidence in this case fall into this category. 20 Mr Rainsford sought and obtained a number of medical certificates from the medical staff. A number of these certificates were placed on his IMP file. There are two types of medical certificate. The first is headed 'Medical Certificate'. Its printed sections pertain predominantly to a prisoner's capacity to work. It allows the medical practitioner completing the form to certify that the prisoner is unfit for work, is ready to resume work, has attended a health care appointment or is fit to undertake certain activities. The second type of medical certificate is headed 'Medical Advice Certificate'. It has fewer printed sections and is therefore more widely applicable than a 'Medical Certificate'. Mr Greene summarised them as follows: "A medical advice certificate permits a prisoner as a consequence of a health issue to have an item or a modification outside of standard prison issue or stipulation. A medical certificate relates to work capacity and attendance". For ease of reference, in these reasons I will refer to both types of certificate as "medical certificates" unless specificity is required. 21 Mr Rainsford's certificates are largely similar. The majority refer to him only being able to perform light duties, and being unfit for heavy lifting, bending or sitting for long periods. A number advise that he is unfit for work for specified periods. Two certificates do no more than request that Mr Rainsford be provided with an extra pillow. Nothing in any of the certificates refers to him being restricted in travelling or to his conditions in the Spine area cell. 22 Mr Rainsford was asked why none of the certificates refer to him being restricted in travelling. He replied that he spoke to medical personnel about his difficulties in travelling in prison vans but their response had been that they had no power to direct the prison how to transport him and that all they could do was recommend that he was unfit for work. He said that it should have been apparent to the authorities from the repeated references to him being unable to sit for long periods that this was true both of sitting for work purposes and sitting for travel purposes. 23 The severity of Mr Rainsford's back injury was contested by the respondents. They referred to a series of diary notes contained within Mr Rainsford's Local Management Plan Progress Notes. His behaviour demonstrates a distinct lack of restrictions or problems in regards to his physical capabilities. These workouts take 30 to 40 minutes during which and after he displayed no visible irritation to any possible injuries. Today's workout was skipping, weight machine, total time 35 minutes, then played table tennis for 25 minutes. He walks and does various exercises for his back. For recreation he attends amenities daily, exercises with weights in the gym to strengthen back. Through his own admission he does some exercises he shouldn't. Dr Phillips agreed that this level of exercise, if it had been accurately reported, was not consistent with prolapse or significant back injury. However, he noted that it was consistent with somebody who worked very hard on his rehabilitation by developing muscle bulk, which he said is very useful for a patient with a bad back. He said that he would not have recommended the exercises Mr Rainsford was observed performing. Dr Dohrmann concluded that Mr Rainsford's injury was minor or trivial. Mr Rainsford, on the other hand, said that his exercise regime demonstrates his commitment to building upper body strength in order to protect his back against further injury. Dr Dohrmann acknowledged that many back patients believe developing upper body muscle is an important practice, although he personally doubted it was as effective as many patients believe. 25 In his evidence, Mr Rainsford sought to explain his exercise regime in greater detail. He said that he did gym work most days and that this involved a variety of different activities. He said that he regularly lifted weights and acknowledged that sometimes he lifted more than he was supposed to. However, he also said that he never lifted more than 10 kg from the ground, which he said was what was meant by the recommendation in the various medical certificates, but could bench press "a couple of hundred pounds". He did push ups, including with his feet elevated so as to take the weight off his back. He also did karate kicks, but could only do this with his right leg without pain. He also performed exercises to strengthen his back and shoulder muscles, and leg exercises while lying in bed. He said his exercise regime lasted for up to 45 minutes on most days. In cross-examination, Mr Rainsford was taken to the entries in the Progress Notes. For the most part, he did not dispute the accuracy of the Notes although he sought to explain the exercises he was observed performing by reference to his regime of developing upper body strength. He noted that often while he could perform the exercises he could not do so without some pain or restriction of movement. He was also transported between the various prisons and courts in Melbourne. The period relevant to the transport claim is from May 1999 to January 2001. During this time, Mr Rainsford was transported approximately 30 times. It would appear that on all but four occasions, he was transported in accordance with usual prison transport procedures. This involved transport provided by Australian Integration Management Services Pty Ltd (AIMS), a subcontractor of the State. On four other occasions, Mr Rainsford was transported using alternative means. On one of these occasions the alternative transport was an ambulance. Mr Kelly --- who held a number of roles at various times including Head of Operations at Port Phillip Prison, Deputy Director of the Sentence Management Unit and General Manager of the Sentence Management Unit --- gave evidence that he authorised the use of an ambulance because it was important for Mr Rainsford to attend a Sex Offender Program and he was concerned that Mr Rainsford may seek to create obstacles to the transfer. Mr Kelly said that there was no medical evidence to support the transport by ambulance. 27 Mr Rainsford was transported in three different AIMS vehicles and claims that in none of them was he able to stretch or exercise adequately and that each journey put his back under extreme strain. He was either transported handcuffed in the back of a divisional van or in a small cubicle in a sort of mini-bus along with other prisoners. His inability to leave the transport vehicle to stretch and exercise outside during the journey was a further cause of the back strain. Mr Rainsford claims that after being transferred from one prison to another it took him up to a month for his back to recover. 28 The respondents do not deny that Mr Rainsford was transported in the manner alleged by him. Evidence was given by Ms O'Connor, then employed by AIMS, about the different vehicles used to transport Mr Rainsford. It is not necessary to set out this evidence in any detail. Of significance is that in none of the vehicles was there a fixture from which to perform chin-ups or pull-ups; as Mr Kelly pointed out, such a fixture would have constituted a 'hanging point' from which prisoners risked self-harm. Transport services were generally express, as it would have constituted a security risk to stop a vehicle to allow prisoners to exercise. There was no suitable secure stopping point on any of the routes travelled by Mr Rainsford at which prisoners could have been allowed out of a transport vehicle to exercise. 29 The respondents deny the level of injury suffered by Mr Rainsford during his various journeys. I do not understand them to challenge his claim to have suffered discomfort during the journey, but they join issue with the ongoing effect of the travel. First they say that Mr Rainsford has led no evidence of any ongoing medical problems caused by his transportation and that neither Dr Phillips nor Dr Dohrmann said that there had been any. Second they say that the evidence of Mr Rainsford's exercises as observed by prison officers tells against any ongoing problems from transport. 30 Mr Rainsford says that he was aware that if he wanted to avoid a prison requirement or rule on medical grounds he needed a medical certificate. As I have set out above, Mr Rainsford claims that he asked medical personnel to request that he be transported in a vehicle that was suitable for his back condition. They replied that they could not direct prison authorities about his mode of transport and that medical certificates were only relevant to work matters. However, he says that it should have been apparent to the prison authorities that a notification on a medical certificate related to work to the effect that he could not sit for extended periods, applied equally to his transport. 31 Much evidence was given as to the manner in which prisoner transfer was organised. Mr Allgood, who was then the General Manager of Ararat and Langi Kal Kal prisons, gave evidence that any prisoner transfer was notified by the relevant prison to the Sentence Management Unit of the OCSC in Melbourne. Mr Kelly gave evidence that the Escort Coordinator of the Sentence Management Unit would then prepare a list of prisoners for transfer and provide it to AIMS and to the relevant prisons. A list of all prisoners scheduled to leave a particular prison was provided to the healthcare authorities at that prison. It should be remembered that only medical staff had access to a prisoner's medical file; other prison staff only had access to a prisoner's medical information to the extent that it was available on the prisoner's IMP file. 32 Prisoners were not always transported in accordance with the usual procedure. Mr Kelly gave evidence that there were a number of circumstances in which a prisoner might be transported other than in the usual way. These included where there was an urgent need for transport or where medical, security or management reasons dictated the use of alternative transport arrangements. Ms O'Connor, Mr Kelly, Ms North (at the relevant time an Operation Manager at Ararat Prison) and Mr Allgood all referred to this requirement, while noting that Mr Rainsford never obtained such a medical certificate. However, no witness could point to a written policy to that effect. No cell in the main part of the Charlotte Management Unit was available until 20 September 2001, at which time Mr Rainsford was moved to another cell within the Unit until 2 October 2001. It is only the nine days spent in the Spine area that are the subject of the Charlotte Management Unit claim. 35 Mr Rainsford was separated from other prisoners as a result of being investigated for having committed a 'prison offence' under reg 44(g) of the Corrections Regulations 1998 (Vic) by sending a letter to a female former corrections officer. Mr Rainsford admitted sending the letter although he denied he was aware that he should not have done so. The respondents submit that I should not accept this denial and point to the reference in the first sentence of the letter to Mr Rainsford possibly ending up 'in the slot' for having sent it. 36 The formal mechanism by which Mr Rainsford was placed in the Charlotte Management Unit was that on 12 September 2001 the then Director of Port Phillip Prison, Mr Anderson, determined pursuant to his powers under reg 22 of the Corrections Regulations , that Mr Rainsford be placed in the Charlotte Management Unit pending investigation. On 13 September 2001 a formal order was made by Mr Roach, then of the Sentence Management Unit of the OCSC, pursuant to which Mr Rainsford was to remain separated from other prisoners pending investigation. 37 Whilst in the Charlotte Management Unit, Mr Rainsford was confined to his solitary cell for 23 hours a day. Being designed for prisoners who present management or security concerns, cells in the Spine area have minimal furniture and opportunities for exercise or stretching. In particular, cells in the Spine area have no 'hanging points' to minimise the risk of prisoner self-harm and no furniture other than a bed, wash basin and toilet. The bed in Mr Rainsford's cell was concrete and approximately six inches from the floor. It was, in effect, part of the floor that was slightly raised and with a lip around it the size and shape of a mattress. Mr Rainsford said that making this bed aggravated his back condition, as did sitting on it. The absence of a chair meant that the bed was the only place for Mr Rainsford to sit, eat, read and write. 38 While in the Spine area, Mr Rainsford was permitted to exercise for one hour per day in a yard. He said that the yard had no exercise facilities other than a bench and that he was unable to perform the full range of exercises that he normally undertook and that had been recommended to him by Mr Jensen. In cross-examination, Mr Rainsford said that he was able to perform a limited range of exercises in his cell in the Spine area, including push-ups, lying leg raises and crunches. There was no opportunity for him to do pull-ups or chin-ups. To do so would have required the presence of a 'hanging point'. 39 Mr Roach, who is the current director of Port Phillip Prison, gave evidence that the prison contains specially designed cells for disabled prisoners. He was aware that there was at least one disabled cell in the Charlotte unit, but that he could not be sure if there was one in the Spine area. He was also asked whether it would have been possible for a disabled prisoner in the Spine area to have been accompanied to the main gym to perform necessary exercises. He replied that this was possible, but that it would have defeated the purpose of placement in the Spine area, which was to keep the prisoner separate from others as a prison management tool. 40 During his oral evidence, Mr Rainsford said he thought that there was a medical certificate from his time in the Spine area, saying that he should not be held there. On it being pointed out to him that it was not in evidence, he said that as far as he knew it was on his medical file. Mr Rainsford said that in speaking to medical practitioners during his stay in the Spine area, he was told that he should not be sleeping on a low bed. Nor was there any evidence as to what would have been the position had a medical officer recommended that Mr Rainsford not be placed in the Spine area cell. There was, however, evidence of complaints made by Mr Rainsford. For example, a medical record from 14 September 2001 notes that Mr Rainsford "stated he needed to rest in a proper bed, rather than a mattress on a floor". A further record from 21 September 2001 states that Mr Rainsford "was in Spine with problem of bed at floor level. Now in normal cell. Claims he can't do back xcises --- given instruction sheet & discussed. " This latter note concludes as follows: "Explained we cannot be involved re placement problem on medical grounds". I find it unnecessary to decide whether any deterioration to Mr Rainsford's back subsequent to his surgery was caused by a further disc prolapse or by post-operative scarring, since he has not satisfied me that any deterioration was caused by the respondents. 42 It is also unnecessary for me to reach any firm conclusions about the seriousness of Mr Rainsford's condition although I consider that his injuries were, at least to some extent, exaggerated, and that this is borne out by the exercise regime and the absence of any medical certificates stating that he was unfit for travel in the normal manner. I find that Mr Rainsford had a genuine desire to develop upper body strength through a regular exercise regime. To a certain extent, he was aware that his exercise regime involved him pushing his body further than he should. But it also demonstrates that his injury was in fact not as serious as he suggested to those around him. 43 I do not accept Mr Rainsford's evidence that he was told by medical staff that they could do nothing about his transport arrangements and that all they could do was make recommendations about his work conditions. On two occasions, a medical officer requested an extra pillow for him. There is no reason why a medical officer could not have requested on a medical certificate that Mr Rainsford be transported in a particular way. It is true that the prison authorities would not have been obliged to grant the request; so much was Mr Greene's evidence. But there is no reason to think that they would not have properly considered it. I cannot accept that prison medical staff would be so remiss in their duty as to refuse to put such a request in writing if they thought Mr Rainsford's medical condition justified it. I am driven to the conclusion that Mr Rainsford asked for a medical certificate concerning his manner of transport and that the medical staff refused to give him one because his condition did not justify it. 44 Mr Rainsford accepted that a prison is an orderly and controlled environment where inmates have a low degree of personal freedom. He was aware that all prisoners are required to work during the period of their incarceration and that if a prisoner considered himself unfit to work he required a medical certificate saying as much. Much the same was true of other activities within the prison system: a departure from the standard procedure would only be justified in certain circumstances and one of those was a relevant medical reason as evidenced by a medical certificate. I find that Mr Rainsford was aware that in order to be assured transport other than in the usual manner and in one of the usual AIMS vehicles, he required a medical certificate. As I have said above, I find that Mr Rainsford asked for, but did not receive, such a certificate. I find that he was aware, at least for most of the period relevant to the transport claim, that prison authorities did not consider his unfitness to sit for long periods of time to prevent him from being transported in the normal manner. I also find that Mr Rainsford was aware that if he wished to have access on medical grounds to additional facilities in the Spine area he needed a medical certificate; this is but part of saying that he understood that to be relieved of a prison rule or requirement on medical grounds a certificate was required. 45 I accept the evidence from the respondents that, prior to transfer, a medical officer would look over a prisoner's medical file to ensure that the prisoner was fit for travel. I am satisfied that if there had been a note on Mr Rainsford's medical file to the effect that he should be transported in a particular way this would have been apparent to the medical officer reviewing his file prior to transfer, and that the medical officer would have brought it to the attention of the prison authorities. 46 Given the contents of the letter Mr Rainsford admitted sending to the former officer, I find that he was aware that he was not permitted to send it and that its having been sent was the reason for his placement in the Spine area. I find that had it been necessary for his health, Mr Rainsford need not have been placed in the Spine area, but that there was no medical evidence expressly stating that he should not be placed there. While in the Spine area, Mr Rainsford was able to perform a number of back exercises but not as many as he would have liked. 47 I find that Mr Rainsford raised concerns about the conditions in the Spine area with prison officers and subsequently with medical personnel. I cannot make a definite finding that he spoke to medical personnel during his time in the Spine area, and at any rate I find, contrary to what he suggested during oral evidence, that he did not receive any medical certificates stating that his conditions in the Spine area needed to be varied. I accept that Mr Rainsford was informed by a medical practitioner that they could not control which cell he was placed in on medical grounds. However, there is no evidence to suggest that the respondents were aware that this had been said or that they would not have considered any medical recommendations about cell placement. 48 In respect of both claims, Mr Rainsford has not satisfied me on the balance of probabilities that any deterioration in the condition of his back was caused by his treatment during transport or in the Charlotte Management Unit. The medical evidence, including from Dr Phillips and Dr Dohrmann, the CT scan and the MRI scan does not allow such a finding to be made. On the contrary, I tend to the view that Mr Rainsford's injuries were somewhat exaggerated. 49 On the other hand, I accept that Mr Rainsford did suffer minor pain and suffering as a result of being transported in the manner in which he was. While I accept that Mr Rainsford was unable to perform all the exercises he would have liked while he was in the Spine area cell, he has not shown that this led to him experiencing any pain and suffering beyond mere inconvenience. 56 The State, through the OCSC, controls and regulates third party contractors providing services to prisons. At the relevant time, AIMS was the contractor providing transport facilities. Mr Rainsford says that the OCSC had the power and responsibility under the Corrections Act to direct AIMS in the manner in which it provided transport facilities. Thus while AIMS is not a party to the proceeding, the State is said to be liable by virtue of this management role. The State does not dispute that, if there has been discrimination as alleged in the transport claim, it is liable. 57 Mr Rainsford says that he regularly raised the issue of the effect transport had on his back with his medical examiners, but that they responded that they were unable to direct prison officials not to put him on a transport vehicle and that all they could do was advise limits on how long he could be seated. He says that the limits advised by his doctors were in any event not adhered to. 58 On 30 September 1999 Mr Rainsford raised the transport claim with Mr O'Grady of the Victorian Ombudsman's Office in the presence of Ms North, then the Operations Manager of the Ararat Prison where Mr Rainsford was then housed. He says that Ms North agreed to arrange for appropriate transport for future transfers. The only change made was for one trip in which a mattress was placed into the back of a panel van however, since he was handcuffed and could not brace himself, this caused him to "bounce around like a ball" and caused further back strain. In a letter dated 8 October 1999, Mr O'Grady wrote to Mr Rainsford concerning the transport claim and a number of other complaints. He noted under the heading "Transport to Port Phillip" that "Ms North has agreed to arrange for suitable transport to be provided". 59 On 27 April and 9 May 2000, Mr Rainsford raised by letter the transport claim with the Corrections Commissioner. This process identifies any medical matter that may preclude or restrict the movement of a prisoner. In your case, although you have a medical certificate that states you are unfit for work which involves you being seated for long periods, the health service has cleared you for transfer. As you have indicated that these transfers are causing you problems, I suggest that you raise this matter with the prison medical officer. He says that if he doesn't maintain his exercise his left leg and buttock stiffen up and he needs crutches to move around. Further, he says that any decision by GSL about cell placement must meet with the approval of the State, by means of a decision of the OCSC or its delegate. Consequently, he says that the State is also primarily liable in respect of the Charlotte Management Unit claim. In the alternative, he submits that if only one of the respondents is primarily liable, the other is secondarily liable under s 122 of the DDA. 62 Mr Rainsford says that prior to being placed in the Charlotte Management Unit he raised with a prison officer his concern that his back injury would be aggravated by the conditions of his new cell. Further, he says that he sent a fax to the Victorian Government Solicitor complaining about his treatment and raised his concerns with an officer from the Sentencing Management Unit. He says that despite raising these concerns nothing was done to assist him. • Was Mr Rainsford required to comply with a 'requirement or condition'? • Was the requirement to comply with a 'requirement or condition' reasonable? • Was the 'requirement or condition' such that Mr Rainsford was not able to comply with it but that a substantially higher proportion of persons without his disability were able to comply? That section prohibits discrimination in the provision of goods and services, and in the making available of a facility. The respondents each say that their relationship with Mr Rainsford did not constitute the provision of a service or the making available of a facility. There was no submission concerning goods. 65 Some assistance on this question is to be gained from the obiter comments of Kenny J (with whom Hill and Finn JJ agreed) in the Full Court in this case. An expression of opinion by this Court may be misleading because it is based on a misconception of the facts that are ultimately found ... With this in mind, only some very brief comments may be made about [the Federal Magistrate's] reasons in relation to the ['service'] question. As [the Federal Magistrate] recognised, on account of its remedial character, the DDA is to be generously construed and the word 'services' includes all matters which ordinarily fall within that notion: see IW v City of Perth at 11-12 per Brennan CJ and McHugh J; 22-23 per Dawson and Gaudron JJ; 27 per Toohey J; 39, 41-42 per Gummow J; and 69-70 per Kirby J. The identification of the 'service' at issue in any case is a question of fact for the trier of fact: see Waters at 361 per Mason CJ and Gaudron J, with whom Deane J relevantly agreed (382); 394 per Dawson and Toohey JJ; and 404-405 per McHugh J; and also Catholic Education Office at [12]-[13] per Tamberlin J and [102] per Sackville and Stone JJ. The question of whether an activity is a service for the purposes of s 24 of the DDA is essentially a matter of characterisation. In discharging statutory duties and functions and in exercising statutory powers in the public interest, a body may also be engaged in the provision of services to particular individuals: see IW v City of Perth at 44 per Gummow J; also 12-13 per Brennan CJ and McHugh J; 24 per Dawson and Gaudron JJ; 29 per Toohey J; and 72 per Kirby J. The Federal Magistrate erroneously relied on a distinction that he drew between the provision of services pursuant to a statutory discretion and "the situation ... where no discretionary element exists": see [17]. The custodial regime that governs prisoners under this Act is compatible with the provision of services to them: see, eg, s 47. Indeed, this proposition is fortified by the provisions of the [Prison Services] Agreement to which counsel for Mr Rainsford referred on the hearing of the appeal (see [21]). In discharging their statutory duties and functions and exercising their powers with respect to the management and security of prisons, the respondents were also providing services to prisoners. The fact that prisoners were unable to provide for themselves because of their imprisonment meant that they were dependent in all aspects of their daily living on the provision of services by the respondents. Although the provision of transport and accommodation would ordinarily constitute the provision of services, whether the acts relied on by Mr Rainsford will constitute services for the DDA will depend upon the findings of fact, which are yet to be made and, in particular, the identification of the acts that are said to constitute such services. The case was a discrimination claim brought on behalf of an association of people with AIDS. They had sought and been refused planning approval from the City of Perth to build a drop-in centre for people affected by AIDS. They alleged that the decision to refuse the planning permit discriminated against the group on the basis that its members had AIDS. The majority of the High Court found against the association. 67 Brennan CJ and McHugh J said that a council considering planning approvals is not engaged in the provision of a service. The Macquarie Dictionary relevantly defines it to include 'an act of helpful activity'; 'the providing or a provider of some accommodation required by the public, as messengers, telegraphs, telephones, or conveyance'; 'the organised system of apparatus, appliances, employees, etc, for supplying some accommodation required by the public'; 'the supplying or the supplier of water, gas, or the like to the public'; and 'the duty or work of public servants'. But wide as the definition is, in our opinion it is not capable of including a refusal to exercise the statutory discretion provided for by the Town Planning and Development Act 1928 (WA) and Clause 40 of the City of Perth City Planning Scheme to approve the use of premises for use other than as a shop. Rather it is a power to process applications for the protection and general benefit of the residents of the City. They began by noting, at IW 191 CLR at 23, that "'services', a word of complete generality, should not be given a narrow construction unless that is clearly required by definition or by context". However, where Brennan CJ and McHugh J found that the Council did not provide a service, Dawson and Gaudron JJ held that there was a service, but that it needed to be properly identified. They identified the service as "the exercise of a discretion to grant or withhold planning approval", and when so identified it was apparent that the Council had not failed to provide a service. The Council had considered the application for planning approval and had exercised its discretion, albeit contrary to the wishes of the association. There is no dichotomy here between the discharge of statutory functions and the provision of services to those seeking the discharge of these functions. 70 Toohey J dissented on the services point. He agreed with Dawson and Gaudron JJ and Gummow J that the Council provided a service, but said that classifying the service as the consideration of applications for planning permits was too narrow. Consideration of an application is of itself hardly a service; it is the disposition of the application which either provides or refuses the service. In the manner of that refusal there may be discrimination. First, not all government functions are services, although some undoubtedly are. Second, as the difference between Dawson, Gaudron and Gummow JJ on the one hand, and Toohey and Kirby JJ on the other hand demonstrates, the way in which the service is identified is critical. It is a question of fact determined by the situation of the particular case. 73 Counsel for the State suggested that the touchstone for service should be whether the act involves helpful or beneficial activity: IW 191 CLR at 11 per Brennan CJ and McHugh J. I accept that this is a useful test, but in a qualified way. Most activities are helpful or beneficial to someone. That in itself does not make them services. The question must be whether the act is helpful or beneficial to the relevant class of persons to which the person alleging discrimination belongs. There is little doubt that GSL provides a service to the State: there was in evidence parts of the Prison Services Agreement between the State and ACF and further evidence that ACF sub-contracted its obligations to GSL. Were it not for the decision of the Court of Appeal in Farah v Commissioner of Police of the Metropolis [1998] QB 65, I would have thought that the State, by maintaining a prison system, provides a service to the general public. However, in Farah , where the alleged discriminator was the police, it was held that assisting and protecting members of the public is a service but that pursuing, arresting and charging criminals is not. To my mind, the pursuit of criminals is so much a part of protecting the members of the public that a distinction between them is hard to justify, but I need not pursue this. These services for the benefit of the State or the general public are not to the point. The question in this case is whether the respondents provide a service to the relevant class to which Mr Rainsford belongs, namely prisoners. 74 Counsel for Mr Rainsford accepted that not all things done by the respondents involve the provision of a service. He suggested, by way of example, that a decision to place a prisoner in a particular cell is not a service and so is not covered by the DDA. However, he did say that the provision of transport and accommodation facilities constitutes a service since they are helpful or beneficial to prisoners. He argued that if a prisoner were not provided with a cell and transport he would be left to survive in the elements and would have to walk between prisons. Even leaving aside the possibility that a prisoner may enjoy the freedom of walking away from his prison, this argument is flawed. If the respondents did not provide accommodation in the Spine area, Mr Rainsford would have remained in the general body of Port Phillip Prison; looked at in this way, the 'service' can hardly be said to be beneficial. Transport is more difficult. If transport between prisons had not been available, prisoners simply would not have been moved, for better or for worse. They would have missed court appearances and not had access to medical facilities and rehabilitation programs available only at other prisons; but equally they could not have been transported from court back to prison. There is therefore an element of the helpful and beneficial in the provision of transport to prisoners, but an element of the unhelpful as well. 75 Part of the error I have just referred to comes from a failure on the part of Mr Rainsford to articulate with precision what service he contends for. The importance of this exercise was stressed by the High Court in Waters v Public Transport Corporation [1991] HCA 49 ; (1991) 173 CLR 349. Before there can be a finding of discrimination by a person in relation to the provision of goods or services, therefore, the relevant goods or services must be identified with sufficient precision to relate them to the facts of the case and the issues which arise for determination. If a person is alleged to have refused to perform services, eg, the services in question must be identified in sufficiently concrete terms to enable the Board to determine whether or not there has been a refusal to perform those services. What is a sufficiently precise identification of the service in one case may be too general in another. If the discrimination alleged was the refusal to allow impaired persons to travel on trams to St Kilda, it would be meaningless to identify the service provided as 'the public transport system'. If, however, the discrimination alleged was the refusal to allow impaired persons to travel on trams generally, 'transportation of members of the public by trams' might identify the service with sufficient precision to enable the relevant issues to be resolved. In my view, such a wide identification of service is meaningless; it is, in effect, no more than "prison management and control". The two activities complained of by Mr Rainsford are, first, the transportation of prisoners between prisons and between a prison and court and, second, the accommodation of prisoners in cells within the prison system. This is the appropriate level of precision with which to identify the alleged services. So identified, I am of the view that neither constitutes a service for the purpose of the DDA. 77 At [74] I postulated what would have happened had no transport been available to prisoners. The question is entirely hypothetical since transport is an inherent part of incarceration. Prisoners on remand must attend court for their hearings. Prisoners in low-security prisons who are re-classified must be moved to higher-security prisons. The prison system simply could not function without prison transport. It is an artificial use of the word service to apply it to a fundamental integer of a system over which those affected have no or almost no control. 78 The accommodation of prisoners in cells within the prison system is similarly an inherent part of incarceration. Prisoners must be housed somewhere within the prison system and that this is so demonstrates that for a prisoner to have a cell is not a helpful or beneficial activity so far as the prisoner is concerned. In so far as there is choice in the allocation of prison cells, it is a purely administrative and prison management matter. It does not, of itself, provide prisoners with a benefit. Rather, it is better described as being "part and parcel of the exercise of a statutory duty and cannot be described as the provision of a service or services", to adopt the words of Underwood J in Secretary of the Department of Justice and Industrial Relations v Anti-Discrimination Commissioner (2003) 11 Tas R 324 at 341. 79 I am conscious of the arguments made by Mr Rainsford relying on the provisions of the Corrections Act and the Prison Services Agreement; they are referred to in the passage of the judgment of Kenny J in the Full Court in this matter that I have set out at [65]. Attending to the welfare of prisoners is an important legal obligation placed on both respondents. This is all the more so given the vulnerabilities of prisoners who are unable to do much to control their circumstances within prisons. It is for this reason that I accept that certain facilities provided by the respondents to prisoners may constitute services for the purposes of the DDA. However, for the reasons I have identified, I do not consider either of the postulated services to fit the definition in the DDA. In addition, it is important not to focus only on the prisoner welfare purposes of the Corrections Act and the Prison Services Agreement. The first purpose listed in the Corrections Act is "to provide for the establishment management and security of prisons and the welfare of prisoners": s 1(a). This purpose demonstrates the balancing act that prison authorities must perform. Their obligations are not just to the welfare of prisoners but also to the general public and prison staff through providing adequate security measures, to other prisoners by ensuring that prisoners do not harm one another, and to the general good governance of the prison. To suggest that transport of prisoners or cell accommodation is a service to prisoners is to ignore the fact that they are functions performed in order to comply with the sometimes competing obligations of prison management to its prisoners, its staff, the public and the good governance of the prison. 80 The parties did not argue for any difference in result depending on whether transportation and accommodation were analysed as involving the provision of a service or the making available of a facility. I agree that in this case there is no relevant difference. Neither activity can be described as a facility any more than as a service. 81 Having concluded that the respondents did not provide a relevant service or make available a relevant facility, the application must be dismissed. In case a contrary view should be taken on this point, I will consider the other aspects of the applicant's claim. WAS MR RAINSFORD REQUIRED TO COMPLY WITH A REQUIREMENT OR CONDITION? In order to satisfy this definition Mr Rainsford must show that he was required to comply with a requirement or condition. In responding to the requirements that Mr Rainsford claims he was unable to comply with, the respondents raised a number of different arguments. One argument was that the alleged conditions were negative and that the DDA does not apply to a negative condition. Another argument was that the conditions in Mr Rainsford's case were no more than inherent in the relevant services and that the condition must be over and above the service: see Waters [1991] HCA 49 ; 173 CLR 349. In my view the question whether Mr Rainsford was required to comply with a requirement or condition can be disposed of without answering these submissions of the respondents. All that needs to be done is to correctly identify the service and the requirement and to apply these to Mr Rainsford's case. Once this is done, it is apparent that for neither claim can Mr Rainsford demonstrate that he was required to comply with a requirement or condition. 83 For each of his two claims, that requirement or condition has been differently formulated. As the judgments in IW [1997] HCA 30 ; 191 CLR 1 demonstrate, the precise formulation of the requirement or condition is critical. For the transport claim, Mr Rainsford says that the requirement or condition was that he be transported between prisons without access to conditions which would have protected his back. For their part, the respondents say that there are two services and that the condition only relates to the second. The first service is the provision of regular scheduled transport available to all prisoners. The second is the provision of separate special transport in circumstances where the regular transport was unavailable or inappropriate. The condition (or at least one of them) attaching to this second service is that the prisoner first obtain a medical certificate demonstrating a need for particular special transport. 84 I do not think either Mr Rainsford or the respondents accurately states both the service and its condition. On the evidence it is not correct to say that prisoners were offered a transport service that did not allow them access to conditions relevant to any medical problems. On the contrary, the evidence established that there were alternative transport arrangements available to those prisoners who demonstrated a need for them. I therefore reject Mr Rainsford's formulation of the condition. The respondents' formulation artificially divides transport into two categories, one for the able-bodied travelling at times when the regular service is available, the other for those with special requirements or travelling when the regular service is unavailable. 85 In my view, if there is a service (which, for the reasons set out above, I reject) then it is appropriate to classify it broadly, so as to encompass prison transport generally. The relevant condition which attaches to the service is that a prisoner who for medical reasons is unfit to take the regular transport service must first obtain a medical certificate stating that alternative transport arrangements should be made. 86 Stated in these terms, there are only two possibilities. Either, Mr Rainsford is medically unfit to take regular transport and was therefore required to, but did not, obtain a medical certificate to that effect, or he was not medically unfit. If the latter then the condition did not apply to him and he cannot be incapable of complying with it. If the former, then any discrimination consists in the refusal of medical staff (whose relationships with the respondents are not clear on the evidence) to provide a certificate. The only allegation made in this respect is Mr Rainsford's claim that he was told by prison medical staff that they could not make recommendations concerning his travel arrangements. As I have said above, I do not accept this claim. 87 It follows that, for the transport claim, there was no requirement or condition that Mr Rainsford was not able to comply with. 88 For the Charlotte Management Unit claim, Mr Rainsford formulates the requirement or condition with which he was required to comply as being 'that he be in the cell without exercise facilities'. The exercise facilities he says he needed was a device or fixture from which he could have engaged in pull-ups or chin-ups. It is to be remembered that the relevant service identified by Mr Rainsford is "prison management and control, including the control of cell accommodation". I do not consider Mr Rainsford's formulation of the requirement or condition to be accurate or appropriate. 89 I find it very difficult to say what should be the appropriate and accurate condition to attach to the service of providing cell accommodation. This is because I consider it so plain that the provision of cell accommodation is not a service and so it is highly artificial to attempt to attach a condition to it. The best I can manage is to say that the 'service' of providing cell accommodation requires that prisoners are placed in a cell the conditions of which take account of the prisoner's security rating, level of privileges and medical condition, among other things. The conditions that attach to this 'service' include that if a prisoner wishes to remain in a superior cell, he should not do anything that would result in him losing his privileges and that if a prisoner is medically unfit for a particular cell he is required to demonstrate that unfitness to prison authorities. It is this latter condition that is relevant to Mr Rainsford. There is little evidence about it. In particular, unlike the transport claim, there is no evidence that Mr Rainsford sought a medical certificate in respect of his Spine area accommodation nor, more importantly, is there any evidence of what the prison authorities would have done if there had been a medical certificate. There was uncontested evidence that Port Phillip Prison had some disabled cells, although what facilities they had was not explored. Common sense suggests that had Mr Rainsford's medical examiners offered the opinion that he should not be placed in a cell with minimal access to exercise equipment then the prison authorities would have considered that advice and may have acted upon it. At any rate, Mr Rainsford has not shown that they would not have. 90 I therefore reject Mr Rainsford's claim that he was required to comply with a requirement or condition in respect of the Spine area cell. WAS THE REQUIREMENT TO COMPLY WITH ANY CONDITION OR REQUIREMENT REASONABLE? I am of the clear view that each of the requirements, whether those formulated by Mr Rainsford or my reformulated ones, is reasonable. 92 Mr Rainsford says in the transport claim that it was unreasonable for him to have to travel without stretching facilities in the transport vehicle or a stop in the journey to allow him to exercise outside. Alternatively, it was unreasonable for him not to be provided with another means of transport, such as a vehicle with a bed. 93 Mr Kelly gave uncontested evidence of the security risks associated with stopping a prison vehicle to allow a prisoner to exercise outside. I accept that evidence which concurs entirely with common sense. I also accept his uncontested evidence that there were no suitable secure stopping places along the routes of the various journeys taken by Mr Rainsford. Mr Kelly also explained why having hanging points in a transport vehicle would pose a risk of prisoner self-harm. It should be remembered that standard transport vehicles carry all manner of prisoners, including those who are assessed as at risk of self-harm. Finally, given that there was a policy (albeit unwritten) that set out the circumstances in which a prisoner may have access to alternative transport arrangements, and that Mr Rainsford was aware of that policy, it was not unreasonable to deny such arrangements to a prisoner who had failed to comply with the policy. 94 I have stated what I consider to be the true condition that attaches to the transport arrangements: a prisoner who for medical reasons is unfit to take the regular transport service must first obtain a medical certificate stating that alternative transport arrangements should be made. This is not an unreasonable requirement. Medical certificates are widely used in a variety of areas as prima facie evidence that a standard course should be departed from on medical grounds. In circumstances where prison life was highly and necessarily controlled and prisoners had regular access to qualified medical practitioners, it was entirely reasonable that prison authorities would require a medical certificate before agreeing to transport a prisoner other than in the usual manner. 95 Mr Rainsford says in the Charlotte Management Unit claim that it was unreasonable for him not to have been afforded a device or fixture in his cell from which he could have performed pull-ups or chin-ups. Alternatively, it was unreasonable for the respondents not to give him access to the regular prison gymnasium. I do not understand him to have said that the placing of him in the Spine area cell was unreasonable. At any rate, it seems to me to be reasonable to isolate a prisoner who is being investigated for a serious breach of prison regulations. 96 I have already referred to the problems associated with a 'hanging point' such as is required to perform chin-ups and pull-ups. While there was no evidence to this effect, it is reasonable to assume that some prisoners who were assessed as being at risk of self harm were housed within the Spine area. It is entirely consistent with a prison's obligations that it seek to minimise the dangers present in cells. It is certainly not unreasonable to refuse to provide hanging points in cells. There was no evidence that any form of portable 'hanging point' could be provided. As to the suggestion that Mr Rainsford be given access to the regular gymnasium whilst incarcerated in the Spine cell area, Mr Roach noted that to have done so would have gone against the purpose of placing a prisoner in the Spine area. I do not accept (nor was I asked to) that once a decision has been made to place a prisoner in the Spine area it will always be reasonable not to provide them with any facilities that are not normally found in that area. Plainly it may not be reasonable to deny a prisoner who has a demonstrable medical need for additional facilities access to those facilities. In this case, however, I have found that Mr Rainsford failed to demonstrate his need for further exercise. Although I accept that Mr Rainsford notified the Victorian Government Solicitor of his complaint and raised it with prison management, it was not contested that he did not obtain medical advice to the effect that he should have different treatment from that which is standard in the Spine area. In light of my finding that Mr Rainsford has exaggerated his condition, I consider it reasonable that the prison authorities did not accept that any different treatment was needed. 97 For the reasons I have given at [96], the condition which I have found attached to the 'service' of cell accommodation, namely that if a prisoner is medically unfit for a particular cell he is required to demonstrate that unfitness to prison authorities, is reasonable. WAS THE 'REQUIREMENT OR CONDITION' SUCH THAT MR RAINSFORD WAS NOT ABLE TO COMPLY WITH IT BUT THAT A SUBSTANTIALLY HIGHER PROPORTION OF PERSONS WITHOUT HIS DISABILITY WERE ABLE TO COMPLY? In one sense, it is true that Mr Rainsford was unable to comply with this condition: he did not, after all, obtain that medical evidence. But the reason why he was unable to comply was that, in the opinion of his medical practitioners, he was not sufficiently unfit to justify different treatment. Had he been sufficiently unfit, there is no reason to think that he would have had more difficulty than anyone else in obtaining a medical certificate. I therefore find that Mr Rainsford has not satisfied s 6(a) of the DDA definition of indirect discrimination. 99 Taking Mr Rainsford's own formulations of the conditions imposed on him, I would reach the same result. In the case of the Charlotte Management Unit claim I do so because there is no evidence that Mr Rainsford's inability to exercise as fully as he would have liked led to any aggravation or further injury to his back. 100 In the case of the transport claim, I accept that Mr Rainsford experienced some pain and suffering as a result of being transported in the manner in which he was. There is however, another problem with his claim on this point. It is that he was able to comply with the condition that was imposed. Mr Rainsford attempts to get around this problem by saying that the requirement was that he be transported without access to conditions that would protect his back from injury. In support of this negative formulation of the condition, he relies on the recent Full Court decision in Hurst v Queensland [2006] FCAFC 100 ; (2006) 151 FCR 562. In that case, the appellant was a deaf child who was denied access to an Auslan teacher or interpreter. The trial judge found that because the child could cope in a regular classroom without Auslan assistance, she could comply with the condition that she "accept an education and receive instruction in English without the assistance of an Auslan teacher or an Auslan interpreter": Hurst v Education Queensland [2005] FCA 405 at [85] . The Full Court found that the trial judge erred in his construction of s 6(c) of the DDA. In our view, it is sufficient to satisfy that component of s 6(c) that a disabled person will suffer serious disadvantage in complying with a requirement or condition of the relevant kind, irrespective of whether that person can 'cope' with the requirement or condition. A disabled person's inability to achieve his or her full potential, in educational terms, can amount to serious disadvantage. In [the appellant's] case, the evidence established that it had done so. 101 The Full Court made it plain (at Hurst 151 FCR at [132]) that the outcome depended on the highly specific facts of the case. There was almost no discussion of whether a claimant who suffers something less than 'serious disadvantage' in complying with a condition would satisfy s 6(c) of the DDA. There is, however, one obiter paragraph that is fatal to Mr Rainsford's claim. On the other hand, neither formulation accords with [the submission of counsel for the intervener, the Human Rights and Equal Opportunity Commission,] that 'non-trivial disadvantage' is all that s 6(c) contemplates. That submission goes too far, and cannot be accepted. There was no evidence before me as to what those arguments were. 102 The Full Court's rejection of the argument that 'non-trivial disadvantage' is sufficient for s 6(c) is plainly obiter, and nothing in its reasons explains why a distinction is drawn between 'serious' or 'substantial' disadvantage on the one hand and 'non-trivial' on the other. Nonetheless, I can see no reason to depart from it. Mr Rainsford did not suggest that merely trivial disadvantage would suffice, since in his submission he suffered considerably more than that. As I have found that the pain and suffering experienced by Mr Rainsford while being transported was only minor, this passage from Hurst is fatal to his claim. Counsel for Mr Rainsford submitted that, if his client were unsuccessful, I should make no order as to costs. This was said to be because of the questions of public importance involved in the proceeding, namely the application or otherwise of the DDA to prisons and the rights of the many thousands of prisoners under that Act. I do not accept this submission. While it is most unfortunate that all of the parties have had to incur substantial unnecessary costs, through no fault of their own, because of the manner in which their dispute has proceeded, I can see no reason to depart from the usual order that costs, including reserved costs, follow the event. I will order accordingly. I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. | prisoner with back injury prisoner transferred between prisons and placed in management cell whether transport and accommodation aggravated condition whether failure to provide adequate exercise facilities aggravated condition whether a 'service' provided whether applicant required to comply with a requirement or condition whether applicant could comply with requirement or condition disability discrimination |
2 The proceedings were commenced by the plaintiff on 19 October 2005. It seeks an order that a mortgage dated 24 August 2003 (the mortgage) granted over the defendant (the vessel) by its owner Kuwaiti Saudi Co for Livestock Meat and Fodder (the owner) is valid. It also seeks payment of the amounts owing to it by the owner under an agreement of 27 July 2003 by which the plaintiff agreed to provide certain credit facilities to the owner and under the mortgage. Under the mortgage, the owner acknowledged its then indebtedness to the plaintiff at KD27,591,000. As at 30 November 2005, the plaintiff claimed the outstanding indebtedness (allowing for payments made, and interest) was KD9,579,113/689. It also claimed ongoing interest. 3 The plaintiff also seeks an order that the monies owing to it be paid, to the extent they are available to do so, out of the monies held by the order of the Court following the sale of the vessel. The vessel and the unused bunkers and lubricants contained therein were sold pursuant to an order of the Court in November 2005. The proceeds of sale and accumulated interest, is now about US$4,830,000 (the sale proceeds). It is common ground that there are insufficient monies available from the sale proceeds to meet the claim of the plaintiff, so that if the mortgage is valid and the plaintiff has first call on those monies as against other unsecured creditors of the vessel (several of which have obtained judgment against the vessel for significant sums), the unsecured creditors will not be able to participate in the distribution of those monies. Consequently, the unsecured creditors who have brought claims against the vessel have been given leave to intervene in this proceeding so that their interests are properly protected. None participated on the hearing of the present motion. I gave leave at the hearing on 9 February 2007 for the notice of motion to be amended to include that extra relief. Counsel for the owner appeared at that hearing said he could not respond to the application in a meaningful way as he had no instructions regarding the amended notice of motion. I allowed the owner until 28 February 2007 to file and serve any answering affidavit and any written submission in opposition to the motion. No further material has been filed. The owner has also not complied with a direction given on 9 February 2007 that it file a document indicating the extent to which, if at all, it disputes the allegations of the plaintiff about payment of monies to it from time to time, the amounts received by the plaintiff to reduce the indebtedness, and the claimed current indebtedness. The onus is on the party bringing the application to satisfy the court that there is an abuse of process: KC Park Safe (SA) Pty Ltd v Adelaide Terrace Investments Pty Ltd (unreported, Mansfield J, 17 September 1998). There is no exhaustive list of what would constitute an abuse of process: Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275, at 279. 8 The defence admits the status of the plaintiff, the vessel and the owner. It admits that a document dated 27 July 2003 between the plaintiff and the owner was made in the terms alleged (the agreement), and that a document dated 24 August 2003 between the plaintiff and the owner was made in the terms of an agreement and mortgage (the agreement/mortgage) as alleged. It admits that the plaintiff advanced to the owner pursuant to the agreement the funds it alleges were advanced, and that the owner failed to repay the loan by 31 May 2004. 9 There is also no dispute that on 25 May 2005 the plaintiff served notice on the owner requiring repayment of all outstanding advances, and of its intention to enforce the mortgage, that the vessel was arrested by order of this Court in July 2005 and the vessel and its unused bunkers and lubricants sold by order of the Court in November 2005, and that the proceeds of sale are presently held in two designated accounts. 10 The defence pleads that no officer of the vessel or the owner was authorised to sign the agreement or the mortgage so as to bind the owner, so that neither agreement is binding on the vessel or the owner and so that there is no valid mortgage over the vessel. It accepts that there is documentation that the mortgage was duly registered by the Kuwait Ministry of Communications, Maritime Affairs Department. No such authority has been given to the signatory of [the Agreement and the mortgage] Naif Abdul Aziz Al-Enazy. 13 Hence, the defence denies that the owner failed to repay the advances as and when they became due, and that the owner is indebted to the plaintiff as it claims, because there is no valid agreement and no valid mortgage. The owner denies that the plaintiff is entitled to any relief. 14 A consequence of the way that is pleaded is that the owner has not directly pleaded to the extent of the present outstanding advances (having regard to payments made by the owner and to interest calculations under the agreement and other monies received by the plaintiff in reduction of the level of advances. That should be a matter of record and arithmetic. To clarify the owner's position in that respect, I directed the filing and service of a further responsive document. It was not provided, as noted above. 15 The plaintiff argued that the defence was an abuse of process because the substantive defence was a sham. I accept that a sham defence may amount to an abuse of process and may be struck out: see Remington v Scoles [1897] 2 Ch D 1. 16 The plaintiff sought to adduce evidence to show that the claim that the signatory to the agreement and to the mortgage on behalf of the owner did not have the requisite authority could not genuinely be raised. Obviously, the Court should be slow to be persuaded that a pleaded defence based on a matter of fact is not genuinely raised. However, if the Court is satisfied that a defendant has pleaded a fact which it does not genuinely maintain, the inference must follow that it has some extraneous reason for asserting that fact. It may be as simple as an attempt to delay the inevitable. There may be other reasons. If the fact is pleaded for an extraneous purpose, then it may amount to an abuse of process: see e.g. Williams v Spautz [1992] HCA 34 ; (1992) 174 CLR 509. Care must be taken, as Mason CJ, Dawson, Toohey and McHugh JJ pointed out at 526-527, to ensure that the relevant or immediate purpose is not misunderstood. 18 During submissions, counsel for the plaintiff reiterated that summary judgment was not being sought. However, considering that the ground of defence complained of is the sole apparent ground of defence, striking out the defence in these circumstances may ultimately have the practical effect of summary judgment, at least as far as liability is concerned. For that reason, I have considered the evidence supporting the plaintiff's motion with added caution. 19 I accept that Naif Abdul Aziz Al-Enazy (Al-Enazy) was the signatory on both the agreement and on the agreement/mortgage. That is not contested by the parties. Curiously, the translation of the mortgage section of the agreement/mortgage, annexed to the affidavit of Shaun Langhorne dated 24 January 2007 as SPL-15, shows the signatory for the owner to be Muhammad Abu an-Nour al-Jawhari, who is also listed as the signatory for the plaintiff on that document. That is clearly an error. The owner admits in paragraph 7 of the amended defence that Al-Enazy was the signatory of the agreement/mortgage and Al-Enazy is shown as the signatory to the agreement/mortgage. 20 I also note that the name of the signatory is spelt in various ways in different documents filed in this matter. In the absence of any contentions to the contrary, I accept that they are alternate anglicised spellings of Al-Enazy's name. 21 The evidence of the plaintiff is in two general categories. The first is evidence that the owner has at other times recognised the validity of the mortgage. The second is evidence that in any event Al-Enazy was duly authorised to sign the agreement and the agreement/mortgage on its behalf. I shall address those categories of evidence in turn. 22 On 30 November 2006, during the course of these proceedings and after its original defence had been filed (which also claimed that the signatory did not have its authority), the owner wrote to the plaintiff to inform it that the owner was carrying out "the cancellation process" of the vessel so that it would be removed from the records of the Ministry of Communications. This would enable the owner to disconnect the satellite lines on the vessel. The letter acknowledged that the "current guarantees" included the vessel, and requested the plaintiff as part of its proposal not to liquidate the assets (clearly including the vessel) if the proposed repayment schedule were adhered to. 25 Thereafter the minutes of the administrative board of the owner contain reports of ongoing discussions with the plaintiff about the monies owed to it. The plaintiff has adduced several translations of board minutes of the owner in which reference is made to the owner's debt to the plaintiff. The relevant meetings occurred on 9 May, 10 May, 10 June, 26 June and 2 October 2004. 26 On 8 August 2004 the owner sent a fax to its insurer of the vessel asking that the plaintiff be recorded as the first beneficiary in case of any 'actual total loss claims'. By Notice of Assignment dated 22 August 2004, the owner assigned to the plaintiff all insurance over the vessel under its policy of insurance. Also, by letters from the owner to the plaintiff of dated 28 December 2004 and 22 April 2005, the owner seeks the assistance of the plaintiff in covering its insurance repayments, arguing that it would be in the plaintiff's interests as the mortgagee of the vessel to do so. In each of those letters there is an unequivocal acknowledgment of the mortgage of the vessel by the owner in favour of the plaintiff. 27 There may be an explanation for the owner's acknowledgment of the existence of the mortgage consistent with its defence. It has elected not to provide that explanation. I am left to speculate. It may be that the owner, knowing that there was no valid agreement and no valid agreement/mortgage because the signatory to those documents was not authorised to sign them, chose to continue to mislead the plaintiff deliberately. That would be surprising. It may be that the owner did not itself realise that those documents were not signed by a person authorised on its behalf until it addressed the defence to these proceedings. If that were the case, the earlier out-of-court admissions would be understandable and would not necessarily lead to the conclusion that the essence of the defence is a sham, that is a purely fabricated defence for the purpose of buying time or for some other reason. 30 The second category of evidence takes the matter further. 31 On 11 March 2003, a certificate was issued by the Ministry of Commerce and Industry. It was issued at the request of the owner. ... In accordance to Article (20) of the Company's constitution, the chairman of the board of directors or his deputy or authorized member shall each have the right to sign separately. 35 According to the administrative board minute, Al-Enazy remained as chairman of the board until at least 16 December 2003 when the board considered his letter of resignation as chairman. 36 Again, that evidence has not attracted any response from the owner. It was given a further period of time after the hearing to respond, as I thought it may have wished to do so in the light of the detailed submissions of the plaintiff. 37 That material adds considerable weight to the plaintiff's contention. If there were any resolution of the board limiting the authority of Al-Enazy as chairman, in accordance with Article 20, to sign documents on behalf of the owner, it is within the power of the owner to have produced it. It has not done so. The material shows that Al-Enazy as chairman has signed documents on behalf of the owner, including the agreement and the agreement/mortgage. It shows that the owner has treated those documents as being efficacious and has acted upon the basis that they are valid. 38 In my view, upon the whole of the evidence, it is clear that the defence of lack of authority of Al-Enazy to have signed the agreement and the agreement/mortgage on behalf of the owner is not a genuine one. There is not the faintest suggestion in the material that it has any factual foundation. The owner has had the opportunity to advance any evidence which might conceivably support the claim, and has not done so. Nor has it tried to explain at all the picture which the material paints. The defence should be struck out as an abuse of process. 39 I have struck out the whole of the defence simply because I think the pleading of lack of authority is so entangled in the various paragraphs of the defence that it could not fairly be removed without the risk of leaving a document which may not, in other respects, reflect the owner's position. 40 As the plaintiff did not seek summary judgment, and in case the owner has some other defence it may properly raise or wishes legitimately to put in issue any other matters (including the detailed allegations about the present indebtedness and how that sum is arrived at), I have given the owner 28 days to file and serve a further amended defence. 41 I have adjourned the directions hearing and the plaintiff's notice of motion of 24 January 2007 to a date after the 28 day period has expired. If there is no further amended defence, the plaintiff may seek to further amend the notice of motion to seek judgment. If there is a further amended defence, depending on its terms, the plaintiff might nevertheless seek to further amend the notice of motion to seek judgment, and in any event in the light of any further amended defence, I will need to address the claim for further discovery in paragraph 3 of the motion. 42 The defendant and the owner should pay the costs of the notice of motion to date to the plaintiff in any event. I accept the contention of counsel for the plaintiff that those costs should be payable on an indemnity basis, given my reason for striking out the defence: see Colgate-Palmolive Co v Cussons Pty ltd (1993) 46 FCR 225 per Sheppard J at 232-234. 43 I direct that the time from which any application for leave to appeal from this decision should run from the date of publication of these reasons for decision. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | application to strike out defence as an abuse of process where plaintiff adduces uncontroverted evidence to show ground of defence not genuinely arguable where no response from defendant defence struck out procedure |
The first filed was the applicant's motion, notice of which was dated 8 May 2006, seeking, amongst other things, leave to amend its application and statement of claim and an order for what was referred to as a split trial. The second was the respondents' motion, notice of which was dated 5 June 2006, seeking, amongst other things, orders that parts of the current statement of claim be struck out. In substance, the respondents (referred to hereafter as "Telstra") seek orders that what has been called the "no cap" representation claim be summarily dismissed pursuant to O 20 r 2 of the Federal Court Rules ("the Rules"). 3 In paragraph 20 of the statement of claim, the applicant (referred to hereafter as "MWO") alleged that Telstra made a representation to the effect that, provided MWO achieved certain conditions, Telstra would not enforce a part of the 2003 agreement that required MWO to refund to Telstra any amount that it received from Telstra exceeding a certain percentage of Net Billings (hereafter referred to as "the cap"). (At the hearing of this motion, the construction of the clause was not the subject of dispute. 4 The loss or damage that MWO claimed to have suffered "by" this conduct was identified in paragraph 29 of the statement of claim to be the fact that MWO was subjected to Telstra's demands, in 2004 and 2005, to repay the sums that Telstra claimed constituted remuneration in excess of the "cap" and that MWO refunded these sums "involuntarily, under protest". That is, according to Telstra, the pleading failed to establish a causal connection between the alleged damage and the conduct of Telstra alleged in paragraph 20 of the statement of claim. In support of this submission, Telstra referred to numerous authorities, including Marks v GIO Australia Holdings Ltd [1998] HCA 69 ; (1998) 196 CLR 494 (" Marks ") at 503-4, Wardley Australia Ltd v Western Australia (1992) 175 CR 514 (" Wardley ") at 525, Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3 ; (1986) 160 CLR 1 at 14; HTW Valuers (Central Queensland) Pty Ltd v Astonland Pty Ltd [2004] HCA 54 ; (2004) 217 CLR 640; Henville v Walker [2001] HCA 52 ; (2001) 206 CLR 459 at 501 [130] , and I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41 ; (2002) 210 CLR 109 at 121 [31] . Telstra submitted that MWO failed to allege the "better" position that it would have been in "but for" its reliance on the representation, or otherwise to seek to connect the damage alleged in paragraph 29 of its statement of claim to any such "better" position. Telstra submitted that the authorities establish that MWO had thus failed to meet a fundamental pleading requirement if it is to make out its cause of action under ss 52 and 82 or 87 of the TPA in respect of the no cap representation. 6 Further, Telstra submitted that the whole of MWO's evidence in chief, as now filed, failed to establish an arguable case that "but for" reliance on the no cap representation, MWO could and would have achieved an agreement on all fours with the 2003 agreement, but without the cap. Telstra submitted that, in the circumstances before the Court, there is no reasonable prospect of MWO establishing on the balance of probabilities that but for its reliance on the representation it would have achieved the 2003 agreement without the cap. 7 In written submissions, Telstra also challenged MWO's pleading of promissory estoppel. In paragraphs 34A to 34F of the statement of claim, MWO alleged promissory estoppel against Telstra. That is, MWO claimed that it would have acted to its detriment and suffered loss and damage if Telstra were allowed to rely on the capping. As the pleadings stood at the relevant time, MWO said that it would provide particulars at a later date of its detriment and of loss and damage. Telstra submitted that it was reasonable to anticipate that the only "detriment" would be that alleged in paragraph 29 of the statement of claim. MWO's proposed amendment to the statement of claim confirmed that this assumption was correct. Telstra submitted that, for the reasons already stated, entry into the 2003 agreement with the percentage cap did not of itself establish relevant detriment. That is, according to Telstra, the promissory estoppel claim was but another iteration of the no cap misrepresentation claim and could not succeed at trial. 8 MWO submitted that the impugned parts of its statement of claim were not so clearly untenable that they could not possibly succeed. MWO said that Telstra misrepresented its pleading and that "no aspect of [MWO's] case is that 'but for' the representation the 2002 Agreement would have continued". MWO affirmed that "[t]he status quo at the time of Telstra reneging on the representation not to enforce the cap, was the 2003 Agreement 'uncapped'. The loss to [MWO] flowing from the wrongful conduct was the consequence of the imposition of the cap". 9 In response to Telstra's strike out application, MWO relied chiefly on the High Court's decision in Murphy v Overton Investments Pty Ltd [2004] HCA 3 ; (2004) 216 CLR 388 (" Murphy "). 10 In Murphy , the Court determined what, if any, relief under Pt VI of the TPA the appellants should have for a contravention of Pt V. They had been induced to enter into a lease of a unit in a retirement village. The lease provided that they should pay certain outgoings. The trial judge found that, in entering into the lease, they had relied on a misrepresentation that the figure for likely outgoings had been calculated taking into account all relevant costs. The figure had not been so calculated and turned out to be much higher than that nominated when the lessors entered the lease. The trial judge found that, had the lessors known the true position, they would not have entered into the lease. The High Court held that the appellants' undertaking of the obligation to pay the increased outgoings figure gave rise to the possibility that they could demonstrate that they had suffered loss and damage: Murphy at 415-6 [74]. 11 MWO submitted that, in Murphy , the High Court did not require the appellants to establish what agreement they would have entered into had the misrepresentation not been made. MWO noted that the Court found that the Full Federal Court had erred in applying the "but for" test for which Telstra contended. This was, so MWO said, "precisely that type" of loss that "was endorsed by the High Court in Murphy " and it could not, therefore, be said that its claims were hopeless, bound to fail or without any prospects of success. The detriment was the non-fulfilment of the no cap representation and warranty. MWO relied on Walton Stores (Interstate) Limited v Maher [1988] HCA 7 ; (1988) 164 CLR 387 at 428-9, Commonwealth v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394 at 442-6 and Giumelli v Giumelli [1999] HCA 10 ; (1998) 196 CLR 101 at 112-4, as well as the reasons for judgment of Gyles J in the Full Court of this Court in Murphy (which MWO said met with the High Court's approval) in support of the proposition that there was no deficiency in its pleading to support its estoppel claim. MWO also referred to its proposed amendment to paragraph 34D, which, so it said, "makes plain that [it] relies upon the particulars subjoined to paragraph 24 as to the acts which it did to its detriment and relies upon the particulars subjoined to paragraph 29 as to the loss and damage occasioned by Telstra's failure to fulfil the assumption or expectation induced in [it] by making the [no cap representation] and Warranty". MWO submitted that this claim was plainly arguable. The Court would exercise its powers under this rule with great care and only make an order against an applicant in a very clear case that disclosed no tenable claim: see, e.g., Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 at 129-130; Fancourt v Mercantile Credits Ltd [1983] HCA 25 ; (1983) 154 CLR 87 (" Fancourt ") at 99; and Webster v Lampard [1993] HCA 57 ; (1993) 177 CLR 598. Whether or not the Court is satisfied that that there is no real question to be tried (see Fancourt at 99) will depend entirely on the circumstances of the case. 17 As MWO ultimately conceded, the new s 31A does not apply to this proceeding, because this proceeding was instituted before the commencement of the operation of the provision: see Item 44 of Part 2 of Schedule 1 of the Migration Litigation Reform Act 2005 (Cth). Accordingly, the Court should apply the authorities to which I have just referred. 18 Although the pleadings have been amended from time to time, the nature of the claims made are, for present purposes, sufficiently described in the reasons for judgment of Crennan J in Mobileworld Operating Pty Ltd v Telstra Corporation Ltd [2005] FCA 292 (" Mobileworld (1) ") at [3] to [4]. Further, as reference to her Honour's decision shows, this is not the first time that this aspect of MWO's pleading has been challenged: see Mobileworld (1) at [25]-[30]. 19 The authorities establish that the relief that ss 82 or 87 of the TPA may afford is not confined to the remedies in tort, contract or equity: see, eg, Marks at 503-4. Further, the causative element in a cause of action under ss 52 and 82 (or 87) of the TPA is to be "understood as taking up the common law practical or common-sense concept of causation": Wardley at 525. Causation is a question of fact. As the Court said in Murphy , at 403, the difference between price and value is not the only kind of damage for which compensation can be given in such an action as this. It is necessary to identify the detriment which is said to be the loss or damage which has occurred or, when considering the application of s 87, has occurred or is likely to occur: see Murphy at 408. In Wardley , as the Murphy Court noted, "the mere entry into obligations which might, but need not, have had detrimental consequences in the future was held not to have occasioned loss or damage to the party making the contract": see Murphy at 408. There may be cases in which a person misled in this way suffers loss upon entering the agreement. ...But that was not this case. Here, therefore, [they] suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid ... was first realised. ... It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did, but only then, [the Murphys] suffered loss and damage. When the respondent started to charge all the outgoings it was entitled to charge, [they] suffered a loss. The amount of that loss was not to be determined ... only by comparing the financial position of the [Murphys] according to whether they entered this lease or took some other accommodation. ... The [Murphys] suffered loss because the continuing financial obligations they undertook when they took the lease proved to be larger than they had been led to believe. The question then became: how much larger was that burden? MWO contended that it did not incur loss when it entered the 2003 agreement. Rather, it incurred loss when Telstra departed from the no cap representation and sought to recover remuneration over the cap. MWO's case is that it suffered loss only when Telstra sought to enforce the cap for which the 2003 agreement provided, notwithstanding that Telstra had represented to MWO that it would not do so. Accordingly, so MWO said, this loss was to be measured as the recoupment amounts that Telstra had claimed. 22 Whatever the difficulties this analysis may ultimately present for MWO in terms of proving causation and detriment, it would not be a proper exercise of discretion to strike out this cause of action. In light of ss 52 and 82 (or 87), as explained further in Murphy , MWO's claim is arguable and not clearly so untenable that it must fail. 23 For similar reasons, I would not strike out the pleadings in so far as they raise a claim of estoppel against Telstra. Examination of the statement of claim shows that it sufficiently pleads the requisite elements of an estoppel as disclosed in the authorities mentioned in [14] above. These authorities establish that a pre-contractual representation can form the basis for an estoppel. In the case as pleaded, the unconscionability, if any, is said to lie in the fact that Telstra unilaterally departed from the assumption it had created by the no cap representation after the 2003 agreement was made. Having regard to the reasons for judgment of Gyles J in Murphy v Overton Investments Pty Ltd (2001) 112 FCR 183 at 225-228, it would not be a proper exercise of discretion to strike out this part of the pleading as clearly untenable. Further, the decision of the High Court in Murphy does not support such a course. 24 For the reasons stated, I would dismiss Telstra's motion, notice of which was given on 5 June 2006. No party suggested that there should be any departure from the ordinary provision as to the costs of an unsuccessful motion. MWO also sought to be relieved of the obligation to file, prior to trial, evidence going to the quantification of this loss. 26 In support of its application for a split trial, MWO relied on affidavits of Nicholas John Andersen sworn on 9 May 2006, 24 May 2006 and 8 June 2006, together with exhibits. MWO also relied on three affidavits of Timothy John Rumbold sworn on 28 April 2006, 8 May 2006 and 8 June 2006, and an affidavit of Dennis Vincent McCluskey sworn on 23 May 2006, together with its exhibits. 27 MWO submitted that, to calculate its loss under paragraph 41, it would need to calculate the trailing commissions and other remuneration due to it under its 2003 agreement with Telstra. Put simply, trailing commissions are commissions paid in relation to Telstra accounts for mobile phones sold in MWO stores. To calculate such commissions, it is said to be necessary to know what is referred to as the Service in Operation (or "SIO") base. Essentially, the SIO base is constituted by those services within Telstra's database attributable to MWO. 28 In detailed written and oral submissions, MWO claimed that its evidence established that Telstra's business and accounting records are inadequate in so far as they relate to calculating its SIO base and trailing commissions. In this connection, MWO referred to Mr Rumbold's affidavit of 28 April 2006 and 8 May 2006, as well as Mr Andersen's affidavit of 9 May 2006 and 24 May 2006. Further, MWO submitted that it would be an enormously complex task to unravel the flaws in Telstra's record keeping so as properly to calculate the moneys owed to it. MWO further submitted that it would "not be able to put on all relevant evidence ... prior to the commencement of the Trial fixed for 2 October 2006 because of the magnitude of the task and the evidence that would be required". There was, so it said, the potential for an enormous waste of time and money in the event that it failed to establish liability against Telstra. It further submitted that "quantification of loss and damage under paragraph 41 may ultimately be found ... to be best performed by a Court appointed expert". 29 MWO referred to an audit conducted by William Buck, Chartered Accountants ("William Buck"). MWO claimed that this audit identified significant deficiencies in Telstra's business systems and records. According to MWO, the William Buck audit took two years to complete and cost over two million dollars even though it was narrower in scope than an audit required to determine the actual remuneration payable by Telstra to MWO. The applicant argued that it would be an even greater task to determine its damages under paragraph 41 of the SFASC. MWO submitted that Telstra's discovered documents also disclosed that there were significant deficiencies in Telstra's databases and business and accounting systems. 30 MWO submitted a report by Dennis McCluskey of William Buck. MWO's solicitors had asked Mr McCluskey to inform them as to how long he believed it would take his firm to conduct a remuneration audit that calculated the sum owed by Telstra to MWO. Mr McCluskey replied that such an audit would take between 5 and 18 months depending on the level of assurance required. 31 MWO claimed that its evidence established that the preparation of evidence of the quantification of any loss and damage suffered by it under paragraph 41 of the SFASC would require many months of work by experienced professionals and would likely cost more than one million dollars. In MWO's submission, the complexity of calculating this loss and damage meant that it was not practical to have that issue determined at the same time as other issues. Although MWO argued that the Court should defer determination of the loss or damage suffered under paragraph 41 of the SFASC, it submitted that "having been satisfied that some loss and damage has been occasioned, the principles upon which [its] claim for loss and damage under paragraph 41 should be determined. MWO argued that the calculation of trailing commissions was the key issue and noted that Ms Parry's affidavit was silent on that topic. 33 For reasons set out in detail in its written submissions and concisely in its oral submissions, Telstra opposed MWO's application for a "split trial". In summary, Telstra said the proposed order offered no utility in terms of the efficient and timely disposition of the proceeding and a better solution might be found after Telstra had filed and served its evidence. 34 Telstra submitted that MWO was obliged to put on evidence as to quantification or explain what information it lacked that prevented it from so doing. It said that the possible difficulty of the task did not relieve MWO of this obligation. Telstra characterised McClusky's statements as "vague and unparticularised", noting that he did "not propose or identify a methodology and merely assumes a need for investigation of all Connections and Trailing Commissions". 35 Telstra contended that, in the circumstances of the case, it would not be possible for the parties or the Court to know what evidence goes "solely to the quantification" of loss, as opposed to going to liability, breach, or the existence of any loss. It relied on the affidavit of Ms Parry, and referred to the affidavit of Mr Rumbold and the William Buck reports as illustrative of this. Telstra pointed out that it was far from clear whether the proposed orders contemplated that the Court consider all, or only some, of these reports and whether Telstra could file answering material. 36 Telstra maintained that some quantification was relevant to determining issues of liability (see further amended statement of claim, paragraphs 59 to 72N, 38 and 40A, 37(a) and 35 to 41). It would not be just and convenient for the orders sought to be made in circumstances where such quantification evidence could be subjected to an application for exclusion on the grounds of relevance. Likewise, for MWO's claims that Telstra has breached an implied obligation to keep an accurate and reliable account keeping system (denied). As part of its evidence in defence of this claim, Telstra is entitled to adduce evidence dealing with a quantitative assessment of the level of dollar values of disputes/inaccuracy which MWO must establish to prove on the balance of probabilities that there has been a breach of the alleged implied term (itself denied). Telstra is entitled to adduce relevant quantification evidence which rebuts these allegations, albeit that it is not necessarily the case that such evidence must establish amounts to the last dollar. Telstra denied that the documents would support such an inference and Telstra submitted that it was entitled to adduce evidence that any impact was minor or, even possibly, cash flow positive for MWO. On one view, so Telstra said, such evidence might be said to go solely to quantification. 38 Further, as Telstra said, Ms Parry's affidavit tended to throw doubt on whether MWO has received less than its claimed entitlements in respect of administration fees and program incentives. If the proposed orders were sought, then MWO would not be required to put on any evidence concerning the individual, or total, amount of such fees and incentive payments it claims should have been and were not paid. Moreover, according to Ms Parry, Telstra cannot investigate MWO's claims for co-operative advertising until MWO provides further details of such claims. 39 Telstra also stated that it was proposing to cross-examine MWO's deponents on that part of its proposed evidence that included quantification (as, for example, the proposed evidence of Mr Rumbold). 40 Telstra pointed out that there will be a need to make findings of fact (some of which may involve issues of credit) on liability and that the same or some of the same witnesses will be relevant at the "quantification" stage. It submitted that there would be no savings in time and expense in adopting the "split trial" approach of MWO. 41 Telstra further submitted that it was not for the Court to initiate an investigation at large to see whether there were any amounts "unpaid" to MWO. The Court was obliged to act only on the evidence adduced before it. It was, so Telstra said, incumbent on MWO to satisfy the Court on the balance of probabilities that it was contractually entitled to an amount for trailing commissions in excess of what it had been paid. It did not have to calculate its alleged loss down to the exact cent but it did have to indicate what it estimated its loss to be and the basis for that estimate. The principles that govern the circumstances in which an order of the kind presently sought may be made were set out in Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 (" Reading" ) at [7] and [8] per Branson J. French J reiterated these principles in Olbers Co Ltd v Commonwealth (No 3) [2003] FCA 651 (" Olbers" ) at [7]. It is subject to the limitation that the Court cannot give an advisory opinion on theoretical or hypothetical facts even if such an opinion were likely to lead to a settlement or resolution of the proceedings. It is common enough to find that the separate determination of questions in a proceeding does not result in the expeditious resolution of the proceeding, although all parties thought it would at the time the separate determination was ordered. Indeed, such orders can have the opposite effect and the resulting fragmentation can add to the expense and time involved in the proceeding. In part, this is because Telstra has not completed the filing of the affidavit evidence that it intends to rely on by way of defence. This fact alone makes it difficult to assess Telstra's claim that it is necessary for its defence that there is some quantification in determining issues of liability. Moreover, until the scope of Telstra's evidence is ascertained, I cannot properly assess the likelihood that some witnesses will be required at both stages of the trial that MWO's proposal contemplates and whether it may be necessary to make credit findings concerning those witnesses at the first stage. For these reasons too, it is difficult now to evaluate Telstra's claim that it desires to cross examine some of MWO's "first stage" witnesses on matters relating to quantification. These matters plainly bear on the question whether orders of the kind MWO proposed by its motion should be made. 46 Assuming MWO succeeded on its ultimate contractual claims, I am not, moreover, satisfied that, so far as the Court is concerned, the task of quantification need be as daunting as MWO would have it, although I accept that it may well be difficult. The fact that the task is difficult does not, however, relieve MWO from its obligation as applicant to prove its case on the balance of probabilities. As Telstra said, the Court can proceed only as such on the evidence before it. It seemed at times that MWO had in mind a very free ranging inquiry indeed, being one that the Court was unlikely to be able to undertake. 47 For these reasons, I would refuse MWO's application for orders to the effect sought in paragraphs 3 and 4 of its motion, notice of which is dated 8 May 2006. It is open to MWO and Telstra to make another application under O 29 r 2 of the Rules or some similar application to assist in the expeditious trial and resolution of this matter once Telstra has filed its evidence. The matter of the costs of the applicant's motion is considered below. The proposed SFASC and amended application was exhibit "NJA 20" to the 8 June 2006 affidavit of Nicholas John Andersen. In particular, it sought leave to delete paragraphs 8 to 12, 15 to 17 ("the pre-2003 agreement claim"), 57 and 58 ("the rolling stones agreement") and 73 to 90 ("the business services claim"). It also sought leave to make partial deletions to paragraphs 55 and 56 (reflecting the deletion of the rolling stones agreement claim). MWO also sought to amend the particulars to paragraphs 29, 32, 34, 34D, with the effect that the relevant loss and damage was said to be Telstra's demands for the repayment of remuneration in excess of the cap and MWO's payment in response under protest. MWO also sought to amend its particulars to paragraphs 40A and 41. Finally, MWO sought to delete Annexures 1, 5 and 11 and to make further consequential amendments to the initiating application by deleting paragraphs 1(a), 1(h), 1(s), 1(t), 1(u), 4(b), 5(a), 5(b), 5(e), 5(f) and 6(c). 49 I note that, at the hearing of MWO's motion, counsel for MWO stated that the information contained in letters dated 13 and 20 April 2006 from its solicitors to Telstra's solicitors were also intended to stand as additional particulars to MWO's claim. The letters formed part of exhibit MLD1 to the affidavit of Melissa Lee Daly sworn on 8 June 2006, which was filed by the respondents. 50 In submissions and in Mr Andersen's 9 May 2006 affidavit, MWO denied that its case was weak with regard to any of the claims that it sought to abandon and stated that it proposed these amendments in the spirit of cooperation and in order that the trial proceed in October this year. On the material before the Court, it is, of course, impossible to assess these inherently self-serving statements. 51 MWO submitted that leave should be granted on the basis that any costs of Telstra occasioned by the amendment be costs in the proceeding. MWO recognized that this was not the costs order usually made upon a grant of leave to amend pleadings, but it contended that the usual "costs thrown away" order would be inappropriate because of what it termed the "unusual" circumstances of the application. 52 Telstra did not consent to MWO having leave to file and serve the SFASC generally, although it did consent to the deletion of paragraphs 8-12, 15-17, and 73-90. Telstra's opposition to the proposed amendments flowed from its contention that MWO had failed to provide proper particulars of its allegations that: (1) Telstra has failed to remunerate MWO in accordance with the 2003 agreement (paragraph 37(a)); and (2) Telstra has failed to ensure that MWO received payment in full of the remuneration payable under the 2003 agreement (paragraph 40A). Telstra specifically referred to the statement in the particulars to paragraph 37(a) that "further particulars will be provided after discovery and inspection and prior to the trial of the proceeding herein" and to the statement in the particulars to paragraph 40A that MWO "will not be able to calculate the remuneration due to it under the 2003 Agreement until after the taking of all proper accounts and enquiries". Telstra also referred to the statements in the particulars under paragraph 41, which concerned the loss arising from these alleged breaches, that MWO "has been unable to verify the quantum of the remuneration to which it is entitled under the 2003 Agreement. [MWO] will provide such further particulars after the taking of all proper accounts and enquiries". In the circumstances of this case, save for the matters raised by Telstra, I would have little hesitation in permitting MWO to abandon claims that it no longer wishes to pursue, whether out of a spirit of cooperation or for purely forensic reasons. 55 Whilst paragraph 37(a) is not the subject of MWO's application to amend, paragraphs 40A and 41 are. It is, as Telstra submitted, unclear from the proposed pleading whether MWO is alleging that it has received a total of remuneration that is less than that to which it is entitled under the 2003 agreement, or whether it is alleging that there are specific unpaid items and it does not know if the total amount of remuneration that it was paid was less than its entitlement. The proposed particularisation of the alleged loss and damage by reference to the taking of a proper account and enquiry at a later date fails to state with sufficient clarity the case that Telstra must meet at trial. Facts relevant to the facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but 'to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial'. Telstra is entitled to have, by way of particulars to MWO's pleading, the details referred to in [53] above as best MWO can provide them and, if it cannot provide such details as fully as it would wish, then Telstra is entitled to have MWO state what MWO requires to complete this task. This obligation cannot be discharged simply by providing some information to Telstra through letters from MWO's solicitors. 56 Accordingly, pursuant to O 13 r 2 of the Rules, I would grant leave to MWO to amend its application and statement of claim in accordance with the SFASC, which is exhibit NJA 20 to the affidavit of Mr Anderson sworn 8 June 2006 and in accordance with these reasons, including further and better particulars of paragraph 41. 57 MWO and Telstra disagreed as to the disposition of the applicant's motion if the applicant were unsuccessful. In all the circumstances, and in particular having regard to the outcome of the principal applications made on the motion, I would dismiss the applicant's motion. I would order that the applicant pay the respondents' costs of the motion. 58 Finally, I would make the order sought in paragraph 2 of the applicant's motion that Mr Ilhan and Mr Hamilton be permitted to inspect the documents that are the subject of the first respondent's Sixth List of Documents dated 7 April 2006 upon the terms proposed. Telstra did not oppose the making of this order. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | pleading application to strike out paragraphs of statement of claim whether no tenable claim application for a split trial whether in the interests of justice and the efficient management of the proceeding application to amend statement of claim whether particulars of loss and damage sufficient causation whether allegations disclose cause of action practice and procedure trade practices |
The appellant has appeared before me this morning to make submissions in support of the grounds of appeal assisted by an interpreter who has assisted in translating the Arabic language into English for the Court. In the course of the appellant's submissions, he made a number of observations and they are these. 2 The appellant is a Lebanese man who is a proud man and proud of his family tradition and the integrity of his family. He came to Australia to visit his family and met an immigration agent who gave him advice and caused him to sign papers by which an application was made for a protection visa as a refugee on the footing that the appellant held a well foundered fear of persecution for a Convention reason should he return to his country of origin. In the course of dealing with a review of the decision of the Minister's delegate, the Tribunal invited the appellant to attend before the Tribunal and provide oral evidence which occurred on 5 May 2005. Evidence was also taken by the Tribunal from the appellant's brother and sister-in-law. The Tribunal made a decision on the basis of the application before it for review of the decision on the footing, of course, that the appellant had contended that he was a refugee. 3 The appellant says this morning that he was hoping that the Tribunal would implement one of two choices. Either, accept withdrawal of the application made on the footing that the appellant was a refugee in circumstances where the appellant made it clear to the Tribunal that he did not press such a position or secondly, the appellant hoped that the Tribunal would formulate a report or recommendation that action be taken against the migration agent who had falsely and improperly induced the appellant to apply for a protection visa as a refugee. The appellant says that he was not aware that such an application had been made and did not authorise it. The appellant says that the Tribunal should have put to the appellant the question "Are you a refugee or not? " and "Do you wish to continue with the application or not? " The appellant says that he spoke honestly and frankly to the Tribunal and told the Tribunal what should happen and that he did not wish to pursue his application on the footing of an allegation that he was a refugee. 4 The appellant expresses the view, understandably, that the Tribunal as a responsible authority has, what he describes as a moral and legal duty, to act in a way which will deliver justice in the context of all of the circumstances confronting the appellant as they emerged. By way of illustration of this belief, the appellant postulates an analogous example where, should he go to see a specialist about some discomfort and pain he suffers from toothache, but it transpires that the specialist he is directed to is an eye specialist, then such a specialist ought to say that it is not open or competent for him to deal with that matter, and make recommendations about where the appellant ought to go. Based on this analogy the appellant believes that the Tribunal has a duty to "freeze" the status of the appellant and assist the appellant in taking action against the migration agent and in assisting the appellant in dealing with the true matter or his application, namely, his desire to stay in Australia as part of his family arrangements, duties and desires. 5 The appellant also observes that the conduct of the agent has resulted in his brother raising $15,000 which now has been entirely lost because the agent has lodged applications on an unauthorised and incorrect footing. The appellant also makes reference to other monies which have been expended in the course of pursuing these matters. The appellant says that he and his brother are victims in this matter and that the Tribunal engaged in jurisdictional error in failing to set aside the decision of the Tribunal. The contention is that Scarlett FM fell into error by failing to find jurisdictional error on the part of the Tribunal. At the threshold it seems to me important to explain the role of the Tribunal in dealing with these matters. The position, of course, is that applications made for a protection visa are determined by those persons who hold delegations for such a purpose and under the provisions of the Migration Act 1958 (Cth) the delegate must make a decision to either grant or reject the application based upon the footing that the applicant is a person who claims to be a refugee for the purposes of the Migration Act 1958 (Cth) having regard to the Refugees' Convention as amended by the Refugees' Protocol . That is to say a person who claims to have a well foundered fear of persecution for a Convention reason. 6 Once a decision is made by the delegate to reject an application, a review of that decision on the merits can take place before the Tribunal. The Tribunal's role in undertaking that review is to determine whether it can be affirmatively satisfied that the appellant is a person who meets the description of a refugee and thus a person who holds a well-founded fear of persecution for a Convention reason should the appellant return to his country of origin. That role and the powers of the Tribunal are confined to dealing with that question. It is not open to the Tribunal, although it may seem unfortunate to the appellant, for the Tribunal to enter upon a consideration of or make recommendations about the conduct of the migration agent, except to the extent, of course, that it is material to do so in dealing with questions going to the review. It is also not open to the Tribunal to adopt a role which makes recommendations about steps the appellant might take in seeking some other form of consent, approval or authority from the first respondent in relation to his proposed stay in Australia. 7 The appellant filed on 15 December 2006 an affidavit in support of the appeal. That affidavit makes it clear that what the appellant was really seeking was a 'work permit and business visa' and 'not a refugee application'. The affidavit also raises a second contention which is that the Tribunal took evidence from the appellant and the appellant's brother and sister-in-law and failed to put adverse information to him or explain to him the information upon which the Tribunal relied in reaching its decision. There is no substance in this contention because the evidence upon which the appellant relied was properly provided, frankly and directly, by the appellant to the Tribunal and in those circumstances, no obligation arose in the Tribunal to put to the appellant the information which the appellant had himself and through his witnesses provided to the Tribunal. Accordingly, there is simply no contravention of s 424A(1) of the Migration Act 1958 (Cth) on the part of the Tribunal. 8 At page 72 of the Appeal Book, the Tribunal recites some of the background circumstances and they are these. " Briefly, it was claimed that the Applicant is Muslim who lived in a Christian suburb in Lebanon and faced harassment from Christians. The Applicant denied these claims at the RRT hearing and gave positive evidence of inter-religious conflict having become a thing of the past. He also said he lives and works amongst Christians in Lebanon and has no problem with them. They said that Mr Zafar persuaded them to lodge a protection visa application for the Applicant merely to buy time for him in Australia. They said that their attempts to contact Mr Zafar, their authorised recipient, in connection with the Applicant's application had been unsuccessful in spite of Mr Zafar providing them with four mobile telephone numbers. The Applicant and his brother made them under oath and they were supported by the sister-in-law. The Tribunal found them to be candid witnesses who were prepared to correct a past wrong doing into which they had been misled by Mr Zafar, even though this meant that the Applicant's protection visa application could not succeed. The Tribunal explained that it does not have jurisdiction to decide such claims. The Applicant understood this. Such claims may be presented to the Minister who has non-binding powers to consider them under s 417 of the Act'. However, as a result of the evidence, the Tribunal concluded that the application could not succeed because the appellant simply was not a refugee for the purposes of the Migration Act 1958 (Cth). 10 Notwithstanding those findings and the position adopted by the appellant before the Tribunal, the appellant filed an application before the Federal Magistrates Court and an amended application on 27 July 2005 seeking to set aside the decision of the Tribunal. The appellant appeared before Scarlett FM and made oral submissions and a number of those submissions are consistent with precisely the views and submissions the appellant has put before this Court. At paragraph 17 of the reasons (AB84), Scarlett FM recognises that the appellant told the Court that he did not want to apply for a visa as a refugee, that he did not have any enemies and that he is not a refugee. He said that the situation in Lebanon was not good at the moment. The appellant is, plainly enough, concerned that an application went forward on a footing which was not authorised by him and misstated his true and real concerns and his objectives in seeking to stay in Australia. As a result of these findings, Scarlett FM, quite properly, concluded that the Tribunal had not misdirected itself and there was no jurisdictional error to be found in the decision or the conduct of the review. At paragraph 21 of Scarlett FM's decision, his Honour observes that the application before his Honour is entirely without merit and further concluded at paragraph 24 that his Honour was satisfied that the application before the Federal Magistrates Court had been brought for a collateral purpose. The Applicant was not aware of the application lodged by migration agent as being a refugee or protection visa application. Rather, I would have preferred to withdraw my application and such opportunity was not given to me by the Tribunal. 15 That affidavit also exhibits a letter which deals with propositions put to the then Minister for Immigration, Multicultural and Indigenous Affairs, Senator Vanstone. That letter identifies particular correspondence and addresses the extent to which the Minister may intervene in certain circumstances, particularly those relating to 'compelling and compassionate circumstances', and those relating to 'Sponsored Family Visitor Visa' arrangements. The ultimate result in this matter must necessarily be that the appeal to this Court is dismissed with costs because there is no error on the part of Scarlett FM in failing to find jurisdictional error on the part of the Tribunal. The appellant believes that the Tribunal ought to have taken a different course and invited the appellant to withdraw his application, ought to have taken steps to make observations about the role of the migration agent and steps that might be directed, more particularly, to the basis upon which the appellant seeks to stay in this country. 16 The Tribunal cannot descend into those questions unless they are expressly relevant to the determination of the review of the delegate's decision. Those matters are not matters which the Tribunal can deal with. It must deal with the question of whether the appellant is a person who has a well-founded fear of persecution for a Convention reason should he return to his country of origin. The plain circumstance in this case is that the appellant recognises, quite properly, that he is not a person who has a fear of persecution nor a well-founded fear of persecution and is thus not a person who is a refugee. He, in consequence, is not a person to whom Australia has protection obligations under the Migration Act 1958 (Cth) for the purposes of the Refugees Convention as am ended by the Refugees Protocol . 17 I have attempted to explain these circumstances in a little detail because I want to address the perception of the appellant that the Tribunal ought to have done something which it failed to do. I want to try and emphasise that the matters that the appellant wished the Tribunal to agitate were simply matters that it could not agitate in the way the appellant seeks. 18 Accordingly, the order of the Court must be that the appeal is dismissed with costs. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of whether the federal magistrate erred in failing to find jurisdictional error on the part of the refugee review tribunal consideration of aspects of the conduct of the appellant's migration agent. migration |
It seeks confirmation that it has not breached a licence agreement entered into between the parties by making and installing a copy of the software system the subject of the licence agreement. It also seeks declarations that the respondent (SAG) is not entitled to be paid additional fees pursuant to the licence agreement. SAG cross claims to the contrary and for a sum equivalent to the fees it says would have been paid on sale of the further licence to RWWA. 2 The dispute relates to RWWA's use of a software system supplied to it by SAG for RWWA's mainframe computer. It is helpful for an understanding of the case that there be some appreciation of the evidence as to the nature of the mainframe industry in Australia. Relatively speaking there are very few (some 60) mainframe computers in Australia. Obviously this stands in significant contrast to personal computers of which there are very many. In the mainframe industry '5-9 availability' means that a mainframe computer, unlike a personal computer, is expected to be available 99.999% of the time. The level of reliability expected of mainframe computers is consistent with the volume and value of the business carried out by enterprises which use mainframes. The reliability of mainframe computers is, of course, commensurate with their cost. 3 The world of personal computers is not simply a smaller version of the world of mainframes. For example, in practice, a mainframe is rarely 'turned off' as a personal computer may be. The concepts of installation or loading software are different. With a mainframe, substantial configuration is necessary in the course of that process. 4 For those (like SAG) who create sophisticated and valuable software for such a small but select market, protection of the rights to use the software is jealously guarded. 5 Failure of a mainframe is said to be extremely rare (a highly qualified expert in his 30 years experience in the industry has known of only one in Australia). The consequences of such a failure or a failure caused by external disaster, nevertheless, would be very significant. Accordingly, substantial resources are applied to providing a backup system which can be resorted to in a timeframe which would be much quicker than re-establishing the whole system. 6 I will say more in due course about the technical meaning of terms and functions which are referred to below. There also follows for convenience, a short dictionary of these terms derived from the evidence that has been given. SAG is in the business of licensing proprietary software systems. 8 Historically, by a series of agreements commencing in 1980, made between the predecessor to RWWA, the Totalisator Agency Board (TAB) and Software AG of North America Inc by its agent SPL (Australia) Pty Ltd, there was granted to the TAB a non-transferable and non-exclusive licence to use database management software known as 'ADABAS'. Also licensed was a related computer language product known as 'NATURAL' together with other necessary and associated products. 9 On 30 January 2004 pursuant to the Racing and Gambling Legislation Amendment and Repeal Act 2003 (WA), RWWA succeeded to the rights and liabilities of the TAB which had been in turn previously established under the Totalisator Agency Board Betting Act 1960 (WA) (see ss 34-37). 10 On 16 June 2005 following what was described as the TAB's 'name change', it became necessary to execute a further written agreement which is the Licence Agreement the subject of dispute in these proceedings. The Licence Agreement grants to RWWA a perpetual licence to use the system software described in the System Attachment to the Licence Agreement. The Licence Agreement sets out the terms and conditions for the granting of the licence. 11 On the pleadings the parties have agreed that the Licence Agreement had force and effect as at January 2005 when RWWA made the relevant copy known as a disaster recovery copy (the DR Copy). It is also common ground that the Licence Agreement governs the relationship between the parties at all material times following the making of the DR Copy. 12 RWWA transacts a very considerable volume of business in the racing and wagering industry. Its annual turnover at the time of the establishment of the DR Site was in excess of $1.3 billion. It has required a highly sophisticated system and a very high level of dependability of the system in order to ensure continuity of business operations. 13 Under the Licence Agreement it is necessary to specify a designated location for the hardware which will store the software supplied by SAG. The Osborne Park head office of RWWA has always been the designated location under the Licence Agreement. 14 The System was supplied to RWWA in a form which consisted mostly of load modules which are precompiled executable files capable of independent execution. In addition, files of source code format were supplied. In configuring and installing the System at the designated location at the head office, the source code files were compiled to create object code files which were then link-edited to form further load modules. These steps are necessary in order for the System to function. 15 On 3 September 2004, RWWA reached an agreement with KAZ Technology Services Pty Ltd (KAZ) by which KAZ agreed to provide a 'warm' disaster recovery site for RWWA at the premises of KAZ in Bennett Street, East Perth. This site has been known as the DR Site. The purpose of the DR Site and its contents (RWWA say the sole purpose) was to enable RWWA to have an emergency recovery system in place to deal with any disaster. In addition to agreeing to provide the site, KAZ also agreed to assist in the conduct of disaster recovery tests at the DR Site. 16 Having reached that agreement, RWWA then made a copy of the System as it was installed and configured on its mainframe at its head office. The copy was effected by a process of 'disk mirroring' which will be explained in greater detail shortly. Up until this time, RWWA had kept backup copies on tapes which were also held at a location apart from the head office location. To use these tapes rather than disk mirroring for disaster recovery of the System in the case of an emergency would have taken a substantially longer period of time than the use of the DR Site and the DR Copy. Material as it is generated at the head office site through the process of disk mirroring is instantaneously replicated at the DR Site but is not in an active form which could enable its use at the DR Site until further steps are taken. 17 The DR Copy is kept at the DR Site under the agreement between RWWA and KAZ. It is stored on a disk that is part of the storage area network known as the SAN. It is also therefore part of the 'mainframe environment' at the DR Site. Unless actually used in a real emergency restart scenario or when it has been used in the course of specific tests which have been conducted, the DR Copy is not and never has been loaded into the memory of the mainframe computer located at the DR Site. This is because there is 'partitioning' (a process to be explained further shortly) between the mainframe computer and the DR Copy. The partitioning on the mainframe at the DR Site is not activated until an emergency requires that to occur or until testing is conducted. There have been four tests conducted and a further attempted test for the purposes of demonstrating the process to persons involved in this litigation. That attempted test was unsuccessful for reasons which are not presently relevant. 18 The mirroring link between the RWWA mainframe at its head office and the DR Copy is one-way. This means that data can only be copied to the DR Copy and not the other way. In order for the DR Copy to be used either in the case of emergency or on a test to operate RWWA's database management system, that connection must be broken by RWWA activating the partition and loading the DR Copy into the memory of the mainframe held at the DR Site. 20 By its original cross-claim, SAG alleged that RWWA breached cl 1.1(d) and cl 1.4 of the Licence Agreement by installing the System on a second machine at a location other than the designated location without the consent of SAG. Further, SAG says that RWWA breached cl 1.5 of the Licence Agreement by 'outsourcing' the operation of the System to KAZ. SAG claims damages in the amount of $2,150,209 for a one off licence fee, and the sums of $725,712 and $322,538 as maintenance fees. Alternatively it claims such amount as the Court may conclude it would have been paid for a negotiated sale with a discount to RWWA, of a further licence for the DR Copy. 21 In its original defence to the cross-claim, RWWA says that it did not 'outsource'. It claims that the System has not been permanently or temporarily moved or installed at any location which is not the designated location. Further RWWA says that it is entitled to keep a copy of the System on its disaster recovery site (the DR Site) for emergency restart purposes. ' Assembly language ' --- a low level programming language that is, a language which tells a computer what to do in precise detail. ' Cold ', ' Warm ', and ' Hot ' Disaster Recovery Site --- are descriptors that refer to the speed with which recovery can take place after a 'disaster' if the current facility is unusable. A hot site is broadly defined as a fully equipped site which is able to resume operations immediately. A cold site is broadly defined as a site with minimal facilities and does not contain a facility for quick duplication or recovery. A warm site is defined as a category between 'cold' and 'hot' and usually contains some backup equipment ready for use. The terms are not particularly precise. ' Compilation of source code ' --- refers to the process by which human-readable programming language is translated into a machine-readable executable program. ' DAF ' --- is an internal SAG deal approval form. ' Designated location ' --- is a prescribed location from which the System functions, in this case the Osborne Park head office of RWWA under the Licence Agreement. ' Disk mirroring ' --- in this case, the RWWA system which is installed on a HDS9970B disk system at its head office is 'mirrored' using an HDS utility known as TrueCopy to an HDS USP-100 disk system located at the DR Site. The mirroring is synchronous. From there the disk is connected to an IBM Z890 Series mainframe computer at the DR Site but the DR Copy is not installed on the DR mainframe and is solely kept on a disk. RWWA's partition on the DR mainframe is not active as it is 'turned off'. The DR Copy is unable to be used or executed unless RWWA activates the partition and loads the system from the backup disk into the memory of the DR mainframe as it does when conducting testing. RWWA thereby mirrors data contained on the ADABAS database continuously to the DR Site. RWWA's component of the DR mainframe would be activated, that is, copying would be terminated and the DR Copy would be loaded into the DR mainframe only in the event of an emergency restart scenario or in testing. ' Distribution tapes ' --- means the tapes originally supplied by SAG to RWWA containing the generic software system, not then configured for use. ' DR Copy ' --- means the copy made at the DR Site of the System as installed and configured on the mainframe computer at RWWA's Head Office by disk mirroring. ' Disaster recovery site ' --- an offsite location where a backup copy of a system can be stored away from the designated location. ' DR Site ' --- means the specific location where RWWA's DR Copy is stored being the premises of KAZ Technology Services Pty Ltd located at Bennett Street, East Perth. ' KAZ ' --- the providers of the disaster recovery site for RWWA. ' Libraries ' --- storage files grouped together, for precompiled routines that perform predefined tasks. ' Linking ' - is the process of combining all of the parts of the computer program into an executable code which runs the program. ' Link edited ', ' Link-editor ', ' Linking of object code ' --- source code (see below) is, the human readable form of a computer program that is input to a compiler or translator for conversion into equivalent object code. Its function is to translate the humanly readable source code into a machine (i.e. computer) readable form known as machine code. To this end, a compiler can be viewed as a program translating high level language into absolute code or assembly language. The output of the compiler is known as object code. Object code is a program which is written in a language capable of being understood by a machine and which can be executed at a later time. However, before execution can occur, it is necessary for the object code to be linked. While the object code is in a machine readable form, it is not necessarily in a state that will allow it to be readily loaded into a computer's memory and executed. The further step involves linking or binding the object code. Object code needs to be linked because in most cases computer programs involve a large number of routines. ' Load module ' --- means all or part of a program in machine language form that is suitable for loading into memory and executing. The load module is generated by the linker or link editor. ' LPAR ' --- is an acronym for Logical Partition which effectively partitions a portion of the machine capacity in this case, ready for use by RWWA. ' Machine code ' --- see Object code. ' Mainframe ' --- means a large high performance computer that supports many users simultaneously and has the computing capacity to store large volumes of data and to run a wide variety of applications at one time. It is common for mainframe software vendors to charge by MSUs consumed or by MSU system capacity. ' NATURAL ' --- is a computer language product supplied by SAG under the Licence Agreement. ' Object Code ' --- means the program as compiled in machine readable, binary code, that can be executed without the need for translation. Object code is generated from source code by an assembler or compiler. ' PriSe ' --- SAG's internal price and discount determination programme. ' RECALL ' --- prior to the establishment of the DR Site, RWWA's transactions and records had been backed up to tape which was held offsite at a location described as RECALL. ' SAN ' --- storage area network. ' SAP ' --- SAG's core financial system. ' Source Code ' --- means a set of instructions to the computer for carrying out the various tasks which are performed by the program, expressed in a human-readable programming language which is yet to be compiled or translated into machine language (object code). Source code is input to a compiler or assembler, in order to derive object code (machine code). ' The System' --- comprises database management software known as ADABAS, a computer language product called 'NATURAL' and five other associated products. It is located at the head office of RWWA. 24 The sums referred to above totalling about $3 million are then particularised in the amended cross-claim filed on 2 October 2007. 26 As explained by counsel for SAG in the course of closing addresses, on the amended claim, SAG contends that it is essentially suing for a price, that is to say, the full price for the licence and various service fees as originally pleaded or alternatively, that sum, discounted. To support the discounted price and practice, SAG produced some 23 agreements and deal approval forms (DAF) with other parties. Those agreements, it was argued, showed the standard internal commercial processes of SAG and the likely practice between SAG and its customers. 27 In essence, the effect of that internal process was for those in authority within SAG to approve a minimum price at which SAG would permit its software to be licensed and also a maximum discount rate. There would then follow negotiations with clients of SAG. Those who were negotiating on behalf of SAG would try to obtain the least possible discount from the price, in other words, they would try to recover the highest price possible for SAG. They received a commission. The permitted discounts varied very considerably. SAG says that the mean discount, as shown on the DAFs produced, was approximately 30%. 28 Accordingly the alternative plea was to the effect that if the Court were satisfied that there had been a breach but not one which would entitle SAG to recover the full licence fee and service fees as pleaded, then it was open to the Court to arrive at a figure based on a course of dealings conducted by SAG with other clients as to the likely price which SAG would have been able to negotiate [after discounting]. Essentially this case involves deciding whether RWWA's actions were authorised by cl 12.3 of the Licence Agreement. 30 The Licence Agreement recites that SAG is the Australian distributor of the proprietary software system(s) set out in the System Attachment(s) attached to and incorporated into the Licence Agreement (the System(s)). It does not at any point, nor does SAG's case assert, that it was the owner of copyright in the System. 31 There are certain key elements of the contract which have fallen for consideration in the case. The first of those is cl 1 which sets out the grant of the Licence. It is in the following terms. 1. The Licensee shall notify Software AG at least 45 days prior to any proposed change of machine or operating system by the Licensee. 1.3 The Licensee's use of the System(s) shall be solely for the purposes of the internal administration by the Licensee of the Licensee's own business or the processing by the Licensee of the Licensee's own data and not to provide any type of bureau, rental, facilities management or similar type of service to, or use the Systems on behalf of or for the benefit of, any third party (including any subsidiary, holding company or associate of the Licensee) by way of trade or otherwise in any similar such manner. The Licensee shall not use the System(s) in connection with the sale or leasing of computer services for development of software for sale, lease or other external distribution, or for training purposes save in respect of the Licensee's own employees. Such consent may be granted for alternative locations operated by the Licensee within Australia at Software AG's absolute discretion upon issue of an additional or amended System Attachment and payment of any additional Licence fees due under the then current Software AG price list. The Licensee may not allow any third party to operate the System(s) on its behalf as part of any outsourcing, facilities management, application service provision or similar type of arrangement. The Licensee shall not be entitled to use the System(s) in any manner or for any purpose not expressly permitted by the terms of this Agreement. For those parts of the System(s) not provided to the Licensee in source code form, Software AG may procure the deposit with a third party of the system source code to facilitate maintenance, modification or correction of product. The Licensee further agrees that all confidential commercial and technical information, data, copyright and other intellectual property rights and know-how provided to the Licensee under this Agreement ("the Confidential Information") is and remains the property of Software AG or the relevant owner thereof. The Licensee undertakes that the System(s), the Documentation and the Confidential Information shall be held in confidence and secret. The terms of the Licence to which this System Attachment is attached shall apply to the System(s) Licensed by this System Attachment together with the terms set out herein. In the event of conflict between the Licence and this System Attachment the terms of the terms System Attachment shall prevail. Upgrade to 32 MSU from 28 MSU previously licensed under the name of Totalisator Agency Board of Western Australia. 36 The licence start date is specified as being 16 June 2005 and the maintenance and service fee start date is 17 July 2005. The System Attachment sets out the System name and operating system for the respective components referable to a 32 MSU capacity. The System Attachment goes on to specify the licence fee, maintenance service fee and maintenance service renewal details. 37 It is common ground that the System comprises database management software known as ADABAS, a relative computer language product called 'NATURAL' and five other associated products. 38 In summary then, by cl 1.1 of the Licence Agreement, SAG grants to RWWA a non-transferable and non-exclusive licence to use the System on terms which restrict the usage to a single machine at a designated location. It is common ground that RWWA is not permitted either to permanently or temporarily move the System or to install the System at any location which is not the designated location without the prior written consent of SAG (cl 1.4). No written consent was sought or obtained in relation to the DR Site which is the subject of this dispute. 39 Consent pursuant to cl 1.4 may be granted for alternative locations operated by RWWA within Australia at the absolute discretion of SAG but only in circumstances where additional licences are granted and in respect of which there would usually be further licence fees payable. The licence fees payable pursuant to those circumstances are under the contract, referable to the then current SAG's price list (subject to discount). 40 RWWA contends that it was entitled by cl 12.3 to set up a disaster recovery site and indeed it maintains that it is also entitled to test the facility at the disaster recovery site as to set it up without testing its capacity to function, would be a pointless and highly risky exercise of little value to it. 41 By cl 1.5, RWWA is precluded from allowing any third party to operate the System on its behalf as part of any outsourcing facilities management, application service provision or similar type of arrangement and SAG contends that RWWA has breached this clause. 42 On or about 30 January 2005, RWWA made a copy of the System as installed and configured on its mainframe at its head office to a disk by a process of disk mirroring which set up what is known as the disaster recovery or DR Copy. The first question will be whether in doing so, it breached the provisions of the Licence Agreement. 43 The DR Copy is kept at the premises of KAZ in Bennett Street, East Perth under an agreement between RWWA and KAZ. Not a great deal of attention was directed to that agreement but it is clear that KAZ has charged a substantial fee to RWWA for the facility at the premises of KAZ which is of considerable sophistication and value to RWWA. The DR Copy is maintained well away from the head office as the purpose of the DR Site is to ensure that if the mainframe at the head office is destroyed by fire, terrorism or some other unforeseen event it is far enough away from the DR Copy to make the chances of the DR Copy being similarly damaged unlikely. 44 RWWA says that the DR Copy was made for the sole purpose of disaster recovery or emergency restart of the System in the event that its head office mainframe computer failed due to it being '(lost), destroyed or rendered unusable'. The concepts of disaster recovery and emergency restart, it says, are synonymous. 45 Insofar as the installation is concerned, SAG argues that by cl 1.4, RWWA can only install (emphasis added) the System at the designated location. Insofar as copying (emphasis added) is concerned, the only entitlement given under the Licence Agreement is the right to copy under cl 12.3 which is expressly limited in its terms. 46 As distinct from the rights which are granted, SAG emphasises that the Licence Agreement imposes a range of prohibitions on RWWA in relation to the System. It is a 'basic' agreement and for additional usage of the System, payment is required. Specifically by cl 1.6, RWWA is not permitted to use the System in any manner and for any purpose not expressly permitted under the Licence Agreement; by cl 1.2, RWWA cannot use the System on any other machine or operating system except under the issue of an additional licence; by cl 1.4, RWWA cannot move the System to or install the System at any other location; by cl 1.5, RWWA may not allow any third party to operate the System on its behalf (emphasis added). By cl 12.2(c), RWWA is not entitled to sell, disclose or communicate the System(s) to any other party and by cl 12.2(d), RWWA is obliged to treat the System, the Documentation and the Confidential Information as if it were its own confidential information. 47 SAG emphasises, no doubt correctly, that the System it supplies is of very considerable value. It is valuable not only in the sense of its cost to produce but also as a backup system it is of great importance to RWWA. SAG also emphasises, again correctly, that the driving factor for RWWA in establishing the DR Site is the great savings in being able to recover from a disaster within a matter of hours rather than a week or so. All of these considerations, SAG contends, should lead to or, at least, support a conclusion that RWWA was required to pay SAG a licence fee and service fees for the copying, installation and usage of the System at the DR Site. 48 In response RWWA says that cl 12.3 of the Licence Agreement (and s 47C CA), must be given some sensible commercial meaning, no matter how strictly and literally the contract is construed. RWWA argues that the contract is made between people who are in the industry. It argues that to not be permitted to test the emergency recovery site to know that it is of practical functionality would mean that the exception conferred by cl 12.3 would have no practical or commercial advantage. If the System could not be tested at the DR Site, RWWA would not know that it was any better off than having to wait for a week or so before the System could be restored in the event of an emergency. RWWA says that the notion that one could have a disaster recovery site without the capacity to test it would be unheard of in the mainframe industry. Back-up copies cannot be made if the program is designed to prevent the making of copies, or if any licence for the use of the original copy given at the time it was acquired has expired or been terminated (s 47C(4)(b), (c)). 52 RWWA says that it made and now keeps the DR Copy for use only by or on behalf of RWWA to enable it to be used in lieu of the System if the System is 'lost, destroyed or rendered unusable'. It also says that the DR Copy was made and is now kept by RWWA as part of the normal back-up copying of data for security purposes. 53 RWWA refers to and relies on extrinsic materials such as the Explanatory Memorandum to the Copyright Amendment (Computer Programs) Bill 1999 to support the proposition that a restrictive view of s 47C should not be adopted. Section 47F relevantly provides that copyright in a computer program is not infringed by making a reproduction or adaptation to the extent reasonably necessary to test, in good faith, the security of the original copy, or of a computer system or network of which the copy is a part. 55 To fall within this exception, there are certain requirements that must be met. First, the reproduction or adaptation must be made by or on behalf of the owner or licensee of the original copy being tested, investigated or corrected; secondly, the information resulting from making the reproduction or adaptation must not have been readily available to the owner or licensee when it was made; and thirdly, the copy being tested must not be an infringing copy. 56 RWWA argues that it has only conducted 'security tests' of the DR Copy in May and July of 2005 and February and August 2006 at the third party site of KAZ. RWWA says that by virtue of the fact that the DR Copy is a mirrored copy of the original system by testing the DR Copy, RWWA is in effect testing the original system. 57 SAG submits that the testing process is not 'security testing' within the ordinary or technical meaning of that expression. SAG says further, that even if the testing process did constitute security testing the conduct would not be permitted under s 47F as the DR Copy was not made for the sole purpose of security testing, but also to have a backup copy. It is clear by virtue of s 21(1) , (2) of the Federal Court of Australia Act 1976 (Cth) that the Court may in relation to any matter in which it has original jurisdiction make binding declarations of right whether or not any consequential relief is or could be claimed and a suit is not open to objection on the ground that a declaratory order only is sought. It is not abstract or hypothetical. The cross-claim by SAG for damages is effectively in millions of dollars. The jurisdiction of the Court to grant declaratory relief is confined only by considerations which mark out the boundaries of judicial power --- Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564 at 582. He first commenced dealing with SAG through its Western Australian reseller. He now deals directly with SAG support personnel in Sydney and Melbourne. 61 He explained that TAB was involved with SAG from the early 1980s and SAG products have become entrenched as a key database within RWWA's systems. The first contract for implementation of SAG's products was made on 26 August 1980. That contract was between TAB and a predecessor of SAG. Each time that the TAB and subsequently RWWA upgraded its mainframe computer, software contracts were also updated to reflect the new hardware. In Mr Meehan's experience that was a common practise in the industry. In Mr Meehan's time with RWWA, RWWA and its predecessor, TAB have always worked with a mainframe. 62 Mr Meehan has worked on mainframes systems since 1972 in various Government and private positions. The major types of databases that may be used on mainframes are IBM's DB2, IBM's IMS, Software AG's ADABAS and Oracle. He describes these databases as database management systems whose role is to hold the data used by the applications which run on computers including mainframe computers. 63 ADABAS is supplied by SAG under the Licence Agreement and holds information relating to RWWA's core business systems. This includes RWWA data, betting accounting information, accounting journals, account betting transactions and unpaid winning betting tickets. 64 Originally all betting tickets are written to an IBM file and after a certain amount of time, (usually about three weeks) all unpaid winning tickets are transferred to the ADABAS ticket file. The primary use of the ADABAS ticket file is to enable the payout of winning tickets that have not been claimed within three weeks. 65 NATURAL is a notional language supplied by SAG. It is used to create programs and interfaces which allow RWWA staff to manage the race day systems, for example, to jump between races to enter results and perform other functions which are necessary for RWWA's business. 67 The distribution tapes contain 281 modules in load module form, four of which are re-link edited. 68 I will explain these concepts further below when considering the expert evidence but they are important in considering the meaning of cl 12.3 of the Licence Agreement because it confines the rights of RWWA to copy the System in object code only. 69 From 1984, RWWA and its predecessor TAB ran two small mainframe computers in adjoining rooms. Those mainframes were both kept at the main building in Osborne Park now occupied by RWWA and formerly by TAB. Both TAB and then RWWA ran production on one machine and development on the other machine. Eventually the production and back up machines were amalgamated into a single big machine. 70 Mr Meehan confirmed that the system from SAG was installed from the distribution tapes onto RWWA's HDS 9970V disk system located in its premises at Osborne Park. 71 He was not involved in the Board discussion in May 2004 when RWWA through its Board resolved to create a separate disaster recovery site some distance from RWWA's main premises in Osborne Park. He did, however, provide information in the paper that was presented to the Board by the Chief Information Officer, Mr Glen Fee (who also gave evidence). He says, however, that one of the key business reasons for the decision was the high risk associated with having the backup (disaster recovery) computer located in the room adjacent to the room containing the production machine. The purpose of shifting it to a different location was to have a backup plan if there was massive destruction of the building by fire or other cause. 72 Mr Meehan said there was a great deal of planning involved in creating the DR Site. He was involved in that planning. The DR Site was established in mid-2004 at the KAZ data centre in East Perth. 73 Prior to the establishment of the DR Site, backups existed by way of tape and were held offsite at a location described as RECALL. After the establishment of the DR Site, RWWA initially backed up its database to tapes at the DR Site. At that stage RWWA had not commenced the process of disk mirroring. From early January 2005 on implementation of the Board's decision, Mr Meehan commenced arrangements for the DR Site to mirror data from the Osborne Park production site by organising the renting of fibre link between RWWA's head office and the DR Site. The other aspect was to arrange for the mirroring process to become active. 74 The process of disk mirroring meant that RWWA's database was written to the primary site at Osborne Park at the same time as it was written to disk at the DR Site to create the DR Copy. The DR Copy was made and kept at the DR Site at the same time RWWA 'went live' at the end of January 2005. 75 In the disk mirroring process all the production files on RWWA's mainframe at Osborne Park are mirrored using the HDS utility known as 'TrueCopy' to an HDS USP-100 disk system located at the DR Site. The mirroring is synchronous. The disk is connected to an IBM Z890 series mainframe computer at the DR Site but, importantly, the DR Copy is not installed on the mainframe at the DR Site and is solely kept on the disk. 76 RWWA has a partition on the mainframe at the DR Site which is not active. As described in lay terms by Mr Meehan, it is in effect 'turned off'. The DR Copy is then unable to be used or executed unless RWWA were to activate the partition so as to load the System from the backup disk into the memory of the mainframe at the DR Site. RWWA's partition on the DR mainframe is not activated and the DR Copy of the system is loaded onto memory only in the event of an emergency restart scenario. 77 The process is continuous, that is, RWWA mirrors data which is contained on the ADABAS database continuously to the DR Site to ensure that the backup copy at the DR Site is always up to date. Mr Meehan says that RWWA made the DR Copy of the SAG software for the purpose only of emergency restart of the database management system in the event that RWWA's mainframe at its head office failed due to being 'lost, destroyed or rendered unusable'. 78 According to Mr Meehan, KAZ does not at any time and has not at any time operated RWWA's component of the DR environment. Off duty RWWA operational staff would take control of that process. RWWA's intention was to establish a safe DR Site and to test it twice a year. It has been unable to meet that schedule. Four tests have been conducted, the first two in May and July of 2005 and then tests in each of February and August 2006. 80 These events all commenced before execution of the Licence Agreement. It was not until 16 June 2005 that Mr Meehan, on behalf of RWWA executed the Licence Agreement with SAG. Since that time the last upgrade of SAG products was completed in March 2006. That was simply an upgrade or change to the SAG products which had been in production since January 2005. It followed that certain SAG libraries were affected by the upgraded products and therefore the changes were mirrored at the DR Site. Since the March 2006 upgrade, no changes have been made to the SAG load modules on the production disk and therefore no changes have been made on the mirrored disk at the DR Site. 81 Mr Meehan confirmed that SAG became aware of the DR Site as a result of an email containing a technical query that he sent to Mr Dan Martin of SAG on 1 June 2006. He had previously had dealings with Mr Martin. Mr Martin responded to his email seeking more details on the DR Site. Those details were provided by Mr Meehan who received a further email and then correspondence essentially raising the question of whether there had been a breach of the Licence Agreement. 82 Different reasons were given by SAG at various times in relation to the basis upon which it was contended that there had been a breach. On 28 July 2006, Mr Meehan and Mr Charles McNiven who was a RWWA senior systems engineer met with Mr Martin and Mr Blair Harding who was a senior technical consultant of SAG. Minutes of that meeting were prepared by Mr Meehan. Discussion was reasonably spirited. No agreement was reached. 83 On 8 August 2006, Mr Martin emailed Mr Meehan suggesting that it would be of value if representatives of RWWA discussed the DR Site further with Mr Colin Brookes, the country manager of SAG. Accordingly, on 14 August 2006, Mr Fee, the Chief Information Officer of RWWA and Mr Meehan spoke with Mr Brookes of SAG. In that conversation, Messrs Fee and Meehan confirmed RWWA's position that the software was not installed at the DR Site and that the load libraries at the DR Site were used as a backup copy for the purpose of an emergency restart. He also provided further requested details which clarified RWWA's position in an email which he sent to Mr Martin on the same day, 14 August 2006. 84 As to the steps which could be taken by RWWA concerning the SAG software, Mr Meehan says there are three possible directions it could take for the DR Site. The first is to maintain the current situation and backup to disk via the mirroring process. The second is to backup, as SAG claims is authorised under the Licence Agreement, that is, to copy the distribution tapes only. Mr Meehan says that to do so is not standard industry practice and it would be a 35 step process which would take at least a week to do and introduce the risk that the newly created environment could differ from the original. The third possibility is to mirror all of RWWA's data except the SAG System which would be backed up to tape. That backup would be of the SAG load libraries and the database. Mr Meehan says that would add approximately 30 minutes to the recovery process. 85 Mr Meehan says that in 2004, had he been aware of SAG's view of RWWA's backup process he would not have implemented the mirror processing for the SAG component of RWWA's production environment. The backup would have remained on tape which had occurred prior to the setup of the DR Site. 86 During a test of the DR Site what is done is to 'break the mirror', that is, at that point data from the production site is not written by mirroring or in any other way onto the disks at the DR Site. The test is conducted as swiftly as possible and the test data is then overwritten as soon as the test ends. In other words, in terms of data for usage on an ongoing basis, the test data (as distinct from the process) has no value in RWWA's future business. Testing the DR Site is a necessary procedure according to Mr Meehan, to ensure that the DR Site is actually likely to work in the event of a disaster. 87 Following RWWA's four tests, there was a further test conducted in April 2008 but that was in the presence of Mr Rodney McKemmish. Mr McKemmish is the expert witness called by SAG. Also in attendance on that occasion were Mr Steven Fink and Mr Richard Adams, the experts for RWWA and certain legal representatives. The purpose of that test was to demonstrate the process in light of the pending trial in these proceedings. (That test actually failed for reasons beyond the control of RWWA but it served part of its purpose of providing a demonstration of the process to the expert witnesses and others). 88 When testing is conducted, the requisite process is to notify the DR Site of RWWA's intention to carry out a disaster test; to ensure that the DR Site operators ready the room with RWWA's terminals and equipment; to recall offsite canisters from RECALL; to form technical and operational teams; to notify external organisations such as banks etc; and to notify Telstra to activate the business resumption plan so as to switch the frame relay network, internet and selected voice/fax numbers to the DR Site. 89 The mainframe equipment is then inspected and activated if required and the disaster recovery mainframe devices are set to a state which stops the mirroring. RWWA's partition is then activated. This in itself is a 33 step process which includes operators replying to various automated messages and performing numerous checks. 90 In an actual true disaster recovery scenario, Mr Meehan says that if RWWA had to reinstall from the SAG distribution tapes, it would delay the recovery process by as much as a week. By standard industry practice that would be unacceptable and to backup distribution libraries so as to enable that process would not be the norm. 91 Using the mirrored backup copy of the System, the DR test takes at least one evening and involves RWWA's software support staff, technical support staff, testing services staff and computer operators. 92 No personnel from the DR Site, that is to say KAZ, are involved in the process. The DR mainframe is kept in a separate locked room and RWWA's partition is not active unless and until there is an emergency restart scenario or RWWA undertakes a DR test. During testing all the production functions are performed. 93 According to Mr Meehan the DR Site is essential for the purpose of ensuring that within 8-12 hours RWWA can have the System ready again to take bets in the event of a disaster. He says all RWWA DR tests to date have been unable to meet this target. On no occasion has RWWA used the DR Site in a real life situation. 94 Mr Meehan gave extremely detailed (and technical) evidence as to the process involved both in testing and if reinstallation from the tapes were necessary. As he was not challenged on that detail, it is unnecessary to repeat it all. Indeed SAG freely acknowledges that there would be good sense in avoiding the old process of backup to tapes. Its argument is simply against RWWA's doing so without SAG's approval, a licence and/or payment of fees to SAG. 95 The KAZ contract contemplates provision of a 'warm' site. That term is very fluid. Mr Meehan does not consider the site is actually 'warm'. Mr Meehan's reason for saying that is because RWWA did not achieve a target of an 8-12 hour turnaround . He confirmed in cross-examination that the timing issue was at least one of the reasons for having the DR Copy and was and is certainly an important issue for RWWA. 96 He accepted that the DR Copy was installed on the KAZ mainframe as and when there was DR testing. He contended that emergency restart was, in the mainframe industry synonymous with the disaster recovery. However, Mr Meehan was not put forward as an expert witness and while there is no reason to doubt the veracity of any of his evidence, there is ample further explanation from the independent experts as to the highly technical aspects involved with mainframe computers. 97 The objective of achieving an emergency restart within 8-12 hours turnaround was a business or financial decision. The turnover of RWWA as at September 2006 was about $1.33 billion (which equates to a mean of over $25,000,000 in a week). There were and are considerable fluctuations at certain times. Later in the calendar year such as the time of the 'Spring Carnival' in Melbourne, the weekly betting revenue which would be lost in the event of a breakdown of the mainframe or the System would be far more than the mean weekly amount. 98 Mr Meehan was questioned about the meeting that he attended on 28 July 2006 which had been preceded by a substantial amount of email exchange. He confirmed that by the time of that meeting, if not before, there was no equivocation whatsoever on the part of RWWA as to its refusal to purchase a further licence from SAG. That position did not change at all at the meeting and the view taken by Mr Meehan as to the position being taken by SAG was that its argument in relation to the construction of the Licence Agreement and to its entitlements was 'ridiculous'. 99 Mr Meehan also accepted that he was the person from RWWA whose job it was to agree with the terms of the correspondence from RWWA's solicitors to SAG. Others in the organisation were also involved. This questioning went to, amongst other things, his authorising of the terms in which experts were briefed. 100 Mr Meehan also accepted that if it had been a small mainframe and there was a relatively insignificant or minor problem with the operation of the mainframe then it may be possible to restart the mainframe by basically turning it off, reinstalling the copy of the software and building it up from the original copy of the software. He accepted that this may be a technical possibility depending on how complicated the configuration linking was. It could take a short period of time in the case of a small mainframe or it could take up to a week in the case of the RWWA mainframe. Mr Meehan accepted that this would constitute an instance of using a backup copy for emergency restart but stressed that in practice, it would not be done that way. 101 I have indicated that Mr Meehan was not put forward as an expert witness but he has had 36 years expertise in the mainframe industry. He accepted that since he commenced in 1972 there has been enormous change in all sorts of respects in terms of software and hardware during that period. The concept of disaster recovery sites is rather more widely employed now than it was 30 or 40 years ago. He accepted that all of the KAZ options which had been offered to RWWA were more sophisticated than simply backing up current versions of a tape and leaving them in a safe location to be used if there was a disaster. Mr Meehan's intention was to engage KAZ to provide a warm DR site as it was no longer acceptable for RWWA to do nothing more than have the backup tapes simply stored in order to be 'pulled out' if there was a disaster. 102 RWWA had spent approximately $2.97 million with SAG for its services in the 10 years up to September 2006. Mr Meehan accepted that it was decided to pay over five years some $4 million to $5 million to KAZ in order to improve the disaster recovery system. 103 Mr Meehan, however, made the point that if it was only open to RWWA to backup the distribution tapes, then RWWA would have to go through a full installation process including configuration, testing, compilation etc to ensure that the end result is the same as what has been destroyed. In relation to his evidence that backing up would not be 'done that way', Mr Meehan said that it was standard practice in any data centre to backup load libraries and it is those load libraries that you would restore if there was a corruption or some other sort of failure. He said that you do not restore from distribution tapes because you are redoing work that has already been done. 104 Mr Meehan's evidence was that if they had (hypothetically) obtained legal advice that they would have to acquire a new licence from SAG for the DR testing, they would have proceeded on a different basis rather than to pay for that additional licence. This has been a contentious issue. SAG submit that I should reject this evidence as it is driven largely by a hostile reaction to demands of SAG which Mr Meehan considers were 'ridiculous'. I will refer to my assessment of this evidence and submission in due course. 105 Mr Meehan did not deny that RWWA could pay for the licence. He was simply not 'in a position to discuss financially what they would or would not have done'. He also accepted that RWWA had derived something of benefit through having gone through the testing process in particular and having proven that the DR Copy worked. He accepted that it was because of his perception as to the unjustified contractual demands from SAG that in his view the figure sought by SAG did not matter as RWWA would never have agreed to pay for an additional licence fee. He is the Chief Information Officer of RWWA. He has held that position since 2000. He is responsible for setting the overall strategic technology direction of RWWA; for establishing and implementing a program of work as agreed by the RWWA Board of Directors; for reviewing and implementing current technology to support RWWA business both internally and externally; and for developing and managing an overall technology budget. In addition, he reviews technical performance of implemented technology in relation to its impact on business objectives so as to ensure appropriate action is taken to predict any unsatisfactory results. 107 His first dealings with SAG were on 27 June 2006 when he was contacted by Mr Meehan. As a result of discussions with Mr Meehan, he became aware of the issue with SAG concerning software licensing at the DR Site. On 27 June 2006 he was copied into the email that Mr Meehan wrote Mr Martin of SAG and in early August Mr Meehan requested him to be involved in a telephone conference with Mr Brookes at SAG. Mr Meehan kept Mr Fee informed about discussions with representatives of SAG in relation to issues arising in connection with the DR Site. 108 Mr Fee was involved in the telephone conference on 14 August 2006 which was mainly between Mr Meehan and Mr Brookes. Following the 14 August 2006 telephone conference, Mr Fee was copied with Mr Meehan's email sent to Mr Martin of SAG on 16 August 2006 and Mr Fee received a letter from Mr Steve Keys, Sales Director of SAG on 21 August 2006 followed by a phone call on 28 August 2006 from Mr Martin. In that phone call, Mr Martin asked whether RWWA would like to meet with representatives of SAG or whether a legal approach would be adopted. Mr Fee informed Mr Martin that he would get back to him by the end of the week. 109 On 31 August 2006 Mr Fee spoke again with Mr Martin and advised him that RWWA had considered SAG's options of either meeting to discuss the situation or embarking in a legal process. He suggested to Mr Martin that SAG should come across to Perth on the following week with their lawyer to discuss the matter further and Mr Martin asked Mr Fee whether he understood SAG's position. Mr Fee confirmed that he did but that RWWA did not agree with the position. Mr Martin suggested to him that SAG and RWWA should speak at a personal level rather than involve lawyers. Mr Fee informed Mr Martin that RWWA intended to have legal representation at the proposed meeting between RWWA and SAG and that it would be more productive if SAG did as well. Mr Martin said that he would discuss the proposed meeting internally with SAG and get back to Mr Fee. 110 On 4 September 2006, Mr Martin telephoned Mr Fee suggesting that SAG's proposed way forward was for RWWA's legal representatives to speak with SAG's contract person to arrive at an agreed understanding of the situation and for SAG to meet in Perth with RWWA to reach an agreed outcome. Mr Martin informed Mr Fee he would send an email to RWWA with the contact number of the contract person at SAG. 111 Emails were duly sent. Mr Fee together with a solicitor had a telephone conversation with Mr Martin and M/s Stella Adams, the General Manager Business Operations/Company Secretary of SAG and Mr Keys. Mr Fee says that most of the discussion took place between Mr Stewart and M/s Adams on the loudspeaker telephone. Their discussion was essentially in relation to the legal interpretation of the contract between RWWA and SAG but no resolution was reached at that meeting. On 12 September 2006, he received a letter from Mr Martin and on 19 September 2006, through RWWA's solicitors a response was sent to SAG. Mr Fee, like Mr Meehan, also confirms that in 2006, he considered the claims by SAG were simply wrong and that was the reason why, in his view, RWWA should not pay anything for an additional licence. 112 Mr Fee also says that although RWWA has at all times considered that it was entitled to maintain the DR Copy, if SAG in January had claimed $2,150,209 for the fee plus maintenance costs of $274,587 per year, RWWA would not have agreed to pay any such fee as RWWA would have continued to simply backup to tape as it had since 1980 prior to setting up the DR Site. Again, whether that is so, is a contentious issue according to SAG in light of the risk of loss of a very large amount of business in the period of a week. 113 On 9 November 2006, RWWA through its solicitors issued the proceedings against SAG. He is the Director of Extended Rights Management for Australia and Asia. He has been in that role for two years. He commenced with SAG in sales and has moved into management. 115 He explains that SAG is a subsidiary of Software AG, a publicly listed company on the Frankfurt TecDax Stock Exchange head quarters in Darmstadt, Germany. It has offices in about 50 countries. Mr Beddoe is responsible for SAG sales revenue in Australia, Asia and Japan. In carrying out his responsibilities, he works with SAG sales directors across the region and with their sales team in identifying revenue opportunities where there are requirements for extended usage rights of SAG systems. Such identification, he says, usually leads to a negotiation process resulting in additional contractual terms and conditions. In this role he is involved in formulating and approving pricing and correspondence which is sent to the customer. 116 From about January 2004 to early 2006 he was the Australian sales director responsible for Australian revenue and the Australian sales team. He managed a team of six salespersons. Amongst those was Mr Martin, the account manager responsible for the RWWA contract. Mr Martin reported to Mr Beddoe. It effectively partitions a portion of the machine capacity for use by RWWA. The full capacity of the LPAR is 32 MSU or 170 MIPS. MIPS is an acronym for Million Instructions Per Second. 118 Mr Beddoe produced the business operations manual for 7 December 2004 which he said was designed to answer most of the 'day to day' questions regarding software licensing policies. It was to be used in conjunction with the most current SAG price list. The business operations manual was used by SAG until it was updated in 2005. 119 In January 2005, SAG's then internal current price list was contained in SAP, SAG's core financial system. It was accessed at that stage via the Vantive price server. SAG's prices were set by its Board. As and when there was a price change, prices were adjusted on the SAP. The Vantive price server sat on a secure intranet available only to SAG's staff. Mr Beddoe used the Vantive price server almost daily from the time he commenced at SAG until April 2006 and was very familiar with it. That system was replaced with PriSe. He now uses PriSe every day. It has the same functionality as Vantive and requires the same input of data in order to determine licence fees payable by a licensee. Based on his frequent use of Vantive until it was replaced by PriSe and his frequent use of PriSe immediately after the changeover, he believed that PriSe replicated details previously produced by Vantive in that PriSe produced the same price amounts as had been produced by Vantive. 120 He demonstrated how these business tools could be used in order to explain what, in the view of SAG, RWWA would be required to pay it for the DR Copy at the DR Site and on what basis. 121 Once the standard licence fees and maintenance fees have been calculated, SAG works with each customer to determine what additional extended usage rights are required to correctly licence the use of the SAG system(s). Extended usage rights or additional usage rights are those over and above the standard product licence terms and conditions. 122 He explained that generally customers take both a current view and a future view and depending on the tactical and strategic directions of the business, elect to include additional contractual terms into an agreement which reflect the additional usage rights. 123 One of the documents Mr Beddoe followed was a licensing rules document prepared by M/s Stella Adams. He used the licensing rules document as a ready reckoner to calculate fees for extended usage rights during the period from about 1 August 2004 to 1 August 2005. 124 Mr Beddoe said using the pricing rules described, the fee (in Euros) for LPAR extended usage right was 50% of the list price being an additional fee of €521,312 (the LPAR Fee). The LPAR Fee was then used as the base amount against which was to be calculated a fee for outsourcing applicable to the second installation. The fee for the outsourcing extended usage right was 50% of the LPAR Fee being a fee of €260,656. He then used the total of the LPAR Fee and the outsourcing fee as the base amount or the list price licence fee on which he applied a fee for the warm disaster recovery because the warm disaster recovery was only applicable to the outsourced second installation not the designated installation. Accordingly, applying the pricing rules, the fee for the warm disaster recovery extended usage right was a 'discount' of 50% of the sum of the LPAR Fee and the outsourcing fee being a fee of €390,984 for the warm disaster recovery fee. 125 In summary, the total list price licence fee for the extended use of the System(s) which would allow RWWA to have a warm disaster recovery standby operating on a second machine within an LPAR with the operation and maintenance of the System(s) maintained and operated by a third party was €1,172,952, that is, the sum of the LPAR Fee, the outsourcing fee and the warm disaster recovery fee. On the basis of 2005 exchange rates that equated to $2,099,585 Australian dollars. 126 In addition to this amount, according to Mr Beddoe, there were maintenance fees payable by RWWA. He calculated the total list price for the maintenance service fee for the grant of the extended usage rights at $314,945 Australian dollars, being 15% of the total DR licence fee. Therefore, the maintenance service fee for 30 January 2005 to 29 January 2006, he said, was $314,945. It was the same amount for the following year and a slight increase for the next year to $336,991 on the basis of 7% of global price list increase. Thus, the total maintenance service fees to 30 January 2009 were $1,303,872, in addition to the total DR licence fee of $2,099,585. A total of $3,403,457. 127 This was the price, he said, that would be sought by SAG for the DR installation. He acknowledged that customers generally endeavoured to negotiate a discount. 128 Mr Beddoe gave detailed evidence about the business operations manual and how prices and discounts were calculated by SAG. He confirmed that the licence which RWWA had was a perpetual licence, that the licence held by RWWA was priced on the basis of various parameters including a capacity of 32 MSU and that during the DR testing the maximum extent to which the KAZ computer was powered up to was 4 MSU. He explained that the SAG pricing policy was to price on the capacity of the machine, not its actual operating capacity. The pricing in this instance was calculated on a 32 MSU basis. The reason it was priced on the basis of 32 MSU, even though it has only ever been powered up to 4 MSU was because of an LPAR on the KAZ machine that allows up to 170 MIPS which is another way of saying 32 MSU. If there was a disaster, RWWA would require that amount of capacity. 129 Mr Beddoe produced and was asked to explain the method of usage by SAG of DAFs. These DAFs were submitted to those in authority within SAG to fix price and discount parameters. He explained the system by reference to another identified client being a particular Bank. He observed that the Bank had a capacity of 12 MSU on its mainframe and prior to the agreement being put in place did not have any extended rights. That Bank, like RWWA, he said had the standard licence agreement for SAG. The Bank engaged with SAG to discuss some strategic decisions to be made in relation to disaster recovery and those requirements were reflected on the DAF which included outsourcing for third party access and various other requirements. 130 By reference to the DAF, Mr Beddoe identified a 'target price'. He explained that the target price was the price at which SAG believed a licence and related fees could be sold to the customer. A discount is then fixed. In this case, the discount to the Bank client was 26%. After internal discussion, working through the various teams, SAG decides what it believes is its minimum price it would accept for the particular set of extended rights. Mr Beddoe identified the various people and divisions involved in reaching this conclusion. It was a lengthy process which could sometimes take more than 12 months with many meetings and discussions. Clearly, he said, the customer has another view on the figure to be paid 'so we enter into discussions and eventually arrive at a figure'. 131 Ultimately the figure in the contract with the client Bank (in this example) reflected the discount figure authorised on an internal basis by SAG. Mr Beddoe produced two other documents, the first being a spreadsheet showing a non-outsourcing calculation. The second was a schedule of percentage discounts for agreements attached to his second statement. This statement was produced after the amendment claim made on the second day of the trial as to SAG's alleged lost opportunity to negotiate at least a discounted figure for payment for the licence. 132 Of the 23 agreements that he produced with his second statement, Mr Beddoe was personally involved in negotiating some of them. Also of the 23 agreements produced, there were only three that involved licensing for disaster recovery usage. 133 He pointed out that the effect is that unless a very good deal is struck, the concluded price after negotiation with the client is usually somewhere between SAG's asking price and SAG's minimum price on the DAF. In the negotiations with a client, the practice of SAG was to seek as much information as possible, to formulate a price and to go back to the client with the price. 134 By 10 July 2006, SAG was aware that disk mirroring was being used, that it was a synchronous process and in relation to RWWA, that the disaster recovery mainframe was held offsite, or at least, that was their assumption. SAG at that stage did not know that the offsite location was the KAZ site. 135 After Mr Harding and Mr Martin returned to Melbourne from Perth from the meeting held on 28 July 2006, they did not report any difficulty in obtaining information from RWWA as to any issue including the DR Site details. 136 Mr Beddoe himself did not have any direct knowledge of the terms of any contractual relationships between SAG and the head company in Germany or any other entity concerning the rights of SAG to licence software products. It related to the actual fee to be charged to RWWA for the proposed warm site extension in September 2006. 138 That DAF showed that the proposed or maximum permitted discount was, in relation to the RWWA DR Site, 52.65%. SAG was in fact hoping to achieve a price of only $441,587 for a licence fee for a warm DR site. In the actual October 2006 offer made by SAG, there was no discount of the maintenance fees for the DR Site. But, within the internal records of SAG as belatedly produced, the DAF discount for the maintenance site fee was also shown as 52.65%. Further, there was no suggestion in the DAF of any additional loading. These sums stand in contrast with claims which now exceed $3 million. 139 Mr Beddoe's repeated explanation for the substantially lower contemporaneous and internal figure was that the sum was fixed prior to any knowledge as to the site location and involvement of KAZ. 140 I am not persuaded that given the extent of SAG's knowledge about the DR Copy at this stage and RWWA's openness about it, that such detail of which SAG was unaware would or should have made any significant difference to the price it may seek to negotiate. It was absolutely clear that SAG was aware that the DR Site was at a location other than the designated location. Precisely where it was located (other than at the designated location, is immaterial). Further, as I conclude below, there was at no time any 'outsourcing' in the manner that term is used under the Licence Agreement. The precise terms of the contract with KAZ made no difference at all to SAG. This is also clear from the fact that it did not seek information in relation to it. 141 In the version of the business operations manual applicable at the time when the DR Site was under consideration by SAG, there was no reference at all to a warm standby. Mr Beddoe also identified a 'licensing rules' document which he used on a regular basis and carried with him for the purpose of negotiations. When he referred to the DR Site as being a warm standby, it was by reference to the definition contained in the licensing rules document. By the time this litigation was commenced, in the subsequent copy of the business operations manual there was a table which did identify warm standby. It also identified warm standby as being a category in respect of which the software was 'fully' installed on a backup system. It also indicated that one quality that distinguished a warm site from a hot site was whether 'the licensed products are installed, but are NOT continuously operational on both machines'. In the later version of the business operations manual that came into effect on 1 October 2007 there was a similar table printed. In that document beneath the table there was a heading 'cold standby'. The system(s) would be installed for the purpose of that testing. But if someone had a licence to use SAG software without any disaster recovery extension having been sought or agreed with SAG, according to the later version of the manual, that customer could, without an additional licence or fee, test, that is, install the software five times a year for the purpose of testing it for disaster recovery. Although Mr Beddoe was '100% sure' that an additional licence would have to be granted for that testing, the table appeared to suggest otherwise. 143 Mr Beddoe ultimately agreed that based on the chart contained in the business operations manual SAG did not require an additional licence to be obtained to simply allow installation for the purposes of disaster recovery testing not more than five times per year (which was considerably more tests than have been conducted by RWWA). However, he said that the guidelines in the business operations manual had been changed, altered and updated. He accepted, however, that nothing had changed in relation to the way SAG treated cold disaster recovery between the date of the business operations manual and the date of negotiations with RWWA. 144 Finally, Mr Beddoe acknowledged that in the agreement with another government agency, SAG had treated 'outsourcing' as meaning the transfer of the management of day to day operation of an entire business function to an external service provider. For the avoidance of doubt, neither engaging a third party as part of a cold disaster recovery strategy or for the purpose of performing specific tasks or specific projects nor engagement of contractors to assist with various aspects of its computer operations, constituted outsourcing. 145 Although Mr Beddoe was of the view that outsourcing was usually uplifted at 50%, he was taken to other agreements with various entities in respect of one of which provided for an additional outsourcing allowance of 25%. Further, on that occasion the discount given on the licence fee was 53.6%. He was taken to another insurance client in respect of which, there was a DR environment where the discount shown for the disaster recovery licence on the DAF was as much as 61.97%. 147 It is clear from the evidence of Mr Beddoe that SAG does believe that its standard agreement entitles it to negotiate with its clients for extended rights in respect of which it is entitled to payment in appropriate circumstances. It is unnecessary to comment on the general practice or the belief of those within SAG. SAG may have been able to negotiate payment of fees in some or many cases. But my impression from the evidence, although the question was not squarely put, was that the sum RWWA would pay, had it believed at the time it was required to pay for a licence, was far less than even the lowest price SAG considered it could obtain. It is one thing for SAG to emphasise the possible loss of a week's turnover in business but against that very considerable loss would have to be weighed the actual likelihood of the risk of that turnover being lost. The likelihood appears to have been very low. 148 From RWWA's perspective, disk mirroring and paying KAZ for the certainty of being able to recover its business operations within a matter of hours was worth, over several years, $4 million maybe $5 million but to pay SAG additional large sums in addition to that amount would have been most unattractive. He was an employee of KAZ, (not SAG), who had been involved with DR testing conducted by RWWA. He thought he was present at all four of the tests. They started on a Sunday and generally finished on a Tuesday. He could not recall seeing technicians carrying out the particular tasks described in the pleadings. He could recall people doing some things but he could not recall who they were. He was not 'sufficiently technical' to comment on who carried out what technical tasks and whether they were in fact performed. In particular, he could not recall whether the testing tasks to which he was taken were tasks carried out by KAZ personnel or RWWA personnel. 150 There is no evidence of any involvement of KAZ personnel in the testing process in any sense which would constitute outsourcing. This conclusion is certainly not a criticism of Mr Melsom or his evidence. He was simply not in a position to give the evidence which was sought to be adduced from him. But the application of the approach has certainly given rise to completely different outcomes. 152 The construction of cl 12.3 on which RWWA bases its entitlement to both operate the DR Site and to carry out tests there is said to be a construction which reflects what a reasonable person in the position of the parties would have understood it to mean. Modern authorities do not restrict the approach to construction exclusively to the text of a contract (in this case the Licence Agreement) but require that the surrounding circumstances which are known to the parties and the purpose and the object of the contract be taken into account. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. SAG points to the fact that the context in which a contract takes its meaning includes a history of the contract. An appreciation of the commercial purpose of a contract calls for an understanding of the genesis of the transaction, the background, and the market. This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The agreement has a history; and that history is part of the context in which the contract takes its meaning. Before considering that history, it is necessary to explain, by reference to the text, how the issue of construction arises. 155 As against that, it is also established that where it is clearly necessary in order to avoid absurdity or inconsistency, words may be supplied, omitted or corrected within an instrument: Fitzgerald v Masters [1956] HCA 53 ; (1956) 95 CLR 420 at 426-427. The present case (like Tanzone) involves an extreme set of facts upon which it is evident that something must have gone wrong in the drafting (cf per Lord Hoffmann in ICS at 912). The literal approach for which the landlord contends produces a ridiculous commercial result based upon a review process which flouts common sense. The nature of the mistake and what was intended is sufficiently clear as to justify the Court in reading the document "as if" the appropriate language had been used to reflect the intentions of the parties. 156 Adopting these approaches, SAG points to the structure of the Licence Agreement in terms of the basic rights being granted. SAG says that the Licence Agreement grants basic rights to RWWA to use (emphasis added) the System only at the designated location and only on a single machine of a specified type, by a specified maximum number of concurrent and other users. In particular, SAG emphasises that the rights granted under the Licence Agreement are limited and 'basic' within SAG's hierarchy of rights to usage of its software. It points out that the Licence Agreement contemplated other extended possible uses in respect of which further licences must be granted but absent such licences, those uses are not permitted. 157 On the four occasions that RWWA caused the System to be tested at the KAZ premises on the DR Site, according to SAG, it breached cl 12.3 of the Licence Agreement. I consider the testing is a central, if not the key issue because even RWWA accepts that on the four occasions in which it tested the System, it was conducting a process of installing the System. Accordingly, the process of testing the System is the high point of the allegation by SAG that cl 12.3 of the Licence Agreement did not authorise the installation of the System in the manner in which it has been installed for testing by RWWA at the DR Site. If SAG fails on that contention in respect of which there is an admission of an installation of the System, it is then driven to assert that RWWA has installed the System at the DR Site on other occasions apart from the testing of the System or that it has 'used' or 'kept' the System in other ways contravening the Licence Agreement. 158 From RWWA's perspective, if it can show that cl 12.3 permitted the installation of the System for the purposes of testing the System for emergency recovery at the DR Site, then it would not be in breach of the Licence Agreement. SAG's damages claim falls only to be determined if there is a breach. 159 It follows from this that although I have considered below all of the arguments raised by both parties, it needs to be borne in mind that the high point of the case by SAG against RWWA is that the testing on the four occasions at the KAZ site is not authorised by cl 12.3. The experts have conferred and as a result of that conferral, certain central issues can be regarded as common ground. Before explaining where the common ground lies, it is necessary to identify the experts, to say something about them and to deal with some fundamentals in relation to building and installing computer software. 161 Of the three expert witnesses (who gave concurrent evidence), Mr Fink called for RWWA, has the greatest experience in the mainframe industry. Mr Fink has had over 30 years experience in the mainframe industry in Australia and, in my view, can deal with relevant issues with precision and personal experience. Mr Fink's experience is of a practical nature having been involved in the IT industry for 38 years, primarily in the mainframe environment in many technical, management, sales and marketing areas. 162 RWWA also called Mr Richard Adams of Deloitte Forensic, a senior engineer who has produced software in machine code, assembler and high level languages for systems operating in the mainframe environment. 163 SAG called Mr Rodney McKemmish. He holds a Bachelor of Business degree from RMIT. Having worked with the Victoria and Queensland Police and KPMG Australia, he is now head of e.forensic.<e.law>Australia. He has had extensive experience in forensic computing and has lectured at universities on those topics. 164 As a matter of convenience, I summarise the following technical material from part of the expert report of Mr McKemmish, the expert for SAG. I do not understand this technical material to be contentious. Certainly in relation to the pleaded case and the disputed issues, I am satisfied that it is not contentious. These are important to understand when construing cl 12.3 of the Licence Agreement. 166 Source code comprises 'computer instructions and data definitions expressed in a form suitable for input into an assembler, compiler, or other translator' (IEEE Standard Glossary of Software Engineering Terminology 1990). Source code is, in simple terms, the human readable form of a computer program that is input to a compiler or translator for conversion into equivalent object code. 167 The compiler itself is also a computer program. Its function is to translate the humanly readable source code into a machine (i.e. computer) readable form known as machine code. To this end, a compiler can be viewed as a program translating high level language into absolute code or assembly language. The output of the compiler is known as object code. Object code is a program which is written in a language capable of being understood by a machine and which can be executed at a later time. 168 However, before execution can occur, it is necessary for the object code to be linked. While the object code is in a machine readable form, it is not necessarily in a state that will allow it to be readily loaded into a computer's memory and executed. The further step involves linking or binding the object code. Object code needs to be linked because in most cases computer programs involve a large number of routines. Each performs different functions. The larger and more complex the program, the more routines and functions are required. In order to make the programming process easier to manage, many of the routines are developed in separate source code files. A program can then be broken up into modules represented by separate source code files. The compilation phase produces a discrete object code file for each source code file. 169 For the program to function, it is necessary to combine the individual object code files into a single executable file. Usually linking is performed by a link-editor. A link-editor is a utility program combining several separately compiled modules into one resolving internal references between them. As well as linking or binding individual object codes, it is on occasions necessary to include other precompiled routines that perform predefined tasks. Typically those precompiled routines are grouped together and stored in files known as libraries. The advantage of libraries is that they eliminate the need for the programmer to have to develop a new source code each time a common function is required. One advantage of using libraries is that they permit greater code re-use. This reduces the overall development time. Accordingly the resulting executable machine code constitutes an amalgamation of the object code modules and the library files. 170 Once the various object code files have been linked to form an executable file, that file can then be loaded into the computer's memory and run. 171 From this it can be seen that there is a difference between object code and executable code as a result of the linking process. The linking of the object code to create a load module is carried out by a loader program. A loader program (amongst other things) reads machine code into the main memory of a computer in preparation for execution. (2) The software needs to be configured for use by the particular customer, in this case RWWA. (3) The distribution tapes as supplied by SAG include load modules and some source code files. Based on the customary definition, the load modules are comprised of linked object code files. The customer (in this case RWWA) uses the source code files to configure the software for use. (4) The distribution tapes are loaded onto the RWWA mainframe system and configured using the SAG source code supplied by SAG to produce further load modules. Mr Adams and Mr Fink opine that the copy of 'the System' which is most suitable for emergency restart is the installed and configured software. (2) Mr Fink and Mr Adams are of the view that although it is an option to restore the system from the original distribution tapes as supplied by SAG or a backup tape copy of these distribution tapes, the time required to reconfigure the software means, in their views, that it is not a reasonable option to backup the unconfigured software as supplied by SAG. (3) Mr McKemmish is of the opinion that 'the System' is the uninstalled and unconfigured software contained on the distribution tapes. Mr McKemmish is of the opinion that it is not necessary in order to operate the software in an 'emergency restart' scenario to have a copy of the configured load libraries as the software can be copied from the distribution tapes and then reconfigured for installation. Accordingly Mr McKemmish believes that for the purpose of cl 12.3 it is not necessary for the copy of the System to be capable of being used, for emergency restart purposes, within any particular time frame. In Mr McKemmish's opinion, it is necessary to determine what is the minimum requirement to achieve an 'emergency restart'. He is of the view that the expression contemplates two elements --- what is 'emergency' and what is 'restart'. His view is that the minimum requirement is to have a copy, which, in an emergency, can be used to restart the system. Therefore he considers that as copying the uninstalled and unconfigured system to tape is a possible form of a 'copy' that the Licence Agreement should be construed as only authorising a copy of the uninstalled and unconfigured system. In his view, backing up to tape is the most common form of backup. He agreed, however, that there is no issue about the media used in this case, for example, disk versus tape. Is the DR Copy in 'object code only'? However, in many contexts, the term 'load modules' will be more useful, because it refers to the state of the object code files, for example, where they have been organised into a load module. (2) The software as supplied by SAG, in addition to some source code (which is compiled to produce load modules in installing and configuring the software on to RWWA's mainframe), is supplied in the form of load modules, which are in object code on the customary definition referred to at (1) above, but not on the second definition referred to at (1) above. (3) It is not possible to copy the software system as supplied by SAG in 'object code only' unless the load libraries as supplied by SAG are treated as 'object code' in accordance with the customary definition referred to at (1) above. (4) If one adopts the customary definition of 'object code' referred to at (1) above, then (leaving aside the issue of what is 'the System'), the DR Copy is in 'object code only' within the meaning of cl 12.3 of the Licence Agreement. What was the Purpose of the DR Copy? (I would take this opinion to be as to the sole apparent purpose, there being no other obvious purpose. While there was agreement between the experts on this matter, SAG submitted, correctly, in my view, that the question of RWWA's own purpose when making the DR Copy was not a matter on which the experts could express any particularly helpful opinion). Is the DR Copy a second installation? As the mirrored copy sits on the Hitachi disk which is part of the mainframe environment, and which, if the link between the production system SAN and the DR Site SAN is broken, is able to be loaded into the DR mainframe memory, it is his view that the DR Copy is therefore installed at the DR Site. In Mr McKemmish's opinion, it is not necessary for the DR Copy to be loaded into the mainframe's memory or for the partition to be activated for there to be an 'installation'. (2) Mr Fink and Mr Adams are of the opinion that the mirrored copy is a backup copy of the production load libraries. This is standard industry practice. RWWA has never gone through the installation process at its DR Site (other than for the DR tests) nor is the partition activated (except in a DR test or in the case of an actual emergency restart scenario). In their opinion, functionality is essential to an 'installation', and there is no installation unless and until the DR Copy is loaded into the memory of the mainframe at the DR Site. The fact that the DR Copy is part of the SAN and part of the mainframe environment does not mean it is 'installed'. In their opinions, the DR Copy is not installed at the DR Site. Is the making of the DR Copy and carrying out the testing process on a second machine at the DR Site a 'use of the System' in breach of the Licence Agreement? In his view, RWWA is using the system at the DR Site. (2) Mr Fink and Mr Adams are of the opinion that 'use' of the system is directly related to carrying out RWWA's internal business which is not the case at the DR Site, and that as the system is backed up (via the mirroring process) to disk at the DR Site and the mainframe computer partition assigned to RWWA is not active nor any programs used unless they are loaded into memory, then the system cannot be said to be 'in use at the DR Site'. The parties have also co-operated to make this aspect of the case which, as with the agreement of issues for the concurrent examination of the expert witnesses, have produced economies in time and cost. What is the 'System' within the meaning of cl 12.3 of the Licence Agreement? It suggests that Mr Adams and Mr Fink were guided by the definition of system to which they were directed in the letter of engagement by which they were informed of the issues in dispute. SAG relies on the fact that Mr Meehan settled that letter of instruction. 182 I accept the submission from SAG that the determination of what is the System for the purpose of the critical cl 12.3 of the Licence Agreement must be a question of contractual construction by the Court. However, the clause employs technical terms. It follows that the expert evidence assists in determining the meaning of cl 12.3. 183 In my opinion, there is no doubt that each of the three experts was doing his best to provide frank assistance but it is equally clear that Mr Fink's views were not only entirely plausible but have the support of a substantial background experience in this specific industry. 184 SAG's expert, Mr McKemmish, has had limited experience in a mainframe computer environment. In comparison Mr Fink has worked for over 30 years in the mainframe industry and has worked at many of the organisations in Australia that operate mainframe computers. 185 I accept the evidence of Mr Fink and Mr Adams that 'the System' in the mainframe industry means the system as installed. The utility of cl 12.3 would be very limited were it otherwise. Most importantly, it would also require the words 'in object code only' where they appear in cl 12.3 to be struck out. To do so would do substantial violence to the meaning of the section when properly understood. 186 Clause 12.3 is intended to be permissive. Objectively viewed, its purpose is to permit the licensee to reproduce the software to the extent that may be required for emergency restart purposes. To merely copy the distribution tapes or cartridges would be of limited practical use for that purpose. This is common ground amongst all experts. To construe cl 12.3 as being confined simply to copying tapes or cartridges of the unconfigured and uninstalled System would be a construction that is at least unreasonable and inconvenient but would also be unjust. 187 It is common ground that the System as supplied does include some source code. When the source code is converted to object code and is then linked to create load modules on installation of the System, the System as installed and configured then becomes a copy 'in object code only' and there is a copying of the System for emergency restart purposes. 188 To limit the right under cl 12.3 to a right to only copy the tapes or cartridges supplied would require part of the copy to be a copying of source code. In my view, that very copying of the source code is expressly precluded by the Licence Agreement. 189 Nevertheless, except in the circumstance of the four successful tests or in the hypothetical circumstance of an actual emergency restart, the System is not operable and accordingly is not installed. I base this view on the evidence of Mr Adams and Mr Fink. 190 The approach of Mr Fink supported by Mr Adams was a practical and functional approach in my view rather than a more academic approach. Mr McKemmish on the other hand accepted that a definition of 'the System' to mean the unconfigured and uninstalled system was simply the approach that he took to the meaning of the term and was not based on any relevant technical concept or widespread industry usage in the mainframe industry. 191 The consequence of an inability to copy the System as configured and installed would be that RWWA would be little better off than simply backing up the tapes of its data as it had done prior to establishing the DR Site. In an emergency in that situation, were it to lose the availability of the mainframe at Osborne Park, it would take something in the order of a week for RWWA to be fully functional under the superseded backup system. 192 Each of the expert witnesses for RWWA, Mr Fink and Mr Adams expressed the view that the expression emergency where it appears in cl 12.3 suggested some time criticality or urgency. There is no doubt that this accords with the ordinary meaning of the words. The primary definition of emergency in the Macquarie Dictionary is ' an unforeseen occurrence; a sudden and urgent occasion for action '. 193 In the New Shorter Oxford English Dictionary the primary definition is ' a situation, especially of danger or conflict, that arises unexpectedly and requires urgent action ... '. 194 For SAG it was contended that the emergency was constituted in the loss of access to the System. The response to that emergency was not part of the emergency itself. I am unable to accept that submission. The ordinary understanding of emergency pertains to an event that requires an urgent response. In the context of this dispute, a week is far from urgent. An urgent response is something which can be achieved (with the aide of disk mirroring) within a matter of hours or at least this is the theoretical target. The entire purpose for establishing the DR Site was to avoid the huge financial cost which would be occasioned in the event of a disaster if the business were inoperable for a period of a week or so. 195 Mr McKemmish tended to agree with these propositions from a practical perspective and also agreed with the functionality of the steps that had been taken by RWWA. His position was simply, that on his view of the Licence Agreement, RWWA had to pay for an additional licence for the benefit of installing a system in the way that it had. He accepted that carrying out an emergency restart using the uninstalled distribution tapes would be 'even less acceptable than the unacceptable' cold site scenario. He also thought an emergency restart had to be 'time critical'. 196 Mr McKemmish said that to make a copy of the distribution tapes would 'most definitely' involve copying the source code, which would not be the case if one copied the System as installed and configured. In my view, cl 12.3 expressly and logically permits copying the System 'in object code only'. Under cl 12.3 of the Licence Agreement, is RWWA entitled to copy the 'System'? 198 The topic has however been covered above in answer to the first issue. Is the DR Copy a copy of the 'System' within the meaning of cl 12.3 of the Licence Agreement? (Indeed, the evidence of Mr McKemmish is that the DR Copy can be considered an installation of the System as well as being a copy of the System. Neither Mr Fink nor Mr Adams agree that there is any installation of the System). Such copying as there has been, is permitted. Was the making of the DR Copy a 'use' of the System within the meaning of cl 1.1(d) and/or cl 12.3 of the Licence Agreement? That licence must be for an LPAR of 32 MSU in circumstances involving a warm DR site and outsourcing. 201 SAG relies upon the view of Mr McKemmish that the making of the DR Copy was a 'use' of the System. Mr Fink and Mr Adams consider that the meaning of the word 'use' of the System in industry context is usually related to carrying out one's ordinary business. It is common ground that such business is not carried out in any relevant way at the DR Site. Mr Fink and Mr Adams contend that as the System is simply backed up via the mirroring process at the DR Site and as the DR mainframe is not active nor is any program used unless actually loaded into memory, then the System cannot be said to be in use at the DR Site. 202 Mr Fink and Mr Adams, rejected the suggestion that the System had been in use at the DR Site in any sense in which that expression might generally be understood in the industry. As against that, the expression 'use' does not appear to have any particular technical meaning in the industry. 203 As there is no technical meaning, the question is one of construction of the Licence Agreement. In my view the only sensible construction is that when the Licence Agreement refers to 'use' it means using the System within RWWA's ordinary business or some other business, not for occasional testing for one DR Site. This must be so, in my view, if the DR Copy at the DR Site is authorised by cl 12.3 as I conclude that it is. 204 A functional meaning of 'use' reflects the protection that SAG needs under the Licence Agreement. It already has protection against copying and installation of the System otherwise than in accordance with the Licence Agreement. In my view, no other construction makes commercial sense. 205 If the use by RWWA of the DR Site is authorised by cl 12.3, then the question as to whether or not the System is otherwise in use (for cl 1.1(d)), in my view, falls away. I consider that the use is so authorised. What is meant by 'archival or emergency restart purposes' in cl 12.3 of the Licence Agreement? SAG makes the point that RWWA considers that emergency restart means or at least includes the setting up of a disaster recovery site and installing the DR Copy at the site as part of the testing process. 207 There is no doubt on the evidence and in the agreement between the expert witnesses that objectively construed at least, the whole and sole purpose of the DR Site was to be able to reactivate the System in the case of an emergency. 208 Any debate about whether emergency restart is the same as disaster recovery, in my view, is somewhat semantic. The notion of emergency restart does have some specialist meaning within the industry but that meaning does not conflict with normal usage. It is necessary to look no further than the dictionary definitions of emergency to see that in the ordinary sense, emergency is equated with the requirement for urgency. This comes back to the fundamental issue in the case which is that the whole reason RWWA established (at considerable expense) the DR Site, in what I accept was the belief it could do so, was to avoid loss of data and the risk of a delay of about a week in being able to recommence its operation. 209 In a business which has an extremely high turnover of transactions and a substantial financial turnover, each day of delay is significant. In my view there is no scope for the argument that emergency restart simply means that the business has sustained a disaster or emergency which will require a restart at some leisurely pace in a week or so. In my opinion the whole concept of emergency restart means that as an essential part of a highly sophisticated business environment, the restart is required as quickly as reasonably possible. 210 While Mr Fink and Mr Adams, conclude that 'emergency restart' is synonymous with 'disaster recovery', Mr Fink also expressed the view that 'emergency restart' in common use of the term in the mainframe environment only ever occurs at a disaster recovery site. That is, at a location removed from the primary mainframe. A failure in any relevant sense in a mainframe environment is extremely rare and Mr Fink in his experience of over 30 years could only recall one such failure. Mr Fink explained the '5-9 availability' of a mainframe and its system meant that it was expected to be available 99.999% of the time. It was not customary to switch it on and off like a personal computer or to simply reboot it after a 'glitch' such as a temporary freeze. 211 Mr McKemmish took the view that disaster recovery was a form of emergency restart but, in any event, had earlier concurred following conferral with the other expert witnesses that the sole purpose of the DR Site was for emergency restart. Did RWWA make the DR Copy for 'emergency restart purposes'? The evidence of Mr Meehan was that the purpose in establishing the DR Site was to achieve emergency restart in 8-12 hours as it simply would not be acceptable to wait a week to do a restart from tapes. There is no dispute that this is simply a business or commercial approach. 213 I am satisfied on the evidence that the sole purpose of the DR Site was for archival or emergency restart purposes. In that regard I have also given consideration to the contemporaneous documentation to that effect constituted in the submission to the Board made by Mr Meehan and in the agreement between RWWA and KAZ. Do the uses which RWWA has made of the DR Copy come within 'emergency restart purposes' under cl 12.3 of the Licence Agreement? The purpose has been clearly defined in the previous issues, namely, that of 'emergency restart'. The question is whether there has been a 'use' in the sense that the parties are to be taken to have intended under the Licence Agreement. In my view there has been no 'use' of the System at all in a sense that would contravene the Licence Agreement. The only sense in which there has been a use of the System has been by RWWA storing the DR Copy on the SAN in order to allow it to be available for an emergency or to be tested so that RWWA could be confident that it would be available in the event of an emergency. Usage of the System where it appears in the Licence Agreement, in my opinion, means a usage for business purposes. No action of RWWA at the DR Site constitutes such a usage. In my view, this is a construction which accords both with industry practice and common sense. In my view installation needs to be read in the same light as usage is to be read in the Licence Agreement, namely in the instance of this Licence Agreement, to install the System in such a way that it is operable in the conduct of RWWA's business. 216 Mr McKemmish took the view that the System was not ' fully installed'. His approach to describing it as an installation depended on the fact that the DR Copy was held on the SAN and was part of the mainframe environment. Mr Fink and Mr Adams took a different view which, in my opinion, was not successfully, if at all, challenged. The central basis for the opinion of Mr McKemmish was that the DR Copy was part of the mainframe environment. The logic of this was challenged in the course of cross-examination on the basis that the SAN could quite easily be unplugged and moved into an adjacent room. It would then no longer be part of the mainframe environment according to Mr McKemmish and would at that location cease to be an installation. The distinction, with respect, is somewhat artificial. Mr McKemmish did not seek to attempt to justify this view on the basis of any personal experience of 'installation' in the mainframe industry. 217 As to (b), the storage of the DR Copy also falls away with the making of the DR Copy for the same reasons. 218 As to (c), the testing process, in my view, is the high point of the SAG case that there was a breach of the Licence Agreement when there was a testing of the DR Copy. RWWA also accepted that once the testing was conducted there had been an installation of the System on the mainframe at the DR Site. The question for determination is whether such installation of the System at the DR Site is authorised by cl 12.3 which constitutes an exception to the general prohibitions in the Licence Agreement against use, copying and installation. I will consider testing further below. Is RWWA in breach of the Licence Agreement? For reasons expressed below in relation to testing, there is and has been no breach. Was RWWA permitted to make the DR Copy by s 47C(1) and/or (2) CA? It was introduced by the Copyright Amendment (Computer Programs) Act 1999 (Cth). Additional amendments were made by the Copyright Amendment (Digital and Agenda) Act 2000 (Cth). As I have already concluded, there is no issue as to RWWA's purpose. The Copyright Amendment (Computer Programs) Act 1999 was enacted following the report by the Copyright Law Review Committee, Computer Software Protection 1994 released in 1995. Both that report and also the Revised Explanatory Memorandum to the Copyright Amendment (Digital Agenda) Bill 2000 (par 90) provide no support for a restrictive view of s 47C CA: see [10.13]-[10.18], 10.106. See also the Explanatory Memorandum to the Copyright Amendment (Computer Programs) Bill 1999 at pars 9-13. In dealing with s 47C, his Honour observed that one of the requisite circumstances was that the reproduction was made for the purposes of which backing up and disk mirroring are commonly employed: subs (1)(c). (The issue before his Honour, however, involved an allegation that the reproduction was made from an infringing copy). 225 RWWA contends that it was entitled to test under s 47C(1) CA having regard to (c)(iii). In my view it has established that the testing of the DR Copy was clearly to enable RWWA to use the DR Copy in lieu of the original copy of the System only if the original was lost, destroyed or rendered unusable. 226 The entitlement to test according to RWWA is consistent with both the literal reading of s 47C(1)(c)(iii) CA and from a purposive approach to statutory interpretation ( Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 29 ; (1998) 194 CLR 355 at 381). 227 RWWA also rely on Mr McKemmish's ready acceptance that it was reasonable and best practice to test one's disaster recovery strategy. He would expect a person to test the disaster recovery arrangement and would be very surprised if they did not do so. As previously observed, however, I consider that Mr McKemmish was simply describing what was best practice. He was not necessarily, in making that concession, purporting to construe the contract or the effect of the CA in relation to the contract on the question of whether or not it was permissible to conduct testing at the DR Site. New s.47C(2) allows the making of a temporary copy of a computer program as part of the backing-up of data on a computer or computer system that is commonly done for security against the possibility of damage to or destruction of the computer or system . The Committee understands that it is common practice for many businesses to back up their work each day. This usually means that everything stored on the business' computer, including data and programs, is down loaded onto another form of storage such as magnetic tape or floppy disc. This copy is then stored in a safe place as a precaution against unforeseen disasters such as fire, earthquake or even terrorist attack. Such back-up copies are usually retained only for a limited period as their usefulness is short lived. Nonetheless, it is likely that businesses may keep copies for a number of days before reusing the tape or disc on which the material is stored. Such back-up copying, insofar as it includes computer programs together with business data, ought not be an infringement of the copyright in those programs. Accordingly, the Committee recommends that the making of an ephemeral back-up copy of a computer program that is incidental to the normal back-up copying of business data for security purposes should not be an infringement of copyright (Recommendation 2.20). In other words, the testing is necessary in order to be sure that if the System at the main premises at Osborne Park is destroyed, the security of the original copy of the System is tested. The purpose of the testing is only the purpose of 'testing in good faith the security of the original copy'. The only testing that is done is to the extent reasonably necessary for that purpose and the information resulting from the testing in the reproduction for the purpose of testing is not otherwise readily available. 235 While the expression 'testing in good faith the security of the original copy' might on one view be given a more restrictive meaning, that does not appear to be the legislative purpose taken in entirety in its context including the emphasised passage appearing in the Copyright Law Review Committee's report cited above. 236 In my view, accordingly, s 47F CA also applies to protect the testing process carried out by RWWA. 237 'Security testing' is directed towards the possible failure of a system or network 'of which the original copy is a part'. Testing as to possible failure of a system (namely, the DR Copy) is the purpose of testing at the DR Site. Accordingly s 47F CA also applies to protect RWWA. (2) For the purposes of this section, sections 47B, 47C, 47D, 47E and 47F are prescribed provisions. It is unnecessary to resolve that question in light of the conclusion I have reached about testing. 240 As I have made clear above in relation to the Licence Agreement and for reasons there expressed, it seems to me that the right conferred by cl 12.3 of the Licence Agreement necessarily conferred the right to carry out the testing performed by RWWA. 241 Regardless of the various arguments advanced, I hold the same view about s 47C CA. In my view, the nature of the testing involved for the same reasons is part of the process of copying. Was RWWA permitted to copy or reproduce the System for the purpose of testing the DR Copy by the testing process pursuant to s 47C(1) and/or s 47F CA? Does the testing go beyond the permitted statutory purposes? In my view for the reasons expressed, it does not. Has RWWA made a use of the DR Copy that is not a specified use under s 47F CA, so that, by virtue of s 47G CA, RWWA must be taken not to have made the DR Copy under s 47F? If the testing is permitted then, to the extent to which there has been any 'use' thereby, the use must also be permitted. Alternatively, does cl 12.3 of the Licence Agreement on its proper construction permit RWWA to copy or reproduce the System for the purpose of testing the DR Copy by the testing process set out in the statement of claim, alternatively, is it an implied term of the Licence Agreement that RWWA is permitted to copy or reproduce the System for that purpose? On any view of the evidence, to have an emergency restart recovery site or a disaster recovery site without having the opportunity to test the functionality of that site would be a pointless exception to the other prohibitive or restrictive provisions of the Licence Agreement. Such a construction would provide very little scope for achieving the obvious purpose to which it was directed. 246 Indeed, in the internal documents produced very late in the piece during the course of the trial in support of the amended cross-claim advanced by SAG, it was clear that SAG's own approach to clients being permitted to test to a limited degree was consistent with this view. It was content that no licence was required when testing was limited to no more than five times each year. 247 It is unnecessary to resort to an implied term. If I am wrong as to my construction of cl 12.3, there would be no or little scope for implying a term in the manner contended for by RWWA and I would not do so in the context of a comprehensive commercial agreement. Evidence was given by Mr Melsom for KAZ. Mr Melsom was an employee of KAZ and was called by SAG in order to give evidence as to the degree, if any, to which KAZ had been involved in the DR testing process. Mr Melsom gave evidence that he did not recall KAZ technicians being involved in the functions which related specifically to operating systems. He accepted that the KAZ technicians may have been involved in severing the link from the DR Site to the RWWA site. 249 Mr Fink who has had very extensive experience in the mainframe industry rejects the suggestion that the arrangement or contract between KAZ and RWWA is one which constitutes outsourcing in any sense. Rather, as a matter of practice and in accordance with the nature of the arrangement between KAZ and RWWA by its contractual documents, what KAZ provides to RWWA is an environment for the equipment on which the DR Copy will be loaded should an emergency occur. RWWA retains responsibility for the DR process. There is no evidentiary basis for suggesting that KAZ is in any way involved in operating the System. Without that evidence which, had it been available, may have been the closest there was to any 'outsourcing', none of the other suggested actions could constitute 'outsourcing' as it is used in the Licence Agreement. 250 There has been no breach of cl 1.5 of the Licence Agreement. Were the terms of the documents referred to at par 6 of the re-amended defence incorporated by reference into the Licence Agreement? They were at no stage referred to RWWA and in my view, have not been incorporated into the Licence Agreement. In any event as there has been no breach, there is no occasion on which resort to the documents could arise. If RWWA has breached the Licence Agreement what, if any, is the amount of SAG's loss and damage? 254 I have referred to the evidence given by Mr Beddoe for SAG in relation to the price which SAG would have endeavoured to negotiate for RWWA taking the DR Copy and establishing the DR Site. This evidence related to the amendment by SAG to its cross-claim to claim not only the maximum price that it contended it would recover or be entitled to recover but to bring an alternative claim in respect of a discounted price. This discount was said to be in the order of 30% from a list price and would reflect business practices of SAG (and its clients other than RWWA at the relevant time). SAG contended that it had negotiated with various other parties over a period of time for discounts against list fees for additional licenses which were granted once the original license had been agreed. Pleading this discounting practice gave rise to a need to produce agreements said to support the practice. 255 Of all the agreements produced, only three reflected any licence fees having been negotiated for additional DR use. No evidence of any such instance prior to 2006 was produced. The evidence generally in support of such a practice was wholly inadequate to support a conclusion on a balance of probabilities that SAG had lost the opportunity to negotiate with RWWA an agreement which would have given it a discount of 30% as against the 'start' price for the establishment of a DR Site. To the contrary, on the analysis of the evidence of Mr Beddoe on cross-examination and referred to above, I consider it is most unlikely that such an agreement would have been negotiated. 256 There is no assertion of copyright or claim for breach of copyright. RWWA contends that the only principle of law that would prevent anyone from using software without a licence arises where it is subject to copyright. RWWA submits that the fact that SAG claims as neither the owner nor exclusive licensee of copyright means that it has not suffered any loss if RWWA has in fact used the software beyond the terms of the licence created under the Licence Agreement. In the judgment of Steytler J, as his Honour then was in the Western Australian Full Court as it then was, in Finesky Holdings Pty Ltd v Minister for Transport (WA) (2002) 26 WAR 368 at 381, His Honour at [54]-[59] discusses various authorities in which damages have been awarded on a 'user pays' basis. That is to say, a context in which someone should pay for the use of property owned by another. At [58]-[59], at 383, his Honour observed that the damages awarded in such cases are restitutionary in their nature, restoring compensation to owners of property whose rights have been breached. There are cases where the owner of property, despite suffering no harm, is entitled to be compensated by another who uses it in breach of the owner's rights. Included amongst them are cases for breach of intellectual property rights such as patents. His Honour concluded that regardless of whether or not damages in such cases might properly be regarded as restitutionary or otherwise, it was difficult to see how there can be any award in damages where there is no proprietary interest. SAG does rely heavily on those cases in which damages are awarded in this sense. But SAG did not have or contend any proprietary interest in the software. Many of the authorities relied upon for SAG were cases dealing with damages for breach of copyright or breach of patent in respect of which additional and different principles may apply. 257 Counsel for SAG asserted that SAG was suing for a price. That is, the price which SAG says RWWA should have paid for the additional licence and the related service fees. Alternatively, a discounted sum in respect of that price. 258 SAG supports its claim for a fee with reference to General Tyre & Rubber Company v Firestone Tyre & Rubber Company Ltd [1976] RPC 197 , Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157 and Microsoft Corporation v TYN Electronics Pty Ltd (in liq) (2004) 63 IPR 137. Each of those cases involves infringement of intellectual property rights. 259 In General Tyre [1976] RPC 197 , Lord Wilberforce referred to the reward to a patentee for his invention being the entitlement to the exclusive rights to use the invention. 260 In Meters Ltd 28 RPC 157 , the defendants sold gas meters which contained a small part that infringed a patent held by the plaintiff. Eve J in the Court of Appeal held that the loss of profit on the sale of whole meters was recoverable by the plaintiffs, Eve J saying that the mechanism protected by the patents was 'of the very essence of the meter'. The passage relied upon by SAG as to the computation of damages follows an earlier passage by Fletcher Moulton LJ at 164-165 expressing 'the true principle' governing cases where it is not possible to prove either the amount of the profit which the owner of a patent has lost by reason of the infringement or there is no 'going rate' of royalty. See also Irvine and Others v TalkSport Ltd [2003] EWCA Civ 423 where the Court of Appeal followed General Tyre [1976] RPC 197 and Meters Ltd 29 RPC 157. 261 Although there is merit in SAG's argument as to the approach which might be taken if it had been the owner of the property which had been used, that is not the case. I do not consider damages could be computed on that basis in this case. 262 Justices Hill and Finkelstein (with whom Emmett J agreed) in Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA 1040 ; (2001) 110 FCR 157 at [157] pointed out that 'the general rule of the common law was laid down by Baron Parke in Robinson v Harman (1848) 1 Ex 850... ' in which it was observed that the aim of an award of damages for breach of contract was to place the plaintiff in the same position as the plaintiff would have occupied had the contract been performed. This reflects the principle that the sole purpose of damages under the law of contract is to compensate. Counsel for SAG say that it is suing for a price --- if not the list price, then the discounted price which would have applied after negotiation. However to this, RWWA points out that SAG have led no evidence at all to show what profit would be lost in respect of such a price. RWWA submits that SAG is not entitled to the full price. 263 RWWA points to the fact that the claim made is a claim for damages, not a claim for a licence fee contractually due. If it is a claim for damages, it should be a claim for a net loss. It says SAG has not proven what its net profit under the contract would be. It would be simply speculation to assume what the net profit may be under a notional Licence Agreement. 264 SAG was obliged to pay commissions at some unknown rate to those who sold its products. It must have paid a licence fee or similar to the German company. (There is no logical reason to assume that the German company would allow SAG to profit from the sale of the System(s) without the German company which developed the System(s) being compensated for such a benefit). As to each of these expenses, there is no evidence at all as to the cost SAG would have incurred in respect of those two items alone in producing a profit. There are then other general overheads, again in respect of which there is also no evidence. 265 No matter what basis for assessment is chosen by the Court, a party is not entitled to be placed in a better position, by way of damages, than would have been the case had the contract been performed. See for example Commonwealth v Amann Aviation Pty Ltd [1990] FCA 55 ; (1991) 174 CLR 64 at 82 per Mason CJ and Dawson J, at 136 per Toohey J, at 155 per Gaudron J, at 163 per McHugh J (dissenting) and Baltic Shipping Co v Dillon (The Mikhail Lermontov) [1993] HCA 4 ; (1993) 176 CLR 344 at 372 per Brennan J. 266 In my view, RWWA's submission that SAG has adduced no evidence as to its net profit position, (that is to say, its expenses in producing the asserted contract price) is correct. I do not think it is open for me to speculate at what SAG's expenses would be. It may well be that RWWA would have been prepared to pay a relatively nominal amount, say $100,000 to $150,000 to, in effect, get rid of the problem of being pursued by SAG. But to reach a conclusion to that effect in the absence of any evidence whatsoever to support it would simply be plucking a figure out of the air or speculating. I do not believe there is any evidentiary basis or entitlement at law for that course to be taken. 267 It follows, in my view, that if the views I have expressed as to the absence of a breach are incorrect, there remains the difficulty that SAG has not properly proven its loss. It is entitled to a declaration to that effect. I was not addressed on the appropriateness of additional injunctive relief. I will provide the parties with a suitable opportunity to file submissions and, if possible, a consent minute in relation to any other relief including costs. There be judgment for the applicant. 2. (ii) The applicant has not by making and storing the disaster recovery copy of the System at a third party site operated by KAZ Technology Services Pty Ltd, breached the Licence Agreement. (iii) The applicant is entitled to test the disaster recovery copy pursuant to the terms of the Licence Agreement and in any event pursuant to s 47F of the Copyright Act 1968 (Cth) in accordance with its testing process. The cross-claim is dismissed. I certify that the preceding two hundred and sixty-eight (268) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | software licence agreement clause permitting copying the system in object code only for emergency restart purposes disaster recovery site established by disk mirroring whether authorised by emergency restart clause or a breach of the agreement principles of construction no breach whether licensee permitted to make disk-mirroring backup copy of software under s 47c or s 47f of the copyright act 1968 (cth) loss of opportunity to negotiate a price whether applicant would have paid respondent for permission to establish disaster recovery site assessment of damages no evidence of actual profit compared with total or discounted price adequacy of evidence contract copyright damages |
There were two separate notices of motion before Gordon J. She made orders in each of the proceedings and published separate reasons for those orders: Bahonko v Sterjov [2007] FCA 1555 ; Bahonko v Sterjov [2007] FCA 1556. The orders made in both proceedings are the subject of this application for leave to appeal. 2 The application was brought by notice of motion filed on 15 October 2007 and supported by an affidavit of the applicant sworn on the same day. A supplementary affidavit was filed on 18 October 2007. Subsequently, on 30 October 2007, the applicant filed an amended notice of motion and a further affidavit sworn on the same day. 4 On 6 November 2006 the two applications were consolidated and the applications were heard by Jessup J. 5 On 24 May 2007 during the proceeding before Jessup J and before its determination, the applicant made an oral application for leave to file a statement of charge for contempt against the respondents and their legal representatives and to challenge the competency of two of the witnesses called on behalf of the respondents, amongst other things. Those applications were refused by Jessup J: Bahonko v Sterjov [2007] FCA 867. 6 On 30 May 2007 the applicant sought leave to appeal from Jessup J's refusal to grant leave, but on 9 June 2007 Finkelstein J directed the Registrar that the notice of motion of 30 May 2007 be refused for filing. 7 In reasons published on 15 August 2007, that part of the consolidated proceedings seeking relief under the two statutes was dismissed by Jessup J. However, Jessup J found that the fourth respondent had defamed the applicant and awarded the applicant $50 in damages: Bahonko v Sterjov [2007] FCA 1244. To the extent not previously dealt with by the Court, the motion of which the applicant gave notice on 4 May 2007 be dismissed. 2. The fourth respondent pay the applicant damages in the sum of $50. 3. The application otherwise be dismissed. 4. The orders given by Justice Jessup on 15 August 2007 stay (put on hold) until the appeals from those orders is fully determined. The stay order is applicable as from the date of this Motion that is 20 August 2007. Justice Goldberg decided that there was no need for a stay of the first three orders made by Jessup J. Orders 1 and 3 would be considered on appeal. Order 2 was in the applicant's favour. He considered the applicant's argument that order 4 be stayed, but rejected a stay because the order simply required the parties to file and serve submissions on costs. His Honour was not prepared to interfere with the trial process. He said that if an adverse costs order was made against the applicant she could appeal and, if it were appropriate, seek an order for a stay. In his reasons, Goldberg J rejected the applicant's very serious complaints about the trial judge and the respondents' legal advisers, which he described as being without basis and unsupported by the evidence. 11 On 31 August 2007 Jessup J made orders as to costs in the substantive proceedings: Bahonko v Sterjov [2007] FCA 1341. The applicant pay the respondents' costs of proceeding VID 756/2006 to the extent that such costs were incurred on or before 6 November 2006. 2. The applicant pay three-quarters of the respondents' costs of and incidental to the applicant's notice of motion dated 22 September 2006. 3. The applicant pay the respondents' costs of and incidental to the applicant's notice of motion dated 27 October 2006. 4. The applicant pay the respondents' costs of and incidental to the applicant's notice of motion dated 5 February 2007. 5. The applicant pay one-half of the balance remaining of the respondents' costs of the proceeding to the extent that such costs were incurred after 6 November 2006 after the deduction of so much of the respondents' costs of the notice of motion referred to in orders 2, 3 and 4 above as were incurred after 6 November 2006. 2. Orders given by Justice Jessup on 31 August 2007 to stay until the appeal is fully determined. 3. Mr. M. McKenney and Mr Felix Vitiello to step down from a legal representation in the appeal matter VID 743/07. 4. 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. In that affidavit she accused the trial judge of deceit and the respondents' legal advisers of contempt and criminal conduct. The allegations were unsupported by evidence. The notice of motion dated 20 September 2007 is otherwise dismissed. The appellant is to pay the respondents' costs of and incidental to the Notice of Motion filed on 20 September 2007. Leave to appeal from the orders given by Justice Goldberg of 27 August 2007 is granted. 2. This leave to be consolidated with the existing appeal matter No: VID 743/07. 3. This leave to appeal hearing to progress into a direction hearing in the appeal matter VID 743/07. 4. Appellant has leave to amend her Notice of Appeal of 16 August 2007 to include Justice Goldberg's orders of 27 August 2007, Justice Jessup's orders and reasons given to the Registrar in the VID 114/06 and Justice Finkelstein's orders and reasons given to the Registrar in VID 114/06. In that affidavit she accused the judge of intimidation, hostility, hate, prejudgment, bias, conflict of interest and racial discrimination. She alleged that the hearing had been conducted corruptly and there was demonstrable cooperation and support of the three judges who had thus conducted the trial and heard her applications "in the travesty of justice". She again made serious allegations about the respondents' legal representatives. Again, no evidence was advanced in support of those allegations. The notice of motion as amended on 8 October 2007 is dismissed. 2. The applicant is to pay the respondents' costs of the proceeding. The second notice of motion purported to be an application for leave to appeal from Goldberg J's decision of 27 August 2007 refusing to stay Jessup J's orders of 15 August 2007 and consequential relief. Appellant is given leave to appeal from the orders NO: 2 and 3 given by Justice Gordon on 8 October 2007 and a part of the order 1, which part is not granting appellant an access to Transcripts of proceedings in VID 114/06 & VID 756/06 in full. (a) All Transcripts be provided in full. 2. The Notice of Appeal from Justice Gordon's orders NO: 2 and 3 and part of the order 1 to be consolidated with the existing Notice of appeal in the matter No: VID 743/07. 3. Appellant has leave to amend her Notice of Appeal in VID 743/07 to include appeal from Justice Gordon's orders No: 2 and 3 and part of the order 1 of 8 October 2007. 4. Transcripts of proceedings before Justice Gordon on 8 October 2007 be made available to the appellant & be part of the leave to appeal hearing. 5. The matter VID 822/07 is an integral part of VID 743/07 as Justice Gordon shared decision in those matters. 6. Appellant is given leave to appeal from judgments & whole of the orders of Justice Gordon given on 8 October 2007 in VID 822/07 and paragraphs 2,3 & 4 applies to this leave & those orders are treated as if given in VID 743/07. 7. Defamatory of the appellant parts of the reasons for judgments given by Justice Gordon on 08/10/07 are removed, replaced with corrective statements and apology statements and damages are paid to the appellant by the Federal Court of Australia. 8. Mr McKenney and Mr F Vitiello are charged with the contempt of the court and wilful defamation of the appellant in the principal matter VID 114/06 and the consequential matters VID 743/07 and VID 822/07 and pay damages to the appellant & are restrain from participation in any of her matters. 9. The Federal Court of Australia & the Commonwealth of Australia are added as parties to proceedings: VID 949/07 and the principal Appeal proceedings VID 743/07. 10. Justice Gordon is suspended from her office having engaged in a wilful and criminal defamation of the appellant in VID 828/07. Justice Gordon is directed to review her reasons for judgment in proceedings VID 822/07. The first, sworn on 15 October 2007, merely exhibited Gordon J's reasons and a proposed notice of appeal. The affidavit sought a copy of the transcript of the hearing before Gordon J. The second, sworn on 18 October 2007, exhibited a corrected draft notice of appeal. The third affidavit, sworn on 30 October 2007, again makes very serious allegations against the respondents' legal representatives and judges of this Court. Again, the allegations are not supported by any evidence. On this occasion, the applicant has accused the judges of this Court of giving "corrupt support" to the respondents' legal representatives. She accuses Gordon J of a wilful criminal act in the publication and content of her reasons. She says Gordon J is in contempt of court and guilty of abuse of office, defamation, intimidation and blackmail. She says that Gordon J's description of the applicant's affidavit as scandalous and vexatious "serves as intentional blackmail & intimidation of me and retaliation on behalf of Mr McKenney & the Federal Court of Australia & a deceit of the public in order to be able to issue costs against me when under the WRA such costs are not to be made. Issuing costs in contravention of the WRA is a hard evidence of the blackmail & intimidation of me and trespass of the Act by Justice Gordon & previous Justices, Justice Jessup & Goldberg. This is an evidence of corruption & serious trespasses of the Law & Justice taking place in the Federal Court of Australia, therefore, the Commonwealth responsibility. I shall later return to the contents of this affidavit. Paragraphs 2 to 5 seek consequential orders on the assumption that the leave sought in paragraph 1 be granted. Paragraph 6 seeks leave to appeal from Gordon J's orders dismissing the applicant's application by a second notice of motion for leave to appeal from Goldberg J's refusal to grant a stay of Jessup J's orders. Paragraph 8 is a similar application to that for which Jessup J refused leave during the trial and dismissed by Gordon J in the first notice of motion. Paragraphs 7 and 10 (even as amended) are scandalous. Paragraph 9 is misconceived. I will deal with each of these paragraphs in turn below. 27 I should note that, before Gordon J, the applicant sought transcript from proceedings VID 114/06 and VID 756/06 which were the proceedings before Jessup J. As noted above, however, Jessup J consolidated those two proceedings, such that the applicant's complaints were all heard as matter VID 114/06. It was under that proceeding that Jessup J made orders in relation to both the substantive proceedings and costs. 28 Justice Gordon gave the applicant access to an electronic form of the transcript of the witnesses at the trial. It is not clear what other transcript is sought. The applicant mentions in her affidavit that she does not have access to the transcript before Goldberg J and Gordon J but that transcript, if it exists, is not evidence and could not be remotely relevant on the appeal or, indeed, on this application. I will assume that the applicant is seeking that part of the transcript before Jessup J not subject to the order made by Gordon J. I will assume that the applicant could appeal from Gordon J's refusal to order that the further transcript be made available, although I doubt that the order is appealable. 29 However, even upon those assumptions the order sought should not be made. It has not been demonstrated that the transcript of what was said during the trial and was not evidence is relevant. Even if it were relevant, Gordon J's order does not prevent the applicant accessing the transcript. The applicant can, if she orders the transcript and pays the fee, have a copy of the transcript. Justice Gordon's order simply means that the Court will not be put to the cost of providing to the applicant a transcript of that part of the proceeding which does not contain evidence and has not been shown to be relevant. Insofar as leave is sought to appeal from the refusal of Gordon J to order that a transcript be made available to the applicant, it is refused. 31 The application before Gordon J sought the stay of the costs order made by Jessup J on 31 August 2007 until the appeal was determined. Order 2 made by Gordon J on the first notice of motion dismissed the other orders sought in the notice of motion which had the effect that the applicant's application for a stay of Jessup J's costs order was dismissed. It also had the effect of dismissing the application in the notice of motion that the respondents "step down" from representing the respondents. Leave to appeal is sought from that order. 32 The test for leave to appeal is well known. An applicant must establish that the decision is attended with sufficient doubt to warrant the decision being reconsidered by the Full Court and, as well, that substantial injustice would result if leave were refused supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 33 Order 52 rule 17(1) of the Federal Court of Australia Rules 1979 (Cth) (the Rules) provides that an appeal to the Full Court does not operate as a stay of execution or of proceedings under the judgment appealed from. Thus it is that the applicant needed a stay of the proceedings to prevent the respondents taxing their costs and when taxed, executing upon the taxed costs. 34 Justice Gordon proceeded upon the basis that an appeal does not operate as a stay but that the Court could grant a stay if the Court considers that, in all the circumstances, the matter is an appropriate case for the grant of the stay. The approach adopted by her Honour was undoubtedly right. In Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 the Full Court of this Court, after observing that O 52 r 17 did not limit the broad discretion reposing in the Court, followed a decision of the Court of Appeal in New South Wales in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 where it was said at 694 that it was "sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour. " In other words, no special or exceptional circumstances need be shown. It is enough to satisfy the Court that the proceeding is one where it is appropriate that the Court exercise its discretion to grant the order. 35 Justice Gordon was asked to consider the question of a stay in relation to costs in circumstances where Goldberg J had considered and refused a stay of the substantive orders made by Jessup J. Justice Goldberg was not prepared to interfere with the trial process and stay Jessup J's order which required the parties to file and serve submissions on costs. 36 When the matter came before Gordon J the applicant had already amended her notice of appeal to add grounds of appeal against the costs orders made by Jessup J on 31 August 2006. 37 Before Gordon J the applicant asserted that Jessup J's orders contravened the WRA and that "[t]here were and are not any costs due against me. " She claimed in her affidavit that the "manner of the orders given by Justice Jessup on 31 August 2007 further demonstrate that those orders are unreasonable & if remain would constitute abuse of the process and continuation of a fraud. " She also alleged that his reasons constituted "multiple wilful misrepresentations, defamations and vilification of me ...". She criticised other aspects of Jessup J's reasons. Putting aside the inappropriate language, the reasons advanced may have been relevant as to whether the order for costs should have remained or were to be reviewed on appeal. However, Gordon J was not hearing an appeal but an interlocutory application for a stay. No ground was advanced why it was appropriate that the orders be stayed. 38 There was no evidence before Gordon J that the taxation of the respondents' costs was imminent or was likely to occur prior to the hearing of the appeal in relation to the substantive matter. That of itself would have been sufficient reason for Gordon J to dismiss the application because no need was demonstrated for the order sought. Justice Gordon, however, dismissed the application because the primary matter of substance advanced in support of the application was that "[t]here were and are not any costs due against me. " Justice Gordon said that was an issue for the appeal. Her Honour's decision was undoubtedly correct. The matters raised by the applicant might be relevant to the appeal before the Full Court but were not relevant to the stay application. 39 Justice Gordon described the additional matters relied on by the applicant as "scandalous and vexatious", being allegations of criminal conduct and conduct constituting abuse of office which were "unsupported and insupportable". I agree with those observations. 40 There is a further reason to refuse leave. If leave were granted the appeal against Gordon J's refusal to grant a stay would be, assuming the other orders sought by the applicant were granted, heard at the same time as the appeal against the substantive orders and the appeal against costs. The purpose of a stay prior to the hearing of the appeal would not be achieved. It follows that an order granting leave to appeal against Gordon J's refusal to grant a stay would be futile in those circumstances. 41 If the Full Court is of the opinion that the appeal against either the substantive orders or the costs orders is likely to succeed it can, on the applicant's application or its own motion, make an order for a stay. 42 Order 2 of her Honour's order on this notice of motion also had the effect of dismissing the applicant's application that the respondents' legal representatives step down. Her Honour dismissed that application on the ground that the allegations made in support of the notice of motion were without foundation and scandalous. I have studied the allegations contained in the applicant's affidavit sworn on 20 September 2007 which was the affidavit relied upon by the applicant before Gordon J and the affidavit sworn on 30 October 2007 in support of this notice of motion before me. I agree with her Honour in both respects. The allegations are without foundation and scandalous. I make these comments notwithstanding the vitriolic comments made by the applicant in respect of Gordon J's comments to the same effect. 43 Leave to appeal must be refused because her Honour's decision is not attended by any doubt and, moreover, no injustice would be suffered by the applicant if leave were refused. Such an order was inevitable having regard to the order made refusing the stay. Insofar as this notice of motion seeks leave to appeal from her Honour's order for costs, it should be dismissed. The applications made under these paragraphs must also be dismissed. That application seeks leave to appeal from the decision of Gordon J in VID 822/2007 also given on 8 October 2007, which related to a second notice of motion before her Honour. The orders which were sought in that proceeding are set out at [16] above. 47 Her Honour dismissed that notice of motion. Because her Honour refused leave to appeal from the orders of Goldberg J of 27 August 2007, she was also bound to dismiss paragraphs 2, 3 and 4 of the notice of motion which sought orders consequential upon the applicant obtaining leave. 48 The applicant now seeks leave to appeal from Gordon J's refusal to grant leave to appeal from Goldberg J's order refusing a stay of the order in the substantive proceedings made by Jessup J on 15 August 2007. 49 For reasons which follow, the application is misconceived. But not only is the application misconceived it is pointless and a waste of the Court's resources and a burden upon the respondents. 50 Justice Goldberg refused a stay of Jessup J's orders of 15 August 2007 for the reasons recited in [10] of these reasons. He was undoubtedly right. There was no practical utility in granting a stay order when orders 1 and 3 dismissed the applicant's proceeding and order 2 was in the applicant's favour. There was nothing in those orders to stay. He refused to order a stay of order 4 made by Jessup J. That order is no longer relevant as further orders have been made. Those further orders have already been addressed in respect of paragraph 1 of this notice of motion. 51 The position at present is quite clear. No part of Jessup J's orders made on 15 August 2007 could be the subject of a stay order at the instigation of the applicant. There is no need for a stay order of orders 1, 2 and 3 of 15 August. For that reason alone, this application must be dismissed. 52 But even if there were a need for a stay order and even if I had power to grant leave to appeal from Gordon J's refusal to grant leave, which I do not, the order sought would be pointless. Like the application in paragraph 1, if leave were granted the appeal against Goldberg J's refusal to grant a stay would be heard at the same time as the appeal against the substantive orders. If that were the case, there would be no stay pending the appeal. It follows that the application is pointless for that further reason. 53 However, in any event, the application for leave to appeal from Gordon J's order refusing leave to appeal from Goldberg J is misconceived. 54 Justice Gordon's refusal to grant leave to appeal from Goldberg J was an exercise by her Honour of the Court's appellate jurisdiction pursuant to s 24(1A) and s 25(2)(a) of the Federal Court of Australia Act 1976 (Cth). Section 24(1) of the Act gives the Court jurisdiction to hear and determine appeals from judgments of the Court constituted by a single judge: s 24(1)(a). However, s 24(1A) requires that where the judgment is an interlocutory judgment the appellant first obtain leave to appeal from the Court or a judge. Section 25(2)(a) provides that an application for leave to appeal may be heard and determined by a single judge or the Full Court. Order 52 rule 2AA of the Rules provides that an application under s 25(2) should be heard by a single judge unless one of the events in the rule occurs. 55 Sections 24(1A) and 25(2)(a) make it clear that the appellate jurisdiction to grant or refuse leave is to be exercised by either a single judge or the Full Court but not both. A party seeking leave is not entitled first to apply to a single judge and, if unsuccessful, then to apply to the Full Court. That follows because, to use the words of s 25(2)(a), the application has been determined by the single judge. It follows that no appeal lies from an order of a Judge granting or refusing leave to appeal: Reid v Nairne (1985) 60 ALR 419; Thomas Borthwick & Sons (Pacific Holdings) Ltd v Trade Practices Commission (1988) 18 FCR 424; Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543. 56 This application for leave to appeal must therefore be dismissed as incompetent. Because no appeal lies from Gordon J's refusal to grant leave to appeal, it follows that no appeal lies from her Honour's refusal to make the second and third orders in the second notice of motion before her Honour which, as I have said, were consequential upon the applicant being granted leave. 57 The fourth order sought in the notice of motion before Gordon J, insofar as it sought to impugn Finkelstein J's direction, was again, with respect, misconceived. Justice Finkelstein made a direction pursuant to O 46 r 7A(2)(b) of the Rules that the Registrar refuse for filing the notice of motion seeking leave to appeal from Jessup J's decision not to grant leave to file the statement of charge for contempt. 58 A direction under O 46 r 7A is made by a judge to assist the Registrar in the administration of the Registry and "is not a determination of right made by a judge after hearing or considering arguments or submissions upon an application to the Court seeking the exercise of judicial power. ": Bizuneh v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 42 ; (2003) 128 FCR 353 at 357. Thus, it is not a judgment which is subject to appeal by a person whose document has been rejected by the Registrar in accordance with a direction given by a Judge. 59 Paragraph 6 of the notice of motion seeking leave to appeal from Gordon J's orders in relation to the second notice of motion must be dismissed. Nothing could be further from the fact. The notion of the independence of the judiciary is fundamental to the system of justice in this country. It is not only that judges are independent of the Executive but each judge of the Court is independent of each other. It is important that judges are not subject to influences or pressures from their fellow judges so that each judge can give their judgment and their reasons freely. A judge's judgment and reasons are subject to scrutiny but only on appeal. 61 Each judge, when exercising the jurisdiction of the Court, is sitting as "the Court". In those circumstances, no one judge sitting as the Court can direct another judge, also sitting as the Court, to do or not to do something and, in particular, to review the judge's reasons or in any way alter those reasons: Bird v Free (1994) 126 ALR 475. It goes without saying, of course, that no judge could direct another judge to apologise to a litigant or to pay damages to that litigant. 62 For those reasons, the applications must be dismissed. 63 The applicant should understand that the kinds of complaints she makes about the judges of this Court must be viewed in the light of the immunity which attaches to judicial proceedings. A judge, a jury, the parties, their representatives and witnesses enjoy an absolute privilege in respect of their statements in judicial proceedings: Cabassi v Villa [1940] HCA 41 ; (1940) 64 CLR 130 at 140; Mann v O'Neill [1997] HCA 28 ; (1997) 191 CLR 204 at 211. The rationale for the rule is that it is indispensable for the performance of the function: Mann v O'Neill 191 CLR at 213. It exists for the protection of judicial independence: Fingleton v R [2005] HCA 34 ; (2005) 216 ALR 474 at 486. No action lies against a judge in defamation for the matters published in the judge's reasons. The words which he speaks are protected by an absolute privilege. The orders which he gives, and the sentences which he imposes, cannot be made the subject of civil proceedings against him. No matter that the judge was under some gross error of ignorance, or was actuated by envy, hatred and malice, and all uncharitableness, he is not liable to an action. 66 It follows that the relief sought by the applicant in those paragraphs is simply not available. 67 I should say, so as to avoid any doubt, that even if I had the jurisdiction which is sought to be invoked I would not exercise it. The claims made by the applicant, as I have already said, are scandalous. However, Jessup J refused leave for the notice of motion to be filed. In due course, Finkelstein J directed the Registrar not to accept a further application in that regard. 69 This application contains no evidence to support the laying of any charge of contempt against the respondents' legal advisers. The applicant's affidavit of 30 October 2007 charges the respondents' legal advisers with misrepresentation, defamation and contempt by reason of their failure to inform the Federal Court of the misrepresentation and defamation contained within the reasons for judgment of 8 October 2007. Whilst not in any way accepting that the reasons for judgment possess the failings complained of, the failure, if there be one, of the legal representatives to inform the Federal Court of the errors contained in those reasons could never amount to a contempt. Not only is there no basis in fact for the application, but the applicant has failed to conform with O 40 of the Rules and to provide a statement of the charge. Any legal practitioner charged with such a serious matter is entitled to have the party laying the charge conform with the Rules in all regards and, in particular, to provide a statement of the charge. 70 That application is refused. During the hearing the applicant applied to amend, as I have mentioned, so as to delete reference to the Federal Court of Australia but to retain an application that the Commonwealth of Australia be joined to the principal appeal proceedings. 72 Leave to appeal has been refused. The Commonwealth of Australia could never be a party to the appeal proceeding. It has no interest in that proceeding at all on any understanding of the matters in issue in that proceeding. The proceeding before Jessup J has concluded. The applicant has a right of appeal from his orders dismissing her application (except insofar as he awarded damages) which she has exercised, but the Commonwealth of Australia has no interest in the proceeding or the appeal from that proceeding. 73 That application is dismissed. It follows that the whole of the notice of motion must be dismissed. The applicant should pay the respondents' costs. The grounds of appeal relating to Gordon J's conduct and reasons are outrageous and unsupported by the reasons about which the complaints are made. 75 The applicant has filed applications before Finkelstein J, Goldberg J, Gordon J and now me in which she has successively made complaints about the conduct of judges of this Court and of the legal practitioners representing the respondents. Latitude is given to unrepresented parties because sometimes they may have difficulty in understanding the Court's processes. Sometimes unrepresented parties become very involved in the processes and express themselves infelicitously. However, there comes a time when the Court must, for the purpose of maintaining the dignity of the Court and the public's confidence in the Court, say enough is enough. That stage has been reached. The applicant must understand that, if she continues to make unsubstantiated allegations of the kind in the application, affidavits and draft notices of appeal which scandalise the Court, action may need to be taken for the protection of the Court. I have considered whether it might be appropriate to take action in this proceeding. However, the applicant has not previously been warned that her conduct may be considered to be a contempt of the Court. I have therefore determined that on this application she should be given this warning. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for leave to appeal from interlocutory order of single judge of this court refusing to grant stay order whether decision attended with sufficient doubt application for leave to appeal from order of single judge of this court refusing leave to appeal from interlocutory decision whether appeal lies from a decision to grant or refuse leave application to amend reasons of another judge of this court whether power to amend reasons exists application for leave to initiate contempt proceedings where leave previously denied application to join the commonwealth of australia as a party applications dismissed. practice and procedure |
In October 1994 Mr Dunn had an estimation of his prostatic specific antigen which was found to be higher than normal. Prostatic biopsies showed that he was suffering from prostate cancer. He underwent radical prostatectomy and at the operation was found to have an aggressive cancer with secondary deposits. Although the condition was treated with hormonal manipulation and orchidectomy, it eventually worsened and Mr Dunn died on 15 June 2003. 2 Mr Dunn's widow applied for a War Widows Pension under the Veterans' Entitlements Act 1986 (Cth) (the VE Act). The Veterans' Review Board (the VRB) concluded that the material before it relating to the application did not raise a reasonable hypothesis within the meaning of s 120(3) of that VE Act, so that it followed that the Board was satisfied beyond reasonable doubt, for the purposes of s 120(1), that there was no sufficient ground for determining that the veteran's malignant neoplasm of the prostate was war-caused. That decision was made on 3 September 2003. 3 Mrs Dunn applied to the Administrative Appeals Tribunal (the Tribunal) to review the decision of the VRB. On 2 June 2005 the Tribunal set aside the decision of the VRB and in substitution decided that the late Mr Dunn's 'malignant neoplasm of the prostate', was war-caused, the decision having effect from 20 December 2001: Dunn v Commission (2005) AAT 510. 4 The respondent before the Tribunal, the Repatriation Commission (the Commission), now appeals to this Court pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). 6 The circumstances in which an injury or a disease is taken to be war-caused is set out in subss 9(1) and (2) of the VE Act as it was at the date of the application. In Repatriation Commission v Owens (1996) 70 ALJR 904 at 904 the High Court emphasised that the question whether a reasonable hypothesis is raised is to be determined on a consideration of the whole of the material before the decision-maker. 13 The consequence of the application of the above sections is that no claim that a disease is related to operational service can succeed, where there is in force a SoP concerning that kind of disease, unless the material before the decision-maker raises (or points to) a hypothesis that fits the template of the applicable SoP in the manner described by the Full Court in Repatriation Commission v Hill (2002) 69 ALD 581 at [57] ( Hill ). In order to satisfy ss 120(3) and 120A(3), a hypothesis relied on by a veteran to support a pension claim must be supported by material pointing to each element that the SoP makes essential for the hypothesis to be reasonable. 84 of 1999, as amended by No. 69 of 2002. It is agreed by the parties that the ' Malignant Neoplasm of the Prostate SoP ' No 84 of 1999 [as amended by No 69 of 2002] was the appropriate SoP and that factor 5(c) of the former SoP was the relevant factor. Included in his operational service from 1947 to 1959 were periods constituting eligible war service. Those periods were 12 July 1947 to 30 June 1951 with respect to World War II and 2 November 1953 to 16 July 1954 with respect to Korea. His first six months of service and a total of about 2.5 years out of the 4 years of his first period of operational service was spent onshore in Australia. Of his 12 years of service, more than 7 years were not operational service. He served on ship and shore during both his operational service and his non-eligible service. 17 Mr and Mrs Dunn were married in 1955. 18 It was in March 1995 that Mr Dunn was diagnosed with prostate cancer. His claim under the VE Act in respect of the disease was lodged on 20 March 2002. It was refused by a delegate of the Commission on 30 April 2002. 19 On 5 May 2003 the VRB adjourned its hearing so that an opinion could be obtained from a dietician concerning the quantity of animal fat in Mr Dunn's diet. Unfortunately Mr Dunn died on 15 June 2003. Neither the Commission or Mrs Dunn was able to find a suitably qualified dietician who could provide an opinion after Mr Dunn's death. It therefore came about that on 3 September 2003 the VRB affirmed the Commission's decision. The parties were in agreement that this hypothesis pointed to a connection of the death of Mr Dunn with the circumstances of his operational service and that it was a reasonable one. 21 In a signed appendix to his claim Mr Dunn provided an example of his diet before service and an example of the diet available and common in service. He also provided a signed account of his pre-service life. On 27 September 2002 Mrs Dunn completed a survey concerning Mr Dunn's diet. Additionally, the Tribunal had before it supplementary witness statements from his wife and two sons concerning Mr Dunn's eating patterns. The Commission did not cross-examine on these statements. 22 The Commission called Dr Ruth English (Dr English), a Nutrition Consultant. The critical question in this appeal is whether the Tribunal was in error of law when it preferred the evidence relating to Mr Dunn over the expert opinion of Dr English. 23 The evidence of Dr English is set out in some detail in the reasons of the Tribunal. In relation to the pre-operational service periods, she testified that the large variation between Mr Dunn's pre-service energy intake and his energy requirement was that the pre-service diet return for him was invalid and unacceptable as it significantly under-reported his true food intake. In relation to his post-operational service period, her evidence was that inconsistencies between the evidence of the diet provided for him and his weight gains and energy levels post-service, was that there was significant under-reporting and documented invalidity in his post-service diet. Therefore she concluded that there was no support for the proposition that his animal fat intake increased by at least 40 per cent between pre-operational service and operational service. She accepted his consumption of animal fat during post-service period would have remained at 70g per day or above for at least the required minimum period of 20 years. In relation to supplementary evidence concerning the daily eating patterns of the late Mr Dunn during pre-service, service and post-service periods, Dr English gave her opinion that they still convincingly showed a major under-reporting of the veteran's pre-service diet and an over-reporting of his post-service diet so that the classification for the diet return for pre and post-service periods remained invalid. Her calculations were that the animal fat and energy content of Mr Dunn's putative diets prior to service were 42.1g/day of animal fat, during service 108.8 g/day and post service 224.8 g/day. 24 The Tribunal's reasons stated in [8]-[11] that 'at the commencement of the hearing both parties acknowledged that there was no dispute that the first 3 steps of the ' Deledio Methodology' were satisfied. It then set out those steps. In relation to the third step the reasons stated 'the parties were in agreement that the hypothesis advanced by the applicant was a "reasonable hypothesis" '. 25 The Tribunal commenced its consideration of the evidence with reference to the fact that Dr English had relied upon inference to provide the basis for her conclusions. It said inferences were only permissible where there are objective facts from which to infer the other facts which it is sought to establish: Caswell v Powell Duffryn Associated Collieries (1939) 3 All ER 722 at 733 ( Caswell ). It said that additionally Dr English had relied on the Schofield equations used in mathematical models for predicting weight change and related dietary aspects to arrive at her conclusions on the dietary fat intake of Mr Dunn at different periods of service. The weight of such evidence depended upon whether the assumptions on which they were based were supported by some factual evidence or satisfactory expert opinion: Lawrence v Kempsey Shire Council (1995) 87 LGERA 49 ( Lawrence ). 26 The Tribunal then turned to the fourth issue arising from Deledio , namely whether the factual evidence before the Tribunal discharged the legal standard of proof. The Commission conceded that there was little dispute in the evidence concerning Mr Dunn's fat intake during his operational service. 27 The Tribunal then described as follows the reasoning of Dr English in predicting Mr Dunn's dietary requirements (basal metabolic rate, 'BMR') for the pre-service period. Taking the lowest estimate of requirement of 14,612 kJ/day to advantage the application and to allow for any over-reporting of the activity factor, there is a daily deficit in energy intake of 6,943 kJ/day between this requirement and the calculated energy intake of 7,669 kJ. As the veteran's regular pre-service diet, this deficit would result in a weekly deficit of 48,600 kJ. As noted above, the relative fixed nature of each individual's energy requirement at a stable level of activity, means that a deficit of 48,600 kJ in energy intake results in a weekly weight loss of 1.4kg. This weekly weight loss would increase to a weight loss of some 70 kg per year over the pre-service period, i.e. more than Mr Dunn's weight at enlistment . In doing so it turned to the scientific articles and materials provided by the Commission, which had been the subject of supplementary submissions. It accepted there was no dispute that the Schofield predictive equations for BMR involved extensive analysis of data points concerning different age groups and sexes. However, one paper (Warwick) had qualified the equations stating they were 'no substitute for actual measurements when these can be properly made especially for individuals and for obese or malnourished patients' for whom the equations may not be appropriate. Warwick had also stated that they were 'very much less accurate for individuals than for groups...' and accurate 'only to within about 10%, in most individuals'. Furthermore Warwick argued 'it is not possible, using the factorial method..., to put an exact value on the accuracy of predictions of habitual energy expenditure in individuals'. This was because it depended 'on the accuracy of determinations of BMR and of assessments of level and energy cost of activity'. Additionally Warwick had concluded that the activity level in the Schofield equation was not constant and daily energy expenditure expressed as a multiple of BMR varies with apparently similar levels of activity. Dr English had assumed a value of 2.1 of activity level. 29 The Tribunal, in accordance with what it considered to be required by Lawrence , found at [87] there were limitations associated with the underlying assumptions made by Dr English. It listed these as (1) the limitations in predictive capacity of BMR for individuals relative to groups and the accuracy of such estimates; (2) factors involved in the accuracy of BMR predictive estimates including individual variation, variations in energy cost of physical activities or in thermogenesis, variations in energy expenditure between individuals, even at apparently similar levels of activity (said not to have been considered by Dr English save as to allow for a coefficient of variation of 10 per cent in the estimates of BMR, and without reference to Mr Dunn's individual case); (3) evidence that it is not possible to put an exact value on the accuracy of predictions of habitual energy expenditure in individuals; (4) qualifications that an estimate of predictive capacity might be to within 0.1 to 0.3 x BMR in most healthy individuals in sedentary/light activities although greater error could occur in more active individuals; (5) the use of a constant value for the Schofield equation coefficient as well as the activity factor coefficient over a 12 month time period in circumstances where Mr Dunn was predicted to have had a weight loss greater than the weight that he had commenced with; and (6) no consideration of additional potential sources of error in estimating food energy requirements. Given those findings, the Tribunal concluded there were limitations in the expert evidence in relation to the assumptions used in the Schofield equations to predict the BMR for Mr Dunn during the pre-service period. It was not satisfied that in applying the mathematical model derived from the study of large groups to the situation of the individual, steps had been taken to ensure that all underlying assumptions influencing the accuracy of the predicted output for an individual had been considered. Consequently it was not satisfied that the principles of Lawrence - and in consequence the standard of proof applicable to a reasonable hypothesis --- had been met. 30 The Tribunal next turned to a consideration of whether Mr Dunn's dietary survey in the pre-service period may be substituted with general community survey data contained in the 1936-1938 Survey of Domestic Food Budgets or the 1944 national household dietary surveys, having regard to the principles in Caswell . It concluded that no requisite proof had been brought into which particular calorific class interval derived from general community surveys in the range of 1 501 to 5 400 kcal Mr Dunn should be placed. Moreover, the Commission had relied on its prediction of BMR using Mr Dunn's recalled diet during the pre-service period without having regard to Mr Dunn's weight on enlistment. 31 The Tribunal referred to reliance by the Commission on the fact that the 'low and inadequate pre-service' diet of Mr Dunn would not result in a situation wherein he would have presented at enlistment within a healthy weight range of 66.4 kg. It said that fact could not be supported without further factual evidence giving some history of body weight of Mr Dunn, at least for some time in the pre-service period. 32 The Tribunal acknowledged the difficulties arising from the evidence on past food consumption by Mr Dunn as a consequence of his death preventing the opportunity for a further reality test of the initial food survey completed by him. Accordingly, the Tribunal concludes the evidence of pre-service diet cannot be extrapolated from general community survey by the method of inference or by relying on the output of a mathematical model where limitations in the accuracy of the output exist. It consequently found that Mr Dunn's dietary survey was the best evidence of his daily calorific and fat intake during the pre-service period (that is, 42.1g animal fat and 1 826 kcal, 7 669 kJ). That is, factor 5(c) is satisfied. Generally, the Commission is contending that the Tribunal erred in various ways described in those grounds when it failed to accept the evidence of its expert Dr English and preferred the evidence brought by Mr Dunn. 36 The respondent (Mrs Dunn) contends that despite the grounds purporting to rely upon errors of law, the thrust of the submissions from the Commission are clearly inviting the Court to make a decision on the correctness of the Tribunal's findings in light of the evidence. She states the Tribunal had made a decision that it preferred the best evidence available, being that of Mr Dunn and his family, over conjecture and general survey evidence relied upon by Dr English. Her submission is that the Tribunal recognised the limitations of the general survey evidence when applying the same to individual circumstances. The Commission having conceded that a reasonable hypothesis had been raised, the Tribunal was entitled to proceed to determine whether or not the standard of proof in s 120(1) of the VE Act was satisfied. It is submitted by Mrs Dunn that, as a finding of fact, the Tribunal found the burden was not met. It is said this follows from the application of ss 8(1) and 9(1) of the VE Act which requires the Commission to find for the veteran unless it is satisfied beyond a reasonable doubt that none of the circumstances set out in those sections exist. It argues that the hypothesis identified by the Tribunal did not contain any statement on how operational service increased Mr Dunn's consumption of animal fat during or after such service. Therefore, it is said, there is no evidence of the causal relationship required to be established: Hill at [57]. 38 The respondent contends that the parties had agreed and the Commission had conceded that her case had raised a reasonable hypothesis. Specifically she asserts that the party's agreement extended to having encompassed the first three points in the approach approved by the Full Court (Beaumont, Hill and O'Connor JJ) in Deledio at 97-98. That is, it was a matter of agreement that the material pointed to a hypothesis connecting the disease or death with the circumstances of the particular service of Mr Dunn and the hypothesis was a reasonable one as being consistent with the template to be found in the SoP. The respondent submits that a party is bound by the conduct of that party's case. It is contended that, except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after the case has been decided against that party, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when there was an opportunity to do so: University of Wollongong v Metwally (No 2) [1985] HCA 28 ; (1985) 59 ALJR 481 ( Metwally ) at 483. It is submitted that what the Tribunal would have done had there not been a concession cannot provide a sustainable ground of appeal. 39 The Commission disputes that the third limb of the Deledio principles was the subject of agreement before the Tribunal. Examination of the transcript establishes that the Tribunal member raised with the parties whether there was agreement on the Delidio steps. He stated he was 'quite happy' to make a finding on whether step 3 was satisfied. Counsel for Mrs Dunn stated he thought the issue was effectively the fourth step and that there was not going to be a dispute concerning the reasonable hypothesis aspect. The Commission's advocate acknowledged that position and said he did not believe there was such a dispute. The Tribunal member then identified Deledio step 4 as being the issue before the Tribunal. Later in the hearing the Commission's advocate accepted that in the case there was no particular problem in having pointers within the factual matrix to the 'missing' facts. The Tribunal member said that if he had to go through all the steps, he would have made a finding that there was no problem with there being the requisite pointers in this case. He added that he could not see that being an issue. The Commission's advocate added that the first three steps in Deledio were effectively met in most cases and it would be very rare for it not to be found that they have been fulfilled on the matrix put before the Tribunal. 40 The Commission now submits that [8] of the Tribunal's reasons must be understood against the background of these portions of the transcript. It contends that the Tribunal had at the outset come to its own view that there was a reasonable hypothesis. It submits that the concession by the Commission's advocate was immaterial to the Tribunal's decision because the Tribunal had formed its own view. 41 The Commission also took the Court to further authorities on the question of whether an issue can be raised at an appellate level which had not been agitated in the primary court. Reference was made to Coulton v Holcombe [1986] HCA 33 ; (1986) 162 CLR 1 at 7 ( Coulton ) where the majority of the High Court stated that in a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, the point cannot be taken afterwards. The majority referred to other authorities including Metwally at 483. In Water Board v Moustakas [1988] HCA 12 ; (1988) 180 CLR 491 at 497 the majority in the High Court on that occasion stated that 'Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied'. The Commission also relied upon Symes v The Proprietors Strata Plan No 31731 [2003] NSWCA 7 at [33] - [34] , [39] and [51]. The Commission submitted that as this was not a case where the giving of any evidence would have been attracted, the issue is not one precluded from arising in this Court. Further, that as the respondent has not sought to show she was prejudiced before the Tribunal as there is no evidence she could have led, the discretion of the Court in the application of the rule in Coulton should be exercised in favour of allowing the grounds concerning the reasonableness of the hypothesis to be argued. 42 I am unable to agree with the Commission's submission that the reasonableness of the hypothesis was not the subject of agreement before the Tribunal. The reasons of the Tribunal are unequivocal in their statement in that regard. Reading the transcript, I am also unable to agree that the agreement was not material to the Tribunal's decision. While the Tribunal member was prepared to make a finding in relation to step 3 in Deledio before hearing the evidence, it is apparent it was the agreement which precluded him doing so. The language which he used made this clear, when he said 'if I had to go through all the steps, that would have been the finding I would have made'. 43 That leaves the question whether the issue should nevertheless now be raised on this appeal. The respondent in oral submissions asserts that, apart from the agreement, the material in any event pointed to the reasonableness of the hypothesis. There is no contention of prejudice on the issue now being argued. In application of the law as set out above, I consider that the Court should exercise the discretion to now permit the grounds directed to that issue to be considered. 44 The principal contention of the Commission on this issue is that there was no hypothesis relating to element (3) in the SoP. That is to the requirement of the 70gm/day being for at least 20 years before the clinical onset of the malignant neoplasm of the prostate. In particular it is said that there was no material before the Tribunal which pointed to Mr Dunn's consumption of animal fat being different during his periods of operational service (other than on voyages to Korea during his second period of operational service) than during his non-eligible service. It contends there was no material before the Tribunal that Mr Dunn, rather than Mrs Dunn, bought, prepared or otherwise determined the amount of animal fat which was consumed by him after his marriage in 1955. Mr Dunn's evidence to the VRB had been that he continued eating the same sort of diet post-service which he had consumed during operational service because he enjoyed it and they just carried on in that way until much later in life changing their diet when they realised it was not healthy. The Commission's submission is that, given there was no expert evidence that fat had any addictive properties, the necessary causal relationship between Mr Dunn's consumption of animal fat at the prescribed level for at least 20 years and his operational service had not been made out. 45 The respondent submits that the material before the Tribunal clearly established that the hypothesis was a reasonable one. Bushell v Repatriation Commission [1992] HCA 47 ; (1992) 175 CLR 408 at 414; Re East and Repatriation Commission (1987) 16 FCR 517 at 532 ( East ). In East at 533 it was stated that a hypothesis may be reasonable without it having been proved (either on the balance of probability or beyond reasonable doubt) to be correct as a matter of fact. Accordingly, a connection asserted by a hypothesis to exist between death or incapacity and service may still be reasonable even though theoretical. In some cases where a hypothesis assumes the occurrence or existence of a fact, that does not of itself make the hypothesis unreasonable: Brynes v Repatriation Commission [1993] HCA 51 ; (1993) 177 CLR 564 at 570. Section 120A of the VE Act requires the reasonableness of a hypothesis to be assessed by a reference to the SoP. These have no function in relation to the proof or disproof of the facts of a case. Rather they prescribe a medical-scientific standard with which a hypothesis must be consistent. The respondent submits that the Tribunal was entitled to make the finding of fact that a reasonable hypothesis had been raised, so that these grounds of appeal should be dismissed. 46 It is necessary to return to the precise words of 5(c) of the SoP. The opening words state the factors which must as a minimum exist before it can be said a reasonable hypothesis has been raised connecting the malignant prostate with the circumstances of the person's death. The three circumstances in (c) have been set out above. The third factor is the duration of the consumption for the 20 year period preceding clinical onset. Of all three factors it was necessary in accordance with cl 4 of the SoP that they be related to relevant service. Step three in Deledio at 97 makes this apparent when it states 'the hypothesis raised before it must thus contain one or more of the factors which the Authority has determined to be the minimum which must exist, and be related to the person's service...' That is, the hypothesis could not be raised as reasonable in accordance with the SoP unless there was some material pointing to the connection between the 20 year post-operational service consumption being connected with the relevant service. As was the case in Byrnes at 569, the hypothesis is one of connection of the veteran's condition with the circumstances of his service. If there is an assumed fact it cannot be the fact to which the hypothesis must be addressed; that is, the fact of connection. 47 In my view the Commission is correct in maintaining that there was not material before the Tribunal which pointed to the continuance of Mr Dunn's diet for a period of 20 years as being related to his operational service. The only way that relationship could have been open and found would have been by inference that it would not have occurred but for the rendering of the service by him - s 196B(14)(f) --- or otherwise fell within other paragraphs of that section. Taking into account the factors referred to in the Commission's submission, it cannot be concluded that the inference was logically the only conclusion open from the other circumstances in the material. The element of enduring fat consumption for 20 years, being the factor upon which the Commission relies in this ground, was not either the subject of an express finding of the necessary relationship or a conclusion open by inference from the material before the Tribunal. 49 Again the Commission contends that the Tribunal found that the hypothesis was reasonable without considering whether the material before it pointed to any of the required kinds of causal relationship. At least so far as ground 1 encompasses, that has been made out. While the relationship may have been arguably implicit in the agreement of the three Deledio steps, that cannot be the case when the concession has been set aside for the purposes of this application. While it is also the case that the Commission may have been unable to disprove one or more of the facts relied on beyond reasonable doubt, the agreement before the Tribunal resulted in the issue of relationship to operational service being agreed and so not subjected to that forensic process. The agreement had the consequence that the relationship of Mr Dunn's dietary consumption for the 20 year period following his operational service to that service was not examined. For the reasons given under ground 1 in relation to the making of an inference, it was not open for it to be inferred that such consumption was related to his consumption during operational service, in the absence of any evidence of relationship in that regard. The Commission contends that in forming its opinion that the hypothesis was reasonable the Tribunal failed to consider her use of two lower activity factors of 1.95 and 1.87; her conclusion that, using those lower activity factors, Mr Dunn's pre-service diet was still understated and invalid; and her testimony that she used three different activity factors. Additionally, it is contended that the Tribunal failed to consider Dr English's evidence in a number of other respects. 51 I agree with the respondent that it cannot be said from the reasons of the Tribunal that no regard was had by the Tribunal to the matters now enumerated by the Commission. The Tribunal was neither obliged to enumerate all matters arising from the evidence in its reasons nor is it for this Court to say how the Tribunal was to weigh the various factors in the evidence before it. This ground is not made out. 'Related to' has the same meaning as 'related to service' in s 196B(14) of the VE Act: Kattenberg at [42]. 54 The Commission submits that the ultimate finding made by the Tribunal was not of a relationship of any of the kinds contained in s 196B. 55 In relation to ground 2 the respondent argues that, by its explicit references to s 196B(14) and Kattenberg in the paragraphs immediately preceding its conclusion in [106], the Tribunal demonstrated it was clearly aware of the operation of that section and the authority of Kattenberg . It is submitted that the Tribunal's finding of relationship to service is implicit in its determination and its explanation of the requirements prescribed by cl 4 of the SoP. Further, the finding in [106] is explicit. It is not necessary, it is argued, for reasons to be lengthy or elaborate and for every fact leading or relevant to the ultimate decision, or the detailed chain of reasoning to be set out, provided the basis for critical findings is apparent on the fact of the reasons: Maynard v Dabinett (1999) 29 MVR 512; NSWCA 295 at [15] - [17] per Stein and Giles JJA. It is contended that the effect of the Commission's submission is to seek to have the Court review the Tribunal's finding of fact. The respondent contends that the Tribunal's finding in [106] discloses no failure to apply the relevant legal principles to the facts before it in evidence. That is, it was a finding the Tribunal member was entitled to come to in preferring the evidence in support of Mrs Dunn's application over the evidence of Dr English. 56 The fact that the Commission has succeeded in establishing ground 1 necessarily entitles it to succeed on this ground also. Once the effect of the concession is set aside for the purposes of argument on this appeal and it is made clear that no material addressed the factor of connection in the manner required by SoP 5(c) and Deledio , it follows that the Tribunal's finding in [106] was made without foundation or necessary accord with s 196B(14). That is, the Tribunal should have considered whether any aspect of Mr Dunn's operational service caused him to increase his consumption of animal fat to the prescribed level and to maintain that consumption for at least 20 years. Instead, the Tribunal, it is contended, confined its consideration to Mr Dunn's level of consumption of animal fat at each of the periods of his service, pre, during and post operational service. In further support of this ground the Commission advances the submission that there was no evidence or material before the Tribunal which was capable of supporting a positive answer to the questions posited by s 196B(14)(f). 58 In relation to ground 3 the respondent says that the starting point is that the Tribunal made a finding of fact that the relationship referred to in the ground existed. Further that it is clear from [53] of the Commission's submissions that it is seeking to have this Court review the evidence before the Tribunal in relation to its finding of fact. Additionally, [43] of the Tribunal's reasons recorded that the Commission's advocate had acknowledged that Mr Dunn's 4.5 years of operational service would have made a 'significant contribution' to achieving the SoP threshold for total fat intake over a 20 year period. 59 In my view this ground succeeds for the reasons essentially developed in relation to ground 1. 61 The Commission submits that in applying Lawrence the Tribunal was in error because Mr Dunn's case did not involve the 'making of assumptions and assessments of various vital factors': Lawrence at [76]. Rather, the vital factors fed into the Schofield equation to calculate Mr Dunn's BMR were his sex, age and weight, concerning which there was no dispute. Also Dr English had given expert evidence which Young J in Lawrence had said was necessary. The unchallenged evidence before the Tribunal was that the Schofield equation was accepted by eminent world bodies and applied in many cases involving claims of prostate cancer. The Tribunal had expressly disavowed a challenge to the Schofield equations as such. 62 Furthermore the Commission submits that any understatement or overstatement of Mr Dunn's BMR produced by the Schofield equation could not affect Dr English's expert conclusion that Mr Dunn's pre-service diet was invalid. Accordingly, the Tribunal applied an erroneous understanding of the principles in Lawrence or misapplied the principles to the material before it. 63 The respondent submits that the Tribunal did not reject the evidence of Dr English but rather concluded there were limitations associated with it. The limitations were those which it set out in [87] of its reasons. The decision by the Tribunal was made in full cognisance of the limitations in the expert evidence. 64 In Lawrence Young J was concerned with whether a scientist's computer models of how a creek would behave under certain conditions, predictions of flooding and extent of flooding should be admitted into evidence. His Honour said that unless the assumptions and assessments of the various factors fed into the computer are proved by evidence (or conceded as valid), the mere fact that a computer produced a prediction is of no evidentiary value. 65 The contention that the Tribunal misapplied the approach ordained by Lawrence is one which potentially would involve this Court becoming involved in the evidence to a degree not appropriate on review. The Tribunal formed its views on the limitations in the evidence of Dr English and this ground invites this Court to second guess those views. I therefore do not consider that the application should be allowed on this ground. 67 The Commission submits that s 119 of the VE Act is a procedural provision: Repatriation Commission v Bey (1997) 79 FCR 364 at 373-374 (though I note that the citation is only with reference to s 119(1)(g)). It is said that, properly construed, the section did not have any application to Dr English's expert evidence concerning the invalidity of Mr Dunn's pre-service diet based on general community surveys or on the Schofield equation. Rather, the consequences of Mr Dunn's recollected diet pre-service being invalid (because it under-reported energy consumption) was that any calculation of Mr Dunn's consumption of animal fat based on the invalid diet was also invalid. That is, no inferences could be made on whether the under-reported energy consumption was of energy in the form of animal fat, protein or carbohydrate or of some (infinite) combination of those three food types. It was in the context of that vacuum that Dr English suggested animal fat intake of adult males reported in the 1944 national household survey be adopted. It is contended that s 119 did not require or permit a conclusion that Mr Dunn's pre-service diet could not be extrapolated from a community survey of the period. 68 The respondent accepts that s 119(h) cannot be used to provide evidence of facts if none exist: Re Sharkey and Repatriation Commission (1988) 15 ALD 783. However the respondent says there is no error in the Tribunal's conclusion that evidence of Mr Dunn's diet cannot be extrapolated from the general community survey by the method of inference or by relying on the output of a mathematical model where limitations in the accuracy of the output exists. It is said the simple effect of s 119 was that, given the Tribunal's findings, the relevant standard of proof had not been discharged by the Commission. Additionally, the Tribunal acknowledged the problems that exist with the validity of recall evidence: at [95]. 69 The only apparent application of s 119 in [96] is reliance on it by the Tribunal for the proposition that evidence cannot be invented. That was a conclusion reached with reference to 'these factual circumstances', which I take in context to be a reference to [95]. In that paragraph the Tribunal acknowledged the opinion of Dr English and that problems exist with the validity of recall of past food consumption because of factors such as the age of the party completing the food survey, the extensive time period for recall, likely errors of omission and intrusion/commission and distortion of memory, as well as the death of Mr Dunn which prevented a further reality test. In taking into account those matters, it appears to me the Tribunal was acting in accordance with s 119. I do not read the conclusion reached in [96] (that evidence of pre-service diet cannot be extrapolated from general community survey by the method of inference or mathematical model subject to limitations) as being a purported application of s 119. 70 Accordingly I would not allow this ground. However, it relied on its own reading of two articles to reflect the conclusions of Dr English on BMR. It did not identify the 'assumptions' said to be in issue. It is argued by the Commission that the Tribunal failed to afford Dr English the opportunity of addressing whatever 'assumption' was of concern to the Tribunal. If, as appears, the Tribunal's concern had been whether a variation of plus or minus 10 per cent between a predicted BMR and a measured BMR could make any difference to Dr English's conclusion that Mr Dunn's recalled pre-service diet was invalid, Dr English, it is said, would have been able to show why such a variation could not affect her conclusion that Mr Dunn's pre-service diet was invalid. Similarly the Commission contends there was a lack of procedural fairness in relation to the Tribunal's consideration of evidence of weight loss of prisoners in Japanese camps during World War II. 72 The respondent refers to s 33(1)(a) of the AAT Act as providing that the procedure of the Tribunal lies within its own discretion. Section 33(1)(c) provides that it is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks appropriate. Nevertheless the respondent accepts that the Tribunal cannot ignore the rules of evidence as being of no account: R v War Pensions Entitlement Appeals Tribunal; Ex parte Bott [1933] HCA 30 ; (1933) 50 CLR 228. She contends that for the purposes of procedural fairness, a distinction has to be drawn between particular facts and documents relied upon by the decision-maker and the general knowledge of an expert. It is accepted that the former, if relied upon, must be disclosed so that there is an opportunity to answer the material. However, it is submitted the general knowledge need not be disclosed, even though it may result in the Tribunal finding expert evidence not credible: R v Milk Board; Ex parte Tomkins [1944] VR 187 at 197 per Lowe J. 73 The respondent's submissions continue by stating that the factual issue in question is whether or not the Tribunal relied on information which should have been disclosed to the Commission. On 8 April 2005 the Tribunal made a direction having the effect of allowing Dr English to comment on a copy of a table and its source, each of which had been referred to in cross-examination. The Commission chose not to prepare any responsive supplementary submissions. 74 In relation to the 'underlying assumptions' referred to by the Tribunal in its reasons, the respondent submits that Dr English provided a response in her further report dated 13 March 2005, whether or not the specific question was referred to her. Further, that in reaching its views on the limitations arising from the underlying assumptions, there is no indication that the Tribunal had made its conclusions in respect of weight to be given to Dr English's conclusion without considering her reports or oral evidence. Consequently, it is contended, the Commission has not been prejudiced or disadvantaged in any way. It is said the reference by the Tribunal to the prisoners of war in Japanese camps is to be seen as being by way of notation and reference and not as having played any part in the Tribunal's formulation of its reasons. 75 It is well established that not every departure from the rules of natural justice will entitle the aggrieved party to a new trial: Stead v State Government Insurance Commission [1986] HCA 54 ; (1986) 161 CLR 141 at 145-6; Re Refugee Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 at 88, 109, 116-7, 122, 131 and 153-4. The question is whether the Court is satisfied that the breach could have had no bearing on the outcome: Tuncok v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1069 per Hely J relying on Stead and Aala . I rely upon the reasoning of Weinberg J in Applicants M1015/2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1309 for the continuing authority of these authorities, none of which were examined in the course of argument in this application. 76 I agree that the reference to the evidence from Japanese war camps was treated by the Tribunal as a supplementary note and failure to give notice of it could not be said to have given rise to any practical injustice. 77 The issue of the predictions of BMR being only to within about 10% in the case of most individuals arose from the paper by Warwick (1990) cited in [85] of the Tribunal's reasons. That article came before the Tribunal as the consequence of being provided to the Tribunal by the Commission along with an extensive bibliography of references in Dr English's report: [51] of the reasons. Given the origins of that issue in that material and the opportunity given by the Tribunal for submissions relating to underlying assumptions and the validation of the output of the mathematical model (reasons [46]) I do not consider the Commission establishes that procedural fairness was denied. 79 The appeal by way of application should therefore be allowed. | application by way of appeal war widow's pension malignant neoplasm of prostate war-caused death tribunal finding of liability based on evidence of deceased and rejection of evidence of expert whether tribunal in error in finding reasonable hypothesis raised agreement on first three deledio factors at tribunal hearing whether appropriate for contentions concerning third factor to arise for argument on appeal whether material raising or pointing to connection of condition and death to operational service whether material to satisfy elements of relevant statement of principle whether failure to accord procedural fairness in relation to evidence of expert veterans' affairs |
Section 190 of the Life Insurance Act 1995 (Cth) prohibits such a transfer "except under a scheme confirmed by the Court" pursuant to s 194 of the Act. Subject to the Court's approval, the Scheme was intended to take effect from the close of business on 30 November 2008 (Completion Date). On Monday, 24 November 2008 I made orders confirming the Scheme and said that I would provide reasons at a later date. These are my reasons. NMLA is a wholly owned subsidiary of AXA Asia Pacific Holdings Group. Prior to September 2007 NMLA issued a wide range of life-insurance products through five statutory funds. Its immediate annuity policies (term certain and lifetime) were issued through its Statutory Fund No 4 (SF4) along with other superannuation products. From September 2007 NMLA closed its term certain and lifetime annuity products to new business. Challenger operates three statutory funds of which Statutory Fund No 2 (SF2) relates to immediate annuity business and remains open for new business. Under the Scheme for which confirmation is sought it is proposed to transfer specified NMLA Australian immediate annuity policies from SF4 to Challenger's SF2. It appears that the impetus for the transfer of these policies from NMLA to Challenger came from the 2006 Federal budget which took effect in September 2007. Before that date complying annuities had the benefit of a 50% tax exemption for the purpose of the Pension Assets Test. From September 2007 that exemption was eliminated and, as a result, NMLA decided not to accept any new business in the immediate annuity market. Subsequently it agreed to transfer these policies to Challenger. Under the Scheme as agreed by NMLA and Challenger on 3 June 2008, Challenger assumes NMLA's liabilities and obligations and is obliged to make all future benefit payments in respect of all NMLA's Australian immediate annuity policies still in force at the completion of the Scheme. Along with NMLA's liabilities and obligations, assets referable to NMLA's SF4 were also to be transferred and become part of Challenger's SF2. On completion of the Scheme NMLA would be relieved of its obligations in respect of the transferred policies. Challenger would be substituted for NMLA as insurer under the transferring policies so that references in those policies to NMLA would be read as references to Challenger, references to NMLA's SF4 would be read as references to Challenger's SF2, and any policy owner or other person having a claim on, or obligation to, NMLA under a transferring NMLA policy would have the same claim on, or obligation to, Challenger in substitution for NMLA. The Scheme was based on an actuarial report dated 26 September 2008 (First Joint Report) prepared jointly by the appointed actuaries of NMLA and Challenger, respectively Mr Michael Thornton and Mr Anthony Bofinger. Mr Thornton is a Fellow of the Institute of Actuaries (UK) and an accredited member of the Institute of Actuaries of Australia. Mr Bofinger is a Fellow of the Institute of Actuaries of Australia. The report states that the opinions expressed in it are the opinions of both Mr Thornton and Mr Bofinger except that Mr Thornton takes responsibility for the commentary on NMLA's history, practice and future intentions and Mr Bofinger takes responsibility for the commentary on Challenger's history, practice and future intentions. An Independent Actuarial Report (First Independent Report) prepared by Mr Clive Aaron of Towers, Perrin, Forster & Crosby Inc and dated 26 September 2008 was commissioned by both applicants. Mr Aaron is a Fellow of the Institute of Actuaries of Australia and a Fellow of the Institute of Actuaries (London). The First Joint Report and the First Independent Report, along with updates to both reports, are discussed below at [24] et seq. Subject to one exception the NMLA policies were to be transferred to Challenger without amendment. The exception, which relates to taxation, is incorporated in clause 5.1 of the Scheme. It applies to certain annuity policies purchased after 9 December 1987. This tax exempt status is reflected in the basis upon which the transferred policies were originally priced and issued and are currently managed by NMLA. This is the proposal that NMLA's Memorandum of Demutualisation (MoD) be modified so that it no longer applies to the transferring NMLA policies. The MoD was established on the demutualisation of NMLA and contains rules for the management of NMLA's life-insurance business following its demutualisation. Accordingly, the Appointed Actuary of NMLA has advised the directors of NMLA that NMLA policies will not be materially adversely affected if the Rules of the MoD are not applied by Challenger upon transfer. Section 190(3) of the Act provides that a scheme must set out the terms of the proposed transfer and the particulars of any arrangement necessary to give effect to the scheme. Sections 192 and 193 provide that APRA may arrange for an independent actuary to make a written report on the scheme and is entitled to be heard on an application for confirmation. The application for confirmation must be made in accordance with the regulations. Section 194(1) provides that the Court may confirm a scheme with or without modification or refuse to confirm a scheme. At [13] his Honour identified two aspects to the protection of the interests of policyholders: First, there are the procedural aspects in which the Court is concerned to see that the process undertaken has been properly executed in accordance with the requirements of the Act and the Life Insurance Regulations 1995 (Cth) ('the Regulations'); and Second, there is a substantive aspect in which the Court is concerned to see that the Scheme will not be prejudicial to the interests of policyholders and that policyholders are properly safeguarded, i.e., there is not likely to be any material detriment to policyholders affected by the Scheme (see NuLife Insurance Ltd v Norwich Union Life Australia Ltd [2005] FCA 1635 at [24] per Emmett J; MLC Lifetime Company Ltd & Anor (No. The dispensation related to policyholders for whom the parties had no record of a current mailing address and to the need to provide an approved summary of the Scheme to those who became policy owners less than 15 days prior to the hearing of the application and up to the completion date as defined in the Scheme. I am satisfied that the detailed affidavit evidence concerning the procedural steps taken by both applicants establishes that the remaining procedural requirements have been met. In short: Evidence was also given of enquiries and objections made by policyholders in relation to the Scheme. In her affidavit sworn on 18 November 2008 Angela Bourke summarised the nature of the objections or complaints raised by callers. Ms Bourke is the Product Champion, Investment Products of AXA Australia Limited. In relation to the Scheme she was responsible for managing and documenting the return mail procedures, ensuring that correct processes were followed and handling and reporting complaints. These complaints and objections are discussed below. Consequently there is no formal contradictor. Nevertheless the provisions of the Life Insurance Act that require publication of a notice of intent, the distribution of a summary of the Scheme to affected policyholders and opportunities for public inspection of the proposed Scheme not only envisage, but invite, comments and objections by policyholders. In this case, in addition to the complaints and objections referred to above, 5 NMLA policyholders attended the first day of the confirmation hearing seeking to make oral submissions to the Court. All policyholders who indicated a wish to make submissions were permitted to do so. The 5 policyholders who made oral submissions were: Mr Michel Gompes, Mr John Cameron, Mr James Josephson, Mr Egon Kampgaard and Ms Anna Yeats. Another, Mr Jim Kemp, was represented by Mr Michael McHugh of Counsel. In addition the Court reviewed a number of letters sent by policyholders who objected to the transfer including letters from Mr AJ Fitzgerald, Ms MK Byrnes and Mr JG Vandenberg. Common themes ran through the reasons given by each objector for opposing the transfer. In general they fell into the categories identified by Ms Bourke (see [18] above). It is entirely understandable that people who had invested in one company should be concerned and even resentful when, without their consent, their investment is transferred to another company. It is also understandable that these concerns should be exacerbated in the current climate of severe financial instability. As noted above at [14], the Court is directed to have regard to "the interests of policy owners of a company affected by the scheme". Consistent with the principal object of the Act, however, the Court is not directed to consider only the interests of policyholders or to consider the interests as paramount. Their interests must be considered in the context identified in s 3(1). Moreover, it should not be assumed that the interests of policyholders are necessarily identical with their preferences. Mr Thornton and Mr Bofinger prepared further reports in which they updated their consideration of financial information relevant to the Scheme, first to 31 October 2008 (Second Joint Report) and then to 19 November 2008. Mr Aaron also updated the First Independent Report, providing a Second Independent Report dated 19 November 2008 and a Third Independent Report dated 24 November 2008. These updates were essential in the current economic climate. The First Joint Report reviewed the basis and terms of the proposed transfer of policies from NMLA to Challenger with a view to identifying and commenting upon the effect of the proposed transfer on existing Challenger policyholders, transferring NMLA policyholders and remaining NMLA policyholders being those in SF4 as well as the other NMLA statutory funds. It stated in its conclusions that the Scheme would have no material adverse impact on the benefit security of Challenger's existing policyholders, NMLA's remaining policyholders or NMLA's transferring policyholders. They found that each of the statutory funds of Challenger and NMLA would remain in a "sound financial position" as would Challenger and NMLA as a whole. They also concluded that there would be no material impact on the contractual benefits or rights of any of these three groups of policyholders. It is clear that between the date of the First Joint Report (30 June 2008) and the final updates to the First Joint Report (19 November 2008) market volatility significantly affected the financial position of both companies. In his supplementary report in relation to Challenger's position, Mr Bofinger estimated that at the close of business on 21 November 2008 "Challenger would have had assets in excess of its Enterprise Capital Reserves of around $15 million, assuming that the NMLA Policies had transferred to Challenger at that time". Mr Bofinger noted that this compared with the position of $34 million excess estimated on the same basis as at 31 October 2008 but stated that, nevertheless, "Each of Challenger's statutory funds continues to satisfy its Capital Adequacy requirements and the Shareholders Fund continued to satisfy its Management Capital requirements". Mr Bofinger also observed that Challenger's Subordinated Debt, which had raised concerns among some who objected to the transfer, actually contributes to policyholders' security "because the assets held in respect of the Subordinated Debt liability are available to support the fund's obligations to the policyholders as a first priority". In the updated report annexed to his affidavit of 24 November 2008 Mr Thornton expressed similar views about the nature of Enterprise Capital Reserves. He further noted that while both NMLA's SF4 and NMLA as a whole had net assets above Enterprise Capital Reserves that this was not true of some individual NMLA Statutory Funds. He pointed out, however, that each Statutory Fund and the Shareholders Fund continued to hold net assets above Capital Adequacy requirements. Mr Thornton also stated that the opinions he expressed in the First Joint Report remained unchanged. The update indicates that Challenger would have had sufficient assets in aggregate to meet the regulatory Capital Adequacy Requirements in its statutory funds, the regulatory Management Capital Requirement in its Shareholder's fund and its internal Enterprise Capital reserves after implementation of the Scheme, if implementation had taken place as at 21 November 2008. However, the level of assets in excess of its regulatory and internal Enterprise Capital requirements would have fallen from $34 million as at 31 October 2008 to $15 million as at 21 November 2008. Despite this reduction in excess assets, Mr Aaron concluded that as both companies would have met their regulatory capital requirements "the level of security of policy owners' benefits should remain adequate. Further, both companies would also, in aggregate, have met their internal Enterprise Capital Reserve requirements as at 21 November 2008, which provides an additional level of support". This being so, Mr Aaron concluded that the change in capital position to 21 November 2008 did not cause him to change the opinions expressed in the First Independent Report. In his Second Independent Report Mr Aaron considered some of the objections raised by policy owners in connection with the Scheme including concerns about the relative financial security of the two companies and the loss of diversification benefits for some policyholders. In relation to concerns expressed about the financial security of Challenger when compared with NMLA, Mr Aaron accepted that there would be some reduction in the security of benefits for transferring NMLA policy owners but that the reduction would not be material. APRA did not exercise its right under s 192 of the Act to instruct an independent actuary. Ms J Gleeson of Counsel who appeared for APRA at the confirmation hearing confirmed APRA's position. The importance of APRA's attitude towards the Scheme is well established. 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. On Friday 21 November 2008, I consulted with the board of Challenger Group and confirm that Challenger Group remains committed to ensuring Challenger is able to continue to meet its regulatory requirements and maintain its capital position consistent with Challenger's capital management policies to the extent of Challenger Group's ongoing capacity to do so. At 21 November 2008, Challenger Group had substantial assets, including cash, that could be made available to Challenger if required. I also took into account the fact that NMLA no longer accepts new business in the annuity market whereas Challenger has a substantial business in this market and is intending to expand that business. I also gave some weight to the expression of Challenger Group support for Challenger described in [35] above. I am supported in my conclusion that the Scheme should be confirmed by the fact that APRA has stated it has no objection to the Scheme and has not felt the need to instruct an independent actuary. As indicated above I also considered the objections raised by individual policyholders, however I concluded that these objections do not outweigh the factors that support confirmation of the Scheme. It is for these reasons that I made orders confirming the Scheme. I also ordered that the applicants pay APRA's costs of the proceedings. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | life insurance scheme for transfer of part of life insurance business application to court for confirmation of scheme compliance with life insurance act 1995 (cth) and life insurance regulations 1995 (cth) insurance |
One of the non-parties - WP Williams and Associates Consulting Engineers Pty Ltd formerly trading as 'Williams Worley Rail' (WP) - has provided the discovery which was being sought. The motion remains extant in respect of the other non-party, WorleyParsons Services Pty Ltd trading as 'Williams Worley Rail' (WorleyParsons). Additionally, under the accrued jurisdiction of the Court, the application is brought in respect to breach of contract and duty of confidence. 3 It is claimed that from 1993 to April 1997 the applicant, through its research and development efforts (Lynx R&D) in relation to the design of a new or improved wagon body suitable for carrying of freight and bulk materials for use in the rail freight market in Australia, had devised a prototype design, together with the requisite technical specifications and manufacturing information. This related to the applicant's prototype wagon known as the 'Lynx 3CR12 Wagon Project'. 4 Further that on or about 10 April 1996 the applicant agreed with the first respondent in the 1996 Confidentiality Agreement to disclose the information concerning the wagon design to the first respondent's servant or agent. This is said to have been for the purpose (the approved purpose) of engaging in discussion to determine whether each of those parties would co-operate in an exclusive arrangement to participate jointly in a tender in respect of a wagon body and/or bogey design in response to BHP Iron Ore Ltd (BHP) Invitation to Tender T 6896 for the design, manufacture, supply and testing of 120 enhanced gondola ore cars (BHP Tender). The disclosure is pleaded as having taken place the next day solely for the approved purpose. At the same time the first respondent entered into a confidentiality agreement with United Construction Pty Ltd for the purpose, if the tender succeeded, of that company manufacturing the wagons, using the applicant's design and technology. The applicant claims not to have given permission beyond the approved purpose. The BHP tender, however, was not successful. 5 The claim continues by referring to an approach in early 1997 by the first respondent to the applicant for them to be jointly involved in submitting a tender to Hamersley Iron Ore Ltd (Hamersley) for the purpose of designing and manufacturing a bulk freight rail wagon (Hamersley Iron Tender). For that purpose they proposed entering into the 1997 Confidentiality Agreement. The subject research and development at this time was the Lynx 1996 Confidential Information with enhancements (Improved Lynx 3CR12 Design). 6 Around 21 April 1997, in anticipation of the conclusion of the 1997 Confidentiality Agreement, the applicant disclosed the Lynx 1997 Confidential Information in respect of the Improved Lynx 3CR12 Design to the first respondent for solely the approved purpose. The Hamersley Tender did not succeed. 7 In August 2000 the first respondent approached the applicant to participate jointly in a further tender to Hamersley. 8 Around that same date the applicant claims to have agreed with the first respondent in the 2000 Confidentiality Agreement to disclose further confidential information reflecting its ongoing enhancements of the Lynx R&D in the field of design of rail wagons for carrying of freight and bulk materials in the Australian rail freight market (Lynx 2000 Confidential Information, which was based on and derived from the Lynx 1996 and 1997 Confidential Information). Around 7 August 2000, the applicant disclosed the Lynx 1997 Confidential Information in respect of the Lynx Golynx design to the first respondent. 9 The claim proceeds by stating that in breach of its obligations under the 1996, 1997 and 2000 Confidentiality Agreements the first respondent has, without licence or authority, disclosed the Lynx Confidential Information contained therein for purposes other than the approved purpose, revealing the information to the second and third respondents which have unlawfully made profits for themselves by the manufacture and marketing of the Bradken 9100 rail wagon and otherwise exploited the confidential information by purporting to licence or authorise other parties to use the information. In the particularisation of breach it is pleaded that the applicant is unable to supply the identity of the persons to whom disclosure took place until after discovery, although certain additional information is also particularised. 10 The applicant claims that, as a consequence, the information has lost its value or that such value has been seriously diminished. 11 It is further said that the information was supplied to non-parties to the Confidentiality Agreements in breach of an obligation of confidence and an account of profits is sought. 12 There is also a copyright claim in respect of the Lynx Copyright Works, being documents recording some of the Lynx Confidential Information as provided to the first respondent pursuant to the 1997 and 2000 Confidentiality Agreements. A breach is claimed in respect of the Lynx Copyright Works as the result of their unauthorised reproduction, publication and sale by the first, second and third respondents. Such is said to have occurred in trade in a manner prejudicial to the commercial interests of the applicant. 13 Finally there are claims that the conduct of the respondents was at all times false and misleading and that they made false and misleading statements. Within this framework, there are some features of the rule that are important for present purposes. That person must be someone whose description has been ascertained. After proceedings have commenced, the rule ceases to apply: Ricegrowers Co-operative Ltd v ABC Containerline NV (1996) 138 ALR 480 (Tamberlin J), at 484. While it is not necessary for the applicant to demonstrate a prima facie case, it is not enough merely to assert that there is a case against the prospective respondent: CCA Beverages (Adelaide) Limited v Hansford (unreported, 15 November 1991, O'Loughlin J), at p 12. But the applicant, after having made all reasonable inquiries, must not have sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain relief against the prospective respondent (see par (b)). The absence of sufficient information is to be assessed objectively: Alphapharm , at p 31. The most recent is the statement of French J in East Grace Corporation v Xing (No 2) [2005] FCA 1266. An earlier statement was that of Hely J in St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147. The belief requires more than mere suspicion or conjecture. On the other hand, it is not necessary for an applicant to establish even a prima facie case. It is necessary, however, for the applicant to show objectively that there is reasonable cause for the relevant belief. It is not necessary to demonstrate whether or not the applicant has the belief. The test is confined to some degree by the propositions that while it does not require a prima facie case for relief to be demonstrated, mere assertion of a case against a prospective respondent is not enough --- Hooper v Kirella Pty Ltd [1999] FCA 1584 ; (1999) 96 FCR 1 at 11-12. Where the action is for breach of confidence and infringement of copyright, a letter before action may not have obtained information of the kind and width for which the processes of discovery make provision. It appears to contemplate a reasonable exhaustion of alternative sources of information and, in any particular case, involves a pragmatic balancing of considerations: CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad (2001) 187 ALR 279 at [25] per Tamberlin J. It is essential to assign meaning and effect to the requirement to make 'all reasonable inquiries'...that is a precondition to the power: CGU 187 ALR at [34] per Tamberlin J. One can venture to say that both the extent and nature of the inquiries should be considered including the likelihood that the inquiries would yield a result. The rule does not require applicants to make inquiries that are predictably fruitless. Her Honour at [12] commented that she did not think the qualification of 'all' before reasonable inquires created a different standard for FCR O 15A r 6. (g) where most of the relevant information is in the hands of the non-party, the focus may not be primarily upon inquiries of the potential respondent, but rather upon external inquiries as to relevant facts: C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [44] per Gyles J. 22 WorleyParsons relies on an affidavit of Mr Wong, its General Manager of Operations of the Infrastructure Division and Mr Sash of its solicitors. It is said the influence of this is reflected in the second respondent's Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Car. The applicant contends that each of these bulk carriers incorporate features which are attended by significant design and performance advantages being the same or substantially identical to features evidenced in the wagons made to the applicant's design. 23 It is argued this is supported by the amended defence in which it is conceded by the second and third respondents that these wagons were developed by WorleyParsons after a detailed physical examination of existing wagons owned by BHP and Hamersley respectively as well as the infrastructure with which the wagon was required to interface. 24 The applicant directs attention to documents exhibited to the affidavits of Ms Trichilo. These are principally email exchanges involving reference to components of the Lynx Confidential Information. Particular reliance is placed by the applicant on the email dated 11 March 2003 for Doug Cummings of WorleyParsons to Patrick Torok of the second respondent, being item 25 of the second and third respondent's discovery, placed in evidence by the second affidavit of Ms Trichilo. That referred to a schedule of preliminary engineering based on previous projects. Can you confirm that the Golynx car structure meets the specification that we are working to? 26 Mr Wong deposes in his affidavit for the respondents that 'a copy of a contract document' was forwarded on 20 March 2003 to WorleyParsons in respect of the BHP Contract, namely the specification and the tender document. He also deposed that at p 54 of the BHP contract document there is a copy of the Lynx ore car drawing. 27 As a consequence Mr Wong deposes he believes that the copies of the Lynx drawings were either contained in the specification referred to in the BHP contract or provided to WorleyParsons by BHP directly or via the second respondent. Likewise in relation to what he described as the 'sidewall drawings'. 28 As to the evidence of Mr Wong, the applicant submits that it raises more questions than it answers. It fails to give discovery while plainly making it apparent that WorleyParsons is likely to hold documents of relevance. 29 WorleyParsons submits that the effect of the evidence is to show that the applicant has no 'reasonable cause to believe' that the applicant has or may have the right to obtain relief against it. This is because it is said the evidence discloses that the Lynx drawings received by WorleyParsons were supplied to it by BHP and were not received by it as confidential information from the second respondent. WorleyParsons submits that there is nothing in the affidavit of Mr Mazur or Ms Trichilo to give colour to the possibility of liability against it. It is said there is nothing to support any reasonable basis for believing that confidential information passed from the second respondent to WorleyParsons in breach of confidentiality obligations owed to the applicant. It is contended that the emails upon which the applicant relies do not meet the standard. Rather the applicant is seen to be proceeding only on a suspicion. 30 Mr Wong also deposed that the documents contained in annexure 15 to the affidavit of Ms Trichilo form only a small proportion of the documents he would expect the second respondent to have in its possession, custody or control relevant to the design and construction of the BHP ore cars. Also that the manufacturing and construction drawing has not been provided to WorleyParsons. 31 He continued by stating that he would expect the second respondent to have in its possession BHP specification documents; BHP tender documents; progress reports; change requests; meeting and site notes; and all final design drawings. 32 I consider that the filing of the amended defence enables the applicant to establish 'a reasonable cause to believe' that it might have a right to obtain relief from WorleyParsons. The claims made by WorleyParsons, in relation to BHP and the second respondent may yet be made out However, the applicant is not bound to accept the claims of WorleyParsons as the only credible explanation of the circumstances to which it has made reference in its submissions and the affidavit of Mr Wong. The circumstances specified in the amended defence and the list of discovery provided by the second and third respondents, unexplained, do provide a basis for a reasonable cause to believe there might be a right of recovery. Just as the applicant cannot establish its reasonable cause to believe by mere assertion, so the mere assertion by the non-party cannot necessarily bring the reasonable belief to an end. It is to better test that belief that the applicant seeks the non-party discovery. The non-party has given one explanation of the circumstances; it is to enable the applicant to consider that position that the discovery is now sought. Until that occurs and speaks for itself there is reasonable cause for the applicant to believe from the circumstances before it that it may have the right to obtain relief until proven otherwise. It is submitted the applicant has failed to make 'all' such inquiries. Rather the applicant has leapt to a conclusion without satisfying the precondition in this paragraph. 33 It is argued that the only evidence the applicant brings of making an inquiry is an inquiry of WorleyParsons. Further, that the applicant has not brought to the Court an affidavit of the effect of the discovery given by WP. It cannot therefore be established in what position of knowledge the applicant is presently placed. Additionally the evidence of Mr Wong is that the second and third respondents have many other documents and there is no evidence of discovery in relation to them: cf CGU 187 ALR at 288 at [33]. His affidavit is suggestive that BHP is also another apparent source of productive inquiry. 34 In relation to both the application of r 6(a) and (b), WorleyParsons submits that the applicant has not attempted to satisfy the jurisdictional preconditions to the exercise of the discretion under FCR O 15A rr 6 and 7 so that the application is incompetent. 35 The applicant relies on the evidence of Mr Mazur to substantiate the making of all reasonable inquiries. That shows that a letter of inquiry on 29 November 2006 from the applicant's solicitors to WorleyParsons. This was responded to by a letter from WorleyParsons dated 5 December 2006 refusing discovery and denying the appropriateness of it because it was a 'fishing' expedition. On 6 December 2006 the applicant's solicitors wrote denying the 'fishing' character of the inquiry and stating, that failing compliance, application would be made to the Court. On 12 December 2006 the applicant's solicitors made a request for discovery to WP. From the supplementary affidavit of Alan Karp there is evidence of the response to that dated 19 December 2006 providing discovery. 36 The applicant submits that the test for the application of the requirements of FCR O 15A r 6(a) and (b) is not as high as the respondents would have and that the applicant is not precluded from 'fishing'. 37 It is important that the nature of the foreshadowed proceedings is that they allege breach of confidence and infringement of copyright. It is in that context that the reasonableness of the inquiries and in which the requirement to make 'all' inquiries is to be judged. Essentially there was only the one inquiry, being that directed from the applicant to WorleyParsons. As the authorities show, there is the possibility of futility in such an inquiry, given the character of the foreshadowed litigation. 38 The possible sources of inquiry which WorleyParsons submits are required to be investigated by the applicant before any application of an order for non-party discovery in its favour are in respect of the second and third respondents. However, discovery against the second and third respondents has taken place. The fact that Mr Wong considers there is more held by those parties for discovery cannot govern the position that inquiry has been made of them. 39 In this particular context I cannot see why the letter of inquiry from the applicant's solicitors to WorleyParsons does not satisfy the requirement of all reasonable inquiries being made. That is consistent with the nature of the issues, involving confidential information and copyright, and with authority. The affidavit of Mr Wong raises the prima facie position that there may not be a foundation to bring proceedings against WorleyParsons. However, until discovery, the applicant will not be in a position to determine whether that is or is not the course it should pursue. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | non-party discovery whether reasonable cause to believe of right to obtain relief whether all reasonable inquiries made context involving alleged infringements of copyright and trade practices letter of request to non-party discovery from respondents affidavit from non-party raising prospect not liable practice |
Not intending any discourtesy, I will refer to them as "Helen" and "Peter" when it is necessary to distinguish between them. Each appeals to the Court against an appealable objection decision of the respondent (Commissioner) to disallow an objection to an assessment of income tax for the year of income ended 30 June 2002. 2 The facts of each case are, mutatis mutandis , identical. There is a statement of agreed facts. The appeals were heard together, the evidence in each being evidence in the other. 3 The appeals turn on the exception to the happening of CGT event E1 and the exception to CGT event E2 found, respectively, in s 104- 55 (5)(a) and s 104-60(5)(a) of the Income Tax Assessment Act 1997 (Cth) (the Act). The terms of those exceptions are, relevantly, identical. The relevant difference between ss 104-55 and 104-60 is in the primary provisions of those sections. 7 In May 1987 the applicants as joint tenants purchased a property at 22 Darlinghurst Road, Kings Cross NSW (folio identifier 13967/129) (the Property) for $612,000. For convenience, I will refer to the interest of each applicant in the Property as a half interest, although this is an oversimplified way of describing the interest of one of two joint tenants. 8 On 28 June 2002 the applicants executed two trust deeds in identical form (Deeds). Each was a deed poll executed by the applicants as a single party. In each Deed the applicants were called the "Trustees". Each Deed recited that the Trustees had decided to establish an indefinitely continuing superannuation fund (Fund) and to declare that one of the half interests in the Property would form trust property to be held on the terms of the Deed and Rules attached to the Deed (Trust) which were to have effect as if set out in the body of the Deed. The term "Deed" was stated to include a reference to the Rules. I will also use the term "Deed" as including a reference to the Rules. 9 The Deed relating to Helen's half interest established "the Helen Kafataris Superannuation Fund" and the Deed relating to Peter's half interest established "the Peter Kafataris Superannuation Fund". For brevity, I will call the respective Funds "Helen's Fund" and "Peter's Fund" without implying anything as to the questions I have to answer. 10 I will discuss the terms of the form of the Deed in detail below. It is not disputed that each Deed was effective to subject the half interest in the Property to the terms of the Deed relating to it. 11 On 4 July 2002, the applicants sold the Property to Marriott Restaurants Pty Ltd (Marriott) for $4,000,000. By that time each half interest had been held by the Trustees subject to the terms of the Deed relating to it for six days. 12 There is no evidence of the circumstances relating to receipt of the purchase money. For example, there is no evidence that one-half went into a bank account maintained in respect of one Trust, and the other half in respect of the other Trust. The evidence does not include evidence of the accounts, if any, maintained by the Trustees in respect of each Trust. In particular, there is no evidence within the records of each Trust of the crediting by the Trustees of half of the proceeds to an account for Helen or Peter, as the case may be. The respective half interests of Helen and Peter in the Property were CGT assets. 14 Although it does not matter for the purposes of the exception in subs (5), it seems clear that it is s 104-55 rather than s 104-60 that applies in the circumstances of the case. Section 104-60 did not apply because there was no "existing trust" and no "transfer" to an existing trust. There could only be "an existing trust" if, prior to the transfer to which s 104-60(1) refers, there was already other property subject to the particular trust. But it is not disputed that the first property (and so far as the evidence reveals the only property) that was subjected to each Trust was the half interest in the Property of Helen or Peter, as the case may be. 15 Prior to execution of the Deeds, Helen and Peter owned their respective half interests in the Property beneficially. Although no document was executed by Helen or Peter as beneficial owner of a half interest, her or his execution as one of the Trustees of the Deed relating to her or his half interest was effective to subject that half interest to the relevant Trust, to sever the joint tenancy, and to attach trust obligations under the Deed to the half interest. Consistently with this analysis, there was not a "transfer" by Helen or Peter to an existing trust. 16 I need not characterise what happened as a "declaration" on the one hand or as a "settlement" on the other. 17 The expression "beneficiary" is not defined for the purposes of subs (5) of s 104-55 and of s 104-60. Nor is there a definition of the notion of absolute entitlement to an asset as against a trustee. However, s 106-50, which, like ss 104-55 and 104-60, is within Pt 3-1 of the Act, is relevant to this concept. 18 This is a "see through" provision, and raises a fundamental question in relation to the applicants' appeals. 19 The applicants propound two inconsistent positions. First, they contend that the interposition of the Trusts had the effect that the sale to Marriott for $4,000,000 was not a sale by them as joint tenants and as beneficial owners of the entire interest in the Property as they had been prior to the establishment of the Trusts. They also contend that the sale was not two sales by them separately of their respective half interests. Rather, they contend that the sale was by the Trustees of the two half interests that were the subject of the respective Trusts. The CGT event that resulted from the sale of the Property to Marriott was treated as having arisen in respect of each Fund, not the applicants personally, in their assessable incomes for the 2002-2003 year. 20 On the other hand, in order to bring themselves within subs (5) of s 104-55 or of s 104-60, they must contend that they are each absolutely entitled as against the Trustees to the half interest in the Property the subject of the relevant Trust. But if this last contention is upheld, s 106-50 has the effect that Pts 3-1 and 3-3 of the Act apply to the Trustees' sales of the respective half interests to Marriott as if Helen and Peter respectively had sold them to Marriott --- the very result that Helen and Peter have sought to avoid. 21 In sum, if, as the applicant's contend, the exception allowed by subs (5) of s 104-55 or of s 104-60 applies, s 106-50 also operates, and the applicants are taken to have sold their respective half interests in the Property to Marriott in the 2002-2003 year. If that subsection, and therefore s 106-50, does not apply, the applicants are caught by the primary provision of s 104-55 or s 104-60 in the 2001-2002 year. I referred earlier to the recital in each Deed which made it clear that "the initial real estate" was a reference to the half interest in the Property of Helen in the one case and Peter in the other. 24 Clause 4 of each Deed provided that the Fund was to be managed and administered in all respects according to the Rules. 25 Clause 6.3 of the Deed provided that the Fund was to consist of all the cash, investments and other property for the time being held by or on account of the Trustees in accordance with the terms of the Deed and was to include, inter alia, "Contributions" by "Members" and contributions in respect of "Employer Supported Members" by "Employers" of those Members. As well, the Fund was to include moneys, investments, policies of insurance or assurance and other property transferred to the Fund from any other superannuation fund or arrangement. 26 Clause 6.4 provided that the purpose of the Fund was to provide superannuation benefits for Members and their "Dependants" after the retirement of a Member. 27 Clause 7.2 dealt with the appointment of trustees. As noted below, a question has arisen as to whether it can be said that Helen and Peter, the initial Trustees, were "appointed". I give the definition of "Act" below at [67]. 28 Clause 7.11 provided that the Fund was to be vested in the Trustees upon the terms and conditions and subject to the trusts, powers and authorities contained in the Deed, and was to be managed, administered and applied by the Trustees in accordance with the provisions of the Deed. 29 Clause 14 was headed "Membership of Fund". "Relative" in relation to a member has the meaning given by the Income Tax Act. "Eligible Person" means any person who is engaged in Part-Time Gainful Employment or Full-Time Gainful Employment. "Gainful Employment" in relation to a Member means engagement in any business, trade, profession, vocation, calling, occupation or employment for gain to the extent required by the Relevant Requirements. I need not give the Deed's definitions of "Part-Time Gainful Employment" and "Full-Time Gainful Employment". I give the Deed's definition of "Income Tax Act" and "Relevant Requirements" below at [67]. 32 Clause 16 required the Trustees to keep a complete record of all matters essential to the administration of the Fund. The clause provided that this might include an "Unallocated Contributions Account", a "Member's Non-Vested Accounts", "Member's Accounts [sic]" and a "Reserve Account". 33 Clause 17 regulated the making of contributions to the Fund. Clause 17.1 provided that each Member might contribute to the Fund in respect of that Member or the spouse of that Member, the amount the Member determines. Such contributions were to be credited to the "Member's account" (cl 17.6(a)) and might be in the form of cash or other property (cl 17.14). 34 Clause 23 provided for the winding up of the Fund and the distribution of any surplus. It suffices to say that the amount of any surplus to which Members, former Members and their Dependants are entitled is affected by the number of persons falling within that class at the time of the winding up and the manner in which the Trustees might exercise various discretions vested in them. 35 Clause 34 has assumed importance in the present appeals. It is headed "Benefits". It provides for the payment of "Benefits" to Members and other persons. Under cl 34.1(a)(i), upon the "Retirement" on or after the "Normal Retirement Age" of a Member, the Member is "entitled" inter alia, to a Benefit equal to the aggregate of the amount of the Member's Benefit and of that part of the balance of the Member's Non-Vested Account that the Trustees, in their absolute discretion, determine is to be included in the entitlement of and to be vested in the Member. 36 Clause 34.1(b) has the effect that the Benefit is payable at the option of the Member either as a "Lump Sum Benefit" or as a "Pension" Benefit. 37 Clause 34.12 deals with "Payments of Benefits by transfers in Specie". Paragraph (a) of cl 34.12 provides for the transfer of an interest in a policy on the life of the Member and is not of present relevance. Paragraphs (b) and (c) of cl 34.12 assume significance for present purposes. (c) No Beneficial Interest With the exception of the provisions of this clause no Member or Beneficiary shall have or acquire any beneficial or other interest in a specific asset of the Fund or the assets of the Fund as a whole whilst such asset or assets remain subject to the provisions of this Deed. As mentioned, I give the Deeds's definition of "Relevant Requirements" at [67] below. 38 It will be noted that para (c) begins with the words "With the exception of the provisions of this clause". This is a reference to para (a)'s reference to life policies. 39 Paragraph (b) (set out above), by its terms gives the Trustees a discretion, but the applicants submit that the word "may" in the paragraph means "must". I do not see why this should be so. There is no reason to give it that meaning rather than its usual permissive meaning. The reference to the "consent" of a Member or the Dependants of a Member, confirms that the provision is concerned with a grant of power to the trustee. The provision does not say: "The Trustee must, if so directed by a Member or the dependants of a Member to whom a Benefit is payable, transfer investments of the Fund of equivalent value to such Member or Dependant in lieu of paying ...". The Trustees have obligations to all Members and it may be that the Trustees would see it to be in the interests of the Members as a whole that the particular Member be paid money rather than receive a particular part of the Fund in specie. 41 The expression "beneficiary" is not defined in the Act and bears its ordinary meaning. 42 According to the ordinary meaning of the word, a beneficiary is any person for whose benefit a trust is to be administered and who is entitled to enforce the trustee's obligation to administer the trust according to its terms. It is trite that for every trust there must be a "beneficiary" so understood (see, for example, Re Denley's Trust Deed ; Holman v HH Martyn & Co Ltd [1969] 1 Ch 373 at 382-384). A beneficiary is not simply a person who as a matter of fact obtains some practical benefit from the existence of a trust: Sacks v Gridiger (1990) 22 NSWLR 502 at 508. 43 The word "beneficiary" reaches beyond a person who has a beneficial interest in the trust property. It is possible for the legal estate in land to be vested in "trustees" without equitable ownership being vested in someone else. The trustees must, however, owe fiduciary obligations in respect of the trust property to persons who, although they may have no interest in the trust property and may never have an interest in the trust property, are called "beneficiaries". That is to say, there can be a trustee who owes fiduciary obligations in respect of trust property to "beneficiaries" without any of the latter having a beneficial interest in the property. 44 Although the discretionary objects do not have a beneficial interest in any property the subject of a "discretionary" trust prior to a distribution or appointment of income or capital, they are freely referred to as "beneficiaries"; see for example, Gartside v Inland Revenue Commissioners [1967] UKHL 6 ; [1968] AC 553 at 617-618; R & I Bank of Western Australia Ltd v Anchorage Investments Pty Ltd (1993) 10 WAR 59 at 79; Australian Securities & Investments Commission v Carey (No 6) (2006) 152 FCR 509 at [25]-[28]. Provided it can be said with certainty that any particular person is or is not within the class of discretionary beneficiaries, there is a trust, due administration of which can be enforced by discretionary beneficiaries: see In re Gulbenkian's Settlements [1970] AC 508 ; McPhail v Doulton [1970] UKHL 1 ; [1971] AC 424. 45 The terms of each Deed shows that each Member of the relevant Fund is properly considered a "beneficiary". Clause 14.2(a) of the Deed provides that a person being "appointed" a Trustee, or a director of a corporate Trustee, becomes a Member on the date of the appointment. (Clause 7.2, which deals with the appointment of trustees, was set out at [27] above. ) Such a person is a "beneficiary" although not a "Beneficiary" as defined in cl 4 of the Deed. Clause 4 of the Deed defines "Beneficiary" to mean "a person presently and absolutely entitled to receive a Benefit at the relevant time and where the context so admits includes a member". 46 The applicants submit that neither of the original Trustees was "appointed". I need not resolve the issue whether, to take the case of the Helen's Fund, Peter was a Member by reason of his having been "appointed" a Trustee. It is not disputed that Helen was a Member of Helen's Fund. 47 The Deed confers a power upon the Trustees to pay Benefits to the Dependants and Relatives of Members. Clause 23.3 empowers the Trustees to pay Benefits in the circumstances and at the times there set out to the Dependants of Members or former Members. Accordingly, Helen's five children are beneficiaries of Helen's Fund. 48 Clause 34.4(d) of the Deed provides that after the death of a former Member who was at the time of death still in receipt of a Pension pursuant to the provisions of the Deed, the Trustees may, unless specifically requested to the contrary by the Spouse of the former Member, pay a Pension to the Spouse. The expression "Spouse" is defined in cl 4 of the Deed to mean a spouse as defined in the Income Tax Act (the definition of "Income Tax Act" is set out at [67] below). Being the Spouse of Helen, Peter is a beneficiary of Helen's Fund. 49 Clause 34.6 of the Deed states that where the Deed provides for the payment of a Benefit on the death of a Member or former Member leaving no Dependants, the Trustees must pay the Benefit to the legal personal representative of the Member or former Member, or if there is no legal personal representative they must pay or apply it to or for the benefit of "such Relatives of the former Member as appear to the Trustee to be entitled to share in the estate of the Member or former Member ...". 51 Accordingly, in addition to Helen's husband Peter, and her five children, her 15 grandchildren were "beneficiaries", although not "Beneficiaries" of Helen's Fund. Although it does not matter, it should be noted that it remained possible, as at 28 June 2002, that additional persons would, at a later date, fall within the definition of "Relative", for example, further lineal descendants of Helen. 52 The applicants submit that if attention is confined, as it should be, to the position at 28 June 2002, it will be seen that Helen was the sole beneficiary of Helen's Fund. I agree that 28 June 2002 is the relevant date. However, the applicants' submission wrongly assumes that in order to be a "beneficiary" according to the ordinary meaning of that term, a Relative must have become entitled to an interest in trust property. On the contrary, it is enough that the Relative has an expectancy and is entitled to compel the due administration of the trust by the Trustees. 53 It follows that at 28 June 2002, there was not a "sole beneficiary" in respect of each Trust. 54 The Commissioner argued that under other provisions of the Deed too, it can be seen that further persons were beneficiaries of Helen's Fund, but I need not refer to those provisions or to the Commissioner's submissions relating to them. The object of this change is to reduce compliance costs for nominees and custodians. Item 4 amends subsection 160APHU(1) accordingly. A person is absolutely entitled to trust property if he or she is able to direct the trustee how to deal with trust property and to give the trustee a good receipt for anything with which the trustee has parted; that is, the beneficiary must be sui juris , and have a vested, indefeasible, and absolute interest in the trust property so that the trustee may be compelled to convey the trust property to the beneficiary if so requested. In such a case, there is an identity of interest between the trust and the beneficiary; indeed, the trustee is effectively an agent of the beneficiary; and it is therefore unnecessary to apply the provisions in the new Division to the trustee. Reference may also be made to Tomlinson (Inspector of Taxes) v Glyns Executor & Trustees Co [1969] 1 All ER 700 at 704 and [1970] 1 All ER 381 at 383-384 (per Lord Denning MR), and Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 281. In substance, it was held in that case that where a beneficiary is absolutely and indefeasibly entitled to a trust asset as against the trustee, the beneficiary is entitled to terminate the trust and require the trustee to transfer the asset to him or her or at his or her direction. In order to invoke the rule, multiple beneficiaries can come together so that their beneficial interests exhaust the beneficial entitlement to the asset. For example, the rule could be invoked by a life tenant and the remainder man: since their interests in combination exhaust the beneficial interest in the subject property, in combination they are entitled to direct the trustee to transfer the property as they will. 115 ; Cr & Ph., 240, Harbin v Masterman (1894) 2 Ch. 184; (1895) A.C. 186 , and other cases). 61 I accept the Commissioner's submission that taking into account the Explanatory Memorandum to the 2000 Act and the authorities, the expression "absolutely entitled to the asset as against the trustee" in subs (5) of s 104-55 and s 104-60 of the Act is intended to describe a situation in which the beneficiary of a trust has a vested, indefeasible and absolute entitlement in trust property and is entitled to require the trustee to deal with the trust property as the beneficiary directs. 62 It will be noted that unlike the position under the rule in Saunders v Vautier , subs (5) of s 104-55 and of s 104-60 applies only to trusts of which there is a "sole beneficiary". Moreover, the provision requires the sole beneficiary to be absolutely entitled "to the asset" over which the trust was created. In the present case, the asset over which the trust was created was Helen's half interest in the Property. 63 It is sufficient to say in relation to the absolute entitlement aspect that cll 34.12(b) and (c) are fatal to the applicants' cases. Those provisions were set out at [37] above. As mentioned, I do not agree with counsel for the applicants that the word "may" in cl 34.12(b) means "must". However, cl 8.4 empowers the Trustees "to make or vary any of the investments authorised under [the] Deed ...". The Trustees had power to sell the Property, as they did only six days after the Trusts were established. Even if Helen had an interest in the half interest the subject of Helen's Trust as at 28 June 2002, the Trustees' power of sale would have made it a defeasible interest: see Kent v SS "Maria Luisa" (No 2) [2003] FCAFC 93 ; (2003) 130 FCR 12 at [71] . It would cease to be defeasible only when the half interest ceased to be part of Helen's Fund and subject to the Trustees' power of sale. 66 Helen was not entitled to the half interest once it was subjected to the Trust. Her only entitlement was to require the Trustees to pay her money once the conditions of her entitlement were satisfied. The word "Regulation" in the definition of "Act" is capitalised, but it is not a defined term. However, I accept that the SIS Regulations fall within the word "Act". The contrary was not argued. 69 Invited to articulate how the terms of cll 5.4 and 26 had any operation in the circumstances of the present case, senior counsel for the applicants was not able to do so, other than to point in a general way to the SIS Act and the SIS Regulations. I discuss these below. Otherwise, I have ignored cll 5.4 and 26. The applicability of those provisions depended on each Fund's being a "regulated superannuation fund" as defined in s 19 of the SIS Act. Regulation 1.04A of the SIS Regulations specifies the Commissioner for the purpose of s 19(4) of the SIS Act. The Commissioner did not receive a notice from the Trustees pursuant to s 19(4) in respect of Helen's Fund until 11 November 2002, and in respect of Peter's Fund until 2 September 2002. 71 It seems clear that neither Fund was a regulated superannuation fund as at 28 June 2002 and that on the evidence before the Court, nothing had occurred to alter that position for that financial year. 72 The various provisions within Pt 6 of the SIS Regulations on which the applicants rely deal with the "cashing" of a member's unrestricted non-preserved benefits and are concerned with the existence or non-existence of "cashing restrictions". The regulations relied on, even if the applied to Helen's Fund or Peter's Fund, are remote from a provision giving an absolute entitlement to a particular asset of a superannuation fund. 73 Resolution of the issue of absolute entitlement to a half interest as against the Trustees as at 28 June 2002 depends on the terms of the Deed and on general law principles. The SIS Regulations do not assist the applicants. I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | capital gains tax a married couple who owned real estate jointly settle it upon themselves as trustees for the husband as to a one half interest whether cgt event e1 or cgt event e2 occurred ss 104-55 and 104-60 of income tax assessment act 1997 (cth) whether exclusion in subs (5) of each section applied whether each spouse was "sole beneficiary" of the trust establishing his or her superannuation fund whether each spouse was "absolutely entitled" to the fund as against themselves as trustees. held in each case (1) spouse was not the sole beneficiary of the trust; (2) the spouse was not absolutely entitled to the asset as against the trustees. taxation |
The applicant's birth was registered in the Victorian Registry of Births, Deaths and Marriages with male given names and the sex recorded as male. 2 In 1967 the applicant married a woman. They remain married but live separately. 3 The applicant changed her given names to female names and on 31 March 2000 was issued with a new birth certificate under Pt 4 of the Births, Deaths and Marriages Registration Act 1996 (Vic) (the BDM Act). The certificate showed the new female given names, and not the former male given names, but still recorded the sex as male. 4 On 20 April 2002 the applicant completed the surgical phase of sex affirmation surgery. This involved the alteration of the applicant's reproductive organs for the purpose of assisting the applicant to be considered a member of the female sex. 5 The applicant subsequently applied to the Registrar of Births, Deaths and Marriages for alteration of the record of her sex in the birth register. 6 The Registrar stated that she could not proceed with the application because the applicant was married and thus did not meet the criteria of ss 30A(1) and 30C(3) of the BDM Act. 7 The applicant seeks, under s 46PO of the Human Rights and Equal Opportunity Act 1986 (Cth), a declaration that the Registrar has unlawfully discriminated against her and an order that the Registrar alter the record of the applicant's sex in her birth registration. Compensation in the agreed sum of $1000 is sought. A claim for an apology is no longer pursued. It provides for application to the Registrar for the record of a person's sex to be altered (s 30A). Statutory declarations by two doctors as to the person having undergone sex affirmation surgery is required (s 30B). Section 30C provides for altering the Register and s 30D for the issue of a new birth certificate. 10 The terms of s 30A and 30C are relevant to the present case. However, the operation of s 22(1) is limited by s 9. including s 22] ... have effect in relation to discrimination against women, to the extent that the provisions give effect to the Convention. Other subsections of s 9 will give effect to prescribed provisions such as s 22 in particular circumstances coming within Commonwealth power, for example when there is discrimination by a trading or financial corporation on the ground of a person's marital status: s 9(11). The Convention, being an international instrument, does not apply of its own force as part of Australian domestic law enforceable in Australian courts: Secretary of State for India v K B Sahaba (1859) 13 Moo PCC 22 at 75, 15 ER 9 at 28-29, cited in Queensland v The Commonwealth [1989] HCA 36 ; (1989) 167 CLR 232 at 239. The terms of the Convention do not directly prohibit or mandate conduct by individuals. By the Convention States Parties undertake to take measures, including legislative measures, which will help to eliminate discrimination against women. Section 22 only has effect if it gives effect to the Convention. 19 The present case is not concerned with the Constitutional validity of s 22. The question is not whether Parliament has made a legislative judgment that a treaty obligation exists, in which case it is enough that " the legislative judgment could reasonably be made " ( Richardson v Forestry Commission [1988] HCA 10 ; (1988) 164 CLR 261 at 295-296). Rather, as Ms Mortimer SC for the Registrar submitted, Parliament has made the legislative judgment. It is expressed in ss 9(4) and (10), and s 22. The Court must construe the language of those provisions. There must be an examination of the Convention to ascertain to what Australia has undertaken to give effect by way of legislation. It also notes that the Universal Declaration of Human Rights affirms the principle of the inadmissibility of discrimination, that all human beings are born free and equal, and that everyone is entitled to all the rights and freedoms set forth in the Declaration, " without discrimination of any kind, including distinction based on sex ". 21 The Preamble then notes that States Parties to the International Covenants on Human Rights have the obligation to ensure " the equal right of men and women " to enjoy all economic, social, cultural, civil and political rights. 22 The Preamble then records consideration of the international conventions concluded under the auspices of the UN and the specialized agencies promoting " equality of rights of men and women ", and the resolutions, declarations and recommendations of the UN and the agencies promoting such equality. 23 The Preamble then records concern that, despite these various instruments, " extensive discrimination against women continues to exist ". 24 The Preamble then recalls that " discrimination against women " violates the principles of equality of rights and respect for human dignity and is an obstacle to " the participation of women on equal terms with men " in the political, social, economic and cultural life of their countries, hampers the growth of prosperity of society and the family and makes more difficult " the full development of the potentialities of women " in the service of their countries and of humanity. 25 The Preamble then records the parties' concern that in situations of poverty women have less access to food, health, education, training and opportunities for employment and other needs, and its conviction that the new international economic order based on equity and justice will contribute significantly towards the promotion of " equality between men and women ". 26 The Preamble then emphasises that the eradication of apartheid, racism, colonialism and interference in the internal affairs of States is essential to the full enjoyment of the rights of men and women and affirms that the strengthening of international peace and security and other international measures such as disarmament will promote social progress and development and as a consequence will contribute to the attainment of " full equality between men and women ". 27 The Preamble then states that the parties are convinced that the full and complete development of a country, the welfare of the world and the cause of peace require the " maximum participation of women on equal terms with men in all fields ". 28 The Preamble then, bearing in mind the great contribution of women to the welfare of the family and the development of society and the role of both parents in the family and in the upbringing of children, notes the parties' awareness that the role of women in procreation should not be a basis for discrimination but that the upbringing of children requires a " sharing of responsibilities between men and women and society as a whole ". 29 The Preamble then notes awareness that a change in the traditional role of men as well as that of women in society and in the family is needed to achieve " full equality between men and women ". 30 The Preamble then records awareness that a change in the traditional role of men as well as the role of women in society and in the family is needed to achieve " full equality between men and women ". 31 Finally, the Preamble records the parties' determination to implement the principles set forth in the Declaration on the Elimination of Discrimination against Women and, for that purpose, to adopt the measures required for the elimination of such discrimination in all its forms and manifestations. 32 The object and purpose of the Convention emerge clearly from the Preamble. Against a background that restates the conviction that discrimination in general is an abuse of inalienable human rights as well as being economically wasteful, the Convention addresses a particular species of the genus discrimination, namely discrimination against women. Discrimination against women means treating women less favourably than men because they are women. In the terminology of discrimination law the " comparator " is men. Thus the Preamble repeatedly refers to equality between men and women. Conversely, there is no suggestion in the Preamble that the Convention is concerned with discrimination where persons are treated unfavourably because of some other attribute, such as race or religion, irrespective of whether they are male or female. 33 The Convention then proceeds to a definition of the term " discrimination against women " and particular provisions directed at discrimination against women in various walks of life. For example, in common law countries, before the enactment of legislation like the Married Women's Property Act 1870 (Imp), a woman's personal property vested in her husband upon marriage and he had the sole right of controlling and managing her freehold estates: Cheshire and Burn's Modern Law of Real Property , 13 th ed, at 864. Another example is legislation in Australia which barred married women from employment (or sometimes permanent employment) in the public service. Thus the definition makes it clear that the Convention is concerned with discrimination against all women, married and unmarried, including discrimination (ie less favourable treatment than men) against women because they are married (or unmarried) women. 36 That the definition does not extend to discrimination against all persons, male or female, simply on the ground of marital status, and is confined to discrimination against women, is confirmed by an example of the construction given by the international community (as to the admissibility of such material see Queensland v The Commonwealth , above, at 240). The UN Committee on the Elimination of Discrimination against Women on 31 July 1995 issued, in the course of its third periodic reports of States Parties to the Convention, the report of the United Kingdom Government. An annexure is a document entitled "Commentary on UK Reservations and Declarations, Statement entered by the United Kingdom on 7 April 1986". The UK Government still believes that it is an accurate statement of the Article's meaning. However, the Government accepts that there is no need for this still to be explicitly stated. On this basis the UK Government wishes to withdraw the statement. 39 Article 4.1 legitimises what is sometimes referred to as affirmative action. Adoption by State Parties of special temporary measures aimed at accelerating " de facto equality between men and women " shall not be considered discrimination but shall not entail the maintenance of unequal or separate standards; such measures are to be discontinued when the objectives of " equality of opportunity and treatment " have been achieved. The equality spoken of is that between men and women. This limited and temporary exception for inequality emphasises that the main purpose of the Convention is the attainment of equality between men and women. 40 Article 5(a) requires the taking of appropriate measures to modify social and cultural patterns of conduct of men and women to achieve the elimination of prejudices based on the inferiority or superiority of either of the sexes or on stereotyped roles for men and women. 41 Article 6 requires States Parties to take measures to suppress all forms of traffic in women and exploitation of prostitution of women. Since exploitation of women for sexual purposes has notoriously been an activity of men in the roles of pimps, procurers and white slavers, this provision of the Convention is directed to another area of inequality of women as compared with men. 42 Article 7 deals with political and public life. State Parties are to take appropriate measures to eliminate discrimination against women to ensure rights to vote and hold public office " on equal terms with men ". 43 Article 8 requires measures to ensure to women " on equal terms with men " the opportunity to represent their Governments at the international level. 44 Article 9 obligates States Parties to grant women " equal rights with men " in relation to nationality and the nationality of their children. 45 Article 10 is concerned with measures to ensure to women " equal rights with men " in the field of education and various rights such as career guidance and access to curricula " on a basis of equality of men and women ". 46 Article 11.1 deals with employment. Measures are to be taken to eliminate discrimination in that field to ensure to women rights such as the right to work " on a basis of equality of men and women ". Article 12.2 provides that notwithstanding Article 12.1 States Parties should ensure to women appropriate services in connection with pregnancy and confinement. Again this is a recognition that equality for women with men is not to be denied because some particular benefits or services are by their nature only available to women. 49 Article 13 provides for measures to eliminate discrimination against women in other areas of economic and social life to ensure " on a basis of equality of men and women, the same rights ". 50 Article 15 provides for the according to women of " equality with men before the law " in matters such as contractual and property rights. Thus far, I agree. She went on to submit that one such form is discrimination " on the basis of marital status " and that the elimination of discrimination against women on the basis of marital status is a " secondary aim " of the Convention. But one cannot leave out an essential element of the concept of discrimination against women, that is to say the denial of equality with men. Marital status and the incidents of marriage is one of many areas in which women may be treated unequally, as compared with men, because they are women. The Convention is not concerned with discrimination which may affect women and men indifferently because it is based on other factors, such as race or religion. 53 Ms McLeod said that the text of the Convention draws a distinction between provisions that eliminate any form of discrimination against women and those that are aimed to ensure equality between men and women. She pointed to a number of provisions which concern " discrimination against women " and which, she said, do not refer to the need for equality with men, namely Article 2 (d), (e), (f) and (g) (quoted at [37] above), Article 6 ([41] above) and Article 7 ([42] above). However, most of these provisions explicitly refer to " discrimination against women ", a concept which, as defined in Article 1 ([34] above), is premised on the absence of equality between men and women. And, as has been seen, the Preamble enshrines equality as between men and women as the lodestar of the Convention. Conversely, the Convention does not deal with marital status discrimination per se , which must mean discrimination against, any persons, whether men or women, on the ground that they are married, or unmarried. The discrimination contemplated by the Convention includes discrimination against women because of their marital status. But this necessarily involves discrimination against a person who is both a woman and married (or unmarried). He also advanced an alternative argument. He submitted that even if marital status discrimination is not covered by Article 1 of the Convention, the application of s 22(1) of the Sex Discrimination Act to marital status discrimination is within the limits of s 51(xxix) of the Constitution (the external affairs power) and thus s 9(10) of the Act. He argued that the proscription of marital status discrimination against women will prevent the perpetuation of negative stereotypes about women and can therefore be seen as a means of " nipping in the bud" conduct which may grow into or foster " discrimination against women " within the meaning of Article 1. He referred to Article 5 ([40] above) and cited the decision of a Full Court of this Court in Toben v Jones [2003] FCAFC 137 ; (2003) 129 FCR 515. 55 In Toben the appellant had been found by a determination of the Human Rights and Equal Opportunity Commission to have engaged in racial vilification contrary to s 18C of the Racial Discrimination Act 1975 (Cth). He contended that provision was invalid because the source of the s 51(xxix) external affairs power relied on, the International Convention on the Elimination of all Forms of Racial Discrimination , was concerned with the dissemination of ideas based on racial superiority or hatred whereas s 18C was intended only to proscribe acts which could be characterised as expressions of racial hatred. In other words, as I understand the argument, the Act did not give effect to the relevant Convention because it did not go far enough, it did not fully implement the Convention. 56 Carr J (with whom Kiefel J agreed) at [18] accepted that the Act did not fully implement Article 4 of the Convention because provisions in the Bill which created criminal offences in respect of racial hatred had been rejected by Parliament. In any event, for the reasons given above, the Convention with which this case is concerned addresses discrimination against women, in the sense defined in Article 1, including discrimination which treats women less favourably than men who have the same marital status. But s 22, which applies to discrimination against men or women, married or unmarried, on the ground of marital status, is not, so to speak, a step along the way to some greater goal concerned with discrimination against women only. In so far as s 22 is concerned with stereotypes, it is the stereotype that might arise from a person being married, or unmarried, irrespective of sex. 58 In Toben the nature of the discrimination (racial) was the subject of both the Convention and Act --- the point was that the prohibition in the latter only extended to less severe forms of discriminatory conduct than the former. In the present case, discrimination on the ground of marital status per se is not some less severe form of discrimination against women. The "nip in the bud" analysis does not apply. 59 Section 9(10) speaks of "giv(ing) effect to the Convention" . A major element, albeit not the only one, of the Convention is the obligation undertaken by States Parties to legislate in a number of areas to proscribe discrimination against women. 60 Section 22 being legislation, and not some other form of governmental activity (such as, for example, public education or governmental employment practices) is part of Australia's discharge of its obligation to legislate as required by the Convention. It is therefore to be construed as prohibiting discrimination against women --- treating them less favourably than men --- because they are married. The action of the Registrar in the present case had nothing to do with the applicant's being a woman. Had the applicant been a man, the result of the application would have been the same. 61 Issue (i) must be resolved in the negative. It is not strictly necessary therefore to consider the second issue, but since the matter was fully argued I shall proceed to do so. The Registrar should have gone beyond a " blanket refusal ". The decision involved an "analysis of the factual content, the supporting material, the weighing of relevant discretionary factors and so on ". When it was pointed that this argument did not fit the agreed question, Ms McLeod sought the amendment which appears in [8] above. 63 For her part, Ms Mortimer submitted that, on analysis, the Registrar's conduct involved three steps. The Registrar receives the application, she considers it and she disposes of it. She has not refused to do any of those things. What she has refused to do is alter the record. That is no more than the " outcome of the three steps " each of which can constitute a service. However, the refusal to alter the record is " but the outcome ". 64 Both arguments seem to me to introduce an unnecessary degree of subtlety into a simple process. The arguments apparently proceeded from a perceived need to accord with what some members of the High Court said in IW v City of Perth [1997] HCA 30 ; (1997) 191 CLR 1. But that case dealt with a town planning decision, an administrative decision of a very different nature. 65 "Service" involves an "act of helpful activity" or "the supplying of any ... activities ... required or demanded" (Macquarie Dictionary) or "the action of serving, helping, or benefiting, conduct tending to the welfare or advantage of another" (Shorter Oxford Dictionary). Altering the Birth Register was an activity. The applicant requested the Registrar to perform that activity. The carrying out of that activity would have conferred a benefit on the applicant. The Registrar, because of the terms of the BDM Act, declined the request to carry out that activity. This was the refusal of a service. 66 An activity carried out by a government official can none the less be one which confers a benefit on an individual. Much of governmental activity today involves the conferring of benefits on individuals. The BDM Act itself recognises this. For example the Registrar may enter into an arrangement for the provision of "additional services" (s 51) and the Governor in Council may make regulation prescribing fees with respect to searches etc and "other services provided by the Registrar" (s 59(1)(a)(iv)). Since there is an important public issue involved in this case, I am tentatively disposed not to make an order for costs against the applicant, but I will hear submissions from counsel if necessary. | applicant, a married person who had undergone sex affirmation surgery, applied for alteration of birth register registrar refused registration on ground that pt 4a of births, deaths and marriages registration act 1996 (vic) did not allow such alteration in respect of married persons discrimination |
Mrs Tracy was not a party to those proceedings. For consistency, I will continue to refer to the first and second respondents to the primary proceedings as "the first and second respondents" notwithstanding that they are the applicants to this notice of motion. Similarly it is convenient to refer to the applicants to the primary proceedings as "the applicants" for the purposes of this judgment. In Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 7) [2008] FCA 1364 , delivered 5 September 2008, the background facts to the proceedings are described in detail. In that judgment I ordered that the amended application filed by the applicants on 16 February 2006 be dismissed, and that the cross-claim filed by the first and second respondents on 5 June 2007 be allowed. Subsequently in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 8) [2008] FCA 1556 , delivered 17 October 2008, I ordered that, with the exception of a number of costs incurred by the applicants in relation to interlocutory applications, the applicants pay the costs of the first and second respondents, such costs to be taxed if not otherwise agreed. In so ordering I rejected the claim of the first and second respondents that their costs be paid by the applicants on an indemnity basis. In detail, the first and second respondents by this notice of motion seek the following orders: Adrienne Elizabeth Tracy (Mrs Tracy), wife of the Second Applicant, pay the First and Second Respondent's costs of the proceedings, including all reserved costs on an indemnity basis. That Mrs Tracy be jointly and severally liable with the Applicants for such costs. Those issues can be summarised as follows: Was the jurisdiction of the Court to make an order as to third party costs exhausted once orders as to costs against the applicants were made and entered? Assuming that the jurisdiction of the Court was not exhausted, is Mrs Tracy liable for the costs of the first and second respondents? In the event that Mrs Tracy is liable for the costs of the first and second respondents, should she be liable on an indemnity basis? I shall address each issue in turn. The applicants have claimed that the issue of jurisdiction arose because, following the entry of those orders, the jurisdiction of the Court has been spent in relation to costs in these proceedings. In summary, the applicants' argument is: Notwithstanding these submissions, I do not accept that the power of the Court to make orders as to non-party costs in these proceedings has been exhausted simply because costs orders have already been made and entered against the applicants. This exact issue was decisively determined by the Full Court in Caboolture Park Shopping Centre Pty Ltd (in liquidation) v White Industries (Qld) Pty Ltd [1993] FCA 471 ; (1993) 45 FCR 224 , wherein the Court considered s 4 and s 43 of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"). The applicant subsequently went into liquidation and the respondent sought a supplemental costs order against the applicant's solicitors which would have had the effect of making them liable for those costs. The solicitors submitted that, once the proceedings had been concluded by judgment being entered and by an order for costs being made inter partes , there was no jurisdiction thereafter for the Court to reopen the case. The solicitors also submitted that the jurisdiction contained in s 43 of the Federal Court Act to "award costs in all proceedings" was spent once there was no longer a "proceeding" before the Court. Applying Knight v FP Special Assets Ltd [1992] HCA 28 ; (1992) 174 CLR 178 , the Full Court held that s 43 conferred jurisdiction to award costs against non-parties to a proceeding (at 229). In relation to the submission of the solicitors concerning whether there was still a "proceeding" before the Court, the Full Court observed that the submission incorrectly confined the meaning of the word "proceeding" to the original action, and was inconsistent with the definition of "proceeding" in s 4 of the Federal Court Act (at 230). In other words, there is no jurisdiction to order costs at large. There has to be or have been, within the Court's jurisdiction, instituted a proceeding. It is irrelevant, subject to the application of common law principles discussed later, that judgment has been given and entered . I note that the decision in Caboolture Park [1993] FCA 471 ; (1993) 45 FCR 224 is consistent with decisions in other jurisdictions, including Dymocks Franchise Systems (NSW) v Todd [2004] UKPC 39 ; [2004] 1 WLR 2807 , NSW Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8 and UTSA Pty Ltd (In Liquidation) v Ultratune Australia Pty Ltd [1998] VSC 13 ; [1999] 1 VR 204. In this case the applicants have submitted that the orders sought by the first and second respondents are in substitution for the costs orders already made rather than supplemental. That is clearly not the case. It is irrelevant that the first and second respondents have sought an award of costs against Mrs Tracy on an indemnity basis, and therefore on different terms from those already obtained against the applicants. As was the case in Caboolture Park [1993] FCA 471 ; (1993) 45 FCR 224 (where the costs were originally ordered on a standard basis but the Court subsequently ordered non-party costs on an indemnity basis), the orders sought pursuant to the notice of motion currently before the Court do not in any way seek to vary or alter the costs orders already made against the applicants. Were the first and second respondents to be successful in relation to this notice of motion, the new orders would properly be characterised as supplemental orders. Accordingly, I find that the submissions of the applicants on this issue are not substantiated, and that the jurisdiction of the Court to award non-party costs, (be they on an indemnity basis or otherwise) pursuant to s 43 of the Federal Court Act was not spent when previous costs orders were entered. Helpful and detailed submissions as to the liability of Mrs Tracy for costs in the primary proceedings were filed by both parties in this case, and made orally by Counsel at the hearing. Submissions of the first and second respondents may be summarised as follows: In response, the applicants submitted in summary: There is no suggestion that the purpose of the advance by Mrs Tracy of $1.15 million to the first and third applicants in March 2005 to enable the first applicant to purchase land and business owned by the first respondent had any connection with these proceedings. There is no evidence that the list of assets provided to the National Australia Bank in support of the loan application including some of Mrs Tracy's assets was provided with Mrs Tracy's consent, knowledge or authority, as the list was executed by Mr Tracy alone. In any event this list is irrelevant as no security was provided by Mrs Tracy to the National Australia Bank in support of the loan application. In relation to Mrs Tracy's status as mortgagee, chargee and lender, it should be noted that both the National Australia Bank and, indeed, the first respondent, also had securities over the assets of the first applicant. Like the National Australia Bank and the first respondent Mrs Tracy's rights as mortgagee/chargee accrued to her prior to the commencement of proceedings and none of the funds advanced were used to fund the litigation but rather were used to purchase the orchards. Accordingly, the securities over the orchards gave Mrs Tracy a direct financial interest in the assets of the first applicant, not the proceedings. Under the Sunstate Orchards Unit Trust Deed, Mrs Tracy is within the class of discretionary beneficiaries contained in Sch 2 Pt 2 of the Deed. Her position as a contingent beneficiary under the Sunstate Unit Trust gave her no direct interest in any of the Trust assets or income of the Trust which might have been received had the litigation been successful. Any benefits Mrs Tracy received if the litigation brought by the applicants had been successful would accrue only by virtue of the securities, and not by virtue of any action taken by her concerning the proceedings. There is no real, direct and material connection between the granting of the securities to Mrs Tracy and the proceedings. The fact that the first and second respondents have already obtained orders for security for costs militate against the exercise of the discretion to make an order for non-party costs. Although the proceedings were initiated by Mrs Tracy as director of Janling Pty Ltd, the significance of the provision of instructions can only relate to the period during which the proceedings were maintained by Janling Pty Ltd. The first and second respondents have already had the benefit of a costs order against Janling Pty Ltd for the period prior to 16 February 2006 when the applicants were substituted for Janling Pty Ltd in the primary proceedings. The applicants conceded that Mrs Tracy attended Court with the second applicant during the trial. A discussion between senior Counsel for the applicants, the second applicant and Mrs Tracy (as the second applicant's wife) was unexceptional and understandable. Notwithstanding the Deeds of Assignment of the causes of action from the applicants to Mrs Tracy and then from Mrs Tracy to Janling Pty Ltd, from 16 February 2006 Janling Pty Ltd had no involvement in the proceedings and Mrs Tracy had no lawful capacity to provide any instructions for the conduct of the proceedings. The matter was resolved by consent orders made on 15 February 2006. All decisions, all discussions, and all negotiations were made, had and conducted by the second applicant on his own behalf and on behalf of the first and third applicants. The position is clouded by the assignment of causes of action, an issue to which I will return shortly, however prima facie the actual authority to make all decisions with respect to the conduct of litigation in the primary proceedings remained with the second applicant because of his historical role and his position as sole director and shareholder of the first applicant, and the sole director of the third applicant. Indeed as I found in the primary judgment, the second applicant was, at all material times, the directing mind and will of the first and third applicants ( Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 7) [2008] FCA 1364 at [9] ). In light of these findings, was the role of Mrs Tracy such that an award of costs with respect to these proceedings should be made against her? Although as a general rule costs are not awarded against a stranger to litigation, as I have already indicated it is well-settled that the Court has a discretion pursuant to s 43 of the Federal Court Act to order costs against a non-party in appropriate circumstances ( Knight [1992] HCA 28 ; (1992) 174 CLR 178 , Caboolture Park [1993] FCA 471 ; (1993) 45 FCR 224 , Gore v Justice Corp Pty Ltd (2002) 119 FCR 429, Kebaro Pty Ltd v Saunders [2003] FCAFC 5 , Life Therapeutics Ltd v Bell IXL Investments Ltd (No 2) [2008] FCAFC 158 ; (2008) 170 FCR 595). The exercise of such discretion is approached with caution --- indeed it has been described as "rare and exceptional" ( Vestris v Cashman (1998) 72 SASR 449 at 467, Kebaro [2003] FCAFC 5 at [103] ) --- and depends on the circumstances of each case as it is a "fact-specific jurisdiction" ( Kebaro [2003] FCAFC 5 at [69] ). Principles guiding the approach of the Court to the exercise of the include the following: Conversely, the courts have declined to order costs against a non-party: Significantly, and by analogy with the principles of maintenance and champerty, the courts have also recognised that not only may legitimate financial support in litigation be provided by family members, but that in the event of the failure of the relevant litigation costs will not as a general proposition be awarded against those supporting family members. The rationale for such recognition appears to be that such social or family ties justify the support of the litigation (cf for example Neville v London Express Newspaper Ltd [1919] AC 368). This principle was discussed by the Full Court in Gore (2002) 119 FCR 429, where their Honours in turn referred to the decision of the Court of Appeal in Condliffe v Hislop [1996] 1 WLR 753 and observations of Longmore J in McFarlane v EE Caledonia Ltd (No 2) [1995] 1 WLR 366 at 373. That is not to say, of course, that non-party costs will not be awarded against a spouse or other family member should the circumstances warrant --- for example Thistleton v Hendricks (1992) 32 Con LR 123 , Locabail (UK) Ltd v Bayfield Properties Ltd [1999] 20 LS GazR 39. In circumstances where financial support for litigation is provided by a spouse the proper starting point may be to regard any such support as motivated by the spouse's natural affection for the litigant, and therefore not such a circumstance where non-party costs should be awarded in the absence of exceptional circumstances (cf Cooper v Maxwell [1992] CA Transcript 273, Murphy [1996] EWCA Civ 1000 ; [1997] 1 WLR 1591 at [1603]-[1604], Jackson v Thakrar [2007] EWHC 626 ; [2008] 1 All ER 601 at 609). That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made. While obviously the comments of Mason CJ and Deane J would be an appropriate guide to the exercise of discretion in an appropriate case, they were clearly obiter (see observations of the Full Court in Yates v Boland [2000] FCA 1895). As the exercise of the discretion in s 43 is unfettered, other than the requirement that it be exercised judicially ( Knight [1992] HCA 28 ; (1992) 174 CLR 178 at [192] ; Gore (2002) 119 FCR 429 at 447-448), it follows that the comments in Knight [1992] HCA 28 ; (1992) 174 CLR 178 could not prescribe prerequisites to the exercise of discretion to award costs against a non-party. The principles articulated in Knight [1992] HCA 28 ; (1992) 174 CLR 178 are relevant as guiding factors only, in appropriate circumstances. (It is not in contention that at all material times the sole shareholder of Janling Pty Ltd was a corporation the sole shareholder of which in turn was Mrs Tracy, and that Mrs Tracy herself was the sole director of Janling Pty Ltd.) I say "purportedly" because the first and second respondent filed a notice of motion on 8 December 2005 seeking orders that the proceedings be dismissed and/or struck out on the basis that, inter alia , the causes of action the subject of the primary proceedings were not assignable (TS 14 December 2005 p 2 ll 35-43). Whether the assignment of the causes of action was valid ceased to be contentious when the parties agreed, and the Court ordered by consent on 15 February 2006, that the strike out motion of the first and second respondents be dismissed, that Janling Pty Ltd be removed as the applicant to the primary proceedings, and that the first, second and third applicants be substituted as applicants. However notwithstanding the orders of 15 February 2006 there is no evidence that the benefit of the relevant causes of action was reassigned by Janling Pty Ltd to the applicants. Accordingly any purported assignment of the causes of action, to the extent that the assignment took effect, remained with Janling Pty Ltd. It followed that presumably financial benefits of any success of the applicants in the proceedings would flow to Janling Pty Ltd, and thence to Mrs Tracy. The fact that the applicants were unsuccessful with respect to their claims against the first and second respondents (other than with respect to a number of reserved costs) is irrelevant in the context of this notice of motion. However in my view, notwithstanding potential financial benefits accruing to Mrs Tracy from the proceedings, the circumstances of this case do not warrant the exercise of the Court's discretion to award costs against Mrs Tracy pursuant to s 43 of the Federal Court Act. As I have already observed, the mere fact that a person may benefit from litigation will not, without more, suffice to justify an award of costs. I form this view for the following reasons. First, Mrs Tracy was never a director or shareholder of either the first or third applicants. In light of the dominant role played by the second applicant in the affairs of all applicants and the clear professional and financial stake of the second applicant in the businesses of the first and third applicants particularly as director and shareholder, it is clear that the failure of the proceedings would have had a much greater impact on the fortunes of the second applicant than on those of Mrs Tracy. I consider that it is likely that any financial support provided by Mrs Tracy to the applicants' case was motivated by Mrs Tracy's natural affection for the second applicant (cf Jackson v Thakrar [2007] EWHC 626 ; [2008] 1 All ER 601 at 609) rather than any financial interest she may have had in the outcome of the proceedings. In my view this is an important distinction between the supportive role played by Mrs Tracy of the applicants, and the motivation of such entities as the third party in Gore (2002) 119 FCR 429. Second, while I note that the proceedings were actually initiated by Janling Pty Ltd following the purported assignment of the causes of action, I also note that costs were awarded to the first and second respondents after the applicants were substituted for Janling Pty Ltd by consent on 15 February 2006. Although the initial involvement of Mrs Tracy's company as the applicant to the proceedings (following various transactions for value implemented for reasons best known to Mrs Tracy, the applicants and the applicants' legal advisers) is a factor to which I should accord some weight, it does not follow that Mrs Tracy subsequently had a continuing active involvement in the proceedings, nor that there was a real and continuing link between Mrs Tracy and the proceedings. Indeed as the applicants submitted, once Janling Pty Ltd was removed as a party to the proceedings any formal authority of Mrs Tracy ended with respect to giving instructions in the proceedings. Third, while it is certainly the case that the Court may be receptive to an application for non-party costs against a third party whose conduct has promoted the litigation ( Arundel [2001] HCA 26 ; [2001] 179 ALR 406 at 414) or can be characterised as having been that of wanton and officious intermeddling with the disputes of others in which the meddler has no interest whatsoever ( Murphy v Young & Co's Brewery [1996] EWCA Civ 1000 ; [1997] 1 WLR 1591 at 1601, Arundel [2001] HCA 26 ; (2001) 179 ALR 406 at 414), there is no evidence of such intermeddling by Mrs Tracy in this case. So, for example, I infer that the regular attendance by Mrs Tracy at the trial was, not unreasonably, to support the second applicant, because the outcome of the trial was important to the second applicant. Further, the comment by Counsel for the applicants during the hearing that he would discuss the issue of an adjournment with "Mr and Mrs Tracy" in my view is not suggestive of meddling by Mrs Tracy in the applicants' case or an active part played by Mrs Tracy in the proceedings. Rather, as submitted by the applicants the comment merely recognised that Mrs Tracy would be present with the second applicant during the discussions, which was both unexceptional and understandable in the circumstances. Fourth, while I note that Mrs Tracy assisted in providing security for costs which the applicants were ordered to pay, I consider that this is explainable by the natural inclination of a wife to support her husband in litigation to which he is a party and does not constitute an active part played by Mrs Tracy in the conduct of the litigation. As has been observed in numerous cases, funding alone will not justify an order where an otherwise disinterested relative has, out of natural affection, funded costs of a claim (Dillon LJ in Cooper v Maxwell [1992] CA Transcript 273 (Stuart-Smith LJ and Mann LJ agreeing); Phillips LJ in Murphy [1996] EWCA Civ 1000 ; [1997] 1 WLR 1591 at 1603-1604, Jackson v Thakrar [2007] EWHC 626 ; [2008] 1 All ER 601 at 607-608). Fifth, I am not persuaded that financial arrangements of Mrs Tracy to which the first and second respondents have directed my attention result in Mrs Tracy having a "real link" with these proceedings, material to the issue of costs. In particular: Finally, in relation to the factor articulated by Lander J in Vestris v Cashman (1998) 72 SASR 449 concerning whether Mrs Tracy could have been joined as a party earlier in the proceedings I note that, in fact, the first and second respondents had earlier claimed that Mrs Tracy's company Janling Pty Ltd had no place in these proceedings. It seems somewhat odd to now claim that Mrs Tracy should bear the costs of the unsuccessful claims of the applicants. The first and second respondents have made much of their claims concerning an alleged asset protection strategy of Mr and Mrs Tracy, comprising shifting of assets from the second applicant to Mrs Tracy, and security being given to Mrs Tracy. The first and second respondents have pointed to the alleged potential resultant unfairness to the first and second respondents in relation to their ability to recover costs. As matters stand, however, such claims are speculative. As a matter of legal principle such allegations concerning shifting assets would be of much more relevance in the context of claims, for example, pursuant to s 120 or s 121 of the Bankruptcy Act 1966 (Cth) which deal specifically with improper transfers of property and asset protection by persons who subsequently become bankrupt. Obviously however those provisions are not the subject of these proceedings and consideration of principles associated with those provisions have no place in this judgment. While such claims may be relevant in considering the justice of the case, on balance I do not consider that any private financial arrangements of Mr and Mrs Tracy, the reasons for which must be the subject of pure speculation at this stage and upon which I express no opinion, are of particular weight in the context of this notice of motion, viewed in light of the circumstances as a whole and the factors I have already described. Mrs Tracy was not, in my view "a real party" to the litigation in very important and critical respects (contrast Arundel [2001] HCA 26 ; (2001) 179 ALR 406 at 414). While Mrs Tracy may have benefited financially from the success of the applicants as I have already noted, and as has been held in numerous cases (for example Bischof [1992] 2 VR 198 , Vestris (1998) 72 SASR 449 , Probiotec [2008] FCAFC 5 ; (2008) 166 FCR 30) the mere fact that a person may benefit, financially or otherwise, from litigation will not, without more, suffice to justify an award of costs. In Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 8) [2008] FCA 1556 I ordered the applicants to pay the costs of the first and second respondents on a standard basis, for the reasons I explained in that judgment. I need not repeat those reasons here. No satisfactory reasons have been provided by the first and second respondents in relation to Mrs Tracy to distinguish her circumstances from those of the applicants, so as to warrant a departure from the usual approach of the Court to order costs payable on a party-party basis. The appropriate order in this case is that the notice of motion be dismissed. I will now hear submissions as to costs. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | s 43 of the federal court of australia act 1976 (cth) non-party costs sought by successful first and second respondents wife of second applicant to substantive proceedings provided financial support for litigation whether jurisdiction to order non-party costs spent after entry of judgment in substantive proceedings factors relevant to exercise of discretion to award non-party costs whether non-party played an active part in the conduct of the litigation non-party to benefit financially if applicants' claim had been successful significance of the knight principles costs |
The parties have agreed to deal with areas of exclusive possession in Determination Area A separately from reserve, and former reserve, areas which will be dealt with in Determination Area B. They agree that mediation should continue in relation to Determination Area B and that no determination of native title should presently be made in respect of that area. The area for which the determination is sought covers some 77,810 square kilometres and is located in the vicinity of the Great Sandy Desert, between the Southern extent of the Kimberley pastoral leases and the Percival Lakes. The area is comprised largely of unallocated crown land. The Ngurrara application was first lodged with the National Native Title Tribunal on 22 March 1996 pursuant to section 61 of the Native Title Act 1993 (Cth) as it stood prior to the commencement of the Native Title Amendment Act 1998 (Cth) ("the old Act"). In accordance with the 1998 amendments to the Native Title Act 1993 (Cth) ("the Act"), the application was deemed to be filed in the Federal Court of Australia in Perth on 30 September 1998. Through mediation in the National Native Title Tribunal ("NNTT") the parties to the application have recently reached an agreement which, amongst other things, recognises the pre-existing native title rights and interests of the claimants and contemplates that this Court will make a determination of native title by consent and without the need for a hearing, pursuant to s 87A of the Act. Section 87A of the Act sets out several pre-conditions that must be met in order for the court to make the orders sought, by consent. These conditions are: The first three pre-conditions have been met in the present case. The period of notification referred to in s 66 of the Act expired on 11 November 1996. The agreement between the Ngurrara applicants and the three other respondents is in writing and has been signed on behalf of the parties by their legal representatives of by the parties themselves. It was filed with the Court on 26 October 2007 in the form of a Minute of Proposed Consent Determination of Native Title Area "A" ("the Minute") annexed to a signed Minute of Consent Orders. All parties to the proceeding are parties to the agreement the subject of the Minute and the Minute of Consent Orders and therefore the Registrar need not give notice to any party under s 87A(3). It follows that there are no objections for the Court to take into account under s 87A(5). The Court's jurisdiction to hear and determine native title applications is specifically provided for by the Act in s 81. This jurisdiction expressly includes the power to make orders by consent pursuant to s 87A. These statutory provisions make it clear that the Court's jurisdiction is enlivened. It should, however, be noted that the agreement in this case relates to part of the land and waters the subject of the Ngurrara application. The making of a determination of native title in respect of part of an application is a matter that falls within both s 87(3) and s 87A of the Act. It follows that the Court may make orders determining that native title exists in relation to Determination Area A while leaving the issues outstanding in relation to Determination Area B for resolution at a later date (Munn (for and on behalf of the Gunggari People) v State of Queensland [2001] FCA 1229 ; (2001) 115 FCR 109 at [6] ). This approach has been taken in a number of cases in Western Australia under s 87 (Nangkiriny v State of Western Australia [2002] FCA 660 ; (2002) 117 FCR 6 ; Nangkiriny v Western Australia [2004] FCA 1156 ; James on behalf of the Martu People v State of Western Australia [2002] FCA 1208 ; Hughes (on behalf of the Eastern Guruma People) v State of Western Australia [2007] FCA 365) and under alternatively s 87 and s 87A ( Brown (on behalf of the Ngarla People) v State of Western Australia [2007] FCA 1025). In Brown's case at [15], Bennett J noted that s 87(1)(d) had not been repealed. That subsection provided in effect that an order could not be made under s 87 unless the Court was satisfied that an order in, or consistent with, the terms of the agreement reached between the parties could not be made under s 87A. Section 87(1)(d) has now been repealed and accordingly has no application to this case. In my opinion, the relevant order in this matter may be made under either s 87(1)(a)(ii) and (3) or s 87A. I accept the joint submissions of all the parties that it is preferable to proceed under s 87A because the balance of the application which concerns Determination Area B will then be deemed to be amended to remove the area covered by the proposed determination: s 64(1B). The application will remain registered following the amendment and the Registrar will be obliged to amend the Register of Native Title Claims even though the registration test has not been re-applied: s 190(3)(a). Section 94A of the Act provides that an order made by the Court for a determination of native title "must set out details of the matters mentioned in section 225". In conclusion, the Court has jurisdiction to make the orders sought and there is nothing in the agreed terms that would suggest that the power of the Court would be exceeded by making those orders. It therefore remains only to consider whether it would be "appropriate" to make the orders sought. The discretion conferred by s 87A is in substance the same as that which applies in the exercise of the Court's discretion under s 87 and must, of course, be exercised judicially and within the broad boundaries ascertained by reference to the subject matter, scope and purpose of the Act (see Brown at [22]). The matters to be taken into account in the exercise of the discretion, and the weight to be given to those matters, may vary according to the particular circumstances of each case. Justice North observed in Ward v State of Western Australia [2006] FCA 1848 at [6] ---[9] that the Act is designed to encourage parties to take responsibility for the resolution of native title proceedings, without the need for litigation. The Court's power must be exercised flexibly and with this purpose in mind. Orders may be made where the Court is not provided with all of the evidence or the primary facts substantiating native title where the Court is satisfied that the parties have freely and on an informed basis come to an agreement ( Brown at [23] in respect of s 87A and Hughes at [9] in respect of s 87). If, of course, an agreement were reached where there was nothing to support the claimed connection of the applicants to their country, or the determination appeared to be unfair or unjust, the Court might conclude that a determination would be inappropriate and decline to make the orders sought ( James at [4]). That is not the case here. In the present case, the applicants, the State and the Martu People have had independent legal advice and although the Shire of Derby/West Kimberley has not been legally represented, the Shire Planner has requested that access rights for the Shire's employees and agents to the Determination Area be recognised, particularly as regards access to upgrade the roads and infrastructure of the Kurlku and Purlawarla communities. These rights have been specifically recognised as "other interests" in Schedule 4 to the Minute. The State has taken an active and significant part in the negotiation of the consent determination. This was said by Emmett J to be an important factor: Munn at [29]. The State has had regard to the requirements of the Act and applied a rigorous and detailed assessment process. It has satisfied itself that the consent determination is justified in all the circumstance. There is no suggestion that the agreement was not freely made. The agreed terms of the proposed orders are unambiguous and are appropriate in the circumstances. The continuous connection of the Ngurrara people with Determination Area A is acknowledged by all parties. There is also evidence to support that connection. The Ngurrara Native Title Claim WC96/32 Supplementary Consent Determination Report dated January 2006 by Daniel Aime Vachon (amended in October 2007) ("the Report") describes the enduring connection of the native title claimant group to their country within the claim area and, on the basis of the material contained in the Report, supports their claim to a native title right to possession, occupation, use and enjoyment of Determination Area A to the exclusion of all others. The members of the Ngurrara claim group are the persons who have native title rights and interests in the Ngurrara application area under traditional law and custom, and are descended from the inhabitants of the claim area at the time of settlement. The Ngurrara native title claim group is comprised of those persons, identified by reference to descent and other culturally-relevant heads of connection to country, who are, in accordance with the normative system of traditional law and custom, responsible for the care and maintenance of country within the claim area and for the transmission of that responsibility to successive generations. The overarching system of jila law shared by all members of the Ngurrara claim group is a system unique to the application area, and recognised as such by neighbouring groups. Jila law is still recognised and practiced, and by this law the applicants' demonstrate their ongoing connection to the Application area. This ongoing connection is, for example, demonstrated through the maintenance of traditional practices such as painting country. Many of the traditional owners paint the places within their ngurrara where they were born/ found and grew up. The State has had regard to the Report together with additional written and audiovisual material provided by the applicants, as set out in the affidavit of Christy Hawker affirmed on 30 October 2007, in addition to a variety of other records held by State Government departments or in publicly available records. It commissioned an independent anthropologist to review that material. Ms Hawker in her affidavit affirms that the State, which represents the community generally, has had regard to the requirements of the Act and is satisfied that the material provided on behalf of the applicant's demonstrates the applicants' traditional connection with the Ngurrara application area and satisfies ss 223 and 225 of the Act. The parties are to be congratulated for reaching agreement and I also acknowledge the significant contribution to this result made by the NNTT. The preference of settling matters as opposed to litigating them has been recognised as a desirable public objective by the High Court and this Court on numerous occasions and its is always heartening when native title claims are settled by agreement rather than through litigation. As the Chief Justice said in Mark Anderson on behalf of the Spinifex People v State of Western Australia [2000] FCA 1717 , at [8]: 'The courts have always encouraged parties to settle their claims amicably'. Agreement is especially desirable in native title cases due to the importance, complexity and sensitivity of the issues involved. Agreement between the parties minimises cost and distress and establishes goodwill between the parties for future dealings: North Ganalanja Aboriginal Corporation v Queensland [1996] HCA 2 ; (1996) 185 CLR 595. In these circumstances I am satisfied that it would be appropriate to make an order in the terms agreed between the parties. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | consent determination of native title whether determination should be made pursuant to s 87 or s 87a of the native title act 1993 (cth) statutory preconditions of s 87a satisfied appropriate to make orders orders made pursuant to s 87a. native title |
He did not appear either when the notice of motion was listed for hearing on 8 February 2008. At the conclusion of those proceedings I made an order dismissing the notice of motion and a direction, pursuant to Order 46 r7A of the Federal Court Rules that the Registrar not accept any document from the applicant for filing unless the leave of a judge was first obtained. I indicated that I would publish my reasons for the order and direction at a later date. These are those reasons. 2 The applicant is a citizen of the Peoples Republic of China who arrived in Australia on 16 June 2006. One week later he made an application for a protection visa. On 29 August 2006 a delegate of the Minister refused the application. The applicant applied for a review of the delegate's decision to the Refugee Review Tribunal ('the RRT') constituted under the Migration Act 1958 (Cth). On 20 October 2006 the RRT wrote to the applicant inviting him to attend a hearing on 16 November 2006. The applicant did not reply to the letter and did not attend the hearing. On 19 December 2006 the RRT handed down a decision affirming the decision of the delegate to refuse a protection visa. 3 The applicant applied to the Federal Magistrates Court of Australia ('the FMCA') for judicial review of the decision of the RRT. The FMCA rejected all of the arguments he advanced in support of his application for judicial review. The Federal Magistrate also considered, independently of his submissions, whether any jurisdictional error appeared in the decision of the RRT. He concluded that it did not. The application for judicial review was dismissed with costs. 4 The applicant brought an appeal to this Court from the decision of the FMCA. The grounds of appeal seem, having regard to the terms of the decision of the FMCA, to be without any substance. At the hearing of the appeal the applicant did not appear. His appeal to this Court was dismissed on 31 October 2007 but he was at the same time granted leave to apply on or before 30 December 2007 to vary or discharge the order dismissing his appeal. The appeal be dismissed. The appellant to pay the respondents' costs. The respondents not perfect this order before 30 December 2007. The appellant have leave to apply on or before 30 December 2007 to vary or discharge these orders, such application to be supported by evidence from a medical practitioner that the appellant was unable to appear in court on 31 October 2007. I do not know why his present notice of motion was accepted for filing in the Registry. By the time he sought to file it there were no proceedings on foot to which the notice of motion could relate. Nevertheless, as it is, at least purportedly, before the Court I shall deal with it. Due to sickness, I was unable to attend the court on 31 Oct 2007. Please see the attached medical certificate. I was unable to attend hearing on 31 Oct 2007 due to my sickness. The certificate is dated 9 November 2007. On the face of the notice of motion and the material filed in support of it there is no basis to reinstate the appeal. No explanation was given for the failure to apply to vary or discharge the order of 31 October 2007 by the date specified in that order. 9 Although the notice of motion was itself liable to be dismissed for the non-appearance of the applicant it was better, in my view, to dismiss it for lack of merit. That was the intended effect of the order which I made on 8 February 2008. I should indicate also that I see no reason to have any doubt about the correctness of the decision of the FMCA which the applicant wished to challenge by the appeal which was dismissed on 31 October 2007. 10 The failure of the applicant to appear in either of the proceedings in this Court relating to his appeal imposes an unnecessary burden on the first respondent, who has been represented on each occasion, and on the resources of the Court, including the arrangements for interpreters. In view of the history of the applicant's failures to appear in the proceedings, or comply with the requirements in the earlier orders, I decided it was also appropriate to direct, pursuant to Order 46 r 7A of the Federal Court Rules , that the Registry not accept any further document from the applicant for filing unless the leave of a judge was first obtained. 11 The written submission for the Minister about the notice of motion sought costs. At the time I dismissed the notice of motion I omitted to deal with that question. It is appropriate to dismiss the notice of motion with costs. I will make that further order. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | failure to attend hearing of appeal failure to apply within time to vary or discharge order application to reinstate appeal proceedings failure to appear on application application refused no further document to be accepted migration |
The order made by that Court was that the appellant's application filed on 15 November 2006 be dismissed. The appellant's application to the Federal Magistrates Court was for constitutional writs directed to the Refugee Review Tribunal ("the Tribunal") in relation to a decision handed down by the Tribunal on 26 October 2006. The decision made by the Tribunal was that the decision of a delegate of the Minister for Immigration and Multicultural Affairs not to grant a Protection (Class XA) visa ("protection visa") be affirmed. The appellant is a national of the People's Republic of China ("China"). She was born in 1967 in Fuqing City, Fujian Province, China. She arrived in Australia on 12 October 1998 using a Chinese passport in the name of another person. On 1 October 2004, nearly six years after she arrived in this country, the appellant was detained by the Department of Immigration and Multicultural Affairs. On 30 November 2004, she applied for a protection visa. A delegate of the Minister for Immigration and Multicultural Affairs refused her application. The appellant's application for review by the Tribunal was refused on 22 April 2005, but that decision was set aside by consent by the Federal Magistrates Court on 20 July 2005. A second Tribunal decision affirming the delegate's decision was set aside, again by consent, by the Federal Magistrates Court. The application for review was remitted to the Tribunal a second time. It is the decision of the Tribunal on the second remitter which was the subject of the application for constitutional writs made to the Federal Magistrates Court, and the decision of that Court which is the subject of the present appeal. The Tribunal rejected all of her grounds and the Tribunal's rejection of a number of grounds is not challenged by the appellant. In terms of setting out the factual background, it is sufficient for me at this point to summarise the claims made by the appellant in her application for a protection visa. In her application, the appellant stated that she was a Christian. She stated that she had been employed in a number of unskilled jobs in both China and Australia. She stated that she was married in 1987 and that she separated from her husband in 1997. She had two children, and they live with relatives in China. The appellant stated that, in 1996, she became pregnant for a third time. She was detained and forced to have a termination of the pregnancy. She also received a notice that she had to have a pregnancy prevention operation, but she ignored it. Her husband and her family wanted her to have the operation to avoid a fine which she and her family would have to pay if she did not have the operation. She moved back to her mother's home. Some time later, she made an unsuccessful attempt to reconcile with her husband. The appellant stated that she encountered problems in China due to her father's previous political activities. Her father was in gaol from 1967 to 1972, and, following his release, he was harassed and tormented by the authorities and members of the community. He died in 1994. The appellant stated that she had been mistreated at school and had had difficulties in obtaining employment because of her father's reputation. The appellant also stated that she encountered problems because of her religion. She attended an underground Christian church. At a time at which she was not present, the authorities raided the church and arrested several members. In her application, the appellant claimed that she had been persecuted by the Chinese authorities because (1) she was a woman; (2) she had had a third pregnancy; 3) she had a "bad" family background; and (4) she had Christian beliefs. She also claimed that her husband and his family persecuted her because she had not given birth to a boy. The appellant claimed that she feared persecution if she returned to China. She feared that she would be detained for avoiding the one child policy and that she would be forced to have a pregnancy prevention operation. She also feared that she would be unable to find employment, and further stated that she feared harm by her husband and his family. The Tribunal also referred to country information it had examined. The Tribunal then proceeded to its findings and reasons. The Tribunal first examined the appellant's claim that she had a well-founded fear of persecution for reasons of her religion. If her siblings had attended a church registered with the authorities, she would have done so. (2) The appellant did not attend church in Australia for a period of about six years because she does not regard herself as a practising Christian. (3) The religious activity engaged in by the appellant in 2004, and in the period thereafter, was for the sole purpose of strengthening her claim to be a refugee and must be disregarded: Migration Act 1958 (Cth) (" Migration Act ") s 91R(3). (4) If the appellant wished to practise Christianity on her return to China, she could do so at one of the officially recognised churches and she would not be persecuted if she did so. The Tribunal rejected the appellant's claim for refugee status on the ground that she had a well-founded fear of persecution for reasons of her religion, and the Tribunal's conclusion with respect to that conclusion is not challenged on the appeal. The Tribunal then examined the appellant's claim for refugee status based on the fact that she faced a sterilisation operation and a large fine if she returned to China. I will need to come back to the Tribunal's reasoning on this issue because it lies at the heart of the appeal. It is sufficient to say at this point that the Tribunal rejected the appellant's claim on this basis because the risk of harm arises from "a non-discriminatory penalty for contravention of a law of general application". The Tribunal then turned to consider whether the appellant's treatment following her third pregnancy, and the termination thereof, may have been influenced by a number of factors involving discrimination, which may have led to her being treated unduly harshly. The Tribunal said: "[t]he relevant Convention reasons which arise on the evidence appear to be her religion and/or her membership of a particular social group, being her family, for the reason of her father's political opinion. " The Tribunal again examined the appellant's religious activities, and concluded that the authorities had no adverse interest in the appellant because of them. As I have said, there is no challenge on the appeal to the Tribunal's conclusions with respect to the appellant's religious activities. The Tribunal then considered the appellant's claim that she had a well-founded fear of persecution due to her father's political opinion. (2) The appellant's father faced no discrimination because of his background for the final five or so years of his life, that is, since the late 1980s. (3) The appellant did not claim to face any discrimination as an adult because of her family background, and the fact that she did not was consistent with evidence from the Department of Foreign Affairs and Trade. There is no challenge on the appeal to the Tribunal's conclusions with respect to the previous political activities of the appellant's father. The Tribunal examined the appellant's claim that she had a well-founded fear of persecution because the Chinese authorities might know of her application for a protection visa. The Tribunal said that there was no evidence the authorities would come to know of that fact, and there was no evidence the appellant might face persecution for a Convention reason for making such an application. There is no challenge on the appeal to these conclusions. The Tribunal rejected any suggestion that the appellant faced a risk of harm from her husband, and it said that even if her husband's family tried to harm her it could not be satisfied that "this treatment might amount to persecution, nor that there might be a Convention reason for it". The Tribunal also rejected any suggestion that the circumstances surrounding the death of the appellant's sister supported the conclusion that the appellant had a well-founded fear of persecution for reasons of her religion. There is no challenge on the appeal to these conclusions. The issues which are raised on the appeal centre on the Tribunal's conclusion that the prospect of forced sterilisation and a large fine did not establish the appellant's claim to refugee status. In this regard, it is important to note the following findings of fact made by the Tribunal. (2) In 1997, the appellant fell pregnant a third time under pressure from her husband to have a son. (3) The appellant was forced by family planning authorities to have her third pregnancy terminated. Forced terminations were taking place at the time and there was no evidence that the termination was anything other than the enforcement of family planning regulations as they were interpreted at the time, or that it was done to her for any of the reasons set out in the Convention. (4) At or after the termination of her third pregnancy, the appellant was ordered to undergo a sterilisation operation and/or pay a large fine. The appellant faces a risk, which is not remote, that these penalties will be enforced if she returns to China. (5) The Tribunal found that forcible sterilisation, whether accompanied by a large fine or not, may amount to persecution if imposed for a Convention reason. The effect of the Tribunal's findings is that it was satisfied that the appellant had a well-founded fear of serious harm if returned to China. (6) The Tribunal appears to have found that the order that she undergo a sterilisation operation was the result of the application of a law of general application. (7) The second of the appellant's daughters remains unregistered and that has come about as a result either "of a failure by anyone to argue that case with the authorities or may be a result of the outstanding debt". The Tribunal referred to what it said was well established, namely, that enforcement of a generally applicable law does not ordinarily constitute persecution for the purposes of the Convention, for the reason that enforcement of such a law does not ordinarily constitute discrimination. The Tribunal acknowledged that Convention protection may be attracted if laws of general application are selectively enforced, "in that the motivation for prosecution or punishment for an ordinary offence can be found in a Convention ground, or the punishment is unduly harsh for a Convention reason". The Tribunal said that it was not satisfied that the motivation for the initial imposition of a fine and enforced sterilisation on the appellant can be found in a Convention ground. The Tribunal concluded that, in forcing the appellant to have her pregnancy terminated, in ordering her to have sterilisation, and in sending the appellant and her husband a bill, the authorities were enforcing in a non-discriminatory way a law, which, although harsh, was a law of general application. The Tribunal noted that the fine appeared to be higher than that required by law, but was not satisfied that that was for a discriminatory reason. The Tribunal referred to the fact that the appellant's second daughter is unregistered. It considered that the denial of registration was contrary to China's law, and, as I have said, was due to the failure of anyone to argue the case with the authorities, or may be the result of the outstanding fine. In any event, as the appellant was not persecuted for a Convention reason before she left China, the Tribunal was not satisfied that the continuing denial of registration of one of her daughters pointed to any change in the official perception of her. The Tribunal then turned to express its conclusions as to the future. However, for the reasons set out above I am satisfied that this arises from a non-discriminatory penalty for contravention of a law of general application. The appellant appeared in person before the Federal Magistrates Court and was unsuccessful. At the first hearing of the appeal before me, the appellant was not represented. After some delay, the appellant came to be represented pro bono by Kah Lawyers and Mr L J Karp of counsel. The Court is grateful for the assistance provided to it by that firm and by Mr Karp. The appellant's submissions, and indeed those of the first respondent, were concise and to the point. The grounds raised in the original notice of appeal were abandoned and new grounds were formulated in a Further Amended Notice of Appeal. Leave to file and serve the Further Amended Notice of Appeal was not opposed by the first respondent and was granted. That document did not in any way suggest that the Tribunal had failed to comply with s 424A of the Migration Act . The appellant's mental condition is such that I appointed a tutor for her under O 43 r 2 of the Federal Court Rules . First, it is alleged that the Court below erred in failing to find that the Tribunal failed to consider a case advanced on behalf of the appellant, namely, that she feared persecution for her membership of a particular social group comprised of the parents of "black children". Secondly, it is alleged that the Court below erred in failing to find that the Tribunal erred in failing to consider whether the appellant would face a well-founded fear of being forcibly sterilised for the reason of her membership of a particular social group comprised of women who had more than one child and had experienced a forced abortion. Thirdly, it is alleged that the Court below erred in failing to find that the Tribunal erred in concluding that the well-founded fear of the risk of forcible sterilisation arose pursuant to the non-discriminatory enforcement of a law of general application where there was no evidence of a law which required forced sterilisation of parents who had infringed, or may infringe, the one child policy, and any law which did exist was not one of general application. Furthermore, the Tribunal failed to consider whether any law authorising forcible sterilisation was appropriate and adapted to achieving a legitimate object of the society. The appeal raises issues as to the principles governing the ascertainment of a particular social group , the applicable principles where it is said that alleged serious harm results from the application of a law of general application and that therefore there is no discrimination, the Tribunal's obligation to deal with all claims advanced by an applicant and the circumstances in which an error of fact constituted by a finding for which there is no evidence amounts to a jurisdictional error. Section 65(1) of the Migration Act provides that if the Minister is satisfied that the criteria for a visa are satisfied then he or she is to grant the visa. In the case of a protection visa, one of the criteria is that the applicant has refugee status under the Refugees Convention as amended by the Refugees Protocol. These two terms are defined in s 5. Furthermore, some of the elements are affected by sections of the Migration Act . For example, s 91R provides a statement of the necessary Convention nexus and of persecution. The reason or reasons must be the essential and significant reason or the essential and significant reasons for the persecution. The persecution must involve serious harm to the person, and systematic and discriminatory conduct. Without limiting the definition of serious harm, s 91R(2) provides a list of instances of serious harm. Section 91S excludes from the notion of a fear of being persecuted certain circumstances where the Convention reason is said to be membership of a particular social group consisting of the applicant's family. For the purposes of this case, it is unnecessary to set out the details. An applicant for a protection visa may rely on more than one Convention reason, either in the alternative, or cumulatively. Clearly, there must be a causative link between the well-founded fear of persecution and the Convention reason. This must be so, having regard to the concept of persecution, including the statutory requirement that the persecution involve conduct which is discriminatory, and the use of the words "for reasons of" in the definition of a refugee. Where an applicant claims a well-founded fear of persecution because of membership of a particular social group then, in the ordinary case, the first question is whether the alleged group is a particular social group within the definition. That question involves, at least in part, a question of law. The next question is one of fact and it is whether the applicant is a member of the group. The questions thereafter are whether the applicant has a fear of persecution, whether that fear is well-founded and whether it is for a Convention reason (see Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 77 ALJR 1088 ; 197 ALR 389 (" Dranichnikov ") at 1092; 394 [26] per Gummow and Callinan JJ (with whom Hayne J agreed)). Particular problems have arisen in cases where the applicant claims that he or she is a member of a particular social group and fears serious harm, but the claim is made that there is no pre-existing social group and that the serious harm claimed arises from the application of a law of general application. I was taken in some detail to three decisions of the High Court and one decision of a single judge of this Court, and it is to those decisions that I now turn. In Applicant A v Minister for Immigration and Ethnic Affairs [1997] HCA 4 ; (1997) 190 CLR 225 (" Applicant A "), a husband and wife, who were nationals of China, arrived in Australia and shortly thereafter the wife gave birth to a son. They claimed refugee status by virtue of the fact that they were the parents of one child and did not accept China's one child policy, which included, if necessary, enforcement by sterilisation. They claimed that they had a well-founded fear of persecution if returned to China. By a majority of 3:2, the High Court decided that they were not entitled to refugee status. Dawson J said that a particular social group for the purposes of the definition of refugee could not be defined by the persecution the members of the group feared. That is to say, not only must such persons exhibit some common element; the element must unite them, making those who share it a cognisable group within their society. The persecution feared by the appellants is a result of the fact that, by their actions, they have brought themselves within its terms. The only recognisable group to which they can sensibly be said to belong is the group comprising those who fear persecution pursuant to the one child policy. For the reasons I have given, that cannot be regarded as a particular social group for the purposes of the Convention. A legitimate object will ordinarily be an object whose pursuit is required in order to protect or promote the general welfare of the State and its citizens. The enforcement of a generally applicable criminal law does not ordinarily constitute persecution. Nor is the enforcement of laws designed to protect the general welfare of the State ordinarily persecutory even though the laws may place additional burdens on the members of a particular race, religion or nationality or social group. Thus, a law providing for the detention of the members of a particular race engaged in a civil war may not amount to persecution even though that law affects only members of that race. It is therefore inherently suspect and requires close scrutiny. In cases coming within the categories of race, religion and nationality, decision-makers should ordinarily have little difficulty in determining whether a sanction constitutes persecution of persons in the relevant category. Only in exceptional cases is it likely that a sanction aimed at persons for reasons of race, religion or nationality will be an appropriate means for achieving a legitimate government object and not amount to persecution. Gummow J's reasons were to the same effect as those of McHugh J. As to those who are so coerced or forced, the RRT erred in law by defining membership of the group by reference to acts giving rise to the well-founded fear of persecution. As to those persons having one child who 'do not accept the limitations placed upon them', they were, at best, merely a group for demographic purposes. Gleeson CJ, Gaudron, Gummow and Hayne JJ delivered joint reasons ("joint reasons") and their Honours made the point (at 301 [19]) that the fact that there is said to be a law of general application is more directly relevant to the question of persecution than to the question whether a person is a member of a particular social group. That case was concerned with persons who feared the imposition of sanctions upon them in the event that they contravened China's 'one-child policy'. In this case, the question is whether children, who did not contravene that policy but were born in contravention of it, can constitute a group of that kind. To put the matter in that way indicates that the group constituted by children born in those circumstances is defined other than by reference to the discriminatory treatment or persecution that they fear. And so much was recognised by the Tribunal in its finding that a 'child is a "black child" irrespective of what persecution may or may not befall him or her'. If persons of a particular race, religion or nationality are treated differently from other members of society, that, of itself, may justify the conclusion that they are treated differently by reason of their race, religion or nationality. That is because, ordinarily, race, religion and nationality do not provide a reason for treating people differently. There may be groups --- for example, terrorist groups --- which warrant different treatment to protect society. So, too, it may be necessary for the protection of society to treat persons who hold certain political views --- for example, those who advocate violence or terrorism --- differently from other members of society. It was not necessary that society perceive young able-bodied men as comprising a particular social group in order to conclude that they were a particular social group within the definition of a refugee. It is sufficient if they are cognisable within the community as a particular social group. Such conclusions are clearly objective, although, that is not to say that subjective perceptions within the community may not be relevant. First, the group must be identifiable by a characteristic or attribute common to all members of the group. Secondly, the characteristic or attribute common to all members of the group cannot be the shared fear of persecution. Thirdly, the possession of that characteristic or attribute must distinguish the group from society at large. Borrowing the language of Dawson J in Applicant A , a group that fulfils the first two propositions, but not the third, is merely a 'social group' and not a 'particular social group'. As this Court has repeatedly emphasised, identifying accurately the 'particular social group' alleged is vital for the accurate application of the applicable law to the case in hand. The Court also addressed a submission that there was no persecution where the foreseeable risk of harm arose from the application of a law of general application. His Honour said that the question of whether the discriminatory treatment of persons of a particular race, religion, nationality or political persuasion or who are members of a particular social group constitutes persecution for that reason ultimately depends on whether that treatment is 'appropriate and adapted to achieving some legitimate object of the country [concerned]'. These criteria were accepted in the joint judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ in Chen . As a matter of law to be applied in Australia, they are to be taken as settled. This is what underlay the Court's decision in Israelian . Namely, that enforcement of the law of general application in that particular case was appropriate and adapted to achieving a legitimate national objective. His Honour gave the examples that (i) enforcement of a generally applicable criminal law does not ordinarily constitute persecution; and (ii) nor is the enforcement of laws designed to protect the general welfare of the State ordinarily persecutory. Whilst the implementation of these laws may place additional burdens on the members of a particular race, religion or nationality, or social group, the legitimacy of the objects, and the apparent proportionality of the means employed to achieve those objects, are such that the implementation of these laws is not persecutory. In any event, even if the object was a legitimate national objective, it was not appropriate and adapted (in the sense of being proportionate) in the means used to achieve that objective because the policy of conscription was implemented in a random and arbitrary manner (see at 404 [47]-[49]). The appellant in the present case relied heavily on the decision of Merkel J in VTAO v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 927 ; (2004) 81 ALD 332 , and it is necessary to consider that decision. There were three applicants for protection visas in that case: a Chinese couple and their third child, who was born in Australia. The applicants claimed a well-founded fear of persecution as a result of the contravention of China's one child policy. The harm feared by the parents was forced sterilisation of the applicant mother, a substantial financial penalty which they could not pay and limitations on employment opportunities. In the case of the child, the fear was that, as a black child, he would face significant discrimination and disadvantage. For present purposes, it is necessary to discuss the reasons only in so far as they deal with the claim of the applicant parents. The Tribunal found that the parents were not members of a particular social group because the harm suffered or feared was the sole defining characteristic of the group. It found that the child was a member of a social group, but that he would not suffer persecution as a black child. It found that China's family planning laws were not discriminatory because they applied to all citizens equally, and are directed at a legitimate purpose, namely, limiting population growth. It further found that the financial burden on the parents was serious, but was not persecution within the Convention or s 91R of the Act. Merkel J held that, as far as the parents' claim was concerned, the Tribunal had committed a jurisdictional error. It had failed to consider the correct question in determining whether the parents were members of a particular social group. Independently of that point, the Tribunal would be required to consider whether China's general family planning laws were appropriately adapted to meet the varying situations of parents who have more than one child. That issue is to be determined by reference to 'the standards of civil societies which seek to meet the calls of common humanity': see Chen at CLR 303; ALR 560 ; ALD 328 [29]. As was explained in Chen , visiting the 'sins' (if they be that) of the parents on the child can be persecutory of the child. Similarly, there are many instances where the view may be taken that the birth of a second child may not have come about as a result of any 'sin' on the part of the mother. The birth of twins, or a child born as a result of a rape, or even failed contraception, are examples. A law of general application mandating the imposition of severe penalties on the mother irrespective of her personal circumstances may be regarded as a measure that, according to the standards of civil societies, is not appropriately adapted to achieving a legitimate object. In Dranichnikov , the appellant claimed that he had a well-founded fear of persecution for reasons of membership of a particular social group, being Russian businessmen who publicly criticised law enforcement authorities for failing to take action against crimes or criminals. The appellant submitted that the Tribunal erred because it failed to consider his claim to refugee status by reference to that particular social group and only considered it by reference to the group of Russian businessmen. The appellant sought from the High Court special leave to appeal and relief under s 75(v) of the Constitution . The Court granted leave and relief under s 75(v). Gummow and Callinan JJ (with whom Hayne J agreed) considered that a failure by the Tribunal to respond to a substantial, clearly articulated argument relying upon established facts was a failure to accord natural justice to the appellant (which was not a statutory ground of judicial review by reason of the then provisions of the Migration Act ) and was a constructive failure to exercise jurisdiction. First the Tribunal needs to determine whether the group or class to which an applicant claims to belong is capable of constituting a social group for the purposes of the Convention. That determination in part at least involves a question of law. If that question is answered affirmatively, the next question, one of fact, is whether the applicant is a member of that class. There then follow the questions whether the applicant has a fear, whether the fear is well founded, and if it is, whether it is for a Convention reason. Accordingly, it had failed to exercise jurisdiction. The Full Court of this Court has also emphasised that, for the principle to be engaged, the claim must be one which emerges clearly from the materials before the Tribunal: NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 144 FCR 1 at 22 [68] . Notwithstanding these principles, it is not necessarily an error for the Tribunal not to begin with (or even to deal with) the question of whether there is a particular social group. The relevant part of the definition of refugee consists of a number of elements and, although they each form part of a compound conception (see Applicant A at 242 per Dawson J; at 256 per McHugh J; Chen at 299 per Gleeson CJ, Gaudron, Gummow and Hayne JJ), failure to comply with one is sufficient to defeat the claim. If the serious harm results from the application of a law of general application and there is no discrimination and therefore no persecution, the claim must fail: Minister for Immigration and Multicultural Affairs v Israelian [2001] HCA 30 ; (2001) 206 CLR 323 at 354-355 [93] - [97] per McHugh, Gummow and Hayne JJ. Finally, I address the principles as to whether an error of fact on an important matter constituted by a finding of fact for which there is no evidence may amount to a jurisdictional error. In this context, I am assuming the fact is not a jurisdictional fact. A decision-maker who makes a finding of ultimate fact for which there is no evidence commits an error of law: Sinclair v Mining Warden at Maryborough [1975] HCA 17 ; (1975) 132 CLR 473. Not all errors of law are jurisdictional errors and therefore outside the reach of the privative clause in s 474(1) of the Migration Act : Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 76 ALJR 966 ; 190 ALR 601. An error constituted by making a finding of fact for which there is no evidence could indicate that the decision-maker applied the wrong legal test, or failed to apply the correct legal test, or took into account irrelevant considerations or failed to take into account relevant considerations and, in those circumstances, the error would constitute a jurisdictional error: Craig v The State of South Australia [1995] HCA 58 ; (1995) 184 CLR 163 at 176-180; Plaintiff S157/2002 v The Commonwealth of Australia (2003) 211 CLR 476. In SFGB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 231 ; (2003) 77 ALD 402 (" SFGB "), the Full Court of this Court suggested that an error consisting of the making of a finding of fact for which there is no evidence may well constitute a jurisdictional error, even if it cannot also be concluded that the decision-maker applied an incorrect test or failed to apply the correct test or took into account irrelevant considerations or failed to take into account relevant considerations. If the tribunal makes a finding and that finding is a critical step in its ultimate conclusion and there is no evidence to support that finding then this may well constitute a jurisdictional error: Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 355---7 [1990] HCA 33 ; ; 94 ALR 11 at 37---8 [1990] HCA 33 ; ; 21 ALD 1 at 23---4. If the decision of the tribunal was ' Wednesbury ' unreasonableness or if the material on which the tribunal relied was so inadequate that the only inference was that the tribunal applied the wrong test or was not, in reality, satisfied in respect of the correct test, then there would also be jurisdictional error: see Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 ; (2003) 198 ALR 59 at 62, 67, 76, 90---91 [2003] HCA 30 ; ; 73 ALD 1 at 4, 8---9, 18, 31---3. ( S20 ). Indeed, unless the relevant fact can be identified as a "jurisdictional fact", there is no error of law, let alone a jurisdictional error, in the tribunal making a wrong finding of fact: Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35---6; 93 ALR 1 at 24---5. The first respondent submitted that the principle identified in [53] above is inconsistent with the decision of the High Court in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 ; (2003) 77 ALJR 1165 ; 198 ALR 59. I have examined that decision carefully and I do not think there is anything in the decision which is inconsistent with the principle identified by the Full Court. Leaving aside the question of whether, sitting as a single judge exercising the appellate jurisdiction of this Court, I could or should decline to follow a decision of the Full Court, I am not persuaded that the decision is clearly wrong and I think I should follow the principle identified by the Full Court. The appellant submitted that her breach of the one child policy had not come about as the result of any "sin" on her part, bearing in mind the pressures imposed by Chinese society to bear a male child. She submitted that she suffers and continues to suffer serious psychological harm as a result of the persecution of her black child. In this case, the Tribunal did not approach the matter by determining whether there was a particular social group of the type identified by the appellant, or, indeed, any other particular social group which might be reasonably arguable on the facts. The Tribunal approached the matter by considering whether the serious harm which the appellant feared, and which the Tribunal found, arose, or resulted from, the application of a law of general application. As I have said (at [50]), that is not necessarily an error. However, the appellant submitted that the Tribunal made an error in determining that an order requiring a sterilisation operation arose, or resulted from, the application of a law of general application. That submission is correct. I accept the first respondent's submission that there are limitations on the Tribunal's ability to determine with precision the provisions of China's family planning laws and that there would be a temptation to think, as the order that the appellant undergo a sterilisation operation followed "hard on the heels" of the termination of the appellant's third pregnancy, therefore it was part of a law of general application. However, when regard is had to the evidence the Tribunal referred to in relation to this question, it seems to me that there was no evidence that sterilisation was part of a law of general application. In fact, the evidence was to the contrary. In determining the parameters of China's population policy, the Tribunal relied on evidence from various sources. It referred to the one child policy launched by the Chinese Government in 1979. It referred to the fact that there is no national legislation, and family planning policy is left to provinces and municipalities to implement, and each province has drafted its own regulations in support of the policy. The Tribunal noted sources indicating that family planning policy varied widely across China and that penalties for contravening the one child policy can also vary across regions. The Tribunal noted a source suggesting that, in general, Fujian had one of the least coercive family planning regimes in China and that "some local governments enforce family planning rules more vigorously than others". This has created "a patchwork of different rules and enforcement across the province". These sources suggested that government policy forbade forced sterilisations, although they occurred from time to time. They tended to result from the actions of overzealous officials and they were becoming rarer. It seems to me that the finding that sterilisation was part of a penalty for the contravention of a law of general application was in error and the error was that there was no evidence to support the finding. The error was an error of law and, following the Full Court's decision in SFGB , a jurisdictional error. The finding was a critical step in the Tribunal's ultimate conclusion. It seems to me that it would be open to the Tribunal to conclude that the appellant belonged to a particular social group, being those women who became pregnant in contravention of China's family planning laws and who have been required to have that pregnancy terminated. The Tribunal found the appellant had a well-founded fear of serious harm (that is, forced sterilisation) and it seems to me that it would be open to it to conclude that the harm was for reasons of her membership of the social group and not for the reason of the application of a law of general application. In those circumstances, the appeal must be allowed and the matter remitted to the Tribunal. The appeal be allowed. I will hear the parties as to any other orders. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | application for protection visa claim that appellant has well-founded fear of being persecuted for membership of particular social group where appellant claimed to be parent of child born in contravention of china's one child policy where appellant claimed to have been issued with forced sterilisation notice delegate of first respondent refused application tribunal affirmed decision of delegate whether tribunal erred in approaching matter by not first identifying particular social group whether tribunal erred in finding forced sterilisation non-discriminatory penalty for contravention of law of general application whether any error in finding as to forced sterilisation constitutes jurisdictional error migration |
Each is a director of, and the holder of shares in, Golden River Footwear Pty Ltd. Mrs Charlton is the company secretary. Until 28 June 2005 Golden River Footwear was the trustee of the Scarpa Australia Unit Trust. Mr Bove and Fumina Pty Ltd, a company controlled by Mr and Mrs Charlton, hold, in equal proportions, all the units in the trust. Approximately two years ago Golden River Footwear was removed as trustee of the trust on the application of Mr Bove. Mr McVeigh was appointed as trustee in its place and a vesting order was made. 2 This application comes about because Mr Bove contends that Mr and Mrs Charlton acted in breach of the duties they owed Golden River Footwear under ss 180 and 181 of the Corporations Act 2001 (Cth), their fiduciary duty of good faith (to avoid conflicts of interest and not to profit from their position) and their common law duties to act with reasonable skill, care and diligence in the performance of their duties of office. Further Mr Bove alleges that by reason of the alleged breaches the trust assets were depleted and, in some cases, found their way into the hands of Kiss & Tell Australia Pty Ltd, a company controlled by the Charltons. 3 Mr Bove requested Mr McVeigh to bring an action against Mr and Mrs Charlton and their company for damages and to recover the allegedly misappropriated trust assets. Mr McVeigh refused to bring the action. Instead he made an application in the Supreme Court of Victoria for "directions pursuant to O 54 of the Supreme Court (General Civil Procedure) Rules 2005 as to the respective entitlements of the trustee and the defendants [Fumina Pty Ltd and Mr Bove] to the property of the trust. " That application has not yet been listed for hearing. 4 In these circumstances Mr Bove asks for leave to bring the action in the name of Golden River Footwear against the Charltons and their company. It is proposed that Mr McVeigh be joined for conformity. The action will seek to recover damages, equitable compensation and an account of profits from the Charltons for breaches of duty, and damages for conversion and passing off and the recovery of trust assets from their company. 5 Section 237 of the Corporations Act sets out what Mr Bove must establish to obtain leave. In summary he must show that it is probable the company will not itself bring the proceeding, that he is acting in good faith, that it is in the best interests of the company that he be granted leave, that there is a serious question to be tried and, finally, that Mr Bove has given the company notice of his intention to apply for leave to bring the action. 6 It is conceded that each requirement has been satisfied other than the requirement that the proceeding is in the best interests of the company. As regards this requirement the rebuttable presumption in s 237(3) that granting leave is not in the best interests of the company does not arise as the Charltons, being directors of the company, have a material personal interest in the decision not to bring the proceeding. 7 Ms Turner who appeared for the prospective defendants (other than Mr McVeigh) made two points in opposition. First she said that the company's interests would not in any way be served by the action because Golden River Footwear was a trustee company and could not in any way stand to benefit from the action. I accept that if Golden River Footwear were to succeed in the action it would not gain any financial advantage for itself. Indeed, it is likely that if it were to succeed the court would order that the damages and any property the company might recover be made over to Mr McVeigh as trustee and in whom the trust assets have vested. 8 Still, that the action will not financially benefit Golden River Footwear does not lead to the conclusion that the action is not for its benefit. Golden River Footwear is obliged to take action to protect the beneficiaries' interest in the trust property. A failure to take action will be a breach of trust. Surely it is in the company's interest, and hence for its benefit, to cure any breach of trust. 9 Ms Turner's second point is any action should be by Mr McVeigh. There are I think two answers to this argument. First Mr McVeigh has been trustee for almost two years and has not taken any steps to bring the action. I do not say this by way of criticism. It seems that Mr McVeigh is investigating whether any action should be commenced and that is one reason he has sought directions from the Supreme Court. However, this matter has dragged on for much too long and, in my opinion, it is in everyone's interest that the matter be brought to a head. The second point is this. While Mr McVeigh may be able to sue for breach of trust he has no standing to sue for breaches of ss 180 and 181 of the Corporations Act . That is a suit that can only be maintained by the company to whom the duties are owed, Golden River Footwear. 10 Accordingly I will grant the leave sought but on condition that Mr Bove give an undertaking that he will be responsible for the costs incurred by Golden River Footwear and any costs that it might be ordered to pay. The costs of this application will be costs in the cause of the action to be commenced by Golden River Footwear. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein . | leave to institute a proceeding in name of a company whether leave in the best interests of the company corporations |
2 Prior to 20 March 2000 the Social Security Act dealt with both entitlements to social security payments and also the administration of claims for such payments. On 20 March 2000 the main operative provisions of the Administration Act commenced whereupon the Social Security Act continued to deal with the question of entitlements, but the Administration Act replaced the Social Security Act as the relevant enactment dealing with the administration of claims for such payments. Transitional and savings provisions were contained in Part 8 of the Administration Act (see in particular ss 246 --- 248). 3 At all material times for the purposes of this case there were seven categories of social security payment. The expression ' social security payment ' was defined in s 23 of the Social Security Act . The expression ' social security benefit ' was defined in s 23 of the Social Security Act . 6 Chapter 2A dealt with ' Benefits and Concessions other than Payments '. 7 Chapter 3 dealt with ' General Provisions Relating to Payability and Rates '. It contained a series of parts commencing with ' Part 3.1 --- Rate Calculators (General)'. 8 Part 3.6 of Chapter 3 of the Social Security Act had a heading ' Benefit Rate Calculator B ', which was relevant for the purpose of quantifying partner allowances. The ascertainment of an applicable amount for rent assistance is but one of the steps in the calculation process. The Social Security Act does not recognise rent assistance as a discrete category of social security benefit. 13 The several paragraph headings in Module F --- Rent Assistance were 'Rent assistance', 'Rent threshold rate', 'Partner with rent increased pension', 'Age test applies to some people', 'Parent', 'Factors affecting rate of rent assistance', 'Partner with rent increased benefit', 'Rate of rent assistance', 'Fortnightly rent', 'Rent paid by a member of a couple' and 'Rent paid by a member of an illness separated couple'. 14 Paragraph 1068 --- F1 of the Rent Assistance Module provided for a rent assistance component to be taken into account in the partner allowance rate of benefit calculation process, as required by step 3, if some eight criteria were satisfied. Under s 1299 it was open to the Secretary to delegate most of his powers under the Social Security Act to Departmental officers (see now s 234 of the Administration Act) and such delegations led to primary determinations of claims for partner allowance being made by such officers. 17 Generally speaking, when a person's claim for a partner allowance is granted, the relevant commencement or start day is the day on which the claim for the partner allowance is made (see s 771HM et seq and s 771JC(1) of the Social Security Act and ss 41 --- 42 together with Schedule 2 clause 3 et seq of the Administration Act). 18 Section 1240 of the Social Security Act made provision for applications to be made to the Secretary for review of the decisions of Departmental officers in respect of claims made under the Social Security Act (the comparable provision is now s 129 of the Administration Act). In the case of 'favourable determinations' made as a result of applications for review of such decisions, s 771NR(2) --- (4) of the Social Security Act made provision for the date upon which those favourable decisions would take effect (see now s 109 of the Administration Act). 21 At first blush, it is difficult to comprehend why a person would seek review of a decision made in relation to a partner allowance where the claim for such an allowance had been granted . The simple answer is to be found in the identification of what will constitute a 'favourable determination' as a result of an application for review of a decision 'made in relation to a partner allowance' (see ss 771NR(1) and especially 771NL of the Social Security Act and now ss 108 and especially 78 of the Administration Act). 28 The point that needs to be made is that no power exists to backdate a favourable determination to a point in time earlier than 3 months (or 13 weeks) before the day on which a determination 'that the rate [at which partner allowance is being or has been paid] is to be increased' is made. 29 This means that, if (say) a person has made a claim for the payment of a partner allowance and such claim has been granted but payments of partner allowance to the claimant, either from the relevant commencement or start date or from some later point in time, have fallen below the rate provided for by the Social Security Act , then there is no facility for what one might call a remedial decision to be made to redress any earlier short payment. 30 Having said that, it may be observed that under s 771NL of the Social Security Act it was open to the Secretary to determine that the rate be increased to 'the rate specified in the determination'. Arguably, such a determination could have called for payment at a greater rate than the statutory rate so as to remedy the earlier short payment which could then be followed by a rate reduction determination once the short payment situation had been suitably rectified. 31 Notably, however, s 78 of the Administration Act does not allow the possibility of a determination of a specified rate above the statutory rate to remedy an earlier short payment. In the event that the Secretary is relevantly satisfied that the rate at which partner allowance is being or has been paid is less than the rate provided for by the Social Security Act , then under s 78(a) the Secretary must determine that the rate be increased to 'the rate provided for by the social security law [relevantly the Social Security Act --- see s 3(3) of the Administration Act]', rather than 'a rate specified in the determination'. 32 A 'favourable determination' under s 771NL of the Social Security Act (or s 78 of the Administration Act) will, relevantly for the purposes of this case, be a determination that the rate at which partner allowance is being, or has been, paid 'is to be increased' because the Secretary is satisfied that the rate previously employed was 'less than the rate provided for' by the Social Security Act . (b) the consideration of an application under s 771NL of the Social Security Act (or s 78 of the Administration Act) for such a determination by the Secretary or an officer exercising delegated power, then the date on which the determination takes effect will fall to be determined by s 771NR(6) of the Social Security Act (or s 114 of the Administration Act). (c) an application for review of a previous decision under s 771NL of the Social Security Act (or s 78 of the Administration Act) then the date on which the determination takes effect will fall to be determined by s 771NR(2) --- (4) of the Social Security Act (or s 109(1) --- (3) of the Administration Act). (d) an initiative of the Secretary to review a previous decision under s 771NL of the Social Security Act (or s 78 of the Administration Act) then the date on which the determination takes effect will fall to be determined by s 771NR(6) of the Social Security Act (or s 109(4) --- (5) of the Administration Act; see also s 126). It referred to the respondent's marriage to Judith Anne Cameron on 30 March 1974. Under item 30 it was indicated that the respondent and/or his partner was paying full rent (not shared with any other person) for their accommodation. The form indicated that the amount per week which was being paid was $110 and the name of the landlady was identified. 35 On or about 15 December 1999 the respondent was advised by the Department that he would be paid partner allowance from 15 December 1999. His claim for a partner allowance had been granted. 36 Thereafter, on 17 August 2005 the respondent contacted the Department's Charlestown Centrelink office. A file note records 'Customer has some questions about rent assistance. Stated that it was complicated and would therefore like to be booked throught [sic] to discuss'. 37 On the same day the respondent apparently spoke with an operator at the Department's call centre in Bunbury with an inquiry regarding partner allowance. Thereupon a 'SU336(M) RENT DECLARATION FOR USE IN EXTREME CIRCUMSTANCES ONLY' form was issued. Such a form was forwarded to the respondent by the Charlestown Centrelink office of the Department with an invitation to complete the form and return it. 38 On 6 September 2005 the respondent contacted the Charlestown Centrelink office whereupon he was interviewed. Amongst other things he provided a completed SU336 Rent Declaration. 39 It would appear that the relevant customer service officer who interviewed the respondent on 6 September advised that the Department could only pay arrears from the date of receipt of the relevant declaration form. The respondent apparently enquired as to why Centrelink had not given him the option for which the form provided previously. 40 On 12 September 2005 a communication was forwarded to the respondent advising him of the rates of partner allowance which would be paid to him for the periods 2 September --- 15 September 2005, 16 September --- 29 September 2005 and regularly thereafter. The payments were backdated to include rent assistance from 6 September 2005. This was a favourable determination under s 78 of the Administration Act, within the meaning of s 108 of the Administration Act, which was within power under s 114 of that Act. It was of the kind referred to in paragraph [33(b)] above. 41 It would appear that on 28 September 2005 the respondent contacted the Department's Brisbane call centre seeking a review of the decision made on 12 September 2005. Cus states was not told at this time or any time in the following years that he could supply a Rent Decaration [sic] for m for extreme circumstances. Cus stated on several times during review over the years he mentioned his inability to get landlady to sign rent cert and was never informed of this extreme circumstances form. I've had no previous involvement in your case. However I have decided to backdate your Rent Assistance to 17 August 2005. This means your request to have the original decision changed has been partially successful. If you decide to appeal, it is important to do so within thirteen weeks of receiving this letter. If you appeal after thirteen weeks and the SSAT decides arrears are payable, these may be backdated only to the date your appeal was received by the tribunal. Details of how to appeal are included in the enclosed SSAT pamphlet. If you don't agree with the decision of the SSAT, you can appeal to the Administrative Appeals Tribunal (AAT). The date of the Authorised Review Officer's decision was recorded as 2 March 2005, but plainly it was 2 March 2006. 45 It will be appreciated that the effect of the Authorised Review Officer's decision was to increase the backdating decision of 12 September 2005 from six days to about 26 days. Such a decision was within the power of the Authorised Review Officer under ss 114 and 135(1)(b)(ii) of the Administration Act. 46 Being dissatisfied with the decision of the Authorised Review Officer to not backdate the payment of rent assistance to a date prior to 17 August 2005, the respondent applied for review of the 2 March 2006 decision by the Social Security Appeals Tribunal ('SSAT'). Following a hearing on 18 April 2006 the SSAT decided, on 9 May 2006, to set aside the decision under review and substitute a new decision that arrears of rent assistance (being part of the partner allowance benefit) were payable from 14 June 2005; i.e. the backdating was increased from the then 26 days to about 90 days or just under the maximum of 13 weeks permissible under s 114 of the Administration Act. At this time he was clearly querying the non payment of rent assistance, and nothing else. He had the means available by which he could have met the documentary requirements of lodging a rent declaration, but was not advised to do so. In the Tribunal's view this was clearly Mr Cameron requesting a review of the decision not to pay him rent assistance, and arrears must be backdated accordingly. Putting it at its highest, the respondent's attendance amounted to an application for a favourable determination under s 78 of the Administration Act that the rate at which his partner allowance benefit was being, or had been, paid was less than the rate provided for by the Social Security Act and that the rate be increased to the rate provided for by the Social Security Act . 48 However, a decision to backdate the determination to 14 June 2005 was within power under ss 114 and 149(1)(b) of the Administration Act. He also had discussions with Centrelink officers about his inability to get a rent certificate signed. He was not told about the rent declaration, nor provided with one. There is no indication that Centrelink contacted Mrs Hoffman about this although it had the means to do so. On 15 December 1999 Centrelink was provided with the information it required to finalise the matter and pay rent assistance to Mr Cameron. They were also told that our landlady was receiving benefits from Centrelink and obviously not declaring. The landlady in question was investigated by Centrelink months prior to us moving to her address. Therefore Centrelink should have acted on the information given. Accordingly, he is entitled to back payments of rent assistance from that date to 14 June 2005. 54 The Tribunal Member found that the respondent did not seek formal review of any decision until 2005. However she accepted the respondent's evidence that he 'enquired' about his rent assistance entitlement previously ( Cameron v Secretary, Department of Employment and Workplace Relations [2007] AATA 1039 at [22] ). 55 The Tribunal Member, in my view incorrectly, concluded that the decision, review of which was sought by the respondent under s 129 of the Administration Act, was the decision made on or about 15 December 1999 to pay partner allowance to the respondent from 15 December 1999. 56 Section 109(2) only applies to determine the day on which a 'favourable determination' takes effect where that favourable determination is made as a result of an application under s 129 of the Administration Act for review of a decision under, relevantly for present purposes, s 78 of the Administration Act. A decision under s 78 of the Administration Act is not a decision to grant or refuse an application for partner allowance; rather it is a decision that the rate at which partner allowance is being or has been paid is (or is not) less than the rate provided for by the Social Security Act , in which case a determination that the rate is to be increased to the rate provided by the Social Security Act will be required. 57 No such determination was made on 15 December 1999. 58 Decisions/determinations under s 78 of the Administration Act are not decisions 'to pay rent assistance' or 'not to pay rent assistance' as the case may be. 59 The reasoning of the Tribunal Member proceeded on the erroneous assumption that the relevant decision to which the review in this case related was a decision not to pay the respondent rent assistance. The Tribunal Member's finding at [28] that the 'original letter of 15 December 1999, advising Mr Cameron of Centrelink's calculations of partner payment, contained no mention of rent assistance' is quite irrelevant, as was the finding at [38] that '[n]o notice was given to Mr Cameron that a decision had been made not to pay him rent assistance'. In the alternative, it may be that Mr Cameron is entitled to earlier payments of rent assistance under s 110(1) of the Administration Act, which provides that a favourable determination may take effect on the day on which an applicant informed the Department of an event or change in circumstances. Mr Cameron advised the Department in his claim form on 15 December 1999 that he had previously been receiving newstart allowance but his entitlement to this had ceased and he and was now claiming to a different allowance. However, it is not necessary for me to consider his claim under s 110(1) as I have already found in Mr Cameron's favour under s 109(3). Section 110(1) of the Administration Act is concerned with favourable determinations of a different character --- where the Department is informed of the occurrence of an event or a change of circumstances (see s 110(1A)-(11)). 68 No order for costs is sought by the appellant. It would be inappropriate to make any order for costs in favour of the respondent as a self-represented litigant. His travel costs and costs of attendance at the hearing of the appeal have been the subject of an earlier order. The appropriate order is that there be no order as to 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 Graham. | partner allowance redress available where the rate at which a social security payment is being, or has been, paid is less than the rate provided for by the social security law limited power to backdate a favourable determination no power to backdate a favourable determination to a date earlier than 13 weeks before the date on which the favourable determination is made social security |
By that decision, the Tribunal affirmed the decision of a delegate of the respondent Minister refusing to grant the appellant a class XA protection visa. 2 The appellant, a national of India, is Muslim. He arrived in Australia on 13 September 2003 on a travel visa issued in Delhi. On 8 October 2003, he applied for a protection visa. A criterion for the grant of a protection visa, pursuant to s 36 of the Migration Act 1958 (Cth) ("the Act "), is that the person bringing the application is a non-citizen of Australia to whom Australia owes protection obligations under the Convention Relating to the Status of Refugees as amended. He claimed to have been a member of the "Muslim League" living in the Coimbatore district of Tamil Nadu, a southern state of India. He said that both his father and his brother had been heavily involved in Muslim politics. In November 1997, his father and mother were killed during religious rioting in the district. Fearing for his life, he moved to the Chennai district. He established a clothing business there. He maintained his involvement with the Muslim League. He claimed that he donated money, was involved in political rallies and that he sought to recruit new party members. He claimed that political opponents became aware of his activities and that he was threatened and "physically attacked" by these people. Nonetheless, he continued his active involvement with the Muslim League. He supported the party financially, and this may have led to a further attack upon him by his political opponents. However, he was spared any serious physical injury because of the presence, on this occasion, of a number of Muslim supporters. 4 When the matter was before the Tribunal, it determined to conduct a hearing at which the appellant would give evidence. However, the hearing was twice adjourned because of the appellant's illness. Thereafter he indicated that he was content for the Tribunal to determine his application for review "on the papers". 5 That posed significant difficulties for the Tribunal. Nor have I been able to clarify and seek additional details of what he claims happened to him in order to establish whether what occurred involved serious harm of a kind which could be regarded as persecution and that it occurred because of his religion or political opinion (or any of the other reasons specified in the Refugees Convention). I understand that there has been and continues to be conflict between Hindus and Muslims in various parts of India but it does not follow from this that all Muslims face a real chance of persecution. There is insufficient information before me about the applicant's circumstances to assess whether there is a real chance that he would face persecution because of the matters raised in his application, that is his religion and his political opinion. His Honour accepted that the Tribunal had, in the circumstances, conducted the proceedings then before it with propriety. On the first hearing date the Applicant sought and obtained an adjournment after providing a medical certificate indicating that he was unavailable for a two-day period. The Tribunal fixed another hearing date, in short time, in response to which the Applicant again sought a further adjournment providing another medical certificate that indicated his inability to attend for another two days. The Tribunal again adjourned the matter, this time for a week and informed the Applicant that he would need to provide a more detailed medical report if he was to seek a further adjournment and also would need to provide a date on which the Tribunal could fix a hearing with some confidence he would be able to attend. In response to that, the Applicant wrote back saying that he would not be attending any hearing and that he was prepared to allowed [sic] the Tribunal to make its decision based upon the material already before it. He did indicate that he would provide further submissions, but they were never provided. His Honour noted that, in essence, the appellant was seeking impermissible merits review. 8 By notice of appeal filed on 21 February 2005 the appellant seeks an order that the judgment of O'Dwyer FM be set aside. The notice of appeal is not particularised. The facts mentioned above are the very basis of my story and the Tribunal has to consider those facts and make a decision. I disagree with the conclusion of the Tribunal where it states "although the concept of onus of proof is not appropriate to administrative inquiries and decision making, the relevant facts of the individual case will have to be supplied by the applicant himself in as much detail as is necessary to enable the examiner to establish the relevant facts. " I say that I have provided all the relevant facts of my case and the Tribunal should have gone through that evidence and ruled on it. She submits that the notice of appeal "essentially asserts that the Tribunal made an error in its consideration of the facts put forward in the Appellant's application for a protection visa", and that this does not amount to an allegation of jurisdictional error. 10 I am mindful that the appellant was not represented by counsel below. Nor did he have the benefit of representation before me. For that reason, I have read the Tribunal's reasons for decision with some care. I am unable to discern any error in those reasons. It was at the appellant's request that the Tribunal proceeded to determine his application without a hearing. On the material before the Tribunal, it could arrive at no conclusion other than that which it did. The Tribunal was not obliged to seek out for itself additional evidence that might bear upon the appellant's case. It remains for the applicant to satisfy the Tribunal that all of the statutory elements are made out. Although the concept of onus of proof is not appropriate to administrative inquiries and decision-making, the relevant facts of the individual case will have to be supplied by the applicant himself or herself, in as much detail as necessary to enable the examiner to establish the relevant facts. A decision-maker is not required to make the applicant's case for him or her. Nor is the Tribunal required to accept uncritically any and all the allegations made by an applicant. These included Minister for Immigration and Ethnic Affairs v Guo [1997] HCA 22 ; (1997) 191 CLR 559, Nagalingam v Minister for Immigration, Local Government and Ethnic Affairs (1992) 38 FCR 191 and Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155 . The Tribunal did not err in relying upon these cases, or in its formulation of the relevant legal principles. Moreover, the appellant's contention must fail by reason of the principles stated by the Full Court in Minister for Immigration and Multicultural and Indigenous Affairs v VSAF of 2003 [2005] FCAFC 73 at [20] --- [24]. 12 For these reasons, the judgment of O'Dwyer FM was correct. It follows that the appeal must be dismissed, with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg J. | appeal from judgment of federal magistrate dismissing application for judicial review refugee review tribunal dealt with appellant's case "on the papers" and without a hearing appellant ill and twice unable to attend scheduled tribunal hearings appellant invited tribunal to proceed without hearing from him whether appellant's case adequately considered migration |
2 The plaintiffs apply, first, for an order under s 439A(6) of the Corporations Act 2001 (Cth) ("the Act ") extending the convening period for the second meeting of creditors of the Company, and, secondly, for an order under s 447A of the Act permitting the committee of creditors to determine the plaintiffs' remuneration as administrators. 3 I think that the plaintiffs are proper plaintiffs in both respects. As to s 447A , subs (4) of that section provides expressly that an order under the section may be made on the application of various persons, including, in the case of a company under administration, the administrator of the company. 4 In relation to s 439A , the obligation to convene the second meeting of creditors is imposed on the administrator of a company under administration. The convening period is set out in s 439A(5)(b) , and is, in the circumstances of the present case, a period of 21 days commencing on 30 June 2006. The business is divided into three business units. The Company has some 600 employees. 6 The evidence shows that the administration is a large and complex one. I need not refer to all of the evidence. It is contained in an affidavit of one of the plaintiffs, Scott Darren Pascoe, made on 19 July 2006, and in the exhibit to that affidavit. 7 The plaintiffs are all experienced administrators. Mr Pascoe states, and I accept, that the plaintiffs need more time in which to complete their report and arrive at the opinion referred to in subs 439A(4) of the Act . They have formed the opinion that it is desirable that they have an opportunity to try to sell the Company's business as a going concern. There are other matters to which they must attend. Since our appointment, the Administrators have spent a considerable amount of time stabilising the business and dealing with the creditors, the employees and the Trade Unions to ensure that the business operations of the Company continue. We have also commenced the sale process, by inviting expressions of interest to purchase the business and appointing and liaising with an international consulting firm. The Administrators are currently uncertain whether they will be able to maintain the Company's business as a going concern. The Administrators have sought funding support from key stakeholders. All of these matters introduce a high level of uncertainty as to the likely outcome for creditors. In substance, that course would give rise to the cost of two meetings rather than one. 9 In relation to the fixing of the remuneration of the plaintiffs as administrators, s 449E(1) of the Act provides for the fixing of their remuneration by a resolution of creditors at a meeting convened under s 439A or s 445F , as the case may be. There is evidence as to the cost of convening a meeting of creditors. On the basis that the 90-day extension is granted, the administrators would be required to do a considerable amount of work without any possibility of their being paid until a meeting, possibly nearly 90 days hence. 10 Importantly, there is evidence that the committee of creditors supports the making of both orders sought. The committee represent 87 percent in value of the unsecured creditors and 75 percent in value of all creditors, secured and unsecured. There is also evidence that the secured creditor, GE Commercial Corporation (Australia) Pty Ltd, consents to the making of the orders. An order extending the convening period, without more, would leave s 439A(2) requiring that the meeting be held within the period of five business days following the expiry of the extending convening period, and no earlier: cf Re Daisytek Australia Pty Ltd (administrators appointed) (2003) 45 ACSR 446 at [10] --- [14]. An order should be made, or sought, under s 447A permitting the meeting to be held during the extended convening period or within the said period of five business days thereafter. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | voluntary administration application for extension of time for convening and holding of second meeting of creditors application for order permitting committee of creditors to fix remuneration of voluntary administrators proper plaintiffs large and complex administration held: the administrators proper plaintiffs in both respects discretion exercised to make both orders sought. corporations |
An order is sought setting aside the share issue. Reliance is placed on ss 232 , 233 and 1400 of the Corporations Act 2001 (Cth) (the CA). These reasons deal only with the respondents' motion to transfer the proceeding to the Victoria District Registry. The applicants contend that the first applicant (Mr Sartori) has at all material times held one A class ordinary share in PFL Properties and since 1 December 1992 has been the holder of 1249 B class ordinary shares. The second applicant (Mr Small) claims he held 1000 B class ordinary shares in PFL Properties. PFL Properties was registered in Victoria in 1979 originally under the name of M.A. MacKenzie Nominees Pty Ltd. The shareholders were the late Mr Walter Rutherford McCarter and the late Mr Barry Henry Ladd as well as the fifth respondent (Mr MacKenzie). The third respondents are the executors of the estate of the late Mr McCarter. He, at relevant times, was an A class shareholder in PFL Properties and until September 1995, a director of each of PFL Properties and the first respondent (PFL). The fourth respondents are the executors of the estate of the late Mr Ladd who was at relevant times an A class shareholder in PFL, a director of PFL until 25 August 2005 and a shareholder and director of PFL Properties. Mr MacKenzie, according to the applicants, was a B class shareholder and from 30 December 1992, a director of PFL and a shareholder and director of PFL Properties. The complaint of the applicants is that the late Messrs McCarter and Ladd, without giving the requisite notice under the Articles of PFL Properties and PFL, purported to issue to PFL Properties 30,804 B class shares in PFL. The applicants claim that the failure to give notice rendered the share issue invalid and further, because it was contrary to the interests of PFL as a whole it was also oppressive. Declaratory relief to that effect is sought. Filed in support of that motion are affidavits of Mr Ian David Wallis who is an accountant and resides in Mornington, Victoria. Mr Wallis was a partner in a firm of accountants (MCA), an accounting practice in Dandenong, Victoria. In 1987, MCA had acquired the accounting practice of Mr Clive Cunneen. PFL, now in liquidation, had previously been known as Perth Freightlines Proprietary Ltd. PFL Properties together with PFL were both clients of Mr Cunneen. They then became clients of MCA. Mr Wallis has been the accountant for PFL and PFL Properties since 1987. The parties have not suggested that the principles are contentious: There must be sound reason to direct that the proceeding be conducted or continued elsewhere. If the party commencing the proceeding chose the place capriciously the Court would be justified in giving no weight to the choice of place. The balance of convenience is important but its weight must vary from case to case. What needs to be ascertained is where the case can be conducted or continued most suitably bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court ( National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162). The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all factors ( National Mutual 19 FCR 155 at 162, Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 at [21] , Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 at [27] - [34] and [42]-[43]. Typically there is no factor that is determinative but rather it is necessary to weigh all the relevant factors that might connect the proceedings to one jurisdiction or the other ( Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 at [19] ). The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and the receipt of submissions is relevant. ( Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239). The question of which District Registry should conduct the proceedings does not raise matters of high principle. Essentially it is a matter of case management and proper recognition of the legitimate interests of each of the parties reflected in the balance of convenience as between them and the convenience of the Court and any economies and efficiencies which may attach to one choice or the other ( Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49). There may be flexibility --- one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry ( Hog's Breath at [10]). There is no burden of proof governing the exercise of the discretion in s 48 of the Act ( National Mutual 19 FCR 155 at 162). The existence of related proceedings which may be case managed jointly may be important ( Wyllie Group Pty Ltd [2000] FCA 1382 at [14] - [19] ). To these points I would add, perhaps an obvious point, that a judge to whom management of a case has been allocated will be reluctant to transfer that duty to another judge unless there is good reason to do so. Mr Wallis deposed to the fact that he had been informed by Mr MacKenzie, a director of each of the companies, that in 1978 Mr McCarter, Mr Ladd and Mr MacKenzie commenced operation of a transport business between Melbourne and Perth. That business originally operated as a partnership under the name of Perth Freightlines and was located in South Melbourne. While the transport business operated between Melbourne and Perth it did not have a Perth depot. PFL was subsequently incorporated in Victoria in 1981 and its original directors were Mr McCarter and Mr Ladd. At that stage the business moved to premises in West Footscray, Victoria. PFL Properties was incorporated in 1982 in order to purchase the premises from which PFL could operate. Mr MacKenzie has informed Mr Wallis that in about 1983 PFL Properties purchased land in North Williamstown, Victoria. PFL Properties then leased that property to PFL. PFL operated from that site until it relocated to Derrimut, Victoria in 2004. In about 1985, PFL Properties bought a warehouse in Perth which was also leased to PFL. PFL Properties purchased the warehouse next door which was also leased to PFL in 1999. Some additional land was subsequently purchased to expand the complex. PFL commenced operations between Melbourne and Sydney and Sydney and Perth in the mid-1990s. In 2000 PFL leased premises in Brisbane and began to operate along the East Coast and also between Brisbane and Perth. This history, while relevant as general background, is relied upon in part to support the undoubtedly correct submission that almost all the relevant events in this case took place in Victoria. In relation to the share issue, Mr Wallis says that the share register of PFL was kept at PFL's head office. Records of the company were maintained by Mr McCarter until his death. He says that Ms Dianne Cox, who was Mr Ladd's assistant for many years became the company secretary from 1996 until recently. She maintained the company records at the time of the impugned share issue. Mr Wallis says in late 1992 he had reason to review the share register of PFL. He cannot recall the reason for the review but he noticed that it was apparent on the review that it did not reflect his understanding of the shareholding of PFL. He said he had a discussion with Messrs Ladd and McCarter in late 1992 concerning discrepancies between the share register and the 'true position'. Messrs Ladd and McCarter agreed that the register was incorrect and should be corrected and said that they believed errors had occurred because they used to notify their previous accountant, Mr Cunneen of any changes to the shareholding by telephone. Mr Wallis explained that in those days it was only necessary to notify the Corporate Affairs Commission (as it then was) on an annual basis of any changes to the shareholding in a company. Mr Wallis has reviewed the minutes of a directors' meeting of Perth Freightlines Pty Ltd recording the minutes of a meeting held on 2 October 1992 at the office of PFL in North Williamstown. Those minutes record that Messrs Ladd and McCarter were in attendance. They do not record that Mr Wallis was present. He says however, that what is recorded in the minutes is consistent with his understanding of the discussion to which he has referred. In addition to outlining the circumstances in which the resolution occurred, Mr Wallis notes that the head office of PFL has always been located in Victoria as were Messrs Ladd and MacKenzie. PFL was always run from Victoria even though it eventually had depots in Perth, Sydney and Brisbane. He says the share registry for PFL was maintained in Victoria by Ms Cox who has the records for PFL. Ms Cox resides in Geelong. The accountants for PFL and PFL Properties reside in Victoria, Mr Wallis living in Mornington and Mr Cunneen living in Berwick and to the extent that Ms Christine Perkal formerly employed by Mr Wallis may have been involved with the issues in relation to the share register, she also resides in Victoria. The resolution issuing the shares to PFL was, of course, passed at the directors' meeting which was held in Victoria. The solicitor for PFL is Victorian as is Mr MacKenzie and the liquidator of PFL. The B class shareholders of PFL were sub-contractors retained by PFL as owner drivers. Most of those sub-contractors (including the applicants) reside in Perth. Mr Small, in addition to residing in Perth also has his own transport company which has a warehouse in Melbourne. Mr Wallis clarifies in a subsequent affidavit that he cannot recall whether or not he was actually at the meeting with Messrs Ladd and McCarter on 2 October 1992 which was the subject of the minutes to which he had previously referred. He does, however, depose to the fact that minutes accurately reflect what had been discussed at some meeting that he did attend with those directors. The applicants oppose the transfer from the Western Australia District Registry to the Victoria District Registry. Mr Sartori makes the point on affidavit that he and Mr Small both reside in Western Australia and may need to give evidence. While the respondents (the applicants' to the motion for transfer) focus on the fact that the applicants cannot be sure that they (or indeed any witnesses) will have to give evidence at all, they do so, as I understand it, not in any critical way. They point to the fact that the applicants make their case, if at all, on the basis of documentary evidence and argument. The respondents, in contrast, contend that the defence to the case which opposes any relief being granted may depend upon people giving evidence as to the reason why the share issue occurred. Mr Sartori indicates that six other shareholders 'might be required to give evidence or might in the future seek to participate in the proceedings'. All those persons live in Western Australia. At this stage, I could draw no inference that it is likely that those persons would be giving evidence in these proceedings or would be seeking to be joined in these proceedings. There is no indication of the basis for the framing of the relief that only sets aside part of the shares allotted under the resolution attacked in the proceedings. Mr Sartori does not seek to set aside the allotment of the shares in his favour as a result of the resolution that he now attacks. But this does not appear to bear significantly on the actual transfer motion. As to the first point, if the delay complaint is advanced in a way that requires the applicants to explain it, then this, almost certainly would require the applicants either personally, or through others, to go into evidence. The delay, then, in fact works against granting the transfer motion. The respondents contend the proceedings can best be conducted to meet the ends of justice by being determined in Victoria. All the connections with Victoria are reiterated in the written submissions of the respondents and also by Mr Abbott for the respondents in oral submissions. In particular, the central point is made that circumstances surrounding the resolution will be important. The respondents argue that the witnesses including Ms Cox, employee of PFL, Mr Wallis, Ms Perkal and the previous accountant, Mr Cunneen all reside in Victoria. To this the applicants respond and reiterate through Mr Hancy, counsel for the applicants that precisely what evidence each of these people could give is far from clear. Further, that each of them would indeed actually need to give evidence surrounding the resolution is also unclear. Nevertheless, it is accepted that it is likely that Mr Wallis would be required to give evidence. In the course of argument, reference was also made to the location of bank accounts for PFL in the Melbourne branches of the ANZ and the resolution making reference to inquiries by an ANZ bank officer about the state of the shareholdings in PFL and that Mr Small has business interests in Melbourne. It is contended that there is an overwhelming connection to Victoria and continuation of the proceedings in Western Australia 'will cause great expense and inconvenience to witnesses and to the parties'. Taking the first point, there are certainly a number of factors connecting the litigation to Victoria but at the moment I can only conceive of a realistic probability that one Victorian resident will need to give evidence. That circumstance may change but on the basis of the facts as they are currently known, that is my impression. As to the 'great expense and inconvenience to witnesses and to the parties' by proceedings being continued in Western Australia, once again it is unclear to me how this is so. There is no evidence to support the contention. Should that evidence emerge, it is not inconceivable that the trial could be conducted in Victoria with interlocutory steps conducted in Western Australia or some other combination of such possibilities, including the possibility of video evidence. The specific issues which have been denied by the respondents are the ownership of shares by Mr Sartori at the relevant times pleaded in the statement of claim. Ownership of the shares claimed by Mr Small are also not admitted. While it may be possible for these matters to be proven by public record, equally it may be necessary for the applicants to give evidence on those facts. It is simply unclear, given the denial and non-admissions at this stage. The specific break-up of the shareholdings in PFL is also denied by the respondents. Again, the respondents say that they will rely on production of the share register but it is certainly conceivable that the applicants may need to give evidence as to the circumstances under which they held the shares which they allege that they held. There is a denial as to any breach or any oppression but the applicants concede that is a matter of argument. On the present pleadings (putting aside the delay point), it is not certain that the applicants will have to give evidence in person but for the respondents, it seems only Mr Wallis could firmly be predicted to be a likely witness. Most of the other factors such as documents, place of incorporation and place of bank accounts in terms of commonsense and practicality are quite neutral. The applicants accept that it may ultimately be necessary to transfer the proceedings to the Victoria District Registry but at present contend that there is no sound reason to do so. The issues arising in the case are very confined. The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and receipt of submissions by video-link or otherwise weigh against a transfer at this stage. In my view, while it was entirely appropriate to bring this transfer motion at an early stage in the proceeding, it can by no means be said at this stage that it would be desirable to transfer the proceeding to the Victoria District Registry now, at a later time or at all. I do not intend to allow the transfer motion at this stage but, I do not preclude the motion being brought again at a later time when circumstances may differ. Although the motion will be dismissed, my view at this stage is that if such a motion were to be brought at all, it was proper to be brought at this time and I would be disinclined to make any costs order other than that the cost of the motion be in the proceeding. If any party wishes to argue to the contrary, submissions not exceeding two pages should be filed and served within 10 days, failing which the following orders will take effect: the motion to transfer the proceeding to the Victoria District Registry of the Court is dismissed. the cost of the motion be costs in the proceeding. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | transfer of proceeding whether proceeding should be transferred from western australia district registry to victoria district registry considerations include the interests of justice, efficiency and administration of the court purported share issue whether share issue invalid, oppressive or unfairly prejudicial whether articles of company complied with in issuing shares practice and procedure corporations |
The Australian Competition and Consumer Commission ('the ACCC'), being the applicant, and EDirect Pty Ltd ('EDirect'), the first respondent, and two of its directors, Vishal Gupta and Manan Chopra, the second and third respondents (together the 'respondents'), have agreed to settle this proceeding. To give effect to that settlement they have applied to the Court for certain final orders by consent. 2. For declarations under s 21 of the Federal Court of Australia Act 1976 (Cth) that the respondents have contravened, or been involved in contraventions of, ss 52 and 58 of Trade Practices Act 1974 (Cth) ('the Act'). b. For injunctions under s 80 of the Act to restrain the respondents from engaging in certain conduct in relation to future customers and from enforcing any early termination charges for the termination of mobile service plans of a specified list of their existing customers. c. Under s 86C of the Act requiring EDirect to, among other things, implement and maintain a Trade Practices compliance program. d. That the respondents pay the applicant's costs fixed in the sum of $50,000. In addition to these consent orders, the respondents have provided the ACCC with a Court enforceable undertaking pursuant to s 87B of the the Act. Pursuant to this undertaking, EDirect will, among other things, offer refunds to certain of its customers together with the opportunity to terminate their mobile service plans without charge or penalty. The statement of claim filed by the ACCC on 24 July 2007. This is a detailed document, extending over 36 pages, which sets out the particulars of EDirect's various alleged breaches of the Act. b. The defence which EDirect was given leave to file at the hearing on 10 December 2007. This is a very brief document in which EDirect admits all of the breaches alleged in the statement of claim. c. The affidavit of Gary Clements sworn 30 November 2007. This affidavit establishes the provenance of the voice recordings that are then dealt with in more detail in the affidavit of Ms Vaughan immediately below. d. The affidavit of Sharyn Maree Vaughan sworn 3 December 2007 with numerous annexures including a compact disc and the transcripts of the voice recordings obtained by Mr Clements from EDirect (see above). These voice recordings are of various telephone conversations between EDirect's telemarketers and potential customers which are relied upon to establish EDirect's various breaches of the Act. Mr Moon deposes to his discussions with a Mr Ed Knowles, the General Manager of the National Indigenous Radio Service (NIRS) to the effect that it is " absolutely appropriate' ' in his opinion to broadcast them in English notwithstanding that the consumers to whom these broadcasts are mainly directed are Aboriginal people living in remote communities for whom English is commonly a second language. g. The affidavit of Heidi Ann Snell sworn 10 December 2007, filed on behalf of ACCC, relating to the same issue. Ms Snell deposes to the fact that 42 of the customers affected by EDirect's misrepresentations about coverage live in remote Aboriginal communities --- 3 in Western Australia, 16 in Queensland and 23 in the Northern Territory. Ms Snell also deposes to discussions she has had with the Indigenous Consumer Action Network (ICAN), an organisation that deals with consumers in the Cape York Peninsula, to the effect that the community service radio broadcasts " would most likely be made in English ". I take that to mean 'most appropriately' be made in English. In relation to the 23 Northern Territory customers, Ms Snell deposes to discussions she has had with the Anti Discrimination Commission in the Northern Territory to the effect that there are four key Aboriginal languages spoken in the various communities where those customers live. However, Ms Snell's affidavit does not go so far as to say that it would be inappropriate for the community service radio broadcasts to be in English, or conversely, that it would be more appropriate for them to be in one or all of the four key Aboriginal languages mentioned. I will return to this issue later in these reasons. h. The amended form of the consent orders. A number of amendments were made to the consent orders, by the parties, as a result of matters that were raised during the hearing of this matter on 10 December 2007. For example, the disparity between the time periods during which EDirect, the company, on the one hand, and its directors, on the other, were to be restrained by the injunction orders. As originally proposed, EDirect was to be restrained for five years and the two directors were to be restrained for three years. The amended form of consent orders now proposes that the respondents be restrained for four years. A further set of amendments was made to the consent orders after certain concerns I had with the form of some of the orders were raised with the parties on 20 December 2007. The details of these changes are dealt with in some more detail in the section headed 'Submissions' below. In addition to the materials listed above, Counsel for the ACCC, Mr Cox, arranged at the hearing on the 5 th of December 2007 to play a part of the compact disc (Annexure SV --- 6 to Ms Vaughan's affidavit) of the voice recordings of the sales calls between the telemarketers on behalf of EDirect and two customers, one named "Jacko" and the other named "Kirsty". Both Mr Cox, for the ACCC, and Mr Ng, for Edirect and its directors, made written and oral submissions at the main hearing of this matter on 5 December 2007. The matter was also mentioned briefly on 10 December 2007 and 5 February 2008 to deal with the appropriate language for the community service radio broadcasts and my concerns about the form of some of the proposed consent orders, respectively. On 5 December 2007, in summary, Mr Cox submitted that the Court had jurisdiction to make the consent orders and it was appropriate that they be made. He submitted that the declarations were in the public interest and that they would, among other things; serve to mark the Court's disapproval of EDirect's conduct, to assist the ACCC to carry out its duties, to inform and warn the public of such conduct occurring; and to act as a deterrence against future breaches. As to the injunction orders, he submitted that they were precise in their terms, that there was a real nexus between EDirect's conduct and the orders sought and that they served to prevent a repetition of conduct that involved repeated breaches over a sustained period, with a reckless disregard for the provisions of the law. At the outset of his submissions, Mr Ng was at pains to make it clear that he did not wish to detract in any way from EDirect's admissions that it had breached the Act and had therefore consented to the orders. However, he submitted, among other things, that it was not clear that EDirect should have known that the 'no coverage' customers could not connect to a network and, that there was no intentional deception involved on EDirect's part. At the conclusion of the hearing, before reserving my decision, I raised some concerns I had about the community service radio broadcasts and, in particular, whether it was appropriate that they be in English. I have dealt with this issue later in these reasons. 7. During the course of preparing these reasons, I had occasion to consider the form of the consent orders more closely. In that process, I became concerned about seven specific aspects of them. As a consequence, on 20 December 2007, I arranged for the District Registrar to send a letter to the solicitors for the parties detailing those seven areas of concern. The parties were then invited to make further submissions in response to those concerns, either in writing, or orally at a resumed hearing of the matter. Ultimately I agreed to resume the hearing of the matter on 5 February 2008 so that they could make any oral submissions they wished to make. 8. In the meantime the parties lodged written submissions. In those written submissions they indicated that after considering the concerns I had raised, they had agreed to amend the consent orders to deal with five of them. That left two matters of concern upon which the parties made further written and oral submissions. Whether it was necessary to adduce evidence to demonstrate that the injunctions in Order 12 were necessary ie that future contraventions were likely? b. In Order 13, whether it was desirable to treat the "no coverage " customers and the customers that have coverage, but were affected by misrepresentations about the effect of their service plans, differently? The ACCC relied on s 80(4)(a) of the Trade Practices Act 1974 (Cth) and the decisions in ICI v Trade Practices Commission (1992) 38 FCR 248 at [256], Foster v ACCC [2006] FCAFC 21 at [30] and BMW Australia Ltd v ACCC [2005] FCAFC 167 at [36] to submit that the Court has a wide discretion to make the injunction orders in Order 12 once it is satisfied that contraventions of the Trade Practices Act have occurred, notwithstanding that the ACCC had not adduced direct evidence that future contraventions were likely. b. The ACCC submitted that Order 13 should not be amended because some customers with "no coverage " will probably not wish to terminate their service plans, therefore all customers should simply have an option to terminate. The ACCC assured me that it would ensure the Court's orders were well publicised and the customers wishing to terminate would be given every assistance. It would not be appropriate to automatically terminate the services of all the customers who do not have coverage, because a number of those customers may have since found a use for their mobile phone e.g. loaned the telephone to family members in an area with coverage. At the resumed hearing on 5 February 2008, Mr Cox for the ACCC made some further submissions upon the question whether direct evidence of the likelihood of future breaches was necessary before the Court could make the injunction orders. When Mr Chopra, the third respondent, was first contacted in November 2006 by the Northern Territory Commissioner of Consumer Affairs he said EDirect would not be telemarketing in the Northern Territory in the future - yet the evidence shows that telemarketers for EDirect contacted customers in the Northern Territory after that date. b. The likelihood of detecting future breaches in relation to telemarketing is slight, particularly in remote areas, so that when a breach is detected, as occurred in this case, the full force of the law should be brought to bear, to send a clear signal that such conduct will not be tolerated in the future. Notwithstanding Mr Ng's failure to object, I have some difficulty accepting the first of these submissions because my notes indicate that this information came from Mr Cox at the Bar table rather than by way of evidence from Mr Clements, or someone else. In fact Mr Clements' affidavit does not appear to mention this matter. Furthermore, it is difficult to ascertain which, if any, of the conversations between EDirect's telemarketers and various customers occurred after November 2006, because all of the records of telephone conversations annexed to Ms Vaughan's affidavit are either dated prior to November 2006, or are marked " Unknown Dates ". I will deal with the second submission and the written submissions of both parties later in these reasons when I come to consider whether it is appropriate to make orders in the terms proposed. Since at least February 2006 EDirect, trading under the name of VIPtel Mobile (VIPtel) has carried on a business in Australia supplying mobile telecommunications services and related equipment to consumers. For that purpose VIPtel entered into an agreement with M2 Telecommunications Pty Ltd to use the Optus general service mobile (GSM) network. The coverage offered by the Optus GSM network at the relevant time is shown on the maps which comprise Appendix A to the statement of claim. Those maps show that the Optus GSM network had an extensive coverage in the more heavily populated areas of Australia but that its coverage was quite limited in the more remote areas of the country. Thus, in Western Australia, the Northern Territory, Western Queensland, Western New South Wales and Central and Northern South Australia, that coverage was limited to the areas immediately surrounding the main cities and towns. This meant, for example, that in the Northern Territory and Western Australia that coverage was limited to a very small proportion of the total land mass and it did not extend to the vast majority of the remote Aboriginal townships or communities in that Territory, and State, respectively. 14. To sell its mobile phones and the related service plans, EDirect used a direct telemarketing service which operated from call centres located in India. From there the telemarketers telephoned potential customers throughout Australia. Those calls usually began with the telemarketers congratulating the person answering the phone and explaining that "....within a couple of days you are going to be receiving a brand new LG flip-top, colour screen, camera, mobile phone......" . The caller then went on to obtain the necessary personal details so that by the end of the call the customer had often entered into a contract for a mobile phone service plan which, among other things, involved a sum per month being deducted from that customer's bank account and paid to EDirect. In the ACCC's written submissions, Counsel aptly described this form of telemarketing in these terms: " Vulnerable consumers have an increased risk of being victims of unscrupulous conduct when it occurs over the telephone. Telemarketing is frequently used in the telecommunications industry to contract new customers by way of voice contracts. In this case, that unscrupulous element particularly affected those customers who lived in the areas of Australia mentioned above, which areas were not covered by the Optus GSM network, because those customers could not use the " brand new " mobile phones they received from EDirect to make telephone calls or to access any of the other services that might otherwise be available by mobile phone. For these customers, the " brand new" mobile phones, and the related service plans they entered into, were as good as useless. 16. These proceedings are mainly, although not totally, concerned with various representations that were expressly or implicitly made during EDirect's telemarketing campaign. The coverage representations. b. The fixed monthly payment representations. c. The included services representations. d. The future savings representations. e. The local call pricing representations. f. The any time termination representations. Between February 2006 and March 2007, the coverage representations were made to at least 152 consumers who entered into service plan contracts with EDirect. In addition to these coverage representations, between November 2006 and March 2007 EDirect made other representations about coverage by publishing on the VIPtel website various statements and a coverage map (Appendix C to the Statement of Claim). These publications together amounted to representations to the public at large that EDirect's mobile telephone services were available and accessible Australia-wide. Apart from these two kinds of representations relating to coverage, EDirect, through its telemarketers, variously made some or all of the other five categories of representations to 14 customers (at least) who have been identified in the Statement of Claim by their Christian names and customer ID number. In its defence, EDirect has admitted that it made each of the six categories of representations (above) and that it made the representations about coverage that were published on the VIPtel website. EDirect has also admitted that all of these representations were contrary to the true position. For example, contrary to the representations its telemarketers made to the customer named 'Jacko', who lives in a remote Aboriginal community, that he could use the brand new mobile telephone he was to receive to make telephone calls and access various other services, in fact he could not do anything of the sort because the Optus GSM network used by EDirect did not cover his home community, nor, indeed, most of the other regional or remote communities in the Northern Territory. EDirect has admitted in its defence that it engaged in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) by making these representations contrary to the true position. Further, by accepting payment for mobile service plans for mobile telecommunication services viz a connection to a network to make telephone calls or access other services, when there were reasonable grounds of which EDirect was aware, or ought reasonably have been aware, for believing that it could not provide those services, because the Optus GSM network did not cover those areas, EDirect has admitted that it engaged in conduct that was in contravention of s 58(b) of the Act. In deciding whether to make these consent orders I must consider the content and scope of the Court's powers to make orders by consent for declarations under s 21 of the Federal Court Act 1976 (Cth), for injunctions under s 80 of the Trade Practices Act 1974 (Cth) and for compliance programs under s 86C of the Trade Practices Act 1974 (Cth). I will now turn to consider each in that order. 21. On the first, there is little doubt that the Court has a wide discretionary power to make declarations of right under s 21 of the Federal Court of Australia Act 1976 (Cth): see Forster v Jododex Australia Pty Ltd [1972] HCA 61 ; (1972) 127 CLR 421 at 437-438 and Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564 at 581-582. When the Court is asked to make declarations of right by consent it is required to scrutinise the orders sought to satisfy itself that it has the power to make those orders and that they are appropriate: see ACCC v Real Estate Institute Industry of Western Australia Inc [1999] FCA 18 ; (1999) 161 ALR 79 at [1] and [17] and ACCC v Virgin Mobile Australia Pty Ltd (No. 2) [2002] FCA 1548 at [1] . This means that the Court has to ensure that the declaration sought is directed to determining a legal controversy and not to answering abstract or hypothetical questions. Further the Court is required to ensure that the party seeking the declaration has a real interest in seeking that relief. And, finally, the Court has to ensure that there are sufficient consequences flowing from the making of the declaration that it is appropriate for it to exercise its discretion to do so. This later aspect may include the public interest in having such a declaration made to indicate the Court's disapproval of particular conduct: see ACCC v Info4PC.com Pty Ltd ( deregistered ) [2006] FCA 1534 at [8] , ACCC v Goldy Motors Pty Ltd [2000] FCA 1885 at [30] and [34], Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No.2) (1993) 41 FCR 89 at 99 - 100 and ACCC v Midland Brick Co Pty Ltd [2004] FCA 693 ; (2004) 207 ALR 392 at [21] . 22. Nonetheless, the Court should not impede settlements by refusing to give effect to the terms of settlements made by the parties where the proposed orders are within the Court's jurisdiction and appropriate. In other words, the Court should be slow to substitute its own view of the orders or undertakings for those which have been agreed by the parties as part of the terms of settlement: see ACCC Real Estate Institute Western Australia (above) at [22], ACCC v Virgin Mobile Australia Pty Ltd (No. 2) (above) at [2] and ACCC v Info4PC.com ( deregistered ) (above) at [18]. 23. I interpolate that in my view these considerations do not prevent a court from asking the parties to reconsider certain aspects of a lengthy and complex set of proposed consent orders, as I did in this case. Whether this approach is warranted will obviously depend on the circumstances of each case. If the proposed consent orders are fundamentally defective the court will likely reject them in total and leave the parties to start again. However, if the proposed consent orders are generally appropriate, but they are long and complex and the court has concern about an incidental aspect of them, it would usually be more expedient and in the public interest to ask the parties to reconsider that aspect, rather than rejecting them in total. 24. Finally it should be noted that there is a long held view that a declaration, being a judicial act, should only be made on evidence and not simply on admissions or deemed admissions: see Bank of Kuwait and the Middle East v Ship MV Mawashi Al Gasseem (No.2) (2007 ) FCA 815 at [10] and the cases referred to therein. Notwithstanding this apparent reservation, Mansfield J proceeded in that case to act on deemed admissions after referring to and considering the observations of Kiefel J in ACCC v Dataline.Net.Au Pty Ltd [2006] FCA 1427 , (2006) 236 ALR 665. 25. In this case I believe I have ample reliable evidentiary material before me upon which I can make the declarations. Not only do I have a very detailed statement of claim setting out the facts (plus some evidentiary material) at quite some length and EDirect's defence which admits all these facts, but I also have a large quantity of evidence including the compact disc and transcripts of the voice recordings of the telemarketing calls during which EDirect's misleading and deceptive conduct occurred. Finally, I believe it is significant that both parties were represented by counsel at the time that all this material was prepared and during the hearing of the matter when it was placed before me by consent: see ACCC v Francis [2004] FCA 487. 26. Based on this material, some of which I have set out in more detail above, I am satisfied that EDirect made each of the representations to the various consumers identified in the statement of claim. I am also satisfied that each of the representations was misleading or deceptive in the sense that it was inconsistent with the truth: see World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 201. This conclusion applies to each of the categories of representations set out above. Whilst I do not propose to review all of the material relating to all of these misrepresentations, it is perhaps appropriate to observe that the most egregious aspect of EDirect's conduct was in its selling its mobile phones and service plans to people living in remote areas of Australia, including remote Aboriginal communities, when the slightest enquiry on its behalf would have disclosed that those mobile phones could not connect to the Optus GSM network because that network did not provide coverage to those remote areas of Australia. Similar observations could be made about EDirect's conduct in publishing statements and maps on the VIPtel website which clearly conveyed the impression that Edirect was able to provide mobile phone coverage to almost all of the Australian land mass. Again, the slightest enquiry would have revealed to Edirect that this representation was quite untrue. 27. This egregious conduct was compounded when EDirect fobbed off complaints from some of its customers living in these remote areas that they could not connect to the Optus GSM network on their new mobile phones provided by EDirect. With one of those customers, after having made two earlier complaints by phone that his new mobile phone was showing " no service" and being told it would be alright in 24 hours, the EDirect person handling his third phone complaint gave him the somewhat disingenuous and fatuous advice that: " ...there might be possibility that you might be getting a coverage problem at your home, because there is partial coverage at your place. So you can just go down the street, out of your house, in the street, or maybe in the roof top (my emphasis). You would be getting the network. You would be getting a bar for your mobile phone...". The ACCC has pleaded that EDirect has breached ss 52 and 58 of the Trade Practices Act by engaging in this conduct. To establish a breach of s 52 of the Trade Practices Act it is not necessary for the ACCC to show that EDirect knew that the statements it was making were untrue and that it intended to mislead or deceive : see Geocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268 paragraph [268], referring to Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 10 CLR 216 at 228 and to Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 197. The situation is different under s 58(a) of the Trade Practices Act where intention is a necessary element: see Barton v Westpac Banking Corporation (1983) 76 FLR 101; (1983) 150 ALR 397 at 409 and Swann v Downes (1978) 34 FLR 36 at [46]. However, in this case, the ACCC has specifically relied upon s 58(b) of the Trade Practices Act which does not involve intention, but rather objective standards of reasonableness: see ACCC v Commercial and General Publications Pty Ltd [2002] FCA 900 at [213] . 29. In this case, given that it was selling its mobile phone services throughout Australia, including vast remote areas of the country, it was reasonable to expect that EDirect ought to have been aware that the mobile phone services it was supplying could not provide the most fundamental thing required of the mobile phone supplied with the mobile service plan ie an ability to connect to an available network, because the Optus GSM network did not cover the whole of the Australian land mass. The fact that consumers in some parts of Australia could connect to the Optus GSM network using EDirect's mobile phones obviously does not excuse the fact that some customers in remote areas could not. 30. In summary, based upon the whole of the material available to me I am well satisfied that this court can and should make the consent declarations. In particular, I believe that there is a real controversy between the parties, that these proceedings do not involve an abstract or hypothetical situation and that it is in the public interest that the declarations be made to mark this Court's disapproval of EDirect's conduct. Finally, as I have already observed above, I believe there is a firm factual foundation for the declarations that are proposed. Similar principles apply to the grant of consent injunctions under s 80 of the Trade Practices Act as apply to consent declarations under s 21 of the Federal Court of Australia Act , viz the Court must be satisfied that the consent orders are within power and appropriate : see ACCC v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79, ACCC v Target Australia Pty Ltd [2001] FCA 1326 , and ACCC v Econovite Pty Ltd [2003] FCA 964. The circumstances in which consent injunctions have been refused in the past are set out in ACCC v Econovite Pty Ltd (above) at [12], viz orders that are not within power, orders that have no relationship to the contravention, injunctive orders that are too imprecise or require court supervision and injunctions and declarations the terms of which overlap and give rise to confusion of obligations: see also ACCC v Real Estate Institute of Western Australia (above) at [18]-[26]. Following the amendment of these consent orders during the course of the hearings in this matter (as detailed above), in my view, none of these circumstances arises in this case. 32. In relation to the question whether it is necessary to have evidence indicating that there are likely to be future breaches before the consent injunctions are ordered, I have considered the terms of s 80(4)(a) of the Act and three of the authorities that Mr Cox relied upon: see paragraph 10(a) above. Having done so, I am well satisfied that I have a broad discretion to make the orders sought in the circumstances of this matter. In addition to the relevant matters I have already outlined in the reasons for my decision to grant the declaration orders (above), the other circumstances I have in mind in exercising that discretion include the fact, as Mr Cox has pointed out, that the likelihood of detection of these sorts of breaches is slight, particularly in remote areas of Australia, and for that reason the full force of the law should be brought to bear in circumstances where, as is the case here, the authorities have managed to detect such breaches. 33. On this point, at the hearing on 5 February 2008 I enquired of counsel for the parties whether there was any regulatory regime in place that required telemarketing calls of the kind involved in this case to be recorded, especially where they involve oral contracts. It seems likely to me that future detection would be increased if there were in place some such regulatory regime. To my surprise, my associate was subsequently informed by the solicitors for the ACCC that their research indicated that the only such regulatory measure in force in any jurisdiction in Australia was s 67D of the Fair Trading Act 1999 of Victoria. That section requires the explicit informed consent of a person to a telemarketing agreement and also requires that explicit informed consent to be recorded either in writing, or by means of a recording device. 34. Furthermore, I have been informed that the issue is not currently dealt with in any industry self regulatory code of practice under Pt 6 of the Telecommunications Act 1997 (Cth). However, a new industry self regulatory code called the Telecommunications Consumer Protections: C 628:2007 is soon to come into effect. Whilst this new code does not require a voice recording to be made, it does require a record of a customer's consent to be provided " where available "; and an associated guideline document suggests that the record " can include..... a voice recording ". All of this reinforces Mr Cox's submission that the likelihood of future detection of the sorts of breaches committed by EDirect in this case, is slight, particularly in remote areas of Australia. 35. By its terms, Order 13 does not discriminate between the " no coverage " customers and those customers with coverage who were affected by the other categories of misrepresentation --- all are to be offered the option of terminating their service plans at no extra charge. My concern with this universal approach was that offering the "no coverage " customers the option to terminate may create confusion in their minds because the vast majority of them really have no option but to terminate where their mobile phones cannot connect to a network. However, as counsel for the parties have pointed out, if all the affected customers are offered the option to terminate, the " no coverage " customers will suffer no disadvantage. Furthermore the ACCC's counsel has given an assurance that the ACCC will use its best endeavours to ensure that the terms of the Court's orders are well publicised and that the affected customers who wish to terminate are given every assistance to do so. In these circumstances I am prepared to make Order 13 in the terms agreed between the parties. The terms of the community service radio broadcasts are before me. In my view they have been drafted and expressed in relatively clear terms The purpose of these broadcasts is to correct the misrepresentations made by EDirect; they are not intended to punish EDirect: see ACCC v Real Estate Institute of Western Australia Inc at [1999] FCA 1387 ; (1999) 95 FCR 114 at 133. During the course of the hearings in this matter an issue arose as to whether the broadcasts would be effective if they were spoken in English, rather than the relevant Aboriginal language of the Aboriginal community involved. The consent orders propose that all these community service broadcasts should be spoken in English. The evidence in the affidavits of Mr Moon and Ms Snell discloses that for the community service broadcasts to be broadcast in Queensland, the most appropriate language is English. However, for the community service broadcasts to be broadcast in the Northern Territory, whilst one of the four key Aboriginal languages may be desirable, English is not an inappropriate choice. In the absence of any evidence that it is inappropriate to broadcast these community service broadcasts in English in the Northern Territory, and with some reservations, I will make this order in the terms sought. 37. The consent orders also propose that EDirect enter into a compliance program pursuant to s 86C of the Trade Practices Act 1974 (Cth). For such an order to be made there needs to be a connection or relationship between the breaches of the Act and the proposed compliance program: see ACCC v Z-Tek Computer Pty Ltd (1997) 148 ALR 339. In this case the compliance program is directed to ensuring that EDirect and its telemarketers comply with the guidelines for telemarketing prepared by the ACCC. In my view this provides a sufficient connection or relationship to make the orders sought. For all these reasons it is my view that the proposed consent orders are within jurisdiction and it is appropriate that they should be made. I will therefore make orders in the terms of the final amended form of consent orders. | misleading and deceptive conduct consent declarations, injunctions and compliance programs scope of court's power trade practices act 1974 (cth) ss 80 and 86c , federal court of australia act 1976 (cth) s 21 trade practices |
Felix also seeks an order pursuant to s 411(12) of the Act exempting it from compliance with s 411(11) of the Act which requires a copy of every order of the Court made for the purposes of s 411(4)(b) to be annexed to every copy of Felix's Constitution issued after the making of an order under that section. On 28 September 2009, the Court ordered that a meeting of shareholders be convened for the purpose of considering a proposed scheme of arrangement. Directions were also given for the conduct of that meeting and the Court approved under s 411(1) of the Act the explanatory statement to be sent to members pursuant to s 412(1) of the Act: Re Felix Resources Limited [2009] FCA 1182. On 11 November 2009, the Court made further orders approving a supplementary explanatory memorandum to be sent to shareholders and gave directions for dispatching the memorandum to members: Re Felix Resources Limited (No. 2) [2009] FCA 1337. The meeting of members was held on 8 December 2009. Mr Craig Russell Smith, the Company Secretary of Felix, swore a third affidavit in the proceeding on 9 December 2009 in which he deposes to the outcome of the meeting. Approximately 99.81% of shares by value were cast. The majority in number of members present and voting in favour of the scheme was 92.61%. In his affidavit sworn 25 September 2009, Mr Smith addresses a number of issues in relation to the proposed scheme and annexes the relevant documents. Some of the events described in that affidavit are addressed in further affidavits and in particular Mr Smith's third affidavit sworn on 9 December 2009 and his further affidavit sworn today. The background matters are these. Felix is a company engaged in the development and operation of a range of coal projects predominantly located on the east coast of Australia. Felix has a portfolio of four operating coal mines, two development projects and four exploration projects located in the States of New South Wales, Queensland and South Australia. Interests are held in operating coal mines described as Yarrabee, Ashton and Minerva. Felix has an interest in a development project at Moolarben and interests in other exploration assets. Felix is a public company limited by shares. The shares are listed on the Australian Securities Exchange (ASX). At the date of the application for orders convening a meeting of members, Felix had 196,455,038 ordinary shares on issue. In addition, 170,000 rights to options for the issue of shares in Felix were outstanding. On 26 August 2009, the Board of Felix resolved, subject to the receipt of a report as to certain matters from an independent expert, Mr Robin Polson, a Director of Deloitte Corporate Finance Pty Ltd ("Deloitte"), that all outstanding options be issued five business days before dates relevant to the scheme of arrangement or on or before 30 September 2009 whichever was the earlier. Mr Polson provided an independent report addressing the relevant matters on 30 September 2009 and share option certificates were issued. Since 30 September 2009, a total of 196,625,038 shares in Felix have been on issue and no options or options rights remain on issue. In summary, the main features of the scheme of arrangement as proposed were these. All issued shares in Felix held by "Scheme Participants" (as that term is defined), would be transferred to Austar Coal Mine Pty Ltd ("Austar") which is a wholly owned subsidiary of Yanzhou Coal Mining Company Ltd ("Yanzhou"). In consideration of the transfer of Felix shares by each scheme participant to Yanzhou, each participant would receive a cash payment of $16.95 from Austar for each Felix share held. On 13 August 2009, a "Scheme Implementation Agreement" ("Implementation Agreement") was entered into between Felix and Yanzhou which provides an agreed framework for the implementation of the proposal to enter into a scheme of arrangement. The Implementation Agreement sets out the terms and conditions upon which a proposal would be put to the members of Felix. Pursuant to cl 4.3 of the Implementation Agreement, each scheme participant is to also receive a dividend totalling $0.50 for each Felix share. On 25 September 2009, when Mr Smith swore his affidavit, the dividend had not been declared although Mr Smith thought it would take the form of a special dividend. As a result of the scheme, Felix would become a wholly owned subsidiary of Yanzhou. In addition to these cash payments, scheme participants who purchased their shares prior to 9 October 2009 and held their shares on 15 October 2009 would receive from Felix a fully franked $0.50 dividend which had been declared on 13 August 2009 and was payable on 30 October 2009; and an in specie distribution of shares in South Australian Coal Limited ("SAC") in which the exploration assets were valued at $0.05 for each Felix share. SAC, at the date of Mr Smith's affidavit, was a subsidiary of Felix and owned assets in the Phillipson Basin in South Australia. Yanzhou was not proposing to acquire an interest in those assets. The de-merger of SAC from Felix would also involve SAC retaining $10m in cash (or the equivalent of $0.05 per Felix share) with the result that the imputed value of SAC constituted approximately $0.10 for each Felix share. SAC was to be converted from a proprietary company to a public company. Neither the cash dividend to be paid on 30 October 2009 nor the in specie distribution of shares were dependent on approval of the scheme of arrangement. On 10 November 2009, the Felix Board declared an additional fully franked $0.50 dividend for each Felix share purchased on the ASX before 19 November 2009 and held at 7.00pm Sydney time on 25 November 2009 which was to be paid on 9 December 2009. It became apparent to Felix that it would not have sufficient surplus cash resources to pay the full amount of the second dividend to Felix shareholders while at the same time complying with the terms of new financing arrangements with the Commonwealth Bank of Australia and other lenders. Nevertheless, the Felix directors elected to pay all of the second dividend on 9 December 2009 and in order to do so, Felix proposed to borrow the full amount needed to pay the second dividend from three major Felix shareholders supported by a guarantee of repayment of the amount of the loans from Yanzhou and Austar, if the scheme proceeded to acceptance, approval and implementation. As a result, Felix sought and obtained an order for the dispatch to members of a supplementary explanatory memorandum or supplementary scheme booklet explaining the content of the circumstances surrounding the payment of the second dividend and the financing of it. That was the order made by the Court on 11 November 2009. In order to enable members attending the meeting on 8 December 2009 to reach an informed assessment of the merits of the proposal, Felix prepared a scheme booklet for distribution to members. The scheme booklet attaches the explanatory memorandum; independent expert's report; Scheme Implementation Agreement; scheme of arrangement; deed poll and notice of scheme meeting. The scheme booklet incorporates an overview document, an explanation of the scheme, a letter from the chairman, a schedule of frequently asked questions, the relevant answers and further information and other related matters. The information contained in the scheme booklet was compiled, assessed and verified by a due diligence committee established by Felix. Material contained in section 6 of the booklet was provided by Yanzhou and section 8 comprises the independent expert's report prepared by Mr Polson, a Director of Deloitte. In his report, Mr Polson outlines the elements of the proposed scheme of arrangement and notes that on completion of the proposed scheme, holders of Felix shares will have received (assuming they are Felix shareholders at all relevant times for the purposes of the scheme including a date described as the "Dividend Record Date" and "SAC Record Date", namely, 15 October 2009; and the "Scheme Record Date", being the fifth business day following the date on which the proposed scheme becomes effective), for every Felix share a cash payment of $16.95; a dividend payment of $1.00 (having regard to the two $0.50 dividend distributions); and an in specie distribution of shares in SAC on 30 October 2009. Mr Polson noted that the directors of Felix had requested Deloitte to provide an independent expert's report advising whether, in the opinion of the expert, the proposed scheme of arrangement "is in the best interests of shareholders". Mr Polson prepared a lengthy report and a second, concise report for the consideration of members. The principal report was prepared in a manner consistent with Part 3 of Schedule 8 of the Corporations Regulations 2001 (Cth) expressly to assist shareholders in their consideration of the scheme. Mr Polson noted that s 640 of the Act requires an independent expert's report in connection with a takeover offer to state whether, in the expert's opinion, the takeover offer is fair and reasonable. Mr Polson noted, as the basis of his report, that where the scheme of arrangement has the same effect as a takeover, the form of analysis used by the expert should be substantially the same as for a takeover bid; however, the opinion reached by the expert should answer the question of whether the proposed scheme is "in the best interests of the members of the company". Mr Polson notes that if an expert were to conclude that a proposal was "fair and reasonable" if it was in the form of a takeover bid, the expert will also be able to conclude that the proposed scheme is in the best interests of the members of the company. Mr Polson notes that under ASIC Regulatory Guide 111, a "control transaction", such as the proposed scheme of arrangement, is fair when the value of the consideration is equal to or greater than the value of the shares subject to the proposed scheme, and such a comparison must be made assuming 100% ownership of the target company. Mr Polson assessed whether the proposed scheme is in the best interests of shareholders by adopting a test of whether the scheme is either fair and reasonable, or, not fair but reasonable, or, neither fair nor reasonable, in accordance with ASIC Regulatory Guide 111. Mr Polson concluded that an offer ought to be regarded as fair when the value of the consideration is equal to or greater than the value of the shares subject to the proposed scheme. Mr Polson estimated the fair market value of a Felix share, using the sum of the parts methodology, to be in the range of AUD16.70 to AUD18.70. Mr Polson assessed the total proceeds payable to a scheme participant under the scheme (including the scheme consideration; the first dividend; the second dividend; and the SAC dividend) at AUD18.05 per Felix share. Mr Polson noted that the "total proceeds" at AUD18.05 is within the range of the estimate of fair market value of a Felix share. Mr Polson applied the ASIC Regulatory Guide (111.10) which provides that "an offer is fair if the value of the offer price or consideration is equal to or greater than the value of securities the subject of the offer", and concluded that since the value of the total proceeds fell within the valuation range of a Felix share, the offer was "fair". Thus, Mr Polson concluded that "the Proposed Scheme is fair". Mr Polson applied the ASIC Guide which provides that an offer is "reasonable" if it is fair and concluded that since the offer of the proposed scheme proposed a fair outcome for a shareholder, the proposed scheme was "reasonable". Mr Polson then identifies the factors which have led him to that conclusion. Mr Polson attaches further copies of his concise report ("RSP-4") and his detailed report ("RSP-5") to his affidavit sworn 28 September 2009 which takes account of particular questions raised by ASIC. Those reports are described as draft reports by Mr Polson. However, the scheme booklet sent to shareholders on 30 September 2009 contained a final version of the detailed report in the same terms as the draft. Mr Polson confirmed that the final reports dispatched to shareholders and marked as exhibits "RSP-6" and "RSP-7" to his further affidavit sworn 8 December 2009 were in the same terms as exhibits "RSP-4" and "RSP-5" to his affidavit of 28 September 2009. For present purposes, it is sufficient to observe that the expert's report is comprehensive. The methodology is set out clearly and the document is able to be read and understood by a fair-minded objective observer or reader, assessing the document for the purpose of seeking to determine whether the proposed scheme is fair and reasonable and whether acceptance of the proposal is in the best interests of the reader in his or her capacity as a shareholder in Felix. By cl 3.1 of the Implementation Agreement, the scheme of arrangement is not intended to become effective unless each of the conditions precedent recited at cl 3.1(a) to (s) are satisfied. In addition, Yanzhou is required by the Implementation Agreement to execute a deed poll which provides that it will take all necessary steps to pay the consideration in accordance with the terms of the scheme. On 28 September 2009, Yanzhou and Austar executed a deed poll in respect of the scheme. Affidavits have been filed on behalf of Felix sworn by Lai Cunliang, a Director of Austar and Yancoal Australia Pty Ltd. Lai Cunliang says that Austar is an indirectly wholly owned subsidiary of Yanzhou and a directly wholly owned subsidiary of Yancoal Australia Pty Ltd. Xiaofei Chen, a solicitor employed by the solicitors for Yanzhou, also filed an affidavit in support of the application. Those affidavits establish that Yanzhou has entered into an Acquisition Facility Agreement with lenders (Bank of China Limited, China Development Bank Corporation and China Construction Bank Corporation) in an amount of US$2.9 billion for the provision of finance to facilitate the implementation and completion of the scheme of arrangement. Felix has also filed an affidavit sworn by Mr Thomas Boyd, a solicitor in the employ of the solicitors for Felix. Mr Boyd exhibits to his affidavit sworn 10 December 2009, certificates executed on behalf of Yanzhou confirming that each of the conditions precedent to the scheme as set out in cl 3.1 of the Implementation Agreement and cl 3.1 of the scheme of arrangement has been either satisfied or waived. In addition, Mr Boyd exhibits to his affidavit a letter from ASIC to the solicitors for Felix dated 9 December 2009 in which ASIC says that for the purposes of s 411(17)(b) of the Act, ASIC has no objection to the scheme of arrangement, on the basis that ASIC is satisfied that the scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act. Mr Smith in his affidavit sworn 9 December 2009 annexes as "CRS-18", a true copy of the scheme booklet that was sent to Felix shareholders. The scheme booklet was lodged with ASIC on 30 September 2009. Mr Smith says that the supplementary scheme booklet dated 11 November 2009 that was provided to Felix shareholders was in the same form as the document attached to Mr O'Rourke's affidavit as exhibit "VJO-5" which was the subject of the Court's order on 11 November 2009. Mr Smith at paras 12, 13 and 14 of his affidavit of 9 December 2009 identifies the other methods by which the scheme booklet and supplementary scheme booklet were available for examination by members. Each document was made available for inspection on Felix's website and at its registered office during normal business hours. So too was the detailed independent expert's report marked as exhibit "RSP-7" to Mr Polson's affidavit of 8 December 2009. In order to encourage members to attend the meeting, Felix made arrangements for advisers, Wilson HTM, to dispatch a "postcard" to all Felix shareholders as at the close of business on 25 November 2009 reminding shareholders to vote in relation to the scheme proposal. Affidavits verifying matters in relation to the vote have been filed, sworn by employees of Computershare (Peter Jones, Bonnie Inall, Chrysta Hudson and Calliopi Lorena), an Australian shareholder registry service provider. I have considered all of the material filed in support of the application. I am satisfied that the scheme of arrangement ought to be approved by the Court. The jurisdiction conferred by s 411 of the Act involves the exercise of the supervisory jurisdiction of the Court. The role of the Court is to determine whether in the face of all the material, there is any basis for apprehension that the members were oppressed in relation to the exercise of their vote; and whether members were sufficiently enabled by the material put before them, to be capable of reaching an informed decision about whether acceptance of the proposal was in their best interests. Fundamentally, the question of whether the proposal ought to be accepted is a matter for the meeting. It is not for the Court to substitute its own view of the merits of the vote, for that of the meeting. If, of course, the meeting reaches a conclusion which seems inconsistent with an objective assessment of the merits of the proposal based on the material put before the meeting, the Court will look closely at the outcome and seek to be satisfied about any matter that might seem to the Court counter-intuitive. Even so, the will of the meeting is paramount subject to the supervision of the Court. If the material clearly explains the proposal and it is capable of acceptance by individuals exercising their best judgment of what is in their own commercial interests or to their own commercial advantage, the Court ought not to withhold approval of the scheme. In the case of a meeting of a single class of members, the Court would need to be satisfied that the vote and thus the will of the meeting had miscarried before withholding approval: Re Amcor Ltd (2000) 34 ACSR 199 at [33]; Re Sonodyne International Ltd (1994) 15 ACSR 494 at 499; Re Hudson Conway Ltd (2000) 33 ACSR 657; Re Coles Group Ltd (No 2) (2007) 65 ACSR 494; Re NRMA Ltd; Re NRMA Insurance Ltd (2000) 33 ACSR 595. In this case, the vote is overwhelmingly in favour of the proposal. The proposal is a cash offer and it is supported by an expert's report which describes the proposition as fair and reasonable. In addition, the application is not opposed by ASIC or any other interested person. Section 411(17)(a) of the Act provides that the Court must not approve a scheme of arrangement unless it is satisfied that the scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act which deals with takeovers. Mr Smith has said in his affidavit sworn 25 September 2009 that the proposed scheme has been recommended by the Board of Felix because the Board has unanimously expressed the view that the scheme is in the best interests of the company for the reasons set out in section 3 of the scheme booklet. There is no evidence nor any inference open on any evidence that the proponents of the scheme have embarked upon a course for the purpose of enabling any particular person to avoid the operation of any of the provisions of Chapter 6 of the Act and thus I am satisfied of the relevant matters for the purposes of s 411(17)(a). In addition, Felix has produced to the Court, for the purposes of s 411(17)(b), a statement in writing by ASIC that ASIC has no objection to the scheme of arrangement. The tendering of a statement that ASIC has no objection to the approval of a scheme of arrangement is given weight in the sense that the Court will have regard to the views of a regulatory body experienced and practised in the discipline the subject of its area of regulatory engagement. However, the statement is simply weighed in the balance with the relevant degree of emphasis and no more. Circumstances might arise where inferences might be open, and the statement of position by ASIC might assist the Court in determining whether inferences about relevant matters ought to be drawn. That however is not this case. It should be noted that all directors of Felix support the proposal. It should also be noted that the proposal will have no impact on creditors. Felix will continue to own the assets deployed in its undertaking. The scheme will simply change the ownership of the shares in Felix. The Implementation Agreement contains a number of commercial terms which impact upon the scheme. Yanzhou must cause Austar to deposit the scheme consideration in cleared funds into an account operated by Felix as trustee for the transferring shareholders. The Implementation Agreement provides that Felix must pay Yanzhou a $33.3m "break fee" in certain circumstances and a similar fee is payable to Felix should Yanzhou breach certain provisions of the agreement. The "break fee" arrangements are not oppressive. They are commonplace as disengagement fees. There is no provision for the payment of a fee should the members vote the scheme down or the Court not approve the scheme. There is also a provision by which Felix promises not to solicit any competing proposal and not to enter into negotiations that might lead to a competing proposal unless the Board of Felix determines that the competing proposal is superior. The restriction applies during the exclusivity period which ends, at the latest, by 31 March 2010. None of these provisions have adversely affected the question of whether the members are properly informed about the merits of the proposal and whether the offer is one capable of being accepted. Felix also seeks an order relieving it from the requirement contained in s 411(11) that a copy of an order of the Court made under s 411(4)(b) be annexed to every copy of the Constitution of Felix issued after the making of the order. There seems to be no utility in the order. The proposed order does not affect any change to the Constitution of the company. Accordingly, there is no need to insist upon compliance by Felix with s 411(11) of the Act: Re Equinox Resources Ltd (2004) 49 ACSR 692 at [22] and [23]; Re Kalgoorlie Lake View Pty Ltd (2005) 56 ACSR 144 at [30] - [32]; and Mincom Ltd v EAM Software Finance Pty Ltd (No 3) (2007) 64 ACSR 387 at 409. Accordingly, the scheme of arrangement is approved by the Court. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for approval of a scheme of arrangement pursuant to s 411(4)(b) of the corporations act 2001 (cth) and an order under s 411(12) of the act s 411 corporations corporations act 2001 (cth) |
. Eleanor's mother, the second respondent Ms Susan Campbell, has made complaints under the Anti-Discrimination Act 1998 (Tas) alleging discrimination against Eleanor and herself. Ms Campbell says Eleanor's suicide arose out of her enforced resignation from the Tasmanian Squadron Air Training Corps. In essence, Ms Campbell says Eleanor was treated less fairly than would have been the case with an older, male person. 2 Ms Campbell's complaints have been accepted by the Tasmanian Anti-Discrimination Tribunal. The Commonwealth and the second applicant, Mr Glen Kowalik, seek to have the proceedings before the Tribunal terminated. She stated that she was making the claim on behalf of her dead daughter and that her daughter had been discriminated against by the Tasmanian Squadron Air Training Corps on the grounds of age and gender/sex. 4 In answer to the question in the form "How has the treatment affected you? I have lost my purpose in life. I have lost my vision for a future. I am suffering post traumatic stress disorder and am being treated by Dr Ian Sale (psychiatrist). Why do you think it happened? " Ms Campbell stated that her daughter had been denied natural justice by her Commanding Officers and "was hounded to death by their implacable resolve to force her resignation (under a cloud of suspicion) from the AIRTC". She stated that Eleanor "had been accused of a charge of 'fraternisation' with a 30 year old flight officer", that this officer had been known to their family, but that no unlawful relationship had occurred. The officer, she said, had resigned in August 2000. 6 Ms Campbell further stated that Eleanor was interviewed without her knowledge and consent on 5 October 2000 and was "forced or coerced to sign [sic --- resign? ] on 12/10/00". Eleanor was rung up by her Commanding Officer on 30 October "demanding her resignation forthwith because '... she brought dishonour upon No 1 Flight' ". Her daughter was denied any right of appeal. The Commanding Officer refused to put the charges in writing and "directed her to resign within 72 hours and return her uniform --- never to parade again". Eleanor was "broken in spirit by the phone call --- devastated and humiliated". The Commanding Officer refused to provide any explanation to her or right of grievance --- it was "an arbitrary and unilateral decision". There was another "intimidating and harassing phone call" on 1 November to "reiterate the message and tone of the previous call". 7 Ms Campbell stated that she told Eleanor to seek clarification from the Air Training Corps in writing and not resign. The Air Training Corps received Eleanor's letter on 2 November but did not answer it. Ultimately "she could not stand the anxiety any longer, she cracked and hung herself in our woodshed". She was "prepared to test the legality" of a claim for her dead child. She enclosed a copy of an RAAF Investigating Officer's Report. 11 The Anti-Discrimination Tribunal, constituted by the first respondent Ms Helen M Wood, conducted a hearing on certain preliminary matters and on 12 March 2004 handed down its first decision. 13 On 30 May 2005 the Tribunal handed down a further decision accepting that the Commonwealth should replace the Australian Air Force Cadets (the successor to the Air Training Corps) as a respondent to the complaint and holding that the Anti-Discrimination Act did apply to the Commonwealth and to individual respondents. 14 The present proceeding was commenced on 28 June 2005 by the Commonwealth and Mr Glen Kowalik, one of the officers named in Ms Campbell's complaint. The other officer named in the complaint, Mr B Smith, is not a party to this proceeding. 16 Direct discrimination (indirect discrimination is not relevant for present purposes) occurs where a person treats another person on the basis of any prescribed attribute, imputed prescribed attribute or a characteristic imputed to that attribute, less favourably than a person without that attribute or characteristic: s 14(2). 17 Section 22 provides that the Act applies to discrimination against a person engaged in or undertaking any activity in connection with certain areas of activity, including (a) employment, (b) education and training, (e) membership and activities of clubs. 18 I shall refer later to other provisions of the Act which bear on particular issues raised in this case. This is the central command of the Act. The definition section, s 3 , states that "'person' includes an organisation" and that "'organisation' includes a council, a Government department within the meaning of the Tasmanian State Service Act 1984 or a State authority". Nevertheless it is to be noted that in Jacobsen at 585 their Honours said that in Bropho the Court "denied the stringency and inflexibility" of the presumption that the Crown is not bound by a statute and affirmed that "it must be the legislative intention which ultimately prevails". This perhaps less deferential approach was, at least in part, based on the recognition of the "multifarious functions" which the Crown carries out in modern times (at 587). 22 The context in which the present question arises includes two important elements. First, the Anti-Discrimination Act is beneficial legislation and ought to be given a generous and liberal construction: IW v City of Perth [1997] HCA 30 ; (1997) 191 CLR 1 at 12; Waters v Public Transport Corporation [1991] HCA 49 ; (1991) 173 CLR 349 at 359, 394; Commonwealth v Human Rights and Equal Opportunity Commission (1998) 152 ALR 182 at 189. 23 The Act does not have any formal statement of objectives. 26 In Tasmania, as in all Australian States and Territories, the Commonwealth in its various manifestations is a highly pervasive presence. Discrimination is, as a matter of reality, committed by people, not abstract entities. In Tasmania at any one time there would be many people acting in a myriad of areas on behalf of the Commonwealth in situations where discriminatory conduct could occur. Apart from the Tasmanian capacity, the Crown's capacity in the right of the Commonwealth is, of all the Crown's capacities, the one most likely to be exercised in Tasmania, as the Tasmanian Parliament would be well aware. It is unlikely that the Parliament was too concerned with the Crown in the right of Saskatchewan or Bermuda. There is no logical reason to impute to the State Parliament an intention not to bind the Commonwealth, insofar as it has the power to do so, in relation to this important area of social policy. 27 Turning to the text of the Act, since s 4 provides expressly that the Crown in the right of Tasmania is bound, the Crown, at least in that capacity, must be a "person" for the purposes of s 16. The applicants submitted that the intention of the Parliament was to ensure that a respondent to a complaint had "legal personality and capacity". Thus, the argument went, the "person" must therefore be "a natural person, corporation or some other body such as a body politic or entity with legal capacity". I do not agree. In legal discourse, "person" often is confined to a natural person or some entity on which the law confers legal personality, such as a corporation. However, in the present case those drafting the Act have been at pains to ensure that "person" is not so limited. The term is defined to include an "organisation". The ordinary meaning of "organisation" extends to all sorts of bodies, such as unincorporated associations, clubs or government departments, which strictly speaking do not have legal personality. 28 Such a construction is consistent with the policy of the Act. The areas of activity in which discrimination may occur which are enumerated in s 22 include some in which it would be expected that unincorporated bodies such as clubs would be substantially involved. 29 The applicants argued that certain powers conferred on the Tribunal by s 89, such as orders for re-employment (s 89(1)(c)) or orders for payment of a fine (s 89(1)(e)) could not have been intended to apply to the Commonwealth. 30 The assumptions underlying that argument are not necessarily correct. For example, even if sanctions for discriminatory conduct could be characterised as criminal, which seems unlikely, the Crown may still be bound. There is a presumption against a statute imposing criminal liability upon the Crown, and it has been said to be a very strong one ( Cain v Doyle [1946] HCA 38 ; (1946) 72 CLR 409 at 424) but it remains a presumption and thus can be overcome by a clear indication of legislative intention to the contrary. At the very least, this is what has occurred in the Anti-Discrimination Act with the Crown in the right of Tasmania. 31 In any event, it does not follow that, because some remedies are incapable of exercise against some categories of person, Parliament did not intend such persons to be subject to the Act at all. Even if orders of the kind mentioned could be made against the Commonwealth, that would not be because of any lack of intention on the part of the Parliament, but rather because of the operation of s 109 and/or the impairment of capacities doctrine. Parliament in s 4 expressly recognised that the extent of its powers in respect of the Crown in capacities other than in right of Tasmania were not unlimited. Its intention was to bind the Crown as far as it was able. 32 A similar argument based on the obligations of organisations to make their members, officers, employees and agents aware of the kind of conduct which the Act prohibits (s 104) must meet the same fate. 33 The applicants relied on Telstra Corporation Limited v Worthing [1999] HCA 12 ; (1999) 197 CLR 61. One of the questions in that case was whether the Workers Compensation Act 1987 (NSW) applied to the Commonwealth. That Act contained a provision (s 6(1)), very like s 4 of the Anti-Discrimination Act , that the Act "binds the Crown, not only in right of New South Wales but also, so far as the legislative power of Parliament permits, in all its other capacities". However, a central provision of the legislative scheme established by the 1987 State Act is the requirement, under the sanction of a penalty, that an employer, other than a self-insurer, obtain and maintain in force a policy of insurance which complies with the requirements of the legislation (s 155). Further, a 'self-insurer' who holds a license granted, as the 1987 State Act originally stood, by the State Compensation Board constituted thereunder, was obliged, under penalty, to maintain with the New South Wales Treasurer a deposit in an amount determined by that Board (s 213). No such indication is to be seen in the 1987 State Act. To the contrary, s 6(2) states that nothing in that statute renders 'the Crown' liable to be prosecuted for any offence. These penal provisions are central to the structure upon which the regulatory scheme established by the State legislation rests. The Anti-Discrimination Act could not be said to have central penal provisions comparable to those in the New South Wales Act. Nor is there any equivalent to s 6(2) of that Act. 34 I conclude therefore that as, by s 4, Parliament intended to bind the Crown in capacities other than in the right of Tasmania, those capacities must include the Crown's capacity in the right of the Commonwealth. Subject to the constitutional issues which are discussed below, the Anti-Discrimination Act binds the Commonwealth. It must necessarily follow that agents of the Commonwealth are bound. Section 62 provides that the complaint is to be in writing and signed by the complainant. It must identify the person, class of persons or organisations against whom the alleged discrimination was directed and set out details of the alleged discrimination. The Commissioner is to accept or reject the complaint (s 64) and may investigate the complaint (ss 69 - 73 ). The Commissioner may attempt to resolve the complaint by conciliation (ss 74 - 77 ). If the Commissioner believes the complaint cannot be resolved by conciliation, or conciliation has been unsuccessful, he or she may refer it to the Tribunal together with a report (ss 78 - 79 ). Thereafter the matter is dealt with by the Tribunal. 37 The present case is neatly bracketed by two authorities concerning deceased persons and anti-discrimination legislation. In Stephenson v Human Rights and Equal Opportunity Commission (1996) 68 FCR 290 a complainant under the Sex Discrimination Act 1984 (Cth) died after her complaint was lodged. The Full Court of the Federal Court held that the complaint survived and could be pursued by the complainant's executrix. In CUNA Mutual Group Ltd v Bryant [2000] FCA 970 ; (2000) 102 FCR 270 the alleged discrimination occurred after death. An insurer under a loan protection policy refused payment because the deceased insured had falsely declared that he had never tested positive for HIV. Branson J held that no claim lay under the Disability Discrimination Act 1992 (Cth). In the present case the alleged discrimination occurred before death but the claim was lodged after death. 38 In Stephenson at 296, Wilcox J (with whom the other members of the Court agreed) said the common law rule that personal actions do not survive the death of the plaintiff had no application where a right of action is created by statute. Guidance must be sought in the statute itself. 39 It is clear from s 60 that a complainant need not be the person against whom the discriminatory conduct was directed. Section 60(1)(f) specifically so provides. Moreover, pars (b)(ii), (c)(ii) and (d) of s 60(1) provide for complaints on behalf of classes of persons discriminated against. The Act contains no restriction on the size of the classes. It is an obvious enough possibility that between the alleged discrimination and the lodging of a complaint some members of the class might have died. 40 The orders that the Tribunal may make under s 89(1) include: (b) an order that the respondent "redress any loss, injury or humiliation suffered by the complainant", and (d) an order that the respondent pay "to the complainant ... an amount the Tribunal thinks appropriate as compensation for any loss or injury suffered by the complainant and caused by the respondent's discrimination ... ". In this context, "the complainant" suffering the loss, humiliation, etc must be the person discriminated against, even though the complainant for the purposes of s 60 may be, as we have seen, some other person. There seems to be no logical reason, consistent with the beneficial policy of the Anti-Discrimination Act , why redress and compensation should not be ordered in respect of a deceased person. 41 Redress of humiliation (par (b)) may serve the educative function of the Act by a public finding that particular discriminatory conduct was unlawful. As Wilcox J pointed out in Stephenson at 297, the primary purpose of anti-discrimination legislation is directed towards the elimination of discrimination. An inquiry and determination by the Tribunal into a complaint may assist that purpose by a formal declaration as to the unlawfulness of the conduct concerned, notwithstanding the death of the person discriminated against. 42 Compensation (par (d)) may benefit those who have suffered financially as a result of the discriminatory conduct. To expand on the last-mentioned point, one obvious field where discrimination may occur is in employment. Indeed it is the first of the "areas of activity" mentioned in s 22(1). Suppose a man is dismissed by his employer on a ground prohibited by s 16(1). He cannot get another job. He has a wife and young children to support. Then he dies. It would be an odd construction of the Act which had the effect of exempting the unlawfully discriminating employer from any liability to the dependents of the deceased. 43 I conclude that Ms Campbell can bring her complaint notwithstanding that it relates to discrimination against a person who has died. Indeed, so much more should this be the case when the complaint is that there is a direct connection between the discrimination and the death. FLGOFF(AIRTC) Smith telephoned Ms Tibble at her home on 30 th October 2000. He told Ms Tibble that she had the choice of resigning from the Australian Air Force Cadets or being terminated. FLGOFF(AIRTC) Smith also spoke to Ms Campbell. It was put that the alleged conduct did not occur "in connection with" any of the "areas of activity" specified in s 16(1). 47 It seems to me at least arguable, on the very limited evidence so far available, that Mr Smith may have discriminated against Ms Campbell in that he treated her less favourably (s 14(2)) because she had an association with (was the mother of) Eleanor who was young and a female. Ms Campbell may be able to argue that if her child was an adult male Mr Smith would not have told her that he would not give her reasons why her son should resign and that he (Mr Smith) would not put anything in writing. This was arguably a matter in connection with the area of training. The Air Training Corps (as its name suggests) was a body whose raison d'être was training. Ms Campbell herself was not involved in training, but there was a connection between the discrimination alleged and training. What passed between Mr Smith and Ms Campbell concerned the membership of Eleanor, her child, in a body that conducted training of children and young people. There was, arguably a relationship between Mr Smith's conduct vis-à-vis Ms Campbell and the training activity that was relevant, having regard to the object and purpose of the Anti-Discrimination Act : see O'Grady v Northern Queensland Co Ltd [1990] HCA 16 ; (1990) 169 CLR 356 at 367; J & G Knowles and Associates Pty Ltd v Commissioner of Taxation [2000] FCA 196 ; (2000) 96 FCR 402 at [22] - [29] . 48 In fairness to Mr Smith, I stress that the evidence is not only scant at the moment, but is untested. The nature of the present proceeding did not call for his version of events to be put before the Court. The Tribunal correctly observed that what evidence may be adduced and what inferences may be drawn from that evidence is a matter for the future. In any event, I would be reluctant to accede to what is in effect a strikeout application. This is particularly so in light of the fact that Ms Campbell did not have legal representation before the Tribunal. Careful investigation and analysis of the evidence by lawyers may put a different light on matters. 49 I hold therefore that Ms Campbell's claim in her own right is maintainable. Does the Anti-Discrimination Act breach Ch III of the Constitution ? 51 In summary, the applicants say that it is a necessary implication from Ch III that a State tribunal (i.e. a body which is not a "court of a State") cannot exercise any part of the judicial power of the Commonwealth. The second respondent does not dispute the first step but takes issue with the remainder of the applicants' argument. The following parts of Ch III bear on these issues. 52 Chapter III of the Constitution is entitled "The Judicature". Section 71 , relevantly for present purposes, provides that "the judicial power of the Commonwealth" shall be vested in the High Court, such other federal courts as the Parliament of the Commonwealth creates and in "such other courts as (the Parliament) invests with federal jurisdiction". 53 Section 75 confers original jurisdiction on the High Court in "all matters" of certain specified kinds, including those "(iii) (i)n which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party". 54 Section 76 grants power to the Parliament to confer original jurisdiction on the High Court in certain further defined matters. 55 With respect to any of the "matters" in ss 75 and 76 , s 77 confers on the Parliament certain powers, including "(iii) (i)nvesting any court of a State with federal jurisdiction". By s 77(ii) Parliament may define the extent to which the jurisdiction of any federal court "shall be exclusive of that which belongs to or is invested in the courts of the States". 56 The power conferred by s 77(ii) and (iii) was exercised in enacting ss 38 and 39 of the Judiciary Act 1903 (Cth). 57 Section 39 of the Judiciary Act provides by subs (1) that the jurisdiction of the High Court, so far as it is not exclusive of State courts' jurisdiction by s 38 , shall be exclusive of the jurisdiction of the State courts "except as provided in the section". Section 39(2) then proceeds to confer on "the several Courts of the States" all the original jurisdiction of the High Court, except as provided in s 38 , subject to certain conditions and restrictions. Is the Tribunal a "court of a State"? The applicants accept that an affirmative answer will dispose of their Ch III case. 59 At the outset, two things can be noted. First, the question is not how the Anti-Discrimination Act itself characterises the Tribunal, but whether the Tribunal answers the description of a "court" in ss 71 and 77 (iii) of the Constitution and s 39(2) of the Judiciary Act . Secondly, the terms "court" and "court of a State" are to be construed in a context where, subject to such qualifications as may arise from the Kable doctrine ( Kable v Director of Public Prosecutions [1996] HCA 24 ; (1996) 189 CLR 51), the separation of powers, strictly applied in relation to the federal judiciary, does not apply at the State level. 60 The applicants accepted that there is no comprehensive test by which it is possible to define the characteristics of a court of a State. 61 On this issue the State of Tasmania supported the applicants. 62 Some of the factors relied on by the applicants seem to point towards, rather than away from, a conclusion that the Tribunal is a court of a State. An example is the right of appeal to the Supreme Court. To examine this in a little more detail, a person against whom an order is made may appeal to the Supreme Court on a question of law or fact (s 100(1)). A person may likewise appeal against a dismissal of a complaint (s 100(2)). There is also an appeal against a determination on a question of law under s 86(4) , i.e. a question of law or procedure made by the presiding member in the course of a hearing (s 100(3)). An appeal is to be instituted, heard and determined in accordance with the Supreme Court Civil Procedure Act 1932 (Tas) and Rules of Court made under that Act (s 100(4)). 63 Thus the Tribunal is incorporated into the judicial system of the State of Tasmania. Its position vis-à-vis the Supreme Court is essentially no different from that of the Magistrates Court of Tasmania: Magistrates Court (Civil Division) Act 1992 (Tas), s 28. (There is no County or District Court in Tasmania; the Magistrates Court is immediately below the Supreme Court. ) This points to the Tribunal being a court of a State , that is to say part of the system which that State has established to exercise the judicial power of the State and to carry out court-like functions. 64 A feature that commonly distinguishes administrative tribunals and other administrative decision-makers from courts is that the former are made the sole repository of questions of fact and policy. Judicial review or appeal is typically limited to questions of law, as for example in s 44 of the Administrative Appeals Tribunal Act 1975 (Cth), or confined to statutory grounds such as those contained in ss 17 and 20 of the Judicial Review Act 2000 (Tas) or common law grounds: Craig v South Australia [1995] HCA 58 ; (1985) 184 CLR 163. A full appeal on fact and law suggests that the body whose decisions are subject to such rights is a court because it is a part of a system which resolves, at trial and appellate level, legal and factual disputes between citizens and between state and citizen. 65 Other features relied on by the applicants are at best equivocal as to the characterisation of the Tribunal as a court of a State. For example, to provide that the Tribunal is not bound by the rules of evidence is to do no more than legislate as to the law of evidence which is to be applied in a particular Tasmanian court. The common law of evidence has already been substantially modified by the Evidence Act 2001 (Tas). 66 Pointing out that the Tribunal is called a tribunal, not a court, the applicants referred to Tana v Baxter (1986) 180 CLR 572. The issue in that case was whether certain claims for relief before the Industrial Commission of New South Wales fell within s 11(1)(a)-(f) of the Service and Execution of Process Act 1901 (Cth) so as to enable service out of that State. The majority (Gibbs CJ, Mason, Deane and Dawson JJ) noted at 161 that it was not disputed that the Commission, which was declared by s 14(1) of the Industrial Arbitration Act 1940 (NSW) to be a superior court of record, was a court within the meaning of s 11(1) of the Service and Execution of Process Act . The Commission's character as a court was not contested in these proceedings and I should wish to reserve consideration of that question until it is argued. What is called a tribunal (or a commission, or a panel, or a board) may be on closer examination be a court for the purposes of s 77(iii) , just as a body which is called a court may not satisfy the constitutional requirement. In Orellana-Fuentes v Standard Knitting Mills Pty Ltd [2003] NSWCA 146 ; (2003) 57 NSWLR 282, Ipp JA, with whom Spigelman CJ and Handley JA agreed, considered at [37]-[69] whether the Workers Compensation Commission of New South Wales was a "court" within the meaning of s 77(iii). After analysing in detail the particular legislation constituting that body his Honour came to the conclusion that it was not. However his Honour did not rely on, or even mention, the fact that the body in question was called a commission. Function and purpose, not labels, should be our guide. However, this circumstance rather tends to support a conclusion that the Tribunal is a court of State. At a federal level, a purported conferral of judicial power on a body which is not a court in the federal sense, i.e. one constituted by judges appointed until age 70 under s 72 of the Constitution , will be invalid because the separation of powers, mandated at a federal level, has been breached. But this separation of powers is not applicable at a State level and a "court of a State" has no particular constitutional tenure qualification (although, as will be seen, the degree of security is relevant). The fact that orders of the Tribunal can be enforced by the same machinery as orders of the Supreme Court without the need for any intermediate permission or authorisation confirms the position of the Tribunal as part of the judicial system of the State of Tasmania. 69 The fact that members of the Tribunal have no security of tenure in terms derived from the Act of Settlement 1700 (Imp) (appointment for life or until an age certain with removal only by the legislature) was relied on strongly by the applicants, but was not suggested to be conclusive. The critical test is whether, if the Tribunal is to be a court capable of exercising the judicial power of the Commonwealth, it be and appear to be independent and impartial: North Australian Aboriginal Legal Aid Service Inc v Bradley [2004] HCA 31 ; (2004) 206 ALR 315 at [29] . One asks whether reasonable and informed members of the public would conclude that the Tribunal was free from the influence of the other branches of government in exercising its judicial function: Bradley at [65]. 70 Gleeson CJ observed in Bradley at [3] that there is no single ideal model of judicial independence, personal or institutional. For example, s 72 of the Constitution does not permit the appointment of acting judges to federal courts but acting judges for fixed on renewable terms are commonly appointed in some State and Territory courts. 71 In the case of inferior courts, less stringent conditions are necessary in order to satisfy security of tenure: Ell v Alberta [2003] 1 SCR 857 at 874 (Supreme Court of Canada), cited in Bradley at [63]. One might add that this circumstance is explicitly recognised in s 39(2)(d) of the Judiciary Act . The federal jurisdiction of a court of summary jurisdiction of a State shall not be judicially exercised except by a Stipendiary or Police or Special Magistrate or "some Magistrate of the State who is specially authorized by the Governor-General to exercise such jurisdiction". At the time the Judiciary Act was passed, such magistrates would have been salaried officials, as distinct from honorary justices of the peace, and members of their State public service, with nothing like Act of Settlement tenure. (And, as late as the 1970s Stipendiary and Police Magistrates in some States were not required to be lawyers. ) Moreover, the fact that Parliament thought it necessary to impose such a condition suggests that at the time of the drafting of the Constitution a few years earlier it was contemplated that even honorary justices, who had no security of tenure at all, would, in the absence of such a condition, constitute a court of a State. 73 To my mind, reasonable and informed members of the public would think that the Tribunal was free from influence of the other branches of the Tasmanian government, and particularly the Executive. On reading the Anti-Discrimination Act , such persons would observe that it specifically applied to the conduct of the Tasmanian government, and other governments. They would also note that the Tribunal was empowered to do most of the things courts do, to conduct hearings in public of disputes between parties, to summon witnesses, to find disputed facts and apply legal rules to facts as found, to give reasons for its decisions, and to make orders which can be immediately enforced. Let it be supposed somebody put to such reasonable and informed members of the public that the Minister could just ring up the Tribunal and tell it how to decide cases, and that if a member of the Tribunal did not do the Minister's bidding, he or she could be dismissed. Such reasonable and informed members of the public would point out that there are very practical political sanctions against such an eventuality. To take the most obvious example, where the Minister dismisses a Tribunal member because he or she dislikes a decision made against the government. Public, political and media attacks on the government would be inevitable. Ministers would know this, and members of the Tribunal would know Ministers knew this. The legal recourse that may be available to members of the Tribunal will be examined in a moment, but one cannot ignore the practical political setting in which the Tribunal exists. The Anti-Discrimination Act holds out to the Tasmanian public a clear promise that the Tribunal will hear and determine complaints of unlawful discriminatory conduct, that in doing so it will act fairly and independently and make orders remedying breaches of the Act, if necessary against the Tasmanian Government. A public expectation that the independence of the Tribunal will be respected by the Government is in itself a circumstance of some significance. 74 The legal remedies that may be open to a member of a putative court faced with adverse governmental action (or inaction) are relevant in assessing whether the requirements of appearance and reality of independence are satisfied. Such factors formed part of the reasoning in Bradley at [65]. Moreover, there is a right, enforceable by the Supreme Court, to obtain reasons for a decision: ss 28 - 37 . Practically speaking, a member of the Tribunal with a right to challenge suspension or dismissal before an independent Supreme Court may be in a stronger position than a Supreme Court judge faced with a hostile government which happens to control both Houses of the legislature. 77 Not only would the Minister be constrained by the potential of an order setting aside a dismissal decision but there would be the prospect of controversial litigation with all its concomitant expense, delay, discovery of embarrassing documents and publicity. 78 The second respondent relied on Henderson , but I am inclined to agree with the applicants that it has little relevance to the issue of the present case now under consideration, although it will need to be considered later. Mr Henderson owned a house which he leased to the Defence Housing Authority, a Commonwealth body. He sought the Authority's permission to inspect the premises and provision of a key for that purpose. This seemingly humdrum event provoked massive constitutional litigation. Mr Henderson asked for orders from the New South Wales Residential Tenancies Tribunal, a body established under the Residential Tenancies Act 1987 (NSW). A majority of the High Court held that the matters dealt with by the State Act did not fall within the Commonwealth's exclusive powers under s 52(ii) of the Constitution , that the State Act was not inconsistent with the Commonwealth legislation establishing the Authority, and that the principle in Commonwealth v Cigamatic Pty Ltd (in liq) [1962] HCA 40 ; (1962) 108 CLR 372 did not prevent the valid operation of the State Act in the circumstances. 79 As a fourth alternative, the Commonwealth in Henderson argued that s 64 of the Judiciary Act did not operate to subject it to the orders sought under the State Act. Section 64 provides that in "any suit" to which the Commonwealth or a State is a party, the rights of parties shall be as nearly the same as in a suit between subject and subject. (There appears to be a misprint at 190 CLR, 429 where the arguments are summarised; "invalid" should be "valid". ) While the Commonwealth argued that "suit" in s 64 refers to a suit "in a court properly invested with federal jurisdiction" (at 417), it seems the State of New South Wales did not assert the contrary. Its counsel (at 417) accepted there was no "suit in federal jurisdiction", as did Mr Henderson's (noted by Gummow J at 474). It was not necessary to decide the s 64 point. 80 There have been decisions of the Victorian Civil and Administrative Tribunal some of which hold, and others of which deny, that that body is a court. Recently Judge O'Connor of the Appeal Panel of the New South Wales Administrative Decisions Tribunal held that that body was a "court" both in the "general sense" and "in the Judiciary Act sense": Radio 2UE Sydney Pty Ltd v Burns (EOD) [2005] NSWADTAP 69 at [31] , [39]. His Honour analysed in detail the decision in Orellana-Fuentes . He observed at [31] that the Court of Appeal had taken a "balance sheet approach", comparing conventional attributes of a court in the Australian system with elements in the structure that deviated from the conventional attributes, many of which were plainly of a non-judicial character and did not connote the level of independence expected of a court. He found at [43] that the key factors which tipped the balance were the "significant administrative and non-judicial attributes". These are discussed in the judgement of Ipp JA in Orellana-Fuentes at [44]-[51] and notably included the conciliation function of Arbitrators, who were members of the Commission (and appointed by the Commission's President, in itself something "foreign to the notion of a court": [42]) and the reference of medical disputes to "approved medical specialists". Comparable features were not present in the body under consideration in Radio 2UE , nor are they present in the Tribunal. Indeed a feature of the Anti-Discrimination Act is the conferral of conciliation functions on the Commissioner, rather than the Tribunal, whose role, undoubtedly a judicial one, comes into play after conciliation has failed. Its importance in the legal institutional framework of New South Wales should not be understated. It deals with a type of complaint commonly seen as involving the protection of fundamental human rights. The Parliament could have, but did not, choose to vest the jurisdiction in the traditional courts. It established a specialist jurisdiction, with special procedures and a special bench. Had the Parliament gone the other route, this present issue would not arise. More recently, by an amendment to s 8(1) , that body was continued in existence under a new name, the Australian Air Force Cadets (AAFC). By s 8(2) the AAFC is to consist of persons appointed in accordance with the regulations to be officers or instructors in that body and persons who volunteer and are accepted in accordance with regulations as cadets. Officers and instructors in the AAFC do not become members of the Air Force by virtue of that appointment (subs (3)). Cadets are not members of the Air Force (subs (4)). Cadets must be above such age as is prescribed (the age of twelve years and six months has been prescribed) and less than 20 years (subs (5)). They cease to be a cadet when they attain the age of 21 or such lower age as prescribed (subs (7)). The regulation making power is conferred on the Governor-General by s 9. 86 Members of the AAFC, not being members of the Australian Defence Force, are not subject to the military discipline and justice system created by the Defence Force Discipline Act 1982 (Cth) and the Defence Force Discipline Appeals Act 1955 (Cth). Regulation 14(2) provides that a member (i.e. where the member is enrolled in a unit at a school and has ceased to attend that school. In case of termination for reasons (a), (b) or (c) the cadet must be notified of the reasons for the intended discharge and given an opportunity to contest it: reg 14(3). 88 The Manual , in the submission of the applicants, with which I agree, comprehensively covers issues relating to the rights and responsibilities of members of the AAFC. 89 Chapter 19 of the Manual is entitled "Harassment and discrimination" and deals in considerable detail with those topics. It is said in par 2 to contain "Air Force policy applicable to the AAFC on what constitutes unacceptable behaviour, the means of dealing with incidents and the measures to be taken to make members of the AAFC aware of this policy". Paragraph 5 of Ch 19 provides that incidents should be resolved between individuals involved or through a process of conflict resolution wherever possible. Assistance should be provided from "outside the group or unit where this is likely to be helpful". Other unacceptable behaviour "of a more serious nature will result in administrative or disciplinary action or charges under either civil or criminal law". 90 Paragraph 10 of Ch 19 states that the AAFC is committed to eliminating discriminatory practices. Paragraph 12 provides that sexual offences are not to be investigated within the AAFC. Any allegations of sexual offences are to be referred to the appropriate civil authority. Paragraph 25 also provides that incidents involving sexual offences involving a minor must be reported to the police and relevant State authority. Each Regional Liaison Officer (RLO) is to seek legal advice on the requirement under State legislation to comply with the provisions of mandatory reporting of suspected physical or sexual abuse and inform their OOC/IOCs of their duty of care to comply with any requirements". If a member does not believe the chain of command is appropriate or the situation requires urgent action, then the police or relevant State authority may be contacted. Where minors are involved State legislation is to be adhered to. In some circumstances a member may have grounds for not wishing to complain to any authority within the chain of command or to state service agencies. The Ombudsman may accept the complaint for investigation, if satisfied that it is appropriate to do so. Members also have the right to refer the matter to the Human Rights and Equal Opportunity Commission (HREOC), although this avenue may not satisfy the immediate requirement of stopping the harassment or discriminatory practice, and acting against the offender in a timely manner. Further information can be obtained from the website www.humanrights.gov.au . Sexual offences may result in criminal proceedings. A member is to be assisted to report any allegation of sexual assault to civil police and various State authorities as required by law within that State and offered counselling support without delay. They provide, it was said, detailed procedures for addressing grievances, including discrimination, by utilizing the military chain of command. It was put that those procedures do not contemplate, and leave no room for, the operation of, "an alternative layer of regulation arising under State anti-discrimination law". Section 8 and the Regulations , it was said, can be seen to express the Commonwealth Parliament's intention to regulate exhaustively and exclusively the relationship between the Commonwealth and members of the AAFC and the relationship amongst members of the AAFC. They cover the field and the Anti-Discrimination Act , to the extent that it attempts to enter that field, can have no valid operation. Here again the Commonwealth law does not of its own force give State law a valid operation. All that it does is to make it clear that the Commonwealth law is not intended to cover the field, thereby leaving room for the operation of such State laws as do not conflict with Commonwealth law. The applicants' focus on s 8(9) of the Air Force Act draws particular attention to the Manual , issued by the Chief of Air Force in the course of exercising his statutory power and duty to administer the AAFC. The exercise of that power and duty is of course subject, amongst other things, to the Cadet Forces Regulations . But the Regulations themselves, relevantly for present purposes, do not go beyond the specific grounds available for discharge and the procedure to be followed in relation thereto. Plainly the legislators, including those who made the Regulations , contemplated that the vast bulk of other administrative provisions essential for the conduct of the AAFC would be left to the Chief of Air Force in the exercise of his power and duty under s 8(9). 96 The Manual , as has been seen, is replete with express references to State authorities and State laws (and also Commonwealth authorities, the Ombudsman and the Human Rights and Equal Opportunity Commission, entirely unconnected with the Air Force). This is hardly surprising. Cadets are not members of the Australian Defence Force. Although they engage in activities and training of a military kind, they do not undertake the obligations and restrictions of military life. Since cadets may be thirteen or even younger, children in the most literal sense, the AAFC is, as is said in Ch 19 par 6 of the Manual, in loco parentis with respect to those who are minors. Discrimination, sexual harassment and like conduct have only become the subject of legislative attention in the last few decades. It can give rise to difficult and delicate problems, especially where children and young people are concerned in activities with older instructors. It is not an area in which the military is perceived to have any special expertise. 97 The present case is the polar opposite of the kind of situation dealt with in Australian Mutual Provident Society v Goulden [1986] HCA 24 ; (1986) 160 CLR 330, discussed in APLA at [42]-[43]. In Goulden the High Court held that the Life Insurance Act 1945 (Cth) made detailed provision for supervising and regulating the statutory funds of life insurers, including the classification of risks and the setting of premiums. It would "alter, impair or detract from" the Commonwealth scheme if a registered life company were prevented by State anti-discrimination legislation from classifying different risks differently or for setting different premiums for different risks. In the present case, there is no intention manifested by the Air Force Act or the Regulations to create a scheme to deal exclusively within the AAFC with discriminatory conduct involving cadets. As was submitted by the second respondent, the Manual , far from being a comprehensive code, is predicated on the continuing operation and availability of State legal regimes as part of a bed of underlying law. 98 The applicants relied on Dao v Australian Postal Commission [1987] HCA 13 ; (1987) 162 CLR 317. Section 42(1) of the Postal Services Act 1975 (Cth) gave the Commission power to appoint persons as officers for the purposes of the Act. Section 42(2) provided that a person should not be appointed unless the Commission was satisfied, after the person had undergone a medical examination required by the Commission, as to his health and physical fitness and that he possessed such educational qualifications, or met such other requirements (if any) as were required by the Commission. The Commission dismissed Ms Dao and the other appellant from temporary employment, and refused them permanent employment, because in their medical examinations they failed to attain a specified minimum body weight determined by reference to their height and sex according to a scale prepared and used by the Commonwealth Department of Health. The Commission determined on this basis that they did not possess the standard of physical fitness required. The appellants complained before the New South Wales Equal Opportunity Tribunal that they had been discriminated against on the ground of their sex, contrary to s 25(1) of the Anti-Discrimination Act 1977 (NSW). The High Court held that the ss 25 and 113 of the State Act (which empowered the Tribunal to award damages and reinstatement) would result in "a clear usurpation ... of the responsibility resting on the Commission under the Commonwealth Act" and were "clearly in collision with s 42 ... and must therefore, by force of s 109 of the Constitution , give way. " (at 335). A State law which takes away the right is inconsistent because it is in conflict with the absolute right and because the Commonwealth law relevantly occupies the field. So also with a Commonwealth law that grants a permission by way of positive authority. The Commonwealth legislative intention which sustains the conclusion that the permission is granted by way of positive authority also sustains the conclusion that the positive authority was to take effect to the exclusion of any other law. Again it produces inconsistency on both grounds: cf. Airlines of New South Wales Pty. Ltd. v. New South Wales [1965] HCA 3 ; (1965) 113 CLR 54, where the permission for which Commonwealth law provided was neither absolute nor comprehensive. (at p260). However, Ms Campbell's case is not directed at any exercise of the power of discharge. It does not trespass on that confined area of Commonwealth statutory power. By stipulating the grounds on which, and the procedure by which, cadets may be discharged the Commonwealth did not evince an intention to exclude generally the operation of a Tasmanian law outlawing discriminatory conduct in the areas of activity specified in s 22(1) , and particularly education and training; cf the discussion of Wardley in Dao at 336. 100 In any case, it is difficult to see how Ms Campbell's complaint on her own behalf is affected by any provision of the Air Force Act or the Cadet Forces Regulations . 102 There is a distinction between, on the one hand, the capacities of the Crown in the right of the Commonwealth and, on the other hand, the exercise of those capacities. State legislation cannot modify the nature of the executive power vested in the Crown in the right of the Commonwealth but it can regulate activities in which the Crown may engage in exercise of those activities. The distinction is discussed by Dawson, Toohey and Gaudron JJ in Henderson at 438-448. Their Honours noted at 444 that the laws of the land are not confined to the laws of the Commonwealth but include the common law and the statute law in force in each of the States. Thus in Pirrie v McFarlane [1925] HCA 30 ; (1925) 36 CLR 170 a person acting in the course of his duties as a member of the RAAF was held to be bound by the provisions of a Victorian Act requiring him to hold a driver's licence when driving a vehicle on a public highway. 103 The present case is concerned with the application of a Tasmanian statute proscribing discriminatory conduct in that State in various areas of activity, including education and training. It is consistent with similar beneficial legislation in other States and Territories and in the Commonwealth itself (which explicitly leaves open resort to State and Territory legislation: Human Rights and Equal Opportunity Commission Act 1986 (Cth), s 4(1)). The executive capacity of the Commonwealth will not be impaired by agents such as Mr Smith being required to conduct themselves in accordance with the Anti-Discrimination Act , along with other Tasmanian laws, as the Manual recognises. Certainly this is so in the absence of any express Commonwealth law to the contrary: cf Pirrie at 183. The Act authorises complaints where the person discriminated against has died. Ms Campbell has an arguable complaint in her own right of discrimination contrary to the Act. In conferring on the Anti-Discrimination Tribunal jurisdiction to adjudicate complaints against the Commonwealth the Act does not breach Ch III of the Constitution . The Act is not inconsistent with the Air Force Act or the Cadet Forces Regulations within the meaning of s 109 of the Constitution . The Act does not impair the capacities of the Commonwealth Executive. I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | suicide of 15-year-old member of air training corps complaint by mother under anti-discrimination act 1998 (tas) whether as a matter of construction act applies to commonwealth and its agents whether act permits complaints in respect of discrimination against deceased persons whether mother has arguable complaint in her own right whether act breaches ch iii of the constitution whether anti-discrimination tribunal established under the act is a court of state whether act inconsistent with air force act 1923 (cth) and/or cadet forces regulations 1977 (cth) whether act would impair the capacities of the commonwealth executive "court", "court of a state" anti-discrimination constitutional law words and phrases |
The amended assessment was based upon determinations made by the Commissioner under Part IVA of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act "). Each such determination was made under s 177F(1)(a) of the 1936 Act , and was to the effect that a tax benefit, referable to an amount that, according to the Commissioner, had not been included in the applicant's assessable income, be so included for the 2003 year. In each case the Commissioner further determined pursuant to s 177F(2) of the 1936 Act that the amount in question be deemed to be included in the assessable income of the applicant by virtue of s 44(1) of the 1936 Act . The amounts which the Commissioner determined had not been included in the applicant's original assessment were the sums of $1,698,300 and $1,298,700. 2 The Commissioner's determinations under Part IVA were based upon s 177E(1) of the 1936 Act , to the detailed terms of which I shall refer later. That provision deems what I shall for the moment describe as a dividend stripping scheme to be a scheme to which Part IVA applies. The Commissioner took the view that, in relation to the 2003 year of income, companies controlled by the applicant had participated in dividend stripping schemes, or in schemes having substantially the effect of such schemes, the end result of which was that profits which were held for distribution by companies in which the applicant was the only shareholder were effectively converted into capital sums held by another company on trust for a class of discretionary beneficiaries which was confined to the applicant and members of his family. I shall refer in greater detail to the transactions said to constitute the schemes below. His principal concern was in the wholesale and retail distribution and sale of plaster board and other plaster products for installation in the interiors of residential and commercial premises. He had also been engaged in other businesses, such as timber milling, horse breeding, the assembly and sale of electronic components and the manufacture and sale of motor vehicle mufflers and exhausts. In some cases, the applicant purchased businesses which had liquidity problems, and attempted to make them financially viable. At the point of purchase, those businesses often were subject to what the applicant described as "significant debt and cash flow distress". Sometimes, it took the applicant several years to turn a particular business around, while at other times he was unable to do so, and had to resell the business. Over the years, I have also had and continue to have an interest in significant real estate, both commercial and residential. For the purpose of conducting these various businesses and holding these various properties, I have been a director and shareholder of numerous companies both as trading entities and as trustees of various trusts. I have also held and continue to hold various assets in my personal name. The applicant said that he knew his limits, and appreciated the need for obtaining and relying upon sound advice. It was his practice to obtain advice from "suitably qualified and experienced lawyers and accountants". He did so in order to obtain the best possible advice and assistance on all business transactions and financial matters, and to ensure that he had the most effective legal structure "to protect my assets from creditors and to maximize the profit of my businesses and investments". It was always his intention and concern to comply with all legal and taxation obligations. 4 The main entity used by the applicant to conduct his various businesses was a discretionary trust known as the Lawrence Family Trust. The trustee was Lauravale Pty Ltd ("Lauravale"). The applicant, members of his family and some of the companies in which he had an interest were among the class of discretionary beneficiaries of this trust. One of the applicant's companies was Plaster Plus (Vic) Pty Ltd ("Plaster Plus"), of which the applicant had been the sole shareholder, and the only director, since 1998. Plaster Plus had been incorporated for business purposes, but was not needed for those purposes and did not operate actively as a company until the 2002 financial year. On 31 May 2002, the applicant and his wife borrowed the sum of $900,000 from Plaster Plus. That sum was applied to reduce an existing liability to the Lawrence Family Trust. On 1 June 2002, Lauravale nominated Plaster Plus as a general beneficiary of the Lawrence Family Trust. On 29 June 2002, Lauravale decided to distribute income and capital gain in the total sum of $1,904,796 from the trust to Plaster Plus. This amount constituted profit. After various adjustments, Plaster Plus recorded a taxable profit of $1,919,574 for the year ended 30 June 2002. Income tax was paid on that sum. In the result, as at 30 June 2002, Plaster Plus had taxed but undistributed profits of $1,328,924. The applicant said that he was advised that he had no need to distribute those profits in Plaster Plus, and that they could have been retained by Plaster Plus indefinitely. 5 In addition to his own accountant, Mr Hayes, the applicant and his companies received accounting and taxation advice from accountants based in Adelaide. They introduced him to a Queensland solicitor, Ian Collie of the firm Cleary Hoare. In early 2003 or thereabouts, Mr Collie contacted the applicant "to arrange a meeting in Melbourne to discuss a legal and financial transaction which he was recommending to some of his clients. " The applicant later learned that the kind of transaction which Mr Collie had in mind was what was described as a "distributable surplus arrangement". In early May 2003, the applicant, Mr Hayes and Mr Collie met at Mr Hayes' office at Glen Waverley. Mr Collie gave verbal advice to the applicant, and discussed technical aspects of the proposed arrangement with Mr Hayes. The applicant did not understand those aspects, and relied upon the expert opinion of Mr Collie and Mr Hayes as to the operation and efficacy of the arrangement, and as to the fact that it was lawful. 6 At the meeting at Glen Waverley, Mr Collie showed the applicant what the latter described as "a supportive opinion from a Brisbane based Queens Counsel about the operation and legality of distributable surplus arrangements"; as a result of which the applicant said that he was "doubly reassured". The creation of a dividend access share followed by the dividend to the holder of the share who enjoyed the whole of the dividend would not, in my Opinion, fall within the section. Nor would the entry by a company into a transaction as a result of which its assets are diminished. It is in my view an essential part of the concept of dividend stripping that there be some trafficking in the securities of the company. Here there will be none. It follows, in my view, that section 177E will have no application. The first related to Plaster Plus. The second related to a company called Zinkris Pty Ltd ("Zinkris"), which was incorporated by Mr Collie on 5 June 2003, and of which the applicant became the sole shareholder and the only director on that day. The sums for the second series (that relating to Zinkris) were different, but the steps were the same. 9 By reference to the diagram set out in the previous paragraph, in the first series of transactions the entity marked "G" was Plaster Plus, while the entity marked "C" was a company called Netscar Pty Ltd ("Netscar"), incorporated by Mr Collie on 30 May 2003. In the second series of transactions, the entity marked "G" was Zinkris, while the entity marked "C" was a company called Windainty Pty Ltd ("Windainty"), incorporated by Mr Collie on 2 June 2003. In both series, the entity marked "T" was a company called Clearmink Pty Ltd ("Clearmink"), incorporated by Mr Collie on 2 June 2003. In both series, the entity marked "V" was Denburrow Pty Ltd ("Denburrow"), a company controlled by Cleary Hoare of which Mr Collie and Mr Michael James Patrick Hart, another member of that firm, were the directors. 10 The transactions by which the distributable surplus arrangements were implemented were carried out at the applicant's home at Richmond on 8 June 2003. Although, at the point of incorporation, it may have been otherwise, by 8 June the applicant was the only director of all the relevant companies save Denburrow, and the only shareholder of all the relevant companies save Denburrow, Netscar and Windainty. Changes in the shareholdings in Netscar and Windainty were central aspects of the first and second series of transactions, respectively, in ways to which I shall refer. The transactions to be carried out on 8 June 2003 were, for each of the series, set out in a document headed "Meeting Times --- 8 June 2003". For the first series, this required 15 steps to be taken between 10:30 am and 12:55 pm; for the second series, it required 15 steps to be taken between 1:15 pm and 3:40 pm. 11 Although not referred to in the schedules of meeting times for 8 June 2003, on that day two new discretionary trusts were settled by Mr Hart. In each case, the settlement sum was $10. The trustee was Clearmink, and the names of the trust were Clearmink No. 1 Trust and Clearmink No. 2 Trust. The primary beneficiaries were the applicant and any spouse, de facto partner, widow, children, grandchildren, great grandchildren, parents and grandparents of his. There was no evidence as to the time, on 8 June, when these trusts were settled. The fixing of the seal of Clearmink to each trust deed was witnessed by the applicant as director. 12 Immediately before the transactions on 8 June 2003, the share capital of each of Netscar and Windainty was structured as follows. There were 900,000 ordinary shares. There were eight classes of shares, of 10,000 shares each, identified as "A" Class to "H" Class. There were 19,999 "J" Class redeemable preference shares, and there was one "K" Class redeemable preference subscriber share. The only shareholder in each of Netscar and Windainty was Clearmink. There is some confusion as to whether it held one share or two shares in each. Australian Securities and Investment Commission extracts indicate that Clearmink held one share in each of Netscar and Windainty. However, all the other evidence in the case, including the books of account of each relevant entity, suggest that two shares in each company were so held. I shall proceed on that basis, and note that the shareholding in question, in each of Netscar and Windainty, was by way of ordinary shares. There was no other issued share capital in Netscar or Windainty. Before any of the steps were taken on 8 June 2003, there was no discrimination, in the constitutions of Netscar and Windainty, as between the participation rights of "A" Class and "B" Class shares on a return of capital. At 10:20 am, acting in his capacity as director of Clearmink, the applicant signed an acknowledgment of having received notice of that meeting. The general meeting of Netscar was duly held at 10:30 am, the applicant being the only person present. Two resolutions of substance were carried. The meeting closed at 10:45 am. At 10:50 am, there was a meeting of the board of Netscar, constituted by the applicant, in which it was resolved to classify the Clearmink shareholding as "A" Class shares. 14 By a document headed "Application for Shares", addressed to the directors of Netscar and dated 8 June 2003, Denburrow applied for 1,700 "B" Class shares in Netscar, with a nominal value of $1,000 per share, payable as to $1 per share upon allotment and as to the balance upon call on seven days' notice. There was no evidence as to the time, on 8 June, when that document was executed. The document was accompanied by a bearer promissory note in the sum of $1,700. At a meeting of the board of Netscar held at 11:00 am on 8 June 2003, attended only by the applicant as director, the receipt of the Denburrow share application was noted, and it was resolved to issue the shares on the basis set out in the application, and to accept the bearer promissory note in satisfaction of the amount payable at allotment. The applicant signed a share certificate recording that Denburrow was the holder of 1,700 "B" Class shares in Netscar. 15 At 11:10 am on 8 June 2003, there was a further meeting of the board of Netscar, attended by the applicant as director. The share allotment to Denburrow was noted. It was resolved to make the call for the balance of the price of the "B" Class shares. The applicant signed a "Notice of Call" addressed to Denburrow, in which the latter was required to pay the sum of $1,698,300, being the balance due in respect of Denburrow's "B" Class shares, on or before the expiration of eight days from the receipt of the notice. 16 At 11:30 am on 8 June 2003, a meeting of the board of Denburrow was held. Messrs Collie and Hart attended as directors. It was resolved to sell to Plaster Plus the 1,700 "B" Class shares "at market value, namely, $1,700". It was noted that that sum represented the amount paid up on the shares, that the amount of $1,698,300 remained subject to call, and that the constitution of Netscar made Plaster Plus, as the new owner of the shares, liable for the call. It was also noted that a call had in fact been made by Netscar. The directors of Denburrow also resolved to accept delivery of a Plaster Plus promissory note in the sum of $1,700 as a payment for the shares. That promissory note was in evidence, and was signed by the applicant on behalf of Plaster Plus on 8 June 2003, but there is no evidence as to the timing of that event. The directors of Denburrow resolved also to deliver the Plaster Plus promissory note to Netscar "in satisfaction of the promissory note for the same amount previously drawn and delivered by [Denburrow] and to seek the return of that note". 17 At 11:40 am on 8 June 2003, there was a meeting of the board of Plaster Plus, attended by the applicant as director. It was resolved to purchase from Denburrow the 1,700 "B" Class shares which the latter then held in Netscar "at market value, namely, $1,700.00 to be paid by delivery of a bearer promissory note for that amount". It was noted that that sum represented the amount paid up on the shares, that the amount of $1,698,300 remained subject to call, and that the constitution of Netscar made Plaster Plus, as the new owner of the shares, liable for that call. The making of the call by Netscar was noted. 18 On 8 June 2003, there was an agreement for sale made between Denburrow as vendor and Plaster Plus as purchaser with respect to the 1,700 "B" Class shares in Netscar. In the recitals to that agreement, it was noted that the shares were paid up to $1 per share, with $1,698,300 at call, and that the holder of the shares was liable to meet the call. Although there is no evidence as to the time at which this agreement was executed (in the case of Plaster Plus, by the applicant), as a matter of sequence it most probably came after the events referred to in the previous paragraph. A share transfer was executed (the applicant signing on behalf of Plaster Plus) on the same day. As director of Netscar, the applicant signed a share certificate stating that Plaster Plus was the holder of the 1,700 "B" Class shares. 19 The next thing that appears to have happened on 8 June 2003 was the signing of a promissory note addressed to Netscar by the applicant on behalf of Plaster Plus. By it, Plaster Plus promised to pay Netscar the sum of $1,698,300 on presentation of the note. At 11:50 am on 8 June, there was a meeting of the board of Netscar, attended by the applicant as director. It was noted that Plaster Plus, which had acquired the shares originally issued to Denburrow, had delivered an "on demand" promissory note to meet the call. It was resolved to accept the promissory note as meeting the call. It was also resolved to accept from Denburrow the delivery of the Plaster Plus bearer promissory note in the sum of $1,700 in satisfaction of the promissory note previously drawn and delivered by Denburrow for that amount, and to return the latter to the drawer. 20 At this point, the shareholding in Netscar was as follows. Clearmink held the only two "A" Class shares issued. It held them as trustee of the Clearmink No. 1 Trust. Plaster Plus held the 1,700 "B" Class shares. It had acquired them from Denburrow, to whom they had originally been issued. As to $1 per share, it had paid Denburrow by way of a bearer promissory note which was subsequently delivered to Netscar. As to $999 per share, it had paid for them by an "on demand" promissory note addressed to Netscar itself. 21 At 12:10 pm on 8 June 2003, the board of Netscar, constituted by the applicant as director, resolved to call an extraordinary general meeting at 12:45 pm that day. The notice was received by each of Clearmink and Plaster Plus at 12:20 pm. The applicant, as the only shareholder in Plaster Plus, signed a consent to that amendment. At 12:30 pm, the board of Plaster Plus, constituted by the applicant as director, noted that consent, and resolved to consent to the amendment. Plaster Plus then executed a formal form of consent to the amendment, signed by the applicant. At 12:40 pm on 8 June 2003, the board of Clearmink, constituted by the applicant as director, resolved to consent to the proposed amendment to the constitution of Netscar. A formal form of consent was executed by Clearmink, signed by the applicant. At 12:45 pm on 8 June 2003, an extraordinary general meeting of the shareholders of Netscar was held. Clearmink and Plaster Plus were both present, by their director, the applicant, in each case. It was unanimously resolved to amend the constitution of Netscar in the form proposed in the notice of meeting. 22 At some time on 8 June 2003, presumably subsequent to the amendments just mentioned, the board of Netscar, constituted by the applicant as director, resolved to advance the sum of $1,698,300 to Clearmink, as trustee for the Clearmink No. 1 Trust, by way of loan. This was to be done, and was in fact done, by the delivery of a bearer promissory note in that sum. The note was executed by the applicant as director of Netscar; and the receipt of the note by Clearmink was acknowledged by a receipt signed by the applicant as director of that company. 23 The accounts for the Clearmink No. 1 Trust as at 30 June 2003 were in evidence. On the balance sheet, the trust is shown to have current assets of $1,700,008. The $8 was cash (presumably the difference between the settlement sum of $10 and the cost of buying two $1 ordinary shares in Netscar). The remaining current assets, $1,700,000, were said to be "promissory note outstanding". On the evidence, the only promissory note that had been delivered to Clearmink, to be held for the Clearmink No. 1 Trust, was the Netscar promissory note (by way of loan) in the sum of $1,698,300. The balance sheet makes no reference to a promissory note in that sum. Rather, as I have indicated, it does refer to a promissory note in the sum of $1,700,000 as to the existence of which there is no other evidence. 1 Trust reflect the advice so tendered by Mr Collie. They do not appear to reflect what actually occurred on 8 June 2003. If they reflect other transactions carried on before 30 June 2003 but not on 8 June, there is no other evidence of them; and, if they did, it would leave the actual promissory note delivered by Netscar to Clearmink unrepresented on the balance sheet. 24 The balance sheet of Clearmink No. 1 Trust showed non-current assets of $3,028,926, made up as follows. First, there was the sum of $1,700,002. The $2 represented the cost value of the shares held by the trust in Netscar. The $1,700,000 was said to be "provision for increase in value". It was common ground, and I would find, that this entry was supposed to represent the increase in value in Clearmink's two shares in Netscar, brought about by the alteration of the participation rights of the "B" class shareholders effected by the substitution of cl 127(b) of the constitution on 8 June 2003. Again, there was no explanation as to why the sum was $1,700,000, rather than $1,698,300, since the sum of $1,700 would still have been due to the "B" class shareholders on liquidation. However that minor anomaly may be, this entry on the balance sheet of the Clearmink No. 1 Trust relates to a central feature of the first series of transactions on 8 June; the result of the alteration of the participation rights of "B" class shareholders in Netscar was that the "A" class shareholder, Clearmink, received a gain by way of a substantial increase in the value of the two shares which it held. 25 Next, the non-current assets of the trust as at 30 June 2003 included the sum of $1,328,924, which had two components. The first was a loan to Lauravale in the sum of $428,924, and the second was a loan to the applicant and his wife in the sum of $900,000. Save for these accounts, there was no direct evidence of the making of those loans. However, it was common ground that I should treat the loans as existing as at 30 June 2003. Additionally, I would note two further things about these loans. First, taken together, they correspond exactly to the accumulated profits of Plaster Plus as at 30 June 2002 (and, I infer, as at 7 June 2003). Secondly, the loan to the applicant and his wife is in the same amount as the loan which had been advanced to them by Plaster Plus in the 2002 year. Later in these reasons (see par 70 below) I refer to evidence from which it should be inferred that the 2002 loan was repaid to Plaster Plus on 8 June 2003. It was submitted on behalf of the Commissioner that the loan of $900,000 from Clearmink put the applicant and his wife in funds such as permitted the repayment of the 2002 loan. I accept that submission. It follows, and I would infer, that the Clearmink loan was made to the applicant and his wife no later than, and most probably on, 8 June 2003. 26 The balance sheet for Clearmink No. 1 Trust as at 30 June 2003 showed also current liabilities of $1,700,000. This was said to be a loan from Netscar. I note that, on the evidence, Netscar had lent the trust a sum of $1,698,300, and that the unexplained variation in the liability section of the balance sheet from this sum corresponds with, and balances, the apparent misstatement as to the face value of the Netscar promissory note referred to as one of the current assets of the trust. 27 As non-current liabilities, the balance sheet showed the sum of $1,328,924. This was said to be a non-secured loan from Plaster Plus. I note that this sum corresponds precisely with the total of the loan said to be made by the trust to the applicant and his wife, and to Lauravale, as described above. 28 The accounts for the Clearmink No. 1 Trust also set out the "trust capital and reserves". This amounted to the sum of $1,700,010, of which $10 was the settlement sum and $1,700,000 was a capital profit reserve, constituted by the provision for the increase in value of the two shares held in Netscar. 29 In the accounts for Plaster Plus for the year ended 30 June 2003, an extraordinary loss item of $1,698,300 was shown in the profit and loss statement. This was said to be a provision for the diminution in value of the shares held in Netscar. When set against the retained profits at the beginning of that financial year, this provision had the effect of causing Plaster Plus to record a loss of $332,079 in that year. 30 In its balance sheet as at 30 June 2003, Plaster Plus showed the value of its shareholding in Netscar at $1,700,000, less provision for diminution in value in the amount of $1,698,000. The value of the shareholding was, therefore, $1,700. Also recorded as a non-current asset was the sum of $1,382,206, said to be an unsecured loan to the Clearmink No. 1 Trust. At the same time, the accounts showed that non-current assets which had existed on 30 June 2002 no longer existed, namely, a loan to Lauravale in the sum of $1,004,796 and the loan to the applicant and his wife in the sum of $900,000 mentioned in par 25 above. It will be recalled that Zinkris itself was incorporated only on that day. It seems that Zinkris received no income between then and 8 June 2003. However, on 29 June 2003 the Lawrence Family Trust distributed income to Zinkris in the amount of $1,762,826. This was shown as operating profit for the year ended 30 June 2003. Tax was calculated at $632,827, leaving Zinkris with taxed, undistributed profits of $1,129,999 as at that date. It is apparent that the transactions of 8 June 2003 were based on an anticipation that profits of about that order would be lying in Zinkris as at 30 June 2003. I should add that, as in the case of Plaster Plus, the applicant said that he had been advised that he had no need to distribute those profits in Zinkris, and that they could have been retained by Zinkris indefinitely. 32 On 8 June 2003, as director of Windainty, the applicant resolved to call an extraordinary general meeting of members at 1:15 pm on that day and, in his capacity as director of Clearmink, he signed an acknowledgement of having received notice of that meeting. The general meeting of Windainty was duly held at 1:15 pm, the applicant being the only person present. Resolutions in the same terms as those passed by the meeting of Plaster Plus at 10:30 am that day were carried (see par 13 above). The meeting closed at 1:30 pm. At 1:35 pm, there was a meeting of the board of Windainty, constituted by the applicant, in which it was resolved to classify the Clearmink shareholding as "A" Class shares. 33 There followed a series of transactions closely corresponding to those set out in par 14 above, the only differences being that Windainty, rather than Netscar, was the company concerned and that 1,300, rather than 1,700, "B" Class shares were involved. Then (at 1:55 pm) the board of Windainty, constituted by the applicant, resolved to call for the balance of the price of "B" Class shares, and a call in those terms was executed and transmitted to Denburrow at 2:05 pm. The sum called for was $1,298,700, being the difference between the face value of the 1,300 "B" Class shares ($1.3 m) and the amount already paid by Denburrow ($1,300). 34 At 2:15 pm on 8 June 2003, a meeting of the board of Denburrow was held. Messrs Collie and Hart attended as directors. It was resolved to sell to Zinkris the 1,300 "B" Class shares "at market value, namely, $1,300.00". It was noted that that sum represented the amount paid up on the shares, that the amount of $1,298,700 remained subject to call, and that the constitution of Windainty made Zinkris, as the new owner of the shares, liable for the call. It was also noted that a call had in fact been made by Windainty. The directors of Denburrow also resolved to accept delivery of a Zinkris promissory note in the sum of $1,300 as payment for the shares. That promissory note was in evidence, and was signed by the applicant on behalf of Zinkris on 8 June 2003, but there is no evidence as the timing of that event. The directors of Denburrow resolved also to deliver the Zinkris promissory note to Windainty "in satisfaction of the promissory note for the same amount previously drawn and delivered by [Denburrow] and to seek the return of that note". At 2:25 pm, there was a meeting of the board of Zinkris, attended by the applicant as director. Business was transacted which corresponded with that set out in par 17 above, mutatis mutandis . Likewise, there was an agreement for the sale of shares between Denburrow and Zinkris which corresponded to that referred to in par 18 above. 35 Next, the applicant, acting as director of Zinkris, signed a promissory note in favour of Windainty in the sum of $1,298,700. At 2:35 pm on 8 June, there was a meeting of the board of Windainty, attended by the applicant as director. It was noted that Zinkris, which had acquired the shares originally issued to Denburrow, had delivered an "on demand" promissory note to meet the call. It was resolved to accept the promissory note as meeting the call. It was also resolved to accept from Denburrow the delivery of the Zinkris bearer promissory note in the sum of $1,300 in satisfaction of the promissory note previously drawn and delivered by Denburrow for that amount, and to return the latter to the drawer. 36 At this point, the shareholding in Windainty was as follows. Clearmink held the only two "A" Class shares issued. It held them as trustee for the Clearmink No. 2 Trust. Zinkris held the 1,300 "B" Class shares. It had acquired them from Denburrow, to whom they had originally been issued. As to $1 per share, it had paid Denburrow by way of a Denburrow promissory note, which was subsequently delivered to Windainty. As to $999 per share, it had paid for them by an "on demand" promissory note addressed to Windainty itself. 37 At 2:55 pm on 8 June 2003, the board of Windainty, constituted by the applicant as director, resolved to call an extraordinary general meeting at 3:30 pm that day. It was proposed to amend the constitution of Windainty by replacing Clause 127(b) with a provision in the same terms as I have set out at par 21 above in the case of Netscar. There followed a series of transactions which corresponded, mutatis mutandis , with those set out in par 21 above in the case of Plaster Plus and Netscar. As in the case of Netscar, the constitution of Windainty was amended to limit the participation rights of the holders of "B" Class shares to $1 per share on a return of capital. 38 Finally on 8 June 2003 (or so it seems) the board of Windainty, constituted by the applicant, resolved to advance the sum of $1,298,700 to Clearmink, as trustee for the Clearmink No. 2 Trust, by way of loan. This was done by the delivery of a bearer promissory note in that sum, executed by the applicant as director of Windainty, and acknowledged by him as director of Clearmink. 39 The accounts for the Clearmink No. 2 Trust as at 30 June 2003 were in evidence. On the balance sheet, the trust is shown to have current assets of $1,300,008. The $8 was cash, presumably the difference between the settlement sum of $10 and the cost of buying two $1 ordinary shares in Windainty. The remaining current assets, $1,300,000 were said to be "promissory note outstanding". On the evidence, the only promissory note that had been delivered to Clearmink, to be held for the Clearmink No. 2 Trust, was the Windainty promissory note (by way of loan) in the sum of $1,298,700. The balance sheet makes no reference to a promissory note in that sum. Rather, as I have indicated, it does refer to a promissory note in the sum of $1,300,000 as to the existence of which there is no other evidence. No such correspondence as is referred to in par 23 above in relation to the Clearmink No. 1 Trust was in evidence in relation to the Clearmink No. 2 Trust. 40 The balance sheet of the Clearmink No. 2 Trust showed non-current assets of $2,952,496, made up as follows. First, there was the sum of $1,300,002. The $2 represented the cost value of the shares held by the trust in Windainty. The $1,300,000 was said to be "provision for increase in value". It was common ground, and I would find, that this entry was supposed to represented the increase in value in Clearmink's two shares in Windainty, brought about by the alteration of the participation rights of the "B" Class shareholders effected by the substitution of clause 127(b) of the constitution on 8 June 2003. Again, there was no explanation as to why the sum was $1,300,000, rather than $1,298,700, since the sum of $1,300,000 would still have been due to the "B" Class shareholders on liquidation. However that minor anomaly may be, this entry on the balance of the Clearmink No. 2 Trust relates to a central feature of the second series of transactions on 8 June; the result of the alteration of the participation rights of "B" Class shareholders in Windainty was that the "A" Class shareholder, Clearmink, received a gain by way of a substantial increase in the value of the two shares which it held. 41 Next, the non-current assets of the trust as at 30 June 2003 included the sum of $1,652,494, which had two components. The first was a loan to Lauravale in the sum of $952,494, and the second was a loan to the applicant and his wife in the sum of $700,000. Save for these accounts, there was no direct evidence of the making of those loans. However, it was common ground that I should treat the loans as existing as at 30 June 2003. 42 The balance sheet for Clearmink No. 2 Trust as at 30 June 2003 showed also current liabilities of $1,300,000. This was said to be a loan from Windainty. I note that, on the evidence, Windainty had lent the trust a sum of $1,298,700, and that the unexplained variation in the liability section of the balance sheet from this sum corresponds with, and balances, the apparent misstatement as to the face value of the Windainty promissory note referred to as one of the current assets of the trust. 43 As non-current liabilities, the balance sheet showed the sum of $1,652,494. This was said to be a non-secured loan from Zinkris. I note that this sum corresponds precisely with the total of the loan said to be made by the trust to the applicant and his wife, and to Lauravale, as described above. 44 The accounts for the Clearmink No. 2 Trust also set out the "trust capital and reserves". This amounted to the sum of $1,300,010 of which $10 was the settlement sum and $1,300,000 was capital profit reserve, constituted by the provision for the increase in the value of the two shares held in Windainty. 45 In the accounts for Zinkris for the year ended 30 June 2003, an extraordinary loss item of $1,298,700 was shown in the profit and loss statement. This was said to be a provision for the diminution in value of the shares held in Windainty. When set against the profits earned by way of distribution from Lauravale as described in par 31 above, this provision had the effect of causing Zinkris to record a loss of $168,701 in that year. 46 In its balance sheet as at 30 June 2003, Zinkris showed the value of its shareholding in Windainty at $1,300,000 less a provision for diminution in value in the amount of $1,298,700. The value of the shareholding was, therefore, $1,300. Also recorded as a non-current asset was the sum of $1,762,826, said to be an unsecured loan to the Clearmink No. 2 Trust . It is tolerably clear that no part of that income represented any distribution to the applicant by Plaster Plus or Zinkris. An assessment issued on 9 March 2004 which was based upon that income as so returned. In May 2005, the applicant received a notice under s 264 of the 1936 Act , requiring him to attend for examination and to produce certain documents. I shall refer further to that notice in due course. The notice appears to have prompted a letter which the applicant sent to the Commissioner on 12 May 2005, and in which he disclosed the details of the Plaster Plus and Zinkris transactions to which I have referred above. After the applicant had attended for examination under s 264 , and after further correspondence passing between his advisers and the Commissioner, the latter made the determinations, and issued the amended assessments, to which I next refer. 48 In making his first determination under Part IVA of the 1936 Act , the Commissioner took the view that there was a scheme, within the meaning of the definition of that word in s 177A , involving the applicant, Plaster Plus, Netscar, Denburrow and Clearmink. He took the view that the scheme was by way of, or in the nature of, dividend stripping, or that it at least had substantially the effect of such a scheme, within the meaning of s 177E(1)(a) of the 1936 Act . He considered that the diminution in the value of the shares in Netscar held by Plaster Plus constituted a disposal of property by Plaster Plus within the meaning of s 177E(2)(d) of the 1936 Act . He formed the opinion that that disposal represented a distribution of the profits of Plaster Plus within the meaning of s 177E(1)(b) of the 1936 Act . The Commissioner also considered that, if Plaster Plus had paid a dividend out of profits equal to the amount represented by the diminution in value of its shareholding in Netscar, the amount of that distribution would have been, or might reasonably be expected to have been, included in the assessable income of the applicant within the meaning of s 177E(1)(c) of the 1936 Act . In the circumstances, the applicant was taken to have obtained a tax benefit for the purposes of s 177F. The Commissioner determined that $1,698,300 was the amount of profits of Plaster Plus which was represented by the diminution in the value of the Plaster Plus shareholding in Netscar. 49 In making his second determination under Part IVA of the 1936 Act , the Commissioner took the view that there was a scheme, within the meaning of the definition of that word in s 177A , involving the applicant, Zinkris, Windainty, Denburrow and Clearmink. He took the view that the scheme was by way of, or in the nature of, dividend stripping, or that it at least had substantially the effect of such a scheme, within the meaning of s 177E(1)(a) of the 1936 Act . He considered that the diminution in the value of the shares in Windainty held by Zinkris constituted a disposal of property by Zinkris within the meaning of s 177E(2)(d) of the 1936 Act . He formed the opinion that that disposal represented a distribution of the profits of Zinkris within the meaning of s 177E(1)(b) of the 1936 Act . The Commissioner also considered that, if Zinkris had paid a dividend out of profits equal to the amount represented by the diminution in value of its shareholding in Windainty, the amount of that distribution would have been, or might reasonably be expected to have been, included in the assessable income of the applicant within the meaning of s 177E(1)(c) of the 1936 Act . In the circumstances, the applicant was taken to have obtained a tax benefit for the purposes of s 177F. The Commissioner determined that $1,298,700 was the amount of profits of Zinkris which was represented by the diminution in the value of the Zinkris shareholding in Windainty. 50 By reason of the determinations to which I have referred, the Commissioner issued a Notice of Amended Assessment on 25 October 2007. That notice disclosed an increase in the applicant's taxable income of $2,997,000, compared with the original assessment issued on 9 March 2004. The additional tax required to be paid under the amended assessment was $1,451,514.32. 51 The Commissioner also imposed an administrative penalty under subdiv 284-C of Div 284 of Part 4 - 25 of Sched 1 to the Administration Act . That penalty was calculated at 50% of the "scheme shortfall amount" (ie 50% of $1,451,514.32) pursuant to s 284-160(a)(i) of that Schedule, reduced by 20% pursuant to s 284-225(1) of the Schedule, on the basis that the applicant had disclosed the details of the scheme after the Commissioner told him that a tax audit was to be conducted of his financial affairs. In the result, the penalty imposed was $580,605.70. Neither did the applicant resist the proposition that at least what occurred at Richmond on 8 June 2003 was a "scheme" for presently relevant purposes, or that diminutions in the value of that shareholding resulted from that scheme. The applicant also accepted that the diminutions were in the sums of $1,698,300 and $1,298,700 respectively (as, indeed, the annual accounts of Plaster Plus and Zinkris indicated). Since those sums were the amounts determined by the Commissioner to be the amounts of profits the distribution of which, in his opinion, represented those diminutions in value, and since the applicant was the only shareholder in each of Plaster Plus and Zinkris, it would seem to be clear that, had Plaster Plus and Zinkris paid dividends out of profits of those amounts respectively, they might reasonably be expected to have been included in the assessable income of the applicant, as required by par (c) of subs (1). While it was accepted that the series of transactions carried out on 8 June 2003 fell within the definition of "scheme" in s 177A , it was contended that the schemes did not extend beyond the transactions by which the participation rights of the "B" class shareholders in Netscar and Zinkris were diminished. In particular, it was said that the loans by the Clearmink No. 1 and No. 2 Trusts to the applicant, his wife and Lauravale were not part of the scheme. 2. It was contended that the schemes were not by way of or in the nature of dividend stripping, and did not have substantially the effect of schemes which were by way of or in the nature of dividend stripping, within the meaning of par (a) of s 177E(1) of the 1936 Act . 3. It was contended that, to the extent that the schemes involved disposals of property within the meaning of s 177E , those disposals did not represent distributions of the profits of Plaster Plus or Zinkris; or at least not a distribution to the applicant. It was not sufficient, it was said, for Clearmink to have benefited from the disposals. 4. It was contended that s 177E simply did not apply in the circumstances of the present case, since that section was a "provision of last resort". As I understand it, this contention was based upon the proposition that various other provisions of the legislation expressly permit a taxpayer to take steps of the kind taken by the applicant in the present case, and thereby contemplate that the taxpayer may secure access to the profits of a company in tax-free form. Section 177E , therefore, should not be permitted an operation which would cut across the apparent intention of those other provisions. I accept that submission at the general level, but note that Hart was, relevantly, concerned with the concept of a tax benefit as dealt with in s 177C and with purpose as dealt with in s 177D. In the case of s 177E , Pt IVA applies because the requirements of pars (a)-(d) of subs (1) have been satisfied in a particular case, not because of the operation of s 177D. Likewise, under s 177E the taxpayer is taken to have obtained a tax benefit because of the operation of par (f), without the need for recourse to s 177C. Counsel for the applicant recognised these points of detailed departure from the situation in Hart , but submitted that the observations in Hart had reference to s 177E in a way that required the scheme to be confined to the transactions which, according to the Commissioner, were by way of or in the nature of dividend stripping, or which were said to have that effect. In particular, he submitted that a scheme of the kind contemplated by s 177E could not include any transactions which occurred later in time than the disposal of property by reference to which subs (1) operates, and that any such later transactions had to be ignored. Specifically in the present case, according to counsel for the applicant, nothing later than the resolutions of the general meetings of Netscar and Windainty by which the participation rights of holders of "B" Class shares were altered could be treated as part of the schemes. 56 Although little turns on it in the facts of the present case, I am inclined to think that counsel's submission fails to recognise the distinction between the operation of s 177E , on the one hand, and the characterisation of the scheme which, as at least one of its results, produces a disposal of property of the kind to which the section refers, on the other. Drawing from the definition of "scheme" in s 177A , the latter question will be whether there was any scheme, plan, proposal etc (including a unilateral one --- see s 177A(3)) which was by way of or in the nature of dividend stripping, or which substantially had that effect. In answering this question, the court should not, in my view, turn a Nelsonian eye to facts, circumstances or transactions which have the capacity to throw light on the matter merely because they post-date the disposal of property by reference to which the operation of the section is complete. For one thing, s 177E requires only that the disposal of property be a result of the putative scheme: it may be that the plan, proposal etc in question involves, in a particular case, the doing of things after the disposal of property is complete. For another thing, as will appear presently, the concept of "dividend stripping" is not defined in the 1936 Act , and, in one of its aspects, involves a consideration of purpose. There is, in my view, no warrant in s 177E for the a priori exclusion of any facts or events, before or after the actual disposal by reference to which subs (1) operates, from that consideration. 57 Consistently with what I take to have been the High Court's injunction in Hart , I do not propose to divorce my identification of the schemes in the present case from the matter of dividend stripping itself. Whether there were schemes which were by way of or in the nature of dividend stripping, or which had substantially that effect, should, in my view, be approached as a composite inquiry in the context of which all proven facts having a rational tendency to provide the answer should be placed on the table for such assistance as they provide. 58 As I have said, the applicant accepted that there were schemes in the present case but contended that they involved no transactions beyond those by which the participation rights of the "B" Class shareholders in Netscar and Windainty were altered. As will appear below, I consider that the matters arising under s 177E can be decided consistently with that contention and that, for that reason, probably little turns on whether the schemes went beyond those transactions or not. However, to be faithful to the facts as they appear in the evidence, I would have to note that (in the case of the Plaster Plus transactions) the loans from Clearmink to the applicant and his wife ($900,000) and to Lauravale ($428,924) were related closely to the events of 8 June 2003 both in time and in purpose. As to timing, I have held above that the $900,000 loan was made on or very shortly before 8 June 2003. There was no evidence of the actual timing of the $428,924 loan, but it occurred before 30 June 2003. The sum of these two loans corresponded precisely with the accumulated, undistributed, profits of Plaster Plus as at 30 June 2002. In the case of the Zinkris transactions, the loans from Clearmink to the applicant and his wife ($700,000) and to Lauravale ($952,494) could only have been made on 8 June 2003, or between then and 30 June 2003. The applicant, on whom the onus lay, gave no evidence on any of these matters. All these loans were, I infer, the ones to be made by the "trustee of new trust" (ie Clearmink) as shown on the schematic representation in the confidential transaction summary --- see par 8 above. As there shown, the loans had every appearance of being part of the "scheme, plan, proposal [etc]" (to use the words of the definition of "scheme" in s 177A) implemented in each of the series of transactions in the present case. In defending the determinations, counsel for the Commissioner relied upon both limbs of par (a) of s 177E(1) of the 1936 Act . They submitted that the schemes (however they might be defined) were by way of, or in the nature of, dividend stripping or, alternatively, had substantially the effect of such a scheme. Counsel for the applicant submitted that the schemes in the present case fell into neither category. 60 The term "dividend stripping" is not defined in the 1936 Act . The meaning of the term as used in s 177E was the subject of detailed consideration by Hill J in CPH Property Pty Ltd v Commissioner of Taxation (1998) 88 FCR 21 and by each of the Full Court and the High Court when that case went on appeal: see Commissioner of Taxation v Consolidated Press Holdings Limited (No 1 ) [1999] FCA 1199 ; (1999) 91 FCR 524 (" Consolidated Press (FC) ") and Commissioner of Taxation v Consolidated Press Holdings Ltd [2001] HCA 32 ; (2001) 207 CLR 235 (" Consolidated Press (HC)") respectively. That case involved a series of transactions, clearly well-organised and co-ordinated (and in that sense recognisable as a scheme) by which shares in a company with accumulated profits were transferred to other entities in the same group in circumstances which, but for the absence of a tax avoidance purpose, might well have constituted dividend stripping. Hill J held that, because of the absence of that purpose, the transactions were not a scheme by way of or in the nature of dividend stripping. However, his Honour held that the transactions fell within subpar (ii) of s 177E(1)(a) because they had substantially the effect of a scheme by way of or in the nature of dividend stripping, notwithstanding that they were not accompanied by a tax avoidance purpose. In that respect, his Honour's judgment was reversed by the Full Court, and that reversal was upheld by the High Court. 61 In Consolidated Press (FC) , their Honours concluded that case law demonstrated that the term "dividend stripping" was "applicable to a range of transactions provided certain essential characteristics are present" (91 FCR at 560 [132]). Specifically, their Honours relied upon the judgment of Gibbs J in Commissioner of Taxation (Cth) v Patcorp Investments Limited (1976) 140 CLR 247 , and upon his Honour's identification of four previous judgments of the High Court in which dividend stripping operations had been involved. The use of the words "by way of or in the nature of" suggests that variations from the paradigm will not necessarily result in the scheme being excluded from the first limb, provided it retains the central characteristics of a dividend stripping scheme. Since the legislation does not identify those central characteristics, it is necessary to look to the decided cases preceding the 1981 Act and to the extrinsic materials accompanying the relevant legislation. We have identified what we would see as the central characteristics of a dividend stripping scheme, by reference to the High Court decisions discussed in Patcorp. The six characteristics so identified are set out in [136] and [137]. They are similar to those identified by the primary judge as comprising the "essential character" of a dividend stripping operation. The six characteristics to which their Honours referred were the five identified by bullet points, as set out in par 61 above, together with the predominant purpose of the vendor shareholders avoiding tax on a distribution of dividends by the target company. Their Honours held that, for a scheme to be by way of or in the nature of dividend stripping, it had to display those characteristics at least. It is, therefore, by reference to the presence or absence of those characteristics that the schemes in the present case should be examined for consistency with the broad description contained in subpar (i) of s 177E(1)(a) of the 1936 Act . 63 Counsel for the applicant submitted that, although Plaster Plus had substantial undistributed profits, there was no potential tax liability either for itself or for the applicant. As to Plaster Plus itself, it was pointed out that tax had been paid (in the 2002 year) on the profits in question, and that there was, therefore, no further potential tax liability. As to the applicant, it was pointed out that there was no evidence to suggest that Plaster Plus intended to distribute the profits in question to its only shareholder (the applicant), in which circumstances it could not be concluded that the undistributed profits of Plaster Plus created a potential tax liability for the applicant. 64 I accept that, because tax had already been paid, the undistributed profits did not create a potential tax liability for Plaster Plus itself. However, the position is different in the case of the applicant. I do not consider it sufficient to avoid the first of the six points in Consolidated Press (FC) to assert that the profits in question might conceivably have forever remained undistributed. Indeed, the very point of the enactment of s 177E in 1981 was to catch schemes which might not otherwise be caught because it might not be possible to say that dividends would, absent the scheme, most likely have been paid. This passage was among those noted by the High Court in Consolidated Press (HC) (207 CLR at 268-269 [108]), and by the Full Court itself in the same case: see 91 FCR at 564 [150]. The particular aspect of the design of s 177E referred to in the Explanatory Memorandum is to be seen in par (c) of subs (1), which states a hypothesis: it is not necessary that a dividend would, or would probably, have been paid. The requirements of par (c) are satisfied where a dividend, if paid , would have been included, or might reasonably have been included, in the assessable income of the taxpayer. 65 In the circumstances, I do not believe that the first of the six characteristics identified by the Full Court should be understood as requiring that the undistributed profits would, or even would probably, have created a tax liability of the kind indicated. Rather, when they referred to "a potential tax liability ... for ... shareholders", their Honours were, in my view, speaking of a liability which had the potential to arise if dividends were so paid. The use of the word "potential" makes it clear that their Honours were referring to what probably would happen if profits were distributed in a conventional way. It is, in my view, no answer for the applicant to say that it had not been positively established that profits would inevitably have been so distributed by Plaster Plus in the facts of the present case. 66 As it happens, there is every reason to suppose, and I would find on the probabilities, that Plaster Plus would have distributed its retained profits, or at least a substantial part of them, to the applicant in a form which would represent income in his hands. On the evidence, Plaster Plus never traded. Its only source of income was a distribution from Lauravale in the 2002 year. Had it indefinitely refrained from distributing its retained profits, those profits would have been of no use to anyone. The applicant, as the only shareholder, had an obvious interest in accessing the value represented by those profits. As a matter of reality, it was inevitable that he would take steps to secure, for himself or his associates, the benefit of those profits. Conventionally, he would do so by procuring Plaster Plus to pay dividends. It was submitted for the applicant, however, that, since he had borrowed $900,000 from Plaster Plus in the 2002 year, and since he could effectively remain permanently indebted to Plaster Plus, he had a means of accessing the value tied up in the retained profits which did not involve the payment of dividends. This was said to be because the loan did, and any future such loans would, comply with Div 7A of Part III of the 1936 Act . This submission requires me to consider the requirements of that division in the context of the arrangements made by the applicant with Plaster Plus. 67 Central to an understanding of those arrangements was the effect of ss 109D and 109E of the 1936 Act . Subject to a number of qualifications set out in Subdiv D, s 109D deemed a loan made by a private company to a shareholder, which was not fully repaid in the year in which it was made, to be a dividend paid to the shareholder at the end of that year. Subject to s 109Y , the amount of the dividend was the amount of the loan that remained unrepaid when the company lodged, or was obliged to lodge (whichever was the earlier) its return of income for that year. One of the qualifications in Subdiv D was that for which s 109N provided. A loan was not taken to be a dividend if the agreement for the loan was in writing, if the rate of interest equalled or exceeded the "benchmark rate" and if the term of the loan did not exceed the "maximum term" worked out in accordance with s 109N(3). The loan of $900,000 from Plaster Plus to the applicant satisfied the requirements of s 109N: the agreement for the loan was in writing, the rate of interest specified was the benchmark rate and the term did not exceed the maximum term. This meant that the loan was not deemed to be a dividend in the 2002 year. 68 The 2003 year was the concern of s 109E. At the relevant time, that section provided (subject to presently irrelevant qualifications) that, when a private company made an "amalgamated loan" to a shareholder in a previous income year, when the loan was not repaid at the end of the current year, and when the current year was the first year of income in which the amount paid to the company in respect of the loan was less than the minimum yearly repayment worked out under subs (5), then, subject to s 109Y , the company was taken to pay a dividend to the shareholder (at the end of the current year) in the amount of the unrepaid part of the loan. An "amalgamated loan" was a loan which was not fully repaid during the year in which it was made and which would have been deemed to be a dividend under s 109D (apart from s 109N). The loan of $900,000 by Plaster Plus to the applicant in the 2002 year was an amalgamated loan apropos the 2003 year for the purposes of s 109E. Had the loan not been repaid by 30 June 2003, and had the applicant not made the minimum yearly repayments worked out under subs (5), the unrepaid part of the loan would have been treated as a dividend paid by Plaster Plus to the applicant in the 2003 year. 69 The loan agreement was written specifically to avoid these consequences. It contained a recital to the effect that Plaster Plus and the borrowers (the applicant and his wife) "wish to ensure that the Loan is not deemed to be a dividend pursuant to Division 7A of the Act, by the Loan being an excluded loan pursuant to section 109N of the Act". Section 109N had a role to play in ensuring that the loan was not deemed to be a dividend in the 2002 year. INTEREST In each year of income following the year in which the Loan is made, the Borrowers agree to pay interest on the outstanding balance of the Loan at such rate as agreed between the parties but being not less than the benchmark interest rate, such interest accruing daily and payable annually in accordance with clause 4. 4. (2) The Borrowers may repay the Loan prior to the due date for repayment, in which case interest will abate in respect of the Loan. A = The amount of the Loan not repaid by the end of the previous year of income. I = The benchmark interest rate for the year of income for which the minimum yearly repayment is being calculated. 70 Also in the evidence, but apparently not part of the loan agreement as such, was a table headed with the name of Plaster Plus and described as "Break up of interest and principle [sic] compnent [sic] of yearly dividend. That endorsement seems to reflect an assumption that the loan was repaid on 8 June 2003. 71 Counsel for the Commissioner submitted that the loan agreement, and the table set out above, made it clear that the applicant intended to avoid the unrepaid part of the loan being treated as a dividend under s 109E by making the minimum yearly repayments for which subs (5) and (6) provided, together with interest. Critically, the way this was proposed to be done was for the applicant to receive dividends as shown in the column in the table headed "total div". Whether or not it was intended that money would in fact change hands either way, it seems inevitable that, if payments of principal and interest had been paid on the loan as intended, and as required to avoid the deeming provisions of Div 7A, the applicant would have received dividends from Plaster Plus. 72 The first requirement of dividend stripping set out in Consolidated Press (FC) is not that profits in the amount of the 177E disposal would necessarily have been distributed as dividends in the year of the disposal. It is merely that the existence of the undistributed profits created a potential tax liability for shareholders. In the present case it is clear that the means chosen by the applicant to have practical access to the undistributed profits of Plaster Plus --- the loan of $900,000 --- brought with them the need for the applicant to receive dividends sufficient to fund repayments of principal and payments of interest. I consider that, for this reason in addition to those referred to above, the first characteristic identified in Consolidated Press (FC) was present in the circumstances facing the applicant. 73 Turning to the Zinkris scheme, there was no pre-existing loan to the applicant and his wife as there was in the case of the Plaster Plus scheme. What actually happened in relation to Zinkris, and in what order, is complicated by the manifest artificiality of the transactions concerned. As noted in par 31 above, it was not until 29 June 2003 that Zinkris received the distribution (from the Lawrence Family Trust) that appears to have constituted its only income for 2002-2003. But it seems clear that the transactions of 8 June 2003 were based on the anticipation that there would be a distribution, and that the source of the funds which would support the promissory note in favour of Windainty in the sum of $1,298,700 would be the after-tax profits of Zinkris for that year. On any view, Zinkris had substantial undistributed profits creating a potential tax liability for the applicant. In this respect, I would apply the reasoning set out in pars 64-65 above to the circumstances of Zinkris. It is true that there was not a loan, or the repayment schedule, that existed in the case of Plaster Plus, but the existence of the undistributed profits created a potential tax liability for the applicant nonetheless. Indeed, the Plaster Plus loan, and the repayment schedule, demonstrated how that potential could not be avoided merely by the making of such arrangements. 74 However, I could not hold that the second, third, fourth or fifth of the characteristics identified in Consolidated Press (FC) were, or that any of them was, present in this case. There was no sale or allotment of shares in Plaster Plus or Zinkris. Necessarily, there was no payment of a dividend to the allottee (or, should it matter, to the applicant). Since there was no "purchaser" of shares, there was necessarily no question of such a person escaping income tax. There were no "vendor shareholders". Counsel for the Commissioner urged upon me the purpose of Pt IVA of the 1936 Act , and submitted that what the applicant had done here was well within the scope of the evil to which s 177E is directed. The fact is, however that the Full Court in Consolidated Press (FC) held that a scheme would not be in the nature of dividend stripping unless it retained the central characteristics to which their Honours referred, including those mentioned in this paragraph which were manifestly absent from the transactions entered into by the applicant in relation to Plaster Plus and Zinkris. In the circumstances, I would conclude that the schemes were not by way of or in the nature of dividend stripping, as required by subpar (i) of s 177E(1)(a) of the 1936 Act . 75 I shall defer my consideration of the requirement of a dominant tax avoidance purpose until after I have dealt with operation of s 177E(1)(a)(ii). The Parliament has adopted a popular compendious metaphor for an organised series of transactions which itself is not otherwise identified. In subpar (ii) of s 177E(1)(a) , the legislation requires the reader to envisage a series of transactions which is not properly described by that metaphor, but which has the effect of a series of transactions which is. Further, the section distinguishes between the effect of the transactions (the concern of subpar (ii)) and the result of them, namely, the disposal of property of the company which, in the opinion of the Commissioner, represents a distribution of all or a part of the profits of the company. Clearly, for a scheme to have such a result is insufficient to justify the conclusion that it has the effect to which subpar (ii) refers. In other words, that subparagraph requires the court to look at circumstances other than the mere fact that company property has been disposed of in a way which represents a distribution of profits. It seems that the Parliament wanted to catch "variations" on dividend stripping schemes, and considered that the unifying principle of all such schemes and variations was that they had the effect of placing company profits in the hands of shareholders in a tax-free form, in substitution for taxable dividends. This is, in my view, a significant indication of Parliamentary purpose, since it treats such an effect as distinct from the result of a scheme of the kind contemplated: s 177E does not require that shareholders themselves, as a "result" of the scheme, receive the profits distributed by way of the disposal of property in question. It lists the conditions which must exist for section 177E to apply and the results which flow from the application of the section. Paragraph (a) sets out the initial and key test that there be a scheme that in fact is either one by way of or in the nature of dividend stripping or one having substantially the effect of such a scheme. Schemes within the category of being, or being in the nature of, dividend stripping schemes would be ones where a company (the "stripper") purchases the shares in a target company that has accumulated profits that are represented by cash or other readily-realisable assets, pays the former shareholders a capital sum that reflects those profits and then draws off the profits by having paid to it a dividend (or a liquidation distribution) from the target company. In the category of schemes having substantially the same effect would fall schemes in which the profits of the target company are not stripped from it by a formal dividend payment but by way of such transactions as the making of irrecoverable loans to entities that are associates of the stripper, or the use of the profits to purchase near-worthless assets from such associates. In Consolidated Press (HC) , the High Court said that the third paragraph quoted above provided "a clue to the understanding of s 177E(1)(a)(ii)" (207 CLR at 276 [139]). What sub-par (ii) was aimed at was a scheme that would be within sub-par (i) except for the fact that the distribution by the target company was not by way of a dividend or deemed dividend. Dividend stripping does not lose its connotation of tax avoidance purpose. But a scheme may have substantially the effect of a scheme by way of or in the nature of dividend stripping even though some means other than a dividend or deemed dividend is employed to make the distribution. In particular, it does not require that any scheme which produces a substantial consequence which is in any respect the same as a consequence of a dividend stripping scheme is within the sub-paragraph. If it were otherwise, a sale of shares cum dividend, followed by a payment of a dividend to the purchaser, would ordinarily be caught. 79 Counsel for the applicant relied on these passages in Consolidated Press (HC) as providing support for the proposition that the only respect in which subpar (ii) travels beyond the scope of subpar (i) is that it catches schemes by which the profits of the target company (once that company is under the control of the new owner of its shares) are distributed otherwise than by payment of a dividend. Only such schemes, it was submitted, had substantially the effect of a scheme by way of or in the nature of dividend stripping. It remained necessary for the shares in the target company first to have been purchased (or otherwise obtained) from the original shareholders. This had not occurred in the present case: the shareholding in Plaster Plus and Zinkris remained in the hands of the applicant throughout. 80 If read as though they purported to stand as exhaustive statements of the reach of s 177E(1)(a)(ii) , the words of the High Court judgment, and of the Explanatory Memorandum, do provide support for the submission made on behalf of the applicant. However, I do not so read those words. In the case of the Explanatory Memorandum, the relevant paragraph is expressed as though providing examples or indications only, and not as though definitive. I do not read the paragraph as indicating a legislative intention that there always need be a separate person or entity, into whose hands the relevant shareholding has first passed. Indeed, the reference to the purchase of near-worthless assets, as an alternative to a formal dividend payment, amply accommodates a situation in which the target company itself purchases such assets from associates of its existing shareholders. In the present case, Plaster Plus and Zinkris purchased "B" Class shares in Netscar and Windainty, the consideration for which provided Netscar and Windainty with capital of equivalent value. Plaster Plus and Zinkris then consented to changes in the constitution of Netscar and Windainty, the manifest effect of which was to render their own shareholdings "near worthless". Although I would not construe s 177E through the prism of the fact situation in the present case, that situation does provide an example of a way in which profits of a company may be placed into the hands of an associate of the taxpayer in a tax-free form. That s 177E(1)(a)(ii) should be construed so as to cover examples of this kind is consistent with the operation of the section as explained in the paragraph of the Explanatory Memorandum set out in par 78 above. 81 In the case of the judgment in Consolidated Press (HC) , their Honours' concern was to lay out their reasons for holding that the presence of a tax-avoidance purpose was a requirement of subpar (ii), no less than of subpar (i). That was why a scheme which produced a substantial consequence which was in any respect the same as a consequence of dividend stripping would not ipso facto fall within subpar (ii). When they pointed out that the subparagraph was "aimed at" a scheme that would be within subpar (i) save for the fact that the distribution was not by way of dividend, their Honours were, in my respectful view, stressing that the difference between subpar (i) and subpar (ii) lay in the means adopted to distribute the profits of the target company. It followed that the requirement of a tax-avoidance purpose, being basic to the idea of dividend stripping in any form, existed equally under subpar (ii). 82 I do not think that the High Court's words --- "except for the fact that the distribution by the target company was not by way of a dividend or deemed dividend" --- should be pressed into service to justify the conclusion that a scheme will never fall within subpar (ii) unless it involves the transfer of shares in the target company to a person or entity separate from the original shareholders. That would be to extend the meaning of those words beyond anything that their Honours had in contemplation. Structurally, the scheme in the present case is quite different from that which was before the High Court in Consolidated Press (HC). I think, with respect, that their Honours would be surprised to be told that they had, in that case, ruled that a scheme which involved the stripping of profits out of a target company and the placement of a corresponding capital sum into the assets of a trust for the original shareholder and his family could never be held to have the effect referred to in subpar (ii) for the sole reason that the shareholding in the target company had not changed hands. 83 I return to the central characteristics of dividend stripping as identified in Consolidated Press (FC) . The first characteristic cannot intelligibly be applied with reference to the "effect" of a scheme: it is concerned only with the starting point of the scheme, as it were. As was made clear by the Full Court and in Consolidated Press (HC) , the tax avoidance purpose is required under subpar (ii), no less than under subpar (i), of s 177E(1)(a). That leaves the second, third, fourth and fifth characteristics, which I have held to be absent from the facts of the present case. Do those facts disclose a scheme that had substantially the effect of a scheme with those characteristics? 84 To answer this question, as it seems to me, requires one to consider a notional scheme which did not in fact exist but which would have had the characteristics to which I refer; and to consider then the effect of that notional scheme. Both in the notional scheme referred to and in the present case the taxpayer, otherwise presumptively entitled to dividends, would receive a capital payment (or benefit) which would have been funded by the profits of the target company. In the notional scheme the capital receipt would consist of the proceeds of the sale of his or her shares. In the present case an accretion of capital, the same in effect as such a receipt, arose from the increase in the value of the assets held by the Clearmink No. 1 and No. 2 Trusts, to which the applicant and his family were beneficially entitled. In both cases, the profits of the target company would effectively have been disposed of, and would no longer have been a potential source of income tax obligations, either for the taxpayer or for anyone else. Both for the taxpayer and for the revenue, the effects of the schemes in the present case were substantially the same as the effect of a scheme by way of or in the nature of dividend stripping. 85 It is convenient at this point to return to the identification and limits of the schemes which I have held to exist. Having considered the matter of dividend stripping, I have concluded that the schemes had substantially the effect of a scheme by way of or in the nature of dividend stripping. To reach that conclusion, I did not need to look beyond the increase in value in the shareholding of Clearmink in Netscar and Windainty. At that point the value --- to use a neutral term --- that started out as undistributed profits in Plaster Plus and Zinkris had become accretions to the capital of the Clearmink trusts. Subject only to the discretionary nature of those trusts, the applicant and his associates were beneficially entitled to that capital. To reach the conclusion that the scheme substantially had the effect of dividend stripping, it is sufficient that associates of the applicant had derived the benefit, as capital, of the profits stripped out of Plaster Plus and Zinkris. In the circumstances, the question whether the scheme went no further than the resolutions altering the participation rights of the "B" Class shareholders was, in my view, moot. 86 However, I would go further and indicate that I consider that the schemes did in fact go further than that, and involved loans to the applicant and his wife, and to their family trust, as indicated on the schematic diagram in par 8 above. In the light of the extremely spare nature of the applicant's evidence, it is not easy to identify a purpose for these loans. Perhaps they were thought to be a means by which funds in the form of capital could be transferred to the applicant or his associates, pending the winding up of Netscar and Windainty. The purpose of the loans from the Clearmink No. 2 Trust is rendered more problematic again by the fact that those loans totalled $1,652,494, where as the increase in value of the trust's shareholding in Windainty was $1,298,700 only. Counsel for the applicant did not seek to explain any of these matters, being content to submit that, because of the terms of s 177E(1)(a) , no fact beyond the deemed disposal of property could be treated as part of the schemes or either of them. In the circumstances, I would find that the scheme in each case --- in the sense of a scheme, plan or proposal --- included the loans to which I have referred. The requirement of a tax avoidance purpose flows from the use by Parliament of the undefined expression "a scheme by way of or in the nature of dividend stripping". What is important is the nature of the scheme, not the subjective motives or intentions of any of the participants or the beneficiaries. The purpose of the scheme is to be assessed from the perspective of the reasonable observer, having regard to the characteristics of the scheme and the objective circumstances in which the scheme was designed and operated. Their Honours also observed that the purpose was ordinarily to be looked at from the perspective of the vendor shareholders. 88 Although these observations by the Full Court related to subpar (i) of s 177E(1)(a) , they apply equally to subpar (ii), in the context of which a tax avoidance purpose is just as necessary. The only evidence of the applicant's (or, by extension, his companies') actual purpose was that set out in the passage in his affidavit which I have extracted in par 3 above. In answer to the point that that passage is barely sufficient to establish that the applicant had a commercial, non-tax, purpose in mind when he entered into the transactions which effected the distributable surplus arrangements in the present case, his counsel submitted that, in the present context, what matters is the purpose of the scheme rather than that of the taxpayer, and that purpose is to be objectively discerned. He submitted that what the applicant said, or omitted to say, on the subject of his own (subjective) purpose would not advance the argument either way. I accept that submission at the general level, and propose to approach the matter of the purpose of the scheme objectively; although it was the applicant himself who bore the onus in relevant respects and who was best placed to give evidence of surrounding facts and circumstances, if there were any, from which a non-tax purpose might be inferred. 89 Counsel for the applicant submitted that I should find, on the evidence objectively viewed, that the predominant purpose of the scheme was to protect the value which resided in the undistributed profits of Plaster Plus by transferring it to, and then sheltering it in, the discretionary trust of which Clearmink was the trustee. In this respect, counsel pointed out that, by reason of the undistributed profits of Plaster Plus, the applicant's share in that company was a valuable asset. Because of the nature of his regular business dealings, the applicant should be regarded as having every reason to apprehend that proceedings might be taken against him, and that he might become liable to awards of damages. If such occurred, the applicant's share in Plaster Plus, being held absolutely by him, would be exposed to the claims of his creditors. If the value represented by that share were held in a discretionary trust, that risk would not arise. There was, however, no objective evidence from which I could infer that the predominant purpose of the scheme was as so described. The evidence set out par 3 above is manifestly insufficient for the applicant's present purposes. There was no evidence of the applicant ever having been sued, or been threatened with proceedings, in any relevant context. There was no evidence of the actual commercial circumstances facing the applicant in the period leading up to the development of the scheme. 90 By contrast, the idea for the scheme seems to have emerged from sources which were quite separate from the individual commercial imperatives facing the applicant, whatever they were. The idea was put to the applicant by solicitors from whom the applicant received taxation advice. The transactions involved were what Mr Collie "was recommending to some of his clients" (to use the applicant's recounting of Mr Collie's words). It was as clear as could be that the applicant knew nothing about the technical workings of the schemes, and relied wholly on the advice he received. Although this might equally have been the case had the schemes had a commercial purpose, in such a case it seems improbable that the applicant, a seemingly competent and worldly man of business, would have so clearly failed to understand the means by which the schemes would have been of practical utility to him. 91 Counsel for the applicant submitted that I should find that Plaster Plus had no need to distribute its retained profits, and that the applicant, having the benefit of the $900,000 loan from Plaster Plus transacted in the 2002 year, was under no pressure to obtain access to those profits by way of dividend. In the light of the considerations referred to above as to the relationship between the loan and the provisions of Div 7A of Part III of the 1936 Act , I cannot accept that submission. 92 The submissions made on behalf of the applicant that the Zinkris scheme had a purpose other than the avoidance of tax, to the extent that it was made at all, is of no substance. The proposition as to the need to protect the undistributed profits of Plaster Plus in a discretionary trust had no application to Zinkris. As counsel for the Commissioner pointed out, it was not until the Zinkris scheme was in the course of implementation (in fact it was not until 29 June 2003) that Zinkris had any profits at all. The source of its profits was, ironically perhaps, a discretionary distribution from the applicant's family trust. That is to say, having started out in a trust, where, to adopt the applicant's rationale offered in relation to Plaster Plus, they would be protected from third party claims, the funds in question were distributed to Zinkris where, according to that rationale, they would not be so protected. There was neither evidence nor submission from the applicant to explain these manoeuvres. The nature of the scheme, and the background to it, loudly bespeak tax avoidance as the dominant purpose thereof. 93 I am satisfied that the dominant purpose of each scheme in the present case was the avoidance of tax by the applicant. I use the term "avoidance", of course, not in any pejorative sense, but as indicating the purpose of bringing about a result in which the applicant would pay less tax than would otherwise be payable. That was in the sense in which the term was used in Consolidated Press (FC) . It was accepted that the Commissioner had in fact formed the opinion required by s 177E(1)(b) , but it was submitted that that opinion was not open to the Commissioner in the circumstances, since the facts could not sustain the conclusion that there was a "distribution", or at least that there was a distribution to the applicant. 95 Under s 177E(1)(b) , counsel for the applicant submitted first that the diminution in the value of Plaster Plus's shareholding in Netscar and of Zinkris's shareholding in Windainty could not qualify as a "distribution" of the profits of Plaster Plus and Zinkris. I was referred to the judgment of Sweeney J in Commissioner of Taxation v Black [1990] FCA 267 ; (1990) 25 FCR 274 , where his Honour observed that the word "distribution" in par (a) of the inclusive definition of "dividend" in s 6(1) of the 1936 Act "involves, at least, a dealing out or bestowal": 25 FCR at 281. In that case his Honour held that the forgiving of a debt owed by a shareholder to the company in question did not constitute a "distribution" in that statutory context. 96 In my view, the judgment of Sweeney J in Black does not govern the present situation. First, his Honour was concerned with the question whether the forgiving of a debt was in fact a distribution. Here, the question is whether a disposal of property "represents" a distribution. The language of s 177E(1)(b) is such as to comprehend a movement of property away from the company in question which is effectively the same as, or is tantamount to, a distribution of profits. Secondly, the operation of par (b) cannot, in my view, be divorced from the nature of the transactions which, according to subs (2), might constitute a "disposal" by reference to which the paragraph operates. For example, it would be no answer for a taxpayer to say that a bailment of property, by reason only of it being a bailment rather than a "dealing out or bestowal", did not constitute a distribution of the kind referred to in par (b). In the circumstances of the present case, s 177E , and therefore par (b) of subs (1), has the potential to extend to a transaction which has the effect, even the indirect effect, of diminishing the value of any property of the company. It could not be an answer to what would otherwise be the operation of s 177E to propose that a transaction of this kind cannot represent, in whole or in part, a distribution of the company's profits for the very reason that no observable movement of property has occurred. The section extends to transactions in which there is no "dealing out or bestowal" and, in my view, par (b) of subs (1) must be construed accordingly. 97 It will be apparent from what I have written above with respect to the matter of dividend stripping that I take the view that it was open to the Commissioner to form the opinion that the transactions by which Plaster Plus's shareholding in Netscar and Zinkris's shareholding in Windainty were diminished in value represented distributions of the profits of Plaster Plus and Zinkris within the meaning of s 177E(1)(b). Indeed, they were effectively so represented in the books of Plaster Plus and Zinkris themselves: they were entered on those companies' profit and loss statements for the year ended 30 June 2003 by way of provisions for losses arising from diminutions in the value of shares. 98 It was also submitted on behalf of the applicant that, at most, the disposal of property represented a distribution of profits to Clearmink, but that the applicant himself was not the beneficiary of the distribution. Whether or not there is any factual basis for this submission, s 177E(1)(b) covers a distribution either to a shareholder in the company or to any other person. If it be the case that the applicant was not the beneficiary, that does not affect the operation of par (b). S 177E A "PROVISION OF LAST RESORT"? The example in point, according to counsel for the applicant, was Div 7A of Pt III , under which non-arm's-length loans by companies to shareholders were not treated as dividends so long as certain conditions were met (which they were in the case of Plaster Plus). It was submitted that it would be antagonistic to the achievement of the objects implicit in Div 7A if transactions designed to take advantage of, for example, s 109N were then treated as dividend stripping under s 177E. 100 I do not accept the submission made on behalf of the applicant. First, and most obviously, the relationship between Pt IVA and other provisions of the 1936 Act is explicitly dealt with in s 177B. Counsel's submission seems clearly to amount to an invitation to the court to hold, contrary to s 177B(1), that the provisions of Pt IVA are limited in their operation by other provisions of the Act. 101 Secondly, to propose that Div 7A of Pt III treats certain loans as not amounting to income, or dividends, under certain circumstances is to misunderstand the provisions of that division. Loans are not income or dividends as ordinarily understood. They are deemed to be so in the circumstances referred to in ss 109D and 109E. In the case of s 109D, exceptions arise under s 109N. Section 109E contains its own exceptions. The effect of these exceptions is to negative what would otherwise be the deeming provisions of s 109D and 109E. In other words, the normal position, as though there were no legislative deeming, is thereby restored. That position is then subject to such other provisions of the 1936 Act as may, in particular circumstances, have something to say about it. Those other provisions are not rendered inoperative just because ss 109D and 109E have no role to play in relation to the loan in question. 102 For the above reasons, I do not accept the submission of the applicant that s 177E is no more than a provision of last resort. Rather, counsel focussed his attention, relevantly to s 284-145(1), upon subpar (i) of par (b) thereof. He submitted that the applicant did not enter into or carry out the scheme with the sole or dominant purpose of himself, or of any entity, getting a scheme benefit from the scheme. 104 Counsel relied upon Federal Commissioner of Taxation v Starr [2007] FCAFC 204 ; (2007) 164 FCR 436 , in which it was held that the "purpose" to which s 248-145(1)(b)(i) refers is the subjective purpose of the entity entering into the scheme, that is to say (in most cases at least), the taxpayer. With respect to this aspect, counsel reiterated his submission that the applicant's purpose of entering into the transactions which I have held to constitute schemes was to enable him to shelter the profits of Plaster Plus and Zinkris in discretionary trusts. 105 On the evidence, I could not find that that was the applicant's purpose. Although a statement by the applicant that such was his purpose might have been self-serving and of little weight, the fact is that the applicant made no such statement in his evidence in the case. For reasons set out at pars 89-92 above, neither are the surrounding facts and circumstances of any assistance to the applicant in this respect. Although I accept the point made by counsel for the applicant that s 284-145(1)(b)(i) requires consideration of subjective, rather than of objective, purpose, it is a normal and legitimate part of the fact-finding process to infer what was a person's subjective purpose from circumstances confronting him or her, and from things done by, and statements made by, him or her, in response to those circumstances. As I have held above, the circumstances surrounding the applicant's undertaking of the schemes in the present case so strongly bespeak a purpose on his part of obtaining a tax benefit as to have called for a clear and detailed explanation, if he proposed, as he has done, to resist a conclusion of the kind to which s 284-145(1)(b)(i) refers. No such explanation was forthcoming. I regard it as reasonable to conclude, and I do conclude, that the applicant entered into, and carried out, the schemes in the present case with the dominant purpose of him getting a scheme benefit from the schemes. 106 The applicant's second point involves s 284-160(a)(ii) of Sched 1 to the Administration Act . Section 284-160 provides for the calculation of the "base penalty amount". Paragraph (a) deals with schemes to which s 284-145(1) applies (ie the schemes in the present case), and subpar (ii) thereof quantifies the base penalty amount as 25% of the scheme shortfall amount "if it is reasonably arguable that the adjustment provision does not apply". In the circumstances of the present case, the "adjustment provision" is s 177E of the 1936 Act . The present point concerns the question whether it is "reasonably arguable" that that provision did not apply in the circumstances. This takes one to s 284-15(1) of Sched 1 to the Administration Act . An earlier provision (which had not been repealed by 2003 but which was not applicable to the circumstances of the present case), s 222C of the 1936 Act , was in the same terms as s 284-15(1), but contained the word "about" before the phrase "as likely to be correct". Notwithstanding the omission from s 284-15 of the word "about", the parties in the present case made common cause in submitting not only that I should read the subsection as though it contained that word but that I should apply the law as declared in Walstern . I must say that I have reservations about such a course, but, in the light of the parties' submissions, I shall adopt it. 107 The applicant's argument about the operation of s 177E(1)(a)(ii) of the 1936 Act , to which I have referred in par 79 above, had a rational basis both in the Explanatory Memorandum which accompanied the introduction of the legislation and in the judgment of the High Court in Consolidated Press (HC) . I have held that argument to be misplaced, but I allow for the prospect that other Judges might have approached the matter differently. I have, perhaps, placed somewhat more emphasis upon the general purposes of Part IVA , and of s 177E in particular, than others might. It would be overstating the matter to say that I thought that the argument advanced on behalf of the applicant was in fact as likely to be correct as incorrect, but I am prepared to hold that that argument is "about" as likely to be correct as incorrect. In relevant respects, the arguments were finely balanced, and I would not be critical of the applicant's advisers for taking a view about the construction of subpar (ii) which, according to the view I take, fell just the wrong side of the line. In the circumstances, I consider that it was reasonably arguable that s 177E(1)(a)(ii) of the 1936 Act did not apply in the present circumstances. It follows that the "base penalty amount" was 25% of the scheme shortfall amount. 108 The applicant's third point concerns the operation of s 284-225(2) of Sched 1 to the Administration Act . In the way that subsection applies to the facts of the present case, if the applicant voluntarily told the Commissioner about the scheme shortfall amount (ie, effectively, informed the Commissioner of the details of the Plaster Plus and Zinkris schemes) before the Commissioner told the applicant that a "tax audit" was to be conducted of his financial affairs in relation to the period in question, then the "base penalty amount" would be reduced by 80%. It was common ground that the applicant made a voluntary disclosure of the details of the schemes by letter dated 12 May 2005. What was controversial was whether a letter sent by the Commissioner to the applicant dated 3 May 2005 told the applicant that a "tax audit" was to be conducted of his financial affairs. Counsel for the Commissioner argued that it did, while counsel for the applicant argued that it did not. If you have any questions concerning the notice or what you are required to do to comply with the notice you should contact Harvey Dolby on (07) 321 35310 as soon as possible. If you are having difficulties complying with the notice in the time allowed, you should advise the Commissioner in writing as soon as possible and in any event, before the date stated in the notice. You should state your concerns and reasons for them for consideration by this Office. You are advised that penalties can apply if you do not comply with all of the requirements of the notice. These penalties are set out below in the notice. Please note that section 264 does not override legal professional privilege but does override the privilege against self-incrimination. The documents requested in the attached notice are required for the purposes of the Income Tax Assessment Act 1936 . In very limited circumstances, some information may be given to certain parties as prescribed in taxation law. Further details on Privacy can be found in the brochure 'Safeguarding your Privacy' available at your nearest Taxation Office. Enclosed with the letter was the s 264 notice referred to. It included the applicant, his wife, Lauravale and Plaster Plus. The notice also required the applicant to produce original minutes and resolutions for two trustee companies, one of which was Lauravale, to the extent that they related to the income or assessment of those companies for the period 1 July 1996 to 30 June 2004. 110 Counsel for the Commissioner submitted that the s 264 notice, and the covering letter dated 3 May 2005, told the applicant that an examination by the Commissioner of his financial affairs for the purposes of the 1936 Act was to be conducted. I cannot accept that submission. I would accept that, acting reasonably, the applicant might well have had his suspicions when he received this correspondence. But the correspondence did not tell him that there was to be such an examination, however much it might have presaged one. It required him to attend, to give evidence and to produce documents concerning the income or assessment of himself and other entities. That is not the same, in my view, as telling the applicant than an examination of his financial affairs was to be conducted. 111 For the above reasons, I consider that the base penalty amount for the scheme shortfall in the present case must be reduced by 80% pursuant to s 284-225(2) of Schedule 1 to the Administration Act . Otherwise, the appeal will be dismissed. I shall hear the parties on the question of costs. I certify that the preceding one hundred and twelve (112) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. | series of transactions involving diminutions (on revenue account) in value of shares held by companies in which taxpayer the only shareholder and corresponding increases (on capital account) in value of shares held by another company on trust for discretionary beneficiaries confined to taxpayer and his family whether constituted "schemes" whether schemes were by way of or in the nature of dividend stripping whether schemes had substantially the effect of schemes by way of or in the nature of dividend stripping whether schemes had tax avoidance as dominant purpose whether schemes involved distribution of profits whether s 177e of income tax assessment act 1936 (cth) had operation in context of transactions by which taxpayer expressly entitled to reduce assessable income under other provisions. whether "scheme benefit" obtained from schemes whether schemes entered into with dominant purpose of getting a scheme benefit calculation of "base penalty amount" whether reasonably arguable that adjustment provision does not apply whether base penalty amount should be reduced upon voluntary disclosure of scheme details. income tax penalties |
The Schedule includes the ABC ' in relation to its program material and its datacasting content '. The parties agree that, for the purposes of this appeal, datacasting is not relevant and does not require further consideration. 2 The issue in this appeal from the Administrative Appeals Tribunal is the meaning of the expression in the Schedule and the extent of its application. Each of the grounds of appeal raises that issue. The Tribunal concluded that the Act does not afford the ABC exemption from disclosure of any of the documents sought by the Australian Centre for Independent Journalism, a centre within the University of Technology, Sydney ('UTS') ( Re Australian Centre for Independent Journalism and Australian Broadcasting Corporation [2005] AATA 1068 ; (2006) 88 ALD 771). The Tribunal concluded that the exemption of documents afforded to the ABC does not extend to complaints about program material or to the response of the ABC to those complaints (at [33]). 3 The object of the Act, as set out in s 3 , is to extend as far as possible the right of the Australian community to access to information in the possession of the Government of the Commonwealth by making available information and giving access to information about the operations of departments and public authorities, including the ABC. This right is limited by exceptions and exemptions necessary for the protection of essential public interests (s 3(1)(b) ; Colakovski v Australian Telecommunications Corporation (1991) 29 FCR 429 per Lockhart J at 438). Any discretion conferred by the Act is to be exercised as far as possible so as to facilitate and promote the disclosure of information (s 3(2)). The documents sought are set out in Annexure 1 to these reasons. For the purposes of this appeal the parties have approached the documents as if they constitute a single category. No distinction is drawn by the parties between documents created before broadcasting and documents created after broadcasting. Rather, the ABC's submissions support a construction of the expression that would include all documents that relate to program material, including documents created before or after the broadcast of the program and any correspondence about program material. The ABC's submissions are to the effect that the exemption is "in relation to documents in relation to its program material". The ABC then relies on the principle that "in relation to" is an expression of wide and general import ( Fountain v Alexander [1982] HCA 16 ; (1982) 150 CLR 615 at 629 per Mason J) and covers all of the documents sought, which are said to exist only because of and arise directly from, the broadcast of ABC program material. The ABC draws a distinction between documents related to its program material, which it says are exempt and documents related to its administrative function, which are outside the scope of the expression. 7 UTS submits that "in relation to" in the context of the Schedule equates to "for" and that the exemption is only for documents which are ABC program material. UTS's submissions support a construction that limits the expression to apply only to the "sights and sounds" of a program: the tapes or recordings. UTS does not submit that the exemption extends only to documents that fall within that aspect of the definition of "document" in s 4(a) that refers to "material", that is s 4(a)(iv). Rather, UTS relies on an amalgamation of the definition of "program" in the Broadcasting Services Act 1992 (Cth) (which of course post-dates the Act) and the construction of the expression "Australian content of programs" by Brennan CJ in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at [22] to submit that program material is limited to ' the sights and sounds which are capable of transmission to an audience for the purpose of education or informing or even for advertising or sponsorship '. A script for a program or instructions for the lighting for recording purposes are not, on this basis, included. UTS submits that all of the documents sought are about program material and, not being documents which are program material, do not fall within the exemption. UTS does not dispute the breadth of the expression "in relation to" but submits that, construed in context, the limited meaning of "program material" means that "in relation to" extends only to other versions of the program material itself, such as to edited tapes or recordings. 8 For agencies other than the Special Broadcasting Service Corporation ('SBS') and the ABC, the word "document" is repeated in the Schedule: ' in relation to documents ' in respect of certain activities. For the SBS and the ABC, the entry is ' in relation to its program material '. UTS contends that the class of exempt documents for the ABC and SBS is defined by reference to nature and content and not to an activity. Where the exemption is for documents in respect of an activity, as for other agencies in the Schedule, it extends to documents received or brought into existence in the course of, or for the purposes of, the carrying on of that activity (s 7(4)). By contrast, UTS submits that where the exemption is defined by reference to the nature and content of the particular documents, it should be read as an exemption "for" those particular documents. It follows that the subject matter of the Schedule is documents that come within the definition in s 4(1). The Schedule then limits the documents by category. If there were simply categories of documents listed, such as "scripts for programs", the exemption would be in relation to scripts for programs. 10 There is no need to repeat "in relation to" in the Schedule unless it adds a further qualification. The fact that this expression appears in each entry in the Schedule means that, putting the section and the Schedule together, exemption is granted ' in relation to...in relation to ' the category specified. 11 The Schedule is headed '[a] gencies exempt in respect of particular documents ' . For agencies except the ABC and SBS, the entry in the Schedule then describes the particular documents as ' documents in respect of [a particular activity]'. This provides a further limitation on the scope of the exemption by reference to a particular activity. For example, if the Schedule were to specify "scripts for programs with respect to current affairs", the exemption would be in relation to documents that fitted that description. That is, "in respect of" is used in the sense of "with reference to" (the Macquarie Dictionary , 4 th ed, 2005 defines "with (or in) respect to" to mean ' in relation to or reference to ', while the Shorter Oxford Dictionary , 5 th ed, 2002 definition includes '[ r ] elation, connection, reference, regard '). A sufficient or material connection or relationship is required when "in respect of" is used, rather than a mere direct or indirect relationship when "in relation to" is used ( Harris v Commissioner of Taxation [2002] FCAFC 226 ; (2002) 125 FCR 46 at [68] ---[69]). A further restriction on the exemption is thereby introduced for those agencies other than the ABC and SBS. 14 A distinction is made between the exemption defined in terms of documents and an exemption defined in terms of an activity. This may also explain the absence of the further reference to "documents" in the entries in the Schedule for the ABC and SBS which do not contain the further reference to an activity. 15 UTS points out that the entry in the Schedule for the ABC does not say "documents in respect of its program material". That is correct. Nor does it say "for its program material". The words ' in relation to ' are used. The width of that expression is determined by the context in which it appears and a relevant connection is required with the subject ( Secretary Department of Foreign Affairs and Trade v Boswell (1992) 36 FCR 367 at 383). However, the repeated use of "in relation to" reinforces an intention to exempt not only the category of documents specified but also documents that relate to that category. Even if, as submitted by UTS, "in relation to" can mean "for", it is unlikely that it was intended to carry that restricted meaning both in s 7(2) and in the Schedule. It may be that, reading s 7(2) and the Schedule together, the exemption is "for documents in relation to" the category specified but I do not accept that the intention was to exempt only the specified category itself. 18 That conclusion is reinforced by an appreciation of the consequences of the construction advanced by UTS, namely that the only exemption is for the "sights and sounds", the recordings and tapes. The program may not be recorded until it is publicly transmitted. Once transmitted, the material would be in the public arena. The ABC would be deprived of the exemption prior to transmission and other parties would be able to obtain information in advance of proposed programs. If a program were not recorded, there would be no exemption. Such a construction would mean that there would be little utility in providing an exemption from production of the recordings. 19 The parties only referred to one case where the Schedule was discussed ( Rivera v Australian Broadcasting Corporation [2005] FCA 661 ; (2005) 144 FCR 334). While Rivera concerned the Privacy Act 1988 (Cth), it did refer to the Schedule. The observation of Hill J at [38], that the ABC is exempt under the Act ' in respect of "documents" in relation to its program material ', is consistent with these reasons. 22 The Tribunal expressed doubt about the approach in Keane where "program" and "material" were defined separately. It considered "program material" to be a composite term but did not explain what that composite term encompassed. UTS supported that construction. The Tribunal did accept, however, the reasoning in Keane that the Schedule is not limited to program material and held that it encompassed documents relating to program material in that it extended the exemption to ' matters such as the intellectual property of [the ABC] in a program ' (at [32]). No basis for this conclusion was given, nor was an attempt made to explain what criteria were applied. To the extent that this formed part of the reasons of the Tribunal, neither party has supported such a limitation and there is no basis for it. The Tribunal stated that it did not ' see an exemption "in relation to program material" as extending as far as a complaint regarding material in a program and the treatment given to that complaint by [the ABC]' (at [33]) and categorised all of the documents sought in that category. 23 The Tribunal in Keane considered dictionary definitions of "program" and "material". Relevantly, the Macquarie Dictionary defines "program" when used in radio and television as ' a particular item or production '; the Shorter Oxford Dictionary defines program(me) when used in broadcasting as '[a] broadcast presentation treated as a single item for scheduling purposes, being broadcast between stated times and without interruption except perhaps for news bulletins or advertisements '. 24 The meaning of "material" in the Macquarie Dictionary encompasses different concepts, including: ' the substance or substances of which a thing is made or composed '; ' any constituent element of a thing '; ' anything serving as crude or raw matter for working upon or developing '; and ' information, ideas, or the like on which a report, thesis, etc, is based '. In the Shorter Oxford Dictionary , it means relevantly '[o] f or pertaining to matter or substance '; '[f] orming the material or substance of a thing ' ; '[ t ] he matter of which a thing is or may be made ' ; and also '[i] nformation, evidence, ideas, etc, for use in writing a book or script, drawing a conclusion, etc '. 25 The Tribunal in Keane found that documents which ' constitute vital steps in the production of a television production program ' and ' make up important elements in that process ' are within the exemption, that is not only is program material exempted but also documents relating to program material (at [7]). It drew a distinction between such documents and a letter which related to a change in script writers which was not exempt. 26 UTS submits that, in effect, the exemption is limited by the meaning of "program material" and that this extends only to the sights and sounds. The ABC made no submission as to the meaning of "program material", other than that it ought not be limited to documents created before a program is broadcast. I do not accept that program material is restricted to films or tapes themselves. In my opinion, it extends at least to the content of the films and tapes. It has not been disputed that the documents sought relate to the content of ABC programs. Accordingly, it is not necessary for me to determine the breadth of the application of "program material". The Senate Standing Committee on Constitutional and Legal Affairs, in its Report on the Freedom of Information Bill 1978 and aspects of the Archives Bill 1978 (Parliamentary Paper No 272/1979) ('the Report')) noted that the Bill, expressed to be concerned with freedom of information, refers generally not to information but to documents. 28 The Report stated at [12.13] '[p] erhaps the best example of a legitimate use of the power to exempt particular classes of records of an agency is to be found in evidence given to us by representatives of the [ABC]'. The evidence from the ABC (Submission No. 131, incorporated in the transcript of evidence before the Committee at pages 1244 to 1303) concerned exclusion from access for its "program activities". The ABC sought exemption for ' all "documents" brought into existence or acquired by the ABC for the purposes of forming a radio or television program or a part of such a program ' (at 1254). The program material was described in terms of ' texts of news bulletins, scripts, sound tapes, videotapes, cinematographic film, graphic displays ' (at 1265). It is clear from that evidence that, while discs, tapes, micro-film and similar devices were important, the submission was concerned with documents associated with the ABC's program material. Exemption was sought in respect of documents ' which are brought into existence, or are acquired, for the purposes of forming a radio or television program or a part of such a program ' (at 1265). Another reference in the submission was to ' documents, as distinct from recordings and films, which come into existence solely because of the programs to which they relate ' (at 1273). 29 The Report contrasted "program material", in the context of presentation on radio and television, with the ABC's administrative operation. It recognised that, in contrast to program material, ' the public has a right to examine the administrative operation of the [ABC] to ensure it is efficiently and properly conducted at public expense ' (at [12.13]), and observed that documents in relation to the latter category should not be exempt. 30 The Report is not particularly helpful as the discussion contained in it was not directed to the wording in the Act as promulgated and the context of the Report (see [12.1] to [12.4], [12.13] and [12.14]) makes it clear that it did not come to any conclusion as to those documents within the scope of the expression relevant to the ABC now in the Schedule. The submission of the ABC to the Parliamentary Committee is referred to in the Report only by way of a footnote and does not itself represent Parliament's intention. However, a construction that extends the exemption beyond the films and tapes is consistent with the extrinsic material. The exemption in s 7(2) is in terms of documents. Documents are broadly defined and include "material" in the nature of tapes and recordings. That does not necessarily mean that other forms of document are excluded by the description "program material". Even if the category of documents specified is limited to tapes and recordings, the exemption both in the section and the Schedule is in relation to that program material. If a document has direct or indirect relationship to program material, subject to one further matter, it is exempt. I see no reason for a limitation to intellectual property. For example, I do not accept that scripts for programs are not included. They are either program material or documents that relate to program material. 32 The further consideration is the condition in s 7(2) that an agency is exempt in relation to the documents referred to in the Schedule ' in relation to them '. That requires the documents to have a relationship not only to program material but also to the ABC. Letters of complaint about the ABC's programs and responses to those complainants on the same subject as well as documents internal to the ABC on this subject are in relation to the ABC. Indeed, the contrary argument was not advanced by UTS. 33 The parties have not given separate consideration to the documents of Annexure 1, treating them as a single category. On that basis, I would uphold the appeal and make an order that the decision of the Tribunal, so far as it relates to section 7(2) of the Act and the Schedule, be set aside. However, the parties requested that I make no order until they have had an opportunity to consider these reasons. Accordingly, I make no order at this time and direct the parties to submit consent orders or further submissions within fourteen 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 Bennett. Apparently this report was mentioned in an episode of Media Watch which was broadcast on 13 May 2002. | appeal from the administrative appeals tribunal abc exempt from the freedom of information act 1982 (cth) ' in relation to its program material ... in relation to [it]' complaints and documents concerning complaints about abc programs documents sought are in relation to program material and exempt from production "program material" "in relation to" "in respect of" freedom of information words and phrases |
It concerns the significance properly to be attributed to several sentences in one paragraph of the Tribunal's reasons in the context of those reasons as a whole. The question it is said these sentences raise, is whether they betray that the Tribunal asked itself the wrong question, i.e. whether the applicant could avoid persecution by taking reasonable steps to avoid it, rather than whether the applicant had a well-founded fear of persecution if she returned to China. I am satisfied the Tribunal did not ask the wrong question. The Tribunal (i) accepted that the applicant developed an interest in Christianity in about 1997 and occasionally attended an official Christian church in Wuhan until she secured employment in Henan; and (ii) was satisfied that she became involved with Christians in Henan and met with a small group there twice weekly to engage in prayer, singing and reading the Bible. Nonetheless, the Tribunal did not accept that she (a) was a member of any particular underground church in China; (b) was detained, assaulted or harmed in any way by the Chinese authorities for any Convention reason; (c) was forced into hiding for a Convention reason; or (d) was or is of any adverse interest to the Chinese authorities. It concluded there was no credible evidence to sustain a finding that she was at risk of suffering serious harm in the reasonably foreseeable future if she returns to China. 3 Central to the Tribunal's conclusion was a particularly adverse view of the applicant's credibility which was based primarily on the view the Tribunal took of differences between the evidence she gave at the Tribunal hearings and evidence given in an additional statement or in her adviser's submissions after the hearings, but also on the implausibility of aspects of her evidence. 4 In its reasons the Tribunal, in six dot-pointed paragraphs, listed some of the "inconsistencies, contradictions and implausibility" that led to its credibility conclusion. In her additional statement provided to the Tribunal on 8 August 2005 and marked B, the Applicant stated 'at the hearing I was asked about the numbers in my underground church group, but I did not go into as much detail as I could because I did not realise why it was important. Actually our group would grow to bigger numbers than ten but when it was about thirteen or fourteen, we would make sure to split the group so that it was no more than fifteen people' . (See page 26 above. ) The Applicant goes on to say in her statement that the group was split a couple of times in order to make it 'less noticeable to the police' . (Also at page 26 above. ) I do not accept that the Applicant did not understand the significance of the questions relating to the numbers involved in our group when she gave her evidence at the hearing. I find that the Applicant's additional statement provided to the Tribunal on 8 August 2005 on this aspect of her claims was fabricated to remove difficulties in her initial evidence. For this reason, I do not accept her further evidence that the group sometimes increased to about thirteen or fourteen which required a need to split the group. She replied she did not know of any others. (See page 17 above. ) In her additional statement provided to the Tribunal on 8 August 2005, she stated that 'sometimes five or six smaller underground church groups would meet together for special occasions, such as for visiting overseas missionaries who would come to speak to us' . (See page 27 above. ) I do not accept that the Applicant's failure to provide this evidence during the Tribunal hearings and later provided in her additional statement about other underground church groups, is because she did not understand the question put to her about this particular point. I accept the Applicant's initial oral evidence that she did not know of any underground churches around Henan and find that her statement of 8 August 2005 on this aspect of her claims was planned subsequently and was not truthful. I am not satisfied that the Applicant's group met with any other Christian groups, given the Applicant's evidence before the Tribunal that she was not aware of any other groups and later on claimed in writing to the Tribunal that she did not understand the Tribunal's questions, stating they met on special occasions and it was her Senior's responsibility to make contact with other groups and even overseas visitors. I find it implausible that the Applicant, who claimed to be second in charge of the group, was never allowed to make contact with other groups and according to her oral evidence before the Tribunal was not even aware of them. At page 2 of the adviser's submissions (dated 8 August 2005 under the heading 'Issue 1' ) she states that the Applicant provided to her 'the name of the "upper" church, which also appointed the senior (Liu Jun) of her underground house church, to be Henan "Jesus is Lord church"' . I am not satisfied that the group to which the Applicant belonged in Henan, was affiliated with the 'Jesus is Lord Church' as later claimed by the Applicant. I am satisfied that the Applicant, during her oral evidence was unable to name the particular church, because the group she belonged to was not affiliated to any church. I am supported in this finding, in addition to the matters set out above, by the independent evidence set out at pages 32 and 33 of this decision. The information indicates that prayer meetings and Bible study groups which are held in homes do not require registration and are legal as long as they remain 'small and unobtrusive'. The Tribunal has been unable to locate any independent evidence in relation to the targeting by the Chinese authorities of small Christian groups such as the Applicant's group as described by the Applicant in her oral evidence before the Tribunal. The adviser in her submissions attached country information relating to reports of arrests of Christians in Henan. The reports detail the arrests of large numbers of Christians who were attending or travelling to a retreat where a large group gathered for Christian activities. I am not satisfied that the Applicant was or is of any adverse interest to the Chinese authorities:" emphasis added. This is particularly so where the actions of the persecutors have already caused the person affected to modify his or her conduct by hiding his or her religious beliefs, political opinions, racial origins, country of nationality or membership of particular social groups. In cases where the applicant has modified his or her conduct, there is a natural tendency for the tribunal of fact to reason that, because the applicant has not been persecuted in the past, he or she will not be persecuted in the future. It did not decide the case on the basis that it was reasonable to expect that the applicant would, or would have to continue to, take reasonable action to avoid harm. Having rejected on credibility grounds that the applicant's group subdivided itself on a number of occasions to make it "less noticeable to the police", there was no claim before the Tribunal that the applicant had modified her behaviour in any way so as to practise her religion without risk of persecution. The applicant's claim was that she was a member of a small group and was persecuted as such. While accepting her small group membership, the Tribunal rejected the claim to persecution, relying both on the unreliability of the applicant's evidence and on the absence of country information relating to the targeting of small Christian groups such as the applicant's. The Tribunal in other words, did not ask itself a wrong question. It addressed the case advanced by the applicant and it considered, in light of what it accepted of that case, whether she had a well-founded fear of persecution if she returned to China. It did not ask whether it was possible for the applicant to live in China in such a way that as to avoid harm. Rather, it concluded that, in the manner in which she actually practised her religion, she would not put herself at risk of persecution from the Chinese authorities: cf NABD of 2002 v Minister of Immigration & Multicultural & Indigenous Affairs [2005] HCA 29 ; (2005) 216 ALR 1 at [151] and [161] ff. 7 I will order that the application be dismissed and that the applicant pay the costs of the first respondent. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | decision of refugee review tribunal adverse findings of credibility alleged behaviour modification whether tribunal asked wrong question tribunal's approach in accordance with applicant's claim application |
The Federal Magistrate dismissed an application for judicial review of a decision of the Refugee Review Tribunal ("the Tribunal") handed down on 19 December 2003. The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs ("the Minister") made on 26 July 2002 to refuse the grant of a protection visa to the appellant. He was born in Tehran in 1956. However he has not lived in Iran since 1978, having lived for 21 years in the United States of America. He arrived in Australia from the United States with his son on 20 July 1999 in possession of a three month visitor visa. He did not depart Australia in accordance with the visa requirements and was located by the then Department of Immigration, Multicultural and Indigenous Affairs ("the Department") working illegally in Perth in May 2001. At this time the appellant was granted a bridging visa to make arrangements to leave the country. He did not do so, but instead relocated to Brisbane where he was again located by the Department in May 2002 and placed in detention. 4 On 31 May 2003 the appellant unsuccessfully applied for a protection visa. On 29 July 2003 the appellant applied to the Refugee Review Tribunal for a review of the decision of the delegate of the Minister not to grant a protection visa. The appellant subsequently appealed the Tribunal's decision to the Federal Magistrates Court and the Federal Magistrate's decision to this Court. 5 I understand that when leaving the United States in July 1999 the appellant held a United States permanent residence visa which was valid for a further two years at the time of his departure from the United States. It appears that the appellant was unaware that the permanent residency visa would expire if he spent two years outside the United States. Subsequently, his visa was not renewed. I further understand that the appellants' legal representatives have made inquiries in the United States regarding the appellant's status, but I understand that the appellant now has no more right to reside in the United States than any other potential visa applicant seeking to enter that country. This is further complicated by charges which are pending against the appellant which relate to, inter alia , his breach of the custody order in relation to his child. I understand that this means that the appellant may not be able to enter the United States either temporarily or permanently. 7 The appellant stressed before the Tribunal that his fear of persecution in Iran was as a result of the combination of his claims. In particular that he has not lived in Iran for 26 years and during most of that time he has been living as a Christian in a Christian country that is the sworn enemy of Iran, that he served for more than two years in the United States Navy and that he has publicly supported the former Shah and criticised the government that replaced him. 8 The Tribunal's findings are set out at pp 8-13 of the decision. The Tribunal considered whether the appellant was someone to whom Australia owes protection obligations under the Refugees Convention 1951. The Tribunal found that the appellant's political activity and comments in support of the Shah were now made over 25 years ago and that the appellant has not ever been an active Monarchist. Further the Tribunal held that the available information suggests that many former supports of the Shah continue to live in or visit Iran without being persecuted. While the Tribunal agreed that the appellant would most likely be questioned on his return, if for no other reason than that he has been outside the country for 26 years, it did not consider that he would be persecuted. 9 In regards to the appellant's religion the Tribunal found that the appellant would be able to fulfil his religious needs by attending church and meeting with fellow practitioners, as he did in Australia. The Tribunal did not believe that there was a real chance of persecution for reasons of religion in the reasonably foreseeable future. 10 Further, the Tribunal did not accept that he appellant would be conscripted and that his fears relating to serving in the Iranian armed services are well founded. It found that the authorities will have no interest in punishing him for his historical connections to the Shah regime, particularly in light of his lack of political activity in the intervening 25 years. It further rejected the assertion that there was a real chance of persecution on account of his service in the United States Navy. The Tribunal found that the authorities could satisfy themselves that he posed no threat to Iran, having only served in the United States Navy for two years some 13 years ago and having only reached a relatively low rank. 11 The Tribunal noted that some Iranian citizens are the subject of serious human rights abuses but that even when considering the cumulative claims of the appellant together the Tribunal could not be satisfied that he appellant had a well founded fear of persecution for a Convention reason. As such he was not a person to whom Australia owed protection obligations. 12 The Tribunal noted at p 8 that they had not considered whether the appellant had effective protection in the United States as the issue did not arise for determination, the Tribunal having found that the appellant did not face a real chance of persecution in his country of nationality. Jarrett FM at [24] through [40] analysed the Tribunal's response to each claim of the appellant. No evidence: If there is no evidence in the case of a critical step in the Tribunal's ultimate conclusion then that constitutes a jurisdictional error. The critical step in this case was in respect of the Tribunal concluding that, once the appellant went back to Iran and was intercepted and interrogated by the authorities, they would accept his explanation about his United States navy service. There was no material as to how the Iranian authorities might react to the appellant's navy service and that is jurisdictional error: SFGB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 231 and re Minister for Immigration and Multicultural Affairs ex parte Epeabaka [2001] HCA 23 ; (2001) 206 CLR 128. 2. " Wednesbury unreasonableness". The Tribunal's decision must be rational and logical and based on findings: Wednesbury Corporation [1947] EWCA Civ 1 ; [1948] 1 KB 223, SFGB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 231. 3. The state of satisfaction that there was no well founded fear of persecution was not formed reasonably on the material before the Tribunal: Applicant M164/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 16. 21 There is clear overlap between bases 2 and 3. I will deal with each of these bases in turn. This may be contrasted with a decision against the evidence or the weight of the evidence, which does not form the basis of jurisdictional error: Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598 at 601. 23 It is clear that in reaching its decision, the Tribunal is not limited to the evidence that is formally put before it: s 353(2) Migration Act . Nor should it be forgotten in this context that in the course of their duties Tribunal members may well come to have a relatively detailed understanding of the political and legal situation in various parts of the world. Within the limits imposed by the Act itself there is nothing to prevent members from using this information. 25 The appellant submits that, in reaching its decision, the Tribunal erred in concluding that, once the appellant went back to Iran and was intercepted and interrogated by the authorities, they would accept his explanation about his United States military service. The Tribunal finds that the authorities will have no interest in punishing him for historical connections to the Shah's regime or for criticising the Revolutionary government when it first came to power, particularly as he has not been politically active or otherwise critical in the intervening 25 years. His service was 13 years ago and he only reached the relatively lowly rank of airman. He voluntarily left after a little more than two years. The Tribunal does not accept the argument that he will be imputed to be an enemy of Iran because he was employed by the Navy. The authorities can examine his service records and question him to satisfy themselves that his service does not disclose he is any threat of Iran. He can inform them that he was never properly rewarded for his study efforts in the Navy. Accordingly, the findings of the Tribunal in relation to the view the authorities might take was based on no evidence, and amounted to jurisdictional error. In other words, inevitably in cases of this nature there won't be perfect evidence before the Tribunal. The Tribunal can't know for absolute certain what will happen in the event that this gentleman is returned to Iran and questioned about these matters. It can only make findings based upon the evidence that it does have and based upon its own experience and its own views. That's all it can do. So to say there's no evidence to support a finding that - the actual findings being that he would not be imputed to be an enemy of Iran because he was employed by the Navy, well, that's a finding that's open to them on the evidence that they have. It's not a finding that they must make. They might have gone the other way, but that's their role. It's a fact-finding role and the fact-finding has to be based on the evidence available, which is the evidence offered by the applicant. In my view, in relation to his Honour's consideration of the findings of the Tribunal with respect to these issues, no error appears from the decision of his Honour. 29 However, once the Tribunal accepted that the United States was the "sworn enemy" of Iran, as it appeared to have done in its findings, it is difficult to identify the basis upon which the Tribunal could then conclude that appellant would not have a well-founded fear of persecution upon returning to Iran, having served in the armed forces of that "sworn enemy". The material I have considered, and to which the Tribunal referred, did not appear to be relevant to the findings of the Tribunal with respect to that service - indeed the Tribunal appeared to mix in its findings the clearly separate issues of the political views and religious beliefs of the appellant with his active service in the United States armed forces. By implication, the Tribunal similarly mixed the evidence upon which it was relying in reaching its findings in respect of these issues. 30 In my view, it is noticeable that, notwithstanding the concerns of the appellant as expressed at the hearing before the Tribunal, no reference at all is made by the Tribunal to the obvious and serious tensions existing between the United States and Iran at the time of and in the year prior to the Tribunal decision, or to evidence of those tensions which were widely reported during 2003 and the subject of commentary in reports including those of the United States Department of State (see, for example, www.globalsecurity.org/security/library/report/2003/dos-pgt2002.htm). 31 The only obviously relevant evidence to which the Tribunal referred in concluding that the Iranian authorities would have no or little interest in the appellant because he "only reached the relatively lowly rank of airman" was that relevant to former low-level bureaucrats in the Rastakhiz Party in Iran to which I have referred earlier, namely the report from UK Home Office and evidence from that report that "there is no evidence of any pattern of action by the regime today against Iranians simply because at one time they were middle-level or low ranking functionaries of the Shah's bureaucracy ". However the analogy cannot be supported. There are clearly different circumstances attending membership of a "compulsory" party in Iran several decades ago, compared with the voluntary service by the appellant in the United States Navy, a branch of military service of - as found by the Tribunal - the "sworn enemy" of Iran. 33 Further, I acknowledge the submission of Mr Bickford that evidence before the Tribunal will not necessarily be "perfect". However, I cannot see how, in these circumstances, it was open to the Tribunal to conclude on the material before it that the Iranian authorities would have little or no interest in the fact that a returning Iranian had not only lived in the United States for over twenty years, but had served in the armed forces of - as the Tribunal accepted - the "sworn enemy" of Iran. By way of comparison only, I note that Australian law treats as very serious the service by an Australian citizen in the armed forces of an enemy state (for example, s 35 Australian Citizenship Act 2007 (Cth), div 80.1 in the Schedule to the Criminal Code Act 1995 (Cth)). The appellant had contended that the cumulative effect of factors relevant to him, including his United States navy service, meant that he had a well-founded fear of persecution. In my view the finding of the Tribunal with respect to the view the Iranian authorities would take of his United States navy service, and accordingly the unlikelihood of the appellant being subject to persecution in Iran, was not open on the evidence before it. Accordingly, the decision of the Tribunal in this respect is attended by jurisdictional error. However, I note the findings of his Honour below that reasoning of the Tribunal was neither illogical nor irrational and, having reviewed the decision of the Tribunal, consider that there is no error in his Honour's findings in relation to these contentions. In any event, these grounds do not appear to support claims of jurisdictional defect in terms of Australian law. In particular, I note the decision of the Full Court in Andary v Minister for Immigration and Multicultural Affairs [2003] FCAFC 211 with respect to Wednesbury unreasonableness, and the decisions of the High Court in Bond 170 CLR (particularly per Mason CJ at 356 with whom, on this point, Brennan, Toohey and Gaudron JJ agreed) and the Full Court in VWST [2004] FCAFC 286 that want of logic does not form a valid basis of judicial review. The matter should be remitted to the Tribunal for further consideration in accordance with the law. The appellant should have his costs of this appeal and his costs of the appearance before his Honour below. The appeal be allowed. 2. The decision of the Jarrett FM dated 17 March 2006 be set aside. 3. The decision of the Refugee Review Tribunal be quashed. 4. The decision be remitted back to a differently constituted Tribunal to be heard and decided again according to law. 5. The first respondent pay the appellant's costs of the appeal and the application. | appeal from a decision of a federal magistrate reviewing a decision of the refugee review tribunal iranian citizen who lived in the united states of america for 21 years and served in the united states navy whether error of law by the federal magistrate in not finding that the tribunal made a jurisdictional error in finding that appellant has no well-founded fear of persecution in iran no evidence whether jurisdictional error in finding that the iranian authorities would accept the appellant's explanation of his united states navy service whether material existed before it on which the tribunal could have reached this finding wednesbury unreasonableness whether a decision which is unreasonable in the wednesbury sense is amenable to judicial review whether finding not formed reasonably or effected by illogicality migration |
During that period she borrowed approximately $750,000 from the CBA. She used this money to buy and develop one property and to develop a number of others. In due course she defaulted on some of her loan agreements and the CBA eventually forced the sale of two of her properties to repay the outstanding loans. During and since that process, Ms Dowling has pursued a number of grievances she has against the CBA in a range of different forums. These proceedings are the most recent step in that pursuit. 2 The CBA's immediate response to these proceedings was to file this application for summary judgment. It has been made under section 31A (2) of the Federal Court of Australia Act 1976 (Cth) on the ground that Ms Dowling has no reasonable prospect of successfully prosecuting these proceedings. In the alternative the CBA has applied to have the proceedings dismissed under O 20 r 5 of the Federal Court Rules on the grounds that they are frivolous, vexatious, or an abuse of the process of the Court. In the further alternative the CBA has applied to strike out the whole of Ms Dowling's statement of claim under O 11 r 16 of the Federal Court Rules on the grounds that it does not disclose a reasonable cause of action, or that it will cause prejudice, embarrassment or delay in the proceedings, or that it is otherwise an abuse of the process of the Court. 3 The critical issue in this application is whether any of Ms Dowling's grievances amount to a valid claim at law that this Court can determine and, if so, whether Ms Dowling has any reasonable prospects of successfully prosecuting that claim in these proceedings. The CBA's original notice of motion filed 16 November 2007 was amended in accordance with the leave I gave on 11 December 2007 (see further below). Mr Farquhar also relied upon parts of the affidavit of Ms Meghann Louise Everett sworn on 16 November 2007. In response Ms Dowling, who appeared in person and represented herself, relied upon some thirty affidavits that she had filed since she first commenced these proceedings on 25 October 2007. Whilst all of these documents were entitled " affidavit ", many of them were not in fact written statements of evidence sworn on oath but instead chronologies, submissions, or requests directed to the Court or the CBA. To add to this avalanche of material, Ms Dowling appears to have filed at least seven further affidavits since I reserved my decision on 20 December 2007. I have not taken these affidavits into account in reaching this decision. I have attached to these reasons marked "Annexure A" a summary of the thirty affidavits Ms Dowling has relied upon. During the hearing of the application Mr Farquhar did not object to the contents of any of Ms Dowling's affidavits. I presume he took this course in the interests of saving time and avoiding confusion. 5 The hearing of the CBA's application proceeded over a part of each of three days: on 11, 17 and 20 December 2007. On the first day I gave Mr Farquhar leave to file and serve an amended notice of motion which relied upon section 31A(2) of the Federal Court of Australia Act as the CBA's primary application and, in the alternative, relied upon O 20 r 5 and O 11 r 16 of the Federal Court Rules . This issue arose during submissions because the CBA's original notice of motion filed on 16 November 2007 made no mention of section 31A of the Federal Court of Australia Act , nor O 11 r 16 of the Federal Court Rules , yet the CBA's written submissions filed on 4 December 2007 relied upon both of these provisions. There is, of course, a significant difference in the nature and effect of an application under section 31A of the Federal Court of Australia Act on the one hand, and an application under O 20 r 5, or O 11 r 16, on the other. The former application strikes at the heart of the whole proceedings and, if successful, can only result in a judgment to the opposite party, whereas the latter type of application is usually directed to the way in which the case has been pleaded and more often than not, dealt with by allowing the offending party to file an amended pleading: see Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [19] to [21] per French J. 6 In addition to procedural fairness considerations, Ms Dowling's status as a self represented litigant, dictated that she should be told in the clearest possible terms the precise applications the CBA was making and the grounds of each application. Moreover, during the hearing of the application Ms Dowling claimed not to have any legal training or experience and claimed not to have been able to obtain any assistance from a legal practitioner in relation to her proceedings. Consistent with these claims, Ms Dowling presented as a person who did not have appear to have an understanding of the legal and factual issues involved in her proceedings and did not appear to have an understanding of the legal intricacies of evidence or the Court's practice and procedures. To the extent possible, given Ms Dowling's lack of legal training, experience and understanding mentioned above, I consider the CBA's amended notice of motion filed and served on 12 December 2007 achieved the purpose of giving Ms Dowling the necessary notice referred to above. 7 On the first hearing day, as well as granting Mr Farquhar leave to file and serve an amended notice of motion and an adjournment to undertake those steps, I granted Ms Dowling an adjournment to allow her to file a further affidavit which annexed and explained a further document she said she wished to rely upon. Furthermore, Ms Dowling also said that in this further affidavit she would identify precisely what she was claiming against the CBA and what materials she intended to rely upon in support of those claims. Ms Dowling gave this indication after I told her during submissions on the first hearing day, among other things, that I was having considerable difficulty identifying exactly what it was she claimed the CBA had done to wrong her and how that amounted to a valid basis for a claim in this Court. 8 By the second hearing day on 17 December 2007, Ms Dowling had filed and served (although it emerged at the hearing she had not served all of them) not one, but four further affidavits. Each of these documents suffered from the same deficiencies as all the earlier ones in that none of them explained how the CBA had wronged Ms Dowling and how that amounted to a valid basis for a claim in this Court. During the second hearing day, in the hope that Ms Dowling may be able to explain orally what she had thus far failed to explain in all the writing she had placed before the Court, I asked her numerous times to tell me what she thought the CBA had done to wrong her and why she thought that amounted to a valid basis for a claim in this Court. In this process I took Ms Dowling to her affidavit sworn on 25 September 2007 and went through some of the crucial paragraphs therein, one by one, asking her to identify where she believed she had stated that the CBA had wronged her and how she believed that had occurred. My questions were generally answered by what I considered to be a series of irrelevant and confused statements. 9 However, two specific allegations eventually emerged from this process. The first was an allegation that on about 3 August 1995 the CBA had taken, or stolen, $25,000 that Ms Dowling had paid as a deposit in connection with the purchase of a property at 108 Wood Street, Warwick in south-east Queensland. The second was an allegation that on about 25 September 1995 the CBA had recorded a loan of $350,000 against Ms Dowling's name when she had neither requested that loan, nor received the proceeds of it. Significantly, neither of these two allegations was contained in any of the numerous affidavits Ms Dowling had filed to that time. The closest were some statements in her affidavit of 25 September 2007 that these two events involved "suspect transaction(s)". Eventually, Ms Dowling indicated that if she were to be given a further opportunity she could outline exactly what her claim was and explain more fully what she meant by various statements in her affidavit sworn on 25 September 2007, including the "suspect transaction(s)" mentioned above. Since Mr Farquhar could not point to any prejudice that would be caused to the CBA if I were to adjourn the matter one more time, I allowed Ms Dowling a further very short adjournment to 20 December 2007 and the opportunity to file and serve this further material. 10 On 19 December 2007 Ms Dowling filed her thirtieth affidavit in response to the CBA's application. In this affidavit Ms Dowling went through the 176 paragraphs of her affidavit of 25 September 2007 and provided a series of comments thereon. Curiously, in that process, she did not repeat the first allegation mentioned above, viz that the CBA had taken, or stolen, the $25,000 deposit paid in connection with the purchase of the property at 108 Wood Street, Warwick. Instead she made the more vague and obscure claims that $25,000 was paid for the deposit on the purchase of the 108 Wood Street property leaving $225,000 to be paid at settlement but that the CBA paid $ 250,000 at settlement and she " could not turn the matter around and back to the $ 225,000". Ms Dowling concluded that section of this affidavit by the puzzling statement that: "The Applicant was in breach with the Respondent of all Records and Transactions and had received a contrary Account the attitude of unable to be true at once established, with the Government Departments, the Vendors, the Real Estate Agent, the Lawyer and the credit information available to all and sundry". Ms Dowling repeated her allegations that this loan was offered to her without her requesting it and that it was recorded against her name, but she concluded that section of this affidavit by saying: "At this point in time the Applicant had to apply for the Funds to the Starta Office Building: The repayment of the NBA loan: The Renovation of the Warwick Property ... (not originally applied for)" . So, contrary to her allegation (above) that she had not received the proceeds of this loan, this latter statement appeared to concede that she had; and moreover that she had applied those proceeds to the specific purposes stated. During the third and last hearing day on 20 December 2007, I again endeavoured to raise with Ms Dowling my concerns about the vagueness of her claims but I failed to receive any satisfactory explanations. I will return to these two allegations later in these reasons. 12 Before proceeding to consider the operation of section 31A(2) of the Federal Court of Australia Act and its application to these proceedings, it is necessary to set out the background to Ms Dowling's proceedings in some more detail. I do so in the paragraphs below under the heading 'Background'. I have obtained some of this detail from the affidavits of Ms Dowling, particularly her affidavit sworn 25 September 2007, and the remainder from the affidavit of Ms Everett mentioned above. In this respect, I should mention another issue that was raised during the hearing of this application: whether the CBA could rely upon hearsay evidence in support of its application for summary judgment under section 31A(2) of the Federal Court of Australia Act . 13 Ultimately, Mr Farquhar dealt with this issue by electing not to rely upon the hearsay evidence in paragraph 8.21 and annexure MLE11 to Ms Everett's affidavit and by only seeking to rely upon the balance of the affidavit to the extent that it provided proof that annexures MLE2 to 10 and 12 to 16 to the affidavit were business records of the CBA. He then sought to rely upon the contents of those business records to establish the relevant course of dealings between the CBA and Ms Dowling. In taking this course, Mr Farquhar relied upon the provisions in sections 69 and 170 to 172 of the Evidence Act 1995 (Cth ) . Furthermore, having now considered the question more closely, I consider Mr Farquhar would have been entitled to rely upon the hearsay evidence in Ms Everett's affidavit without the election he adopted. This is so, first, because in paragraph 8 of her affidavit, Ms Everett clearly identified the CBA and its records as the source of the hearsay evidence in her affidavit. Secondly, section 75 of the Evidence Act 1995 (Cth ) , provides an exception to the hearsay rule in interlocutory applications if the person who adduces the evidence also adduces evidence of its source. As I have observed above, I consider that Ms Everett has done this in her affidavit. Thirdly, there is clear authority that an order summarily dismissing proceedings on the ground that no reasonable cause of action has been disclosed is an interlocutory order: see Re Luck [2003] HCA 70 ; (2003) 203 ALR 1 at [9] , Dai ---v- Telstra Corp Ltd (2000) 171 ALR 348 at [21] and Marketing Advisory Services (MAS) v Football Tasmania Ltd [2002] FCAFC 165 at [29] , cf Egglishaw-v- Australian Crime Commission [2007] FCAFC 183 involving a dismissal based upon res judicata, issue estoppel and Anshun estoppel, none of which arise in this case. 15 Finally, and in any event, I consider that Mr Farquhar was correct in his submission that the annexed documents were business records of the CBA under section 69 of the Evidence Act 1995 (Cth ) . In reaching that conclusion I have looked at the documents and drawn inferences from their contents in accordance with section 183 of the Evidence Act . Specifically I have observed that the documents variously contain the CBA's letterhead, or its full name, or have been signed by persons who claim to hold positions of authority in the CBA. I have also relied upon the contents of Ms Everett's affidavit to establish that the documents are the business records of the CBA in accordance with sections 170 and 171 (proof by affidavit evidence) and section 172 (evidence based upon knowledge, belief or information where the source is given) of the Evidence Act . During this period she was living at 129 Spring St, Toowoomba, in south-east Queensland. 108 Wood Street, Warwick. 17 To acquire the 108 Wood Street property and to develop some of the other properties, Ms Dowling obtained a number of loans from the CBA and provided mortgage securities over her various properties (above) to secure those loans. Between 31 August 1995 and 6 October 1997, Ms Dowling obtained six such loans (involving five separate loan accounts) for a total amount of $725,000. Then the lessee that she did find, a Mr. Lye, proved to be unsatisfactory and he subsequently abandoned the premises allegedly taking some of the fittings with him. Mr. Lye's involvement was apparently the cause of some tension between Ms Dowling and the CBA because she later made a complaint to the Australian Banking Industry Ombudsman Limited that Mr. Lye had been recommended to her by the CBA. She apparently pursued this complaint through a series of letters in 1999 and 2000. For its part, the CBA denied it had any involvement in recommending Mr Lye to Ms Dowling. 19 In about 1998, whether because of these difficulties with the leasing of the 108 Wood Street property, or for other reasons, Ms Dowling fell into default under her loan agreement with the CBA in relation to the Wood Street property. In particular, she did not repay this loan when it matured on 1 September 1998. The CBA made contact with Ms Dowling on a number of occasions in 1998 and eventually, in early 1999, it transferred the management of all her loan accounts to the Credit Management Unit in its Brisbane head office. By that time, in addition to her default under her loan agreement for the 108 Wood Street property, Ms Dowling had overdrawn her overdraft facility by almost $10,000 (to $34,999) above the approved limited of $25,000. 20 The Credit Management Unit of the CBA wrote to Ms Dowling on 2 March 1999 calling on her to bring her overdraft facility within its limit forthwith and to enter into discussions about the management of her various loan accounts. Ms Dowling and the CBA corresponded about these issues on a number of occasions during 1999 and 2000. Eventually, on 16 May 2000, the CBA sent Ms Dowling a letter giving notice that it intended to proceed to serve notices under the Property Law Act 1974 (Qld ) to enable it to take possession of 'the security properties'. 21 Notwithstanding this stated intention, the CBA waited until 22 September 2000 before appointing agents to act to take possession of the security properties. In the meantime, or at about the same time, Ms Dowling received an offer of $675,000 for the purchase of the James and Ruthven Street property, which offer she rejected. Her rejection of this offer apparently led the relevant officers at the CBA to conclude she was not taking their threats of action sufficiently seriously. There followed a series of meetings and conversations between Ms Dowling and the relevant officers of the CBA during November 2000. Some of these meetings and conversations were apparently quite tense because during one of them Ms Dowling is recorded as threatening to sue the bank for fifty million dollars "unless the assault on my property is not stopped" . In another, with a Mr Olson of the CBA, Ms Dowling is recorded as questioning whether Mr Olson might be a criminal and might have a hidden agenda in respect of her properties. 22 There must have been a lull in these hostilities for a period because the CBA did not deliver its final and formal notices of demand for the repayment of Ms Dowling's outstanding loan accounts until some nine months later, on 5 September 2001. On that date the CBA issued five notices of demand requiring Ms Dowling to repay each of her five loan accounts within fourteen days of the receipt of the notices. By the time these notices were issued, the amount owing under the five loan accounts totalled $913,768.06. When these notices of demand were not met, the CBA then issued a Notice of Exercise of Power of Sale under the Property Law Act 1974 (Qld ). It did that on 5 October 2001. 23 In early 2002 the CBA sold the 26A Hill Street property for $199,500. In April 2002 the property situated at the corner of James and Ruthven Streets in Toowoomba was sold for $797,796.35. It appears that this latter property may have been sold by Ms Dowling herself, rather than by the CBA exercising its power of sale. From the proceeds of these two sales the balance owing under the five loan accounts was paid to the CBA and it then discharged the mortgages it held over Ms Dowling's other two properties at 108 Wood Street, Warwick and 129 Spring Street, Toowoomba. The CBA confirmed these discharges in a letter it sent to Ms Dowling dated 15 October 2002. In the same letter, the CBA told Ms Dowling that it considered the matter to be closed and it would not respond to any further correspondence from her. 24 This statement apparently did not deter Ms Dowling, because it appears from her various affidavits filed in these proceedings that since 2002 she has pursued her grievances against the CBA in correspondence directed to a wide range of public officials in Australia and elsewhere, including the Speaker of the House of Representatives in Canberra, the Australian Federal Police, the United States of America Embassy in Canberra, the United States Federal Bureau of Investigation and the Mayor of Toowoomba. However, in all this time she does not appear to have commenced any proceedings against the CBA in any court in relation to her grievances before she commenced these proceedings. S 31A was introduced by the Migration Litigation Reform Act 2005 (Cth) and came into effect on 1 December 2005. In White Industries Aust Limited v Commissioner of Taxation (2007) 160 FCR 298, Lindgren J examined the introduction and operation of section 31A at some length: see paragraphs [50] to [60]. At paragraph [53] Lindgren J noted that the "no reasonable prosects of success" formula echoed rule 24.2 of the United Kingdom's Civil Procedure Rules in which context that formula has been held to " require attention to be given to real, as opposed to ' fanciful ' or ' merely arguable prospects'": see Swain v Hillman [2001] 1 All ER 91 at 92; Three Rivers District Council v Bank of England (No 3) [2001] UKHL 16 ; [2003] 2 AC 1 at [90] , [95], [133-134] [158-162], and ED & F Man Products Ltd v Patel [2003] EWCA Civ 742 at [8] . His Honour also noted that the formula has been used in a similar context in Queensland's Uniform Civil Procedure Rules : see Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 at 235. At paragraph [54] his Honour observed that the " legislature's intention in enacting s31A was to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 at 91-92. " At paragraph [55] his Honour noted that " by ' broadening the grounds ' the Attorney General was referring to the formula ' no reasonable prospect of success' , as contrasted with a 'hopeless' or ' bound to fail' test" . See also: Barwick CJ in General Steel Industries v Commissioner for Railways ( NSW) [1964] HCA 69 ; (1964) 112 CLR 125 at 128-130. 27 Earlier, in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720, Rares J reviewed the authorities on section 31A to that time: see paragraph [26] to [48]. His Honour concluded that what is required of the Court in applying that section is not a predictive assessment of the prospects of success in the matter should it proceed to trial, but rather an assessment of the evidence and pleadings on the incomplete material available: see paragraph [26] and [38] to [39]. His Honour said that if, on that assessment, the evidence is ambivalent and there is a real issue of fact to be decided, or a real issue of law, the matter should be allowed to proceed to trial in accordance with the principles set out in Hocking v Bell [1947] HCA 54 ; (1947) 75 CLR 125: see paragraph [43]. He emphasised that the Court should be careful not to do a party an injustice by summarily dismissing proceedings. He added that the moving party bears the onus of enlivening the Court's " discretion to authorize a summary termination of the proceedings which s31A envisages" : see paragraph [45]. This judgment may be made, by reference to pleadings, where there is a defect in the pleadings which cannot be cured. Alternatively, it may be a judgment made by reference to evidence put on in support of an application under s31A which reasonably excludes the possibility that facts essential to the success of the claim or defence will be able to be established". He instanced a claim involving a critical allegation that the defendant was present at a particular time and place. If, upon an application for summary judgment or dismissal being made, that defendant files affidavit evidence to show he was not present at that time and place, and there is no other evidence to contradict this 'alibi', the court would be justified in summarily disposing of the claim on the ground that it has no reasonable prospects of success. He also instanced a defence which relies upon the defendant not being party to a contract. If, on an application for summary judgment or dismissal, the plaintiff is able to put into evidence the contract signed by the defendant with supporting (and undisputed) affidavit evidence of the witnesses to his signature, the court would likewise be justified in summarily disposing of the defendant's defence on the ground it has no reasonable prospects of success. 30 To these examples must be added the situation where a party completely fails to identify any valid claim or cause of action, to the court or fails to provide any factual material that could amount to a valid claim, in the materials he or she places before the court, having been given a reasonable opportunity to do so. This situation is different from one where a party has identified what appears to be a valid claim or cause of action but has failed to delineate the factual basis for the claim e.g. a failure to plead all the necessary material facts to found the claim that has been identified, or one where a party has pleaded the necessary material facts for a claim but failed to plead any connection between those facts and the respondent. These situations essentially involve pleading issues that may be remedied by orders to amend or strike out the pleadings. However, where the applicant has failed to identify any valid claim in the materials he or she has placed before the court and has failed to provide any factual material that could amount to a valid claim and the court concludes that the party has no reasonable prospects of ever being able to do so, the situation is fundamentally different. The complete absence of an identified and valid claim and, more importantly, the factual materials to found either that valid claim, or some other form of valid claim, along with the likelihood that the applicant has no reasonable prospects of ever being able to produce that material, justifies a conclusion that there is not, and never will be, a valid claim before the court. This obviously cannot be remedied by orders to amend or strike out the pleadings because no amount of pleadings will remedy the fundamental absence of a valid claim. Moreover, the complete absence of a valid claim in this sense i.e. no identification of a claim, no factual foundation for a claim and no prospect of providing either, must lead inexorably to the conclusion that the applicant has no prospects of prosecuting his or her proceedings to a successful conclusion. 31 It follows that in the circumstances of this particular case, to determine whether Ms Dowling has any reasonable prospects of successfully prosecuting her proceedings against the CBA, it is necessary to examine the materials she has filed in this Court to attempt to ascertain whether she has identified a valid claim and, more importantly, delineated the factual materials necessary to found that claim, or some other claim that she could identify as a valid claim. If the conclusion is that Ms Dowling has not done so, the question will then arise whether she has any prospect of ever providing either. The answers to these two questions will then determine the ultimate question whether Ms Dowling has any reasonable prospects of successfully prosecuting her proceedings against the CBA. her references to the " Law of Understanding ", and to "secret dealings " with the Public Trustee in Toowoomba, and to her mission statement including her mission to "assist the saints ", to mention just some. In the details of claim section she states that she wants her claims determined under sections 22 and 21 of the Federal Court of Australia Act 1976 . While it is unclear what is meant by the words " to receive ownership of property" and it is difficult to understand why s 86(2) of the Trade Practices Act has been mentioned in this context (perhaps she meant to refer to s 87(2)) I am prepared to assume that Ms Dowling has identified a valid claim for a breach of s 52 of the Trade Practices Act . On that basis she would then need to delineate a factual foundation for that claim. In this affidavit Ms Dowling sets out a chronology of events beginning on 30 March 1995 and concluding on 28 January 2007. This chronology extends over some 176 paragraphs. Most of this chronology simply records the events in relatively neutral terms e.g. " On 18 June 1997 --- I received from the CBA a Better Business Loan for $ 45,000......" . Indeed the chronology confirms most of the significant dealings between Ms Dowling and the CBA that are also set out in the business records annexed to Ms Everett's affidavit including the establishment of the loan accounts, the delivery of the letters of demand for the re-payment of the loan accounts and the service of the notice of exercise of power of sale. However, in confirming those events, the chronology does little, if anything, to delineate the factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or some other valid claim against the CBA. Furthermore, many of the other events recorded in the chronology have little obvious relevance to any claim Ms Dowling may have against the CBA e.g. " On 13-8-1996 --- a rate notice is paid for the 129 Spring Street property". On at least three occasions Ms Dowling states that a " suspect transaction had occurred" . She says this in relation to the 22 nd August 1995 when she says a mortgage was executed in the amount of $250,000 (paragraph 7), the 22 nd August 1995 when she says she received documents for a mortgage on her private home for $250,000 (paragraph 10) and 28th March 1996 when she says she received a loan schedule from the CBA for a loan for $100,000 (paragraph 34). Since no details were provided on how any of these events were said to be " suspect " and only the first of them involved an actual transaction - the other two involved what amounted to proposals to enter transactions - it is almost impossible to identify exactly how they could amount to " suspect transactions ". To the contrary, they each appear to be quite innocuous on their face. Moreover, it is totally impossible to see how they provide any factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. 37 The other vague references to possible misconduct on the part of the CBA occur where Ms Dowling states that a particular document or documents 'contain legal information for a mediation' or statements to similar effect: see paragraphs 14, 15, 16, 55, 65, 67, 68, 69, 73, 79, 80, 82, 91, 96, 97 and 98. However, nowhere did she explain what she meant by this statement or how it could provide any factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. 38 This affidavit contains many other obscure statements none of which constitutes a factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. For example at paragraph 30, referring to an event on 19 March 1996 which appears to relate to a loan of $160,000 to pay Mr Gordon Burke, a builder, for work on a strata title office at the Hill and Clifford Street complex she says " I have to make it clear that at no time did I expect or want this process and at no time was any of the funds spend other than a forced legal matter building the appearance of Non Compos Mentis was a pure product of bias" . This statement is both obscure and nonsensical. Similarly, her statement at paragraphs 109 to 111 referring to events that occurred in September 1999 where she says " all sample ethics of practice and gross errors of conduct and money transactions, and it was refused" ; and at paragraph 135, referring to an event that occurred on the 15 th of February 2001, where she says " I could not work in a " trick environment" and I do not think anybody could' '. Finally at paragraph 170, referring to an event that occurred on 17 th of September 2003, she makes the bizarre and nonsensical statement that " the practice of thug tactics took place to me in the pound, needles, drugs, fear, maniac behaviour, assault, damage, handcuffs, fake papers, having to produce ethical material for sanity, and then producing it and being assaulted, mental revoke tribunals, TAFE accountancy courses" . Self evidently, none of this comes close to delineating a factual foundation for any valid claim against the CBA. 39 In relation to the $25,000 issue, Ms Dowling says at paragraph 6 that on the 3 rd August 1995 an NBA (presumably National Bank of Australia) cheque number 00122 for $25,000, being the deposit for 108 Wood Street property, was handed over to the parties for the contract to be finalised. The only other mention of a payment of $25,000 occurs at paragraph 24 where Ms Dowling records that on 7 December 1995 she received an application for the advance of a loan of $25,000 from the CBA (see further my comments about this issue below). As I have already pointed out, Ms Dowling does not allege that the CBA took, or stole, this amount from her, when she paid it as a deposit in connection with the purchase of a property at 108 Wood Street as she did orally at the hearing on 17 December 2007. The second allegation that she raised orally at that hearing, viz that the CBA had recorded a loan of $350,000 against her name when she had neither requested that loan, nor had received the proceeds of it, does not appear to be mentioned at all. In my view none of this material provides any factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim. 40 Finally, as with the contents of many of the other documents she has filed, many of the events recorded in Ms Dowling's affidavit sworn on 25 September 2007 are completely irrelevant to any claim she may have against the CBA eg. at paragraph 78 she says that on 23 October 1997 she received the rates notice for the 129 Spring Street property, or at paragraph 116 she says that on 13 May 2000 she received a letter regarding land tax. 41 In summary, having examined it carefully, I cannot find in her affidavit sworn on 25 September 2007 any delineation by Ms Dowling of any factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. Significantly, she has not raised the two specific allegations that she raised orally with me at the hearing on 17 December 2007, beyond mentioning the first in relatively neutral terms. Having filed an affidavit in support of her application it was not necessary for Ms Dowling to also file a statement of claim. However, since that is what she has done, and it may serve to achieve what the affidavit does not, it bears closer examination. This document extends over four pages and contains 14 main paragraphs with a number of sub-paragraphs. • Paragraph three sets out a list of the affidavits that Ms Dowling had filed with the Court to that time. This list is, of course, is completely irrelevant to identifying any valid claim Ms Dowling may have against the CBA. • Paragraph four begins with the statement " Pursuant to the agreement of being invited to be a vested/customer the Respondent's Business Dealings a 'Breach' took place ". Seven sub-paragraphs follow containing a confusing array of references to " trademarks, business transactions, a statutory declaration" dated 16 January 2002 which is said to be " a legal alert, personal business practice" from the " Executive Office of Government Finance and the Respondents' Advisors to allow the process to be amended " and concludes with a jumble of references to " Breach, Restrictive Trade Practice, Excluded Assets dealings", and Trademark privileg e." Apart from all this being obscure, confused and irrelevant, it does not provide any factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. • Paragraph five begins by stating that " there were terms and conditions to being a vested/customer and those are" - seven sub-paragraphs are then set out. As with paragraph four, these sub-paragraphs refer to a confusing array of irrelevant matters including: " free market trading, Commonwealth Bank codes, the Banking Act, The Australia Constitution " and " National laws ". Again, none of this serves to delineate the factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. • Paragraph six then pleads that the Respondent is in breach of all of the above mentioned " conditions" . It then sets out nine sub-paragraphs which also contain a jumble of references to " property holdings, income, company legislation, trademarks, the local financial market, registered builders ", and " futures and basic stock certificates" . The concluding three sub paragraphs set out details of Ms Dowling's earnings in 1999 and end with the statement: " The applicant would contribute to the reputation of the respondent. " This paragraph is in a similar vein to the other paragraphs above --- confused and irrelevant without any delineation of the factual foundation for a claim against the CBA. • Paragraph seven contains a peculiar reference to a " breach of the Respondent's knowledge" and then sets out two sub-paragraphs that are just as confused and obscure as all of the others above. • Paragraph eight contains a relatively straightforward claim that Ms Dowling has suffered " loss and damage ", but no more details are given. • Paragraph nine appears to contain an alternative claim that the CBA would not " respond to regulation ", whatever that may mean. • Paragraph ten is in similar terms, claiming that the CBA would not " respond to commercial practice" , whatever that may mean. • The remaining paragraphs, 11-14 inclusive, appear to repeat the earlier references to breach, the statutory declaration dated 16 January 2002, the vested/customer account and the claim that Ms Dowling had suffered loss and damage. As with the affidavit of 25 September 2007, it does not raise as a basis for a claim the two specific allegations that Ms Dowling raised orally with me at the hearing on 17 December 2007. This document is also confused. It begins by referring to Ms Dowling's dealings with the bank from 1995 to 2002 (paragraph 1A). It then refers to the Respondent being a " trademark business corporation " and sets out some details about the share capital of the CBA (paragraph 2A), followed by what appears to be a quote from the House of Lords decision in Salomon v A Salomon & Co Ltd [1897] AC 22. Section 2 of the document then appears to set out nine alleged breaches under the Trade Practice Act Part 4 sections 52 and 86. Nowhere in this section does she descend into any detail about the facts involved in these alleged breaches. Throughout these paragraphs there are smatterings of references to court decisions which do not appear to have much relevance to the subject matter dealt with. Furthermore these paragraphs contain some bizarre statements, such as: " The new act of service to the Applicant is a forgery of service under the trademark of the Respondent and reported on papers as a forgery for the Applicant because the service of the papers is gross and a person could not feel secure in any trade dealings with the matters" . 45 The final page of this document contains a mention of the allegation that the loan of $350,000 was not received. However, there is no explanation as to why the CBA is responsible for that, or how it could amount to a breach of s 52 of the Trade Practices Act , or, for that matter, any other valid claim against the CBA. This document then proceeds to list nine further transactions where the monies were allegedly either not received, or not recorded. In most cases it is not clear what the CBA has to do with these various allegations or, indeed, what the allegations are referring to. More importantly, even if these events occurred, this document does not explain how they could amount to a breach of s 52 of the Trade Practices Act , or found any other valid claim against the CBA. 46 The sum of $25,000 does receive a brief mention in this document. On the final page there is a long list of matters including the following: " Affidavit 25 th of September 2007 Annexure B number10. The amount of $25,000 was not deducted off the contract established by the bank ". This statement does not explain why the CBA was obliged to make such a deduction, or even whether that obligation rested with the CBA. It certainly does not explain how this could amount to a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. As with Ms Dowling's application, the affidavit of 25 September 2007 and the statement of claim, this document does nothing to delineate the factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or, for that matter, any other valid claim against the CBA. Whilst she has mentioned the sums of $350,000 and $25,000 that were central to the specific allegations that she raised orally with me at the hearing on 17 December 2007, she has not provided any further details as to how either of these incidents involves a valid claim against the CBA. It describes Ms Everett's affidavit as " defunct " or as establishing a " motion to criminal proceedings ". Otherwise this affidavit is confused, disjointed and nonsensical. This is exemplified by one of the concluding paragraphs (paragraph 15) where it is stated that: " the Applicant is in possession of commitment that in practice can not be described or act in " defunct " to the Federal Court from the Respondent ". • Affidavit of 13 December 2007: This affidavit appears to be an attempt to reply to the amended Notice of Motion said to be under Order 19 Rule 2 , which, of course, it is not. It sets out a list of irrelevant matters such as: Attorney-Generals, interim orders, industrial proceedings etc. It then sets out references to a number of the Rules of Court which appear to be totally irrelevant to the matters dealt with by the Notice of Motion. • Affidavit of 14 December 2007: This affidavit contains a number of references to the CBA's privacy policy, the relevance of which is not apparent. The Annexure to the affidavit is a blank Discharge Refinance Authority Form which also appears to have little, if any, relevance to any matter in issue. • Affidavit of 14 December 2007 (2 nd occurring): Paragraphs one and two of this affidavit appear to record the fact that the affidavit of the 25 th of September 2007 was filed in the Court on the 3 rd of October 2007. This is not in issue and is therefore completely irrelevant. Paragraph three of this affidavit appears to relate to the service of documents on the bank as does the section under the heading " Service to the above Affidavits " on the third page of the Affidavit. Again, this is not in issue and is therefore completely irrelevant. The remaining paragraphs of the affidavit give some detail of various transactions that occurred in relation to Ms. Dowling's various properties; none of which appears to be of any relevance to Ms Dowling's claims against the Bank or to explain what those claims are. The references on page 3 of this affidavit to various bodies " not listening " including " the Law Society, the Police Society, the Real Estate Society and all the authority regulatory bodies" are, likewise, completely irrelevant, as is the list of matters on page 4 following the confused statement: " The office invented a third party that was somehow attached to the applicant in a mystery type of manner to establish ". The balance of this affidavit is similarly confused and nonsensical. In summary, as with all the other documents that preceded them (above) these four affidavits do nothing to delineate the factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. Furthermore, these affidavits do not contain a mention of the allegations associated with the sums of $350,000 and $25,000 that emerged as the central and specific allegations at the hearing on 17 December 2007. This affidavit commences with the bizarre statement: 'The applicant in not armed or dangerous and can proceed under the English language'. The affidavit then proceeds to go through the chronology of events recorded in the affidavit of 25 th of September 2007 by reference to the paragraph numbers in that affidavit and attempts to provide comments, or details, in relation to each of those events. Most of the information provided is either irrelevant, simple repetition, or nonsensical. This theme begins with the first event that occurred on the 30 th of March 1995 where Ms Dowling states, among other things, that " the equity was governed by the Corporations Law" , whatever that may mean. The theme continues through to the end of the affidavit which concludes (paragraph 178) with a warning as follows: " The applicant advises that it could be an offence under the Federal Court Rules and law in general a legal and moral crime to withhold information given in these proceedings or stated proceedings from a law enforcement body or an authority under the Constitution of Australia". There she appears to allege that $225,000 was to be paid by the CBA when the funds appearing on the title transfer for the 108 Wood Street property suggested $250,000 was paid. Given that $250,000 was the purchase price of the property this is the figure one would ordinarily expect to be stated on the title transfer. Ms Dowling then says that she " could not turn the matter around and back to the $225,000 ". There is no logical reason why the purchase price should be "turn[ed]....around and back to $225,000 ". Ms Dowling concludes that section of this affidavit by stating that the process was reported to the local police and adding " the police started to play in "creepy britches" mental tempering was established. " None of this provides any further explanation for, or detail of, Ms Dowling's allegation that the CBA had taken, or stolen, $25,000: see paragraphs 10, 39 and 46 above. Moreover Ms Dowling has completely failed to delineate any factual foundation for this claim (whether it involves a breach of s 52 of the Trade Practices Act or not) or any other valid claim against the CBA. 50 At paragraph 8 of this affidavit, Ms Dowling refers to the loan of $350,000 which she alleges was never requested and the proceeds of which were never received. However, as I have already observed above (see paragraph 11), Ms Dowling appears to contradict this claim by stating that she applied the funds from this loan to various nominated purposes. Moreover, neither Ms Dowling nor the CBA has produced any record that would suggest a loan in this amount ever existed e.g. a letter of offer or a schedule of loan conditions similar to those set out at paragraph 13 above. The explanation for this may lie in a letter Ms Dowling sent to the CBA on 7 March 2002 which is annexed to her affidavit cum submissions dated 4 December 2007. In the third and fifth paragraphs of that letter Ms Dowling appears to explain that the amount of $350,000 is made up of the loan for $250,000 to purchase the 108 Wood Street property and the loan for $100,000 to improve the 26A Hill Street property. These amounts are confirmed in the schedule of loans set out in paragraph 17 above. Ms Dowling returns to this issue at paragraph 13 of this affidavit where she states: "On the 31-8-2007 The Applicant received a Schedule from the Bank for $350,000.00 Term Loan 10 years maturing September 2005 (no specific date) FRTA Loan Account No. 4433. Nominated Account No. 4433. Attached Description of Security. A Second Registered Mortgage over the 129 Spring Street Property (my private home) and that the First Mortgage does not exceed $160,000.00. Significantly, this schedule has not been produced. 51 As this affidavit proceeds, Ms Dowling appears to raise a number of new allegations against the CBA including that an account was raised under duress or fear (see paragraph 22), that a loan in the sum of $164,415 was raised and not received (paragraph 25) and that Ms Dowling did not receive the amounts of two loans, one for $160,000 and the other for $180,000 (paragraph 30). At paragraph 84, Ms Dowling seems to suggest that the CBA was responsible for the failure of the 108 Wood Street investment and that this was somehow connected with the figures available from the Main Roads Department of Queensland. When this affidavit deals with the events surrounding the forced sales of Ms Dowling's two properties to pay out the five loans (see paragraphs 118 to 130 inclusive) she describes the process variously as "illegal" and "pure murder " without explaining what she means by those words. Finally, the affidavit becomes incoherent where (at paragraphs 168 to 174 inclusive) Ms Dowling includes a claim that, in relation to an unspecified event: "the concept of place was distorted to the point of a film production that was being filmed privately from a hidden source in the Family Home, at the Hospital, at the Family Home and the applicant was taking part. the factual foundation for the claims. As with all the other documents that preceded it (above) this affidavit does nothing to delineate the factual foundation for any valid claim against the CBA, whether the claims be for breaches of s 52 of the Trade Practices Act , or some other valid claim against the CBA. 53 Furthermore, this affidavit does not provide the necessary factual foundation for Ms Dowling's allegations about the loan of $ 350,000 and the deposit payment of $ 25,000 that became the central and specific allegations that Ms Dowling raised with me orally at the hearing on 17 December 2007. In particular, I have carefully examined the six affidavits that could possibly identify the claim and the factual foundation for it. This has been an extremely difficult and time consuming process because the affidavits are voluminous, disjointed, largely irrelevant and rambling. They contain a jumble of allegations about ethics, commercial practice, trademarks, the Australian Constitution , the Trade Practices Act , and many other things. I should add in relation to the trademark issue, that Ms Everett deposes in her affidavit to the fact that the CBA has not had any dealings with Ms Dowling in relation to any trademark matter. Moreover none of the correspondence that Ms Dowling annexes to her numerous affidavits makes any mention of any claim involving a trademark. Indeed it is difficult to see how Ms Dowling could have a trademark claim against the CBA arising out of her customer/banker relationship with the CBA. 55 Quite apart from any trademark claim, Ms Dowling has completely failed in all the material she has filed to explain exactly what her claims against the CBA are, and exactly what the CBA had done to give rise to those claims. In other words she has not, despite filing and relying on a large volume of material, been able to delineate the factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. In particular, she has not been able to provide the necessary details of, and factual foundation for, any valid claim arising out of the allegations that she made to me orally at the hearing on 17 December 2007 that the CBA took, or stole, the sum of $25,000, or raised a loan for the sum of $350,000 in her name and did not provide the proceeds thereof to her. 56 Having reached this conclusion, the next question is whether Ms Dowling has any reasonable prospect of being able to identify a valid claim against the CBA, or the factual foundation for it, sometime in the future. I have concluded that the answer to this question is "no" . In reaching that conclusion I have taken into account the thirty affidavits that Ms Dowling has thus far filed and relied upon in which she has attempted to identify a valid claim and the factual foundation for it, but has completely failed to do so. Further, I take into account the fact that she has been granted two adjournments for the express purpose of allowing her to file further material directed to identifying her claims against the CBA and the factual foundation for them, with the same result. I also take into account the obscure, confused and sometimes bizarre nature of much of the material Ms Dowling has filed and the like manner in which she made submissions and responded to my questioning of her during the three days of hearing in this application. Finally I take into account these facts: Ms Dowling's concerns (whether or not they amounted to valid claims) arose out of events that occurred between six and twelve years ago which would ordinarily put them outside any relevant limitation period; the specific claims Ms Dowling raised about the loan of $350,000 and the deposit payment of $25,000 were (at once) of recent origin, improbable, not supported by any documents and apparently contradicted by Ms Dowling's own evidence; and Ms Dowling had a tendency as this matter proceeded to raise more and more allegations about misconduct on the part of the CBA, which allegations appeared to me to become increasing extreme and unconnected to reality. 57 I am mindful of the fact that notwithstanding the lower test for summary judgment introduced by s 31A of the Federal Court of Australia Act it is incumbent upon the Court to be very cautious about terminating a litigant's right to pursue a genuine claim. I am also mindful of the fact that Ms Dowling is self represented and that this has probably affected her capacity to identify whatever claim she believes she has against the CBA. For this reason I have conducted a careful examination of the relevant materials Ms Dowling has relied upon to see whether any real basis for a claim exists within it. At the end of that process, even taking into account all these factors, I am forced to conclude that Ms Dowling's proceedings against the CBA have no reasonable prospect of success because nowhere in all the material that she has filed, or indeed in any of the material that the CBA has filed, has she been able to delineate the factual foundation for a claim involving a breach of s 52 of the Trade Practices Act , or any other valid claim against the CBA. Furthermore, based upon her conduct in, and of, these proceedings, I have concluded that there is no reasonable prospect of her ever being able to so. 58 For these reasons I order that judgment be entered for the CBA against Ms Dowling in these proceedings and that Ms Dowling pays the CBA's costs of the proceedings. Since I have concluded that the CBA is entitled to summary judgment it is not necessary for me to consider the alternative applications it has made under O 20 r 5 and under O 11 r 16. 6 30 October 2007 Annexes a document entitled Statement of Claim 7 5 November 2007 Annexes a document entitled Request for Further and Better Particulars of Statement of Claim 8 5 November 2007 Correspondence with Mr Gordon of the CBA about an amendment to an earlier affidavit 9 12 November 2007 Annexes a letter to Mr Gordon of the CBA about 'the Law of Understanding'. 10 12 November 2007 Appears to relate to service 11 14 November 2007 Lists all earlier affidavits filed 12 16 November 2007 Annexes a statement 'A' wherein Ms Dowling does not admit to 'any secret dealing with the Public- Trustee of Toowoomba, Queensland or... Police of Toowoomba...' 13 20 November 2007 Annexes six pages of quotes from the Australian Trade Practices Commission Australian Business Law Review. 14 21 November 2007 Annexes a statement 'A' wherein Ms Dowling confirms the receipt of the CBA's Notice of Appearance and seeks discovery of documents. It includes a statement 'My consent is available to the respondent's solicitors to discover all the records of the Court and any record under affidavit that would be available to the bank. The (Respondent) or any Authority engaged in Banking Regulations and Service to the community by the Respondent knowing the Respondent has already replied to the matter....' 15 28 November 2007 Appears to relate to the service of a letter on the 18 December 2006 and an affidavit dated 13 August 2007 and concludes with the statement: 'The applicant is not to accept the Statement as purger (sic) from the Respondent .....'. 16 29 November 2007 Appears to be a copy of the affidavit of 28 November 2007 (above). 17 29 November 2007 Quotes from a CCH publication on the Privacy Act , annexes an affidavit sworn 13 August 2007 and another document entitled "affidavit" which among other things refers to the disclosure of information and gives consent to the CBA releasing all information on the applicant. It also annexes what appears to be the CBA's Privacy Policy Statement. 18 3 December 2007 Is headed 'Reply to papers offered by the Respondent' but refers to the Workplace Relations Case, the duties of Cridlands (the CBA's solicitors) and concludes with the statement: 'In view of the matter the Applicant would feel assured with the above assurance given because of the alleged "Breach" by the Respondent and "Money usage is a man made science" and is regulated by the Federal Government. ' 19 4 December 2007 Whilst in the form of an affidavit, appears to be Ms Dowling's submissions on the CBA's application. 20 5 December 2007 As above with what are said to be amended submissions yet appears to be the same as annexure E to the above 21 5 December 2007 Acknowledges receipt of the CBA's submissions and says Ms Dowling's submissions will be delivered in person. 22 7 December 2007 Appears to be an application under Order 14 Rule 2. 23 10 December 2007 Lists the 18 affidavits to that time 24 10 December 2007 Sets out the Applicant's mission statement including: '10 To assist the Saints by remembering the advice of one is to be sincere. ' 25 12 December 2007 Sets out what appear to be comments on the Affidavit of Ms Everett. 26 14 December 2007 Said to be a 'further explanation of the Applicant's affidavit dated 25 September 2007 .....". 27 14 December 2007 Refers to the CBA's privacy policy and annexures a blank discharge/refinance authority 28 13 December 2007 Refers to the Respondent's Notice of Motion and sets out Ms. Dowling's understanding of the procedures of the Court. 29 12 December 2007 Appears to be a further copy of the Affidavit of 12 December 2007 (above). 30 19 December 2007 Said to be a 'submission and statement attached to the affidavit dated 25 September 2007.....' and comments on each of the paragraphs of the affidavit dated 25 September 2007 in turn. | application for summary judgment s 31a(2) federal court of australia act 1976 (cth) no claim identified no factual foundation for a claim provided no reasonable prospect of ever being able to identify a claim or factual foundation for a claim no reasonable prospect of success application s 31a(2) federal court of australia act 1976 (cth) whether hearsay affidavit evidence permitted practice and procedure practice and procedure |
The applicant, Maxim Krok, claims that a decision of a delegate of the respondent, the Commissioner of Taxation of the Commonwealth of Australia ( the Commissioner ), to refuse to defer the time for him to attend and give evidence pursuant to a notice under s 264(1)(b) of the Income Tax Assessment Act 1936 (Cth) was an exercise of power so unreasonable that no reasonable person could have so exercised the power. The matter has come before me on an urgent basis today for reasons which should become apparent shortly. The required date for Mr Krok's attendance is 11.00 am on 16 December 2009 (that is, next Wednesday) in circumstances where for some months Mr Krok had planned to leave Australia on 14 December 2009 (that is next Monday) in order to deal with certain serious family and business obligations, with his return scheduled for early February 2010. The relevant factual context can be identified briefly. On 16 October 2009, the Deputy Commissioner of Taxation issued a notice pursuant to s 264(1)(b) of the Income Tax Assessment Act . This notice required attendance on 17 November 2009 at 2.00 pm. On 10 November 2009, Mr Krok filed proceedings in the Federal Court of Australia seeking to set this original notice aside as invalid. Thereafter, amongst other things, a conversation took place between Mr Krok's solicitor, Alistair McKeough of Morgan Lewis, and an officer of the Australian Taxation Office ( ATO ), Mr Greg Trewin. Mr Trewin is a Regional Director in the Project Wickenby segment in the Serious Non-Compliance Business Line of the ATO. He has worked for the ATO for 32 years. According to Mr Trewin in his affidavit sworn 8 December 2009, Project Wickenby is a multi-agency operation directed at investigating tax avoidance arrangements with offshore elements. Evidence about the conversation on 10 November 2009 between Mr McKeough and Mr Trewin is contained in their respective affidavits. There is no material distinction between the two versions; they merely supplement each other. Why don't you issue another notice with the names of the entities you wish to discuss? My client is a busy man and is often out of the country. The reference by Mr McKeough to the issuing of another notice with the names of the entities the ATO wished to discuss with Mr Krok is a reference to Mr Krok's position that the original notice was invalid because, amongst other things, it failed to specify the entities about which evidence was to be given. After some communications between Mr Krok's solicitors and the ATO, the original notice under s 264(1)(b) was withdrawn on 16 November 2009. The following day, 17 November 2009, a further notice under the same section was issued. This further notice was served under cover of a letter from the Deputy Commissioner of Taxation to Mr Krok. The letter enclosed the notice under s 264 formally requiring Mr Krok to attend and give evidence. It is important that you do this before the date stated in the notice. These penalties are set out with the notice. The required time for attendance was 16 December 2009 at 11.00 am. The notice attached the penalties for failure to comply, referring to ss 8C , 8D , 8E and 8ZF of the Taxation Administration Act 1953 (Cth). Under s 8C(1)(b) the offence provisions do not apply to the extent that the person is "not capable of complying with the relevant paragraph". The notice also attached a document known as "The Taxpayers' Charter". The Taxpayers' Charter, amongst other things, set out the ATO's formal powers, including the power to require a person to attend an interview. If you are reluctant to provide access or information or do not provide it in a timely way, we may make a formal request. We will also tell you when we are using our formal powers to compel you to give access to and provide information. From the Commissioner's point of view when the original notice was withdrawn no indication was given by or on behalf of Mr Krok that he would not be available to attend to comply with the foreshadowed further notice. On 19 November 2009 (two days after the further notice was issued) Mr McKeough, on behalf of Mr Krok, forwarded a letter to the Commissioner. In that letter, Mr McKeough recorded that the notice required Mr Krok to attend on 16 December 2009. The letter stated that it was not possible for Mr Krok to attend on that date. The letter then set out eleven reasons in support which I do not need to repeat in these reasons for judgment other than to note that the reasons constitute serious family and business commitments. The letter also stated that all of Mr Krok's travel arrangements were made some four months beforehand. The letter ended by noting that the week commencing 22 February 2010 would be a suitable time for Mr Krok to attend an interview. Please let us know a date in the week commencing 22 February 2009 [sic] that it is convenient for the ATO to conduct the s 264 interview. In the absence of agreement to a postponement, we expect to receive instructions to apply for judicial review of the decision. The letter sought a statement of reasons and asked for them quickly on the basis that it was anticipated that an application for judicial review of the decision refusing postponement was to be filed and served no later than Monday, 30 November 2009. On the same day, 27 November 2009, there was a conversation between Mr McKeough and Barbara Zakos. Ms Zakos is a principal litigator employed in the litigation section of the ATO. We don't regard there as being any deemed refusal or any decision to which s 13 could apply. Also, we're sending you a letter ourselves. The letters have crossed. Will you hold off until you get our proposal? I'm happy to do that. You should get it in about 30 minutes. I'm not in the office, but I'm arranging it, and I'll just add another paragraph about your letter. I look forward to seeing your letter. However putting that to the side, we were just finalising the letter which was about to be sent to you, when we received your letter. Our letter outlines a proposal which may resolve this issue. The letter to which Ms Zakos was referring is a letter of 27 November 2009 from the Deputy Commissioner of Taxation to Mr McKeough. That letter refers to Mr McKeough's letter of 19 November 2009. Any proposed time and date for your client to attend should be at least three days prior to your client's departure from Australia. Further acceptance of this offer must be made within five days of the date of this letter. The Assistant Commissioner of Litigation in the ATO, Grahame Tanna, sent a letter under Ms Zakos's hand to Mr McKeough referring to Mr McKeough's letter of 27 November 2009 and Mr McKeough's conversation with Ms Zakos of the same date. As you would be aware the Income Tax Assessment Act 1936 does not make provision for a decision to postpone an interview pursuant to s 264 in the way you seem to postulate. In any event such a decision is not a decision under an enactment such as to be reviewable under the ADJR Act. You are therefore not entitled to make a request under s 13(1) of that Act as you have purported to do. In our letter you were informed of the Commissioner's proposal that he is prepared to withdraw the s 264 notice dated 17 November 2009 if your client agrees to attend this Office pursuant to s 264 at a time and date earlier than 16 December 2009. The Commissioner would then withdraw the existing s 264 notice and issue your client with a new s 264 notice to attend at the agreed time and date. We understand from your email to Ms Zakos, however, that your client does not accept this proposal. We're writing to you at the moment about your letter dated 27 November and you should get that in the next 20 minutes. That was dealt with in our letter dated 27 November. It's Alistair. It seems you want to interview my client urgently. I was just finalising a letter which will be sent to you in response to your letter of 27 November. We put forward our position to you in our letter of 27 November. We did want to resolve this issue by putting forward a proposal, but I take it from your email on Friday that your client does not accept the proposal? With respect, this is not the relevant question. Mr Trewin is authorised by the Commissioner to approve the issue of notices under s 264 of the Income Tax Assessment Act . He authorised the issue of the notice to Mr Krok on 16 October 2009, being the original notice. According to Mr Trewin he also decided on 17 November 2009 to issue the further notice pursuant to s 264 requiring Mr Krok to attend and give evidence on 16 December 2009. Mr Trewin also received and read a copy of the letter sent by Mr McKeough to the ATO, being the letter dated 19 November 2009. I would nonetheless have been prepared to allow more time if I considered that the circumstances made a greater period of time reasonable or desirable. In this case, I was not satisfied that such a postponement was reasonable or desirable. Typically investigations made in that area are more time consuming than other audits as it is often necessary to seek considerable information offshore. Such requests are often made via the Exchange of Information Articles in the various Double Tax Agreements Australia has with other countries. In this instance I was aware that the auditors wished to make preliminary enquiries of transactions involving 11 different countries. Accordingly it was possible that any delay would have considerable "follow on" effects which would delay the enquiries by much more than just the 3 months being sought. Mr Krok submitted that the decision recorded in the letter of 30 November 2009, being the letter from Mr Tanna signed per Ms Zakos, was the letter recording the relevant decision not to postpone the time requirement in the further notice. The Commissioner, however, submitted that the relevant decision not to postpone the time requirement in the further notice was made by Mr Trewin, as recorded in para 10 of his affidavit; further, that the decision as made is recorded in the letter of 27 November 2009 from the Deputy Commissioner of Taxation to Mr McKeough. This letter, as noted, sets out the Commissioner's position that the issues raised in the letter of 19 November did not warrant withdrawal of the notice but the Commissioner was agreeable to an alternative proposal. I am satisfied that the Commissioner's characterisation of the facts is correct. Mr Trewin's evidence has not been challenged. Mr Trewin is authorised to issue notices under s 264 of the Income Tax Assessment Act . There is no suggestion in the evidence that Ms Zakos is similarly authorised. Mr Trewin is the regional director of the Project Wickenby segment, as set out in para 1 of his affidavit. Ms Zakos is a litigator in the ATO's litigation section. The letter of 30 November 2009 is a letter from the litigation section. By contrast, the letter of 27 November is from the Deputy Commissioner of Taxation. All of these matters, but particularly Mr Trewin's unchallenged evidence, demonstrate that Mr Trewin made the relevant decision and that the decision is recorded in the letter of 27 November 2009. However, as explained below, this distinction is immaterial to the resolution of the ultimate dispute. Some other immaterial matters can also be dismissed immediately. On 2 December 2009 the Commissioner filed a notice of objection to the competency of the application in respect of the review under the Administrative Decisions (Judicial Review) Act stating that the Commissioner objected to competency on the basis that the application did not identify a decision under an enactment which is reviewable by the Court under the Administrative Decisions (Judicial Review) Act . This is immaterial because the Commissioner accepted that the Court has jurisdiction under s 39B of the Judiciary Act . The application, moreover, identifies a single ground of review being Wednesbury unreasonableness of the decision not to postpone the required time. Wednesbury unreasonableness is a ground of review derived from the decision in Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223 at 228. The ground of review is available irrespective of the source of jurisdiction. Another immaterial matter is that the Commissioner understood that there was no power to adjourn a date specified in a notice under s 264. This is apparent from the letter from the ATO of 30 November 2009. Mr Krok submitted that this showed the Commissioner's failure to understand the availability of the power to accede to his request for a deferral when various decisions show that such a power is available to be exercised. In this regard Mr Krok relied on the decisions in Federal Commissioner of Taxation v Smorgon (1977) 16 ALR 721 at 730-73, Holmes v Deputy Federal Commissioner of Taxation (1988) 88 ATC 4328 , particularly the head note, 4329 and 4334, as well as Clarke and Kann v Deputy Commissioner of Taxation (Qld) (1983) 50 ALR 351 at 360. It seems to me that this misconception as to the availability of the power is immaterial because the evidence discloses that the Commissioner fully appreciated that there was power to accede to Mr Krok's request by another means, namely, to withdraw the further notice specifying the date of 16 December 2009 and to issue a fresh notice. As the Commissioner submitted the machinery is beside the point. The Commissioner recognised that the result which Mr Krok wished to achieve could be achieved. This is borne out by Mr Trewin's affidavit, para 10 of which discloses Mr Trewin's appreciation of the existence of a power to accede to Mr Krok's request. Mr Trewin, however, did not make that decision in the exercise of his discretion having regard to the matters set out in subparas 10.1 through to 10.9 of his affidavit. Once that question is answered in favour of the local authority, it may be still possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The notice was served on 17 November 2009 without any inquiry being made as to his availability and without prior consultation as foreshadowed was the Commissioner's practice in the Taxpayers' Charter. The covering letter to the service of the s 264 notice invited Mr Krok to make contact if there was anticipated to be any problem with compliance. By the letter of 19 November 2009 Mr Krok's solicitors informed the Commissioner that Mr Krok would not be in the country on the nominated date of 16 December 2009 due to longstanding personal and professional commitments which were described in the letter in some detail. Mr Krok requested a postponement of the requirement for his attendance to the date of 22 February 2010 on the basis that he would make himself available to give evidenced on that date. The Commissioner, via his delegate, refused to do so knowing that Mr Krok would not be in the country on the nominated date of 16 December 2009 because of his planned departure from Australia on 14 December 2009. Mr Krok referred to the decision in Holmes where, insofar as relevant, the notice required attendance on a day when the recipient would be in the country but between two trips overseas. In rejecting the claim of manifest unreasonableness Davies J (at 4,438) noted that the recipient of the notice would be in Australia on the date nominated. Mr Krok submitted that the circumstances of the present case are quite different. Not only is Mr Krok not intending to be in Australia on 16 December 2009 but the evidence discloses the lack of any urgency in the interview taking place. In this regard Mr Krok referred to the circumstances described in subpara 10.9 of Mr Trewin's affidavit in which it is said that typically investigations of this type are more time consuming than other audits as it is often necessary to seek considerable information offshore. Mr Krok thus submitted that the investigation will take quite some time, thereby further undermining any suggestion of urgency. Mr Krok pointed out that the evidence discloses that he has residential property as well as substantial business interests in Australia. Mr Krok has said he will make himself available on 22 February 2010. The Commissioner had not identified any prejudice by reason of the postponement. Mr Krok submitted that this must be assessed in circumstances where non-compliance with a notice under s 264 is a criminal offence. Having regard to these matters Mr Krok submitted that the refusal to defer or postpone the requirement for his attendance is so unreasonable that no reasonable person could have reached it. The Commissioner's case on the principal point is equally straightforward. The Commissioner emphasised that the relevant (indeed, the only) challenge is to the decision not to postpone the date in the s 264 notice. The challenge is brought on a single ground being Wednesbury unreasonableness. The issue is whether the circumstances disclosed in the evidence meet the relevant test of being so unreasonable that no reasonable person could have reached it. The reasons Mr Trewin made the decision are set out in subparas 10.1 to 10.9 of his affidavit. His reasons are rational and cogent. 264 of the Assessment Act, it is difficult to demonstrate unreasonableness unless improper motive or other abuse of the power be shown. In issuing a sec. 264 notice the decision maker has a discretion as to the date appointed and a reasonable decision-maker may choose one convenient to him. However, it is another matter to say that a contrary decision was unreasonable in the relevant sense, that is, as being "an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power"... The choice of a date was a matter for judgment under all of the circumstances... But even if these factors be discounted, the fact that we might think that some later date would have been preferable does not make Mr Osborne's decision unreasonable in the relevant sense. It is worth recalling the comment by Lord Hailsham LC, Re W (An Infant) [1971] AC 682 700: "Not every reasonable exercise of judgment is right, and not every mistaken exercise of judgment is unreasonable. There is a band of decisions which no court should seek to replace the individual's judgment with his own". Mr Krok observed that in contrast to Fieldhouse there was evidence in the present case about the time for compliance presenting Mr Krok with difficulties. However, the Commissioner pointed out the decision for the purpose of identifying an anomaly. Although counsel in that matter had referred to the decision of the Full Court in Wouters , dealing with the matter on the basis of Wednesbury unreasonableness, there is no reference to that submission in the decision. Rather, it appears that the question of reasonableness was dealt with by reference to an objective test of reasonableness on the basis of the decision in Deputy Commissioner of Taxation of the Commonwealth v Ganke [1975] 1 NSWLR 252 (which was not accepted in the first instance decision of Holmes or by the Full Court in the appeal in Wouters ). As senior counsel for the Commissioner said in submissions I do not need to concern myself with any potential inconsistency between these two decisions because Mr Krok's application in para 3 clearly identifies the sole basis of the challenge, being that the making of the decision was an improper exercise of the power conferred by the Income Tax Assessment Act in that it was an exercise of power that was so unreasonable that no reasonable person could have so exercised the power. That is, the challenge is clearly on the basis of Wednesbury unreasonableness. Can it be said that the decision not to postpone the date for attendance (by whatever mechanism, be it by variation of the notice or by withdrawal of the notice and issue of the new notice, as the Commissioner accepted was possible) was so unreasonable that no reasonable person could have made it? As a matter of general principle this test is to be applied to the circumstances as known to this decision-maker at the time. Those circumstances and the decision-maker's reasoning process are disclosed in para 10 of Mr Trewin's affidavit. Those circumstances include that Mr Krok had been aware since approximately 16 October 2009 that the Commissioner wished to interview him. The usual period that the Commissioner allows for attendance at an interview is 28 days, but Mr Trewin "nonetheless would have been prepared to allow more time if [he] considered that the circumstances made a greater period of time reasonable or desirable". Mr Trewin was not so satisfied observing that even if Mr Krok had to change his flights and delay his arrival in South Africa it was still, in Mr Trewin's view, reasonable and desirable for the interview to proceed before 16 December 2009. Mr Trewin did not think it necessary to decide whether the statements in the 19 November letter were true or not. Even assuming them to be true, he said that he had reached the view that the s 264 examination should not be delayed until 22 February 2010. Amongst other things, Mr Trewin took into account that a delay until February 2010 in conducting the interview would mean a similar delay in progress of the review by the ATO. Further, Mr Trewin considered that there was no guarantee that Mr Krok would necessarily return to Australia and be available in the week commencing 22 February 2010, even if that be his current intention. Accepting that Mr Krok had responsibility for two teenage children, Mr Trewin considered that Mr Krok could have made arrangements as necessary for their care so as to enable him to attend the interview at the time specified in the second notice. Mr Trewin also referred to the Commissioner's alternative proposal as set out in the letter of 27 November 2009 that if the interview proceeded on or before 16 December the Commissioner would be able to make further inquiries while Mr Krok was overseas. Although Mr Trewin considered making inquiries by reference to third parties he did not accept that this was appropriate on the basis that Mr Krok had no tax file number and little was known about him. According to Mr Trewin, the ATO may "be unable to make any meaningful inquiries about [Mr Krok], entities associated with him or transactions involving him, without first interviewing him". It is true, as Mr Krok's submissions pointed out, that Mr Trewin described investigations involving offshore information as "more time-consuming than other audits". Mr Trewin also noted, however, that he was aware that the auditors wished to make preliminary inquiries in respect of transactions involving eleven different countries. Accordingly, Mr Trewin considered that it was possible that any delay in the conduct of the interview with Mr Krok would have what he described as "considerable 'follow on' effects", which would delay the inquiries by much more than just the three months being sought. The point is not whether I (or anyone else) would have made the same decision as Mr Trewin in the circumstances. Review on the ground of Wednesbury unreasonableness is confined because of the distinction which must be maintained between judicial and merits review. The decision cannot be vitiated merely because it seems unfair or unreasonable in the ordinary sense of those words. That would involve merits review disguised as judicial review which is impermissible. Moreover, the impugned decision in this case is not the decision to issue the further notice containing the date 16 December 2009. The decision is the decision not to postpone, defer or adjourn that date. When the notice issued there was no suggestion that the Commissioner knew that Mr Krok had planned not to be in Australia. That information seems to have been provided in response to the notice by way of the letter of 19 November 2009. But the circumstances relating to the refusal to postpone, adjourn or defer the date are not merely that by the letter of 19 November 2009 the Commissioner, via his delegate, knew that Mr Krok planned not to be in the country on 16 December 2009. The circumstances include all of the matters to which Mr Trewin adverted in para 10 of his affidavit. A fair reading of the reasons given by Mr Trewin in para 10 of his affidavit does not permit characterisation of those reasons as rising higher than an unwillingness on the Commissioner's part to alter the standard 28 day period. As the Commissioner submitted, the Commissioner was entitled to act having regard to the matters set out in para 10 of Mr Trewin's affidavit. As the Commissioner also submitted, there is no principle of law that if the Commissioner cannot prove urgency then a decision not to postpone as requested must be affected by Wednesbury unreasonableness. The conversation between Mr Trewin and Mr McKeough on 10 November 2009 in which Mr McKeough asked whether there was any particular urgency and Mr Trewin said there was not, confirming that it was "just the usual of wanting to get on with things and to proceed promptly with an investigation, not have too much delay, and so on" does not establish Wednesbury unreasonableness. These are perfectly proper reasons for the Commissioner to have acted as he did. Having regard to these matters I am not satisfied that the threshold of Wednesbury unreasonableness has been reached. It was open to the Commissioner by his delegate, Mr Trewin, to make the decision which is sought to be impugned by the application. I should also say, as I noted earlier, that the factual dispute about the decision seems to me to be immaterial. Even if the decision is as recorded in the letter of 30 November 2009, the fact that letter refers to the Commissioner's apparent misconception about the availability of the power is beside the point for the reasons I have already given. The same letter, as I have said, acknowledges that there is power to achieve the outcome that Mr Krok sought and also refers to the alternative proposal which Mr Krok apparently declined to accept. Moreover, the same result (namely, that the decision cannot be vitiated on the ground sought) would follow even assuming, contrary to the Commissioner's position, that the application for review under the Administrative Decisions (Judicial Review) Act is competent. Accordingly, I do not need to determine that issue. It follows from the reasons I have given that I must dismiss the application filed on 1 December 2009 and order that the applicant pay the respondent's costs as agreed or taxed. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | applicant required to give evidence pursuant to a notice issued under s 264(1)(b) income tax assessment act 1936 (cth) where applicant sought a deferral of time in which to give evidence where respondent refused to grant the applicant the deferral of time whether respondent's decision to refuse deferral manifestly unreasonable taxation |
The acronym APS is used to define the Australian Public Service established by s 9 of the Act. In 2007 Mr Lohse was an Executive Level 2 Senior Investigation Officer in the Regulatory Compliance Unit of the Therapeutic Goods Administration, a division of the Department of Health and Ageing ('the Department'), which is an Agency within the meaning of the Act. On 13 November 2008 Mr Lohse instituted proceedings against Mr Arthur, the second respondent Mr Geoff McKinnon (Ms Coppin's predecessor in office as Director, Management Advisory and Solutions Section, People Branch of the Department), and Ms Coppin seeking constitutional writ relief in respect of the operative decisions which led to his reduction in classification. A claim for relief in respect of an alleged decision of Mr McKinnon was not pressed when the respondents conceded that Mr McKinnon had not made any relevant decision. Pursuant to leave granted on 14 September 2009 Mr Lohse filed a Further Amended Application for Judicial Review dated 24 August 2009, a copy of which had previously been forwarded to the Court. A second Further Amended Application for Judicial Review dated 15 September 2009 was filed, with leave, on that day. A short chronology of the relevant events leading to the institution of the proceedings is as follows: Monday 5 November 2007- Friday 9 November 2007 Four APS employees based in Canberra carried out surveillance operations in Adelaide. The employees were all officers of the Therapeutic Goods Administration Division of the Department. The four officers were staying at a hotel in Glenelg whilst undertaking surveillance operations in Adelaide. Wednesday 7 November 2007 The four TGA officers visited the 'Jetty Hotel' at Glenelg, a hotel near to the hotel at which they were staying, arriving at about 5:30pm. Between about 10:00pm and 10:30pm Ms Barclay and Mr Hislop left the Jetty Hotel. At about 10:25pm Mr Lohse sent a text message to Ms Barclay. The four officers dined together at the Jetty Hotel and all drank alcoholic beverages during the course of the evening. At times Mr Lohse left the table at which the group was seated to smoke cigarettes on the footpath in front of the Jetty Hotel. When smoking he was approximately 10-15 metres away from the dining table. Whilst at the Jetty Hotel Mr Lohse was said to have engaged in conduct which was described by counsel for the respondents as 'mucking up'. Monday 12 November 2007 Mr Coloe submitted a minute to the Executive Manager of the TGA Surveillance Unit in which he reported on conduct which he observed at the Jetty Hotel at Glenelg on 7 November 2007 when 'the four of us went out for dinner and a few drinks', conduct which Ms Barclay reported to him and text messages which he observed on the morning of Thursday 8 November 2007 which it was said had been transmitted by Mr Lohse to Ms Barclay on the evening of Wednesday 7 November 2007. The minute also reported on Mr Lohse's dress when he went about regulatory compliance visits. Wednesday 21 November 2007 Statement of Ms Barclay directed to the TGA HR Manager concerning 'Sexual Harassment by Michael LOHSE'. The statement included: '... That evening we all met in the foyer of the hotel and walked to the Jetty Hotel for drinks and dinner. At the hotel we sat at a table located next to the footpath. Since returning from this trip I have spoken with Senior Investigator Geoff LANE and Training Officer Margaret LANE. Margaret LANE has informed me that on a trip previously she too has had inappropriate text message from Michael LOHSE. I was also informed that they had found out recently Michael LOHSE had been speaking to their fourteen year old daughter on the computer site facebook. ' Tuesday 4 December 2007 Selection of the first respondent, Ian Arthur to determine whether or not Mr Lohse breached the APS Code of Conduct. Monday 10 December 2007 Contract for the provision of services by the first respondent, Mr Arthur, between Commonwealth of Australia and Mr Arthur. In the early evening you were at the Jetty Hotel, Glenelg in company with Ms Barclay and two other colleagues. During the evening you purchased a rose and a "love heart chocolate" and gave it to Ms Barclay. It is alleged that as you gave these items to Ms Barclay you rubbed her hand with yours and rubbed your leg against hers. Ms Barclay states that this was unwelcome to her, and she moved away from you as a consequence. It is also alleged that during the evening, you made inappropriate gestures to passing females, including saying words to the effect of "here puss puss puss" while making hand gestures to them. It is further alleged that later that evening, or in the early hours of the following morning, you sent a text message from your work mobile phone to Ms Barclay's work mobile phone which read "have you put puss to bed". Ms Barclay states that she then switched off her phone without responding to the message. Upon switching her phone back on the following morning, Ms Barclay alleges that she saw a further two messages sent from your mobile which read " whimp " and another message " at karaoke seen the girl with the awesome tits sensational ". Mr Arthur's communication included: '... I note that you declined to be interviewed by me on tape, preferring instead to prepare a written response in your own time. The allegations against you arise from a work-related trip you have confirmed you attended on the 7 th November 2007. It is my understanding that Mr John Coloe, Mr Andrew Hislop and Ms Sasha Barclay travelled with you, to Adelaide for work-related purposes. Upon completing your duties, the four of you gathered at the Jetty Hotel for a meal and debriefing of the day's activities. [ The applicant submits that the word 'debriefing' was suggested by Mr Arthur and did not originate from any of the officers. It is alleged that you [Mr Lohse] purchased a rose and love heart shaped chocolate which you then gave to Ms Barclay. Ms Barclay states that at the time you gave these items to her, you rubbed the back of her hand and arm with your hand, while at the same time rubbing your leg against hers and placing your foot across hers. ... It is alleged that a short time after this incident, you quietly said to Ms Barclay words to the effect of "you always smell good". ... It is alleged that at various times during the night, you stood up from the table to have a cigarette and while doing so, you made comments and gestures towards females of various ages as they passed by, including the words 'here puss puss puss". It is alleged that while saying those words you made gestures with your hand that could have been interpreted as being sexually orientated. It was also stated that this behaviour occurred in public, and with members of the public including other diners nearby. Ms Barclay states that this message read "have you put puss to bed". ... Ms Barclay states that the next morning she turned her phone back on and found a further two text messages sent by you to her phone. Ms Barclay states that the first message was simply "whimp", and the second was "at karaoke seen the girl with the awesome tits sensational". Consistent with our discussions, I believe that the summary of the allegations against you is sufficient for you to be able to construct a response should you wish to do so. The 12 page response included: 'I state that in the very early evening, sometime before sundown, I did purchase a rose and give it to Ms BARCLAY. I have no recollection of purchasing a love heart chocolate and unless it came as part of a "package deal" with the rose then I would refute its existence in fact. ... the purchase was spur of the moment and was bought from a salesgirl who was walking about the bar hawking flowers. ... I "presented" it to [Ms Barclay] in front of both Mr COLOE and Mr HISLOP and welcomed her as a new member of our unit. ... I can only describe this particular allegation as mischievous prevarication on Ms BARCLAY's behalf and also of any other who claims to substantiate the premise or allegation. I state that I have never behaved inappropriately towards Ms BARCLAY, either on the night in question, or before or after this alleged incident, ... I would add that there has been a lapse of some 11 weeks since this alleged incident being reported and my being made aware of this investigation ... I have always treated Ms BARCLAY, and all other DOHA employees and persons, be they either male or female, with the courtesy, respect and professionalism due to them. Interviews of my colleagues, both male and in particular female in the realm, sphere and vicinity of my employment would bear this out. ... I state that at no time during that evening or on any other occasion have I said any such or similar thing [as "you always smell good"] to Ms BARCLAY. I state that I said no such thing to her, it simply did not occur; again it is mischievous prevarication on Ms BARCLAY's behalf and also of any other who claims to substantiate the premise or allegation. During the course of that evening I got up and left the table numerous times, this being mainly to walk out onto and down the footpath so that I could smoke and make phone calls, also to go to the bar to purchase drinks and utilise the male toilets and answer phone calls ... It has also been alleged that at various times during the evening that I made inappropriate gestures to passing females of various ages, including saying words to the effect of "here puss puss puss" whilst making hand gestures to them. I have not been informed to date, as to who, in particular, is alleging this and as to what specific form (s) these alleged inappropriate gestures took, neither as to the exact location or time (s) or frequencies that this allegedly occurred. I can only respond to what has been alleged to me thus far ... ... I will state that at no time whilst I was at the Jetty Hotel or any other location that evening did I act or speak in the way that is alleged or behave inappropriately towards any passing females or in fact any other female person in my vicinity. This particular allegation is outrageous, preposterous and total fabrication. I would submit that scrutiny of hotel security logs, any Local Council and Hotel surveillance cameras and interviewing of bar and security staff would assist to bear this out although I am very much aware that the passage of time since may constrain against this. The allegations are false, malicious, and mischievous and they are made only with intent to mislead and deceive. ... It has also been further alleged that later in the evening, or in the early hours of the following morning ... I sent a text message from my work mobile phone to Ms BARCLAY's work mobile phone which read "have you put puss to bed"[. ] I state that I did send her a text message containing that wording. ... it was sent in reference only to Mr HISLOP and his apparent and visible heavy intoxication at the time [he left the Jetty Hotel with Ms Barclay]. In relation to the further allegation of two other texts allegedly read by Ms BARCLAY when turning her phone on the next morning ... I will state that if she received these from my work mobile phone as is alleged [messages reading "whimp" and "at karaoke seen the girl with the awesome tits sensational"] then they were received erroneously. I had no reason to send any such texts to Ms BARCLAY and can only say that if they were as is alleged, in that format and sent by me and received by her then that can only be due to error on my part and I apologise for making that sending error. ... I recall making and receiving several phone calls that night and sending numerous text messages to various persons including work colleagues and other social contacts and friends that reside in Adelaide ... ... I totally refute the allegations. They are false, without any substance and are completely out of character and have been made only with malicious and mischievous intent. I am aware that the alleged "victim" was not the original complainant and that for some reason that the complaint was made on her behalf and that that written complaint contained gross exaggeration and prevarication by its author. ... I contend that Mr COLOE and Ms BARCLAY have actively conspired together in the making and bolstering of these allegations and that they have been mischievously and maliciously constructed around the presentation of the rose and the sending of the text message that stated "have you put puss to bed" and that their collusion has been ongoing since the 8 th November 2007. ... I am aware that Mr COLOE and Ms BARCLAY spent most of the day of Thursday the 8 th of November 2007 in company with each other. They were supposed to be conducting regulatory visits however to the best of my knowledge no regulatory visits or otherwise were conducted and they spent most of that day in the Adelaide Hills inspecting race horses and did not return until very late in the afternoon of that day. The record included under the heading 'OUTCOME AND FINDINGS': 'Mr Arthur concluded his investigation on 30 March 2008 and has presented me with his findings. On the balance of probabilities, Mr Arthur determined on the evidence before him that you did fail to treat Ms Barclay with respect and courtesy and failed to behave at all times in a way that upholds the APS Values and the integrity and good reputation of the APS. In consequence, Mr Arthur has determined that you have breached the APS Code of Conduct. As such, it is now a matter for me, as a delegate of the Secretary, to consider what sanction, if any, should be imposed under Section 15 of the Act. ... I now invite you to provide me with any additional documents, statements or other material that you wish me to consider in the context of this decision. This may also include any additional information or views as to why a reduction in classification should not be imposed given the circumstances of the breach. The email included: 'Can you also please advise me of when I will be provided with a copy of all the statement's (sic), documents and other material relied upon in investigating this matter. The email continued: 'However, it is only a summary and it did not have attached copies of all the statements, transcripts of interviews and all other material etc relied upon in investigating and determining the matter. Can you please advise me as soon as is possible of when I will receive this material? As such, I do not intend to accede to your request. By not fulfilling all the procedural fairness and natural justice requirements, in particular, the refusal to supply relevant and requested documentation I am not being given the opportunity to respond to the full case against me prior to the determination being made. ... The matter was apparently first formally complained of on the 12th November 2007 however not by the alleged victim but on her behalf by one of the alleged witnesses. Why was I not made aware of its existence until the 22nd of January 2008, when I was first "ambushed" by the investigator, some 11 weeks later? I contend that I have been denied natural justice by not being given the opportunity to promptly respond to or to refresh my memory while said alleged incidents were fresh in my mind and that that lengthy and inordinate time gap has allowed the alleged "victim" and alleged "witnesses" a considerable and disproportionate advantage over me. The allegations were not clearly and fully outlined to me at all in the initial notice of investigation: ... The investigation has not been conducted objectively, the investigator has simply set out to substantiate the allegations that were made and has not explored all other available avenues of investigation and has taken into account irrelevant considerations and has also failed to taken into account relevant considerations. I am not really certain as to what the next step in this process might be however I will await further guidance and advice from you on that. I have given careful consideration to the matters raised in your response of 18 April 2008 ... after reviewing all available documentation , I am satisfied that the investigation has been properly handled, conducted fairly and that you were afforded natural justice. Consequently, I have decided to uphold the proposed sanction of reduction in classification and reduce your substantive classification from Executive Level 2 to Executive Level 1 (top salary point) as outlined in Mr McKinnon's letter to you on 7 April 2008. Therefore I have made arrangements for the reduction of your classification to be effective from pay day 1 May 2008. Item 1 of the schedule to the contract identified the services to be conducted as being those 'outlined in the Terms of Reference at ATTACHMENT A'. Attachment A contained some seven paragraphs under the heading 'TERMS OF REFERENCE'. Ian Arthur ... is to undertake an investigation into allegations that Mr Michael Lohse, an employee of the Therapeutic Goods Administration may have breached the APS Code of Conduct. Ian Arthur must provide this in a report to the Department, clearly expressing his findings and conclusions in relation to this matter. The respondents concede that no belief of Mr Arthur that there was a requirement to investigate outside of the 'scope' was discussed and approved by the 'Project Officer'. (b) Did Mr Arthur fail to comply with the procedures established by the Head of the Department for the determination of whether Mr Lohse, as an APS employee, breached the Code of Conduct? (ii) Alleged prior misconduct on the part of Mr Lohse in his dealings with Mrs Lane in that he made advances to her, tried to make moves on her and sent her inappropriate text messages. (iii) Alleged misconduct of Mr Lohse in his dealings with the 14 year old daughter of Mrs Lane in that he inappropriately communicated with her on the computer site 'Facebook'. (e) Did Mr Arthur approach the task which was entrusted to him with an open mind or was he not open to persuasion? (f) Whether a hypothetical fair-minded lay person, properly informed as to the nature of the process in which Mr Arthur was engaged, might reasonably apprehend that Mr Arthur might not have brought an impartial mind to making the decisions which he made. (g) Whether the decision of Mr Arthur was so unreasonable that no reasonable decision-maker could have made it? Section 10(1) of the Act defines 15 values as 'APS Values'. In s 13 of the Act thirteen separate stipulations as to conduct required of APS employees were recorded ('the Code of Conduct'). Whilst one might have thought that the section would deal with procedures for establishing breaches of the Code of Conduct before addressing sanctions for such breaches, the section was structured in a way that placed sanctions ahead of procedures for determining breaches. Under s 33(2) it was open for the regulations to prescribe exceptions to the entitlement to review. The 'Commissioner's Directions' are to be found in the Public Service Commissioner's Directions 1999 as amended. Those directions, required by s 15(4) of the Act, (see also s 15(3)(a)) are to be found in Chapter 5. Not all suspected breaches of the Code of Conduct may need to be dealt with by way of a determination. In particular circumstances, another way of dealing with a suspected breach of the Code may be more appropriate. The procedures, dated 5 December 1999 were set out under 10 separate headings including 'Application of Procedures', 'Selection of Decision Maker', 'Formal Hearing not required', 'Information to be given to employee before Determination is made', 'Determination process to be informal', 'Person making Determination to be independent and unbiased', 'Action that may be taken if breach found to have occurred' and 'Record of Determination'. The procedures were expressed to apply only in relation to a suspected breach of the Code of Conduct by an APS employee in respect of which a determination was to be made. The procedures marked 'Attachment B' do not distinguish between different categories of APS employees. It is arguable that for some categories of APS employees and in some circumstances a formal hearing may be required. If procedural fairness requires a formal hearing it would not seem to me open to an Agency Head to establish procedures which are inconsistent with the requirement of procedural fairness. Mr Lohse was not provided with copies of statements made by Ms Barclay and Mr Coloe or transcripts of interviews of Ms Barclay or Mr Hislop in relation to the conduct said to constitute breaches of the Code of Conduct, nor was he given an opportunity to be present when any oral interview of Ms Barclay or Mr Hislop took place. Furthermore, he was not given an opportunity to cross-examine Ms Barclay or Mr Hislop. Under the heading 'Determination to be informal' the procedures established by the Agency Head for determining whether an APS employee had breached the Code of Conduct required that they be carried out 'with as little formality and as much expedition as a proper consideration of the matter allows'. The procedures required the Agency Head to take reasonable steps to ensure that the person who determines whether an APS employee has breached the Code of Conduct 'is, and appears to be, independent and unbiased'. The rules of natural justice require that a person making a determination as to whether an APS employee has breached the Code of Conduct must be unbiased and free from any reasonable apprehension of bias. If a decision-maker has pre-judged a case so as to be unable or unwilling to decide it impartially, that decision-maker's determination will be affected by actual bias (see per Stone J, with whose reasons Hill J agreed, in Gamaethige v Minister for Immigration and Multicultural Affairs [2001] FCA 565 ; (2001) 109 FCR 424 at [79] ). The requirement that justice should both be done and be seen to be done is one which reflects the fundamental importance of the principle that a decision-maker determining whether or not the Code of Conduct has been breached be independent and impartial ('unbiased'). Where an administrative decision is made in private, the test for apprehended bias is whether a hypothetical fair-minded lay person properly informed as to the nature of the proceedings or process, might reasonably apprehend that the decision-maker might not have brought an impartial mind to the making of the decision. In deciding such a matter, the Court determines the issues objectively (see per McHugh J in Hot Holdings Pty Limited v Creasy [2002] HCA 51 ; (2002) 210 CLR 438 ('Hot Holdings) at [68] where his Honour effectively paraphrased what had been said by Gleeson CJ, Gaudron and Gummow JJ in Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425 ('Re RRT; Ex parte H') at [27]-[28]). That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the Tribunal be independent and impartial. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge ... to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly , Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of 'the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case'. Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them. Whether that has happened is a matter of judgment taking into account all of the circumstances of the case. However, one thing that is clear is that the expression of tentative views during the course of argument as to matters on which the parties are permitted to make full submissions does not manifest partiality or bias. That formulation owes much to the fact that court proceedings are held in public. There is some incongruity in formulating a test in terms of "a fair-minded lay observer" when, as is the case with the tribunal, proceedings are held in private. Whether or not that be the appropriate formulation, there is, in our view, no reason to depart from the objective test of possibility, as distinct from probability, as to what will be done or what might have been done. To do otherwise, would be to risk confusion of apprehended bias with actual bias by requiring substantially the same proof. In the present case, a significant difference between curial proceedings and the proceedings of the tribunal is that the former are adversarial and the parties are usually legally represented, whereas the latter are inquisitorial in nature and the parties are not represented. Natural justice and fairness are not to be equated. In the context of administrative decision-making it is more appropriate to speak of a duty to act fairly or to accord procedural fairness (per Mason J, as his Honour then was, in Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ('Kioa v West') at 583). In most cases the critical question is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? (see per Kitto J in Mobil Oil Australia Proprietary Limited v The Commissioner of Taxation [1963] HCA 41 ; (1963) 113 CLR 475 at 504, per Mason J in Kioa v West at 585 and per Ellicott J in Finch v Goldstein [1981] FCA 132 ; (1981) 36 ALR 287 ; see also In re Pergamon Press Ltd [1971] 1 Ch 388). The expression 'procedural fairness' more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, i.e. in accordance with procedures that are fair to the individual in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the Act seeks to advance or protect or permits to be taken into account as legitimate considerations (per Mason J in Kioa v West at 585 cf Salemi v MacKellar [No. 2] [1977] HCA 26 ; (1977) 137 CLR 396 at 451 per Jacobs J). Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice (per Gleeson CJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 ('Lam') at [37]). The content of the requirement for procedural fairness may fluctuate during the course of particular administrative decision-making (per Gaudron and Gummow JJ in Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 ('Aala') at [62]; see also per McHugh and Gummow JJ in Lam at [48]). Proceedings before a decision-maker engaged in determining whether an APS employee has breached the Code of Conduct are not adversarial but inquisitorial. Such a decision-maker is an inquisitor obliged to be fair. In my opinion, such a decision-maker is not required to carry out an inquiry in order to identify what the case of an employee suspected of breaching the Code of Conduct might be (see by way of analogy Minister for Immigration and Multicultural and Indigenous Affairs v SCAR [2003] FCAFC 126 ; (2003) 128 FCR 553 at [36] ). In circumstances where no formal hearing was held in relation to the suspected breaches by Mr Lohse of the Code of Conduct and he was without an opportunity to test evidence provided to the decision-maker by others, it was essential, in my opinion, that he knew what was being put to the decision-maker, by, in particular, the complainant Ms Barclay, against himself. Mr Lohse was entitled to know about material that was clearly put against him (see by way of analogy Finch v Goldstein ). As procedural fairness is directed to the obligation to give a person such as Mr Lohse a fair go, it is necessary to begin by looking at what procedural fairness required the relevant decision-maker to do in the course of conducting the process of determining whether Mr Lohse had breached the code of conduct. Because principles of procedural fairness focus upon procedures rather than outcomes, it is evident that they are principles that govern what a decision-maker must do in the course of deciding how the particular power given to the decision-maker is to be exercised. They are to be applied to the processes by which a decision will be reached. If adverse information that was credible, relevant and significant to the determination to be made by the decision-maker was placed before the decision-maker it would be unfair to deny a person such as Mr Lohse an opportunity to deal with it where there was a real risk of prejudice, albeit subconscious, arising from the decision-maker's possession of the relevant information. The fact that a decision-maker may later have chosen not to apply adverse information does not bear upon whether an affected person should be afforded an opportunity to deal with adverse information that is credible, relevant and significant to the determination to be made. A decision-maker can only dismiss information from further consideration if it is evidently not credible, nor relevant and of little or no significance to the determination to be made (see Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 ('Applicant VEAL') at [14]-[18]). In Applicant VEAL the High Court held that procedural fairness required the Refugee Review Tribunal to inform the applicant for a protection visa of the existence of an unsolicited letter which had been forwarded to the Department in which the author made certain allegations against the appellant, and of its contents, before the Tribunal decided to affirm the refusal of the Minister's delegate to grant the appellant a protection visa. A decision-maker engaged in determining whether an APS employee has breached the Code of Conduct has no general obligation to initiate inquiries or to make out a case for an APS employee in Mr Lohse's position. It is only in rare or exceptional circumstances that a decision-maker's failure to inquire may ground a finding of jurisdictional error because the failure may render the ensuing decision manifestly unreasonable in the sense used in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 ('Wednesbury') (See Minister for Immigration and Citizenship v Le [2007] FCA 1318 ; (2007) 164 FCR 151 ('Le')) or may allow a conclusion that there was a constructive failure to exercise jurisdiction on the part of the decision-maker (see Minister for Immigration and Citizenship v SZIAI [2009] HCA 39 at [24]-[26]). Le was a case where the circumstances were rare or exceptional. In Le reliance had been placed by the Refugee Review Tribunal upon a transcript of a five and a half hour interview which had been recorded on seven only pages of notes. Kenny J referred to the fact that there had been a mistranslation which meant that the significance of the primary decision-maker's decision record and the typed notes of interview were doubtful or uncertain in a number of critical respects. The mistranslation raised several uncertainties. SZJBA v Minister for Immigration and Citizenship [2007] FCA 1592 ; (2007) 164 FCR 14 was another case where the circumstances were rare or exceptional. In that case a coversheet together with a five page submission had apparently been forwarded by facsimile to the Refugee Review Tribunal in response to a s 424A letter under the Migration Act 1958 (Cth) inviting comment on certain information, but only the cover sheet was received. Allsop J, as his Honour then was, held that it was a case where the Tribunal needed to see and should have inquired about the absence of the missing five page submission. Whilst the 'scope' of the investigation for which his contract for services dated 10 December 2007 provided could be said to limit his authority to the making of a determination in respect of a suspected breach of that part of the Code of Conduct contained in s 13(3) of the Act in respect of Mr Lohse's alleged behaviour 'in a harassing manner' towards Ms Barclay, especially given the express qualification 'In the case Ian Arthur believes there is a requirement to investigate outside of this scope it must first be discussed and approved by the Project Officer', coupled with the respondents' concession that no approval to investigate otherwise was discussed and obtained, nevertheless the limitation of the relevant 'scope' needs to be viewed in the light of Mr Arthur's formal selection of 4 December 2007 to determine, in accordance with the Secretary's Procedures for Determining Breaches of the APS Code of Conduct dated 5 December 2009, whether Mr Lohse breached the 'APS Code of Conduct' and not simply a discrete part of it. In addition, the Secretary's Procedures clearly contemplated consideration of 'details of the suspected breach of the Code of Conduct ( including any variation of those details )'. (b) Mr Arthur did fail to comply with the procedures established by the Head of the Department for the determination of whether Mr Lohse, as an APS employee, breached the Code of Conduct. Firstly, Mr Lohse was never informed of the suspected breach of the Code of Conduct, which led to Mr Arthur's appointment as the decision-maker, before the variation of those details by Mr Arthur as recorded in his letter to Mr Lohse of 22 January 2008. In my view the details of the suspected breach of the Code of Conduct as recorded in the three bullet points in paragraph 2 of the Terms of Reference, forming part of Mr Arthur's contract for services dated 10 December 2007, were details of which disclosure to Mr Lohse was mandatory (see [13] above). The Secretary's procedures (see [23] et seq) provided 'the employee must be informed of' such details (emphasis added). Whilst it was open to Mr Arthur to inform Mr Lohse of a variation of those details, as he did in his letter dated 22 January 2008, it was not sufficient to simply inform Mr Lohse of the details as varied. Mr Lohse was entitled to the details of the suspected breach which led to the appointment of Mr Arthur and also to the variation of those details, which emanated from Mr Arthur. Secondly, and perhaps more importantly, the mandatory requirement that Mr Lohse ' must also be given the opportunity to make an oral statement in relation to the suspected breach' (emphasis added), as stipulated in the Secretary's procedures (see [29] above), was denied to him. Whatever Mr Lohse may have said about declining to be interviewed by Mr Arthur on tape, that was clearly put to him as an alternative to his provision, in the first instance, of a written response to the details of the suspected breach of the Code of Conduct. What Step 3 in the Secretary's Procedures makes clear is that if, as here, Mr Lohse made a written statement in response to the details of the suspected breach of the Code of Conduct of which he was informed, it was obligatory that he be given an opportunity to make an oral statement in relation to the suspected breach thereafter. No such opportunity was provided. A failure to observe the Secretary's procedures as procedures established by the 'Agency Head' for determining whether an APS employee in the Agency had breached the Code of Conduct in this case constituted jurisdictional error. One can well imagine that if an APS employee in the position of Mr Lohse had an opportunity to make an oral statement in relation to the suspected breach he would be able to ensure that appropriate emphasis was given to the matters addressed in his written statement thereby ensuring that the decision-maker did not misunderstand what had been written. No doubt an oral statement would also be relevant to matters of credit which would ensure that justice was done and that matters were not simply decided on a '3 against 1' basis. Counsel for the respondents relies upon the preferred test stated by McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390 in respect of invalidity, where a relevant provision had not been complied with. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. ... In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute". In the circumstances it is hardly surprising that the Secretary's Procedures for determining Breaches of the APS Code of Conduct provided that ' If the employee makes a written statement [within the requisite period of time] of being given the opportunity to do so, the employee must also be give the opportunity to make an oral statement in relation to the suspected breach'. The use of the expression 'must also' following the words commencing with 'if' make it clear that the opportunity to make an oral statement must be afforded after the written statement for which the procedures provide, has been made. Given the range of possible sanctions available, in circumstances where a person in the position of Mr Arthur may find that a person in the position of the applicant breached the Code of Conduct, fairness clearly required that an opportunity be afforded to Mr Lohse to make an oral statement following the making by him of his written submission to Mr Arthur on 11 March 2008 and before Mr Arthur made his determination of 30 March 2008. Given that there was no 'hearing', Mr Lohse was not invited to be present when Ms Barclay and Mr Hislop were interviewed and Mr Lohse did not have an opportunity to cross-examine them, fairness clearly required that there be a procedure such as that established by the Agency Head and further that such procedure be strictly complied with. This is not a case where earlier indications by Mr Lohse of his preference for making a written statement, as opposed to participating in an oral interview, in response to the details of the suspected breach of the Code of Conduct, of which he was informed, could be relied upon to justify refusal of the relief sought by Mr Lohse, in the exercise of the Court's discretion in that regard. (c) In my opinion procedural fairness did not require disclosure by Mr Arthur to Mr Lohse of the allegations made by Ms Barclay referable to Mrs Lane or Mrs Lane's 14 year old daughter. It is evident that Ms Barclay did not know anything about any alleged misconduct of Mr Lohse towards Mrs Lane's 14 year of daughter. She conceded as much in her interview with Mr Arthur. In relation to Mrs Lane, Ms Barclay suggested that Mrs Lane had informed her that she felt a bit uneasy with Mr Lohse, that he had 'tried to make moves' and had sent Mrs Lane 'some text messages on a trip'. Ms Barclay informed Mr Arthur that she had no knowledge as to the content of those messages. In the circumstances a failure to disclose these matters to Mr Lohse could not constitute procedural unfairness. Allegations of misconduct in dealings with Mrs Lane and her daughter which were devoid of any content could not, in my opinion, have subconsciously affected Mr Arthur's decision-making process in respect of the suspected breaches of the Code of Conduct to which he was invited to respond. However, there should in my opinion, have been a disclosure to Mr Lohse of the matters put to Mr Arthur by Ms Barclay about Mr Lohse's alleged viewing of Ms Barclay and her breasts in a 'sleazy manner' on earlier occasions. The ultimate finding of Mr Arthur in relation to a suspected contravention of s 13(3) of the Act (part of the Code of Conduct), was not that Mr Lohse behaved in a 'harassing manner' towards Ms Barclay, but rather, that he failed to treat her 'with respect and courtesy'. During the course of her interview with Mr Arthur on 21 December 2007 Ms Barclay was asked about the level of contact she had had with Mr Lohse in the five months preceding the incident. When I walk in, every time I feel he looks down and does this look like he's looking --- he looks over his glasses and looks at me, yes, in a sleazy manner, if I could say. On a couple of occasions, like when I've ... a different top ... other than a business shirt ... on one occasion I walked out of the door and he ... stood there at the door ...looked at my --- like, my breasts. Or, to me, he was looking at that direction. This was a classic case for the application of the principles stated in Applicant VEAL , especially in circumstances where there was no formal hearing, Mr Lohse had no opportunity to hear what Ms Barclay said to Mr Arthur at her interview on 21 December 2007 nor did he have an opportunity to test its accuracy by cross-examining her. The consequences for Mr Lohse of acceptance of Ms Barclay's untested assertions obliged Mr Arthur, acting fairly, to disclose the matters mentioned by Ms Barclay to Mr Lohse, thereby affording him an opportunity to respond to same. (d) Procedural fairness did not require Mr Arthur to make inquiries into the matters referred to at [16](d)(i)-(vi) above. There were no relevant rare or exceptional circumstances requiring Mr Arthur to make the further inquiries for which Mr Lohse contended. There was no matter that obviously required further inquiry in relation to a critical fact or facts. Had Mr Lohse wished to provide support for his claims of prior good character, it was perfectly open to him to obtain character references and attach them to his response of 11 March 2008. Similarly, if Mr Lohse was of the view that Ms Barclay and/or Mr Coloe bore ill will towards him, he could have obtained statements from others to support that suggestion and attached them to his response of 11 March 2008. (e) Much of the evidence touching upon Mr Arthur's consideration of this matter prior to the making by him of his determination on 30 March 2008 supports an inference that Mr Arthur did not bring an open mind to the determination of the issues with which he was confronted. In my opinion one cannot simply look at his ultimate reasons and work backwards from the manner in which he expressed them to an inference that he did bring an open mind to the issues. The suggestion that this was the purpose of the gathering was that of Mr Arthur who on two occasions in the course of his interview of Ms Barclay on 21 December 2007 said 'essentially, it was a debrief'. On the first occasion he raised it as a question and on the second he asserted it as conclusion. This characterisation of the gathering was in the face of Mr Coloe's, Ms Barclay's and Mr Hislop's observations. I understand that that search warrant was in fact executed on the 7 th November during the day? And later that evening you went somewhere for drinks. I went back to the hotel with John [Coloe] in one car and he [Mr Lohse] went back in another car with Andrew [Hislop] . So we didn't have any time of talking about what had happened during the day until we'd met up for dinner. So, yes, it's essentially a debrief ', to which proposition Ms Barclay assented. Given that a contravention of s 13(3) of the Code of Conduct required a finding that an 'APS employee, when acting in the course of APS employment , must treat everyone with respect and courtesy' it may be said that Mr Arthur's suggestion and subsequent confirmation of the purpose of the gathering at the Jetty Hotel demonstrated a prejudgment on a material issue before Mr Lohse was even informed of the allegations against him on 22 January 2008. Other matters arose during Mr Arthur's interview of Ms Barclay on 21 December 2007 which supported an inference that, by the time Mr Lohse first had notice of the investigation into his alleged breach of the APS Code of Conduct, Mr Arthur had a closed mind which was not open to persuasion one way or the other. Just as Mr Arthur had suggested that the dinner and drinks gathering of the four APS employees had essentially been an employment based debriefing meeting, he also suggested to Ms Barclay that Mr Coloe's reaction to what had happened when Mr Lohse presented Ms Barclay with the flower was one of 'surprise' when she had failed to articulate any matter which would justify such a conclusion. When Ms Barclay said that the alleged statement attributed to Mr Lohse about 'how I always smell good' intimidated her, Mr Arthur impliedly accepted the premise upon which the claimed intimidation was based by saying 'Yes, I can understand that'. When Ms Barclay made mention of Mrs Lane and an alleged conversation in which Mrs Lane spoke about Mr Lohse's behaviour towards Mrs Lane on some trips that they had previously made together, Mr Arthur inquired as to what sort of behaviour. Rather than allowing Ms Barclay to answer the question as to what Mrs Lane had allegedly spoken of, he suggested the word 'similar'. He then proceeded to suggest that Mr Lohse had been 'making advances' to Mrs Lane. The suggestion was embraced by Ms Barclay who agreed with it. In relation to Mr Lohse's alleged 'here puss puss puss' remark and movement of his hand, Ms Barclay said on 21 December 2007 'he just disgusted me'. Once again, it would appear that Mr Arthur accepted the premise upon which the observation was made by saying and repeating it 'I'm not doubting that'. Ms Barclay said of Mr Lohse's behaviour, ' it's not the behaviour that I am used to being around ... you know, starting in a workplace that you're on an Executive Level 2 position, I thought that ... you should be ... better behaved . Actually, ... the remainder of this ... is fairly good. It's all good, anyway. In my opinion Mr Arthur did not approach the task which was entrusted to him with an open mind and he was not open to persuasion. The applicant's claim of bias has been made good. (f) Even if the evidence mentioned was not sufficiently strong to establish actual bias on the part of Mr Arthur, it was sufficient, in my opinion, to draw a conclusion of apprehended bias sufficient to constitute a denial of natural justice to Mr Lohse. In my opinion a hypothetical fair-minded lay person properly informed as to the nature of the process which Mr Arthur was engaged in and the possible sanctions which might be imposed upon Mr Lohse, might reasonably apprehend that Mr Arthur might not have brought an impartial mind to the making of his decision on alleged breaches of the APS Code of Conduct by Mr Lohse. A case of reasonable of apprehension of bias has clearly been made out. (g) In my opinion the decision of Mr Arthur as recorded in his report of 30 March 2008 was not on its face so unreasonable that no reasonable decision-maker could have made it. Whilst one could criticise Mr Arthur's approach to the proof of matters on a '3 against 1' basis rather than who was to be believed and, whilst he may have failed to approach the determination of the matter before him on a Briginshaw v Briginshaw basis (see Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336) , I am inclined to the view that there was no relevant Wednesbury unreasonableness. This of course provides no answer to the case, given the other findings going to jurisdictional error and denial of natural justice which have been made. For the reasons indicated above Mr Lohse is, in my opinion, entitled to relief. The determinations of the first respondent that on 7 November 2007, when acting in the course of his APS employment the applicant failed to treat Ms Sasha Barclay with respect and courtesy as required by s 13(3) of the Act and that the applicant failed to behave at all times in a way that upholds the APS Values and the integrity and good reputation of the APS as required by s 13(11) of the Act should be quashed, as should the determination of the third respondent of 21 April 2008 imposing a sanction on the applicant by reducing his substantive classification from Executive Level 2 to Executive Level 1 (top salary point). An order should be made that a writ in the nature of prohibition issue, directed to the third respondent, preventing the third respondent from imposing any sanction on the applicant in respect of a breach of the APS Code of Conduct in the absence of a lawful determination that the applicant has breached the APS Code of Conduct. The respondents should be ordered to pay the applicant's costs. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | natural justice and procedural fairness bias and apprehension of bias failure to comply with agency head's procedures employment suspected breach of australian public service code of conduct imposition of sanctions including reduction in classification administrative law |
I have made orders and given directions for the early hearing of this matter and I now publish my reasons for granting interlocutory relief. 2 The decision in respect of which the stay is sought is a decision of the Board to suspend the applicant's registration as liquidator for a period of twelve months pursuant to s 1292(2) of the Corporations Act 2001 (Cth) ("the Act "). 4 Section 1296(1) of the Act requires that within fourteen days after the Board has made such a determination, the Board must give a notice in writing to the person setting out the decision and reasons, and also cause to be published in the Gazette a written notice setting out the decision. The stay sought by the applicant is to restrain the giving of that notice required by s 1296(1) due to the anticipated adverse effect on his practice and the inconvenience likely to be caused. 5 The application is resisted by ASIC on the basis that there is no seriously arguable error, and also on the ground that any exercise of discretion should be exercised against the applicant on the balance of convenience test. The application for a stay is based on an alleged error of law in the Board's reasoning in that it invoked an erroneous test as to what constitutes a conflict of interest and misapplied the relevant law. The contention for the applicant is that on its face, the Board's reasons for determination disclose an error of law. 7 By way of example, one of the allegations of ASIC in relation to Mr Dean-Willcocks is that he accepted an appointment as administrator where there existed a prior continuing professional relationship with a related practice and the appointee company during two years prior to appointment. ASIC alleges that this acceptance by Mr Dean-Willcocks displayed a lack of professional independence and a conflict of interest in relation to the administrations of nominated companies, including a company known as Freedom and two others known as Holilop and Callen. There were other specific allegations in relation to inadequate disclosure, conflict of interest, the offer of an inducement and the offer of consideration to secure appointment. 8 In its reasons for determination, the Board states at para 5.3 entitled "Perception of Lack of Objectivity" that references in the Practice Standards to conflicts should be read as referring to a real possibility of conflict or potential conflict, and not simply to a theoretical, fanciful or speculative conflict. The Board also notes in this paragraph that in the case of conflict between the law and standards, the law must prevail. Thus the decision as to whether CWSPL was a related practice of RDW or not does not depend on being able to identify particular circumstances of any appointment or administration as having a real possibility of impairing independence in connection with a particular appointment. In our view this result accords with the spirit or purpose of the concept of related practice namely that a related practice should be treated in effect as part of the practice concerned for the purpose of various provisions of the ICAA code. ' (Emphasis added). In such a case the analysis of potential conflict is not required and the answer is presumed. Put another way, the likelihood of potential conflict is regarded by the professional bodies as being so great that there is an irrebuttable presumption of impairment of independence. ' (Emphasis added). There is only a conflict where there is something that can be seen from the circumstances apparent at the time of appointment which generates a conflict situation. There is no relevant conflict if there are no circumstances to indicate that conflict is likely to arise in the real world in a particular case. In that case, Sackville J considered the principles applicable where it was proposed that a person who had a prior connection with the company be appointed as liquidator. It is also clear that due recognition should be given to the legitimate fears and perceptions of a substantial body of creditors. In this case, the wishes of Sensor Technologies Pty Ltd, as expressed by Mr Shearer ... should be taken into account. However, in my view, it is necessary to examine the evidence carefully and not to act on fears or suspicions that are not explained or justified by reference to underlying facts. Furthermore, it is relevant, although by no means decisive to take account of the advantages of continuity of administration if they apply in the circumstances of a particular case . ' (Emphasis added). Other cases which indicate that it is necessary to look at the particular circumstances of each case before making a decision as to whether there is a reasonable apprehension of a conflict of interest in relation to the appointment of a proposed liquidator include Commonwealth of Australia v Irving (1996) 144 ALR 172; Network Exchange Pty Ltd v MIG Communications Pty Ltd (1994) 13 ACSR 544 and Advance Housing Pty Ltd (In Liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230. 15 In Irving , Branson J, after a careful analysis of the facts, considered that it had been shown that a fair minded person informed of the facts could reasonably entertain a doubt as to the capacity of Mr Irving to be independent in circumstances where he was required to investigate the past conduct of a person with whom he had a professional relationship. It was on this basis that Her Honour expressed the view that it would not be appropriate for Mr Irving to continue as an administrator of the estate of the respondent. 16 These authorities support the view that in the present case, there is a serious question as to whether the broad approach taken by the Board was in accordance with the established legal and equitable principles applicable to liquidators and administrators. In failing to investigate and consider the circumstances of particular appointments, and by accepting the relationship and the potential for conflict as the decisive consideration, it is at least reasonably arguable that the Board applied the test at too high a level of generality. 17 In my view, there is a serious question to be tried in this matter arising from the way in which the issue dividing the parties was formulated in the Board's reasons for determination. This question concerns whether the relationship alone is sufficient, or whether there must be requisite conduct where, having regard to the circumstances of each particular appointment at the time of the appointment, there are circumstances known which could lead to conflict of interest. It is arguably necessary to investigate the particular circumstances of appointment in relation to specific entities in order to determine whether there is a possibility of conflict. ASIC recognises that the applicant has been a registered liquidator and official liquidator for a substantial period of time and has a substantial reputation at stake. It also acknowledges the inconvenience which will arise if applications have to be made for the applicant's removal from the numerous positions to which he has been appointed. On the other hand, ASIC refers to the important fact that the Board has exercised a broad discretion as to the appropriate sanction. It notes that the Board's determination represents the evaluation of an experienced and qualified expert body, and requires due deference because of this evaluation. It is further urged that on a general basis and paying due regard to the protective nature of the Board's function the issues raised are directed to protection of the public interest as opposed to the resolution of competing private interests. ASIC refers to the application of appropriate standards and sanctions which are fundamental to the proper discharge of its functions, and points out that there is a weighty and legitimate necessity to ensure compliance with carefully formulated Codes of professional conduct. 19 The applicant, on the other hand, submits that ASIC points to no prospect or potential circumstance where any actual conflict of interest may arise or detriment be caused. The applicant also emphasises that the conduct occurred between 5 to 8 years ago, and that there have been no complaints about appointments after 2003 when the joint venture came to an end. There is uncontested evidence from Mr Dean-Willcocks that he has no present intention of entering into any similar arrangements. The applicant also points to the substantial expense and inconvenience in making applications for substituted appointees to handle the large number of commitments, liquidations and administrations in question. In addition, the applicant is also extremely concerned as to the impact on his reputation and that of his practice. In the event that he is ultimately successful, the applicant contends that publication of the Board's determination will cause irreparable harm which is not compensable. The lack of any likely or reasonably foreseeable harm arising if the stay is granted and an early hearing with a tight expedited schedule imposed is important in relation to the balance of convenience. 20 I conclude that the balance of convenience in this case, especially in view of the absence of any indication of any possible or likely prospect of harm to the public, falls in favour of the applicant. I consider that it is clearly a matter which must be expedited and I have imposed a tight timetable to progress the matter and to ensure an early hearing. 21 In the circumstances, I grant the order sought and I have made the necessary orders as to enable the prompt prosecution of this matter. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | application for interlocutory injunction companies auditors and liquidators disciplinary board suspended applicant's registration as liquidator applicant sought stay to restrain publication of board's determination need for plaintiff to show a serious question to be tried whether board must look at the particular circumstances of each case in assessing conflict of interest application of balance of convenience test adverse affect on applicant's reputation serious inconvenience to applicant protective nature of board's function ensuring compliance with professional codes of conduct foreseeable harm if stay is granted and hearing is expedited. corporations |
The reasons for that order follow. 2 On 7 November 2006 the applicant, Anthony Warner (the Trustee), was appointed the trustee of the bankrupt estate of the deceased Rene Walter Rivkin (the deceased) by order of the Federal Magistrates Court. The application for the order had been made by the wife and one of the sons of the deceased pursuant to s 247 of the Act acting as persons administering the estate of the deceased. The administration of the estates of deceased persons in bankruptcy is dealt with by Pt XI of the Act. Vesting of property on making of the order is dealt with by s 249. The divisible property of the estate vests forthwith in the trustee upon the making of the order. The date of commencement of administration is fixed by s 247A. "Property" means real or personal property of every description, whether situate in Australia or elsewhere (s 5 of the Act). In addition to the express provisions of Pt XI , s 248 incorporates many of the general provisions of the Act into the regime for the administration of bankrupt estates. The net result is that the trustee administers the estate of the deceased in accordance with the Act, rather than the probate, succession and trust laws of the various States. 3 So far as the Trustee is aware, no application has been made for a grant of probate of any will of the deceased. The next of kin have not obtained a grant of administration and it is unlikely that any such application will be made. Even if there were a grant of probate or administration, it would not affect the administration of the estate in bankruptcy for so long as the administration continues until cessation by annulment pursuant to s 252A or s 252B of the Act. 4 The Trustee has undertaken investigations into the affairs of the deceased and has concluded that he held assets outside of Australia and, in particular, held assets in Jersey by virtue of his beneficial ownership of shares in the following corporations situate in Jersey: Darlington Limited, Mallard Holdings Limited, Le Moulin Limited, Rowan Consultancy Limited, Andes Financial Corporation and Thameslink Limited. Legal ownership of the shares is held by Equity Trust Limited which administers the companies in question from its Jersey office. The investigations by the Trustee included meeting with former and present employees of Equity Trust Limited in London and in Jersey, as a consequence of which proceedings were commenced in the Royal Court of Jersey, including orders freezing disposal of assets of the companies concerned and for disclosure of information as to the assets of the companies. As a consequence of the orders that were made, it appears that there are substantial assets controlled by those companies. Hence, the application for a request pursuant to s 29(4) of the Act. 5 No forms of request are prescribed and there are no Regulations or Rules of Court setting out any procedural requirements. The general procedure has a long history (briefly reviewed by Fox J in Ayres v Evans (1981) 39 ALR 129; 56 FLR 235 at 239) but the details have varied over time. The complexities of modern cross-border insolvency make it likely that this beneficial provision will be exercised more in the future than it has been exercised in the past. Jersey is a prescribed country by reason of reg 3.01 of the Bankruptcy Regulations 1996 . Therefore, the Court is obliged to act in aid of, and be auxiliary to, Jersey courts with jurisdiction in bankruptcy (s 29(2)(a) of the Act). A request pursuant to s 29(4) is not limited to the court of a prescribed country. Although there is no requirement to establish that it is likely that the foreign court will honour the request before the court should act under s 29(4) ( Clunies-Ross v Totterdell (1988) 20 FCR 358 at 361), the evidence establishes that the Royal Court of Jersey will so act. 6 I am satisfied that a request is appropriate in the circumstances. I am satisfied that the form of the request is appropriately specific in accordance with Re Mann (1887) 13 VLR 590. I would leave for another day the question whether that authority should continue to be applied to the provision as now framed. It is not clear to me that a request should not be general in form, the "matter" being the administration of the particular bankrupt estate, leaving it to the foreign court to decide precisely how the assistance might be afforded. 7 The application has not been served on any party. In Official Trustee in Bankruptcy v Lyons [2000] FCA 1428 ; (2000) 104 FCR 486 Tamberlin J explained why it will normally be necessary to give notice to a live bankrupt --- see also Re Hudson (2005) 3 ABC(NS) 350 illustrating the exceptions to that principle. It may be accepted that a similar principle would normally apply in the case of a bankrupt deceased estate where probate has been granted. Even where probate has not been granted there may be occasions where it would be appropriate to serve the next of kin. The present case is somewhat out of the ordinary. The next of kin applied for the administration of the deceased estate in bankruptcy. The wife and children of the deceased are aware of this application and support it. In those circumstances, formal service is not necessary. 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 court to request assistance from foreign court in matters of bankruptcy concerning a deceased's bankrupt estate request appropriate whether should be made ex parte where next of kin sought bankrupt administration and support application bankruptcy |
The proposed appeal challenges the construction, in certain respects, placed by the Court upon s 65A of the Trade Practices Act 1974 (Cth) (the Act): the so-called 'media safe harbour'. 3 In June 2007 an article appeared in The Sunday Telegraph newspaper in New South Wales and in The Sunday Times newspaper in Western Australia which concerned Mr Alan Bond and a diamond mining company, Lesotho Diamond Corporation Plc (Lesotho Diamond) which operates in the Kingdom of Lesotho in South Africa. The article reported on the relationship between Mr Bond and the company, its shareholders, executive and two chairmen of its board and his conduct as its consultant. The article was written by a freelance journalist, Mr Paul Barry. It was published by Nationwide News Pty Ltd (Nationwide News). It also appeared on a website "News.Com" operated by News Digital Media Pty Ltd (News Digital). The companies are members of the News Group of companies which includes News Limited. 4 Mr Bond and Lesotho Diamond commenced proceedings against Mr Barry, the companies and the editor of The Sunday Telegraph, Mr Breen. They said Mr Barry had contravened provisions of the Fair Trading Acts 1987 of Western Australia and New South Wales and of the Act which prohibit misleading or deceptive conduct. They said Mr Breen has also contravened s 52 of the Act. They sued the companies as accessories in those contraventions. 5 Mr Barry, Mr Breen and the News Group companies said that, regardless of the merits of the complaints about Mr Barry's article, these proceedings could not succeed. They said that they were exempted from the application of the relevant provisions of the Act and the Fair Trading Acts by a specific section in each which creates a media safe harbour. They moved to dismiss the proceedings under s 31A of the Federal Court of Australia Act 1976 (Cth) on the basis that there is no reasonable prospect of success. French J concluded that the proceedings had no reasonable prospect of success and should be dismissed with costs. 6 Lesotho Diamond is incorporated under the laws of Gibraltar. It holds mining leases in Kao in the Kingdom of Lesotho in South Africa. It is the developer of a prospective diamond mine in the area covered by the licences. Alan Bond is a consultant to the company. 7 Paul Barry carries on business as a freelance journalist in Australia and other places. Between the middle of May 2007 and 1 June 2007 Mr Barry researched and wrote an article about Mr Bond and Lesotho Diamond. He did so under an oral agreement with the editor of The Sunday Telegraph, Mr Neil Breen. By that agreement, according to the defence, he was paid $15,000 and his travel expenses to England and South Africa. Mr Barry sent the text of the article by emails to Mr Breen. 8 The Sunday Telegraph is a weekly newspaper published by Nationwide News. That company publishes a number of newspapers nationally and in different States of Australia. It publishes The Sunday Telegraph in New South Wales and the weekly newspaper known as "The Sunday Times" in Western Australia. It also publishes the daily newspaper known as "The Daily Telegraph" in New South Wales. 9 After receiving the emails from Mr Barry, Mr Breen is alleged to have sent the substance of the article to the editors of other newspapers published by Nationwide News. News Digital on its website "News.Com" from 3 June 2007. 2. Nationwide News as the cover story in The Sunday Times of 3 June 2007 under the heading "Bond the $1B Man". 3. Nationwide News in The Sunday Telegraph of 3 June 2007 under the heading "The greed that won't let Alan Bond rest --- Special Investigation --- America's Cup hero and convicted fraudster poised to become oil and diamond billionaire". They also said that his conduct in writing the article for publication in Western Australia and in New South Wales was misleading or deceptive or likely to mislead or deceive in contravention of s 10 of the Fair Trading Act 1987 (WA) and s 42 of the Fair Trading Act 1987 (NSW) respectively. 11 Insofar as Mr Barry's conduct involved writing the article for publication on the worldwide web and sending it by email he is said to have contravened s 52 of the Act. Mr Bond and Lesotho Diamond relied upon the extended application of the Act to individuals using telephonic services (s 6(3)(a)). Similarly, Mr Breen is said to have contravened s 52 by sending the article by email to other editors. 12 News Digital and News Limited are alleged to have "aided and abetted" Mr Barry to contravene s 52 of the Act by publishing the article on the internet and authorising its publication. By publishing the article in The Sunday Times newspaper, Nationwide News is said to have been "involved", within the meaning of s 74 of the Fair Trading Act (WA), in Mr Barry's contravention of s 10 of that Act. It is also alleged that Nationwide News was involved in his contravention of the Fair Trading Act (NSW) by publishing the article in The Sunday Telegraph. They admitted that Mr Barry researched and wrote the article referred to and sent it by email to Mr Breen. They pleaded in the defence the terms of Mr Barry's engagement by Mr Breen. They did not admit that Mr Breen sent the substance of the article by email to other editors of newspapers published by Nationwide News. What they said, however, was that the article published by The Sunday Telegraph was accessed through the internal communications systems of Nationwide News and used as the template for the article published in The Sunday Times. Further, and in the alternative, if (which is denied) the Article, or the text of what was submitted by the First Respondent was misleading or deceptive, in contravention of section 52 of the Trade Practices Act 1974 (Cth) (or section 10 of the Fair Trading Act (WA) ('FTA (WA)') (or section 42 of the Fair Trading Act (NSW) ('FTA (NSW)') as pleaded in paragraphs 13, 14, 15 and 16 of the Amended Statement of Claim, then the Respondents say that the First Respondent prepared and submitted the text of the Article as a prescribed publication of matter and as a prescribed information provider, in the course of his business as a freelance journalist with the consequence accordingly that the First Respondent is exempted from liability under the TPA or FTA (WA) or FTA (NSW) by application of the provisions of section 65A of the TPA and/or section 63 of the FTA(WA) and/or section 60 of the FTA (NSW). 11A. Further, the Respondents repeat paragraph 11 of their Defence above mutatis mutandis as regards the assertion of misleading or deceptive conduct contrary to section 52 of the TPA, as against the Fifth Respondent as Editor of The Sunday Telegraph and rely upon the protective application in his favour of section 65A of the TPA. The exemption under s 65A applies only to a "prescribed publication of matter". That is a publication by the prescribed information provider "in the course of carrying on a business of providing information". Put another way, was the transmission by a freelance journalist to a media outlet of an article for publication itself a "publication", for the purposes of s 65A(1)(a). 18 The applicants had argued that the words "publishing" and "publication" are "fundamental expressions meaning making available to the public" and that the emails from Mr Barry could not be so characterised. 19 French J disagreed on the basis that the ordinary and natural meaning of "publication" includes transmission of a news article to a media organisation for publication to the world at large. It was submitted that in such a case the freelance journalist supplies services, being "journalist services preparing newspaper articles or articles for inclusion in news services" [41]. French J held that there was no reasonable room for debate about the construction of s 65A that would leave room for Mr Bond and Lesotho Diamond to establish liability on the part of any of the respondents. His Honour erred in fact and in law in concluding in his reasons for decision at paragraphs 39 and 40 that the communication by way of e-mail transmission of a proposed or draft news article by a freelance journalist to the editor of a media organisation was not a 'publication' within the meaning of section 65A of the Trade Practices Act 1974 (Cth). 2. Further, His Honour erred in fact and in law in concluding in his reasons for decision at paragraph 42 that the exclusions from s 65A of the Trade Practices Act 1974 (Cth) provided for in s 65A(1)(a)(i) read with s 65A(1)(a)(vi)(A) in respect of publications 'in connection with ... the supply or possible supply of goods or services' did not apply unless the content or text of the publication has some relationship to the supply of the goods or services in question. 4. Leave to appeal is required pursuant to s 24(1A) of the Federal Court of Australia Act 1976 (Cth). The decision whether to grant leave or not involves an exercise of judicial discretion. 27 The judgment, whilst interlocutory, is one on points of substance and not merely practice or procedure. A distinction is drawn between these: Yap v Granich & Associates [2001] FCA 1735 at [6] ; Dunstan v Orr [2007] FCA 873 at [6] ; see also Visy Industries Holdings Pty Limited v Australian Competition and Consumer Commission [2007] FCAFC 147 at [39] per Lander J with Moore J concurring. In a case where judgment has the practical effect of finally determining a party's rights, a prima facie case exists for granting leave to appeal: Ian Duncan v Secretary, Department of Family and Community Services [2007] FCA 507 at [18] . 28 In this case, the practical effect of the decision prevents the first and second applicants from ever pursuing a claim for damages for breach of s 52 of the Act (and equivalent provisions in the Fair Trading Acts ) arising out of the conduct referred to in the applicants' statement of claim. 29 There is an important issue at stake, namely, the scope and proper interpretation of the 'media safe harbour' provisions of s 65A of the Act. The issues raised in the proposed appeal are important and have not previously been considered by an appellate court. 30 Counsel for the applicants referred to a recent decision of the Court concerning s 65A: Australian Competition & Consumer Commission v Seven Network Limited [2007] FCA 1505. It was delivered on 5 October 2007 (the day that the applicants filed and served their submissions in support of this application). It was submitted that, in this decision, Bennett J at [77] and [80] had placed a different construction upon s 65A to that of French J at [42] and that on the construction of the section adopted in the Seven Network decision, it is arguable that the applicants' case has reasonable prospect of success. 31 However, the judgment in Seven Network does not immediately assist the present applicant. In that case, the necessary elements of s 65A(1)(a)(i) and (iii) which in turn lead to a consideration of s 65A(1)(a)(vi) were not in dispute, [70]. Bennett J was concerned with the inter-relationship between the "matter" in s 65(1)(a) and the "contract, arrangement or understanding" in s 65A(1)(a)(vi). 32 That was not the position in this case. French J concluded that the transmission by a freelance journalist of a news article to a newspaper or other media outlet with whom he or she has a contract to supply such services was not a publication of matter " in connection " with the supply of such services. Thus the necessary element under s 65A(1)(a)(i) was held not to have been made out. 33 Nonetheless I propose to grant leave. Section 65A is an important statutory provision. Its interpretation is not without difficulty. Bennett J said, in Seven Network at [92], that the "drafting of the section is not a model of clarity". I respectfully agree. It has ramifications beyond the protection, if any, available to freelance journalists. Its reach ought to be considered by a Full Court. Although I have accorded the matter little weight, I note that an appeal has been lodged in the Seven Network case. To that extent therefore s 65A will be the subject of reconsideration by a Full Court which may then examine the section as a whole. 34 The construction placed on the provision by French J has considerable force. However in all of the circumstances I am persuaded that there is sufficient doubt in respect to the decision to warrant it being reconsidered by the Full Court. Certainly, substantial injustice would follow if leave were refused, assuming the decision to be wrong: Decor Corporation and Another Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 35 Accordingly, I will grant the applicant leave within 7 days of the date of these Orders to appeal from the interlocutory judgment of the Honourable Justice French delivered on 21 September 2007 on the grounds set out in the Amended Draft Notice of Appeal filed in support of the application. Costs of the application will be costs in the appeal. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application for leave to appeal interlocutory judgment of dismissal pursuant to federal court of australia act 1976 (cth) s 31a points of substance misleading or deceptive conduct media exemption construction of s 65a(1)(a) and s 65a(1)(a)(vi) of the trade practices act 1974 (cth) whether supply by freelance journalist to newspaper company pursuant to contract a "publication" whether assuming "publication" the matter published was "in connection with" the supply or possible supply of goods or services whether decision attended with sufficient doubt leave granted. appeal |
The application says the claim is concerned with amounts in the order of US$380,000 and A$60,000, or thereabouts. Reliance is placed on s 4(3)(e) and s 9 of the Admiralty Act 1988 (Cth). Section 4(3)(e) , of course, is to do with a claim for loss of or damage to goods carried by a ship. The application refers to those two sums to which I have referred and alternatively damages for breach of contract and or alternatively breach of duty and or alternatively breach of duty of care. 2 The statement of claim, which was filed with the document, makes it clear that the complaint, whether or not properly pleaded, is material damaged to a cargo of 400,469 metric tons of Yubase 6. The US dollar claim of $380,616.55, is the damage to the Yubase 6. The balance of the claims in Australian dollars is the costs of testing, terminal handling fees and the port corporation's fees. The content of the statement of claim allows one to understand that the Yubase 6 was contaminated with molasses. 3 Whatever its precise use, the Yubase 6 was said to have been contaminated by molasses. To anyone with some familiarity with cargo claims, the spectre of a prior shipment of molasses or molasses in the cargo tank, brings to mind that there is an issue thrown up as to whether the carrier, using that term in the widest sense for the moment, exercised its responsibilities under whichever liability regime is applicable, to exercise due diligence to make the ship seaworthy for the carriage of that particular cargo. Given that the cargo was an in-bound cargo to Australia, there can be no doubt that if it was bill of lading carriage, it was covered by either the Australian Amended Hague-Visby Rules, the Hamburg Rules, the Hague Rules, the Hague-Visby Rules, or an acceptable variant of one of those for the purposes of the Carriage of Goods by Sea Act 1991 (Cth). 4 All those liability regimes, if it be bill of lading carriage, would require, at the very least, the carrier to exercise due diligence to make the ship seaworthy, which would encompass, undoubtedly, the making available of a cargo tank which did not contaminate the cargo; that is, exercising due diligence to make available a cargo tank which did not contaminate the cargo. The statement of claim is, as Mr McHugh, who appears for the plaintiff, said, economical. I have heard an argument about its adequacy. I have had written submissions about that matter and short oral argument. I wish to go back and give a little history of this matter and before I do say anything further, I wish to preface it by saying that save that which necessarily, from its terms, may imply criticism, I am not directing any personal criticism to any practitioner. 5 This matter has come before me at least twice before. Three years ago Sydney judges and two years ago all the judges of this Court, decided that the commercial community, in maritime matters, would be best served by the setting up of specialised lists in each city, for the handling of Admiralty and maritime matters. These matters include, but are not limited to, cargo claims. Speaking for myself as the Sydney list Judge, in Admiralty and maritime matters since the commencement of the national arrangement, I expect practitioners to understand and adhere to the notice to practitioners which was promulgated by the Chief Justice, upon the setting up of this arrangement, which was in similar terms to an earlier document distributed by the District Registrar of New South Wales in 2004. 6 The running of a list, and the conduct of matters in the list, requires a balance between proper attendance to structural detail and a degree of sensible informality whereby parties to litigation reach agreement on what are the central justiciable issues that need to be resolved by the Court, if they cannot be resolved by agreement. Litigation is an expensive and time consuming activity and the Court expects practitioners, knowledgeable in the area, to attend to these tasks with diligence. I think the statement of claim in this case, does lack a degree of required detail. However, to any practitioner knowledgeable of the kinds of issues that arise in this kind of case, it was an adequate starting-off point to understand what the case is about. I quite deliberately express the matter in that informal way, because I think there is a degree of force in the submissions as to the formal requirements of a statement of claim in such a matter as this. But I refuse to allow a cargo claim to descend into arid debate about who has pleaded what. 7 One of the legacies of the drafting of the Hague Rules and the demand by ship interests for language redolent of their liner bills of lading prior to 1924, was the categories and lists of exceptions in Art 4 r 2. There was a debate from the very earliest as to who had to prove what in a cargo claim. One of the finest English maritime judges of the 20th century, Wright J, had a view in Gosse Millerd v Canadian Government Merchant Marine Ltd [1927] 2 KB 432; (1927) 29 Ll. L. Rep 101, that embedded within Art 4, r 2 was the relationship of bailment and that once it was proved that damage had occurred to goods which were in good condition when provided to the carrier, not only did the carrier have to prove that which is found in Art 4 r 2, but also it had to prove that it had carried the goods with due care and exercised due diligence to make the ship seaworthy. 8 That view has not received universal acclaim, to put it mildly, and was doubted and rejected respectively, by two members of the House of Lords in Albacora SRL v Westcott and Laurance Line Ltd [1966] 2 Lloyd's Rep 53. It could be fair to say that in England, Canada and the United States (and Australia until 1997), the accepted view was that what has often been referred to as the 'game of ping pong', in proving a maritime case of this character as set out in The Glendarroch [1894] P226, was the appropriate way to approach the matter. Half of the sitting High Court in Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad ("The Bunga Seroja") [1998] HCA 65 ; (1998) 196 CLR 161, departed from this accepted view. 9 Gaudron, Gummow and Hayne JJ made clear their view that this was an international convention and should not be construed by English cases on bills of lading in the 19th century and, in particular, the English rules of pleading. Now whether or not that view is "radical", as Professor Davies has said (see Shipping Law 3 rd Ed) need not be discussed. Whether or not it leads to a creation of a further onus of proof on the cargo interest also need not be discussed. What it does throw up, however, in particular in the light of the acceptance in The Shipping Corporation of India Ltd v Gamlen Chemical Co (Australasia) Pty Ltd [1980] HCA 51 ; (1980) 147 CLR 142 case of The Glendarroch , is that there is some less than clarity in the issue of onus of proof in cargo claims in Australia when there is the possibility of the interplay between Arts 3 and 4 of the Hague-Visby Rules. 10 That leads to or can lead to in theory at least, difficulties with plaintiffs in knowing precisely what they should plead. That is, whether it is simply adequate to plead damage as a prima facie case or whether, as Gaudron, Gummow and Hayne JJ appeared to indicate, it is necessary to go further and plead breaches of Article 3 r 1 and r 2. 11 The complaints here are not precisely directed to this problem. They are directed to three issues: the inadequacy of the pleading of the plaintiff as a holder of the bill, the inadequacy of the pleading of duty and the inadequacy of the pleading as to why the defendant is mentioned in the statement of claim. 12 It is not clear to me whether this debate masks more fundamental and important issues or whether it will be seen to be in the final resolution of this case, an arid beginning to what might be an otherwise simple or complicated case. It is as plain why the defendant was brought into the statement of claim. The proposition is embedded clearly within the pleading by way of at least an implied assertion that the defendant was the contractual carrier under the bill. From what has been said on previous occasions at directions hearings, the structure, as I would understand it, of the arrangements was that there was a time charter by an owner or disponent owner to the defendant. The defendant then entered a voyage charter with a shipper. Under those arrangements a bill was issued. Naturally, while the bill was in the hands of the shipper it did not evidence the contract of carriage: see President of India v Metcalf Shipping Co Ltd [1970] 1 QB 289. Rather, the only contract between the two parties to the voyage charter was the voyage charter. If the bill was negotiated to a third party, became the evidence of the contract of carriage between the carrier and the holder if the holder was a legitimate successor in title to the rights under the bill. This issue will be affected by a number of matters, including, subject to argument to its applicability, the Sea Carriage Documents Act 1997 (NSW). 13 I have asked Mr Rajadurai on a prior occasion and, with respect, I do not recall obtaining a clear answer, as to whether there is a point in this case to be run by the defendant that it is not the contractual carrier. The cases are too numerous to mention exhaustively as to the often raised and discussed problem of the proper party to a bill issued in the context of a time charter. The defendant, as I understand it, not from the evidence on the motion but from what has been said to me at directions hearing was the time charterer. If the defendant wants to say that it is not a party to this bill it should say so. The administration of justice in this list requires the prompt identification of issues. If the defendant accepts that it is the contractual carrier under the bill in question, it should make an unequivocal admission to that effect. If it is not the carrier or says that it is not the carrier, it may be necessary for the joinder of the owner of the vessel. 14 If that is the case, that needs to be done promptly. It may or may not be the case that the bill incorporates the terms of the voyage charter. That will be important to identify although it goes without saying that Art 3 rule 8 of the Amended Hague Rules or its equivalent in the Hamburg Rules will ensure that any purported contractual shortening of the convention time bar is not effective. 15 I have allowed the argument to go forward in this motion because I wanted to understand, with a little more precision than I had been given at the directions hearing, what the case may be about. There is some legitimacy to the defendant's claims but I am not having this case go off on pleading arguments. The parties are going to direct themselves with some precision and frankness to what the issues are. I propose to exercise my power as the list judge in place of the docket judge to ensure that the issues in this case come forward promptly and as expeditiously and cheaply as possible before I send this matter to the docket judge for trial. It appears that the statement of claim mechanism has failed to illuminate to the defendant what this case is about. Whether or not that is the case or whether or not we are simply dealing with an exercise in formality need not delay me any further. 16 Each side gave the other, for today's hearing, a notice to produce asking for the original bill. The defendant says that its time charter with the owner or disponent owner is over and the original bill is still on a ship. I do not know whether the defendant's affairs are such that it does not have any copy records of this bill of lading. I would be surprised if that were the case. If it is, so be it. It might say something about the record-keeping of a company if that were the case. The plaintiff was not able when called upon to produce the original bill but that may be because inadequate preparation had been made to meet the notice to produce, or it may well have handed the original to the ship to obtain the cargo. 17 I find it hard to accept that between the plaintiff and the defendant, they cannot agree upon the terms on the front and back of the bill, or a copy thereof. The defendant should now and before any amended document to which I will make reference in a moment be able to say whether or not it accepts that it was a contracting party to the bill of lading. It was the time charterer and as I understand effectively the disponent owner on the voyage charter. If it wishes to contest its contractual position, it must say so promptly. If it says that it cannot, then I will require an affidavit from a responsible executive of the defendant why that is so. 18 If it does contest the case as to whether it is the party under the bill, the plaintiff can make up its mind as to whether it wishes to seek to amend the proceeding, the application and sue the owner or deponent owner. If an application for preliminary discovery needs to be made in that regard against the defendant or any other party, that should be made promptly. As I have said, I agree entirely with Mr McHugh's description of the statement of claim as economical. (That should certainly be done with reference to the Sea Carriage Documents Act 1997 (NSW) and any other underlying legal principle which the plaintiff seeks to rely upon. (3) The nature of the damage and how the claim is made up, that is whether or not the Yubase 6 has salvage value or whether it was unsalvageable and if so, why. I propose to provide the parties with a short period of time to produce the documents that I have identified. I propose then to direct the parties to attend a case management conference with Deputy District Registrar Gilich, whether in person or by video link, for the express purpose of identifying all issues the parties say which are likely or which may arise. The parties should give urgent attention to the question of the need or otherwise to join any further party. 20 If that issue does not arise and if it be accepted that this defendant is the carrier, and if I am correct that the allegation is that the Yubase was contaminated by the residue of a previous cargo of molasses in the cargo tank or the ship's pipes, I will need to understand from an executive of the carrier with personal knowledge of the affairs of the defendant how it can be that Art 3 r 1 was discharged. If it be that the defendant says that the owner or disponent owner was the carrier under the bill, the same issue will arise but in relation to another party. If there is some complexity about how this Yubase could have been contaminated by molasses then the matter will no doubt require investigation. 21 One of the matters which I would expect both parties to attempt to investigate, in particular the defendant, former time charterer, is what earlier cargoes the vessel in question shipped. I have deliberately not dealt with all the arguments. As I said earlier, I simply refuse to have this list in any particular case to generate into a debate about pleading. That is not to say the defendant should be left in the dark about important matters. The only matter which this defendant really does not know is how the plaintiff got hold of the bill. Mr Rajadurai indicated on the previous occasion that the plaintiff was the notify party. 22 Prima facie and subject to hearing parties, that does not disentitle that party from becoming a lawful holder of the bill for the purposes of s 8 if it purchased the cargo. When the plaintiff has filed and served the document, which I have indicated and which I will make more precise orders about in a moment, we can then ascertain whether there really is an issue about title to sue. As to the duty in question, I do not think there is too much doubt that the duty was the duty either of a bailee or a duty at common law although, as I said, the statement of claim is both economical and perhaps assumes too much on the part of the defendant. I have already dealt with the proposition that the defendant really does not know why it is a party. 23 This afternoon has not been wasted because it has been a convenient opportunity for those who have turned their minds to the pleadings to understand how I expect this case to be handled henceforth. That leaves the question as to the despositive orders for the motion. I propose to strike out the statement of claim as much as to clear the decks for the proper identification of issues. I do not propose to make any orders for costs. Those orders for costs, one way or the other, will be made when I understand if there really is any issue about title to sue, if there really is any issue about who are the parties to the bill and if there really is any issue about whether the carrier, actual or contractual, exercised due diligence. The statement of claim be struck out. 2. The operation of the rules be suspended as far as they relate to pleading. 3. The costs of the motion be reserved. 4. The orders made on 4 May 2007 be vacated. 5. (ii) If the defendant says that it was not the carrier what parts of the bill, or any surrounding facts, it relies on for that conclusion. (ii) The facts it says give rise for a prima facie case of liability of the carrier. (iii) A brief statement of the legal basis for any such liability of the carrier. (iv) An explanation of the basis for the damages. 2. 3. Parties have liberty to apply on 2 days' notice. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. | practice and procedure proper approach to issues in the admiralty and maritime list. admiralty and maritime |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse to grant a protection visa to the appellant. Before the Tribunal the appellant claimed to have a well-founded fear of persecution because of his political opinion and claimed to be of Sikh ethnicity and region. The appellant's claims involved being a leader of the Akali Dal Party (Badal Group) and having false charges laid against him by the Congress Party. The appellant claimed that he was arrested by the police and detained for one month, that his house was attacked in 2002, and that his brother was injured and subsequently died. 3 On 28 March 2006 the Tribunal received a response to a hearing invitation indicating the appellant did not want to attend the scheduled Tribunal hearing. The appellant did not attend the hearing and the Tribunal proceeded to make a decision on the evidence available to it. The Tribunal accepted the appellant was a citizen of India and was of Sikh ethnicity and religion. However, the Tribunal found the appellant's claims to be vague and lacking in details. As there were no further details and clarification as to his evidence, the Tribunal was not satisfied of the appellant's claims regarding perceived harm. The Tribunal was not satisfied the appellant had a well-founded fear of persecution for a Convention reason and dismissed the application. The appellant appealed against this decision to the Federal Magistrates Court. 5 Before the Federal Magistrate, the appellant stated that he needed more time to prepare his case. His Honour considered this to be an application for an adjournment but found there were no grounds to support such a request as the appellant had three months to prepare and had been offered legal advice by an experienced barrister. In relation to the substantive grounds, his Honour found the grounds raised referred to factual matters and thus sought merits review. The Federal Magistrate found no reviewable error as the decision was based on a lack of information and thus the Tribunal was not satisfied the information was sufficient to enable it to grant a protection visa. His Honour was unable to see any evidence of jurisdictional error and dismissed the application. 7 At the hearing of the appeal before me the appellant provided a written submission dated 3 November 2006. Most of the material in his submission relates to facts that were or could have been placed before the Tribunal. Otherwise the submission contains the following complaints against the Tribunal: that it did not give any importance to the claims or evidence of the appellant; that it did not take into account the factual matters raised by the appellant; and that it did not make findings in relation to the appellant's claims, specifically whether the events might occur again and whether the appellant had a well-founded fear of persecution on this basis. It may have been that he was ill-advised in so acting, but the appellant must accept the consequences of that choice: see S58 v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 85 ALD 492 at [25]. These were factual conclusions that were open to the Tribunal. According to the decision in Minister for Immigration & Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272 the Court cannot review the merits of the Tribunal's decision. Further, there is no error of law, let alone a jurisdictional error, in the Tribunal making a wrong finding of fact: see Abebe v Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510 at 560, [137] . 10 There was some confusion, apparently, with a reference made by the appellant in his amended application before the Federal Magistrate to 'drug lords' in Pakistan. These factual claims were not made by the appellant to the Tribunal. The applicant told the Court that he does not speak, read or write English, and that a friend had prepared the amended application for him. It appears that the person who prepared the material for the applicant may have been confused. It is a known fact that even the states are unable to stop the drug dealers. The applicant, with no backing, fought the war against the drugs in his country . If the applicant is sent back to Pakistan, in that case the applicant shall be done to death by the hands of the drug lords in Pakistan. The amended application complains that the Tribunal did not make findings in relation to those claims. As the applicant has always claimed to be a citizen of India who was seeking a protection visa on the basis of his political opinion and membership of the Akali Dahl party, it is quite clear that the reference to Pakistan and a struggle against the drug lords of that country has no relevance to the applicant's case at all. I asked the applicant about that, and he indicated that he had nothing to do with Pakistan. What use to happen that the Hindu Drug Lords use to sell the drugs to many Sikhs drug dealers to sell them, and purchase the arms, this was one way or the other was a typing mistake, and the word of Pakistan came in, the drug was to be selled [sic] in Pakistani Punjab. This was not the mistake of the applicant rather it was misunderstood by the friend of the applicant. 13 Finally, the Federal Magistrate took the view that he would not permit the appellant more time to prepare his case, and effectively refused an adjournment. In the circumstances of this case, I do not think the Federal Magistrate failed to exercise his discretion properly in this regard, or to deny the appellant natural justice. The appellant had ample opportunity to prepare and present his case. 14 Further, the appellant before me sought an adjournment in order to place some additional unspecified documents before me. However, in the absence of any information as to the nature of those documents or the reason for requiring that material, I will not grant the appellant any further time. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | appeal from the decision of a federal magistrate to dismiss a decision of the refugee review tribunal refusing to grant a protection visa non-attendance at hearing whether jurisdictional error migration |
Cosco seeks leave to bring a cross-claim against Seacope for an order that its (Cosco's) liability (to BHPB) is limited pursuant to s 87CD of the Trade Practices Act 1974 (Cth) and damages by way of contribution pursuant to s 23B of the Wrongs Act 1958 (Vic). I will permit Cosco to pursue, in part, the claim for contribution but not the claim for proportionate liability under s 87CD. 2 To appreciate why these orders are made it is necessary to explain BHPB's claims as they appear in its amended statement of claim. The negotiations for the charterparty were between Seascope, acting as shipbroker for BHPB, and Cosco, another shipbroker. During the course of those negotiations Cosco falsely represented that: (a) it was acting on behalf of NCI; (b) the entity to whom the vessel would be chartered was NCI; and (c) it was authorised to enter into the proposed charterparty on behalf of NCI. On the basis of those representations BHPB agreed to charter the vessel to NCI. Without BHPB's knowledge the vessel was delivered to Nera. The vessel then sailed from China to Thailand where it was redelivered to BHPB. But the hire and other charges due under the charterparty were not paid. In its action BHPB seeks to recover those charges as damages. As against Cosco it seeks damages pursuant to s 82 of the Trade Practices Act or compensation under s 87 for an alleged contravention of s 52 (misleading and deceptive conduct). Alternatively it seeks damages for negligent misstatement and breach of warranty of authority. In relation to Seascope, BHPB claims damages for negligence and breach of its retainer as BHPB's shipbroker. 3 By its defence Cosco denies liability in respect of all claims. It also pleads that if it is liable to BHPB then its liability is limited to a proportion of the loss claimed determined by reference to its responsibility for that loss. For this plea it relies on s 87CD of the Trade Practices Act and s 24AI of the Wrongs Act , the proportionate liability provisions. Seascope also denies liability and, in the alternative, raises proportionate liability as a defence. 4 Proportionate liability was introduced into state and federal legislation following an inquiry into the law of joint and several liability established by the Commonwealth and the New South Wales Attorneys-General in 1994. The impetus for the inquiry was the growing number of actions against professionals, particularly auditors, who were being singled out as targets for negligence actions not because of their culpability (which might be small) but because they were insured and had the capacity to pay large damages awards. One consequence was a sharp rise in insurance premiums payable by professionals. The inquiry was conducted by Professor Davis of the Australian National University. He published stage one of his report in July 1994 and stage two in January 1995. In his report Professor Davis recommended that joint and several liability for negligence which causes property damage or economic loss be replaced by liability which is proportionate to each defendant's degree of fault. 5 Draft model provisions that reflected the recommendation of the enquiry were published in July 1996 in the form of a part that could be inserted in appropriate legislation. The Commonwealth, State and Territory governments agreed to amend relevant legislation, based on the draft model provisions, to facilitate the introduction of a nationally consistent proportionate liability regime in respect of claims for economic loss or property damage. To implement its part of the agreement the Commonwealth amended the Australian Securities and Investments Commission Act 2001 (Cth), the Corporations Act 2001 (Cth) and the Trade Practices Act so that proportionate liability applied to claims for damages for economic loss or property damage arising from misleading or deceptive conduct. By amendments to the Wrongs Act , Victoria introduced proportionate liability in respect of claims for economic loss or property damage arising from a failure to take reasonable care. 6 In the Trade Practices Act the relevant provisions are contained in Pt VIA , comprising ss 87CB to 87CI . Section 87CB(1) limits the operation of Pt VIA to "a claim for damages under section 82 for: (a) economic loss; or (b) damage to property; caused by conduct that was done in contravention of section 52". This type of claim is referred to as an "apportionable claim": s 87CB(1). Proportionate liability for an apportionable claim is established by s 87CD. That section relevantly provides that "the liability of a defendant who is a concurrent wrongdoer in relation to ... [an apportionable] claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss": s 87CD(1)(a). The court may give judgment against the defendant for not more than the portion of the damages which the defendant is judged to be responsible: s 87CD(1)(b). For the purposes of s 87CD a "concurrent wrongdoer" is a person who is one of two or more persons whose acts or omissions caused, independently of each other or jointly, the damage or loss that is the subject of the apportionable claim: s 87CD(3). Section 87CF provides that a defendant against whom judgment is given as a concurrent wrongdoer cannot be required to contribute to the damages recovered from another concurrent wrongdoer or indemnify that person. 7 The proportionate liability provisions in the Wrongs Act are contained in Pt IVAA. Unsurprisingly, they follow the same structure as found in the federal legislation. But there are important differences. First of all, Pt IVAA applies to "a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care": s 24AF(1)(a). This covers a greater range of torts than the provisions in the Trade Practices Act , which are confined to claims for damages under s 82 based on a contravention of s 52. There is also a procedural difference. For a defendant to take advantage of the proportionate liability provisions in the Wrongs Act , the concurrent wrongdoer must be a defendant: s 24AI(3) ; see also Woods v Gabrielle [2007] VSC 177 , [62] --- [65]. The word "defendant" is defined in s 24AE to include any party in the proceeding (except the plaintiff). The Trade Practices Act has no such requirement. To the contrary, s 87CD(4) provides that proportionate liability is available "whether or not all concurrent wrongdoers are parties to the proceeding". 8 The proportionate liability regime in the Wrongs Act may apply to an action in the Federal Court by reason of s 79 of the Judiciary Act 1903 (Cth) so long as commonwealth law does not "otherwise provide". This was decided in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216 ; (2007) 164 FCR 450 , 457 although Middleton J assumed that the proportionate liability regime was a matter of "procedure" for the purposes of s 79 , a point which may be controversial: see John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36 ; (2000) 203 CLR 503. Assuming that the provisions are procedural in nature, they would not apply to a claim for relief under s 87 of the Trade Practices Act for a contravention of s 52 because, by necessary implication, Part VIA has otherwise provided. Separately from s 79 , the proportionate liability regime in the Wrongs Act would apply to BHPB's common law claim for negligent misstatement to ensure resolution of the whole matter: Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7 ; (1981) 148 CLR 457 , 475. 9 With this background in mind, I can now explain why I will not permit Cosco to seek against Seascope an order that its (Cosco's) liability (to BHPB) is limited pursuant to s 87CD of the Trade Practices Act . The only claim BHPB brings against Cosco that is an apportionable claim under the Trade Practices Act is the claim for damages pursuant to s 82 for a contravention of s 52. The action for damages for negligent misstatement is an apportionable claim by reason of the application of the Wrongs Act . Neither the claim for relief under s 87 nor the claim for breach of warranty of authority is an apportionable claim. The claim under s 87 does not fall within the scope of Pt VIA as it is not "a claim for damages under s 82" and the proportionate liability regime in the Wrongs Act does not apply. The claim for breach of warranty is clearly beyond the scope of Pt VIA and does not fall within the field of Pt IVAA. A person who warrants that he has the authority to act on behalf of another is liable for breach of warranty to any person to whom the warranty was made and who suffers damage by acting on the faith of that warranty: Collen v Wright (1857) 8 E & B 647. The action is based on collateral contract: Penn v Bristol & West Building Society [1997] 1 WLR 1356. It does not depend on showing the defendant failed to act with reasonable care. 10 Although when dealing with BHPB's claim it will be necessary to determine proportionate liability between Cosco and Seascope in relation to the claim under s 82 it does not follow that Cosco can raise that issue against Seascope in its own claim. With few exceptions a plaintiff is only permitted to bring an action in a court of law to enforce some right against, or to restrain the commission of some wrong by, the defendant. In other words, courts are there to adjudicate disputes about rights and obligations. So, in Fawkes v Pratt [1719] EngR 20 ; (1719) 1 P WMS 593 Lord Parker LC, said that: "[t]he plaintiff may complain and tell stories of whom he pleases; but they only are defendants against whom process is prayed, and no process being prayed against the assignees, they still are not defendants". 11 The contention by Cosco that it is only proportionately liable in accordance with Pt VIA for the damages claimed by BHPB raises a dispute between BHPB and Cosco. The resolution of that dispute will affect the rights and obligations of BHPB and Cosco. It will not, however, affect the rights or obligations of Seascope. Thus, even if Cosco is able to shift some of the blame to Seascope, that confers no right in Cosco against Seascope that can be enforced in a court. 12 It is, I suppose, theoretically possible for Cosco to bring an action against Seascope seeking a declaration that as between Cosco and Seascope their liability to BHPB is proportionate and ask for a determination on what those proportions are. The jurisdiction to grant declaratory relief is available though there has been no contravention of rights or breach of obligations: Forster v Jododex Australia Pty Limited [1972] HCA 61 ; (1972) 127 CLR 421. It is sufficient if there be a legal controversy between the parties to the suit. But in this case any dispute (if there be one) between Cosco and Seascope about proportionate liability is a dispute without any legal significance. If Cosco is found to have breached s 52 it will be necessary in BHPB's action to determine its proportionate share of the responsibility. Raising the issue in a cross claim against Seascope serves no purpose, so far as I can see. Moreover, cases such as Atkin v Interprac Financial Planning Pty Ltd 2007 VSC 445 and P & V Industries Pty Ltd v Secombs (a firm) [2008] VSC 209 are not in point. They are cases where a defendant was given leave to add a concurrent wrongdoer as a party to the proceeding. But adding the party was necessary to ensure that the proportionate liability regime in the Wrongs Act would apply. 13 The position is different in relation to BHPB's claim for damages for breach of warranty of authority and its claim for relief under s 87. Those are not claims in respect of which Cosco can limit its liability under either the federal or state proportionate liability legislation. By its proposed cross-claim Cosco seeks contribution under s 23B of the Wrong Act in respect of those claims and others. Section 23B is not concerned with proportionate liability. It permits contribution from any person liable in respect of the same damage as the party seeking contribution. Contribution is based on an assessment of what is "just and equitable having regard to the extent of that person's responsibility for the damage": s 24(2). The precise basis upon which the claim for contribution is sought is not set out. But that is not a complaint Seascope makes. It seeks to challenge the right to bring a cross-claim in limine. I can see no reason why a claim for contribution limited to damages BHPB may recover on in its breach of warranty of authority claim and its s 87 claim should not be permitted. 14 As regards costs it will be apparent that Cosco and Seascope have both had a measure of success and in those circumstances it would be fair for the costs to lie where they fall. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | application to bring a cross-claim under pt via of the trade practices act 1974 (cth) and pt ivaa of the wrongs act 1958 (vic) application of s 79 judiciary act 1903 (cth) properly constituted action practice and procedure |
2 On 16 July 2007, the Minister for Immigration and Citizenship ("the Minister" or "the respondent") cancelled Dr Mohamed Haneef's (the applicant) Subclass 457 Business (Long Stay (Class UC) visa. An order in the nature of certiorari quashing the Respondent's decision made on 16 July 2007 to cancel the Applicant's Subclass 457 Business (Long Stay) (Class UC) visa. An order in the nature of a prohibition and/or an injunction restraining the Respondent from acting upon the cancellation of the Applicant's visa. A declaration that when the Applicant departed Australia on 27 July 2007, his immigration status was that of a lawful non-citizen. That provision is a primary constitutional underpinning of the Rule of Law in Australia. 10 While ss 75 and 76 of the Australian Constitution are derived from Article III Section 2 of the Constitution of the United States, there is no counterpart of s 75(v) to be found in the Constitution of the United States. 11 The absence of an equivalent of s 75(v) means that there can be conduct by officers of the government of the United States that is immune from judicial review by the Supreme Court of the United States. The Detainee Treatment Act 2005 (US) 119 Stat. 2742. provides in par 1005(e)(1) "[N]o court, justice, or judge shall have jurisdiction to hear or consider an application for a writ of habeas corpus filed by or on behalf of an alien detained by the Department of Defense at Guantanamo Bay, Cuba. 2749 (2006)). 13 Section 75(v) appears in the Australian Constitution as a consequence of the finding by the Supreme Court in the United States in Marbury v Madison 5 U.S. 137 (1803). Sir Edmund Barton (later an original judge of the High Court) in the debates of the Australasian Federal Convention in Melbourne in 1898 ("Official Record of the Debates of the Australasian Federal Convention", Melbourne , 4 March 1898 Vol II at page 1883) referred to the terms of section 2 of Article III of the United States Constitution . Jurisdiction was not given in any express terms as to writs of mandamus, prohibition, or injunction. Therefore there was only an appellate jurisdiction. When the United States Congress tried to confer an original jurisdiction upon the Supreme Court of the United States, it was held that, as there was no such jurisdiction conferred by the Constitution , it could not be conferred by an Act of Congress, because such an Act was outside the Constitution . For that reason, the statute was held to be void. In particular, it permits the Court to restrain a Minister, who is an officer of the Commonwealth, from going beyond his or her duty, or exceeding his or her power. If the Minister has acted ultra vires of the statute, there is jurisdiction in this case pursuant to s 476A(2), in the Federal Court to grant relief. 19 This is no more than a manifestation of the Rule of Law. It is an embedded constitutional guarantee that persons will be dealt with according to law. 20 In Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2 ; (2003) 211 CLR 476, the High Court was concerned with provisions in the Migration Act , namely ss 474(2) and 474 (1), which, on their face, purported to render some decisions made under the Migration Act immune from judicial review. The issues decided in these proceedings are not merely issues of a technical kind involving the interpretation of the contested provisions of the Act. The Act must be read in the context of the operation of s 75 of the Constitution . That section, and specifically s 75(v) , introduces into the Constitution of the Commonwealth an entrenched minimum provision of judicial review. There was no precise equivalent to s 75(v) in either of the Constitutions of the United States of America or Canada. The provision of the constitutional writs and the conferral upon this court of an irremovable jurisdiction to issue them to an officer of the Commonwealth constitutes a textual reinforcement for what Dixon J said about the significance of the rule of law for the Constitution in Australian Communist Party v Commonwealth [(1951) [1951] HCA 5 ; 83 CLR 1 at 193; cf Kartinyeri v Commonwealth [1998] HCA 22 ; (1998) 195 CLR 337 at 381 [89] ; [1998] HCA 22 ; 152 ALR 540 at 569 per Gummow and Hayne JJ.]. Among these I think that it may fairly be said that the rule of law forms an assumption. The centrality, and protective purpose, of the jurisdiction of this court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative action. Such jurisdiction exists to maintain the federal compact by ensuring that propounded laws are constitutionally valid and ministerial or other official action lawful and within jurisdiction. In any written constitution, where there are disputes over such matters, there must be an authoritative decision-maker. Under the Constitution of the Commonwealth the ultimate decision-maker in all matters where there is a contest, is this court. The court must be obedient to its constitutional function. In the end, pursuant to s 75 of the Constitution , this limits the powers of the parliament or of the executive to avoid, or confine, judicial review. It secures a basic element of the rule of law. The jurisdiction of the court to require officers of the Commonwealth to act within the law cannot be taken away by parliament. Within the limits of its legislative capacity, which are themselves set by the Constitution , parliament may enact the law to which officers of the Commonwealth must conform. If the law imposes a duty, mandamus may issue to compel performance of that duty. If the law confers power or jurisdiction, prohibition may issue to prevent excess of power or jurisdiction. An injunction may issue to restrain unlawful behaviour. Parliament may create, and define, the duty, or the power, or the jurisdiction, and determine the content of the law to be obeyed. But it cannot deprive this court of its constitutional jurisdiction to enforce the law so enacted. [Menzies, Afternoon Light , 1967, p 320. ] In resolving this case, resort to each of these is necessary: history for an understanding of the law in relation to prerogative writs at the time of Federation and the considerations which moved the founders to use the language that they did in s 51(xxix) and (xxxvii), and Ch III of the Constitution ; statutory interpretation to construe both the provisions of the enactment under challenge, and the Constitution which is both the source of the power to enact them, and the instrument which prescribes the powers conferred on this court to examine and pronounce upon their validity; and, political philosophy for an understanding of the need for each of the arms of government, the parliament, the executive and the judiciary to pay due deference to, and not to intrude upon the roles of one another, in the good, that is to say the lawful and efficient government of the nation. 31 The preceding observations demonstrate that there is no room for the view, sometimes uttered, that the executive should have exclusive responsibility over all matters involving national security. 32 True it is that the executive is charged with a heavy responsibility in matters of national security, but parliament has defined the limits defining the discharge by the executive of that responsibility, and it is for the judicial arm of government "to ensure that ministerial or other official action (is) lawful and within jurisdiction," as the plurality judgment at [104] of Plaintiff S157 , set out at [23], makes plain. 35 The Constitutional Reform Act 2005 provides in section 1 that the Act does not adversely affect "the existing constitutional principle of the rule of law" or "the Lord Chancellor's existing constitutional role in relation to that principle". Lord Bingham noted that the Act does not define "the existing constitutional principle of the rule of law", nor the "Lord Chancellor's existing constitutional role in relation to it. ... I think that this formulation, of course owing much to Dicey, expresses the fundamental truth propounded by John Locke in 1690 that "Where-ever law ends, tyranny begins",[John Locke, Second Treatise of Government (1690), Chap XVII, s.202 (Cambridge University Press, 1988, p 400. For as in absolute governments the King is law, so in free countries the law ought to be King; and there ought to be no other. " [Thomas Paine, Common Sense (London: Everyman's Library 1994),p 279. 39 The first sub-rule enunciated by Lord Bingham at 23 was that "the law must be accessible and so far as possible intelligible, clear and predictable. It is one thing to alter the law's direction of travel by a few degrees, quite another to set it off in a different direction. The one is probably foreseeable and predictable, something a prudent person would allow for, the other not. Thus one can agree with Justice Heydon of the High Court of Australia that judicial activism, taken to extremes, can spell the death of the rule of law. [J.D. Heydon, "Judicial Activism and the Death of the Rule of Law", Quadrant, January-February 2003. He said, "... if everyone is bound by the law they must be able without undue difficulty to find out what it is. ... While some special legislative provision can properly be made for some categories of people such as children, prisoners and the mentally ill, based on the peculiar characteristics of such categories, we would regard legislation directed to those with red hair (to adapt Warrington LJ's long-lived example) as incompatible with the rule of law. It is difficult to suggest any act which would be held ultra vires under this head, though performed bona fide. To look for one example germane to the present case, I suppose that if the defendants were to dismiss a teacher because she had red hair, or for some equally frivolous and foolish reason, the Court would declare the attempted dismissal to be void. My view then is that the only case in which the Court can interfere with an act of a public body which is, on the face of it, regular and within its powers, is when it is proved to be in fact ultra vires, and that the references in the judgments in the several cases cited in argument to bad faith, corruption, alien and irrelevant motives, collateral and indirect objects, and so forth, are merely intended when properly understood as examples of matters which if proved to exist might establish the ultra vires character of the act in question. Romer J, at first instance, concluded that the object of the defendants in attempting to dismiss the plaintiff was in pursuance of motives in no way connected with the efficient maintenance of the schools, or of education in their district, but for motives alien and irrelevant to the discharge of their statutory duties. 46 The Court of Appeal, Warrington LJ and Sargant LJ, reversed the decision of Romer J. If government can arbitrarily select those to whom the law, and consequent sanctions, will apply, there is no Rule of Law, but arbitrary whim. 50 In R v Zaphir [1978] Qd. Whether or not it extends to threats to cause a detriment to another by bringing about a consequence which is not in violation of the other's legal right should be left for decision in an appropriate case. The words "injury" and "detriment" are both qualified by the further words "of any kind," and that being so I can see no warrant for importing a qualification that the injury or detriment must involve a criminal or unlawful connotation. Examples were given in the course of argument to illustrate the consequences which would ensue in situations in everyday life if the word "detriment" were not to be qualified in this way. In my view these considerations do not justify placing, as it were, a gloss upon the section which would be contrary to its clear words. It is not to be expected that the section would be invoked in circumstances such as those used by way of illustration even though on its strict terms it would seem to apply. Conversely, nothing opens the door to arbitrary action so effectively as to allow those officials to pick and choose only a few to whom they will apply legislation and thus to escape the political retribution that might be visited upon them if larger numbers were affected. Courts can take no better measure to assure that laws will be just than to require that laws be equal in operation. Did Parliament intend that the definition of "not passing the character test" should apply to persons whose "association" with persons who are criminals does not bear adversely on their character, as well as to those whose "association" with such persons does bear adversely on their character? It is that ministers and public officers at all levels must exercise the powers conferred on them reasonably, in good faith, for the purpose for which the powers were conferred and without exceeding the limits of such powers. This sub-rule reflects the well-established and familiar grounds of judicial review. This is not in my view an accurate analysis. But there is an inevitable, and in my view entirely proper, tension between the two. There are countries in the world where all judicial decisions find favour with the government, but they are not places where one would wish to live. Such tension exists even in quiet times. But it is greater at times of perceived threats to national security, since governments understandably go to the very limit of what they believe to be their lawful powers to protect the public, and the duty of the judges to require that they go no further must be performed if the rule of law is to be observed. This is a fraught area, since history suggests that in times of crisis governments have tended to overreact and the courts to prove somewhat ineffective watchdogs. [See Tom Bingham, "Personal Freedom and the Dilemma of Democracies" (2003) 52 ICLQ 841. ] In our country and in the United States, decisions have been made of which neither country can be proud. [In this country, one would instance R v Halliday [1916] 1 KB 738, [1917] AC 260 and Liversidge v Anderson [1941] UKHL 1 ; [1942] AC 206; in the United States, notably, Korematsu v United States 323 US 214 (1944), a decision which Scalia J has put on a par with that in Dred Scott, thereby assigning it to the lowest circle in Hades. But it has proven unable to prevent itself from repeating the error when the next crisis came along. " [William J Brennan Jr, "The Quest to Develop a Jurisprudence of Civil Liberties in Times of Security Crises" 18 Israel Yearbook of Human Rights (1988) 11. (Lecture at Melbourne University, 7 November 2001, www.hcourt.gov.au/speeches/cj/cj_ruleoflaw.htm) noted that "the rule of law does not mean rule by lawyers. The state for its part accepts that it may not do, at home or abroad, all that it has the power to do but only that which laws binding upon it authorise it to do. If correct, this conclusion is reassuring to all of us who, in any capacity, devote our professional lives to the service of the law. For it means that we are not, as we are sometimes seen, mere custodians of a body of arid prescriptive rules but are, with others, the guardians of an all but sacred flame which animates and enlightens the society in which we live. But it is not too much to say that any suggestion that Parliament has impliedly excluded judicial review, especially for ultra vires, should be viewed with extreme caution, indeed with healthy scepticism. But it does not follow that ASIO's activities should be completely free from judicial review. To so conclude would be to ignore the protection which is given by the doctrine of Crown privilege to information the disclosure of which is prejudicial to national security. It is one thing to say that security intelligence is not readily susceptible of judicial evaluation and assessment. It is another thing to say that the courts cannot determine whether intelligence is "relevant to security" and whether a communication of intelligence is "for purposes relevant to security". It may be necessary to evaluate Australia's relationships with foreign countries, the stability of international affairs, the passion inspired by a particular cause or the likelihood of adherents to the cause taking violent steps in support of it; it may be necessary to evaluate rumour or suspicion as well as proof. It may be reasonable, even necessary, to determine the gravity of a risk by intuition rather than deduction. It may be truly said that the skills and procedures of a court do not fit it to find the point on the scale of gravity of every risk which may be thought to pose a threat to the Commonwealth, the States and Territories and the people thereof, and it may be accepted that a court will not necessarily have or be able to obtain all the evidence needed to allow it to quantify a risk precisely. However, it does not follow that judicial review is excluded. The Minister is nonetheless susceptible to the requirements of the law that he act within the jurisdiction conferred by the Parliament on him. (5) The rules of natural justice, and the code of procedure set out in Subdivision AB of Division 3 of Part 2 , do not apply to a decision under subsection (3). The note that follows s 501(1) confirms this. 71 Further, the language used in s 501(6) , and, in particular, the word "if", indicates that this definition of the "does not pass the character test" is a definition which "means" rather than "includes" the meanings provided. The learned authors in DC Pearce and RS Geddes, Statutory Interpretation in Australia (6 th ed, Butterworths, 2006) at [6.56], make it clear that such a definition is intended to be exhaustive. 72 The contention by the Minister is that the second instance of the character test, that in s 501(6)(b) , has no element of personal fault. In support of this contention, the Solicitor-General, David Bennett QC, contrasts the language at s 501(6)(b) with the other paragraphs of the subsection. Further, he suggests that even in relation to s 501(6)(a) , there is scope for an absence of relevant fault, and gives by way of example "a person convicted and sentenced for blasphemy in a Middle Eastern country". 73 Counsel for the applicant contends that s 501(6)(b) , on its proper construction, requires a connection between the visa holder and those suspected of criminal conduct that involves personal fault, or reflects adversely on the character of, the visa holder; any connection is not sufficient. 74 These submissions will be considered in greater detail later. 75 The Minister complied with his statutory obligations under s 501C(3). Further, the Minister provided a statement of reasons. There was no express statutory obligation to do so. Section 501G(1)(e) imposes an obligation of the Minister to give reasons for a decision made under s 501 subss (1) or (2) or s 501A(2) or s 501B or s 501F. The decision in the present proceedings was made under s 501(3) and is not therefore a decision to which the obligations in s 501G applied. Section 503A permits the Minister to authorise the disclosure of specified information to specified persons or bodies. 78 There has not been a declaration under s 503(3) in force which authorised the disclosure of protected information to the Federal Court for the purposes of this proceeding. 79 It follows that there has been no occasion to consider whether the Court should make non-disclosure orders concerning the protection of confidential information disclosed to it. 80 The evidence before the Court on this application does not include any part of the protected information that was before the Minister. This case has to be decided on the evidence properly before the Court, which includes, of course, that there was protected information before the Minister that was not before the Court. 81 The contents of any release to the public, by or on behalf of the Minister of what might, or might not be part of that protected information, or a summary or version of part of that protected information, is not in evidence before the Court. I am not concerned with the lawfulness or propriety of any such release of that protected information to the public. 82 The Minister could have made a declaration pursuant to s 503A(3) for authorising the disclosure of specified information to this Court, but has not done so. 84 With that notice was a copy of the full text of s 501 of the Migration Act . While the Minister is not bound by the Direction in making the decision under section 501(3) , it is open to him to be guided by the Direction in making a decision personally. 87 That material also included a copy of the submission and attached evidence that the Minister considered in making the decision to cancel the applicant's visa under s 501(3). 89 Direction 21, a copy of which was given to Dr Haneef, was made by Phillip Maxwell Ruddock, the then Minister for Immigration and Multicultural Affairs, on 23 August 2001. Mr Ruddock gave the Direction pursuant to s 499 of the Migration Act . To facilitate this object the Minister has been given a discretion to refuse or cancel a visa where the visa applicant or visa holder does not pass the Character Test. In exercising this power, the Minister has a responsibility to the Parliament and to the Australian community to protect the community from criminal or other reprehensible conduct and to refuse to grant visas, or cancel visas held by non-citizens whose actions are so abhorrent to the community that they should not be allowed to enter or remain within it. The purpose of refusing or cancelling a visa under section 501 is to protect the safety and welfare of the Australian community and to exercise a choice on behalf of the Australian community as a whole as to who should be allowed to enter or to remain in the community. "Association" does not require actual membership of a group or an organised body that is involved in criminal activities. In all cases, great care should be taken not to disclose information that might put the life or safety of informants or other persons at risk. In reaching the conclusion that a non-citizen is not of good character, decision-makers must take into account all the relevant circumstances of a particular case, including evidence of rehabilitation and recent good conduct. 93 The comments under 501(6)(c) are divided into two sections, the first dealing with past and present criminal conduct and the second dealing with past and present general conduct. 96 Also in the material hand delivered to the applicant on the afternoon of 16 July 2007, and which material was before the Minister when he made his decision to cancel the applicant's visa, was annex 4 detailing the attempted London car bombings; annex 5 detailing the Glasgow airport bombing; annex 6, being an extract from an article on the website for the Sydney Morning Herald, entitled "Britain wants doctor extradited"; annex 7 being an extract of an article entitled "Suspect arrested at Brisbane airport used to be doctor at NHS hospital in Liverpool" from the Guardian in the United Kingdom; and annex 8 being an extract of an article "Hospital keeping Haneef's job open" from the ABC. I have decided to exercise my discretion under subsection 501(3)(b) to cancel his Subclass 457 Business (Long Stay)(Class UC) visa. My reasons for my decision will be set out in the Statement of Reasons. 103 The Statement of Reasons was divided into three sections. I noted that on 14 July 2007, Dr HANEEF was formally charged with intentionally providing resources to a terrorist organisation, consisting of persons including Sabeel AHMED and Kafeel AHMED, being reckless as to whether the organisation was a terrorist organisation, contrary to section 102.7 Criminal Code Act 1995. Dr HANEEF has advised the Australian Federal Police (AFP) that he is the second cousin of two people suspected of involvement in the London incident and the Glasgow bombings: Dr Sabeel AHMED and Dr Kafeel AHMED. Further, I note that since leaving the UK, Dr HANEEF and Dr Sabeel AHMED have been in correspondence via on-line chat rooms. The most recent correspondence was on 26 June 2007, regarding the birth of Dr HANEEF's daughter. From this information, I reasonably suspected that Dr HANEEF has, and has had previously, an association with Dr Sabeel AHMED and Dr Kafeel AHMED. Dr Sabeel AHMED and Dr Kafeel AHMED are suspected of involvement in the London incident, and the Glasgow bombings. Based on this information, and further information provided to me including section 503A protected information, I reasonably suspect that Dr Sabeel AHMED and Dr Kafeel AHMED are, or have been, involved in criminal conduct. Based on the information provided to me, including section 503A protected information, I reasonably suspect that Dr HANEEF does not pass the character test by virtue of section 501(6)(b) in that he is a person who has or has had an association with Dr Sabeel AHMED and Dr Kafeel AHMED whom I suspect are or have been involved in criminal conduct. I considered that the criminal conduct in which Dr HANEEF's associates are suspected to have engaged in is particularly serious. I considered that it was in Australia's national interest to prevent Dr HANEEF who was charged with intentionally providing resources to a terrorist organisation, consisting of persons including Sabeel AHMED and Kafeel AHMED, being reckless as to whether the organisation was a terrorist organisation, contrary to section 102.7 Criminal Code Act 1995 from continuing to hold a valid visa and to remain in the Australian community. I note that this is clearly a serious offence in national and international terms. On this basis, I was satisfied that cancellation of Dr HANEEF's visa was in the national interest. Having formed the necessary suspicion that Dr HANEEF does not pass the character test, and having decided that cancellation of Dr HANEEF's visa would be in the national interest, I carefully assessed all of the information set out in the Issues Paper and considered whether to exercise my discretion to cancel Dr HANEEF's visa. Under Primary Considerations , the first subheading was Protection of the Australian Community . I gave primary consideration to the protection of the Australian community, taking into account the seriousness and nature of Dr HANEEF'S suspected conduct, the likelihood that such conduct might be repeated (risk of recidivism), and general deterrence. I am aware that Dr HANEEF has been charged but not convicted of intentionally providing resources to a terrorist organisation, consisting of persons including Sabeel AHMED and Kafeel AHMED, being reckless as to whether the organisation was a terrorist organisation, contrary to section 102.7 Criminal Code Act 1995. I also noted that on 16 July 2007, Dr HANEEF was granted bail by the Brisbane Magistrates Court in relation to that charge. I also note that Dr HANEEF is a person of interest to the British Metropolitan Police Service, Counter Terrorism Command (MPS CTC), and to their investigation of the recent bombings in London and Glasgow. I note that the Australian Government has a strong interest in deterring non-citizens from providing support to terrorist organisations/networks. I also considered that 16 July 2007, Dr HANEEF was granted bail in relation to the charge against him under section 102.7 of the Criminal Code Act 1995. I also considered that Dr HANEEF is currently on a Subclass 457 Business (long stay)(class UC) visa, and was working at the Gold Coast Hospital. I also noted that he had not previously been warned of visa cancellation under section 501 or criminal deportation under section 201 of the Act. I found that the 'other considerations' weigh against visa cancellation. I gave these considerations moderate weight. I considered all relevant matters including (1) an assessment against the character test as defined by s501(6) of the Migration Act 1958, (2) Ministerial Direction 21 under s499 of that Act and (3) all other evidence available to me. Having formed the necessary suspicion that Dr HANEEF does not pass the character test, and having decided that cancellation of Dr HANEEF's visa would be in the national interest, I concluded that the seriousness of Dr HANEEF's suspected conduct and, to a lesser extent, the expectations of the Australian community outweighed all other considerations mentioned above. I therefore decided to exercise my discretion to cancel Dr HANEEF's visa under s501(3). 115 On 16 July 2007, at about 11 am, the Magistrate granted conditional bail to the applicant. As noted earlier in these reasons, paragraph 62 of the Minute to the Minister dated 16 July 2007 recorded that Dr Haneef had been granted bail by the Brisbane Magistrates Court. Paragraph 3 of that Minute under the heading Current Location says, "Dr HANEEF is currently on remand at the Brisbane City watch house. 117 The evidence before the Court establishes that subsequent to the decision to cancel the applicant's visa, and before the communication of that decision to Dr Haneef, the Minister held a press conference at about 1.45 pm on 16 July 2007. Dr Haneef will be detained by immigration authorities and relocated to the Villawood Immigration Detention Centre as soon as arrangements can be made. In the meantime, he'll be held in immigration detention in Brisbane. That certificate certifies that, "... the stay of the removal or deportation of Mohamed HANEEF ... from Australia is required for the administration of criminal justice. 123 The Criminal Justice Stay Certificate was cancelled by the Attorney-General, either on 27 or 28 July 2007. 124 The applicant left Australia on 28 July 2007 and is presently in Bangalore, India. However that provision has application only to a decision that does not involve jurisdictional error. It is the contention of the applicant that the decision of the Minister to cancel the applicant's visa on 16 July 2007 involved jurisdictional error. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it. Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it. Nothing in the Act suggests that the tribunal is given authority to authoritatively determine questions of law or to make a decision otherwise than in accordance with the law. 130 In Lobo , the delegate of the Minister was concerned with the grant of a subclass 845 visa. Clause 845.216 of the Second Schedule of the Migration Regulations prescribed a criterion in which the Minister must be satisfied before he could grant such a visa. His satisfaction that the criterion had been satisfied was a necessary condition of his power to grant the visa. If he was satisfied that the criterion had been satisfied, and that the other conditions set out in s 65(1)(a) of the Migration Act were met, then he had a statutory duty to grant the visa. For, on the face of it, he has failed to ask the question which the Act and regulations, upon a proper construction of the criterion, require him to ask. In such a case, absent s 474, the minister's decision would be a nullity. The minister has not done that which the Act requires him to have done. The decision would be a purported decision of no legal effect. 133 On the appeal to the Full Court in Lobo , it was not disputed that the departmental policy to which the Tribunal adverted was narrower than the criterion for a subclause 845 visa set out in cl 845.216 of the Second Schedule to the regulations. In the light of that concession, the Full Court concluded that failure to satisfy the criteria set out in the departmental policy did not equate to failure to satisfy the criterion in cl 845.216. In consequence, the Tribunal fell into jurisdictional error. In so doing it erred and its error was jurisdictional. It did not address the question which s 65(1) of the Act required it to address. 136 In MIMIA v SGLB [2004] HCA 32 ; (2004) 207 ALR 12, Gummow and Hayne JJ (with whom Gleeson CJ agreed) indicated at [49] that the nature of the alleged error in Plaintiff 157 was the denial to the plaintiff of jurisdictional fairness. 137 Their Honours in [50] and [51] turned to other cases where the nature of the alleged error turned on the meaning of the legislative criterion of jurisdiction. Re Minister for Immigration and Multicultural Indigenous Affairs; Ex parte Applicants S134/2002 was such a case. The court divided on the question whether, on the proper construction of the relevant regulations under the Act, as picked up by s 65(1), the tribunal had been obliged to determine to its satisfaction whether applicants were entitled to protection visas by reason of membership of the family unit of a person who had already been granted a protection visa. The majority answered "no"; Gaudron and Kirby JJ were of the other view. [51] However, in the light of the detailed specification of the criteria for the grant of the various classes of visa, including protection visas, it is impossible to treat the consideration by the minister's delegate (and hence the tribunal) of what are the relevant criteria (the issue in Applicants S134 ), and the satisfaction thereof, as other than conditions precedent to the making of a valid decision to grant or refuse to grant a visa under s 65. Further, certain observations by Gaudron and Kirby JJ in Applicants S134 (not on an issue upon which the division in the court turned) are, with respect, compelling. And as already pointed out, a decision-maker cannot be said to be satisfied or not satisfied if effect is not given to those criteria because, for example, they have been misconstrued or overlooked. The Respondent fell into jurisdictional error by deciding that the threshold requirement under s.501(3)(c) of the Migration Act had been satisfied based on upon misconstruction of the expression "association" in s.501(6)(b). The Respondent's purpose in cancelling the visa under s.501(3) was to allow the Applicant to be detained when he had been granted bail and that was an improper purpose. 140 It is necessary to consider each of these grounds in turn. 142 The applicant concedes, "The Respondent's reasons cannot be construed as if they were as statute, or with an eye finely attuned for error. " This statement adopts the thrust of the observations of the Full Court in Collector of Customs v Pozzolanic (1993) 43 FCR 280, including the mis-combination of visual and aural senses. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed. In the present context, any court reviewing a decision upon refugee status must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision. This has been made clear many times in this Court. For example, it was said by Brennan J in Attorney-General (NSW) v Quin : [(1990) [1990] HCA 21 ; 170 CLR 1 at 35-36. 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. The second paragraph of the statement of reasons deals with the question of whether the Applicant has or has had an association with Dr Sabeel Ahmed and Dr Kafeel Ahmed. The third paragraph deals with whether the Respondent reasonably suspects that Dr Sabeel Ahmed and Dr Kafeel Ahmed are, or have been, involved in criminal conduct. The Respondent had regard to s.503A protected information with respect to this issue. 31. In the fourth paragraph, the Respondent reaches a conclusion that the Applicant does not pass the character test by combining the findings he made under paragraphs 2 and 3. The reference in the fourth paragraph to s.503A protected information, read in context, refers only to the issue of the Minister's reasonable suspicion that Dr Sabeel Ahmed and Dr Kafeel Ahmed are, or have been, involved in criminal conduct and does not suggest that the Respondent relied upon s.503A protected information to reach the conclusion that the Applicant has, and has had previously, an association with Dr Sabeel Ahmed and Dr Kafeel Ahmed. The Respondent's statement of reasons shows that he considered that the " association" required under s.501(6)(b) could be a merely familial relationship and correspondence with persons whom the Respondent reasonably suspects has been or are involved in criminal conduct. There is nothing in the reasons to show or suggest that the association of the Applicant with Dr Sabeel Ahmed and Dr Kafeel Ahmed relied upon by the Respondent was an association that reflected adversely upon the character of the Applicant. An "innocent association" is not sufficient for the purposes of s 501(6)(b). There must be some nexus between the visa holder and the criminal conduct. 146 The applicant submitted that some support for the conclusion that an "innocent association" is not sufficient for the purposes of s 501(6)(b) and that there must be some nexus between the visa holder and the criminal conduct by way of knowledge of, or belief in, or even suspicion of criminal conduct, was to be found in the observations, albeit dicta , of Lee J in Godley v MIMIA (2004) ALD 411. First, the minister must form a reasonable suspicion that a person, group or organisation has been or is involved in criminal conduct. It may be taken that to be a reasonable suspicion the suspicion must be based on reasonable grounds. Second, the minister must make a finding of fact that the visa applicant has, or has had, an association with that person, group or organisation. Again it would be necessary for there to be material capable of supporting that finding. It is unnecessary to consider the meaning of the word "association" but for a visa applicant not to pass the character test it may be taken to require the minister to make relevant findings of fact as to the knowledge, or awareness, by the visa applicant of the facts that point to the involvement of the person, group or organisation in criminal conduct. The Full Court, however, did not refer to or deal with that passage in Lee J's judgment. 149 It was submitted by the Solicitor-General that the Full Court quoted the passage of Lee J's judgment preceding [47] and subsequent to that paragraph, but did not quote that passage, the suggestion being that the Full Court declined to endorse those remarks. 150 However, the position is that, having spoken of s 501(6) generally, Lee J, in [46] dealt with s 501(6)(a) ; in [47], dealt with s 501(6)(b) , and in [48], dealt with s 501(6)(d). 151 The Full Court referred to the general observations about s 501(6) , and then went directly to Lee Js observations about s 501(6)(c) , which commenced at [49] of Lee Js reasons. The reason for the omission of Lee J's observations about s 501(6)(a) , s 501(6)(b) , s 501(6)(d) , is that Godley was concerned with s 501(6)(c). Section 501(6) defines the limits of the discretion Parliament has conferred on the Minister. As set out above , the other paragraphs of s 501(6) require the Minister to make findings of fact, or to form opinions or suspicions based on reasonable grounds, before a discretion to refuse a visa will be conferred. The Minister says that all that s 501(6)(b) requires is that the visa holder has an "association" with a person, group, or organisation that the Minister reasonably suspects has been involved in criminal conduct. If the visa holder has an association, the threshold test, the Minister submits, is satisfied. 154 For the Minister it was submitted that that test is supported by the decision of Emmett J in MIMA v Wai Kuen Chan [2001] FCA 1552 ; that judgment of Emmett J is correct, and that that is the test which the Minister applied. 155 It is on these competing interpretations that an issue is joined. 156 For the Minister, it was submitted that the expression "an association with" can have various meanings which may range from a mere connection or link, to participation in a common goal or purpose. All that paragraph 501(6)(b) requires is that the visa holder has "an association with" the person, group or organisation that the Minister reasonably suspects has been involved in criminal conduct. If the visa holder has an association the threshold test is satisfied . These matters were sufficient to enliven the Minister's discretion. They established an association between Dr Haneef and both of the Ahmed Brothers. The information before the Minister was that Dr Haneef had stayed in the same boarding house accommodation in the United Kingdom as Dr Sabeel Ahmed. 159 The factors referred to in submissions by the Solicitor-General for the Minister confirm that it is the Minister's case that because of those matters, Dr Haneef had an association with his cousins. Those cousins were involved in criminal activities. The Minister was therefore entitled to conclude that Dr Haneef failed the character test and the Minister's discretion to cancel his visa was thereby enlivened. 160 Mr Bennett submitted that facts pointing to an innocent connection was sufficient to establish the "association" in s 501(6)(b), and that the Minister was correct to so find. Dr Haneef was invited to and entitled to satisfy the Minister that he did not fail the "character test". He chose not to do so. There Emmett J rejected the submission that in order to come within the scope of the section the person had to have some form of community of purpose or ideas with the person, group or organisation involved in the criminal conduct such that there was a nexus between the visa holder and the alleged criminal conduct. " For the applicant, however, it was pointed out that there was no contradictor in Chan , and that Emmett J's attention "does not seem to have been drawn to all the relevant legislative provisions and the extrinsic material". Emmett J's judgment was given ex tempore, and in particular, the significance of s 501C(4) was not adverted to. The applicant respectfully submitted that Chan was wrongly decided. 163 It is necessary to consider Emmet Js judgment in Chan in some detail, as well as the reasons for decision of Deputy President Purvis QC in the Administrative Appeals Tribunal from whose decision the appeal was made to the Federal Court by the Minister: Chan v MIMA [2001] AATA 487. Mrs Wai Kuen Chan did not appear on the appeal. 164 The Minister for Immigration and Multicultural Affairs, on 26 February 2001, cancelled the applicant's class UC (temporary business entry) sub class 457 visa on the basis that the respondent Minister was not satisfied that the applicant passed the character test, pursuant to s 501(6) of the Migration Act . (b) if the answer to (a) is in the affirmative whether, the Tribunal reasonably suspects that Mr Wong has been or is involved in criminal conduct. (c) if the answers to (a) and (b) above are both in the affirmative and the applicant thereby does not satisfy the character test, whether the Tribunal should or should not exercise its discretion to cancel the Applicant's visa. "Association" does not require actual membership of a group or an organised body that is involved in criminal activities. On 17 October 1997, they were each granted a four-year Sub-class 457 Visa. Ms Chan and her husband had met in 1987. They began living together in 1990, married in 1991, and the relationship produced three children. The family visited Sydney in 1996 and 1997, and they entered Australia on 17 October 1997 on tourist visas and they were granted Sub-Class 457 Business Visas. Golden Win International Pty Limited, with the husband and wife as sole shareholders, was incorporated on 28 July 1998, and in September of that year, entered into a joint venture with another company for the purpose of developing real estate. 167 Mr Wong's visa was cancelled on 12 October 1999. On 8 February 2000, he resigned as director of, and transferred his shareholding in, Golden Win International Pty Ltd, to his wife. On 25 July 2000, their marriage was dissolved by the Family Court of Australia. 168 Ms Chan gave evidence that by June 1998, she regarded herself as separated from Mr Wong. He made several trips to Australia during school holidays in order to see the children, but did not live with the applicant as her husband. She last saw Mr Wong in Australia in July/August 1999, when he was in Australia to visit the children. Since August 1999, she had had minimal contact with him. 169 The only time she had spoken to him by telephone was when the children had asked her to call him or he had telephoned from Hong Kong or elsewhere to speak with the children. The only time she had seen him since August 1999 was when she visited Hong Kong in December 2000 on occasions when he called to pick up and return the children. Ms Chan first became aware that her former husband had a criminal conviction some time after August 2000. She said that up until that time, she had no idea he had a criminal record. An organisation of people with a common purpose 2. The act of associating 3. Companionship or partnership 4. Connection or combination 5. The word "association" in the present context encompasses persons associated, connected or combined with a common purpose, or having a community of ideas, where one of the associates is reasonably suspected of having been, or being, involved in criminal conduct. The reasonably believed association, connection, combination, community of ideas of the one must then have a nexus with the reasonably believed involvement of the other, in criminal conduct. It is necessary for there to be a reasonable belief in the existence of the nexus. This in the context of section 501(6) of the Act. The Tribunal accepts the evidence of the Applicant that there was not a resumption of cohabitation. It was submitted on the basis of the above facts that, if a person has family ties to a person who is connected to a group or organisation that is involved in criminal activities, then the person having the family tie will not pass the character test. It is the opinion of the Tribunal that this is not a correct statement of the law. The existence or otherwise of the association will depend upon the particular circumstances of each case and whether or not the connection, combination, community of ideas, common purpose directly, or indirectly, results in establishing a criminal association. 37. The Tribunal is satisfied in the present matter that the Applicant is not one who may reasonably be suspected of not passing the character test. The Tribunal is not satisfied that the Applicant has or has had a relevant association with her ex-husband Mr Wong, who may reasonably be suspected of having been, or being, involved in criminal conduct. 174 On the appeal, Ms Chan did not appear. Emmett J summarised the Minister's contention as to the existence of an association between Mrs Chan and her husband, which have been earlier set out. However, I do not consider that the language of s501(6)(b) justifies such a limitation . There is nothing in the paragraph itself to limit the association in that way. Rather the scheme of the provision is to confer upon the Minister a discretion under s 501(2) to cancel a visa if certain prerequisites are satisfied. The first prerequisite is that the Minister reasonably suspects that the person does not pass the character test and the second is that the person does not satisfy the Minister that the person passes the character test. [8] Even if those prerequisites are satisfied, the words "the Minister may cancel a visa" (emphasis added) indicate that there is still a discretion to be exercised by the Minister or his delegate as to whether or not to cancel a visa. There may be good reasons why, in a particular case, notwithstanding that the prerequisites are satisfied, the Minister may in the exercise of his discretion decide not to cancel a visa. For example, it may be that there is no nexus between the criminal conduct of the person with whom the visa holder had an association and the visa holder , as was found to be the case in relation to Mrs Chan. [9] It may be a relevant consideration that the visa holder had no knowledge of the criminal conduct of the other person . It may be a relevant consideration that the visa holder did not knowingly take a benefit from the proceeds of the associate's criminal conduct . Those matters , however, are matters for consideration upon the exercise of the discretion if the discretion arises. They are not matters to be taken into account in determining whether or not the discretion arises , namely, whether or not the person has had an association with someone else whom the Minister reasonably suspects has been involved in criminal conduct. [10] It may be significant that s 501 was relevantly amended with effect from June 1999. Prior to 1 June, 1999, the Minister had power to refuse to grant a visa or to cancel a visa, "if ... the Minister ... is satisfied that the person is not of good character because of the person's association with another person ... who the Minister has reasonable grounds to believe has been or is involved in criminal conduct". In that form, the Minister was required to make a judgment as to whether or not the visa holder was not of good character because of the association with the person involved in criminal conduct. [11] The effect of the amendment was to remove any question of whether the Minister is satisfied as to the good character of a visa holder. The provisions in their present form merely require that the Minister be satisfied that the person does not pass the character test. The character test requires a more mechanical exercise, namely, whether or not for present purposes, the person has satisfies any of the four criteria set out in s 501(6)(a)-(d). [12] The change in the legislation confirms the construction that I consider is the proper construction of the words contained in the paragraph. It follows in my view that the Tribunal erred in law. Accordingly, the decision should be set aside and the matter should be remitted to the Tribunal for decision according to law. (Emphasis added). He clearly held that an association by way of family ties was of itself sufficient to ground the necessary "association". That view suggests that any association, whether innocent or sinister, whether fleeting or regular, whether in the distant past or contemporary, is sufficient to enliven the discretion to cancel. 176 In my opinion, that is the test which the Minister applied, that is the test which the Solicitor-General on behalf of the Minister says the Minister applied, and further, that is the test which the Solicitor-General on behalf of the Minister contends is the correct test. 177 In my respectful opinion, Chan was wrongly decided. 178 On its proper construction, the composite phrase "has an association with someone else, or with a group or organisation, who the Minister reasonably suspects has been, or is involved, in criminal conduct" is not properly to be interpreted by considering separately whether there is an association between the visa holder and a person or group, and then consider as a separate matter, whether the Minister reasonably suspects that the person or group is or has been engaged in criminal activity. 179 The proper connotation of the phrase has to be ascertained from the context in which it appears; the object and purpose of the statute in which the provision is found; the legislative history of the matter; and a consideration of the consequences of adopting the competing interpretations. 180 All of these considerations lead me to conclude that the test in Chan that all the test requires is "an association", is erroneous. 181 The meaning of the phrase given by Deputy President Purvis QC in Chan in the Administrative Appeals Tribunal and the dicta of Lee J in Godley at paragraph [47] better meets those considerations, and, in my view, correctly reflect the true meaning of s 501(6)(b). 182 In a case factually quite different from the present, and involving quite a different statutory regime, namely the Copyright Act 1968 (Cth) (the Copyright Act ) the High Court was concerned with the application of provisions of the Copyright Act , particularly the phrase "a work of artistic craftsmanship" which appears in the definition of "artistic work" in s 10 and in s 77(1) of the Copyright Act : Burge v Swarbrick [2007] HCA 17 ; (2007) 234 ALR 204. The case was concerned with the Copyright Act in its form before amendment by the Designs (Consequential Amendments) Act 2003 (Cth). 183 Its relevance for the present case is for the guidance it gives as to the proper approach of statutory construction of a composite phrase. 185 The "association test" is one of four criteria by which a person does not pass the character test. It is relevant that the other three are (a) if the person has a substantial criminal record; (c) if, having regard to either or both of the person's past and present criminal conduct, or the person's past and present general conduct, the person is not of good character; or (d) the presence of the person in Australia would involve a significant risk that the person would engage in criminal conduct or act in the other reprehensible ways specified in s 501(6)(d)(ii)-(v). 186 Each of (a), (c) and (d) requires the decision maker to look at the person (ie, the visa holder); each of them requires an assessment of qualities personal to them, which qualities, parliament has said, determine that that person fails the character test. 187 In that context, it would be striking if the criterion in (b), which this case is concerned, could be met by an or any association with a person, group or organisation reasonably suspected of having been or is involved in criminal conduct. Such an association could be a completely innocent, and involve not the slightest reflection on that person's character. The association could be of the most transient kind, could be not only innocent but historically ancient. 188 Having regard to the context, it seems to me impossible to conclude that Parliament would have intended that a person fail the character test where relationship of a visa holder with a person, group or organisation was utterly remote from the criminality that person, group or organisation. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos , Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. In The Commonwealth v Baume Griffith CJ cited R v Berchet to support the proposition that it was "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". Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. An organisation of people with a common purpose and having a formal structure. 2. the act of associating. 3. the state of being associated. 4. companionship or intimacy. 5. connection or combination. ; 6. the connection of ideas in thought, or an idea connected with or suggested by a subject of thought. 2. to join as a companion, partner, or ally. 3. to unite; combine: coal associated with shale. --- verb (i) 4. to enter into a league or union; unite. 5. to keep company, as a friend or intimate; to associate only with wealthy people. --- noun 6. a partner in interest, as in business or in an enterprise or action. 7. a companion or comrade: my most intimate associates. 8. a confederate; an accomplice; an ally. The words used are not "is or was an associate of". This consideration tends, in my view, to support the connotation of the necessary relationship as the "state of being associated with", so that the feature of involvement in criminal activity of the person or group is not divorced from the existence of relationship. 193 The relevant connotation of "association" in my view, is reflected in the words of explanation in paragraph 1.5 of Direction 21 --- "link" or "alliance". So too, the notion of "association" as comprehending a "combination". 194 That there is necessarily some nexus or connection between the relationship and the criminal activity is reinforced by the repeated use of the phrase "criminal association", in the extrinsic material and in paragraph 1.5 of Direction 21 itself. 195 Many examples can be given of circumstances in which an innocent association would, on the interpretation for which the Minister contends, result in a person being unable to satisfy the respondent that he or she passes the character test. Mere familial interaction, mere social interaction, mere involvement by the provision of professional services, the battered wife scenario, would all result in the person not passing the character test, on the test for which the Minister contends. 196 Emmett J opined in Chan that the innocence of the association would be a relevant consideration in the exercise of the Minister's discretion. However, the Act does not confer any opportunity to be heard on how the discretion should be exercised, either prospectively or retrospectively, after the decision to cancel: cf s 501C(4). There is no opportunity for a person to make representations as to the exercise of discretion about cancellation, or as to the circumstances whether cancellation was or was not in the national interest. The only opportunity afforded by s 501C(4) is to seek to establish that the person passes the character test. That opportunity is empty, and is doomed to fail if, by definition, totally innocent associations mean that the person does not pass the character test. 197 Section s 501C(4) provides that a person whose visa has been cancelled can make representations to the Minister and the Minister may revoke the original decision if the person satisfies the Minister that the person passes the character test, as defined by s 501. 198 The decision under s 501(3) to cancel a visa is made without any obligation to accord natural justice to the visa holder. The opportunity conferred by s 501C(4) is not to make representations to the Minister concerning whether to exercise the discretion to cancel the visa, nor whether the cancellation is in the national interest. That opportunity is only in respect of the element of whether the person can satisfy the Minister that the person passes the character test. 199 If a person were to fail the association test in s 501(6)(b) by a merely innocent association, then there would be no utility in conferring opportunity on that person to be heard on the jurisdictional fact on which the cancellation decision was made. This is to be contrasted with the opportunity under s 501C(4) to correct reliance on s 501(6)(a), (b) or (d). 200 Section 501C(4) is directed to giving the person whose visa has been cancelled, based on a failure to pass the character test in s 501(6)(b), the opportunity to demonstrate that the basis for that failure, and therefore the basis for the cancellation is erroneous. If innocent association was sufficient to ground failure of the character test, the scope of s 501C(4) would have no work to do in that circumstance. 201 The observations of the High Court in Project Blue Sky at [71] in the judgment earlier set out have direct application to this consideration. 202 Counsel for the Minister said that the character test, which a person does not pass if the person has or has an association with a person or group or organisation that the Minister reasonably suspects has been or is involved in criminal conduct, does not involve any question about the character of the person being assessed. 203 Mr Bennett submitted that the words "the character test" are not words to be read as having a meaning. He says that those words are "just a convenient definition". He submitted, "one does not read character test and say, 'oh, well, this is about character; that means something about character'. Of course it doesn't. So what is being looked at there is whether the association leads one to the conclusion that the person is not of good character. Now, my learned friend says, when one looks at the new version of the Act, that it does the same thing. We submit it doesn't. Now, the phrase, "the character test", my friend uses to get in the same sort of requirements, but, of course, those words are nothing more than a statutory definition. They're not words to be read as having a meaning. They're just a convenient definition. One does read "character test" and say, oh, well, "This is about character. That means something about character. " Of course it doesn't. It's just a statutory definition and, being just a statutory definition, which then fits into other parts of the section, the requirement simply is that the person has --- well, has had --- an association of the relevant kind. Why does one then look at (a), (b) --- (a), (c) and (d), including (c)(ii) --- (c)(1), (c)(ii), (d)(i), (d)(ii), (d)(iii), (d)(iv), (d)(v), all of which separate integers reflect poorly on the character of the person the subject of pass or failure of the character, when (b) alone doesn't? 209 A professional association, whether as a doctor, lawyer, social worker, or teacher, would be within the respondent's construction of the association test. A mere familial or social association would be enough. So much is implicit in Emmet J's rejection of the view of the Tribunal that the association by way of family ties, summarised by Emmett J in [7] of his reasons, was sufficient to ground the relevant association. 210 The primary submission for the Minister is that "if the visa holder has an association, the threshold test is satisfied. This connotation would also not involve any type of relationship which would or might reflect adversely on the character of the person. It would, however, exclude those who had a professional or commercial relationship from being within s 501(6)(b). 215 There is a further example to which reference may be made in attempting to elucidate the correct or proper interpretation of s 501(6)(b). This provides that a person does not pass the character test if they have or have had an association with someone else, or with a group or organisation, whom the Minister reasonably suspects has been or is involved in criminal activity. It also pointed out that, on the basis of the provision, "Galileo, Ghandi and Mandela would all fail the character test". It is not inconceivable that victims of crime will be tarred with the same brush as the perpetrator simply because the perpetrator is someone close to them. However, this was in the context of an onus on the Department to show bad character. I do not think that necessarily means that a family member is damned by the family member's association with that organisation. 219 It is necessary to say something about the raising of hypothetical examples in an attempt to elucidate the proper construction of the phrase in s 501(6) of the Migration Act . 220 When this matter was first before the Federal Court for directions, the nature of the association required was referred to, and whether that an association based on family relationship, with a number of communications between the relatives was within the paragraph. Mr Roger Derrington SC, who appeared on behalf of the Minister on that occasion, said that the relevant association was an association with people suspected of being involved in criminal activities. 221 I raised the suggestion that I had been associated with persons involved in criminal activity, in that I had defended persons charged with murder. Mr Derrington said that my right to remain in the country rests on Australian citizenship; Dr Haneef's rests on his entitlement as a visa holder. I indicated that I would not pass the character test "on your statement", because I was a person who had an association with someone else whom the Minister would reasonably suspect had been involved in criminal conduct. Mr Derrington said "Quite. Even if it were to be so, it would be sufficient, because the purpose of the migration legislation, as it says in the legislation, is to protect the national interest. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly , Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of " the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case ". Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them. To facilitate this object, the Minister has been given a discretion to ... cancel a visa where ... the visa holder does not pass the Character Test. In exercising this power, the Minister has a responsibility to the Parliament and to the Australian community to protect the community from criminal or other reprehensible conduct and to ... cancel visas held by non-citizens whose actions are so abhorrent to the community that they should not be allowed to ... remain within it. (Emphases added). Paragraph 1.5 of Direction 21 makes it plain that actual membership of a group or body that is involved in criminal activities is not required, and there is then specified that relevant factors are the degree and frequency of association, the duration of the association, and the nature of the association. 229 It is necessary to construe s 501(6)(b) having regard to the context in which it appears. It is necessary to pay particular regard to the fact it is defined to be one criterion on which a visa applicant or holder fails the character test. Its meaning has to be derived having regard to the other criteria having that consequence, namely s 501(6)(a), s 501(6)(c) and s 501(6)(d). 230 I reject the submission by the Solicitor-General for the Minister that the "character test" which a person does not pass if the person has or has had an association with a person or group or organization that the Minister reasonably suspects has been or is involved in criminal conduct, does not involve any question about the character of the person. In my opinion 501(6)(b) is a composite phrase and has to be construed as such. In my opinion it has the connotation that there is an alliance or link or combination between the visa holder with the persons engaged in criminal activity. That alliance, link, or combination reflects adversely on the character of the visa holder. Such a meaning would exclude professional relationships, or those which are merely social or familial. It would exclude the victim of domestic violence. Persons will be undesirable if they fail to pass the character test. Shortly put, persons who have committed or are likely to commit criminal or other like conduct should not be permitted to travel to or remain in Australia. Because the purpose is to exclude those persons, the matters that are relevant to the exercise of the Minister's discretion will include any fact or circumstance which would suggest that a person of otherwise bad character (as it is defined in the Act) should be allowed to travel to or remain in Australia. 233 However, the submissions by the Minister attribute to the applicant a desire to introduce limitations, which in fact the applicant does not seek to do. The Minister's submissions assert that the section does not say that the visa holder need be a member of a group or organisation, nor a participant in criminal activity, nor does the section say that the association of the visa holder with the person, group, or organisation, need be an ideological or criminal association, or an association by which the visa holder or applicant would benefit from the criminal activity. Moreover, the section does not say that the circumstances identified have to be such as to reflect adversely on the character of the visa holder or applicant. All of this may be accepted. 234 The submissions for the applicant do not speak of any such necessity. The submission is simply that, by orthodox methods of construction, and particularly having regard to the context in which the association test is to be found, and its purpose, the Chan test namely, that any association, however innocent, is sufficient, is wrong. That was the test which the Minister applied, and which the Solicitor-General has sought to defend, with the consequence that the Minister has applied the wrong test. That being so, jurisdictional error underpins the exercise of the discretion to cancel the visa. 235 To counter the difficulties suggested that would flow from a consequence of the Chan interpretation of the character test, it was submitted for the Minister that if the association was purely innocent, then that would be taken into account as a factor in whether the Minister would exercise the discretion conferred by s 501(3). Emmett J advanced that possibility in Chan. It ignores that criterion (b) follows criterion (a), and precedes (c) and (d), and that its meaning has to have regard to that context. It ignores the significance of s 501C(4). And it strips the words "the character test" of any meaning. 236 I have already noted the Majority Report of the Senate Legal and Constitutional Legislation Committee in its consideration of the Migration Legislation Amendment (Strengthening of Provisions Relating to Character and Conduct) Bill , rejected the idea that a construction of par (b) would have the effect that women, who had suffered domestic violence, might be regarded as not passing the character test because of their association with violent partners. 237 It seems to me that a woman who has suffered domestic violence by her partner would fall within the test of s 501(6)(b) that the Minister propounds: she has an association with a person reasonably suspected of criminal activity. 238 Further, if the discretion to cancel a visa holder's visa were to be enlivened on the basis of a perfectly innocent association with a person who had engaged in criminal activity, the position is not much different from the exercise of a power conditioned on the circumstance that a person had red hair, in the celebrated example of Warrington LJ in Short v Poole Corporation [1926] Ch 66. 239 It is no answer to this criticism of the Chan test that the Minister's power, if conditioned on such a premise, could be expected to be exercised only in those circumstances where the Minister thought it appropriate to exercise the power. The exercise of a power conditioned on such an consideration would be an exercise of power alien to the object of the purposes of the Migration Act . The provision should be read so as to accord with the object and purpose of the statute. A wider construction, which goes beyond that object, is not to be adopted on the basis that the Minister will confine the exercise of his powers to only those instances within the wider construction which are consistent with the object and purpose of the statute. 242 Emmett J in Chan placed some reliance on the amendments to s 501 brought about by that Amending 1998 Act in reaching the "any association is sufficient" view. 245 Section 501(2) provided that the Minister had a discretion to refuse or cancel a visa if, relevantly, the Minister was satisfied that the person is not of good character because of the person's association with another person, or a group or organisation, who or that the Minister has reasonable grounds to believe has been or is involved with criminal conduct. 246 The change introduced in 1999 in my opinion did not have the effect of removing the relevance of the impact on a person's character to be derived from a consideration of the association of that person with persons who engage in criminal conduct. What the legislative amendments did do is reverse the onus. The previous terms of s 501 conditioned the grant or cancellation of a visa on a satisfaction in the Minister that the person is not of good character because of the person's association with those who were believed on reasonable grounds to have been involved in criminal conduct. 247 Section 501, as amended, has effect if the Minister reasonably suspects that a person fails the character test, and a person fails the character test if there is an association of the visa holder with that other person or group. The change in the section did not alter the quality or nature of the association required. 248 The Second Reading speech gives no comfort to the suggestion that reflection on the good character on the visa holder was done away with by the changes introduced by the Bill. Quite the contrary. For these steps to be effective, however, they must be complemented by legislative provisions to ensure that non-citizens with criminal backgrounds or criminal associations can be refused a visa . The provisions must also enable the government to remove those non-citizens who are detained following convictions for crimes committed in Australia. Experience over recent years has shown that the existing legislative provisions are inadequate for this task. This is despite the fact that they were amended as recently as 1992 with the express purpose of improving the government's ability to deal with the visa applicants and visa holders with substantial criminal backgrounds. Secondly, in exceptional or emergency circumstances, by giving the Minister acting personally powers to act decisively on matters of visa refusal, cancellation, and removal of non-citizens; and thirdly, giving information effective protection, so that Australian and international law enforcement agencies can be confident about passing information to immigration decision makers. Under this test, the onus will be on visa applicants and visa holders to satisfy decision makers that they can pass the test. This will redress a significant deficiency in the legislation arising from the changes made in 1992. Since that time, decision makers have been required to establish that a person is not of good character before they could refuse a visa to an applicant or cancel a visa. This has meant that, whenever there has been doubt about the criminal background or criminal associations of a non-citizen , the doubt has been resolved in the non-citizen's favour . I understand that this was not the intention of the 1992 amendments. This bill takes us back to the situation that existed before 1992 by placing the onus of proof on the visa applicant to demonstrate that he or she is of good character. This means that, where there are real doubts about the criminal background or criminal associations of a visa applicant or visa holder , the objective of protecting the Australian community will take precedence in immigration decision making. (Emphasis added). (Emphasis added). The Minister said that "this was not the intention of the 1992 amendments. " The Minister said that the position after the amendments was: "where there are real doubts about the criminal background or criminal associations the objective of protecting the Australian community will take precedence in immigration decision making. " (Emphasis added). 252 The Minister's comments do not suggest that the amendment of s 501(6)(b) was intended to catch merely innocent associations. The repeated references to "criminal associations" suggests that it was associations having a sinister connotation for the character of the visa holder that the provision was being aimed at. The reference by the Minister to placing the onus of proof on the visa applicant to "demonstrate that he or she is of good character" confirms that the character test was concerned with whether the Minister had a reasonable suspicion that the visa holder is not of good character. 253 The Minister's statement in the Second Reading speech would have no meaning if innocent or merely familial associations were sufficient to satisfy the test. 254 For the above reasons, in my opinion, the Minister misconstrued the expression "has or has had an association with someone else, or with a group or organisation, who the Minister reasonably suspects has been or is involved in criminal conduct" in s 501(6)(b) as including an association which does not reflect adversely upon the character of the visa holder. 255 He did this, as the submissions by the Solicitor-General corroborate, on the basis that the decision of this Court in Chan was correct, and that a relationship which evinced no suggestion of knowledge of, or suspicion of, or any hint of involvement in, criminal activity was nonetheless within the paragraph. 256 In my opinion, Chan was wrongly decided, and the test which the Minister applied was not the test called for by s 501(6)(b). 257 As the result of this misconception as to what the exercise of the statutory power entailed, there was a purported, but not a real exercise of the power conferred by s 501(3). 258 As a consequence, the decision is a nullity and s 474 does not apply. 259 It follows that there ought to be an order in the nature of certiorari quashing the respondent's decision made on 16 July 2007 to cancel the applicant's Subclass 457 Business (Long Stay) (Class UC) visa, and also an order in the nature of prohibition and/or injunction restraining the respondent from acting upon the cancellation of the applicant's visa. 260 The above finding is sufficient to dispose of this application. 261 I should however say that there was, on the material that was before the Minister, and of which is also before the Court, that had the Minister applied the correct test for which s 501(6)(b) calls, it would have been open to the Minister to cancel Dr Haneef's visa. 262 It seems to me that in addition to the circumstances of connection to the Ahmed brothers on which the Solicitor-General has argued the Minister was entitled to conclude that there was the relevant association, there are other factors, two in particular, which would take the case into one where it was open to the Minister to have a reasonable suspicion that there was the requisite association. 263 The first is the information contained in annex 2 of the materials that was before the Minister, namely, that the United Kingdom Metropolitan Police Service Counter Terrorism Command had advised the Australian Federal Police that Dr Haneef was a person of interest to their investigation through his association with two of the UK suspects. The fact that Dr Haneef was a person of interest to the Counter Terrorism Command persons investigating the terrorist events bears on the nature of the association between Dr Haneef and the two UK terrorists. 264 The second is that on 14 July 2007, Dr Haneef had been charged with intentionally providing resources to a terrorist organisation consisting of persons including the Ahmed brothers, being reckless as to whether the organisation was a terrorist organisation, contrary to s 102.7 of the Criminal Code (Cth). 265 The fact that the Australian Federal Police and/or the Director of Public Prosecutions had laid that charge is a factor relevant to the nature of the association between Dr Haneef and the Ahmed brothers. The factors of association on which the Minister did rely (see [139] above) together with the two matters set out above would have entitled the Minister to conclude that the association between Dr Haneef and the Ahmed brothers was of the kind for which s 501(6)(b) calls. 266 The legality of the decision to cancel a person's visa depends on the circumstances as they exist to the knowledge of the decision maker at the time of making the decision, and the tests applied at that time by the decision maker. 267 It is not to the point that the circumstances may change at a later time. That occurred in this case, where the Director of Public Prosecutions offered no evidence in respect of the charge against Dr Haneef pursuant to s 102.7 of the Criminal Code Act (Cth). The Minister is not bound to take a particular matter into account in the exercise of that discretion unless an implication to that effect is to be found in the subject matter, scope, and purpose of the statute: Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 40 (per Mason J, as his Honour then was). Failure to take into account a particular consideration cannot constitute jurisdictional error unless the consideration is one which, on the proper construction of the Act, is made compulsorily relevant: Paul v Minister for Immigration and Multicultural Affairs [2001] FCA 1196 ; (2001) 113 FCR 396 at 423 . 271 The nature and extent of the "association" is relevant to whether the test in s 501(6)(b) is made out. If that test is met, the Minister is not required by the Act to consider it in the exercise of his discretion under s 501(3). The respondent acknowledged that the applicant had been charged with the offence, but that the defence had not been proved. The significance of the fact that Dr Haneef had been charged with a serious offence of intentionally supporting a terrorist organisation lay not in whether that charge was strong or weak, but with the fact that the Australian Federal Police and/or the Director of Public Prosecutions were at the time the decision to cancel Dr Haneef's visa was made, of the view that there was evidence sufficient to charge Dr Haneef with that offence. 273 It is not to the point that at a later time, after the decision to cancel the visa had been made, the Director of Public Prosecutions offered no evidence in relation to the charge, and it was dismissed. This consideration again is one which the respondent Minister was not obliged to take into account. There is nothing on the proper construction of the Act which makes this consideration "compulsorily relevant". I note that the Australian Government has a strong interest in deterring non-citizens from providing support to terrorist organisations/networks. 277 Faulty or illogical reasoning does not amount to jurisdictional error. Where the purpose of a decision has to be ascertained by inference from other facts, there is a presumption of regularity: Industrial Equity Limited v Deputy Commissioner of Taxation [1990] HCA 46 ; (1990) 170 CLR 649 at 671 per Gaudron J. 279 Gaudron J dissented on the question of whether a notice to produce documents made as the result of a random selection of the top hundred companies, was within the purposes of the Income Tax Assessment Act 1936 (Cth). That is, removal must be the purpose for which the power is exercised. 283 Secondly, if, at the time power to cancel a visa is exercised, the decision maker does not have the purpose of removal as soon as is reasonably practicable, the exercise of the power is invalid. 284 Thirdly, detention by and of itself cannot be a valid purpose for exercising the power to cancel a visa contained in s 501 of the Migration Act . Detention under s 189 must be for the purpose of removal from Australia. 285 Fourthly, when the Minister made the cancellation decision on 16 July 2007, the Court can infer that he did not have the purpose of removing the applicant from Australia as soon as is reasonably practicable. (Emphasis added). 286 The consequence, it is submitted, is that the Minister's exercise of the power contained in s 501 was invalid and of no effect. 287 If a discretionary statutory power is exercised for a purpose other than the purpose for which the power was conferred, the exercise of that power is invalid. The purpose for the grant of a power is to be derived from the statute conferring it. If there is a combination of purposes actuating the exercise of the discretionary power, the exercise will be invalid if an improper purpose was the "substantial" or the "true and dominant" purpose of the exercise of the power: Thompson v The Council of Municipality of the Randwick [1950] HCA 33 ; (1950) 81 CLR 87 at [186] ; Samrein v Metropolitan Water, Sewerage and Drainage Board (1982) 41 ALR 467 at [7]-[8]. 288 Thus in Schlieske v Minister for Immigration and Ethnic Affairs (1988) 84 ALR 719, the Full Court of the Federal Court (Fox, Wilcox and French JJ) held that where a particular deportee was wanted by authorities in West Germany, of which he was a national, Australian authorities were entitled to do everything necessary for the enforcement of a deportation order under the Act, but were not entitled to go beyond that. In particular, the Court held that to deport a person to a particular country for the purpose of presenting a person to the law enforcement authorities of that country is outside the purposes of the Migration Act . But they are not entitled to go beyond that, and in purported exercise of powers under that Act, to take steps whose only purpose is the bringing to justice of the deportee in a foreign country. At that stage the Australian authorities would not be exercising deportation powers; they would be involved in an unlawful extradition. 291 The decision of the Full Court upheld the decision of Davies J at first instance, to declare the deportation orders a nullity and set them aside. The matter went to the High Court, but only on the question of whether the Full Court had been correct in upholding the refusal of Davies J to make a declaration of unlawfulness. It was on this basis that the decision of the Full Court of the Federal Court was reversed. 292 In the High Court, Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 88 ALR 517, (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) referred to the findings of Davies J, confirmed by the Full Court, that more of the deportation orders had been made by the delegate of the Minister for the legitimate purpose of giving effect to a decision that a prohibited non-citizen should be deported as soon as appropriate arrangements for that deportation could be made, and that each had been made for the impermissible purpose of detaining the particular appellant in custody so that his evidence would be available in the criminal proceedings, and the conclusion of Davies J that the deportations were all intrinsically flawed. Thereafter, the person to whom the visa is issued is an unlawful non-citizen, in the terms of sections 14 and 15 of the Migration Act , is liable to detention under s 189 of the Migration Act , and for removal from Australia under s 198 of the Migration Act . 295 As a consequence of s 501E , no further application for the grant of a visa can be made by the person whose visa has been cancelled. The only exception, pursuant to s 501E(2)(a) , is an application for a protection visa. Because the person cannot, after cancellation, obtain a visa, that person's status has been determined for all time. That person is an unlawful non-citizen liable to detention and removal from Australia. 296 I think it may be accepted that the power in s 501 can only be validly invoked if the purpose of the exercise of the power is, relevantly, to achieve a person's removal from Australia as soon as is reasonably practicable. 297 True it is that the Minister's decision was made immediately after the applicant had been granted conditional bail by the Brisbane Magistrates Court, and that the effect of cancellation of his visa meant that he would be detained in immigration detention, and would not be free to move about the community on bail. Paragraph 43 of the Minute by Mr White to the Minister suggests that the Minister was not given the Minute until after the applicant had been granted bail by the Brisbane Magistrates Court. 298 The Minister's press statement earlier set out indicates that either before, at the time of, or shortly after his decision to cancel the applicant's visa, the Minister expected that a Criminal Justice Stay Certificate would be issued by the Attorney-General. The consequence of that certificate is specified by the Migration Act , in particular, s 150. Where there is a Criminal Justice Stay Certificate in force, the non-citizen is not to be removed or deported. 299 The consequences of the cancellation of the applicant's visa, and the issuing of a Criminal Justice Certificate by the Attorney-General are consequences which are dictated by the Act. 300 I am not prepared to infer that the Minister, at the time of making the decision to cancel the visa, did not have the purpose to secure the removal from Australia of Dr Haneef as soon as was reasonably practicable. 301 The reasonable practicability of removal is influenced by, and in fact dictated by the issue a Criminal Justice Stay Certificate. The fact that the Minister was aware of the possible issue of such a certificate at the time he made the decision to cancel the visa does not, in my opinion, establish that he did not have the required purpose of removing the applicant from Australia "as soon as was reasonably practicable". 302 The circumstances in the present case are significantly different from those in Park v Oh Ho , as is the applicable statutory scheme. 303 In that case, no consideration was given to the provisions of Part 2 Division 4 of the Migration Act as it presently stands, which deals with Criminal Justice Stay Certificates. The reason was that no such certificate had been issued in that case. Further, none of the appellants in that case were charged with any offence, and otherwise apparently did not meet the requirements for the issue of a Criminal Justice Stay Certificate pursuant to the Act, as it then stood. 304 It seems to me that the fact that immigration detention was a likely consequence of the visa cancellation does not indicate that that was part of the Minister's purpose. The obligation to detain was a consequence of the Migration Act , a consequence of which I am sure the Minister was well aware. More importantly, in my opinion, the fact that the Minister was aware of the consequences of his cancellation decision did not mean that he did not have the intention to remove the applicant from Australia "as soon as was reasonably practicable". 305 In essence, the contention on the applicant's behalf as to improper purpose seems to be that the decision to cancel the visa is void ab initio because it was made for the purpose of preventing the release of the applicant from detention, and was made only colourably for the purpose of deportation. 306 The provisions of s 150 of the Act, which provides that if a Criminal Justice Stay Certificate about a non-citizen is in force, the non-citizen is not to be removed or deported, and s 162, which deals with cancellation of that certificate, are part of the legislative scheme, dealing with the timing of when a person might be removed from Australia, and impact on that timing. 307 A visa is simply a permission to enter or remain in Australia. The decision to cancel a person's visa pursuant to s 501 is the cancellation of that permission. The powers to deport in ss 200 and 201 are different powers from the power to cancel a person's visa in s 501. 308 The timing of the departure of a person whose visa is cancelled pursuant to s 501, and whether it eventuates at all, will depend upon the particular circumstances of the case, and the operation of the other provisions of the Act, in particular, s 198 and the provisions of Part 2 of Division 4, including s 150. 309 It is relevant to note that although the Minister was aware at the time he made the decision to cancel the applicant's visa that he had been charged with a serious criminal offence, it was not the role of the Minister to decide whether or not the applicant should remain in Australia to stand trial for that Commonwealth offence. 310 It is the Attorney-General who has the role and function of issuing a Criminal Justice Stay Certificate. He chose to do so on 17 July 2007, the day following the cancellation of the applicant's visa. 311 On the material before me there is no proper basis for any inference that when the Minister made the decision to cancel the applicant's visa, the Minister did not intend to remove the applicant from Australia "as soon as reasonably practicable". 312 There is one final matter to which reference must be made in respect of the ground of improper purpose. 313 It was submitted for the applicant that a Jones v Dunkel inference can be drawn against the Minister as to his purpose, from the circumstance that he did not give evidence in these proceedings. 314 Whether such an inference can be drawn in the circumstances where a Minister of the Crown has not given evidence was the subject of separate observations by Kirby J and Callinan J in Minister for Immigration and Multicultural Affairs v Jia [2001] HCA 17 ; (2001) 205 CLR 507. 315 Before that decision, there was commentary in the textbooks and in the authorities supporting the view that the rule did, in fact, apply to Ministers. [ Lebanese Moslem Association v Minister for Immigration and Ethnic Affairs (1986) 11 FCR 543 at 548. This was despite the fact that Senior Counsel to the respondent Minister argued, so Pincus J said, "with some cogency that performance of his ministerial duties would be impractical if he were to spend substantial amounts of time in courts being cross-examined about his decisions. See also Citibank Ltd v Federal Commissioner of Taxation & Others (1988) 83 ALR 144 at 159, where Lockhart J notes that if the inference is capable of applying to Ministers and senior corporate executives, then it is capable of applying to senior public servants (citing to Lebanese Moslem Association, Cross on Evidence, and Electronics Industries Ltd v Mayor of City of Oakleigh [1973] VR 177 at 189). 319 In Minister for Immigration and Multicultural Affairs v Jia , Kirby J and Callinan J, in separate opinions, observed that the rule in Jones v Dunkel may not apply in the same way to Ministers as it does to others. Although Ministers, whilst holding office, are not immune in this country from giving evidence before courts, a court would not ordinarily hasten to draw an inference that the Minister had deliberately refrained from giving oral evidence because of a concern that the impugned decision would be revealed as affected by bias or that the Minister would be forced to make concessions damaging to the Minister's case. Ministers have to perform highly complex and onerous functions. They carry heavy burdens that severely limit the time available for them to give evidence in individual cases. In Mr Jia's case, the Minister might have considered it sufficient to rely on the record as, in the opinion of the majority of this Court, it is held to be. Applying the test of whether the parties, or the public, might entertain a reasonable apprehension that the Minister might have been biased, I do not believe that the principle expressed in Jones v Dunkel , that an adverse inference may sometimes be drawn from a failure to give evidence, should loom large in evaluating appearances in the applications brought to this Court by Mr Jia and Mr White. But on any view it cannot be applied in any unqualified way to a modern Minister of State, and not just for the reasons that Pincus J described as cogent. Considerations of public interest immunity may loom large in some cases. A Minister is a policymaker and policy advocate as well as a decision-maker. Further, the statement of principle in Jones v Dunkel is no more than a particular instance of the old rule stated by Lord Mansfield in Blatch v Archer and cited recently by this Court in Vetter v Lake Macquarie City Council , that evidence has to be weighed according to the circumstances of, as well as the capacity of, a party to adduce it. Sackville J had concluded, at [71], that assuming the rule applied, it would not assist the applicant. 324 Given the rule in Jones v Dunkel is one of the "commonsense reasoning" and one which allows parties to satisfactorily explain their failure to call a witness ( Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 at 342), there can be no per se rule that a Jones v Dunkel inference is not available where a Minister does not testify. 325 However, in most, if not all, cases, because of the factors expressed by Pincus J, and also Kirby J and Callinan J in the passages set out above, the absence of a Minister giving evidence in the for the witness box will be easily understood. 326 There is, nonetheless, a certain piquancy in the present case, in that the Minister has chosen to give a selected part of what is said to be protected information to the public by way of press release, but has not sought to divulge to the Court any part of the protected information under s 503A(3) of the Act. 327 The Minister is, in a sense, presenting one case in the public arena, a case the accuracy of which cannot be challenged in any meaningful way, and a smaller and not the same case in the Court, in a way which does not permit explanation or challenge by way of cross-examination. 328 Since this case can and indeed must be determined on the material that is before the Court, and since on that material it has not been shown that the Minister cancelled the applicant's visa for an improper purpose, it is unnecessary to consider whether the principle of Jones v Dunkel has any application in this case. An order in the nature of certiorari quashing the respondent's decision made on 16 July 2007 to cancel the applicant's Subclass 457 Business (Long Stay) (Class UC) visa. 2. An order in the nature of a prohibition and/or an injunction restraining the respondent from acting upon the cancellation of the applicant's visa. I have concluded that the purported cancellation of Dr Haneef's visa was invalid. It is therefore appropriate to make the declaration sought. That the respondent pay the applicant's costs of and incidental to the proceedings, to be taxed if not agreed. | section 501 migration act power of minister to cancel visa where migration act grants a discretion to cancel visa if a) minister reasonably suspects visa holder does not pass character test and b) cancellation is in the national interest where migration act provides character test not passed if visa holder has or has had an association with someone else, or with a group or organisation whom the minister reasonably suspects has been or is involved in criminal conduct where minister cancelled applicant's visa where applicant sought review of decision pursuant to s 476a migration act commonwealth constitution where jurisdiction of the same kind exercisable by the high court under s 75(v) invested in the federal court by s 476a migration act where applicant seeks constitutional writs whether minister acted ultra vires by misconstruing 'association', failing to take into account relevant considerations, taking irrelevant considerations into account or acting for an improper purpose whether applicant has or has had an 'association' with those involved in criminal conduct meaning of 'association' in s 501(6)(b) migration act where 'association' not met by any association with a person, group or organisation where minister asked the wrong question and applied the wrong test to determine 'association' where minister did not otherwise take irrelevant considerations into account or fail to take account of relevant considerations where no improper purpose established having regard to the scope and purpose of the migration act constitutional writs s 75(v) where minister committed jurisdictional error and decision ultra vires writ of certiorari issued quashing decision prohibition and/or injunction issued declaration made declaring the status of the applicant as a lawful non-citizen migration constitutional law constitutional law |
By notice of motion filed on 30 September 2005 the Commissioner seeks an order that the application be struck out in whole or in part pursuant to O 11 r 16 of Federal Court Rules (Cth) ('FCR') or alternatively pursuant to O 20 r 2 of the FCR. Mr Croker challenged these notices in the Federal Court and was successful in having each set aside. One such notice was set aside by the Full Federal Court because it was founded upon an award of costs by the High Court of Australia, for which a judgment debt could not be validly registered in a local court: see Croker v Federal Commissioner of Taxation (2003) 52 ATR 226. The second notice was set aside because the amount claimed was greater than the original award of costs against Mr Croker, since it included costs of registration of the judgment and interest: see Croker v Commissioner of Taxation [2005] FCA 127 ; (2005) 145 FCR 150. The third notice was set aside by consent because it included two judgments in the same notice, contrary to legislative requirements. 3 The current proceedings appear to comprise a claim by Mr Croker for damages arising out of the issue of bankruptcy notices by the Commissioner. The applicant seeks redress to claim for financial and non financial detriment caused by the respondent. Such other and further relief as this Court deems just and appropriate. On the 1/4/1999, 27/9/1999, 17/3/2000 and 28/10/2003 the Respondent was awarded costs against the Applicant. On 18/2/2002, 25/6/2002 and 9/11/2005 the Respondent presented commissions of bankruptcy against the Applicant in the sum of $8,111.65, $6,467.37 and $13,035.30. In the total of $27,614.32. On the 18/2/2002, 25/6/2002 and the 9/11/2005 respectfully the Applicant applied to the Commonwealth of Australia Tribunals to have the commissions set aside as defective. Those bankruptcy proceeding where terminated in the Applicant's favour on 14/5/2002, 25/2/2003 and 24/2/2005 when they where dismissed. The proceedings in bankruptcy instituted by the Respondent against the Applicant were taken and the commissions were presented and prosecuted, the affidavits in support therefore were made, falsely and maliciously and without reason and probable cause. The allegations in the said commissions and affidavits that the Applicant was indebted to the Respondent in the sum sufficient to support the bankruptcy notices and that the Applicant had committed acts of bankruptcy were false to the knowledge of the Respondent and were made maliciously and without reasonable cause. The Respondent well knew or should have known that there was a genuine dispute concerning the Respondents entitlement to a commission of bankruptcy founded on a non-existent judgment. The Respondent well knew or should have well known that there was a genuine dispute concerning the Respondents entitlement to a commission of bankruptcy founded on two judgment debts. The Respondent well knew or should have well known that the Applicant had not committed any acts of bankruptcy. The Respondent well knew or should have well known that the commissions of bankruptcy and affidavit's [sic] in support of those commissions of bankruptcy therefore were made, falsely and maliciously and without reason and probable cause. Mr Croker says that he has exhausted his extra-judicial remedies in relation to the conduct of the Commissioner and asks the Court to provide redress for the tortious interference with his constitutional rights. Whilst the Mr Croker alleges Court has jurisdiction pursuant to the Federal Court of Australia Act 1976 (Cth), the Bankruptcy Act 1966 (Cth), the Judiciary Act 1903 (Cth) and the Constitution , the Commissioner submits that these statutes do not confer jurisdiction upon the Federal Court to grant the relief sought. 9 Alternatively, the Commissioner submits that the proceedings should be struck out on the basis that they constitute an abuse of process, that they fail to disclose any reasonable cause of action, and have a tendency to cause embarrassment. The Commissioner submits that these proceedings re-agitate issues which were raised in the earlier proceedings relating to the bankruptcy notices, namely the entitlement of the Commissioner to issue the bankruptcy notices and a claim by Mr Croker for damages in relation to defective administration: see Croker v Federal Commissioner of Taxation [2005] FCA 127 ; (2005) 145 FCR 150 at [19] - [20] . The Commissioner submits these proceedings are accordingly an abuse of process. 10 The Commissioner submits that no cause of action is contained in Mr Croker's application. In particular, no duty of care is identified, nor are details of the content of any such duty provided, nor is there any assertion of a breach of duty or details of damage sustained by Mr Croker. The Commissioner refers to the two possible causes of action which are suggested the Mr Croker's application, namely the tort of malicious prosecution and the tort of misfeasance in public office. The Commissioner states that a tort of malicious prosecution could not be made out because there have been no proceedings instituted by the Commissioner against Mr Croker. In relation to any tort of misfeasance in public office, the statement of claim and affidavits of the applicant do not contain the material facts upon which such a suit must be founded. 11 In respect of embarrassment, the Commissioner submits that the entire pleading is embarrassing and confusing. The Commissioner refers to the terminology contained in the statement of claim such as "violation of the Constitution ", "violation of right to procedural due process protected by the Constitution " and "exhaustion of administrative remedies". 12 In respect of Mr Croker's claims under the Constitution , the Commissioner submits that Mr Croker does not identify any basis to support the claim that the Constitution confers on him a right to private suit against the Commissioner. 13 Further, the Commissioner submits that he is incapable of being named as a respondent to a damages claim in tort because of the limits on his legal personality. Should the action continue, the Commonwealth of Australia would be the appropriate respondent. 15 Mr Croker submits that the Constitution confers jurisdiction on this Court to hear his application. ) the recognition throughout the Commonwealth of the laws and the public Acts and records, and the judicial proceedings of the States. In all the implied rights of the Commonwealth of Australia Constitution Act 1900 (Imp) is submitted to protect the administration of justice on matters of public importance. Alternatively, Mr Croker submits his application alleges violation of the Bankruptcy Act in respect of which the Court has jurisdiction. 18 Mr Croker refers to Halsbury's Laws of Australia wherein the criminal tort of malicious prosecution is described. He says the actions of the Commissioner constitute malicious prosecution and false swearing. 19 Additionally, Mr Croker alleges that the Commissioner has failed in its duty to act as a model litigant in the former proceedings with respect to the bankruptcy notices issued to him. Pursuant to s 19 of the Federal Court of Australia Act , the Court only has jurisdiction where the Parliament has specifically conferred jurisdiction upon the Court (see Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48 ; (1981) 148 CLR 150) or where the accrued or associated jurisdiction of the Court arises. 21 Mr Croker's claim against the Commissioner is based in tort. He has variously relied upon the Constitution , the Bankruptcy Act , the Judiciary Act and the common law as the basis of the Court's jurisdiction. Leaving aside the fact that Mr Croker is not making a claim against the Commonwealth, this section does not confer jurisdiction on the Federal Court to entertain a claim in tort. Mr Croker's reliance on this section is misconceived. 24 In relation to the Bankruptcy Act , s 27 confers jurisdiction on this Court and on the Federal Magistrates Court in respect of bankruptcy. Accordingly, ss 27 and 30 do not confer jurisdiction on the Court in relation to Mr Croker's claim. 26 With respect to the other grounds on which Mr Croker submits the Court has jurisdiction, this Court does not have jurisdiction to determine constitutional or common law causes of action, except in its accrued or associated jurisdiction where such claim arises in conjunction with a claim over which the Court has statutory jurisdiction. As the Court has decided that no statutory jurisdiction exists in relation to Mr Croker's application, claims made under the Constitution and the common law cannot be heard by this Court. 27 Accordingly, the Court does not have jurisdiction to hear the application brought by Mr Croker. 28 Further, the Court considers that Mr Croker's application and statement of claim do not disclose any reasonable cause of action. The elements of a cause of action in tort, either of malicious prosecution or of misfeasance in public office, are not pleaded in his application. Pleadings must contain a statement of the material facts relied upon to support the cause of action: O 11 r 2 FCR. In Trade Practices Commission v David Jones (Australia) Pty Ltd & Ors (1985) 7 FCR 109, Fisher J considered a motion for strike out of a statement of claim. It is merely a statement of a conclusion drawn from facts which are not in the statement of claim. Standing alone, par 15 does not disclose a reasonable cause of action against the respondents. Furthermore all of the authorities abovementioned very clearly indicate that material facts set out in the particulars can not be used to make good the deficiencies in the statement of claim. Although it sets out conclusions, for example with respect to the motivation of the Commissioner of Taxation in issuing the bankruptcy notices, it does not state the facts upon which those conclusions are based. The application and statement of claim do not contain the material facts on which the claim is made, and therefore do not disclose a reasonable cause of action. The application as pleaded could not be sustained. In the circumstances, costs of the application and of the Commissioner's motion should be awarded in favour of the Commissioner. The Respondent's motion be upheld. 2. The Application be dismissed. 3. The Applicant to pay the Respondent's costs of the proceedings and of this motion. | motion for strike out whether jurisdiction to hear application whether application discloses a reasonable cause of action practice and procedure |
On 13 May 2009, Jagot J granted interlocutory orders against the respondents which continue until further order. At the commencement of the hearing, I gave the ACCC leave to file in Court an amended application making amendments which were not substantial but which sought to identify, with greater precision, the contravening conduct of the respondents alleged by the ACCC having regard to the evidence relied on. The respondents did not oppose the grant of such leave. None of the deponents were required for cross-examination and the respondents filed no affidavits in response; nor did they seek to tender any evidence in the course of what, in consequence of the position they took, was a relatively short hearing. On the hearing, the second respondent appeared in person, by telephone from Melbourne, and as representative of the first and third respondents. I had previously granted the second respondent leave to appear for the first respondent pursuant to O 9 r 1(3) of the Federal Court of Australia Rules . What follows in these reasons is largely taken from the written submissions of the ACCC dated 21 September 2009. The second respondent (Mr Darley Stephen) and the third respondent (Ms Vanitha Darley) are listed as directors of Zanok. Zanok's website (www.zanokit.com) described Zanok as a 'Global Consultancy and IT Solutions Company' based in the USA, Australia, India and Malaysia. The Zanok website was registered on 15 March 2008, that is, less than two weeks after Zanok was incorporated. AREA is a company based in South Australia. It was incorporated in 2007 and is engaged in the business of locating employment for students. Mr Shreyas Narayana was the National Recruitment Manager for AREA located at AREA's Melbourne office. AREA was retained by Zanok to assist with finding and interviewing applicants for employment with Zanok. During the period February 2009 to May 2009, Zanok, and AREA on behalf of Zanok, placed a number of advertisements on various websites. The advertising placed by or on behalf of Zanok was directed to persons residing in Australia by reason of a temporary visa issued by the Department of Immigration and Citizenship. Most notably, it applied to persons residing in Australia by reason of a '485 visa' or skilled graduate visa. A 485 visa or skilled graduate visa permits the holder to remain in Australia for up to 18 months after completing higher education to enable the person to obtain the relevant points needed to meet the requirements of a permanent general skilled migrant visa. Points are rewarded depending on certain factors including whether the applicant has a job offer in Australia. To obtain sufficient points to attain the permanent general skilled migrant visa one option is for a person to have been employed in a skilled occupation in Australia for at least 12 of the last 24 months. Many of the witness affidavits filed by the ACCC depose to similar facts. Exhibit 11 is a typical example. Mr Arora was born in India and migrated to Australia in June 2006. His native language is Hindi. He holds various degrees including a Masters of IT obtained from the Swinburne University of Technology in Melbourne. He has temporary residency in Australia expiring September 2010 at which time unless he qualifies for permanent residency will be required to return to India. One way for Ms Arora to obtain permanent residency is to complete one year of work experience in the IT field. Mr Arora has had great difficulty obtaining employment in an IT position because of his lack of experience in the Australian IT industry. In January 2009, Mr Arora read an advertisement for a position as a business analyst with Zanok. There was no mention of training in the advertisement. Mr Arora attended an interview on 3 February 2009. During the interview Mr Arora was informed by representatives of Zanok that: Mr Arora paid the first instalment by credit card for the training program on 6 February 2009. Similar evidence is given by the deponents in Exhibit 10 at paras 21 --- 43 and Exhibit 4 at paras 17 --- 45. Zanok was aware that, at the time of paying the training fee, the trainees were at a special disadvantage, namely, concerned to obtain permanent residency by obtaining one year of skilled work experience in Australia within a relatively short period of time. The trainees were not seeking training but paid employment which Zanok promised them in return for payment of the training fee. The evidence for this is to be found in: Section 51AA incorporates into the Act the unwritten law in relation to unconscionable conduct thereby extending the remedies available under the Act for unconscionable conduct to the extent that this concept is presently part of the common law or equitable principles recognised by the courts. Unconscionable conduct is conduct which attracts a sufficient level of judicial opprobrium to support the grant of relief based on principles set out in specific equitable doctrines established by Courts of Equity: Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Limited (2003) 214 CLR 51. Unconscionability is a concept which requires a high level of moral obloquy. It is not necessary for the party who has benefited from a transaction challenged as unconscionable to itself have created the special advantage which forms the basis of the unconscionability claim. It is sufficient if that party knows, or ought to have known, of the other party's situation of special disadvantage and takes unfair advantage of the opportunity presented: Louth v Diprose [1992] HCA 61 ; (1992) 175 CLR 621. A person will be under a special disadvantage if there are circumstances seriously affecting the ability of the person to make a judgement in his or her own best interests: Berbatis Holdings per Gleeson CJ at [5]. A person is not under a special disadvantage simply because of inequality of bargaining power: Berbatis Holdings . In the present circumstances, the unconscionable conduct on the part of Zanok was the promise that, in return for a fee, the applicant would receive training and thereafter guaranteed skilled employment in circumstances where Zanok knew or ought to have known that many of the applicants were temporary residents and anxious to find skilled employment to assist with their applications for permanent resident status. This conduct constituted more than simply taking advantage of a superior bargaining position but involved an unconscientious exploitation of another's inability or diminished ability to conserve his or her own interests. Dangling the 'employment carrot' in return for a fee in circumstances in which the applicant faces having to leave Australia, constitutes a high level of moral obloquy especially where the promised employment does not exist: Australian Competition & Consumer Commission v Chats House Investments (1996) 71 FCR 250. In the circumstances, the ACCC submitted the Court should make a declaration in terms of para 1 of the amended application. The power to make a declaration is a discretionary one and the basis upon which it should be exercised is conveniently summarised by Kenny J in Australian Competition & Consumer Commission v Henry Kaye and National Investment Institute Pty Limited [2004] FCA 1363 at [200] --- [201]. In Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc [1993] FCA 83 ; (1993) 41 FCR 89 , Sheppard J held that the concern of the Act with the public interest supported the view that the Court may, in appropriate cases, exercise its power to grant the declaratory relief to mark its disapproval of particular conduct engaged in contravention of the Act: [1993] FCA 83 ; [1993] 41 FCR 89 at 100 see also 106 per Foster J and 107 per Hill J; Australian Competition & Consumer Commission v Goldy Motors Pty Limited (2001) ATPR 41-801 at [34] per Carr J; Australian Competition & Consumer Commission v Target Australia Pty Limited [2001] FCA 1326 ; (2001) ATPR 41-840 at [18] per Lee J. In the circumstances, the ACCC submitted that the Court should make the declaratory relief sought in paras 1 --- 9 of the amended application, particularly given the important public interest element involved and also having regard to the fact that the ACCC stands apart from other litigants in that its functions include the furtherance of those public interests. I agree. Presumably as a means of satisfying trainees that Zanok was capable of arranging employment opportunities, it represented to them that it was a global company with offices in a number of countries including the United States. This is based on the following examples: In fact, Zanok had no presence in the United States. The evidence disclosed that the Zanok office addresses located in America do not exist. Consequently, the evidence established Zanok had engaged in conduct that constituted a contravention of s 52 of the Act. Zanok also represented that it had developed and sold functional IT software products. For example see the following affidavits: In fact, Zanok had no functional IT software products. So much is established by: The ACCC submitted the Court should make a declaration in terms of para 2 of the amended application. For the reasons outlined above, including at [19] above, I agree. From in or about February 2009 Zanok made representations in advertisements published on the website www.gumtree.com.au to the following effect: For examples of the advertisements on the www.gumtree.com.au website, see Tab 22 of Exhibit JAL-1 to Exhibit 1. In fact, contrary to the representations, Zanok was offering IT training for which trainees were required to pay a non refundable fee of up to $4,700 rather than paid employment opportunities in the IT sector and further the 'IT Scholarships' did not exist. This is evidenced by the following: In these circumstances, Zanok engaged in conduct that was misleading or deceptive in contravention of s 52 of the Act. Zanok also contravened s 53B of the Act, namely, it engaged in conduct that was liable to mislead a person seeking employment as to the availability, nature, terms or conditions or any other matter relating to the employment. The ACCC submitted that the Court should make a declaration in terms of para 3 of the amended application. For the reasons outlined above, including at [19], I agree. In addition to the publications on the Gumtree website, Zanok, from about April 2009, on the website www.seek.com.au and in the interviews with applicants from February 2009, made representations to the effect that Zanok offered an unqualified guarantee of paid employment in the IT sector in Sydney or Melbourne at the end of an IT training course. Examples of the advertisements placed on the website www.seek.com.au can be found at Tab 22 of Exhibit JAL-1 to Exhibit 1. Examples of the representations made during interviews include: In fact, Zanok was not in a position to guarantee paid employment in the IT sector to graduates of the training course. Further, cl 8 of the Workplace Training Agreement between Zanok and the trainee provided that any guarantee of paid employment did not apply in the event of a 'Global Economic Crisis'. See Exhibit 5 at paras 24 --- 33 and Exhibit 7 at paras 84 --- 100. As a consequence the ACCC submitted Zanok engaged in conduct that was misleading or deceptive contrary to s 52 of the Act and further engaged in conduct that was liable to mislead persons who were seeking employment as to the availability, nature, terms or conditions of the employment contrary to s 53B of the Act. In these circumstances the ACCC submitted that the Court should make a declaration in terms of para 4 of the amended application. For the reasons outlined above, including at [19] above, I agree. During various interviews with applicants from in or about December 2008, Zanok represented that Zanok would pay graduates of the IT training course a salary of a minimum $45,000 per annum once employed by Zanok. The evidence of the representation is contained in the following affidavits: The representation was in fact misleading or deceptive because Zanok was not in a position to pay a salary of a minimum of $45,000 per annum (or any amount) to graduates of the training courses. The evidence in respect of that matter can be located in the following affidavits: In the circumstances, the ACCC submitted the representation was misleading or deceptive contrary to s 52 of the Act and Zanok engaged in conduct that was liable to mislead persons seeking employment as to availability, nature, terms or conditions of the employment contrary to s 53B of the Act. Accordingly, the ACCC submitted the Court should make a declaration in terms of para 5 of the amended application. For the reasons outlined above, including at [19] above, I agree. Zanok represented to applicants that it offered a referral program whereby trainees would be paid $200 per individual they referred to Zanok that signed up for the IT training course. The evidence of the representation referred to in [35] is contained in the following affidavits: The representation was in fact misleading or deceptive because Zanok did not pay to any of the trainees the promised $200 payment in respect of trainees referred to Zanok: Exhibit 1 at para 35.26. In the circumstances, the ACCC submitted the representation was misleading or deceptive contrary to s 52 of the Act and accordingly the Court should make a declaration in terms of para 6 of the amended application. For the reasons outlined above, including at [19] above, I agree. From in or about February 2009 Zanok accepted payment for the training in circumstances where Zanok intended to supply training materially different to the training in respect of which the payment was accepted, alternatively, there were reasonable grounds of which Zanok was or ought to have been aware for believing that it would be unable to supply the training within the time period specified by Zanok. Zanok prepared training documents which contained an outline of the training for which payment was accepted. See Exhibit 6 annexure SG4 at pages 30 --- 46, SG5 at pages 48 --- 55. In fact the training actually delivered to the extent that it existed was very different. See the following affidavits: In the circumstances, Zanok engaged in conduct in trade or commerce contrary to s 58 of the Act in that it accepted payment for services where at the time of acceptance: The ACCC submitted the Court should therefore make a declaration in terms of para 7 of the amended application. For the reasons outlined above, including at [19] above, I agree. Section 75B of the Act provides that a person is involved in a contravention of a provision of Part V (which includes ss 51AA, 52, 53B and 58 of the Act) where a person has been in any way, directly or indirectly, knowingly concerned in, or a party to, the contravention. The words 'party to a contravention' refer to a person who participates in, or assents to, the contravention. To be regarded as participating, a person must have knowledge of the essential elements constituting the contravention: Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 at 670. The evidence establishes that Mr Darley Stephen was knowingly concerned in or a party to the contraventions which the ACCC alleges as against Zanok. That evidence is contained in the following: In the circumstances, the ACCC submitted the Court should make a declaration in accordance with para 8 of the amended application. For the reasons outlined above, including at [19] above, I agree. The ACCC also submitted the evidence establishes that Ms Vanitha Darley was a person directly or indirectly knowingly concerned in or a party to the contraventions of Zanok alleged by the ACCC. That evidence is contained in the following: In the circumstances, the ACCC submitted the Court should make a declaration in accordance with para 9 of the amended application. For the reasons outlined above, including at [19] above, I agree. The respondents did not oppose the making of the injunctions in the form sought by the ACCC. Section 80(1AA) of the Act provides that when application for an injunction has been made the Court may if it deems to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied the person has engaged, or is proposing to engage, in conduct of a kind mentioned in subs (1). The Court has power to grant injunctions on such terms as the Court determines to be appropriate. That discretion must be confined by reference to the scope and purpose of the Act. The Court needs to be satisfied of the following matters: In ICI Australia Operations Pty Limited v TPC [1992] FCA 474 ; (1992) 38 FCR 248 , Lockhart J said that the Act permitted the granting of an injunction to deter an offender from repeating the offence and in TPC v Mobil Oil Australia Limited [1984] FCA 363 ; (1985) 4 FCR 296 , Toohey J said that even where there was no evidence to indicate the offenders intention to continue the offending conduct, it might be appropriate to mark the Courts disapproval by an injunction. In Glev Pty Limited v Kentucky Fried Chicken Pty Limited [1994] FCA 916 ; (1994) ATPR 41-299 , von Doussa J pointed out that in applications for an injunction under the Act there is an element of public interest involved and the Court should be slower to withhold relief. Section 80 is essentially a public interest provision, the traditional rules relating to injunctive relief do not apply and once the condition precedent of the grant of an injunction has been satisfied, that is, once a breach has been established, the Court has the widest possible injunctive powers devoid of traditional restraints, though the power must be exercised judicially and sensibly. By reason of the foregoing, the ACCC submitted that the Court should grant the injunctions sought in paras 10 - 18 of the amended application. I agree. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | conduct in contravention of ss 51aa , 52 , 53 and 58 of the trade practices act 1974 (cth) whether the respondents knew or ought to have known of the special disadvantage of the job applicants and whether the respondents took unfair advantage of the opportunity presented the conduct complained of amounted to an unconscientious exploitation of another's inability or diminished ability to conserve his or her own interests conduct complained of was liable to mislead a person seeking employment as to availability, nature, terms or conditions or any other matter relating to employment. trade practices |
He received a payment of compensation on account of his injury. Pursuant to the provisions of the Social Security Act 1991 (Cth), the respondent ( the Secretary ) determined that Mr Kezchek could not receive social security benefits for a period assessed having regard to the payment of compensation. Mr Kezchek exercised his rights of appeal, culminating in a decision of the Administrative Appeals Tribunal ( the Tribunal ) affirming the Secretary's determination ( Re Kezchek and Secretary, Department of Education, Employment and Workplace Relations (2009) 108 ALD 618; [2009] AATA 248). This is an appeal from the decision of the Tribunal. Under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth), an appeal from a decision of the Tribunal may be brought on a question of law only. In a further amended notice of appeal, Mr Kezchek identified four questions of law said to arise from the Tribunal's decision. The first two questions concern the proper construction of s 17(3) of the Social Security Act . Section 17(3) defines the "compensation part of a lump sum compensation payment". The compensation part of a lump sum compensation payment determines the "lump sum preclusion period" during which the payment of social security is affected by the compensation payment. The Tribunal decided that the facts in respect of the payment of compensation to Mr Kezchek were not within the circumstances prescribed in s 17(3)(a) and thus, by default, were within s 17(3)(b) of the Social Security Act . Mr Kezchek contended that, to the contrary, on the proper construction of s 17(3) the only conclusion open is that the facts are within the circumstances prescribed in s 17(3)(a) of the Social Security Act . The other two questions of law identified in Mr Kezchek's further amended notice of appeal concern the Tribunal's reasoning process (that is, allegations of a failure to give adequate reasons and of taking into account irrelevant considerations). The Secretary accepted that these questions are questions of law but contended that, as all of the facts were agreed, the only relevant question is whether the facts are within s 17(3)(a) of the Social Security Act , properly construed. Mr Kezchek was injured in a motor vehicle accident in the course of his employment. He claimed compensation. His claim for compensation was subject to the Motor Accidents Compensation Act 1999 (NSW). Chapter 4 of the Motor Accidents Compensation Act establishes a regulatory scheme for the making and resolution of claims. Part 4.3 specifies various duties in respect of claims. Relevantly, by s 80(1) an insurer has a duty to "to endeavour to resolve a claim, by settlement or otherwise, as justly and expeditiously as possible". An insurer also has a duty to "give written notice to the claimant as expeditiously as possible whether the insurer admits or denies liability for the claim" (s 81(1)). It is also the duty of an insurer to "make a reasonable offer of settlement to the claimant (unless the insurer wholly denies liability for the claim)" within certain time periods (s 82(1)). All of these duties are enforceable as conditions of the insurer's licence. Contravention of a condition is an offence (s 161(4)). Contravention also exposes an insurer to the risk of a civil penalty and suspension or cancellation of its licence (ss 165 , 166 and 167 ). Part 4.4 of the Motor Accidents Compensation Act relates to "Claims Assessment and Resolution". Part 4.4 contains four divisions. Division 1 of Pt 4.4 deals with preliminary matters. Specifically, Pt 4.4 "applies to any claim, whether or not the insurer admits or denies liability" (s 89(1)). However, nothing in Pt 4.4 "prevents a claim from being settled at any time" (s 89(2)). Under s 108 , a claimant is not entitled to commence court proceedings against another person in respect of a claim unless a certificate has been issued under Pt 4.4 in respect of the claim (to the effect that the claim is either exempt or has been assessed). Division 1A of Pt 4.4 deals with "Document exchange and settlement conference before claims assessment". Under s 89A , the parties to a claim must participate in a settlement conference (being, under s 89A(4) , a conference, the purpose of which is to settle the claim). If a claim is not settled at a settlement conference then each party must make an offer of settlement within 14 days after the settlement conference concludes (s 89C). Division 2 of Pt 4.4 deals with the assessment of claims. If a claim has not been settled at or following a settlement conference (by reason of the required further settlement offers), the parties may refer the claim to the Motor Accidents Authority of New South Wales (s 90). Unless the claim is exempt (s 92) , the claim will be assessed by a claims assessor from CARS (s 94). (2) Such an assessment is to be made having regard to such information as is conveniently available to the claims assessor, even if one or more of the parties to the assessment does not co-operate or ceases to co-operate. (3) The assessment is to specify an amount of damages. (4) The claims assessor must, as soon as practicable, after an assessment issue the insurer and claimant with a certificate as to the assessment. (5) The claims assessor is to attach a brief statement to the certificate, setting out the assessor's reasons for the assessment. The rate of interest may be set by reference to the rate of interest prescribed for the purposes of section 101 of the Civil Procedure Act 2005 but may not exceed that rate. (3) It is a condition of an insurer's licence under Part 7.1 that the insurer complies with this section. Division 3 of Pt 4.4 contains provisions dealing with claims assessors. Part 4.5 of the Motor Accidents Compensation Act deals with "Court Proceedings on Claims". The parties referred the Tribunal to a number of decisions ( Secretary, Department of Social Security v Banks (1990) 23 FCR 416 , Singh v Secretary, Department of Family and Community Services (2004) 142 FCR 232 ; [2004] FCA 1685 , Re Welch and Secretary, Department of Family and Community Services (2003) 78 ALD 550 ; [2003] AATA 905 , and Hansen v Dal y [1998] 1 Qd R 629). As the Tribunal observed (at [23]) in Banks Von Doussa J traced the history of the predecessor provision to s 17(3) of the Social Security Act (s 152 of the Social Security Act 1947 (Cth)). Subparagraph (i) introduces an arbitrary formula to be applied if the lump sum payment was made in settlement of a claim. What stands in contrast with a lump sum payment made in settlement of a claim is a lump sum payment made pursuant to a curial determination of a claim on the merits according to law. Determinations of this kind are dealt with by subpar (ii). It is understandable with this class of lump sum payment that the Secretary is still required to form an opinion as to the amount of a lump sum payment that is in respect of an incapacity for work, as a curial determination will be accompanied by reasons for decision which can be expected to disclose the component parts of the award, which constitutes the lump sum payment. The expression "the lump sum payment... made... in settlement of a claim" is apt to describe the total amount which is payable as the monetary consideration passing from the party on whose behalf the payment is to be made to the recipient in exchange for a release of the claim. The order in the present case in favour of Mr Banks did not by its terms prevent him from proceeding independently of the Workers Compensation Ac t for damages at common law against his employer. Even where such a claim remains open, a lump sum payment made in settlement of claims arising under the Act meets the description in s 152(2)(c)(i) of a "lump sum payment... made... in settlement of a claim...". Where the payments have been made in consequence of a judgment of a court, and the specific calculations have been made or can be made those provisions are inapplicable. ... Payments mandated by judgments do not answer these descriptions. Because the plaintiff in the District Court proceeding was under a disability, Order 70.10 of the Rules of the Supreme Court of Western Australia required any settlement or compromise reached by the parties to that proceeding about the compensation payable to be approved by the Court. Otherwise the settlement or compromise would be invalid. Accordingly, the Tribunal was satisfied that the claim was "settled" and the payment was made in settlement of the claim as referred to in s 17(3)(a) of the Social Security Act. In Hansen v Daly , to which the Tribunal referred at [26], Fryberg J considered statutory provisions applying to a "settlement or compromise". The claims in question had been subject to a process of case appraisal which involved a provisional decision. Fryberg J held that the case appraisal process and resulting provisional decision did not involve a compromise or settlement of the claims because the terms "compromise" and "settlement" are "apt to refer to situations where there has been some element of consensus in reaching the outcome which has been achieved" (at 630). That was the case in Welch , although Court approval of that agreement was required. Rather, a statutory scheme applied such that, once the insurer accepted liability, an independent assessment of damages was made on the basis of material put forward by the parties, reasons were given, and the relevant heads of damage set out. It is true that Mr Kezchek did not have to accept that assessment, however, there were costs penalties if he was not significantly more successful in court. The consequence is that there is material available from an independent third party which enables the Secretary to form the opinion required pursuant to s 17(3)(b) of the Act. This is in my view is consistent with the statutory scheme of s 17(3). It is a characteristic of such determinations that they are binding on all parties. The claims assessment process under Pt 4.4 of the Motor Accidents Compensation Act does not involve any such determination. First, an insurer does not have to admit liability. Such an admission may be deferred until after an assessment is made on both liability and the amount of damages. Second, a claimant need not accept the assessment of the amount of damages. An assessment only becomes binding on an insurer if the insurer admits liability and the claimant accepts the assessment of the amount of damages. Pursuant to s 95(2)(b) of the Motor Accidents Compensation Act a claimant accepts the "amount of damages in settlement of the claim". According to Mr Kezchek's submissions, there was thus in this case, in both form and substance, a claim which was settled and a payment made in settlement of the claim within the meaning of s 17(3)(a) of the Social Security Act. In other words, the status of an assessment which is accepted by a claimant is defined by s 95(2) of the Motor Accidents Compensation Act as involving a settlement of the claim. This is to be contrasted with Pt 4.5 of the Motor Accidents Compensation Act providing for court proceedings on claims. The characterisation of a claimant's acceptance of an amount of damages in s 95(2) as involving the settlement of a claim under the Motor Accidents Compensation Act is sufficient to bring the circumstances within s 17(3)(a) of the Social Security Act. Further, and in any event, there is no reason to give the words "in settlement of the claim" in s 95(2) of the Motor Accidents Compensation Act a meaning different from that of "settled" and "in settlement of a claim" in s 17(3)(a) of the Social Security Act (referring to Imperial Chemical Industries of Australia and New Zealand Limited v Commissioner of Taxation of the Commonwealth [1972] HCA 75 ; (1972) 46 ALJR 35 at 41). Mr Kezchek submitted that this construction did not frustrate the purpose of s 17(3) as identified in Banks . To the contrary, the Secretary's construction would be open to be manipulation. People in Mr Kezchek's position might reject an assessment only to make an offer to settle in the same or a slightly lesser amount in order to ensure that their circumstances attract the 50% rule in s 17(3)(a). As the observations in Banks and Singh indicate, the relevant distinction is between a "determination" and other forms of resolution. Because s 17(3)(a) uses words of wide meaning, all other forms of resolution fall within its ambit. A claimant's acceptance of an assessment of an amount of damages under s 95(2) of the Motor Accidents Compensation Act does not involve a resolution of the claim by agreement. An insurer which has admitted liability is bound by the assessment of the amount of damages once the claimant decides to accept that amount. The Motor Accidents Compensation Act provides a scheme for resolution of claims by agreement (including the provisions of ss 82 , 89A , and 89 (2), each of which encourages resolution by agreement, also referred to as the "settlement" of a claim). But s 95 involves a resolution by the claimant accepting an assessment which, by force of that acceptance, becomes binding on the insurer. The Secretary observed that the purpose of s 17(3) , as referred to in Banks and to be taken into account in accordance with s 15AA of the Acts Interpretation Act 1901 (Cth), is best fulfilled by this requirement for agreement. First, there must be some distinction between s 17(3)(a) and the default provision in s 17(3)(b). Otherwise, s 17(3)(b) would have no work to do. Second, agreements between parties are capable of the type of manipulation which led to the enactment of the predecessor to s 17(3). Statutory assessments by an independent third party, for which reasons must be given, are not capable of such manipulation. Third, the Motor Accidents Compensation Act is a New South Wales statute, enacted later in time, dealing with a different subject matter from the Social Security Act. Accordingly, caution is required in placing too much weight on the use of the phrase "in settlement of the claim" in s 95(2) of the Motor Accidents Compensation Act . Fourth, and in any event, the Motor Accidents Compensation Act uses the word "settle" and "settlement" in different contexts including contexts which require agreement by both parties (for example, ss 89A and 89 (2)) and contexts which do not (s 95(2)). For this reason the first question of law in the further amended notice of appeal, asking whether those words as they appear in s 17(3) of the Social Security Act take their ordinary meaning or a technical, legal or trade meaning, does not arise. Neither party suggested that the words take other than their ordinary meaning. The Tribunal did not find that the words take other than their ordinary meaning. The problem is that "settle" and "settlement" signify more than one potential ordinary meaning depending on their context. More fully, to settle out of court . To arrange matters in dispute, to come to terms or agreement with a person. The observations of Mason P in House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498 ; [2000] NSWCA 44 at [25] - [29] about the role of dictionaries in statutory interpretation are thus apt. Dictionaries "may offer a reasonably authoritative source for describing the range of meanings of a word", they "can illustrate usage in context, but can never enter the particular interpretative task confronting a person required to construe a particular document for a particular purpose" (at [28]). For this reason also, I do not accept Mr Kezchek's submission that the fundamental question is whether the identical terms used in s 95(2) of the Motor Accidents Compensation Act and s 17(3)(a) of the Social Security Act have the same meaning. The fundamental question is the meaning of s 17(3)(a) of the Social Security Act. The meaning given to that section will determine whether a claimant's acceptance of an amount of damages in settlement of a claim under s 95(2) of the Motor Accidents Compensation Act satisfies the circumstances required by s 17(3)(a) of the Social Security Act. It follows that I do not accept Mr Kezchek's submission that the description of the process in s 95(2) of the Motor Accidents Compensation Act of a "claimant [who] accepts that amount of damages in settlement of the claim...", of itself, determines the question of construction in his favour. The Motor Accidents Compensation Act is but one example of legislation regulating the resolution of claims for compensation that may be "compensation" as defined in s 17(2) of the Social Security Act and thus relevant to the operation of the provisions of the Social Security Act. It is not possible to envisage all of the possible ways in which a state or other legislature may choose to regulate the resolution of such claims. The fact that, in one particular statute, the New South Wales Parliament has chosen to describe a payment that an insurer which has admitted liability is bound to make following a claimant's acceptance of an assessment of damages as a "payment in settlement of the claim" does not provide a necessary answer to the question whether the circumstances satisfy s 17(3)(a) of the Social Security Act. The terms of s 95(2) of the Motor Accidents Compensation Act determine the operation of that Act. They are relevant to, but do not necessarily determine, the operation of the Social Security Act. I thus accept Mr Kezchek's submission that the provisions of the Motor Accidents Compensation Act are relevant to the resolution of the appeal. They are relevant not the least because Mr Kezchek's claim for damages in respect of his injury was resolved in accordance with the provisions of that Act. The provisions of that Act thus establish the form and substance of that resolution. In contrast to the submission rejected above, this conclusion does not treat the description in s 95(2) of the Motor Accidents Compensation Act as providing a necessary answer to the question whether that resolution satisfies s 17(3)(a) of the Social Security Act. In other words, it is necessary to consider how a claim is resolved in substance in order to determine whether or not the true character of the resolution satisfies s 17(3)(a) of the Social Security Act. The language which a legislature or the parties use to describe the resolution will inform but not necessarily determine an assessment of the substance or true character of the resolution for the purposes of s 17(3). Insofar as it might be necessary to say so, I do not accept Mr Kezchek's submission that before the Tribunal the Secretary conceded that s 17(3)(a)(i) of the Social Security Act was satisfied and that, as the same word must take the same meaning throughout a single enactment, s 17(3)(a)(ii) must thereby be satisfied as well. First, a fair reading of the parts of the transcript on which Mr Kezchek relied does not disclose any such concession. The Secretary was not making any concession but submitting that the essential requirement of s 17(3) is that a claim be "settled". A payment is "made in settlement of a claim" provided the claim has been settled. Hence, the section requires not merely the fact of a claim that is settled but also the fact of a payment. Second, this is an appeal on a question of law relating to the proper construction of a statutory provision. A concession purely about construction, even if made, cannot dictate the task of construction on appeal. What then is the true character or substance of the resolution of Mr Kezchek's claim? The claim was one for compensation for injury in a motor vehicle accident. The Motor Accidents Compensation Act regulated the resolution of the claim. Contrary to Mr Kezchek's submission, it would be inconsistent with the provisions and purpose of the Motor Accidents Compensation Act for an insurer routinely to defer any admission of liability until the amount of damages is assessed. An insurer has a duty under s 80(1) "to endeavour to resolve a claim, by settlement or otherwise, as justly and expeditiously as possible". An insurer also has a duty to admit or deny liability within a prescribed time period (s 81). If an insurer fails to comply with this obligation within the time limit prescribed, it is taken to have denied liability (s 81(3)). The insurer is not then bound to make a settlement offer or to participate in a settlement conference. A claims assessor will then have to assess (presumably, at increased cost to the parties and the system as a whole) both liability and the amount of damages. Accordingly, attempting to defer a decision about liability has consequences under the Motor Accidents Compensation Act for an insurer and, in a case where there is in truth no issue about liability, is inconsistent with the insurer's statutory duties. Given that an insurer's statutory duties are enforceable as conditions of an insurer's licence, a practice of routinely deferring any decision on liability may expose an insurer to action for contravention of the terms of its licence, including proceedings for an offence or a civil penalty, or suspension or cancellation of the licence. In substance, the Motor Accidents Compensation Act requires an insurer to make a genuine assessment of its liability and to either admit or deny liability as expeditiously as possible. An insurer's admission of liability, in this context, involves the discharge of a statutory duty. Under the Motor Accidents Compensation Act , an insurer's admission of liability does not involve any admission about the amount of damages payable. The Act, consistent with the duty imposed on an insurer by s 80(1) to "endeavour to resolve a claim, by settlement or otherwise, as justly and expeditiously as possible", provides various methods by which a claim might be resolved. At least three of those methods, all described as "settlement" in the statute, involve the reaching of an agreement between the insurer and the claimant (being: - (i) acceptance of an initial offer of settlement made pursuant to s 82, (ii) agreement at a settlement conference under s 89A, and (iii) agreement consequential on the exchange of further settlement offers under s 89C). Another method, also described as involving a settlement of a claim in the statute, is effected by a combination of an insurer's admission of liability, assessment of the claim by a claims assessor, and unilateral acceptance of an assessment of the amount of damages for which an insurer is liable by the claimant (being the method of resolution applicable in this case under s 95(2)). Another is resolution by a court as provided for in Pt 4.5. It is apparent from these provisions that the Motor Accidents Compensation Act uses the words "settle" and "settlement" to embrace two types of resolution of claims. First, it embraces a type of resolution at the core of the ordinary meaning of "settle" and "settlement", being by agreement between the parties. Second, it embraces a type of resolution created by statute, being unilateral acceptance of an assessment by a claimant, which may or may not involve an element of compromise by the claimant. But for the force of s 95(2) , those circumstances could not result in the resolution of a claim. Against this background, it is apparent that the fact that the New South Wales Parliament has chosen to use the words "settle" and "settlement" in this way cannot determine the meaning to be given to those words in the Social Security Act. The ultimate question thus is and remains the meaning of s 17(3) of the Social Security Act. The ordinary meaning of "settle" and "settlement", as the Tribunal's analysis of various definitions from dictionaries shows, includes both resolution of a claim by agreement and resolution of a claim by any means. In the context of the Social Security Act it is apparent that s 17(3) does not use the words "settle" and "settlement" in the broadest sense of the ordinary meaning of those words. If those words meant simply a resolution of a claim (irrespective of the means) then, as the Secretary submitted, there would be no work for s 17(3)(b) to do. Hence, to "settle" a claim within the meaning of s 17(3)(a) cannot be merely to resolve a claim. A narrower meaning, within the range of the ordinary meaning of the words, must be found. Such a meaning is immediately apparent, namely, to resolve a claim by agreement. This meaning, involving the essential requirement of a resolution by agreement, accords with the purpose of s 17(3). Section 17(3) was intended to prevent the manipulation or masking of the economic loss component of damages awards. A resolution by agreement need not identify any component for economic loss or, if it does so, the sum nominated may bear no true relationship to that component. This is because parties to an agreement about compensation are generally interested only in their ultimate net position and not the components which contribute to that position. By contrast, an assessment under s 94 of the Motor Accidents Compensation Act is prepared by a person independent of the parties to the claim. The person preparing the assessment must give reasons for the assessment (s 94(5)). The amount assessed is incapable of manipulation by the parties. The fact that a resolution of a claim under s 95(2) of the Motor Accidents Compensation Act might involve an element of compromise (by the insurer in initially admitting liability and by the claimant in accepting the offer) also does not indicate that the claim was settled within the meaning of s 17(3)(a) of the Social Security Act. A compromise, if it is used to mean something other than a resolution by agreement, depends on a comparison between the outcomes agreed and the rights or expectations of the parties. An insurer's admission of liability and a claimant's acceptance of an assessment by a claimant may or may not represent a compromise. A compromise cannot be inferred from those acts alone and, indeed, in some cases may be incapable of objective ascertainment. This indicates that the possibility of elements of compromise inherent within s 95(2) cannot be indicative of the fact whether a claim was settled within the meaning of s 17(3) of the Social Security Act. The existence of a resolution by agreement does not depend on whether any party compromised their position in order to achieve the agreement. The essence of a resolution by agreement is the agreement itself, which is always capable of objective ascertainment. It is true, as Mr Kezchek said, that a claimant could attempt to manipulate the process of acceptance under s 95(2) of the Motor Accidents Compensation Act in order to obtain the greatest benefit under s 17(3) of the Social Security Act. But that is not a sufficient reason to construe s 17(3) as Mr Kezchek proposed. It is also true that this construction gives a narrower meaning to "settle" and "settlement" in s 17(3) of the Social Security Act than in the Motor Accidents Compensation Act . But the meaning of those words in the Motor Accidents Compensation Act has been extended to apply to a method of resolution which exists only by force of the statute itself. The true character of the resolution of a claim under s 95(2) of the Motor Accidents Compensation Act would not be within the range of the ordinary meanings of the words "settle" and "settlement" unless those words mean nothing more than a resolution of the claim, irrespective of the means of the resolution. Yet, as discussed above, "settle" and "settlement" cannot take that broadest possible meaning in s 17(3)(a) of the Social Security Act because that would leave no work for s 17(3)(b). I thus do not accept Mr Kezchek's submission that the essential distinction drawn by s 17(3) of the Social Security Act is between a determination of a claim binding on all parties and any other form of resolution of a claim. To the contrary, the description "the claim was settled", against the background of the purpose of the provision, indicates that the essential distinction drawn by s 17(3) is between a resolution of a claim by agreement between the parties (howsoever that claim might be given effect) and any other form of resolution of a claim. This analysis is not inconsistent with the reasoning in Banks and Singh . Banks referred to the wide language of the predecessor provision to s 17(3) of the Social Security Act as part of a consideration of the payments affected. Given the purpose of the provision, to prevent manipulation of the components of compensation by parties interested only in their total liability and benefit, all payments by way of compensation were affected whether or not they were said to relate to compensation for any incapacity to work. The construction adopted by the Tribunal gives the words "settle" and "settlement" a meaning consistent with their ordinary meaning, enables s 17(3) to function as a coherent whole by giving work to s 17(3)(b), and is consistent with the purpose of the provision. The construction advocated by Mr Kezchek, in contrast, attempts to draw a distinction between s 17(3)(a) and (b) of the Social Security Act based more on the words used in the reasons in Banks and Singh than the words of the statutory provisions themselves and in circumstances where neither Banks nor Singh concerned the issue of the meaning of "settle" or "settlement" as in the present case. A claim is "settled" within the meaning of s 17(3)(a)(ii) if it is resolved by agreement between the parties, irrespective of the means by which that agreement is made valid or given effect. The "settlement" in s 17(3)(a)(i) is a reference to the agreement. Further, a payment made "in settlement of a claim", as referred to in s 17(3)(a)(i) is a payment made pursuant to, or in accordance with, the agreement by which the claim was settled. Accordingly, I agree with the Tribunal's conclusion that s 17(3)(a) requires a resolution of a claim by an agreement between the parties, irrespective of the form in which that agreement is given effect. Resolution of a claim by a claimant accepting an assessment of an amount of damages under s 95(2) of the Motor Accidents Compensation Act is not a resolution by agreement between the parties to the claim. Admission of liability by an insurer (and the knowledge when doing so that the insurer will be bound by the assessment of the amount of damages) also does not make the resolution by agreement. The resolution is reached by force of the statutory provisions irrespective of the insurer's position on the amount of damages. It follows that the answer to the second question of law identified in the further amended notice of appeal (whether the facts as found by the Tribunal fall within s 17(3)(a) of the Social Security Act, when the provision is properly construed) is "no". As explained below, this answer is sufficient to dispose of the appeal but, given the submissions made in respect of the other questions of law, it is necessary that I consider and resolve those questions. The requirement that the Tribunal give reasons for its decision, the principles relating to that obligation and the fact that that an allegation of a failure to do so involves a question of law, were all common ground between the parties. Perram J recently discussed these matters in Civil Aviation Safety Authority v Central Aviation Pty Ltd (2009) 253 ALR 263; [2009] FCA 49 at [22] - [37] and [46]. The summary in Ainger v Coffs Harbour City Council [2005] NSWCA 424 at [47] - [49] about the principles informing the requirement to give reasons is also useful. Mr Kezchek submitted that the Tribunal's reasons were inadequate. According to the submission, the Tribunal's reasons do not explain what it took from the decisions in Banks or Singh or the statutory history or purpose of the provision. Further, the Tribunal failed to explain how it reconciled the provisions of the Motor Accidents Compensation Act with those of the Social Security Act or to identify whether it accepted that the words "settle" and "settlement" had the same meaning in ss 17(3)(a)(i) and (ii) of the Social Security Act. The Tribunal, Mr Kezchek said, also did not explain why it considered that the purpose of the provision was better promoted by adopting a narrower meaning when the meaning Mr Kezchek advocated did not frustrate and may have promoted the purpose. Mr Kezchek said that the Secretary's detailed submissions in support of the Tribunal's construction in this appeal, being made on a basis never articulated by the Tribunal, supported a conclusion that the Tribunal's reasons were inadequate. I do not accept these submissions. As the Secretary submitted, the Tribunal's reasons are succinct but not inadequate. The Tribunal's reasons explain what it took from decisions in Banks and Singh , as well as the statutory history and purpose of the provision. The Tribunal took from those matters that s 17(3) used "settle" and "settlement" to mean an agreement negotiated between the parties (at [32]). The extracts provided by the Tribunal identifying these matters (at [23]-[29]) provide clear support for this conclusion. The Tribunal did not need to reconcile the provisions of the Motor Accidents Compensation Act with those of the Social Security Act, at least not in the sense of reconciliation as generally used in respect of statutory construction (as explained, for example, in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 ; [1998] HCA 28 at [70] ). The issue was whether or not certain agreed facts satisfied s 17(3)(a) of the Social Security Act. The dispute about meaning related to that Act, not the Motor Accidents Compensation Act . The Motor Accidents Compensation Act was relevant because it both determined the substance and form of the resolution of the claim in question and provided an example of the use of the same term as used in s 17(3)(a) , albeit in a separate enactment of a different legislature. The Tribunal explained the substance and form of the resolution of the claim in accordance with the Motor Accidents Compensation Act (at [33]). It recognised that s 95(2) of the Motor Accidents Compensation Act described a claimant as accepting "that amount of damages in settlement of the claim" (at [31] and [33]). Nevertheless, the Tribunal concluded that such a resolution, by application of that statutory scheme, did not result from an agreement and thus did not satisfy s 17(3)(a) of the Social Security Act (at [33]). The Tribunal's reasons draw no distinction between the meaning of "settle" and "settlement" in s 17(3)(a)(i) and "settlement" in s 17(3)(a)(ii). It is clear that the Tribunal considered that the words had the same meaning in each part of the section. Given this, the Tribunal was not required to say more. It may be acknowledged that the Tribunal did not explain why it considered that the purpose of the provision was better promoted by the conclusion it reached than that advocated by Mr Kezchek. Mr Kezchek said that this was necessary because the construction he advocated did not frustrate and may have promoted the purpose. I do not, however, accept this latter proposition. The capacity for manipulation of the components of compensation agreed between the parties is patent. By contrast, the examples of potential manipulation given by Mr Kezchek as supporting his construction, if implemented, would be inconsistent with the intention of the Motor Accidents Compensation Act (at best) and an offence against the provisions of that Act (at worst). It is difficult to accept that the Commonwealth Parliament's purpose in enacting s 17(3) of the Social Security Act had anything to do with such potential manipulation of the Motor Accidents Compensation Act . In any event, and as the Secretary submitted, even if the Tribunal's reasons were inadequate (which I do not accept), in a case such as the present, where all facts were agreed and the only issue before the Tribunal was one of construction, there would be no utility in setting aside the Tribunal's decision and remitting the matter to the Tribunal. On the construction that I have concluded is preferable, there is only one answer open; the agreed facts do not satisfy s 17(3)(a) of the Social Security Act and thus fall within s 17(3)(b). That is also the answer the Tribunal reached. For these reasons the third question of law in the further amended notice of appeal (whether the Tribunal failed to give adequate reasons) must be answered "no". Even if the Tribunal took into account an irrelevant consideration, when s 17(3) of the Social Security Act is properly construed, only one conclusion was open to the Tribunal and the Tribunal reached that conclusion. Accordingly, there would be no utility in the making of any order in Mr Kezchek's favour even if the Tribunal had taken into account an irrelevant consideration. Nevertheless, I do not accept that the Tribunal took into account any irrelevant consideration in reaching its decision. The only issue the Tribunal had to resolve was the proper construction of s 17(3) of the Social Security Act. Once it had properly construed the section, the answer to the question whether or not the agreed facts satisfied s 17(3)(a) necessarily followed. The Tribunal, in construing the statutory provision, was not exercising an administrative discretion. It is difficult to see how the doctrine of irrelevant considerations is capable of applying to the function of statutory construction. If put forward on the basis of the doctrine of irrelevant considerations, the argument must fail. I am unable to see any basis for a suggestion that, in performing its task, the Tribunal fell into error in considering: - (i) Pt 4.12.2.40 of the Guide to the Social Security Law as it did in [29] of its reasons (despite the fact that this extract concerns judgments by contested hearing and not other forms of resolution), or (ii) the costs provisions in the Motor Accidents Compensation Act designed to encourage settlement as it did in [33] of its reasons. If put forward on the basis that the task of construction miscarried because the Tribunal placed weight on impermissible extraneous material, four answers arise. First, it is not apparent from [29] and [32] of the Tribunal's reasons that it placed any weight on the Guide to the Social Security Law. Second, the reference to the role of costs in encouraging settlement in [33] of the Tribunal's reasons was responsive to the submissions Mr Kezchek put as recorded in [31] and thus cannot involve error. Third, I have concluded that the Tribunal's construction is preferable. Fourth, and following from the third answer, there would be no utility in making any order in Mr Kezchek's favour even if the Tribunal had erred as alleged (which I do not accept). The Tribunal was not in error in concluding that the agreed facts did not satisfy s 17(3)(a) of the Social Security Act. It therefore follows that the Tribunal was correct to affirm the decision under review. Accordingly, the appeal must be dismissed with costs. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | construction of s 17(3)(a) social security act 1991 (cth) whether determination and payment of compensation under motor accidents compensation act 1995 (nsw) made in settlement of a claim for the purposes of s 17(3)(a) social security act meaning to be given to "settle" and "in settlement of claim" words to be given ordinary meaning in the context of the provision as a whole and its legislative purpose use of same words in motor accidents compensation act not necessarily determinative of their meaning in social security act . whether tribunal failed to give adequate reasons for decision whether failure to explain what tribunal took from relevant case law whether failure to give reasons for why preferred construction promoted legislative purpose of social security act . whether tribunal took into account irrelevant considerations doctrine of irrelevant considerations not applicable because tribunal was not exercising an administrative discretion no irrelevant considerations impugning tribunal's decision. statutory interpretation administrative law administrative law |
2 The applicant ("Cadbury") appeals to the Court under s 60(4) of the Patents Act 1990 (Cth) ("the Act ") against a decision of a delegate of the second respondent ("the Delegate" and "the Commissioner" respectively) given on 30 September 2002 concerning an Australian Patent Application Number 706901 ("the Patent"). By the decision, the Commissioner, by the Delegate, allowed the opposition of the respondent ("Effem") to the grant of the Patent, and awarded costs against Cadbury. 3 The Patent application was filed under the Patent Cooperation Treaty on 21 December 1995 under International Application Number PCT/GB95/03010. The application claimed priority from British Application 9426078 dated 23 December 1994. The publication date was 19 July 1996 and the publication journal date was 5 September 1996. The application and complete specification were accepted on 6 May 1999. Notice of the acceptance was advertised on 1 July 1999 under serial number 706901. Effem's notice of opposition was filed on 1 October 1999. On the appeal, I had before me Effem's "statement of grounds and particulars of opposition" dated 4 January 2000. The opposition was heard on 19 February 2002. 4 The specification related to a "process for manufacture of reduced fat chocolate". There are ten claims. The process involves controlling the milling of the solid ingredients to produce particles of a specific "particle size distribution," in which the proportion of ultrafines is kept to such a level that the addition of water is not required. Before the Delegate, the opposition succeeded on obviousness alone. 6 The closest art relied on by Effem was a PhD thesis entitled " Particle Size Distribution Effects in Chocolate Processing" by A D Darley, University of Bradford, 1987. This document was referred to as "D10" in the Delegate's decision. 7 Cadbury challenged the admissibility of D10 before the Delegate on the ground that Effem had not provided an exact publication date. However, the Delegate noted that the first page of D10 indicated that it was submitted in February 1987. The Delegate stated, "A PhD thesis, once submitted, is published by the university within a few months at worst". In addition, the Delegate noted that the cover sheet from the British Library Document Supply Centre carried a handwritten date of 1987. According to the Delegate, this suggested that the thesis was publicly available well before the priority date of Cadbury's application. 8 The Delegate found that, on the balance of probabilities, D10 was published before the earliest priority date of the claims. On this basis the Delegate concluded that all ten claims were obvious and that there was no patentable subject matter. For this reason, dependent on D10 alone, the Delegate refused Cadbury's application for the Patent. 9 On 7 August 2006, pursuant to O 22 r 1 of the Federal Court Rules , I granted Effem leave to withdraw its appearance. On 14 August 2006, Effem filed a notice of withdrawal of appearance. 10 The Commissioner appeared on the hearing of the appeal, but did not wish to be heard in opposition to the appeal. With her consent, I ordered that she be added as second respondent. 11 In the light of the above developments, no evidence was adduced on the hearing of the appeal in support of any ground of opposition. 12 An appeal under s 60(4) of the Act is a proceeding in the original jurisdiction of the Court, and is in the nature of a hearing de novo. None of the evidence in support of the opposition that was before the Delegate was before the Court. 13 Cadbury submitted that the onus rested on Effem to establish that, if granted, the Patent would be clearly invalid: F Hoffman-La Roche AG v New England Biolabs Inc [2000] FCA 283 ; (2000) 99 FCR 56 at [48] - [67] . 14 Cadbury further submitted that in the circumstances, it was not required to adduce any evidence to counter the ground of opposition that succeeded before the Delegate or any other ground of opposition. 15 Recently, in European Community v Commissioner of Patents [2006] FCA 706 , Young J dealt with a similar submission made in similar forensic circumstances. Young J accepted the submission and held that the appeal should be allowed and that the application for the patent should proceed to grant. His Honour referred to Caroma Sales Pty Ltd v Philmac Pty Ltd (1972) 46 ALJR 324 per Walsh J; Brickwood Holdings Pty Ltd v ACI Operations Pty Ltd [1983] 2 VR 587 at 588-589 per King J; and Titan Mining & Engineering Pty Ltd v Arnall's Engineering Pty Ltd (1988) 12 NSWLR 73 at 75-76 per McLelland J. 16 I have read those authorities, but will not review them. In substance, that is now the position on the appeal. 18 The appeal should be allowed, the Commissioner's decision allowing the opposition should be reversed, and the Patent application should proceed to grant. 19 Notwithstanding his submission that it was not incumbent on Cadbury to lead any evidence addressing any ground of opposition, in order to provide some "comfort" to the Court, Mr Burley, of counsel for Cadbury, did read an affidavit of Michael Kenneth Payne of the British Library Document Supply Centre, demonstrating that document D10 was in fact received by the British Library Document Supply Centre on 3 August 1998 --- well after the priority date. 20 The making of the orders foreshadowed above will not, of course, foreclose the question of the validity of the Patent in any future proceeding, such as a proceeding for revocation of the Patent. | appeal under s 60(4) of patents act 1990 (cth) by applicant for patent against decision of commissioner of patents upholding opposition to grant pursuant to leave, opponent withdrew its appearance on the appeal, did not appear on the hearing of the appeal, and submitted no evidence in support of the commissioner's decision commissioner, joined as second respondent, appeared on hearing of appeal, but only to announce that she did not wish to participate actively on the hearing of the appeal or to oppose the allowing of the appeal procedure to be followed on the hearing of the appeal held : appeal could be allowed without applicant's adducing evidence to displace the opposition that had succeeded before the commissioner patents |
2 The principal issue is whether Telstra breached the 2005 Enterprise Agreement by failing to pay an employee, William McDonald, a member of the CEPU ("Mr McDonald"), his previous rate of salary after he was redeployed to, and later accepted a redundancy package from, a lower paying position. The answer turns on the proper construction of cl 17.4 of the 2005 Enterprise Agreement and, in particular whether cl 17.4 of the 2005 Enterprise Agreement permits the application of cl 15.3 of the TRA to Mr McDonald. At the relevant time, Mr McDonald's employment was governed by the 2005 Enterprise Agreement and the TRA. 4 Prior to 2 February 2006, Mr McDonald was employed by Telstra as a Contract Liaison Officer. The job was classified as a band 7 position in the "Customer Field Workstream" ("CFW7") under the pay and classification scales of the 2005 Enterprise Agreement. Mr McDonald worked in Telstra's offices at Seymour, Victoria. His actual rate of pay was $61,676 per annum. 5 On 2 February 2006, Telstra issued Mr McDonald with a "Form A Notification of Redundancy and Proposed Retrenchment" under cl 6.1 of the TRA. This had the effect of notifying Mr McDonald of proposed retrenchments of a number of staff employed in CFW7 positions. On 28 February 2006, Telstra issued Mr McDonald with a "Form B Advice of Selection for Retrenchment" under cll 5.4 and 6.6 of the TRA. This had the effect of confirming Mr McDonald's retrenchment. Upon receipt of the "Form B" notice, cl 8 of the TRA gave Mr McDonald the option of remaining in paid employment with Telstra for at least another 6 weeks pending attempts at redeployment under the Telstra Jobs Program. Mr McDonald took that option. 6 On 1 April 2006, Mr McDonald requested he be redeployed to a communications technician job "in the field" at Seymour. On 11 April 2006, Telstra accepted Mr McDonald's request by notifying him that he was redeployed as a Field Joiner. This job was classified as a band 4 position in the Customer Field Workstream ("CFW4") under the pay and classification scales of the 2005 Enterprise Agreement. Mr McDonald commenced in the CFW4 position on 13 April 2006. His actual rate of pay was $49,991 per annum at the time of redeployment. On 7 September 2006, that amount was raised to $51,241. 7 On 27 September 2006, Mr McDonald wrote to Telstra to confirm that he was volunteering for redundancy and that he wished to leave on 16 October 2006. On 16 October 2006, Mr McDonald ceased employment with Telstra in accordance with the TRA. 8 From the time of his redeployment on 13 April 2006, Mr McDonald was paid only the lower salary (and, later, redundancy benefits) applicable to the new position. It came into force on 6 September 2005 and remains in force until 5 September 2008. However, the 2005 Enterprise Agreement overrides the operation of the TRA and the Relevant Awards to the extent of any inconsistency: cl 5.3 of the 2005 Enterprise Agreement. 13 As cl 17.4 of the 2005 Enterprise Agreement provides, where an employee moves to a new job covered by the 2005 Enterprise Agreement at a lower rate of pay, there are two circumstances in which an employee is entitled to maintain his salary at the old, higher rate: (1) where the work undertaken by the employee in the new position is substantially the same as the work undertaken in the old position ("the First Limb"); or (2) where the employee was redeployed under the TRA ("the Second Limb"). Only the Second Limb is relevant to the issue in dispute. 15 The TRA was initially the AOTC Redundancy Agreement 1993 between the Australian and Overseas Telecommunications Corporation Limited and various employee associations. That agreement was certified under the Industrial Relations Act 1988 (Cth) ("the IR Act ") and had the status of an Award. On 29 August 2002, the AOTC Redundancy Agreement 1993 was substantially varied by consent pursuant to s 113 of the IR Act to become the TRA. The history was said by both parties to support the particular construction of cl 17.4 of the 2005 Enterprise Agreement that each advanced. An employee review will proceed in relation to redeployees receiving salary maintenance for more than two years. No redeployee however will have his/her salary maintenance ceased unless he/she has refused a reasonable opportunity for placement at their nominal level. Except that where an employee has accrued a minimum of twelve months higher duties service in the previous fourteen months, higher duties payment is to continue as income maintenance for a period equal to half the length of higher duties service in the preceding two years. The CFW Agreement established the new classification structure known as the 'customer field workforce or workstream' or 'CFW' which I have referred to earlier. This new classification structure removed the distinction between the technical workforce responsible for operations and maintenance of the network in exchanges and the lines workforce responsible for fault restoration and line installation, cable jointing and digging trenches. The CFW Agreement did not address redeployment or redundancy. Subject to relevant legislation, the IS & W Agreement overrode the operation of any award or certified agreement binding on Telstra to the extent of any inconsistency (cl 27.1 of the IS & W Agreement). In addition, it superseded and replaced a number of agreements including the CFW Agreement. Under the IS & W Agreement, the pay increases for employees employed in the Infrastructure Services and Wholesale Business Units were based on Company Rates introduced by the CFW Agreement. Mr McDonald was covered by the IS & W Agreement. 24 The issue of redeployment and salary maintenance was, for the first time, dealt with in an enterprise agreement in cl 18 of the IS & W Agreement. The terms of this Agreement apply instead. Increments will cease. The job to which you are redeployed will then be allocated to a Band in a Workstream. Your Actual Salary will remain unchanged. On the Second Increase Date, if as a result of the movement in the Company Rate for your job, your Actual Salary is less than the Company Rate you will move to the Company Rate. If on the Second Increase Date your Actual Salary still remains above the Company Rate you will receive a salary increase of 2%. If you are paid in accordance with (a)(i) above, you will receive any subsequent increases to the Company Rate for your new job. If you are paid in accordance with (a)(ii) above, on the Second Increase Date you will move to the Company Rate for your job, if your Actual Salary is below the Company Rate. If your Actual Salary still remains above the Company Rate on the Second Increase Date you will receive a salary increase of 2% calculated on your Actual Salary. First, the issue of redeployment and salary maintenance was, for the first time, dealt with in a certified agreement addressing the general terms of employment as opposed to a specific agreement dealing with redundancy. Secondly, in the case of redeployment, the AOTC Redundancy Agreement 1993 no longer applied. The IS & W Agreement applied by providing for different rates of increase if the employee was a redeployee and his or her salary was above the Company Rate for his or her job: cl 18.3. 25 During 2000, Telstra's other certified agreements introduced Company Rates for workstreams other than the CFW including the Customer Sales and Services Workstream ("CSSW") and the Support Workstream. New employees in these workstreams were employed under Company Rates. Existing employees did not move to Company Rates until 2002. This was the first occasion that a provision was made which limited salary maintenance when an employee requested, and was accepted by Telstra for, an alternative position more than two levels below his or her current position: see cl 15.3 of the TRA. The limitation applied to redeployment. 27 The variation took effect from 29 August 2002, being the date of the decision of the AIRC. In short, the variation, whilst it does not change the basic framework of the Agreement, it does significantly improve the process. To use the words of Mr Bretag, the variations provide a contemporary and secure instrument. The achievement of the negotiators can not be overstated. I am aware that negotiations have been difficult and the process was not interrupted by any industrial action. The IS EA 2002 applied to the business unit in which Mr McDonald was employed. Your Grandfathered Allowance will replace any Grandfathered Allowance that you may have previously received (as part of your Actual Salary) for your old job. Any Grandfathered Allowance will be paid in accordance with either clause 12.2.3 or clause 12.5(b) of [the IS EA 2002]. 31 This was the first time a 'Grandfathered Allowance' had been introduced. However, it only applied in limited circumstances. Those circumstances were set out in cl 12 headed "Workstream Principles". Clause 12.1 provided for agreed core job descriptions for each Band within a Workstream. Transition of employees to Workstreams and Grandfathered Employees was dealt with in cl 12.2. Telstra transfers and redeployees were dealt with in cl 12.5. Your Grandfathered Allowance will replace any Grandfathered Allowance that you may have previously received (as part of your Actual Salary) for your old job. In paragraph A, the "new Redundancy Agreement 2002" is a reference to the TRA. In paragraph B, the salary maintenance provisions for staff receiving the Grandfathered Allowance is a reference to cl 12.2 of the IS EA 2002: see [31] above. Subject to relevant legislation, it overrides the operation of any Award or Certified Agreement binding on Telstra to the extent of any inconsistency. There were 5681 votes in favour and 3882 votes not in favour. Prior to approval being given, the terms of [the IS EA 2002] were appropriately explained to the relevant employees in accordance with section 170LJ(3) of the [the WR Act]. The details of this are set out in parts 6.6 and 6.8 of the statutory declarations together with the annexures to Mr Brian Stapleton's statutory declaration. This shows that each employee who would be covered by [the IS EA 2002] were (sic) given a copy of [the IS EA 2002] which would cover their employment and the terms of [the IS EA 2002] were appropriately explained to the employees. The details of these awards are contained in part 7.1 of the statutory declarations. In this respect [the IS EA 2002] builds on and improves the terms and conditions of the previous Telstra enterprise agreement certified by the Commission in 2000. You will see that the grandfather allowance will form part of the grandfathered employees' actual salary that is relevant for the purposes of calculating leave, superannuation and other such entitlements. It is the parties' intention that the grandfathering provisions only apply in a limited set of circumstances; that is, it only applies to employees who were subject to the 2000 certified agreement and not to employees who are subject to other industrial instruments. This agreement consolidated the six separate certified agreements that were entered in 2002 and which are listed in [28] above. Clause 17.4 was substantially in the same form as cl 12.5 of the IS EA 2002. The only change was that the references to "you" were replaced with the phrase "an employee". There is no dispute that Mr McDonald was a "redeployee" for the purposes of cl 15 of the TRA. Further, there is no dispute that Mr McDonald requested and was accepted for the Field Technician position, being a position more than two levels below his previous position. 40 The issue to be resolved is whether, upon the proper construction of cl 17.4 of the 2005 Enterprise Agreement, Mr McDonald was entitled to salary maintenance or whether cl 15.3 of the TRA was engaged with the consequence that Mr McDonald was not eligible for salary maintenance because his new position was more than two levels below his old position. 41 Telstra submitted that cl 15.3 of the TRA was engaged and, accordingly, Mr McDonald was not entitled to salary maintenance. The CEPU contended that, on a proper construction of cl 17.4 of the 2005 Enterprise Agreement, cl 15.3 of the TRA was inapplicable. It is necessary, therefore, to have regard not only to the text of [cl 17.4], but also to a number of other matters: first, the other provisions made by [cl 17]; secondly, the text and operation of the [2005 Enterprise Agreement] both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the [2005 Enterprise Agreement] was made and in which it was to operate. See also Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Ltd (2006) 155 IR 211 at [27] and Liquor, Hospitality and Miscellaneous Union v Prestige Property Services Pty Ltd (2005) 141 IR 105 at [48]-[49]. 43 The Court's adoption of a "purposive" approach to the interpretation of statutory instruments, awards and certified agreements has been explained by various courts: Vision Super Pty Ltd v Poulter [2006] FCA 849 ; (2006) 154 FCR 185 at [66] --- [69]; Ansett Australia Ltd (Subject to Deed of Company Arrangement) v Australian Licenced Aircraft Engineers Association [2003] FCAFC 209 at [8] ; Australasian Meat Industry Employees' Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 at 212 and Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213 at 218. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning. First, Telstra placed considerable emphasis on the fact that the first time the parties expressly imposed a limit on salary maintenance was in the TRA - there being no similar provision in the AOTC Redundancy Agreement 1993. The timing of this was said to be significant because negotiations for the 2005 Enterprise Agreement commenced just three months later. Telstra's submission was that it would be highly unlikely that the parties would remove the operation of cl 15.3 without expressly referring to it given that it had only been in place for 3 months. Secondly, Telstra submitted that the explanatory note to cl 12.5 of the IS EA 2002 (being the predecessor to cl 17.4 of the 2005 Enterprise Agreement), which stated that the clause had been simplified to "take into account" rather than "supersede" or "replace" the TRA, was further evidence that the object of the parties was to preserve the substance of the TRA salary maintenance provisions rather than override them. 46 On the other hand, the CEPU submitted that the historical analysis supported their construction of cl 17.4 of the 2005 Enterprise Agreement on the basis that from 2000 the parties were dealing with salary maintenance in the relevant enterprise agreement and not in the redundancy agreement. 47 The principal conclusion to be drawn from the historical examination was that the salary maintenance provisions were a point of contention between the unions and Telstra and from time to time, agreements were proposed and agreed. It is not suggested that the current form of the 2005 Enterprise Agreement does not reflect the obligations of the parties. If there is any light shed on the meaning of cl 17.4 by what happened in the past, it is at best a faint and wavering light. If there is a high point, it rises no higher than Telstra's submissions at the hearing before the AIRC regarding the certification of the IS EA 2002: see [37] above. 48 At that hearing before the AIRC, Telstra stated that the IS EA 2002 " would not result, on balance in the reduction in the overall terms and conditions of employment " of employees covered by the IS & W Agreement; rather the IS EA 2002 was said to " build ... on and improve ... the terms and conditions of the [IS & W Agreement] . " Furthermore, with respect to the grandfathering provisions of the IS EA 2002, Telstra stated that they would only apply " to employees who were subject to the [IS & W Agreement] and not to employees who [were] subject to other industrial instruments . " Telstra accepts that Mr McDonald was subject to the IS & W Agreement. 49 As the historical material illustrates, CEPU's analysis of the history is correct. The IS EA 2002 was negotiated, at least with respect to employees such as Mr McDonald, against the backdrop of the IS & W Agreement, not against the backdrop of the more recently negotiated TRA. Once it is recognised that the salary maintenance provisions of the TRA were intended to cover only " employees who [were] subject to other industrial instruments ," and not employees subject to the IS & W Agreement and its 2002 successor, the temporal proximity of the TRA to the IS EA 2002 is irrelevant. 50 Further, when one considers that the parties understood the IS EA 2002 to at least maintain the terms and conditions of the 2000 agreement (and thus pass the no disadvantage test under s 170XA of the WR Act), it provides further support for the contention that the IS EA 2002 should be read to preserve, if not "build on and improve", the level of salary maintenance found in cl 18 of the IS & W Agreement. Telstra accepted at the hearing that cl 18 provided for salary maintenance for redeployees without respect to the pay level of the new position (the only limitation being that redeployees would receive smaller pay raises until the pay rate for the new position caught up with their actual salary). 51 The purpose of cl 17.4 is clear --- to substitute the salary maintenance provisions in the TRA with those set out in the balance of cl 17.4 of the 2005 Enterprise Agreement. The relevant question presented by the clause is what is it that "will not apply"? Is it, as the CEPU submitted, "the salary maintenance provisions of the TRA (without limitation)? " Or is it, as Telstra submitted, only one of the provisions made in that agreement on that subject which "does not apply" --- cl 15.2? 52 When the relevant question is identified in that way it is evident that the construction urged by the CEPU must be adopted. It must be adopted because cl 17.4 must be construed as a whole. It must be construed having regard to the fact that it provides that some provisions on a particular subject (salary maintenance) will apply, and others (on the same subject) will not. That is, the clause identifies what salary maintenance provisions are to apply: they are the provisions set out in the 2005 Enterprise Agreement and referred to as "the following provisions". What the clause then says is that certain (earlier made) provisions on that subject do not apply: they are the "salary maintenance provisions of the TRA". The further identification of those provisions as being contained in cl 15.2, which is all that the parenthetical expression does, does not preserve the operation of cl 15.3 of the TRA as some additional qualification to the rights that the parties have bargained for in the 2005 Enterprise Agreement because the clause itself (cl 15.2) expressly refers to clause 15.3 and is subject to it. What then cl 17.4 says is not to apply (cl 15.2) is the clause whose application is qualified by reference to cl 15.3. Telstra's argument seeks to stand this relationship between the three clauses (cl 17.4 of the 2005 Enterprise Agreement and cll 15.2 and 15.3 of the TRA) on its head. It does so by seeking to elevate the qualification in cl 15.3 to the operation of cl 15.2 (a clause which on any view is said not to apply under cl 17.4) into a free-standing provision which itself regulates entitlements to salary. What Telstra's argument did not identify was any satisfactory explanation for how cl 15.3 as a qualification to cl 15.2 could be given that operation when cl 15.2 is a provision which is expressly excluded from engagement under cl 17.4 in the circumstances identified in that clause. 53 In addition to the textual arguments and the history of the negotiations between Telstra and the unions, Telstra submitted that if the CEPU's construction were adopted "extreme examples" would follow which were "odd just from an industrial view point". The "extreme example" or the "oddity" was said to arise because an employee could decide that it might not suit them to be retrenched voluntarily at a particular time and, rather than be retrenched, he or she takes a job at a level more than two CFW levels below their current job with a salary differential of some 40 or 50 per cent and yet Telstra must accept that offer on the basis that it will maintain the employee's salary at the higher salary rate. 54 The unstated premise for Telstra's argument about this oddity from an industrial view point was that the result which Telstra characterised as "odd" was a result imposed on Telstra. Once it is recognised, however, that Telstra is not required to agree to redeployment of the employee concerned to a particular position (see cl 15.1 of the TRA in [17] above, stating that the employee must be "accepted for" the new position), it is evident that the premise for Telstra's argument is not established. In other words, the arguments founded in alleged extreme or odd results resulting from the construction urged by the CEPU should be rejected because Telstra can avoid such results by choosing not to accept employees for redeployment to positions more than two pay levels below their current pay level. In short, whether to accept the employee for redeployment to a particular position was and remains a decision for Telstra. 55 The textual and historical considerations referred to earlier, coupled with the rejection of Telstra's arguments founded in allegedly extreme or odd results "from an industrial view point", are determinative. Telstra breached the 2005 Enterprise Agreement by failing to provide Mr McDonald salary maintenance as required by cl 17.4 (as well as redundancy benefits under cl 9.1 of the TRA at the higher rate of pay) after he was redeployed to, and later accepted a redundancy package from, a lower-paying position. I will also allow pre-judgment interest under s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) calculated at the rate fixed from time to time in accordance with the Penalty Interest Rates Act 1983 (Vic). This follows the usual practice of this Court in adopting the rates of interest applied in the relevant State Supreme Court: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55; Walker v Citigroup Global Market Pty Ltd [2005] FCA 1866 and Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | employee entitlements under certified agreement where employee was transferred to alternative position before employment relationship terminated where new position at a lower rate of pay construction of salary maintenance provision in relevant certified agreement relevance of salary maintenance provisions in earlier redundancy agreement between unions and employer industrial law |
In 2001 he held an Australian passport. In the aftermath of the New York atrocity of 11 September, 2001 (9/11), he was in Pakistan and suspected of activity in aid of persons supporting anti-Western terrorism. He was arrested by Pakistani authorities and detained by them on 4 October. Later that year he was taken to Egypt and detained there. By early 2002 he was detained in Afghanistan, apparently by officers of the United States of America. From about April or May 2002 until 27 January 2005 he was held by US forces at Guantanamo Bay in Cuba. He was then released and returned to Australia. 2 He claims to have been wrongfully arrested and falsely imprisoned by the Pakistani, US and presumably Egyptian governments and to have been assaulted and tortured, in a number of ways. He claims that officers of the Australian government, with the authority of the government, were in various ways complicit in his maltreatment and/or took no or inadequate steps to prevent it when effective steps might have been taken to assist him. 3 He sues on many causes of action including a species of negligence, asserting that the Australian government has a legally justiciable duty of care to its citizens abroad and in possession of an Australian passport to take all reasonable steps to ensure that when they are in the custody of foreign governments, they are treated lawfully, fairly and humanely, and that the Commonwealth failed to fulfil that duty to him. 4 After the proceedings had been under way for some time, Mr Habib alleged that while in Islamabad he was taken on or about 24 October 2001 to the Australian High Commission where he met a man known to him as Alastar Adams, and whom he understood to be an agent of the Australian Security Intelligence Organisation (ASIO). Mr Habib claims that he had visible signs of beatings and that he told Adams of his kidnapping and other maltreatment and asked him for help. He also claims that on or about 26 October 2001 he was again taken to the High Commission and interrogated by US officers in Adams' presence. Adams, he says, also interrogated and threatened him. 5 He also alleges that elsewhere in Pakistan on or about 29 October 2001, Adams was present at and complicit in further maltreatment of him and his abduction to Egypt. 6 In the proceedings in this Court, the Commonwealth had attempted, one way and another, to have determined separately and early the question of whether there was a justiciable duty of care by the Commonwealth to its citizens as alleged, in order, if there were not, to narrow the factual issues in the case. That legal question is, at present, an open one: Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574. In the course of interlocutory proceedings related to such procedural attempt by the Commonwealth, Mr Habib first made the allegation that he had actually been in the Australian High Commission to the knowledge of at least one Commonwealth officer, Mr Adams. Counsel for the Commonwealth then conceived, correctly as it appears to me, that such an allegation would bear strongly on whether the Commonwealth had a duty of care of the kind alleged. 7 I was then persuaded, over the opposition of the applicant, to try the discrete question, whether Mr Habib had ever been at the Australian High Commission in Islamabad, separately pursuant to O 29 r 2 of the Federal Court Rules . As I indicated in the course of discussion with counsel, prima facie it seemed unlikely that any participation by an Australian officer in the maltreatment of Mr Habib, or turning of a blind eye to it, would have occurred at Australian diplomatic premises. Further, the circumstances alleged by Mr Habib as to how he came to believe and to assert late in the piece that he had been at the High Commission, viewed in the light of the bad treatment he says that he received in Pakistan, Egypt and at a US military base, made it unlikely that to decide the issue I would need to cast any reflection on Mr Habib's truthfulness or even general reliability, such as might prejudice or embarrass a manifestly unbiased trial of the other factual issues in the case. Because of my impending departure from the Court, the trial of other factual issues, and of the legal issues, in the case will be before (or as directed by) another judge. 8 This is now my judgment on a final trial of the factual issue: was Mr Habib ever in the Australian High Commission in Islamabad before he was taken to Egypt? 9 I have concluded that he was not, and I will so declare, for the reasons that follow. Islamabad was the capital and in 2001 had a population in the order of one million people. The extent of Mr Habib's general knowledge of the buildings of Islamabad was not established. Late in 2006 he says that he was out to dinner in Auburn and Mr Ejaz Khan introduced himself to Mr Habib. Mr Khan said he was a solicitor who also practised in Pakistan. He invited Mr Habib to consider an action against the Pakistani government. Mr Habib later saw Mr Khan in his office on 5 December 2006. Mr Khan told Mr Habib that in his opinion Mr Habib had been taken on the occasions of seeing Adams to either the US or the Australian embassies. Mr Khan also said that he was soon to visit Pakistan and would investigate the matter for him if Mr Habib wished. Mr Khan said it was common for people in Islamabad to be interrogated in the consulates of their own countries. This was so in respect of the UK, US and Australian consulates. 12 When, soon after, Mr Habib saw photographs of the Australian High Commission in Islamabad he recognised it as the building to which he believed he had been taken to see Adams. Mr Habib says that he was blindfolded when driven to the meetings with Adams. He could, by tilting his head, partially see under the blindfold. He thus saw the steps of the building and plants that were there, indeed half way up the building at its entry. He also saw the fence. 13 Inside the building, the blindfold was off. He was in a room like a bedroom; it had a television set, a computer, a bar --- "everything ... five star". Otherwise in the building he saw a hallway, a tea area and a huge room. The whole building was big and impressive, of five star quality. He saw no Australian flag, emblem or sign that indicated it was an Australian establishment. There were people dressed as servants in Pakistani dress serving food. He could not recall the colour of the carpet in the bedroom where he was. 14 The only photograph tendered shows a building of good quality. There was no evidence to suggest that a building of that type was singular or even uncommon in Islamabad, although Mr Habib said that there were not many buildings of fine quality in that city. An ASIO officer known as Paul Stokes, came to Pakistan for the purpose of interviewing Mr Habib once it was known he was in Pakistani custody. An interview of Mr Habib was arranged for 24 October, which Mr Stokes but not he, Briskey, attended. Mr Stokes left the High Commission for the purpose of that interview. Mr Briskey's information was that Mr Habib was never at the High Commission. 16 Mr Briskey was present at interviews with Mr Habib on 26 and 29 October 2001, attended also by an ASIO officer, not Adams. Neither interview was at the High Commission but at "safe houses" apparently controlled by Pakistanis. There was nothing to indicate that the safe houses were owned by Australia. 17 The High Commissioner Mr Brown, Alastar Adams who was the Consul, Paul Stokes and Mr Briskey were involved in the decision that Stokes should meet Mr Habib and perform consular functions. 18 Mr Habib said at interview he had been kidnapped and beaten and had been subjected to a number of incidents of mistreatment. 19 In general, Mr Briskey was not permitted an operational role in the investigation of crimes in Australia, not even to interview Australian suspects present in Pakistan. No one was ever detained at the High Commission. There were issues of Pakistani sovereignty. 20 The number of Australian diplomatic staff in Islamabad was reduced after 9/11. He said that there were about four to five Australians then at the High Commission and about 20 Pakistanis. 21 There were several entrances to the High Commission complex. 22 Mr Alastar Adams gave evidence that he was a long-serving officer of the Australian Department of Foreign Affairs and Trade (DFAT) on the verge of retirement. In October 2001 he was the Consul at the High Commission in Islamabad. He first had "tangible evidence" of the arrest by Pakistani authorities of an Australian who turned out to be Mr Habib by a report in the Pakistani media on 20 October 2001. He promptly asserted Australia's consular rights with the Pakistani Foreign Ministry and requested a consular visit. He was told to send a diplomatic "third person note". Such a note was sent on 1 November and, unanswered, was followed up by another on 9 November. 23 He did not meet Mr Habib or attend any meeting with him in October. He had never seen him before he saw him on a videolink in Administrative Appeals Tribunal (AAT) proceedings in 2007. He had probably seen press photos of him before then. He had never interviewed Mr Habib. 24 He confirmed Mr Briskey's account in part, having prepared a "consular arrest package" (including a card with his name on it) for Mr Stokes to take to the 24 October meeting with Mr Habib. 25 He had no knowledge of Mr Habib having ever been at the High Commission and would expect that he would have become aware of it if Mr Habib had been there, in his capacity as Consul and generally because his office "oversight[ed] the entrance to the Chancery, for security supervision". 26 It was through police/intelligence and not consular channels that the meetings with Mr Habib were arranged. 27 After 9/11, security at the Mission was increased physically and non-essential staff were evacuated. 28 It was inconceivable that the intelligence service of a foreign country which had detained an Australian national would take such a person to the High Commission, regarded as Australian territory, where that service would have no control over the detainee. 29 Mr Habib's case was quite unlike the common ones of Australians actually charged with a criminal offence. It was the first case of a suspected terrorist he had encountered. 30 It was suggested that Mr Adams had exhibited some animus to Mr Habib in the AAT proceedings. Mr Adams gave an explanation of the circumstances that gave rise to the suggestion. It is unnecessary to resolve that question and I refrain from doing so. 31 Most of the Pakistani guards of the High Commission were illiterate and, despite instructions to record visitors, somebody could have come to the premises without appearing in the register of visitors. Mr Briskey but not Mr Stokes would have had a key to the building. 32 Mr Brown , now the Australian Ambassador to Sweden was the head of the Australian Mission as High Commissioner in Islamabad in October 2001, and a foreign affairs officer of over 30 years' experience. 33 The contingent of Australians in the Mission was reduced from about 13 to five after 9/11. Security was considerably tightened. Mr Brown knew nothing of Mr Habib being at the High Commission and would have expected to be aware of any such thing: he had overall responsibility for management of the Commission and would be informed of all major policy matters and significant developments. The possibility of Mr Habib being brought to the High Commission would have constituted both. He had heard of no such proposal. Now, after 39 years in the foreign service, he knew of no occasion when an Australian citizen had been brought to Australian diplomatic premises by officials of the host country for interview and intended return to detention in that country. 34 Mr Brown generally confirmed the evidence of Mr Adams and Mr Briskey as to Mr Stokes' and Mr Briskey's, but not Mr Adams' involvement at meetings with Mr Habib. Mr Adams, he said, was not a covert officer of any Australian security service. 35 Mr Beardsley was the Deputy Head of Mission. He was responsible for, among other things, the promotion of Australian security interests. He said that he had no knowledge of Mr Habib having been interviewed or interrogated in the High Commission as alleged by Mr Habib. Had that occurred, by reason of his position, he would expect to have been aware of it. 36 The other officers who were at the High Commission at relevant times also gave evidence that they knew nothing of Mr Habib being there and would have expected to know if he had. 37 Mr Stokes (a nom de guerre, being an assumed identity under the Crimes Act 1914 (Cth)) was an ASIO officer stationed outside Islamabad. He arrived in Islamabad on 22 October 2001. Through intelligence channels he sought to arrange access to Mr Habib. 38 He interviewed Mr Habib on three occasions at two houses controlled by the Pakistani authorities, and not in the High Commission. The houses were not in or near the High Commission. On the last two occasions Mr Briskey was present. On each occasion there were others including Pakistanis present. Mr Adams was at none of the interviews. At the first interview Mr Stokes handed to Mr Habib written material which Mr Adams had given him, including a card with Adams' name on it. 39 On 24 October he did not respond to requests by Mr Habib for assistance. He said that this was because he did not want to prejudice future access to Mr Habib. 40 There was concern among Pakistani and Western authorities that an attack similar to that of 9/11 might occur. This was only a couple of weeks after the incursion of troops into Afghanistan. He denied that either Mr Stokes or Mr Briskey had ever interviewed him. At the airport, before flying to Egypt, Adams was present when he was maltreated. Although Mr Adams was then wearing a balaclava, Mr Habib recognised Mr Adams' tie. 42 Although he had claimed in the original Statement of Claim that Mr Adams had visited him while he was imprisoned, he said, for the first time in the proceedings, that he had initially told his lawyers that his gaolers had indicated he would be taken to the Australian High Commission. He had been taken to a place better than the best hotel in Pakistan. 43 He said Mr Stokes was not the same man who called himself that and gave evidence in the Supreme Court (Mr Evatt, counsel for the applicant in this case, represented Mr Habib in the Supreme Court proceedings and, fairly, contradicted that suggestion but did say from the bar table that he thought the amplification of Mr Stokes' voice was clearer than there). 44 Mr Habib said that only one Australian had interviewed him and it was Mr Adams. 45 Mr Habib's solicitor did not give evidence. 47 While the Commonwealth may possibly be in no position to admit, and may wish to test, some of Mr Habib's allegations of maltreatment and harm suffered, it is essentially no part of its case to deny that over the years from 5 October 2001 until his return to Australia, Mr Habib was not grossly maltreated by officials of foreign governments. 48 It is common ground that, without any charge ever being laid against him in any country, Mr Habib was arrested and detained in Pakistan; interviewed there by at least one Australian officer; taken against his will to Egypt for reasons that cannot have been for his welfare; compulsorily transferred at some point from Pakistani to US custody; taken from there to Afghanistan; then to Guantanamo Bay, no ornament to Western civilisation; and finally released, presumably for want of credible evidence that he was ever an enemy combatant of US forces in Afghanistan or had ever aided or abetted the slaughter of innocents on 9/11. It is notorious that he and his family have, nevertheless, thereafter had to endure in Australia often voiced suspicions that he was an Islamist terrorist or fellow traveller or one who would give aid and comfort to such evildoers. On the face of things, there is little reason to doubt that his arrest and imprisonment were accompanied by measures of more active physical abuse. It would be unsurprising if being abused in such ways should have produced as to one matter some confusion of memory, some over-susceptibility to suggestion that at least part of his abuse was connived at by Australian governmental officials, even some tendency to exaggerate in order to try to make Australian authorities, including courts, understand what might be the central truths of his complaints. 49 Also in his favour, the years since 9/11 have featured unfortunate instances of overreaction, seemingly irrational reactions, hubris, discarding of tried and tested high standards of public conduct and respect for traditional civil rights by various Western governments and some persons in their service. Any assumption that a similarly chaotic approach might not, in the close aftermath of the shattering of Western complacency by 9/11, have also afflicted one or more branches of the Australian government would be imprudent. I make no such assumption. 50 However, it is clear that the DFAT officers concerned were very keen to afford, or (even if one should view the matter cynically) to be seen to afford Mr Habib due, traditional consular services. Even if this were only done in order to watch their own backs, and I make no finding on that question, what they did is a powerful source of improbability of the notion that they would permit, or could be ignorant of, the bringing of Mr Habib in daylight hours into the High Commission itself. Mr Habib must have been at least one of the outstanding matters of immediate interest to those officers. 51 It is even more improbable that the Pakistani security authorities would take an Australian citizen whom they were holding without charge and whom, on Mr Habib's case, they had physically abused, into Australian diplomatic territory in company with Australian officials. 52 The issue I am deciding, whether Mr Habib was taken to the Australian High Commission, does not necessitate the resolution of Mr Habib's claims that he was interviewed by Mr Adams and did not ever see Mr Briskey or Mr Stokes, far less his claim that Mr Adams, in a balaclava, benignly watched US and Pakistani officers physically abuse him immediately before his flight to Egypt. 53 It is enough to say that there was nothing in what the respondent's witnesses said nor in the way any of them gave evidence to cause me to depart from the foregoing assessment of the objective probabilities of the accuracy of the assertion by Mr Habib that does fall for my decision. I do not need to make any positive finding as to their subjective truthfulness or accuracy. 54 Likewise it is unnecessary to assume either a lack of truthfulness or any opportunistic tendency by Mr Habib to delude himself and which might account for his strongly stated beliefs about the detail of where he saw an Australian official, how many such officials he saw and their identities in Islamabad. The possible effects of his condition and then recent history and of his subsequent history could well account for what I think is his mistaken belief, apparently prompted by Mr Khan, that he was taken to the Australian High Commission. The same could account for his apparently novel suggestion at trial, which originally I thought might have more telling significance, that his Pakistani oppressors told him he would be taken to his embassy or consulate and his presumably incorrect suggestion that he had long ago told his solicitors this. 55 Blindfolded, he could not have seen much. I am unpersuaded that what he says he saw was necessarily any part of the Australian High Commission in Islamabad. What he believes he saw is unlikely to have been sufficiently distinctive to differentiate it from other buildings in that city, which no doubt had well-built offices, hotels and private residences as well as many poorer buildings. 56 As it seems to me, no reader and certainly no judicial reader of these reasons could fairly view my conclusion as redounding to Mr Habib's discredit on any other factual issue in the case. I find only that he was in one respect inaccurate about events that befell him at a time when he was sorely tried and ill-used and since when he has been further sorely tried and ill-used. There is therefore no new reason to consider that this finding might prejudice or embarrass the trial of other issues in the case. 58 Costs will be reserved for consideration in the light of the final disposition of the proceedings. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. | federal court procedure and evidence determination of preliminary or separate issue effect on credibility of witness for purposes of determining remaining issues high court and federal court |
2 In accordance with cl 5 of the Deed of Settlement dated 9 November 2007 between, inter alia, Mr Taylor and Telstra Corporation Ltd ("Telstra"), Telstra consents to the orders sought in the notice of motion. Two of the affidavits were sworn on 12 December 2007. One was sworn on 13 December 2007. The two affidavits of 12 December 2007 are identical except that in the second of the affidavits a table, which sets out details of shareholders who have objected to the settlement, has some of the personal details of the shareholders masked for confidentiality. I propose to set out the details as they appear in the affidavit. 6 These proceedings were commenced by an application and statement of claim on 20 January 2006. The cause of action in the proceedings is based essentially upon a briefing which Telstra gave on 11 August 2005 to members of the then Commonwealth Government. 7 In the briefing, forecasts were provided concerning declining PSTN revenues, and opinions were expressed regarding the insufficiency of past network expenditure. The information conveyed a negative sentiment about the financial position of Telstra. The briefing incorporating the information was not released to the Australian Stock Exchange until 7 September 2005. 8 Mr Taylor, who was the representative party in these proceedings, alleges that the information was of a kind which Telstra was required to disclose pursuant to its obligation of continuous disclosure under s 674 of the Corporations Act 2001 (Cth). 9 Mr Taylor alleges that persons who bought shares in Telstra between 11 August 2005 and 6 September 2005 inclusive bought those shares at an inflated price because the share price of Telstra would have been lower if the information had been released to the market before 7 September 2007. 10 Telstra denies the allegations and has made no relevant concessions throughout the proceeding. 11 On 31 March 2006, Wilcox J made orders for Telstra to provide discovery of limited categories of documents. The focus of the categories was upon the date on which the forecasts were first made and the opinions first reached. Discovery was provided in a number of tranches. At the conclusion of the discovery phase, Mr Taylor amended and further amended his statement of claim and application. 12 Telstra sought to strike out portions of the applicant's further amended statement of claim. That application was dealt with by Gyles J in an interlocutory hearing on 2 November 2006. Further amendments were made to the pleadings in light of the judgment of Gyles J and the result was that the causes of action are now pleaded in the second further amended application and second further amended statement of claim. The final date for providing opt-out notices was fixed at 4 May 2007. At the time when his Honour made those orders, he gave directions for the filing of lay and expert evidence by the parties and fixed the matter provisionally for hearing on 26 November 2007. 15 Opt-out notices were issued to group members by sending the notice by prepaid post to each group member who was recorded on the respondent's share register as having purchased shares in the period 11 August 2005 to 6 September 2005. It appears that slightly in excess of 33,000 notices were sent to group members. 4073 opt-out notices were received by the Court up to and including 4 May 2007. Accordingly, the group now consists of approximately 29,000 shareholders. That affidavit was served on 26 April 2007. 17 Telstra's lay evidence comprised statements of Mr Solomon Trujillo, who is the Chief Executive Officer of Telstra, Mr John Stanhope, the Chief Financial Officer, Mr Gregory Winn, the Chief Operations Officer, and Mr Andrew Klein, a partner in Bain & Co. Those affidavits were served on 18 June 2007. Telstra's lay evidence as contained in those statements comprised nine lever arch folders of material. A supplementary statement from Mr Stanhope comprising one further lever arch folder of material was served on 22 October 2007. 18 The thrust of Telstra's lay evidence is to the effect that the information was conveyed at the meeting at an early stage of an extensive strategic review and thus did not represent a concluded view reached by Mr Trujillo. 20 Ms Preston is a financial analyst from the firm of Financial Markets Analysis LLC, based in Princeton, New Jersey. Ms Preston in her report adopts an analysis known as an "events study" analysis which is commonly used in the United States in this type of proceeding. 21 An events study is an econometric technique that seeks to measure the impact of specific events on a company's share price by removing other unrelated events such as market-wide movements. The events study seeks to determine how much of a share price movement on a particular day is due to a specific event such as a disclosure of a hereto undisclosed piece of information. The events study methodology invites the conclusion that if a disclosure causes a statistically significant fall in the share price it follows that the information disclosed was material and it enables an estimate to be made of the extent of the "price inflation" present in the share price as a consequence of any earlier non-disclosure. 22 To date, the events study analysis has not been adopted by Australian courts, but it was relied upon by an applicant in representative action proceedings brought in this Court in the matter of Dorajay Pty Ltd v Aristocrat Leisure Limited. That matter was heard recently by Stone J and her Honour has reserved judgment in that proceeding. 23 The other report to which I referred was that of Mr Mangan. He is an analyst with stockbroking and funds management experience. He gives an opinion on the types of matters an analyst would take into account in determining whether the information was material and whether the earlier disclosure of the information would have had an impact on share price and the extent of such impact. 24 Both Ms Preston and Mr Mangan conclude that the information was material information within the meaning of the Act and that if earlier disclosure had been made, the price of Telstra shares would have been lower. They were of Mr Frederick Dunbar, Mr Vincent O'Brien, Mr Terry Walter and Mr Nicholas Hullah. Those reports comprise four lever-arch folders of printed material. In addition, Mr Walters' report includes 11 CD-ROMs containing more than 257,000 pages of documents. 26 Mr Dunbar and Mr O'Brien are experts from the United States who apply the events study analysis. Their reports are therefore responsive to the expert evidence of Ms Preston. 27 Mr Walter is an equity researcher who has undertaken an empirical study of the types, frequencies and the nature of disclosures made by ASX-listed companies since 2000. 28 Mr Hullah, who is an accountant, has provided an opinion on whether the information was material from the perspective of the application of the accounting standards and whether it was required to be disclosed in Telstra's financial accounts concerning the financial year 2004-2005. Telstra's annual report was released to the market on 11 August 2005. 29 Telstra served a fifth report on 24 October 2007. That was an expert report by Mr Warwick Evans. He is an analyst who adopts a similar approach to that of Mr Mangan. Mr Evans' report is contained in two lever-arch folders. 30 Although I have set out briefly the nature of the evidence contained in Telstra's expert evidence reports, I make no comment about the admissibility of that material had the proceeding gone to trial. 31 Each of Telstra's experts concludes that there was no obligation on Telstra to release the information. Apart from Mr Walter, whose analysis does not concern questions of materiality, each of the other experts concludes that the information was not material information at any time from 11 August 2007. Following from this, Messrs Dunbar, O'Brien and Evans conclude that there was no price inflation present in the period with which the proceedings are concerned. Each of the parties had filed evidence which should have enabled the matter to commence on or about the date provisionally fixed by Gyles J. There were a number of minor interlocutory matters still to be dealt with. 34 Mr Taylor on behalf of group members seeks approval for a settlement of the proceeding resulting in Telstra paying a total sum of $5,000,000 into an interest-bearing account to be maintained by Messrs Slater & Gordon who are the solicitors for the applicant. 35 The settlement sum is essentially divided into three parts. The first part will be directed to meeting the legal costs and disbursements of the applicant. The total amount sought is $1.25 million. The reasonableness of this allowance and the reasonableness of the costs and disbursements are dealt with in Mr Thompson's affidavit. 36 The second part of the settlement sum would be directed to an organisation known as Link Market Services ("Link") which manages Telstra's share register. Link has agreed to be involved in the processing of claims of eligible group members and has given an estimate of its likely costs. The figure envisaged is not a substantial sum. 37 The third part of the settlement sum which would be approximately $3.7 million will then be distributed to group members via the settlement scheme. In short, it is proposed to pay to Mr Taylor and all members of the group, excluding those who purchased shares on 11 August 2005, 5 or 6 September 2005, or who purchased and sold shares within the period in question, the amount of $3.75 million less the costs and disbursements and administrative expenses to which I have referred above. This will be paid in full and final settlement of all claims in the proceedings. Depending upon the number of eligible members of the group who opt into the proposed settlement, the amount which may be recovered by an individual group member will be between an amount of less than one cent up to a capped maximum of five cents per share. 38 The settlement followed a course of arm's-length negotiations between legally represented parties. The evidence establishes that the only way in which Mr Taylor, and hence group members, could achieve a better result was by going to trial. 39 The settlement scheme is an opt-in administrative process. Persons who opted out of the proceeding in May 2007 will not be eligible to participate in the scheme but they will not be bound by the settlement. 40 I have evidence before me as to the exclusion from the settlement of persons who purchased shares on 11 August or 5 and 6 September 2005 or who purchased shares between 12 August 2005 and 2 September 2005 but who sold those shares before 6 September 2005. I will refer to that evidence later. 41 Mr Fowlie described the means of participating in the settlement scheme. A significant part of the strategy is the requirement, as much as is practicable, that persons seeking to make a claim do so by completing a web-based proof of claim form which will be located on a webpage hosted by Slater & Gordon to be found at www.slatergordon.com.au/pages/telstrasettlement.aspx. If a person is unable to access the webpage, that person will be able to contact Slater & Gordon who will arrange for a proof of claim form to be provided to them. 42 Each person who wishes to participate in the scheme will be obliged within 49 days of approval to provide certain information in the proof of claim form. It is unnecessary to set out the information but it is basically concerned with the identity of the eligible claimant and bank details to permit electronic funds transfer of the relevant proportions to the bank account. If a participant does not wish to or is unable to provide such details, provision is made for a payment to be made by a cheque to that person. 43 The participant will be obliged to accept certain conditions of participation. Essentially, they are that so long as the scheme is administered in accordance with its terms, the decision of Slater & Gordon with respect to eligibility and the amounts of any distribution from the settlement fund is final. Further conditions are that a participant is authorised to submit the claim on behalf of the legal owner of the shares, that the information within the proof of claim is correct, and that participant meets the definition of group member and eligible claimant. 44 Link will prepare a schedule listing by shareholder, listing all purchasers of Telstra shares during the eligible period. The data collected by Slater & Gordon through the proof of claim process will be provided to Link by way of a proof of claim schedule. Link will compare the schedule with the registered transaction schedule and compile a confirmed transaction schedule which will comprise all transactions except for those referrable to persons who are listed as having opted out of the proceedings that appeared on the schedules. 45 There may be some complications due to intra-day purchases by institutions that are not separately recorded by Link. The scheme provides for Slater & Gordon to review unrecorded transactions and request documents to support them and to determine whether they are eligible to participate. 46 There may also be instances of persons incorrectly entering data. The scheme provides for Slater & Gordon to request supporting documentation and to determine whether the persons are eligible to participate. 47 Under the scheme, Slater & Gordon are authorised to add to the confirmed transaction schedules those unrecorded transactions that the firm satisfies itself to be in respect of purchases of eligible shares. The scheme also requires Slater & Gordon to communicate by letter with each person who submitted a proof of claim but has been determined to be ineligible. 48 Participating claimants will be entitled to payment of a sum calculated in accordance with a formula. The formula is recorded in [53] of Mr Fowlie's open affidavit of 9 November 2007. of Participating Claimant's Eligible Shares X Settlement Fund Total no. However, it appears to be the intention of the scheme that the whole of the fund be dealt with in accordance with the terms of the agreed settlement. 50 Mr Fowlie's affidavit of 10 December 2007 deals with the orders I made under s 33X(4) of the Act on 12 November 2007 regarding notification of the proposed settlement. 51 I should add that following publication of the notice of the scheme in newspapers on 15 November 2007 the parties became aware that the text of the notice differed to a small degree from the text which I approved. The parties subsequently approached me and further orders were made on 20 November 2007 requiring the applicant to publish a corrective notice in newspapers. The corrective notice was published on 23 November 2007. 52 I do not propose to set out the details of advertisement of the proposed settlement which are recorded in [4] to [13] of Mr Fowlie's affidavit of 10 December 2007. However, I am satisfied on the evidence that there has been extensive and sufficient notice to group members of the proposed settlement. 54 The essence of the objections is that they raised four objections to the proposed settlement. The first is to the amount of the settlement. The second is that the fees payable are too high. The third is said to be that there is provision in the settlement deed for destruction of certain documents. The fourth is as to the exclusion of some shareholders as eligible participants in the settlement, notwithstanding that they fell within the definition of the group contained in the statement of claim. 55 Messrs Slater & Gordon represent 223 members of the group. That is to say 223 clients have retained that firm to represent them in the proceedings. One of the clients lodged two separate notices of objection. The reason there are two notices is that there are two separate legal owners of the shares. The purpose intended to be served by s 33V was stated succinctly by Branson J in Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 142 ALR 177 at 184. His Honour observed at [15] that he was not concerned so much with the position of the applicant, who was represented by solicitors and counsel, but with other group members, many of whom are not protected in this way. 58 In Williams v FAI Home Security Pty Ltd (No. Ordinarily...the court will take into account the amount offered to each group member, the prospects of success..., the likelihood of group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding... and the attitude of the group members to the settlement. 60 In Darwalla Milling Co Pty Ltd v F Hoffmann-La Roche Ltd (No. 2) (2007) 236 ALR 322, Jessup J took a slightly different approach from Goldberg J. His Honour observed at [3] that each case is dealt with on its own merits and by reference to specific factors which might raise serious doubts as to fairness. His Honour said at [35] that he could see no particular warrant for incorporating into Part IVA of the Act the requirements of the rules of the court of an overseas jurisdiction. 63 Jessup J at [50] also said that he did not consider that it was the Court's function under s 33V to second-guess the applicants' advisers as to the answer to the question whether the applicants ought to have accepted the respondents' offer. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one...the court should, up to a point at least, take the applicants and their advisers as it finds them...So long as the agreed settlement falls within the range of fair and reasonable outcomes, taking everything into account, it should be regarded as qualifying for approval under s 33V. My reasons for this are as follows. 68 Counsel for the applicant have provided a joint opinion that the proposed settlement is fair and reasonable. This is a matter which carries weight in the exercise of my discretion although, of course, ultimately it is for me to satisfy myself in accordance with the relevant principles. 69 I have given careful consideration to the objections which have been raised. 70 As I said previously, the first objection is as to the amount of the settlement. In my view the matters which point in favour of the fairness and reasonableness of the amount are four-fold: (i) there were arm's length negotiations between the applicant and the respondent; (ii) the evidence establishes that the amount which has been offered was the best amount that could be achieved on a negotiated basis; (iii) the only alternative to accepting the settlement offered by Telstra was for Mr Taylor to run the proceedings with the inherent risks of such a procedure; and (iv) the risks included the possibility of an adverse costs order. 71 As I have said earlier, Jessup J in Darwalla drew attention to the approach which the Court should take, namely that the Court should take the legal advisers as it finds them. Of course, that is a matter which has bearing in relation to the members of the group who retained Slater & Gordon, but it does seem to me also to be a matter which I ought to take into account in considering the fairness and reasonableness of the settlement proposal. 72 The second objection was as to the fees that are payable. I have considered the evidence of Mr Thompson who is an independent and accredited costs assessor. He is the principal of the firm known as Blackstone Legal Costing Pty Ltd. He has assessed the costs as fair and reasonable. It should be noted that Mr Thompson points out that the actual professional costs incurred by Messrs Slater & Gordon exceed the amount that has been claimed. Moreover, although Slater & Gordon have undertaken work in relation to the files of the 223 group members who retained them, the firm will not be charging costs for that work. The estimate of the amount of those costs would be in excess of $100,000. Slater & Gordon will incur irrecoverable costs in administering the settlement. They have not charged a success fee or any uplift in their fees nor have they charged for disbursements including overseas calls. 73 Although the amount of the costs looked at in isolation seems to be a large figure, it is necessary to take into account the stage at which the settlement has been reached. It is evident from the evidence that has been filed and the fact that settlement was reached only about two weeks before the hearing that a substantial amount of work has gone into the preparation of the case. The global figure is as I have said $1.25 million, but approximately a third of that is comprised of expenses and disbursements including counsel's fees. 74 I do not consider that it is necessary to take the step which was taken by Sackville J in Courtney v Medtel Pty Ltd (No. 5) 212 ALR 311 at [57] to [60]. His Honour there suggested that evidence should be presented from an independent cost consultant. Here I have such evidence in Mr Thompson's affidavit. 75 The third objection was as to the possible destruction of documents. However, the objection is based on a misreading of cl 10(a) of the Deed of Settlement. The destruction of documents contemplated by that clause does not authorise the destruction of the primary evidence in the possession, custody or power of Telstra. It provides only for destruction of documents in the possession of, or controlled by, Mr Taylor. 76 The final objection deals with the exclusion of certain group members from participation in the settlement. The confidential affidavit of Mr Fowlie of 9 November 2007 dealt with this in [26], [28] and [29]. I did make an order for confidentiality of the whole of the affidavit but Mr Gageler SC has this afternoon waived the confidentiality of the provisions of those paragraphs and it is convenient to refer to them because they explain why the eligible participants in the settlement comprise fewer than all of those who are members of the group defined in the statement of claim. 77 Telstra's lay evidence discloses that the briefing to the government did not take place until after the market closed on 11 August 2005. Accordingly, even if Telstra was required to disclose the information, the earliest time when disclosure should have occurred would have been at the time of the briefing. It follows that even on Mr Taylor's case, group members who purchased shares on 11 August 2005 could not have purchased shares in an inflated market. 78 The exclusion of group members who purchased shares on 5 and 6 September 2005 is explained by the fact that an earnings warning was released before the market opened on 5 September 2005. The reason eligible participants are limited to those who purchased up to 2 September 2005 is that the period 3-4 September 2005 was a weekend and no transactions took place on those days. The earnings warning was released before the market opened on 5 September 2005. Accordingly, on Mr Taylor's own case, from 5 September 2005 the market was fully informed. Mr Fowlie gives an opinion that the consequence of this is that group members who purchased on 5 and 6 September 2005 did not purchase shares in an inflated market. 79 The exclusion of the category of group members who purchased shares between 12 August 2005 and 2 September 2005 but who sold those shares before 6 September 2005 is that they sold in a market which was unaffected by the actions or inaction of Telstra. On Mr Taylor's own case, group members who bought and sold shares in that market did not suffer loss and damage. The opinion given by Mr Fowlie is that the applicant would be unable to demonstrate that any selective disclosure of the information which apparently took place prior to 5 September 2005 did not cause the share price to decline. His opinion is hence that any difference between the price paid on purchase and the price received on sale by a group member in respect of shares sold before 6 September 2005 would reflect movements in the share price unrelated to the information which was said to be required to be disclosed under s 674 of the Corporations Act . 80 Taking into account therefore the matters put by the objectors and the evidence referred to above, I have come to the view that applying the tests stated in the authorities the overall settlement is fair and reasonable and, as I have said, I propose to approve it. It follows that I will make orders in terms of [1] to [14] of the minutes of order that were handed to me today. 81 I will also order that the Order 3 made in the four paragraph set of orders of 12 November 2007 be varied so as to exclude from it [26], [28] and [29] of Mr Fowlie's confidential affidavit of 9 November 2007. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | representative proceeding court approval of settlement fairness and reasonableness of terms of settlement objections to settlement alternative outcomes independent assessment of reasonableness of legal fees exclusion of certain group members from settlement practice and procedure |
The Tribunal had affirmed a decision of a delegate of the first respondent, the Minister for Immigration and Citizenship who formed the view that the appellant is not a person to whom Australia has protection obligations under the Convention Relating to the Status of Refugees 1951 , amended by the Protocol Relating to the Status of Refugees 1967 (Convention) and accordingly refused to grant a protection visa on 21 November 2006. On 29 August 2006, the appellant lodged an application for a protection visa with the Department of Immigration and Multicultural and Indigenous Affairs. The appellant filed a statutory declaration in support of his visa application in which he stated that in August 2003, he became involved in a protest against the closure of the wool spinning plant where he worked. He stated that as a result of the protest, he and over ten other protesters were arrested and detained and mistreated for a month. After his release and during 2004 and 2005 he sent petitions to the Chinese government protesting about the closure of the factory. This led to him being further questioned by Chinese authorities. He claimed that in November 2005 he openly protested about the closure of the factory with more than 1000 people. The appellant was then arrested and sent to a "centre of re-education through labour" until March 2006, when his family paid bribes to have him released. Thereafter he had to submit a "self-examine" report to the police every month and could not find employment. He left China on 1 August 2006 and believes he would be persecuted if he returned. A delegate of the first respondent refused the application for a protection visa on 21 November 2006. On 22 December 2006, the appellant applied to the Tribunal for a review of the delegate's decision. On 5 March 2007, the Tribunal affirmed the delegate's decision not to grant the appellant a protection visa. The appellant sought judicial review of the Tribunal decision and on 31 July 2007 the Federal Magistrates Court made orders by consent, remitting the matter to the Tribunal to be determined according to law. On 13 November 2007, the Tribunal affirmed the delegate's decision not to grant the appellant a protection visa. The appellant again sought judicial review of the Tribunal decision, and on 12 March 2008, the Federal Magistrates Court dismissed the application. The appellant appealed this decision, and on 6 June 2008 the Federal Court allowed the appeal, setting aside the orders of the Federal Magistrates Court, and remitting the matter to the Tribunal to be determined according to law. Before the Tribunal, the appellant made no new claims. He had already produced to the previously constituted Tribunal: his passport; a document described as a "Certificate of Release" (the Certificate) certifying that the appellant was ordered on 15 November 2005 by the People's Court to undergo "rehabilitation through labor"; and two handwritten letters from his wife (the letters), one addressed to the Department of Immigration and the other addressed to the appellant. The appellant did not place before the Federal Magistrate's Court a transcript to show all that occurred at the hearing. The appellant claimed to fear persecution by the authorities in China upon the basis of his past involvement in protests and demonstrations in relation to the closing of a factory where he worked and consequent loss of compensation and other payments by himself and fellow workers. The appellant also claimed that he could not get employment in China because of the Public Security Bureau (PSB) and his wife (still in China) could not get employment because of her association with him. He further claimed that a friend had disappeared (AB 244, [89]). The Tribunal did not accept that the appellant had a well-founded fear of persecution in China by reason of political opinion (actual or imputed) or any other Convention reason (AB 241, [75], AB 245, [94] --- [95]). It found the appellant to be "not a credible witness" (AB 241, [76]). The Tribunal accepted that the appellant was a citizen of China (AB 241, [73]), that he worked in a factory that closed in 2003 (AB 244, [89] --- [90]) and that he and fellow workers thereby lost employment. However, the Tribunal did not accept that: The Tribunal's non-acceptance of those matters stemmed from the Tribunal's non-satisfaction as to the credibility of the appellant and in particular, the "concerns" referred to as "above-noted" in the first line of [89] (AB 244). Those were described at AB 241 --- 244 and may be summarised as follows: The Tribunal also made some findings of an alternative kind, in the event that it was wrong not to accept the appellant's claim that he had bribed police (and thereby been able to leave China). Those are the findings relating to the "Certificate of Release" from the second line of [88] at AB 244 to the end of that paragraph. The Tribunal did not accept that the appellant had a well founded fear of persecution for a Convention reason, "including but not limited to actual and/or imputed anti-government political opinion and/or activity". The Tribunal noted (at [76], AB 241) that two previous Tribunal Members had each had concerns about the appellant's credibility and stated that: "For similar and different reasons, the Tribunal is satisfied that that the applicant is not a credible witness". The Tribunal considered the appellant's explanations for omitting certain information from his original statutory declaration, but was not persuaded by these reasons. In particular, the Tribunal gave no weight to a document submitted by the appellant entitled Certificate of Release dated 17 March 2006 which it found to be fraudulently prepared. The Tribunal also considered and rejected two letters from the appellant's wife, stating that it did not accept that the letters were reliable evidence of the facts contained in them. The Tribunal therefore found that the appellant did not have a well-founded fear of persecution for a Convention-related reason, and affirmed the decision under review. As summarised by the Federal Magistrate, the particulars to these grounds alleged: bias, or lack of good faith; a failure to comply with s 425 of the Act; a failure to consider certain relevant material; and a statement which read: "In summary, I have never ever agreed that my application has been assessed by the Tribunal fairly and carefully". The Federal Magistrate found that the appellant had not led any evidence that would suggest any bias, whether actual or apprehended, or any lack of good faith on the part of the Tribunal. Similarly, in relation to ground 2, his Honour found that the appellant had not provided any evidence to support his claim that he was denied the right to present his oral evidence and give argument against the issue arising from the Tribunal relating to his application. His Honour therefore could not find any breach of s 425 of the Act. In relation to ground 3, his Honour found that this ground sought to challenge the Tribunal's decision on its merits, and did not establish any failure by the Tribunal to consider relevant material. In particular, his Honour found that the Tribunal specifically did consider his reply to the s 424A letter, and rejected it. Similarly, the fourth ground did not establish any jurisdictional error in the Tribunal's decision. Having found no jurisdictional error in the decision of the Tribunal, his Honour dismissed the application. The key issue about my application is the credibility. In the Tribunal's decision, it has stated that: The applicant has been before two previous RRT Members, both of whom had concerns about the applicant's credibility. For similar and different reasons, the Tribunal is satisfied that the applicant is not a credible witness. The Tribunal conducted a relatively lengthy hearing, giving the applicant a third opportunity to put his case fully before the Tribunal. In other words, the purpose of giving me a relatively lengthy hearing was that the Tribunal intended to create me a third opportunity to put my case fully before the Tribunal. So, the Tribunal has in fact encouraged me to give my evidences in my more details. Furthermore, when I did so according to the Tribunal's conduction, the Tribunal stated in its decision that: The Tribunal notes that there have a number of details which have been provided after the applicant lodged his application for a protection visa. The applicant has accepted this and in response to the s 424A letter, he requested that the Tribunal kindly understand that he had many difficulties to prepare his claims at the very beginning. 'Firstly, at the very beginning while I arrived in Australia, I was subjected to serious financial difficulties. As a person who was not familiar with local environment in Australia and who particularly could not understand any English, I felt very much difficult to find a job; and it made me even hardly maintain my basic living. I sometimes had to borrow money from the others. Therefore. I had to try my best to minimize the payment for the cost of preparing my application through a migration agent. For doing so, I had to describe my claims more briefly and more generally in order to minimize the words of my statements, because the payment would be depended how many words were in the statements and how many hours would be spent by the migration agent. Secondly. I might have different understanding about how to describe my major claims, briefly and generally, according to Chinese culture. For example, I thought that the claim that "...I was greatly supported by many kind people and especially by those who previously worked together with me at the No. 1 Wool Spinning ..." might have already described, briefly and generally, how I departed from China. Thirdly, while I lodged my protection application at the beginning, I was advised that I would have a chance to detail my claims orally at the Departmental interview or at the Tribunal's hearing' He also said that it is almost impossible for him to prepare a Statutory Declaration covering all of his claims in detail, similar to the three Tribunal hearings he has attended; although the major claims which Tribunal discussed with him were similar, the questions put to him at the three hearings were completely different. Considered in isolation, the applicant's explanations appear to be fair and reasonable. The Tribunal recognises that it would be unreasonable to expect an application to include every detail at the primary level; the Tribunal does not have that expectation. But, as a matter of fact, the Tribunal has in fact expected me an applicant to have included all and every detail about their claims at the primary level , because it has rejected my credibility mostly on the ground that I have not included every detail in my primary application, particularly while the Tribunal considered my claims about my departure from China as well as my claims about the demonstrations. So, it is no doubt that the Tribunal itself made findings which was contradictory with each other. Also, there is no evidence that the Tribunal has taken genuine attempt to consider my response to the s.424A letter independently, fairly and properly. It may be seen that grounds 1 --- 6 relate to the "key issue" about credibility, and ground 7 stands alone, although it is generally related to the other grounds. As noted above, before the Federal Magistrate, the appellant claimed that the Tribunal: The application to the Federal Magistrate's Court was made on 18 November 2008. The Federal Magistrate dealt with each of the grounds raised therein, expressing his conclusions. His Honour also considered whether there was any other jurisdictional error, including as to the Tribunal's treatment of the Certificate of Release, and found that there was not. It is well established that a decision of the Tribunal is only available to be set aside upon judicial review if it involves "jurisdictional error". Absent that, a decision refusing an applicant a protection visa will be "privative clause decision" for the purpose of s 474 of the Act from which no appeal or relief on judicial review is available: Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476 at [76]. It is also accepted (see Plaintiff S157/2002 211 CLR 476 at [76]) that there may also be jurisdictional error if a tribunal fails to discharge "imperative duties" or to observe "inviolable limitations or restraints" upon which its exercise of administrative powers is conditioned. See also Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [82] ; Lobo v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 168 ; (2003) 132 FCR 93 at [45] . However, where a decision of the Tribunal refusing an applicant a protection visa turns entirely on an assessment of that applicant's credibility, a challenge to the Tribunal's findings and conclusions will usually be considered an impermissible attempt to undertake further merits review. This proposition has been affirmed in a number of cases. Recent examples include SZKMV v Minister for Immigration and Citizenship [2009] FCA 157 at [18] per Stone J; SZMFH v Minister for Immigration and Citizenship [2009] FCA 105 at [14] --- [15] per Graham J; SZMLR v Minister for Immigration and Citizenship [2008] FCA 1853 at [11] per Spender J. Accordingly, a finding by the Tribunal, which is not capable of being set aside on the basis of jurisdictional error, is a factual one which is not open to challenge by way of judicial review or on subsequent appeal proceedings: see NAHI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 10 at [10] . There is however a question whether a Tribunal decision which lacks rationality and logicality is one that exhibits jurisdictional error. The decision of the Full Federal Court in VWST v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 286 holds it is not. However, another line of Federal Court authority suggests otherwise: see for example, SZMDS v Minister for Immigration and Citizenship [2009] FCA 210 , where Moore J, having reviewed a number of recent authorities on this point since 2004, found, at [22] --- [30], that a decision of the Tribunal could suffer from jurisdictional error where it lacked logicality. This issue, I am informed by counsel for the Minister, is now the subject of a grant of special leave to appeal to the High Court of Australia in SZMDS v Minister for Immigration and Citizenship [2009] FCA 210 , made 31 July 2009. The appellant's first ground of appeal asserts simply that the Federal Magistrate "erred in law" and "was wrong" in finding that the Tribunal acted properly in its findings. No particulars are given within the ground itself as to how either limb is said to be made out. The following grounds 2 --- 6, however, read as a narrative flow from ground 1 and set out all of what the appellant wishes to contend in relation to ground 1. The Minister contends that the particular argument developed in grounds 2 --- 6 was not put to the Federal Magistrate, and that although this Court has power to allow an argument to be raised for the first time on appeal if it thinks that the interests of justice so require, the argument in question here is misconceived and cannot be allowed. I am however of the view that the arguments are more or less a refashioning of those put to the Federal Magistrate and should in any event be considered by this Court, particularly as he is a self-represented party. The appellant by his argument seeks to challenge the Tribunal's findings as to his credibility. Credibility findings are classically for the finder of fact --- in this case the Tribunal ( Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham 168 ALR 407 at [67]). The appellant refers to [76] --- [79] (AB 241 --- 242) of the Tribunal's decision and criticises the Tribunal for basing an adverse finding of credit upon the fact that the appellant provided a number of details after his initial application for a protection visa. However, the appellant fails to fully quote [79]. There one finds explanation by the Tribunal that the details to which it was referring that were not included at the primary level were "not minor" and were ones which "relate to significant claims", whereas the statutory declaration provided by the appellant was "lengthy and comprehensive", extending also to include "irrelevant matters", and that "the Tribunal is thus not persuaded by the applicant's explanations". The Tribunal said the "applicant's explanations" were those contained in the answer to the letter sent to the appellant under s 424A of the Act, such answer being extracted by the Tribunal at [77]. The Minister also notes that the following paragraphs of the Tribunal's reasons, particularly [80] --- [82] and [85] --- [86], further explain the Tribunal's difficulty accepting specific evidence from the appellant that was not included in his earlier statutory declaration (frequently there described as "lengthy and comprehensive"). I accept that this is so. The weight to be given to the appellant's evidence, including his explanations for why things were not said earlier, was entirely a matter for the Tribunal. The fact that the appellant was being given a further opportunity to put his case and to answer questions did not mean that the Tribunal was obliged to disregard any inconsistency with what had been said before, or the fact that something was now being said for the first time which (if true) the Tribunal would have expected to have been said earlier. In light of the information before it, the findings made by the Tribunal were open to it. Further, there is nothing irrational or illogical in the credibility findings made against the appellant by the Tribunal assuming an irrational decision indicates a jurisdictional error. That another tribunal may arguably have come to a different conclusion on credibility, is not to the point. In these circumstances the credibility findings made against the appellant are unassailable. As the Federal Magistrate found at [46] and [50] --- [51], referring to authority, there was also no basis for any finding of either actual or apprehended bias, or a failure to act in good faith. The Tribunal, on the material before this Court, did not do or say anything to support a finding of actual or apprehended bias, and his Honour was correct to so find. The appellant's ground 7 is a complaint that "there is no evidence that the Tribunal has" made a "genuine attempt to consider (the appellant's) response to the s 424A letter independently, fairly and properly". The Tribunal specifically referred to those documents at [59] --- [64], as well as in the "findings and reasons" section of its decision record in the paragraphs mentioned above. It plainly turned its mind to the appellant's answer to its invitation, but was not persuaded by that answer. To reject the answer, or to be unsatisfied by the answer, is not to fail to consider the answer. As the Federal Magistrate found at [61], the Tribunal "specifically did consider" the appellant's answer "and rejected it". His Honour was correct to find, in my view, (in the same paragraph) that the corresponding ground before him "is in effect a challenge to the Tribunal's decision on its merits", which "does not establish any failure by the Tribunal to consider relevant material" and that "no jurisdictional error is shown". The appeal should be dismissed with costs. These will be the orders: The appeal is dismissed. The appellant is to pay the first respondent's reasonable costs as taxed, if not agreed. I certify that the preceding thirty-seven (37) 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 |
Under that agreement (the Acquisition Agreement) RCR acquired all the shareholding in Eagle. The purchase consideration for the Acquisition Agreement was a maximum sum of $21 million to be satisfied by the payment of $15 million in cash on settlement under the Acquisition Agreement. The balance was to be paid over a two year term by way of two annual payments to a maximum of $6 million satisfied through the issue of shares in RCR or cash at the option of RCR. Settlement occurred on 30 April 2007. On 10 July 2009, RCR issued 4,270,644 fully paid ordinary shares with a deemed issue price of 59.6 cents per share to the Placees in satisfaction of part of the purchase price for Eagle pursuant to the Acquisition Agreement. RCR lodged an announcement on 10 July 2009 with ASX in respect of the issue of those shares. The purpose of the Chapter is to ensure that the acquisition of control of shares in the circumstances of takeovers, takes place in an efficient, competitive and informed market. The provisions aim to achieve reasonable and equal opportunities on the part of shareholders within a relevant class to participate in any benefits accruing to holders through any proposals for which a person would acquire a substantial interests in a company, body or scheme. Appropriate procedures are to be followed. To the extent relevant to this application, the CA restricts the on-sale of shares issued without disclosure under Ch 6D unless the sale is exempt under s 708 or s 708A CA. The current sale was exempt but it was still necessary to give notice to investors (the Placees in this instance) of the matters prescribed in s 708A(6) within the time set out in subs (6). Subsequent to those events occurring, it has been confirmed on behalf of RCR that none of the parties notified in respect of the relief which RCR now seeks, intends to appear or opposes the granting of the relief. The Company Secretary and Chief Financial Officer of RCR refers to the fact that as at the time of swearing his affidavit in support of the originating process, the Placees have on-sold over a million of the shares that were issued. On discovering that fact and notifying the Placees of the failure on the part of RCR to issue the Notice, he was informed by the representative of the Placees that the Placees would cease trading until further notice from RCR. He has given an explanation which I accept as to other activities at the time which gave rise to oversight on his behalf and presumably on behalf of others involved in and with the company. In addition, he has deposed to the fact that at all material times RCR has complied with the provisions of Ch 2M (financial reporting requirements) and s 674 CA (continuous disclosure requirements) as they applied to RCR; there was and is no excluded information as defined in s 708A(7) CA which would have been required to be disclosed or now requires disclosure and, accordingly it is submitted by RCR, that no injustice will have been caused to any person by reason of the Notice not having been lodged within five business days of the shares being issued. Inadvertence has its normal meaning as suggested in the authorities, for example, Blaze Asset Pty Ltd v Target Energy Limited [2009] FCA 698 per Barker J (at [35]). On the basis of the evidence and applying some common sense, it is plain that the oversight in failing to give the requisite Notice was caused by inadvertence. There is no doubt in the present case that RCR has taken steps within a reasonable time once the failure to lodge the Notice was identified. Specifically, RCR first became aware of the failure to issue the Notice on 9 September 2009. Given the need to take some advice in respect of that matter, taken with an intervening weekend, the notification to the Placees, the announcement to the ASX and the communication with ASIC had all been achieved by 14 September 2009 which is effectively within some three working days. There has been no undue delay. Also central to the relief sought by this application is the fact that RCR would have been exempt in respect of the requirements under s 708A(5) CA in respect of the on-sale of the shares had it given a notice for the purpose of s 708A(5)(e) CA within five business days of the issue of the shares. The declaratory relief sought by RCR under s 1322(4)(a) CA to the effect that a notice given under s 708A(5)(e) CA within the extended period be deemed to take effect as if it had been given on 13 July 2009, that is, within the required five business day period, is consistent with relief granted in the matters of Charter Hall Limited, in the matter of Charter Hall Limited [2007] FCA 1316 , Diversified, in the matter of Diversified United Investment Limited ACN 006 713 177 [2008] FCA 720 and In the Matter of Chameleon Mining NL [2009] NSWSC 660. It also gives clarity for those affected shareholders (the Placees) who on-sold the relevant securities prior to the lodgement of a notice which complies with the section and thereby to any purchaser from them. I am satisfied that no substantial injustice has been or is likely to be caused to any person. It is not evident that any injustice at all will be occasioned by granting the relief sought. Indeed, the contrary may be the case if relief is refused. It seems there was no excluded information which should have been but was not disclosed that could have altered the information base of those concerned if the time limits had been met. If that is wrong, a purchaser who is able to prove that there was excluded information which should have been disclosed would presumably have an independent cause of action available and certainly by the granting of liberty to apply, will have additional relief in respect of the orders to be made in this proceeding. There is no reason to think that compliance in the circumstances would have improved the position of a purchaser ( Charter Hall Ltd at [5]). Given the requirements for notice and advertising of the proposed orders, the granting of liberty to apply to vary or discharge the orders within a limited time would appear to accommodate any presently unforeseen potential for injustice ( Chameleon Mining NL (at [12])). The following orders will be made: In respect of the 4,270,644 shares in the Plaintiff issued on 10 July 2009 ( the relevant securities ), the period of 5 business days referred to in s 708A(6)(a) of the Corporations Act 2001 be extended to the second business day after the day on which these orders are entered. The notice under s 708A(5)(e) of the Corporations Act 2001 given to ASX Limited in respect of the relevant securities within the period provided for in order 1 be deemed to take effect as if it had been given to ASX Limited on 13 July 2009. These orders be entered forthwith. A sealed copy of these orders be served on ASIC, ASX, and each person named in paragraph 6 of the Affidavit of Phillip Crighton sworn 15 September 2009 within 2 business days of the date of these orders. A copy of these orders also be placed on the website of the Plaintiff as soon as practicable and remain there for at least 28 days. Any interested party have liberty to apply within 28 days of the entry of these orders to revoke or vary the orders. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | application for order under s 1322(4)(a) and (d) of the corporations act 2001 (cth) extending the time for the company to give notice of share placement in accordance with s 708a(5) and (6) whether failure to issue notice due to inadvertence whether substantial injustice to any party corporations law |
2 On 5 December 1993, The National Mutual Life Association of Australasia Limited ('the taxpayer') made a loss from the sale of shares held in its wholly owned UK subsidiary NM UK Limited ('NMUK'). The amount of the capital loss the taxpayer could claim for capital gains tax purposes, then under Pt IIIA Div 3 of the Act, depended on whether the capital contribution to the extent of [sterling]42.912 million, incurred by the taxpayer, formed part of the reduced cost base of the shares under s 160ZH(3)(c) of the Act. 3 A capital loss is calculated by reference to the reduced cost base of the disposed asset: see s 160Z(1)(b). Accordingly, where an asset is disposed of for an actual or deemed consideration which is less than its cost base, the reduced cost base must be calculated to determine whether a capital loss has been realised on the disposal. 5 The Commissioner did not dispute that the taxpayer incurred the [sterling]42.912 million for the relevant purpose, or that the capital expenditure added value to its shares in NMUK. The issue for determination is whether the capital contribution, at the time of disposal, was 'reflected in the state or nature' of the shares the taxpayer held in NMUK for the purposes of s 160ZH(3)(c) of the Act. 6 The parties agreed upon the facts relevant for my determination, although evidence was tendered in addition to an agreed statement of facts, primarily in the event that any agreed fact needed to be considered in context. Expert testimony was included within the evidence tendered, but the expert testimony tendered by the Commissioner was in the end accepted by the taxpayer. In view of the agreed facts, nothing seems to turn on this expert testimony for the purposes of my determination on the construction of s 160ZH(3)(c) of the Act. However, the taxpayer did specifically refer in opening to the uncontested fact (which I accept) that at the time of the disposal of the shares in NMUK in December 1993, the assets of NMUK available to be distributed to shareholders pursuant to the rights attaching to their shares were augmented by the amount of the capital expenditure of [sterling]42.912 million. The UK business was established in the late 19th century and was carried on through the taxpayer's No 6 statutory fund which operated as a self contained entity subject to UK regulation. 8 The No 6 fund traditionally sold "with profits" policies of life insurance. By the mid 1980s those types of policies were declining in popularity and the taxpayer's UK business was growing slowly. Due to its slow growth, the No 6 fund had available to it a very significant surplus far in excess of that which was needed to meet the reasonable expectations of policy holders. 9 The taxpayer conceived of a plan whereby it would grow its UK business by purchasing another UK life insurance company. It decided that it should acquire three subsidiaries of Schroder plc, namely Schroder Financial Management Ltd, Schroder Life Assurance Ltd (later called National Mutual Schroder Life Assurance Limited or 'NMSLAL') and Schroder Unit Trust Management Ltd. NMSLAL wrote unit linked policies, which at the time were popular in the UK. NMSLAL had, for that reason, expanded greatly in the 1980s, but needed further capital to keep growing. The taxpayer's plan was to use the surplus in its No 6 fund to provide that capital. It would do so by merging the assets and liabilities of that fund with NMSLAL. 10 NMSLAL was ultimately acquired on 19 December 1986 for [sterling]105 million by the taxpayer's wholly owned UK resident subsidiary, NMUK. NMUK had been previously acquired as a shelf company in 1986 for the purpose of being the UK holding company of the taxpayer's UK business. The price paid was more than the actuarially ascertained value of [sterling]85 million. 11 As at 31 March 1988, 43% of shares in NMUK were owned by the taxpayer and 57% by a wholly owned subsidiary of the taxpayer, NMC. 12 Between December 1986 and March 1988 the taxpayer took steps to merge the business of its No 6 fund with that of NMSLAL. This required it to negotiate with the then UK Department of Trade ('DTI') and the UK Government Actuary's Department ('GAD') over the amount of the No 6 fund surplus that would be available to be utilised by the taxpayer. The DTI and the GAD had formed the view that the policy holders in the No 6 fund were entitled to a part of that surplus and that it should be returned to them by way of bonuses over time. 13 After agreement was reached with the DTI about the surplus, the taxpayer was able, pursuant to s 49 of the Insurance Companies Act 1982 (UK), to apply to the Chancery Division of the High Court for orders requiring the transfer of the assets and liabilities of the No 6 fund to NMSLAL. Under the arrangement agreed with the DTI, that part of the surplus which could be used to grow NMSLAL's business would be paid as contributed capital by the taxpayer to the shareholders' funds of NMSLAL, and thereafter be transferred to NMSLAL's Long Term Business Fund ('LTBF'). Orders securing the transfer of the business of the No 6 fund and for the making of the contribution of capital were made on 23 March 1988. 16 Pursuant to the orders the taxpayer transferred the Capital Contribution Amount to the shareholders' funds of NMSLAL and subsequently that amount was transferred to NMSLAL's Long Term Business Fund. 18 The amount transferred to the LTBF was allocated partly to the Closed Business Fund and the balance to the OBF. The amount allocated to the OBF, [sterling]42.912 million increased the surplus in the fund and was used to grow the business of NMSLAL. 19 The [sterling]42.912 million was not credited to NMSLAL's share capital account, no issue of scrip accompanied the expenditure and the expenditure did not effect any change to the memorandum or the articles of association of NMSLAL or NMUK. Neither NMUK nor NMSLAL paid dividends or returned capital from 1988 until the sale to Friends. After April 1993 and immediately prior to the sale of the NMUK shares by the taxpayer to Friends the [sterling]42.912 million was available to be transferred out of the LTBF to NMSLAL's shareholders' funds in accordance with cl 5(4) of the orders referred to above. In early December 1993 the taxpayer sold its shares in NMUK to Friends for [sterling]113 million. Friends was the only company prepared to buy the business. 22 Immediately prior to the sale of NMUK, the taxpayer owned all of the shares in NMUK. Prior to this NMUK's shares had been held by other group companies, but neither party contended that theses changes in ownership was a relevant consideration to the issue for determination. 23 As I have already indicated, it was accepted by the parties that the amount equal to the Capital Contribution Amount paid by the taxpayer to NMSLAL to the extent of [sterling]42.912 million, was incurred by the taxpayer for the purpose of enhancing the value of the shares in NMUK, the parent of NMSLAL. 25 The Commissioner's contention was that the 'value' of an asset is different from its 'state or nature' for the purposes of s 160ZH(3)(c) and that an increase in the asset's value, resulting from the capital expenditure, is not, of itself, sufficient to meet the requirement that the expenditure be 'reflected in the state or nature of the asset at the time of disposal'. Accordingly, on this view, the capital expenditure of [sterling]42.912 million did not form part of the taxpayer's reduced cost base of the shares. 26 The Commissioner submitted that, on the proper construction of s 160ZH(3)(c), what is required for amount of capital expenditure to be included in the reduced cost base is a change in the asset, attributable to the expenditure, other than by way of an increase in value. It was contended that the language of the section distinguishes the concept of 'value', related to the purpose of the expenditure, from the concept of 'state or nature', in which the expenditure must be reflected. For the Commissioner, the criterion is not whether the expenditure has actually enhanced the value of the asset, but whether there is some identifiable change to that asset, that is, to the qualities or attributes that make up the asset distinct from its worth or enhancement in value, which has resulted from the expenditure. 27 The Commissioner contended that the language of s 160ZH(3)(c) makes it clear that Parliament did not intend that all capital expenditure incurred for the purpose of enhancing the value of an asset should be included in the reduced cost base of the asset. It was contended that s 160ZH(3)(c) does not look to value as the determiner: it is not whether the value of the expenditure is maintained at the time of disposal. The question is whether the expenditure incurred was reflected in a part of the asset disposed of, that is to say in those features or attributes of the asset that may be described as its 'state' or 'nature'. 28 It was contended by the Commissioner that, in the case of expenditure incurred in relation to shares in a company, it is the bundle of rights attaching to the shares in which the expenditure must be reflected. Here, the making of the expenditure did not alter the rights attaching to the taxpayer's shares in NMUK. It did not alter the rights attaching to the shares issued by NMSLAL. The Commissioner pointed out that the [sterling]42.912 million was not credited to NMSLAL's share capital account, no issue of scrip accompanied the expenditure, and the expenditure did not effect any change to the memorandum or the articles of association of NMSLAL or NMUK. 29 It was contended that the making of the capital expenditure may have increased the value of the taxpayer's shares in NMUK (because the making of the capital expenditure may have increased the value of NMUK's (indirect and later direct) shareholding in NMSLAL), but the taxpayer's shares always carried the right to participate in dividends, the right to share in a distribution of assets and the right to receive capital. Therefore, it was contended by the Commissioner, that the making of the capital expenditure did not create rights additional to, or different from, those existing rights, and all that varied was the value of the shares. Therefore, neither the 'state' nor 'nature' of the shares changed as a result of the capital expenditure. 30 The taxpayer rejected this approach taken by the Commissioner, and focused upon the ordinary meaning to be given to the words in the Act of 'state' or 'nature', the purpose of the capital gains tax provisions in the Act, and the nature and state of a share, to urge upon the Court the construction it contend for in this proceeding. More particularly, the taxpayer submitted that on the facts the condition of the shares had been improved or enhanced by the expenditure, in that the value of the taxpayer's rights in NMUK had been improved or enhanced, and the benefit of that expenditure remained reflected in the state or nature of the share at the time of its disposal. 31 The taxpayer did not just rely upon the fact of an increase in the embedded value of the shares. It was contended that it was important to determine the reason for an increase in the embedded value. The taxpayer contended that there had been an increase in the embedded value of the shares because the assets available for distribution had been increased arising from the capital expenditure. 32 The purpose of s 160ZH(3)(c) is to allow a taxpayer to take into account in calculating the cost base of an asset, the capital cost incurred for the purpose of enhancing the value of the asset where the expenditure is later reflected in the state or nature of the asset at the time of its disposal. 33 It is clear that s 160ZH(3)(c) extends to tangible and intangible property, including shares. Section 160A of the Act defines 'asset' to mean 'any form of property' and includes a 'chose in action'. The phrase 'state or nature' must therefore be capable of applying to both tangible and intangible forms of property. In the case of both tangible and intangible assets the requirements of s 160ZH(3)(c) remain the same: the capital expenditure must be made for the purpose of enhancing the value of the asset and at the time of the disposal of the asset the expenditure must still be reflected in the state or nature of the asset. 34 The taxpayer argued that the language of the first limb of s 160ZH(3)(c), that the capital expenditure be for the purpose of enhancing the value of the asset, informs the meaning and operation of the second limb, that the expenditure be reflected in the state or nature of the asset at the time of its disposal. Therefore, according to the taxpayer, what must be 'reflected' in the 'state or nature' of the asset was the benefit of the expenditure made to enhance its value. 35 The first limb of s 160ZH(3)(c) refers to the expenditure being incurred for the purpose of enhancing the value of the asset. The second limb refers to the expenditure being reflected in the state or nature of the asset at the time of disposal. In my view, the legislature has deliberately identified two main concepts, 'value' on the one hand, and 'state or nature' on the other. Each concept has significance for each limb to be considered in the application of s 160ZH(3)(c). 36 It seems to me that the structure of the provision indicates that what must be reflected in the state or nature of the asset is not the value of the asset, but the expenditure of a capital nature. It is immaterial whether or not the expenditure in fact enhances the value of the asset. It may be that the expenditure incurred may not have increased the value of the asset at the time of its being incurred. For that matter, the expenditure may never increase the value of the asset, but may nevertheless be incurred for the relevant purpose (ie. enhancing the value of the asset), and be reflected in the state and nature of the asset at the time of disposal. 37 The legislature has not focused on the actual value of the asset in either of the two limbs of s 160ZH(3)(c). The only focus on value is as to the purpose of the expenditure. It may be difficult in any given case to determine whether expenditure has enhanced the value of an asset, whether at the time of its being incurred, or at the time of its disposal. This may be particularly so with shares, where the value may depend on the extent of a holding, rather than just looking at each individual share. This would be a good reason for the legislature not to focus on value other than in determining the relevant purpose of the expenditure. 38 I accept that the market value is basic to many of the assessments which are made under Pt IIIA of the Act. There also may be support for defining some assets as a going beyond a bundle of physical characteristics and legal relationships. However, in the context of determining the reduced cost base and construing s 160ZH(3)(c), the legislature seems to have eschewed the concept of 'value' in the operation of the second limb, and used it only to a limited extent in the first limb. 39 It is necessary to turn to the notion of a share and to address the meaning to be given to the words 'state' and 'nature', and to consider them in the context of the operation of s 160ZH(3)(c). 40 However, before doing, I make mention of extrinsic material placed before the Court said to assist in the interpretation of s 160ZH(3)(c). 41 Both parties, in support of their own constructions, referred to the Explanatory Memorandum to the Income Tax Assessment Amendment (Capital Gains) Bill 1986 (Cth) which inserted s 160ZH(3)(c) into the Act. I note that care must be taken in the use of an explanatory memorandum: see, eg, Re Australian Federation of Construction Contractors; Ex parte Billing [1986] HCA 74 ; (1986) 68 ALR 416 , 420. Generally, expenditure on rates, interest and repairs will not fall within the cost base of the asset as these items of expenditure may be classed as expenses of a revenue nature and not of a capital nature. Note that expenditure incurred in enhancing the value of the asset must be reflected in the state or nature of the asset at the time of disposal. For example, if a carport is erected adjacent to an income-producing property but at a later stage is dismantled and a garage erected, the expenditure incurred in erecting the carport would be disregarded in calculating the cost base of the property as it is no longer reflected in the state or nature of the asset. Similarly, paragraph (c) is designed to exclude from the cost base any expenditure incurred for the purpose of enhancing the value of the asset by way of improvements which have wasted away prior to disposal. 43 In considering the competing submissions on the construction of s 160ZH(3)(c), the Explanatory Memorandum provides little assistance, although it does indicate an approach to the intended operation of the provision in relation to tangible assets. The example given of the type of capital expenditure covered by s 160ZH(3)(c) is that of expenditure incurred to erect a carport adjacent to an income-producing building. The example continues that if the carport were to be subsequently dismantled prior to sale, the expenditure would be disregarded as it would not be reflected in the state or nature of the asset at the time of the sale. Such an example is not easily translatable to intangible property such as shares as the example assigns physical characteristics to 'state or nature'. The example does indicate, however, that any physical changes brought about by the expenditure must continue and must not have dissipated prior to disposal of the asset, for a taxpayer to take advantage of the provision. 44 It is then convenient at this point to consider the notion of a share. However, their Honours went on to say that 'the reference to measuring the interest of a shareholder in a company by a sum of money is no longer apt under present corporations law in Australia following the abolition of the concept of par value and of authorised capital' (at [19]). 45 Of course, there may be a specific class of share where the interest of the shareholder is measured by a sum of money as where a company issues a class of preference shares carrying a right to dividends related to a certain sum of money and a right to payment of a certain sum of money if the company goes into liquidation in priority to ordinary shareholders if there is a surplus of company assets over debts and liabilities. 46 More specifically, a share comprises 'a congeries of rights in personam ' ( Archibald Howie [1948] HCA 28 ; 77 CLR 143 at 154 per Dixon J) which includes the right to participate in dividends, the right to participate in a distribution of assets upon a winding up, and the right to receive capital upon a reduction of capital by the company: Sydney Futures Exchange Ltd v Australian Stock Exchange Ltd [1995] FCA 1106 ; (1995) 56 FCR 236 at 255. 47 It may be said that these aspects contribute to the economic content of a share. Some commentators make mention of the 'economic' character of a share. For example, Professor R Pennington in (1989) 10 Company Lawyer 140 concluded that 'they are a species of intangible movable property which comprise a collection of rights and obligations relating to an interest in a company of an economic and proprietary character, but not constituting a debt'. After all, a share is a fractional part of the capital, and thus confers upon the shareholder a certain 'interest' to a proportionate part of the assets of the corporation whether by way of dividend or of distribution of assets in winding up (see Bradbury v English Sewing Cotton Company Ltd [1923] AC 744 , 767 per Lord Wrenbury), and that that 'interest' might come to represent in value far more than the original capital which had been contributed (see Ord Forrest Pty Ltd v Federal Commissioner of Taxation [1974] HCA 57 ; (1974) 130 CLR 124 , 132 and 133 per Stephen J). 48 It was on the basis of these bundle of rights in personam , the taxpayer submitted that capital expenditure in relation to shares will be 'reflected' in the 'state or nature' of the shares where the amount of the contribution increases shareholders' equity thereby increasing their value, and the amount of the contribution remains available for return to the shareholders pursuant to the rights attaching to the shares. 49 In the present case, the payment of the capital contribution to shareholders' funds of NMSLAL was made for the purpose of, and to the extent of [sterling]42.912 million had the effect of, increasing the embedded value of NMSLAL and the embedded value of NMUK, and thus, the value of the shares in NMUK. The benefit of the contribution to the extent of [sterling]42.912 million remained reflected in the value of shares in NMUK at the time of their disposal. Moreover, after April 1993 and until the date of sale, the amount of the contribution to the extent of [sterling]42.912 million remained in existence and was available to be returned to the shareholders' funds of NMSLAL, and distributed as capital to NMUK and by NMUK to the taxpayer pursuant to the rights attaching to the shares. This is how, as it was argued by the taxpayer, the capital contribution was reflected in the 'state or nature' of the shares in the context of s 160ZH(3)(c). 50 I was taken to a number of dictionary definitions of the words 'state', 'nature' and 'value'. Relevantly, the first definition given by the Macquarie Dictionary (4 th ed) for 'state' is 'the condition of a person or thing, as with respect to circumstances or attributes'. The definition of 'nature' relevantly refers to 'the particular combination of qualities belonging to a person or thing by birth or constitution', referring to the inherent qualities of a person or thing. 'Value' is relevantly defined as 'material or monetary worth, as in traffic or sale' and 'the worth of a thing as measured by the amount of other things for which it can be exchanged, or as estimated in terms of a medium of exchange'. 51 Whilst a useful reference, one should be careful not to be restricted by dictionary definitions and one should look at the context in which each word appears in s 160ZH(3)(c) and the context in which s 160ZH(3)(c) itself appears: see, eg, Falconer v Pederson [1974] VR 185 , 187. 52 I have already attempted to explain that context. Looking at the context in which the concept 'state or nature' is used in s 160ZH(3)(c) referable to a share, I do not consider that concept includes a share's value. As I have said, s 160ZH(3)(c) in my view, clearly distinguishes the concept of 'value', with 'state' or 'nature'. I do not mean by this to treat the term 'state or nature' as a composite phrase, but I do consider it appropriate to view both words in the context in which they appear alongside 'value' as found in the first limb of s 160ZH(3)(c). Undoubtedly, a share as an item of property differs from property such as land in that a share's characteristics are fixed primarily by the obligations and rights in the contract between company and shareholder. In the case of land, as the example in the Explanatory Memorandum would indicate, 'value' would not be included within the concepts of 'state' or 'nature'. Similarly, in the case of a share 'value' is not included within the concepts of 'state' or 'nature'. 53 Even by just considering the words 'state' or 'nature' themselves, I am also of the view that it cannot be said in relation to a share as an item of property, which may be bought and sold, that 'value' forms any part of the nature or state of that form of asset. The 'nature' of a share refers to the bundle of rights (and obligations) attaching to a share, as described previously, being the inherent qualities of a share. Those rights exist, and may be exercised, irrespective of their value. The 'state' of a share does not refer to its 'value', but refers to other matters, such as whether a share is fully paid up or not. The value of a share does not affect the 'state' of a share, if one focuses on the particular condition of a share as an item of property. 54 The colloquial use of the phrase "state of one's shares" may refer to their "market value" at any given time, but this is more a reference to the state of one's portfolio globally, rather than to the condition of a particular share in itself and as an identifiable piece of property. Equally, as I have indicated, a reference to state of a share could be a reference to whether a share is fully paid up or not. In any event, the colloquial usage, even if treated as the ordinary meaning, cannot override the meaning I consider the terms 'nature' and 'state' have in the context of s 160ZH(3)(c). 55 I have considered the issue for determination without reference to any direct authority on s 160ZH(1)(c). The phrase 'reflected in the state or nature of the asset' has not been authoritatively considered by Australian courts. The only consideration of the phrase, appears in Re Taxpayer and Federal Commissioner of Taxation [2004] AATA 1304 ; (2004) 58 ATR 1172 , in which Member G A Barton considered the identical phrase as found in ss 160ZH(1)(c) and (2)(c) of the Act. Member Barton found that the taxpayer was not entitled to include capital expenditure by way of incentive payments in the cost base of the shares in calculating the capital gain on the sale of those shares, as they were not reflected in the 'state or nature' of the shares at the time of disposal. There was no dispute that the incentive payments constituted expenditure of a capital nature. There was no evidence before the Tribunal on which it could find that the applicant's shares in the proprietary company or in the new company, constituted a class of shares reflecting the amount of the incentive payments because they included a special or additional right attributable to such payments. The fact that the issued shares in the new company were listed on the boards of the London and Australian stock markets did not make the state or nature of the applicant's shares reflective of the amount of the incentive payments. The state or nature of the applicant's shares in the new company was indistinguishable from that of other issued shares in the new company. The Tribunal rejects the proposition that any causal link between the incentive payments and the listing of the issued shares in the new company makes the state or nature of the applicant's shares in that company reflective of the amount of the incentive payments for the purposes of ss 160 ZH(1)(c) and (2)(c) of the ITAA 1936. So the Tribunal finds that the state or nature of the applicant's shares in the proprietary company did not reflect the amount of the incentive payment when they were exchanged for shares in the new company, and the state or nature of the shares in the new company did not reflect that amount when the applicant disposed of them. In the light of this finding it is unnecessary for the Tribunal to consider whether the incentive payment was incurred for the purpose of enhancing the value of the applicant's shares in the proprietary company and in the new company and whether the indexed cost base of the trustee's shares in the new company included any part of the incentive payment. 56 In the United Kingdom, the distinction between the 'value' of an asset and its 'state' or 'nature' was drawn in Aberdeen Construction Group Ltd v Commissioners of Inland Revenue (1978) 52 TC 281 which was concerned, in part, with para 4(1)(b) of Sch 6 to the Finance Act 1965 (UK). 57 Section 160ZH(3)(c), which was introduced into the Act later in time is in similar, but not identical, terms to this UK provision. The taxpayer did point out that the first limb of the UK provision requires that expenditure be incurred on the asset, but I do not regard that a difference determinative of the issue before me and the way I consider the s 160ZH(3)(c) should be interpreted. In Aberdeen Construction 52 TC 281, Lord President Emslie found that expenditure by the taxpayer in the form of loans to a company that were later waived was not the kind of expenditure to which paragraph 4(1)(b) was directed and the paragraph was therefore not applicable. The waiver of the loans may well have enhanced their value but what para 4(1)(b) is looking for is, as the result of relevant expenditure, an identifiable change for the better in the state or nature of the asset, and this must be a change distinct from the enhancement of value. 60 Lord Avonside said that the loan 'may have enhanced [the share's] value in so far as it might give [the company] working capital helpful to its trading. When the loan was waived the shares remained in their state and nature unchanged' (at 294). 61 This issue was not considered by the House of Lords when the matter went on appeal, although the appeal was successful. 62 In The Trustees of the FD Fenston Will Trusts v The Commissioners of Her Majesty's Revenue and Customs (unreported, Special Commissioners, 7 February 2007), the Special Commissioners considered s 38(1)(b) of the Taxation of Chargeable Gains Act 1992 (UK) which likewise contains the phrase 'reflected in the state or nature of the asset'. The expenditure in this case was made by the trustees as capital contributions to a company in which they held shares. Those shares were the relevant assets. The appellants submitted that the shares increased in value following the expenditure and the expenditure was therefore reflected in the state or nature of the shares at that time, continuing through to the time of disposal. Only such expenditure as would be reflected in the "state and nature of the asset at the time of the disposal" was to be allowed. Further, "state and nature" for these purposes must be something other than merely the value of the asset --- otherwise this phrase would add nothing to the immediately preceding words. In this case the Capital Contributions did not result in any increase in the number of shares in issue, or result in any change in the rights or restrictions attaching to the shares. The only effect of the Capital Contributions was to increase the surplus of the company --- which would increase the amount available for distribution to shareholders, and therefore presumably the value of the shares. We do not consider this sufficient for the expenditure on the Capital Contributions to be reflected in the state and nature of the shares, either at the time the expenditure was incurred or at any time subsequently. On the other hand, the taxpayer submitted that the UK authorities have no precedential value, either because in the case of Aberdeen the actual decision relied on was overturned by the House of Lords, and in the case of Fenston , the comments relied upon were clearly dicta. The taxpayer also contended that the dicta relied upon by the Commissioner before me in the above passages was wrong. 64 At the outset, I reject the Commissioner's submission that I should elevate the UK decisions or the dicta contained therein to decisions or dicta which I should presume the Commonwealth Legislature treated as correct and adopted in relation to the meaning of the words now under consideration in s 160ZH(3)(c): see, eg, Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62 ; (2000) 202 CLR 133 , at [282]-[283]; and PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241, 251. 65 However, I consider that some assistance can be gained from the approach of the UK authorities. 66 The comments therein relied upon by the Commissioner do support the approach to the concepts of 'value', and 'state or nature' included within similar legislation which accord with my own view of the operation of s 160ZH(3)(c). It may not have been strictly correct to refer (as was done by the Lord President in Aberdeen ) to 'an identifiable change', or a 'change distinct from the enhancement of value'. The UK provision, like s 160ZH(3)(c) does not specifically talk in terms of 'change', only the need for the expenditure being reflected in the state or nature of the asset. However, the clear approach taken by the UK authorities is to treat 'value' as a concept falling outside the concept of 'state or nature' in similarly worded legislation dealing with the same subject matter. 67 Finally, in the taxpayer's submission, excluding the capital contribution from the cost base of the NMUK shares would give rise to an anomalous result. Payments into shareholders' funds may take a variety of forms, including the purchase of shares, the payment of calls on shares, and as here, by the making of capital contributions. It was contended that to allow some of these payments to be taken into account in determining cost base, but not others (being the capital contribution), is not capable of rational explanation. 68 The Commissioner responded to this submission by contending that the exclusion of the capital expenditure of ₤42.912 million from the reduced cost base of the shares does not give rise to an anomalous result. It may be that the amount would have been part of the cost base if it had taken some other form. However, the way in which a company raises capital can take many forms, each with different taxing consequences. Moreover, it was submitted that the provision is not specific to cost base in respect of shares, but to assets generally. The way in which the taxpayer here determined to contribute capital to NMSLAL should not dictate the proper construction of the section because the taxpayer may have been able to secure the expenditure as part of the cost base if it had been done differently. Especially when different views can be held about whether the consequence is anomalous on the one hand or acceptable or understandable on the other, the Court should be particularly careful that arguments based on anomaly or incongruity are not allowed to obscure the real intention, and choice, of the Parliament. ... [w]e are unable to conclude that the operation of ss 118 and 119 on a literal reading does not conform to the legislative purpose. 70 I do not accept that any anomaly arises from the construction pressed by the Commissioner in this case. I accept the submissions of the Commissioner that the taxpayer, having chosen a particular way in which to organise its affairs, must then be bound by any fiscal consequences that follow, and this does not lead to an anomaly, but arises because of the application of the legislative provision to the facts. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | capital loss reduced cost base shares use of explanatory memorandum anomalous consequences dictionary definitions nature and state of a share value of a share taxation statutory interpretation company law |
It arises in part from the operation of the Building and Construction Industry Payments Act 2004 (Qld) ("the BCIP Act"). The BCIP Act established a system for entitlement to progress payments for construction work performed under construction contracts in Queensland. It established a statutory regime for making claims, for responding to those claims and for the prompt determination of such claims. It limits the matters which an adjudicator appointed under the BCIP Act may take into account in dealing with such claims. It also limits the extent to which, in proceedings to set aside an adjudication, there may be other matters raised for attention. But in s 100 it expressly provides that nothing in the provisions to which I have referred affects rights under a construction contract or in civil proceedings concerning a construction contract. The applicant ("Blue Chip Development") appears from its statement of claim to have entered into a contract with the second respondent ("Flea's Concreting") to carry out some contract concreting works. It is apparent that Blue Chip Development and Flea's Concreting fell into disagreement. The first respondent to the proceedings is said to be a subcontractor to Flea's Concreting but has played no part in the proceedings before me and is not affected by the relief which is sought at the present time. The third respondent is an adjudicator who was appointed under the BCIP Act to deal with the claim made by Flea's Concreting against Blue Chip Development for progress payments. The proceedings before the adjudicator were commenced on 6 January 2009. Thereafter both parties participated in the adjudication, each making submissions to which the adjudicator referred in a decision made by him which is dated 2 February 2009. The claim made by Flea's Concreting was for a sum in the order of $3.5 million. In due course, and as explained by reasons given in his 56 page determination, the adjudicator found that Blue Chip Development should pay Flea's Concreting a sum in the order of $250,000 referrable to matters which were identified and discussed in the determination. There were a significant number of payments claimed by Flea's Concreting which were disallowed. In the first instance, Blue Chip Development sought an ex parte interlocutory injunction from this Court. That application was dealt with by the duty judge, Bennett J, on 3 February 2009. Bennett J, on that day, granted an injunction restraining the third respondent from publishing or handing down his adjudication prior to 4 pm on Friday 6 February 2009. It appears that the adjudicator took the view that he had made his decision before the order came into effect. Be that as it may, there was no restraint upon publication of the adjudication after the time identified in the Court's order, namely 4 pm on Friday 6 February 2009, as no continuing order appears to have been sought. The matter came before me today upon a different footing. On this occasion Blue Chip Development sought an order restraining Flea's Concreting from taking steps to enforce the adjudication. The statement of claim pleads reliance upon section 45D of the Trade Practices Act 1974 (Cth) and also seeks to raise a constitutional matter, with respect to which, on the same day, notice was given under section 78B of the Judiciary Act 1903 (Cth). The constitutional matter said to be raised by the proceedings in this Court is to the effect that certain provisions in the BCIP Act are invalid for reason of inconsistency with s 22 of the Federal Court of Australia Act 1976 (Cth). Section 22 of the Federal Court of Australia Act grants to this Court power to grant all remedies to which parties appear to be entitled, so that as far as possible matters in controversy may be completely and finally determined. It is a grant of power rather than of jurisdiction (see e.g. Carantinos v Magafas [2008] FCA 1107 at [3] ). It appears that the application for the order which was sought from the Duty Judge on 3 February 2009 rested upon the contention that the adjudicator was about to act outside his statutory authority for the reason that the provisions which invested him with authority were said to be ultra vires. That is not how the matter has been advanced today. Today, the application for an interlocutory injunction is put upon the foundation that Blue Chip Development has an equity, consisting of a claim for liquidated damages, which would be pursued in an accounting which was sought as part of the relief in the proceedings in this Court. It was argued that the existence of that equity is justification for an injunction to restrain Flea's Concreting from enforcing the adjudication which it has obtained under the BCIP Act. In my view, there is no sufficient foundation for this Court to interfere, at this point in time at least, with the operation of the statutory scheme established by the BCIP Act. Assuming for the purpose of this judgment that an arguable case might exist that Blue Chip Development has a claim for liquidated damages against Flea's Concreting (as to which I say nothing more than making the assumption), I am not satisfied that the balance of convenience requires any injunctive relief. Blue Chip Development relies upon affidavits sworn by its Managing Director, Sidney Charles Knell, and another officer, John William Gates. Mr Knell's affidavit makes it plain that resistance to satisfying the adjudication lies in the commercial interests of Blue Chip Development and the fact that it is at the moment financially extended. Not only does a claim based simply on the commercial inconvenience to one party, as against the other, not provide a sufficient justification for the grant of an injunction in the present case, it tends to emphasise that any adjustment of the position of the parties which is necessary at the conclusion of the proceedings may satisfactorily proceed by reference to a monetary adjustment rather than the necessity to restrain the exercise of rights under State legislation. The same consideration applies to the possibility that the constitutional argument might succeed, with the result that the BCIP Act is declared to be invalid to any extent. The contention upon which the latter argument rests appears to me to be extremely weak. Had the injunction been sought today upon that foundation, the weakness of the argument would have been another factor against the grant of such an injunction (see e.g. Bullock v Federated Furnishing Trade Society of Australasia (1985) 5 FCR 464 at 472; Mobileworld Operating Pty Ltd v Telstra Corporation Limited [2005] FCA 1365 at [20] and Wilson Parking Australia 1992 Pty Ltd v Rush [2008] FCA 1601 at [38] ). If in due course the contention succeeds and the adjudication is set aside then, again, there may be a sufficient monetary adjustment to do justice between the parties. In the circumstances, I am not prepared to grant the injunctive relief which is sought. The notice of motion will be dismissed. Flea's Concreting has sought costs. Counsel for Blue Chip Development accepted that he could not resist an order for costs. Accordingly the notice of motion will be dismissed with costs. It is not necessary to deal with a notice of motion which Flea's Concreting desired to advance because the notice of motion sought to strike out certain of the pleadings relating to the constitutional issue, which was not the foundation for the relief sought today. That may receive further attention in due course. I should say one further thing. All of the parties in this litigation are located in Queensland. Blue Chip Development, for reasons concerned with its own convenience, commenced the proceedings in the ACT Registry. The proceedings have to date been dealt with from Sydney by duty judges in response to the urgent nature of the applications which have been made. In the ordinary course of events, the proceedings will be listed for directions on 23 February 2009 in Canberra. The parties should be prepared at that time to address the question of whether the proceedings should be retained in the ACT Registry or transferred to the Queensland Registry of this Court. Further steps in the proceedings may include consideration of whether they should be retained within this Court at all or dealt with in some other court. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | legislative scheme for progress payments under construction contracts challenge to validity of state legislation whether balance of convenience favours grant of interlocutory relief monetary adjustment available if application succeeds weakness of challenge to validity of state legislation also relevant to whether an injunction should be granted. practice & procedure |
The proceedings involve a contest between two battery manufacturers or suppliers. Energizer has established that Remington engaged in misleading and deceptive conduct which is proscribed by the Trade Practices Act 1974 (Cth). Final orders were made on 14 December 2007 and reasons for judgment published on 8 February 2008: Energizer Australia Pty Ltd v Remington Products Australia Pty Ltd [2008] FCA 58. The misleading and deceptive conduct concerned statements made on the packaging of batteries sold by Remington (Varta High Energy AA and AAA batteries) and statements in promotional material (billboards and in-store promotional material). At the heart of the unlawful conduct was a claim by Remington that certain of its Varta High Energy batteries lasted as long as Energizer batteries when this was only true of a limited class of batteries manufactured and sold by Energizer. On 28 November 2007, Energizer approached the duty judge who granted leave to Energizer to file the application, statement of claim and affidavits in support and made the matter returnable before the duty judge at 2.15pm on 30 November 2007 for the hearing of the claim for interlocutory relief. 3 On 30 November 2007, Remington informed the Court that it was not ready to proceed with an interlocutory hearing on that day and was not in a position to do so the following Wednesday or Friday or "for some little time to come". Remington indicated that it wanted an urgent final hearing of the matter. The matter was adjourned to 6 December 2007 on the basis that the applicant would apply to have the matter heard on that day. The matter was then allocated to my docket. 4 On Thursday, 6 December 2007, the matter came before me. Energizer sought to commence the hearing of its interlocutory application. Remington opposed this course of action on the basis that it was not ready to proceed and could not be ready to proceed until Monday, 10 December 2007, at the earliest. Remington again indicated its willingness to agree to an early final hearing. I then fixed the hearing of the interlocutory application for the following day. 5 The interlocutory hearing commenced on 7 December 2007. During the course of the hearing, Remington offered to undertake to remove one of the contentious forms of advertising, namely the billboards, within a period of 5 days but only if Energizer desisted from seeking any further interlocutory relief. Energizer did not accept that offer. The proceedings did not finish on that day and were adjourned for further hearing to the next available court date, namely 14 December 2007. 6 Shortly after the hearing for interlocutory injunctive relief resumed on 14 December 2007, I invited the parties to consider whether the interlocutory hearing might transform into a final hearing on the basis that I would make final orders that day disposing of all issues between the parties. Secondly, I had formed the preliminary view that on the evidence presented to that point, the respondent was able to make claims about the comparative performance of its batteries of the type alluded to in the advertising and other promotional material. However, I had also formed the preliminary view that the form of advertising and promotion actually used by the respondent to convey the comparative performance of its batteries was misleading and deceptive. I communicated at least aspects of these views to the parties. In the result, both the applicant and the respondent agreed to the transformation of the proceedings, with the applicant doing so on the basis that it accepted that the respondent could make a comparison between its batteries and one of the types of batteries made and sold by the applicant. 8 It is necessary to note several features of the debate that occurred on 14 December 2007. Order that on and from 19 December 2007 the Respondent use its best endeavours to remove the sticker containing the words "Lasts As Long As Energizer & Duracell" or oversticker that sticker on all Current Varta High Energy Packaging located in retail stores and in any event ensure that by no later than 29 January 2008 all such stickers on such stock are removed or overstickered. Order that on and from 19 December 2007 the Respondent use its best endeavours to remove or oversticker all Current Varta High Energy Promotional materials wherever located and in any event ensure that by no later than 29 January 2008 all materials are removed or overstickered. I will return shortly to the events of 14 December 2007 that lead to my intimation that I would not make that order. However, it is convenient to set out the reasons I gave on 8 February 2008 for refusing to do so. The first was that it appeared to me potentially impracticable to require that to be done in what would have effectively been a period commencing the week before Christmas. The second was that I had formed the view that the proceedings could have been brought by the applicant earlier and it would, in all the circumstances, have been unjust to impose on the respondent the burden of complying with the order. In other circumstances it would have been an appropriate order, particularly given that I had gained the impression from the evidence (which is mainly unnecessary to detail) that the respondent had made a conscious decision (aided by legal advice) to steer a line of saying as little as possible about the basis of the comparison on which its promotion and advertising was based, even if in doing so, there was a real and obvious risk of contravening the Act. The fact that the respondent had embarked upon this course was starkly illustrated by the fact that it did not follow the form of advertising and promotion used in the United States of America. Indeed, in advertising and promoting Varta High Energy batteries in the United States, the respondent fairly clearly revealed to consumers the nature of the comparison (namely that Varta High Energy batteries last as long as Energizer Max batteries), while in Australia, the respondent had prepared art work (which it later decided not to adopt) for stickers which in substance replicated the United States' model for advertising and promoting Varta High Energy batteries. The discussion was also complicated by a suggestion made at one stage (either by me, counsel for Remington or both) that future events which might arise once orders were made could be accommodated by the provision of liberty to apply. Now, if your client wishes to embark on the process of over-stickering, presently that would be a matter for it. If it makes a decision not to embark upon that process of over-stickering, then I would entertain any application that might be made during January in exercise of the liberty to apply. With respect, that is going to be a recipe for your Honour being badgered by application after application. Over-stickering where --- total, complete, partial, some, what have you. If it made a decision not to, then it may be necessary for me to revisit the question, that's all. I've indicated I don't propose to make such an order. I've indicated additionally that it's really a matter at the moment for Mr Hutley's client to make a commercial decision whether it wishes to engage in that process or not. If it transpires that its decision is not to, then if need be the liberty to apply can be exercised. I'm just not quite sure any more where we are. That means one can't have a final determination of the issues. I should note that it was clear from remarks made by counsel for Energizer at this hearing that his client understood that if such an order was not made, potentially there would be stock in retail stores with the misleading sticker for some months to come, that is, stock which had not been overstickered with a new sticker which was not misleading. 13 I should also note that to the extent that it was thought that granting liberty to apply would affect the finality of the orders, this was not correct. These cases reveal that liberty to apply does not render a final order any less final: see further Neil J Williams, Civil Procedure at [I 59.01.20] and the cases cited therein. While Energizer does not suggest this is inappropriate, it complains about the slow speed at which it is happening and the consequential effect of stock remaining in retail stores containing the earlier misleading sticker. It is for this reason it seeks what it characterises as the supplemental order. Having regard to that evidence, I am satisfied that the programme of overstickering (being undertaken by Alliance Marketing Corporation Pty Ltd on behalf of Remington) does not have, as an objective, ensuring that all battery packets with the misleading sticker would be overstickered as soon as possible. It is more a question of the overstickering being done as and when it is convenient, but no more. I am also satisfied from the evidence that although there can be no precision about it, there are significant numbers, at least in the tens of thousands and perhaps hundreds of thousands, of packets in retail outlets with the misleading sticker and they are likely to remain in the marketplace for several more months though obviously in diminishing numbers as they are sold. One difficulty in being precise about the number is that there is, in a sense, a probably unquantifiable circulation to and within retail organisations of batteries packaged with the old sticker, batteries packaged with the old sticker which has been overstickered in the retail outlets and batteries in packages overstickered by Remington before distribution. I should note that it was part of Remington's case, in resisting the making of the supplemental order, that when I declined to make order 11 on 14 December 2007, there was evidence before the court (from Energizer) that it could take more than six months, and in some cases up to a year after launch, for old stock to be sold through at retail outlets. 15 It is necessary to refer to the approach adopted by Remington in informing retailers about the orders. The clear implication of the orders made on 14 December 2007, as ultimately articulated in the reasons published on 8 February 2008, was that the dissemination to the public of the packaging containing the old sticker involved misleading or deceptive conduct proscribed by the Act. On 19 December 2007, Remington sent to, I infer, all of its retailers an e-mail stating that "Varta is pleased to make the attached announcement". Accompanying the e-mail was a document illustrating the new sticker which does not contain the vice evident in the old sticker found to have been misleading. The document said that Varta would sell its High Energy AA and AAA batteries to retailers with the new sticker from 22 January 2008. The document also said that Varta would continue to sell its Varta High Energy AA and AAA batteries (which were made in Germany) bearing the old sticker. The document noted that for a period of time after 22 January 2008 it was likely that Varta batteries with both the new sticker and the old sticker would be sold in retail stores until stock with the old sticker was eventually sold through. It probably conveyed to at least some recipients that the step being taken by Remington of adopting the new labelling was one that Remington welcomed and was seen by it to be a positive step forward. What this communication singularly failed to inform the recipients was that the new labelling was required by Court order which, by necessary implication from the orders made on 14 December 2007, flowed from a finding of this Court that the packaging with the old sticker was misleading and that to offer packaging with the old sticker for sale ultimately to the public was misleading and deceptive conduct in contravention of trade practices legislation. 17 It is true that when the e-mail was sent, Remington did not have the benefit of my reasons published on 8 February 2008. However, it is inconceivable, in my opinion, that Remington did not understand (doubtless with the benefit of legal advice) from the orders (as well as from the discussion at the hearing on 14 December 2007) that a finding to this effect had been made. Moreover, a legal obligation on Remington and retailers not to engage in misleading and deceptive conduct flows directly from the Act. It is true that no order was made expressly requiring Remington to do anything about its packaging in relation to packets of batteries already in retail stores (and putting to one side an argument advanced by Energizer in contempt proceedings about the legal effect of one of the orders made on 14 December 2007) and that the retail stores were not themselves parties to those proceedings. But neither of these facts lessen the legal effect of the express and unqualified proscription of misleading and deceptive conduct by s 52 of the Act which requires all corporations to act in a particular way (as to this issue more generally see Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146). 18 To similar disingenuous effect as the 19 December 2007 announcement was a letter dated 24 January 2008 from Remington's solicitors forwarded by Remington to relevant retailers, including Coles (this retail chain which was, by a considerable margin, the largest retailer of Varta batteries) on the same day. No such orders were made. However, it is false to the extent that it implies (and in my view it does) that such an order was sought or even might have been able to be made against Coles in the proceedings resulting in the orders of 14 December 2007. Coles was not a party to those proceedings. Coles, and any other retailer, remains at risk of proceedings seeking such an order of the type referred to in the letter. Relief sought -supplemental order? The reasons of the Full Court in Caboolture do not support that qualification. At its highest, the Full Court's citation with approval (at 234-235) of Lord Lindley's speech in Preston Banking Company v William Allsup & Sons (1895) 1 Ch 141 at 143-144 would suggest that a supplemental order can be made if circumstances had occurred since the original final orders were made which rendered a supplemental order necessary. In the present case, I have no hesitation in finding that such circumstances have arisen. Since the original orders were made in this matter, Remington has embarked on a programme of overstickering but without the objective of ensuring it occurs as soon as possible. At the same time it has communicated with retailers in a way which, in my opinion, misrepresented (at the least by failing to fully explain) the reason the orders were made on 14 December 2007 and endeavoured to create an unjustified measure of comfort for the retailers if they continued to display and sell batteries in the packaging that has been found to be misleading. For my part, I do not see how this is so. While it is probably undesirable for a Court to make orders with overlapping effect, I am not aware of any authority that denies the existence of power to do so. It is not necessary, in my opinion, to construe order 5 to determine whether a supplemental order should be made. 21 I should note that I did not make the several orders on 14 December 2007 and then a further order that Energizer's application "otherwise be dismissed". The matter, however, proceeded on 14 December 2007 on the basis that Energizer would be able to pursue that part of its claim which claimed damages for Remington's conduct. That overarching principle is well settled, reflected in many legal principles and serves an obvious and important purpose. However, this case is unusual. I adopted a course, with the agreement of the parties, designed to fast track the resolution of the dispute between them. Regrettably, it has had the result of fomenting further litigation, manifest by Energizer's notice of motion of 1 February 2008 as well as contempt proceedings brought by Energizer which are in the docket of another judge. 23 However, in adopting the course I did on 14 December 2007, many issues needed to be addressed by counsel and considered by me in a comparatively short time frame. Had I taken the course I originally discussed with counsel for Remington but was then persuaded not to follow, I would have expressly granted liberty to apply to the parties (in practical terms, to Energizer) to approach the Court to further consider whether I should make an order to substantially the same effect as order 11, with knowledge of what Remington had done in the intervening period to ameliorate the effect of its decision to use packaging which, at the time that decision was made, might reasonably have been thought to be misleading. 24 Having concluded that I have power to make the supplemental order sought by Energizer, the only question is whether as a matter of discretion I should make it. Having regard to the likelihood that there will be misleading packaging in the market place for several months if Remington is not compelled to overstick all packets with the misleading sticker expeditiously, and also having regard to Remington's conduct since the orders were made (discussed earlier in these reasons), I have concluded that the supplemental order should be made. 25 There was an issue concerning the length of time it would take for Remington to comply with the order proposed by Energizer and how that time frame should be reflected in the order. Energizer pointed to earlier affidavit evidence of Remington that it would take four weeks to complete the process. Remington has updated this evidence. It was that 90 to 95% of stock in Coles' stores had been overstickered, although no estimate was given as to how long it would take to oversticker all Coles' stock, it would take three to five weeks to oversticker stock displayed in Bunnings' stores and up to four weeks and eight weeks to oversticker stock in independent electrical stores in metropolitan and non-metropolitan areas respectively. However, compliance with that part of the order sought concerning overstickering (which I propose to make) presents Remington with the alternative of making whatever commercial arrangements it wishes with retailers to retrieve stock with the misleading sticker. In my opinion, a month is adequate for Remington to either oversticker all stock with the misleading sticker or to take such steps as may be available to it to retrieve stock which cannot be overstickered. I do not think it is appropriate to make an order requiring Remington to communicate with the retailers in the terms proposed by Energizer which specified how Remington would achieve the results required by the principal order. The method by which Remington goes about complying with the order is a matter for it. 26 I conclude by repeating an observation in the reasons for judgment published on 8 February 2008 quoted earlier. Remington made a conscious decision (aided by legal advice) to steer a line of saying as little as possible about the basis of the comparison on which its promotion and advertising was based, even if in doing so, there was a real and obvious risk of contravening the Act. The fact that Remington had embarked upon this course was starkly illustrated by the fact that it did not follow the form of advertising and promotion used in the United States of America. Remington prepared art work for use in Australia (which it later decided not to adopt) which in substance replicated the United States' model for advertising and promoting Varta High Energy batteries and clearly revealed to consumers the nature of the comparison. The packaging Remington actually adopted, in contrast, did not reveal the nature of the comparison. 27 Energizer should have its costs of this application. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | comparative advertising contravention of section 52 of the trade practices act 1974 (cth) supplemental order sought power to make supplemental orders trade practices |
He was born on 7 December 1974. He is one of eight children. Two of his sisters reside in Australia. The remainder of his siblings live in Lebanon. He is unmarried. The applicant travelled to Australia lawfully on 19 September 2000. On 15 December 2000 he lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs (DIMA). Central to his application was a claim that he was at risk of being killed if returned to Lebanon by persons connected with someone his brother-in-law had accidentally killed many years before. His father had already been the victim of a revenge killing resulting from that accidental homicide. On 15 January 2001 a delegate of the Minister refused the application. The applicant then applied to the Refugee Review Tribunal (the Tribunal) on 8 February 2001 seeking review of the delegate's decision. A considerable delay followed. The Tribunal gave a decision on 12 June 2002 in which it affirmed the delegate's decision not to grant a protection visa. 2 The applicant filed an application in the Federal Magistrates Court on 2 October 2003 seeking judicial review of the Tribunal's decision. However on 30 June 2004, his solicitor wrote to the solicitor for the Minister stating that his client no longer wished to proceed with the matter and that he sought to discontinue the proceedings by consent. That course was agreed and consent orders were signed by the solicitors for both parties and filed in the Federal Magistrates Court on 20 July 2004. On 21 July 2004 Raphael FM made orders dismissing the application for judicial review accordingly. 3 The applicant's solicitor, on 16 September 2004, submitted an application to the Minister under s 417 of the Migration Act 1958 (Cth) (the Act) for the grant of a visa on humanitarian grounds. That application was unsuccessful. 4 On 20 February 2006 the applicant filed an application in the Federal Magistrates Court seeking reinstatement of the proceedings in that court. In an affidavit in support of that application he said that he felt he had a strongly arguable case and that his claim was genuine. He said he had never instructed his solicitor to consent to the dismissal of the Federal Magistrates Court proceedings. He understood from his solicitor that he had very strong grounds. His solicitor had advised that if he withdrew the application in the Federal Magistrates Court there would be no costs and a stronger case could be lodged. He subsequently realised that the solicitor had written a letter to the Minister which was against his wishes. 5 The learned Federal Magistrate heard the reinstatement application on 10 April 2006 and delivered judgment on the same day dismissing the application. He referred to an affidavit sworn by a solicitor appearing on behalf of the Minister in which she recounted a conversation between her and the solicitor acting for the applicant. She exhibited to her affidavit a document which was an authority to withdraw the proceedings signed by the applicant and upon which his solicitor acted. In evidence before the Federal Magistrates Court the applicant agreed that he had signed the authority and had in fact instructed his solicitor to withdraw the proceedings. He told the Court that he had been advised to withdraw the proceedings so that different proceedings could be commenced which would be 'stronger'. He mentioned the High Court. He claimed to have been charged for advice received from the solicitor and advice from a barrister whom he had never met and whose advice he had never seen. 6 The learned Federal Magistrate said that in order to allow the reopening of a case some one and three quarter years after it had been dismissed by consent, he would have to be satisfied that there was a genuine reason for the application. He would also have to be satisfied that if the case were to be reopened the applicant stood at least a reasonable prospect of success. The evidence revealed neither a genuine reason for the application for reinstatement nor any reasonable prospect of success. A reading of the papers would indicate that if that advice was given it was probably the best advice the applicant could have received. The Tribunal took into account whether or not the applicant would receive adequate State protection in respect of his alleged fear of a revenge killing. The Tribunal did not consider that the anxiety felt by the applicant was of a severity that amounted to persecution. 8 His Honour said that if he were to decide the case on the basis of the papers before him, he would not find it difficult to hold that the Tribunal did not fall into jurisdictional error in coming to its decision. He was mindful of the time that it had taken the applicant to make his application which appeared to have been instigated after a member of his community had appeared in the Court in relation to another matter. His Honour declined to grant leave to reopen the proceedings or to set aside the consent orders which had been made. 9 The applicant's application to this Court, for leave to appeal against his Honour's decision, was supported by an affidavit sworn on 5 May 2006. It was largely repetitive of his earlier affidavit. He asked the Court to accept his application as he strongly believed that his former solicitor had withdrawn the earlier proceedings without his consent. His solicitor had assured him that he would look after him and do what was appropriate legally. He assured him that he would be lodging a stronger case, but this did not happen. The applicant alleged that his former solicitor had done the same thing to other clients. 10 At the hearing of the application for leave to appeal the applicant handed up a typewritten submission. He referred in it to his original affidavit of 23 March 2006. The bulk of his argument thereafter went to the difficulty of his dealings with the solicitor and the anxiety that he felt about his return to Lebanon. 11 The applicant had claimed before the Tribunal that 12 years earlier his father had been shot dead in his presence in Lebanon. The circumstances leading up to that killing had begun 13 years earlier. Hs brother-in-law had accidentally killed a person who was a member of the Syrian National Socialist Party. Members of that group had tried to kill the brother-in-law by way of revenge. The applicant's father had tried to mediate. For his troubles he was killed, albeit it was 13 years after the original incident. 12 The applicant claimed that the people who shot his father were living next to his village. He would see them constantly and found that very stressful. They had never spoken to him. He claimed they were still looking for his brother-in-law with a view to killing him. The applicant believed that if they did not find the brother-in-law they would kill him instead. He said the police had been informed about the killing of his father but because the group responsible had links with the Syrian government and a particular family no action had ever been taken against them. 13 The Tribunal found that the harm feared by the applicant was not directed at him for any Convention reason. The fact that the people who killed his father belonged to a political party was not of itself sufficient to bring the applicant within the Refugee Convention. The crucial question is whether they intend to harm the applicant for reason of his political opinion, or, indeed, for any other Convention reason. They wished to kill his brother-in-law by way of revenge. The Tribunal accepted that this was also probably the reason why they killed his father. There was no suggestion arising from the evidence that the group intended to kill the brother-in-law for any reason other than that he had killed one of the group's members. There was no indication of any basis for a complaint of jurisdictional error. 15 In the circumstances, in my opinion, there was no error on the part of the Tribunal or on the part of the Magistrate. The applicant has had the benefit of a consideration by the Magistrate of the merits of his application for review and the learned Magistrate found no prospect of success. 16 There is no error disclosed in the approach taken by the learned Federal Magistrate. The application for leave to appeal will be dismissed with costs. | judicial review protection visa refugee review tribunal application for judicial review in federal magistrates court dismissal of application by consent attempt to reinstate application 21 months later application for reinstatement dismissed application for leave to appeal against dismissal leave refused migration |
The parties have made submissions. In issue is whether declaratory orders should be made and, if so, their terms. Also in issue is whether an injunction should issue and, if so, its terms. Similarly there is an issue about whether corrective advertising should be ordered and, if so the terms of the advertisements and where they should be placed. Lastly, there is an issue about what order should be made as to costs. Prouds has in trade or commerce engaged in conduct that is misleading or deceptive, or is likely to mislead or deceive, in contravention of section 52 of the Trade Practices Act 1974 by publishing and disseminating a catalogue entitled "Summer of Love" in Australia during January and February 2006 containing representations that, for a reasonable period immediately preceding publication of that catalogue, the price identified in that catalogue by the word "Was" for each of the items of jewellery identified by the SKU Codes 2952471, 4050554, 4050562, 2894889, 2906399, 2937001, 2958299, 2958972, 2996980, 2971390, 2984008, 2984016, 7054991, 7102459, 7550654, 7712909 and 7757464 ( 17 Catalogue Items ), was the usual price for each of those items of jewellery ( Summer of Love Usual Price Representations ), where contrary to each representation, the price identified by the word "Was" in that catalogue for each item of jewellery was not the usual price for each of those items for the period 1 December 2005 to 28 January 2006. Prouds has in trade or commerce in connection with the supply or possible supply of goods, namely the 17 Catalogue Items, or in connection with the promotion of the supply of such goods, made false or misleading representations with respect to the price of goods, in contravention of section 53(e) of the Trade Practices Act 1974 in that it made the Summer of Love Usual Price Representations by publishing and disseminating a catalogue entitled "Summer of Love" in Australia during January and February 2006, where contrary to each representation, the price identified by the word "Was" in that catalogue for each item of jewellery was not the usual price for each of those items for the period 1 December 2005 to 28 January 2006. Prouds has in trade or commerce engaged in conduct that is misleading or deceptive, or is likely to mislead or deceive, in contravention of section 52 of the Trade Practices Act 1974 by publishing and disseminating a catalogue entitled "Love You Mum" in Australia during April and May 2006 containing representations that, for a reasonable period immediately preceding publication of that catalogue, the price identified in that catalogue by the word "Was" for each of the 17 Catalogue Items was the usual price for each of those items of jewellery ( Love You Mum Usual Price Representations ), where contrary to each representation, the price identified by the word "Was" in that catalogue for each item of jewellery was not the usual price for each of those items for the period 26 December 2005 to 22 April 2006, or for any part of that period. Prouds has in trade or commerce in connection with the supply or possible supply of goods, namely the 17 Catalogue Items, or in connection with the promotion of the supply of such goods, made false or misleading representations with respect to the price of goods, in contravention of section 53(e) of the Trade Practices Act 1974 in that it made the Love You Mum Usual Price Representations by publishing and disseminating a catalogue entitled "Love You Mum" in Australia during April and May 2006 where contrary to each representation, the price identified by the word "Was" in that catalogue for each item of jewellery was not the usual price for each of those items for the period 26 December 2005 to 22 April 2006, or for any part of that period. Relying on the presence of s 80(4) and (5), Sheppard J found that the policy of the Act, concerned as it is with public interest, extends to the area of declaratory relief, for it marks the court's disapproval of particular conduct which contravenes the Act. In some cases it might be appropriate to simply make findings of fact that a respondent has contravened a provision of the Act. However, conduct constituting contravention of the Act need not be dishonest or flagrant before a court, may, in its discretion, grant declarations: Australian Competition and Consumer Commission v Goldy Motors Pty Limited (2001) ATPR 41-801 ("Goldy Motors") at [30] and [32] per Carr J. It has also been observed that there is a public interest in the court making declarations in cases involving admitted breaches of Part V the Act, for it is a piece of legislation of some importance to consumers and others engaged in trade and commerce: Goldy Motors at [34]; see also Australian Competition and Consumer Commission v Target (2001) ATPR 41-840 ("Target") per French J at [18]. They will articulate with precision the conduct of Prouds that contravened the Trade Practices Act 1974 (Cth). They will vindicate ACCC's claims, notwithstanding that it failed to satisfy the Court that the "was" price should be viewed as the previous selling price. The making of declaratory orders will also mark the Court's disapproval of Prouds' conduct which, at best, involved indifference about whether its promotional material fairly or accurately informed consumers about the extent to which, in truth, the promotional sale provided real and material benefits to the consuming public. 6 This leads to a question of how the declaratory orders should be expressed. Prouds seeks a declaration, in its proposed order 1, that certain conduct was not misleading or deceptive. Prouds' proposed order 1 simply reflects conclusions I reached and expressed in my reasons for judgment (see Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd [2008] FCA 75) and, in my opinion, nothing more. It is clear, however, that declaratory orders should not be used for this purpose. It is intended to state the rights of the parties with respect to a particular matter with precision, and in a binding way. The remedy of a declaration is not an appropriate way of recording in a summary form, conclusions reached by the Court in reasons for judgment. This is even more strongly the case when the conclusion is not one from which any right or liability necessarily flows. Plainly, proposed order 1 does not reflect findings of liability in the sense of declaring the conduct of Prouds that was in contravention of the Act. It is inappropriate and probably impermissible to declare what conduct was not in contravention of the Act. 7 ACCC's formulation, with one qualification, adequately and appropriately describes the way in which Prouds' liability should be expressed. The qualification is that proposed orders 1, 2, 3 and 4 suffer, in my opinion, from the vice of using the expression "usual price" which, in the context of this litigation, is an expression with no precise legal or factual content. Rather the order should speak of the "price at which each of those items of jewellery was offered for sale". Prouds took issue with whether a finding of contravention of s 53(e) of the Act should be reflected in the declaratory order when I made no express reference to that provision in the conclusions articulated in my earlier reasons for judgment. However, contravention of that section was alleged and the findings made lead necessarily to the conclusion that the particular section was contravened. The expression in the provision "false or misleading representation with respect to the price of goods" clearly, in my opinion, comprehends misleading statements made about the significance of the present offer price (in this case, the "now" price) when compared to an earlier offer price (the "was" price) and how the former might be understood having regard to the latter. Accordingly, reference should be made to contravention of s 53(e) of the Act. If an injunction should issue, the second question is the form it should take (although issues attending this second question, in a sense, inform the answer to the first question). Plainly, Prouds is, into the future, compelled by the Act not to engage in conduct that is proscribed by the Act. ACCC submitted that an injunction was necessary, having regard to Prouds' conduct to date and the evidence of Mr Cockayne concerning its practices. I do not accept that. While Prouds has contested many aspects of ACCC's case alleging breaches of the Act, it has nonetheless acknowledged possible contraventions in relation to items affected by the increase in the price of gold, has agreed to submit to a compliance program and in the period leading up to the hearing, volunteered to use and did actually use a notation in its more recent promotional material designed to address one possible conclusion about contravening conduct which might have emerged in the litigation. Moreover, ACCC withdrew, at a hearing concerning the appropriate orders that should be made, a submission that the facts needed to prove contravention of the injunction would be substantially narrower than the facts the Court would need to consider in any future proceedings for statutory contravention. In my opinion, this is not a case that warrants the grant of injunctive relief. 10 This conclusion is fortified by the terms of the injunction ACCC is seeking, which I consider are inappropriate. ACCC's draft injunction prohibits the use of dual pricing (but only for a period of three years) that uses a "was" and a "now" price unless a precondition is met, namely, that any dual priced item had been offered for sale or supply at the "was" price for a period of two months immediately preceding the commencement of the sale. However, an order in these terms assumes that this precondition is the only way of avoiding misleading and deceptive conduct when using dual pricing. It is true that the failure of Prouds to satisfy this precondition, in the facts of this case, led to one of the conclusions that it had engaged in misleading and deceptive conduct. However, depending on the terms of the promotional material including, in relation to statements involving dual pricing, qualifications and explanations about what is said and meant and depending on the factual matrix in which it occured, lawful dual pricing may be possible and not in contravention of the Act. It would be undesirable to speculate about circumstances in which dual pricing might not involve misleading and deceptive conduct. It is sufficient to note that, in my opinion, the precondition contemplated in the draft order is not likely to exhaust the ways in which dual pricing can be undertaken without engaging in misleading and deceptive conduct. Whether the same vice attended the promotion of other items in those catalogues or infected other catalogues or, indeed, other means adopted by Prouds to market its goods, was not a question I was called upon to consider. Nonetheless, the contravening conduct did involve something more than a trifling incident of misleading and deceptive conduct that was doubtless intended to influence consumer behaviour. Prouds' use of comparative pricing is an essential, if not the fundamental, feature of its marketing. Particularly in circumstances where no injunction is granted, it is desirable, in my opinion, to order corrective advertising as a means of creating an environment in which, in this case, Prouds will be more assiduous in ensuring that it does not repeat the contravening conduct, knowing that consumers are aware that it occurred in the past. However, I think the order proposed by ACCC is too wide in its reach, in the sense that it is unnecessary, in my opinion, to require letter-boxing as proposed in the draft order. It is sufficient that the advertisements are placed in the newspapers and Prouds' stores. However, if that does not occur, it is desirable that the notices at the point of sale remain in place for more than 28 days. Three months, in my opinion, is appropriate. Some minor criticisms were made by Prouds concerning the form of the proposed advertisement. I agree with those criticisms and, in any event, they were accepted by senior counsel for ACCC. ACCC seeks that all its costs be paid as the successful party. Prouds seeks 50% of its costs, on the footing that ACCC failed in relation to a central platform of its case, namely that the "was" price should be viewed as the price at which a particular item had historically been sold. I will not rehearse the authorities concerning the exercise of the Court's discretionary power to award costs. Suffice to say, the discretion must be exercised judicially, not arbitrarily and on the basis that a successful party can have all its costs even if it has failed on a particular point or issue but, even so, adjustments can be made having regard to partial success or partial failure or, putting it slightly differently, success on some points but not all. 15 In my opinion, this is a case where ACCC can be viewed as the successful party, even though it failed to establish that some of the pleaded conduct contravened the Act. However, I do accept that ACCC's case, and certainly its evidentiary case, was based in substantial part on the contention that the "was" price should be viewed as the price at which a particular item had, historically, been sold. The detailed evidence of Dr Ferrier, led by ACCC, was directed, in substance, to establishing what the actual selling prices of the 17 items had been. The notion that the promoted "was" price would be taken by consumers to be reference those prices was at the forefront of ACCC's submissions. The relief it sought was, in many respects, framed on the basis that this was correct. ACCC failed on this significant point and some adjustment should be made to the costs order to reflect this failure. The appropriate order is that Prouds pay 70% of ACCC's costs. I certify that the preceding fifteen(15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. The reason the Federal Court made this declaration is that the catalogues advertised the 17 items of jewellery as having a "Was" price and a "Now" price in circumstances where we had not offered the items of jewellery for sale at the "Was" price for a reasonable period immediately prior to the catalogue promotions. The 17 items had the following SKU numbers: 2952471, 4050554, 4050562, 2894889, 2906399, 2937001, 2958299, 2958972, 2996980, 2971390, 2984008, 2984016, 7054991, 7102459, 7550654, 7712909 and 7757464, which represent the following items: I Love You Bear Pendant, 19cm Solid Belcher Bolt Ring Bracelet, 21 cm Solid Belcher Bolt Ring Bracelet, CZ Heart including 43cm Chain, 19cm Double Curb Padlock Bracelet, 2 Tone Flower Heart Pendant, 2 Tone Heart Knot Pendant, 3 x 15mm Hoop Earrings, Diamond Filigree Heart Ring, 15mm Ribbon Twist Hoop Earrings, 20mm Ribbon Twist Hoop Earrings, Emerald Cut Blue Topaz Dress Ring, Diamond Crossover Dress Ring, Cute Heart Pendant, Diamond Cross Over Earrings, Amethyst Oval Bezel Drop Earrings. | misleading and deceptive conduct dual pricing distribution and publication of jewellery catalogues final orders terms of declaratory orders whether injunctive relief is appropriate in the circumstances whether an order for corrective advertising should be made costs in the proceedings where applicant fails on significant point trade practices |
2 The application was supported by an affidavit of the applicant sworn on the same day in which he deposed that he was a member of the Department of Defence between October 1982 and 3 November 2004 when his service was terminated by reason of the decision complained of, which decision had been made on the ground that the applicant lacked the necessary qualities for service in the Army. 3 On 26 April 2007 the respondents applied in the High Court to have the proceeding remitted to the South Australian Registry of this Court. That application was supported by an affidavit in which the deponent asserted that the application for an extension of time which had been sought by the applicant in the High Court would be opposed and that the respondents would apply to have the proceeding dismissed. The further proceedings in the plaintiff's application for an order to show cause, together with the plaintiff's application for an extension of time filed on 17 March 2006, be remitted to the Federal Court of Australia, South Australian Registry, for hearing. 2. The time limits imposed by Rules 25.06.1 and 25.07.2 of the High Court Rules 2004 are to continue to apply to these proceedings upon their remittal to the Federal Court of Australia, subject to the determination by the Federal Court of Australia of the plaintiff's application for an extension of time filed on 17 March 2006. That, in the event that the application for an extension of time is granted, the whole of the Application to Show Cause filed in the High Court of Australia and remitted to this Court by order of the Honourable Justice Crennan on 4 May 2007, or such parts of that Application as the Court sees fit, be struck out pursuant to Order 11 Rule 16 of the Federal Court Rules for disclosing no reasonable cause of action and for causing embarrassment. 2. That the whole of the relief sought in the Application, or such parts thereof as the Court sees fit, be summarily dismissed pursuant to Order 20 Rule 5 of the Federal Court Rules for being an abuse of process of the Court. 3. That the respondents have summary judgment in the proceedings or such parts as the Court sees fit, pursuant to subsection 31A(2) of the Federal Court of Australia Act 1976 , on the grounds that the applicant has no reasonable prospect of successfully prosecuting the proceedings. The application which is before me this morning is the applicant's application for an extension of time within which to apply to the Court for an order to show cause why the constitutional writs should not issue in relation to Brigadier Appleton's decision. The application to show cause which has been filed by the applicant does not clearly identify the relief that is sought but I think it may be understood that the applicant seeks both the issue of a writ of certiorari to quash the decision of Brigadier Appleton on 3 November 2004 and the issue of a writ of mandamus. That the Department of Defence comply with its duty and responsibility as a party to serious and complex litigation, and comply with all judicial orders and directions; and answer in full, all correspondence sent by the plaintiff with regards to full and complete discovery and disclosure in these legal issues of appeal. 5. That the plaintiff is allowed to proceed unhindered and unimpeded by the defendants to complete his appeal of conviction in the DFM 1999 trial. The access of the documents in question is illegal and constitutes a breach of privacy. That being the case, he argued that Brigadier Appleton was wrong to take into account those convictions. In essence, he seeks to use the proceeding to show cause to overturn those convictions. 9 The High Court Rules apply to this application because Crennan J so ordered and because the proceeding was initiated in that Court. 11 Brigadier Appleton's decision is an "other proceeding" within the meaning of those words in rule 25.06.1. 13 Rule 25.07.2 applies only to a writ of mandamus directed to a judicial tribunal. Clearly enough, Brigadier Appleton does not come within the description of a judicial tribunal and, in those circumstances, the rule does not provide a time limit for the issue of the constitutional writ of mandamus if it were to issue directed to the respondents. 14 Although no time limit therefore is prescribed in relation to an application for mandamus in a case such as this, the writ would not issue unless the decision which is complained of was first quashed. Therefore, the applicant would not be entitled to the issue of the writ of mandamus in relation to the orders sought in the application to show cause unless he can first satisfy the Court that a writ of certiorari should issue to quash Brigadier Appleton's decision. 15 The application for a writ of certiorari is well out of time. The application was commenced more than 16 months after the decision was made, which means that it was commenced 10 months after the time prescribed by rule 25.06.1. 16 Both Mr Ferdinands and Dr Bleby, who appeared for the respondents, referred me to Gallo v Dawson (1990) 93 ALR 479. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-5; 70 ALR 185. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. 17 In Re Commonwealth; Ex parte Marks [2000] HCA 67 ; (2000) 177 ALR 491 , McHugh J was concerned with an application for the issue of the writs of certiorari and mandamus in circumstances where the application was 11 months out of time for the issue of certiorari and 15 months out of time for the issue of mandamus, a similar delay to the period in this proceeding. 18 McHugh J said that the grant of an extension of time is not automatic whether the substantive application is for constitutional relief or by way of an appeal. The explanation for such a delay is also a relevant consideration. 19 McHugh J said that he needed to take into account the explanation for the delay and, where the application is for an extension of time, the prospects of the application succeeding. 20 Dr Bleby contended on this application that I should have regard to the history of the matter, the nature of the litigation, the consequences for the parties of a grant or refusal of the extension and, because this is an application for the issue of the constitutional writs, the fact that the public interest requires that there be an end to litigation about the efficacy of such acts or decisions. 21 I accept, of course, that all of those matters are relevant. Those matters were all referred to by McHugh J in Gallo v Dawson 93 ALR 479. But they are, I think, of less importance than the two primary issues which must be determined. The primary issues are first, the explanation for the delay and secondly, the prospects of the applicant succeeding on the substantive application. 22 The applicant has filed four affidavits in support of the application for an extension of time. With regard to Extension of Time matters, I say that time should be and will be extended until I can find a legal practitioner that is honest and decent and can step forward and assist the High Court of Australia in these matters of fraud and racial hatred of employees in the Department of Defence. ... [E]xtreme poverty and hardship and trying to get the respondents to actively engage in serious issues such as professional misconduct, process corruption and hate crimes without using the courts. However, the authorities are clear that impecuniosity itself is not a basis on which a party is relieved of the obligation to prosecute his application diligently: Ferdinands v The Chief of Army [2003] FCAFC 10 at [36] . Moreover, the failure of the applicant to obtain a solicitor or counsel who satisfies what he says is a test of honesty and decency cannot be a ground for or an excuse for the applicant failing to bring the application within the time prescribed by the High Court Rules . In the end, I think it not unfair to say that no real explanation has been given for the delay, notwithstanding that this proceeding was commenced more than two years ago. 25 The applicant has been convicted in the Adelaide Magistrates Court and by a Defence Force Magistrate. The thrust of the applicant's complaints is that Brigadier Appleton wrongly took into account those convictions and the circumstances surrounding those convictions. Rather, Brigadier Appleton should have, it is asserted, ignored the convictions because the convictions ought to be set aside. 26 The proceeding which was commenced in the High Court is patently an abuse of process in that it seeks by the application for the issue of the constitutional writs to set aside a conviction in the Adelaide Magistrates Court and a conviction by a Defence Force Magistrate. 27 The applicant was at the relevant times a police officer. He was charged in the Adelaide Magistrates Court under s 39 of the Criminal Law Consolidation Act 1935 (SA) with common assault. He was convicted on 27 February 2001. On 27 April 2001 a psychiatrist described the applicant as having a paranoid personality disorder characterised by a pervasive distrust and suspicion of others. In his sentencing remarks, after the imposition of the conviction to which I have referred, the Magistrate described the conduct of the applicant as "a cowardly and seemingly inexplicable and unprovoked attack by a member of the police force against a defenceless person already in police custody. The applicant appealed to the South Australian Supreme Court, but unsuccessfully. It is not entirely clear what other appellate steps he took in relation to that conviction. It is clear that the applicant eventually obtained a hearing in the High Court but that seems to be in relation to an issue relating to the termination of his service as a police officer. 29 The applicant was charged that on 15 January 1999 and 16 January 1999 he assaulted an inferior officer contrary to s 34(1) of the Defence Force Discipline Act 1982 (Cth). The applicant pleaded not guilty to both counts but was convicted on one of the counts by a Defence Force Magistrate on 4 November 1999. He was sentenced to be reduced in rank from corporal to private. It is not entirely clear to me whether that sentence on reduction in rank was for a period of time of three months or whether, after three months, the applicant was promoted again from private to corporal but nothing turns on that. 30 On 17 April 2001 he lodged a notice of appeal to the Defence Force Discipline Appeal Tribunal against the conviction. The notice of appeal was out of time and on 15 August 2001 Heerey J refused an application to extend time to file the appeal. The applicant then appealed to the Defence Force Discipline Appeal Tribunal but again out of time. 31 On 16 August 2002 the Tribunal, constituted by Underwood, Mildren and Duggan JJ, extended the time for the filing of the appeal until 29 August 2001, which was the date upon which the notice of appeal was filed but dismissed the appeal. 32 On 9 September 2002 the applicant filed a notice of appeal in this Court against the order of the Tribunal dismissing the appeal from Heerey J. On 7 February 2003 the respondent to that appeal, who is the first respondent to this application, applied to have the appeal dismissed on the ground that the applicant had failed to prosecute his appeal with due diligence. 33 On 11 February 2003 the appeal was dismissed by the Full Court of the Federal Court, consisting of Spender, Ryan, von Doussa, Dowsett and Selway JJ, on the ground that there was no prospect of success and the further ground that there would be no injustice to the applicant in dismissing the appeal for want of prosecution. 34 On 6 March 2003 the applicant filed an application for special leave to appeal to the High Court. He again failed to prosecute that application and on 1 October 2003 the High Court issued a certified of deemed abandonment. 35 Brigadier Appleton considered the convictions to which I have referred and the assessment of the psychiatrist, and concluded that the applicant's behaviour was contrary to military ethic and cast serious doubts about his qualities to serve as a junior non-commissioned officer in the Australian Army. 36 On 9 June 2004 Brigadier Appleton invited the applicant to give a written statement of his reasons why the applicant's service in the Defence Force should not be terminated. The applicant responded on 6 August 2004 presenting arguments against his termination. 37 Brigadier Appleton said that he considered the response in detail but concluded that there was sufficient evidence to support his initial assessment that because of his behaviour and attitude the applicant was not suitable for service in the Australian Defence Force. On the same day as Brigadier Appleton reached that decision, his service was terminated. Brigadier Appleton took into account, as he was entitled, the two convictions to which I have referred. The convictions, notwithstanding the appeals and re-hearings to which I have referred, stand. The applicant seems to challenge the conviction of the Defence Force Magistrate in these proceedings. 38 That is not the purpose of these proceedings and he is using this proceeding to quash Brigadier Appleton's decision as a collateral attack on that conviction. In his argument the applicant seems to suggest that he would use this proceeding to obtain evidence to allow him to establish that the conviction of the Defence Force Magistrate was secured by fraud to present that evidence to the High Court. How he could re-open the application for special leave to appeal to the High Court, which has been dismissed, was not explained. However, if that is the purpose of this proceeding, that purpose is clearly an abuse of process. 39 The applicant frankly said that he intended to challenge in this proceeding the convictions. He went into detail about the evidence before the Defence Force Magistrate. The applicant has exhausted all avenues of appeal from the decision of the Defence Force Magistrate and, indeed, from the Adelaide Magistrates Court. It is not appropriate to challenge the conviction by way of application to show cause. I acknowledge that Mr Ferdinands has a strong belief that the conviction which was entered by the Defence Force Magistrate was a result of a combination of conspiracy, incompetence and fraud, but they are matters which have already been dealt with by the appropriate appeal tribunals. 40 They are matters which cannot be inquired into on a proceeding of this kind. Moreover, the application clearly seeks, insofar as it goes further than seeking the re-opening of the two convictions to which I have referred, a merits review of Brigadier Appleton's decision. It does, notwithstanding the use of the language in the application, not raise any question of law which would give rise to the relief sought. There are no prospects that the applicant will succeed in obtaining the issue of the writ of certiorari and consequently the issue of the writ of mandamus. 41 In those circumstances where no proper explanation has been offered for the delay and there is no prospect of the applicant succeeding, the application for an extension of time should be refused. There will be an order refusing the applicant's application for an extension of time within which to issue an application to show cause for the issue of the writ of certiorari and for the issue of the writ of mandamus. The proceeding will be dismissed and the applicant must pay the respondent's costs. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for extension of time within which to apply to show cause application remitted from the high court application for writs of certiorari and mandamus application significantly out of time factors relevant to grant of an extension of time impecuniosity itself is not a sufficient reason to grant an extension of time no prospect of the applicant succeeding application dismissed applicant sought to use application to challenge convictions by the adelaide magistrates court and a defence force magistrate application was an abuse of process application dismissed practice and procedure practice and procedure |
The mandatory injunction was granted after a hearing ex parte and upon the applicant giving an undertaking as to damages (the undertaking). 2 On 13 April 2006, the Magistrate discharged the mandatory injunction and related orders on the ground that the applicant's solicitor had failed to act with the requisite candour when seeking an order ex parte: see Lamb v Ariss [2006] FMCA 510 (the Magistrate's reasons). 3 The applicant applies for leave to appeal, if it be required, from the discharge of the mandatory injunction. (A notice of appeal has been filed. ) The applicant also moves the Court for a stay of the proceeding before the Magistrate pending the hearing and determination of the appeal. The first respondent is the bankrupt's former husband, Stephen Gordon Ariss. Mr Ariss is a director of the second respondent. 6 On 23 December 2005, the applicant commenced a proceeding in the Federal Magistrates Court against Mr Ariss and the second respondent (the FMCA proceeding) by way of an "Application" based on a standard form issued by the Federal Magistrates Court (the FMCA application). The form requires the person completing it to specify the "final orders sought" and any "interim or procedural orders sought". The FMCA application was silent as to final orders sought and, as to interim or procedural orders sought, specified the mandatory injunction. 7 As the applicant's solicitors claimed that the obtaining of the mandatory injunction was a matter of urgency, the FMCA proceeding was brought on for hearing before McInnis FM on the day it was commenced. 8 Before McInnis FM, the applicant relied upon an affidavit affirmed by Alexander William King of the applicant's solicitors. That affidavit was largely based on Mr King's "information and belief". (b) Her statement of affairs disclosed "no interests of substance in any jewellery". (c) She was examined before a Registrar of this Court, pursuant to s 81 of the Bankruptcy Act 1966 (Cth), on 19 September and 22 December 2005. (d) Mr Ariss was examined by a Registrar of this Court on 22 November 2005. (e) Information obtained by the applicant disclosed that twelve items of ladies' jewellery were insured in the names of the bankrupt and the respondents for $226,755.00 (the listed items). (f) In the course of the bankrupt's second examination, she said that (a) the listed items "were gifts to her, and at the time each was gifted to her she believed it was hers and hers forever", (b) two of the listed items (a gold Rolex watch and a three stone diamond ring) were gifted to her after her bankruptcy, (c) she last saw the listed items at premises at Port Douglas where she had lived with Mr Ariss --- from whom she was now separated. (At his examination, Mr Ariss said that the separation had taken place on 17 July 2005. " She also said that she had asked Mr Ariss for the listed items "but that he had said that [they] were the property of [the second respondent] and that she could not have them. The Response sought orders that the mandatory injunction and related orders "be set aside on the basis that they were obtained irregularly because ... the applicant failed to bring to the notice of the Court all facts material to his right to the orders" and/or the FMCA application did not specify any final orders sought. 10 In support of the Response, Mr Ariss swore an affidavit. An extract of the transcript of the hearing before McInnis FM on 23 December 2005 was exhibited to that affidavit. Notwithstanding that he eventually did so, that extract shows that the Magistrate was obviously reluctant to grant the mandatory injunction ex parte. 11 Mr Ariss deposed that during his examination he said that the listed items belonged to the second respondent --- of which the applicant omitted to inform the Magistrate on 23 December 2005. Mr Ariss also deposed that during her examinations the bankrupt "gave evidence that conflicts with any claim" that she owned the listed items --- of which the applicant also omitted to inform the Magistrate on 23 December 2005. Mr Ariss then sets out seven examples of such evidence. Rather than recite them, I will set out what I consider to be the relevant parts of the transcripts of the bankrupt's examinations. No, because we were having marital problems then. It was all a matter of money, and I said I didn't want it, so he took it. But you didn't say that on your statement of affairs?---Well, you never asked, I gave a lot of things away. "---Well, it wasn't a gift. It wasn't mine to give. They weren't mine to give. They are not in my name. I mean - - -?---We had a fight, about six months before I went bankrupt. There was a real issue about money and jewellery and what a kept woman I was, so I said to him to have it. It wasn't in my name. I believe the jewellery is either in his name or a company name, so I had no claims to it, anyway, because we were looking at separating then. Is that what you considered?---No. My husband was very --- always very --- after his business went --- liquidated, we went through a very difficult period and --- when he lost everything, so he had nothing in --- and it was me that they attacked, so he had nothing in my name. Now, the jewellery was never in my name and I know that for a fact. That's not the question I'm asking you Mrs Ariss, I'm asking you - - -?---No. I thought it was forever. I didn't want it. I gave it all to him. I didn't want him. Well, I had --- you know, I had, you know, a Guess watch. I had --- I've got, like, cosmetic jewellery that I would wear that I had. I didn't really think about it and, if I made a mistake, I'm sorry. I didn't think about it. I didn't think about it. Because I know, because --- I just know --- that watch. I remember the watch. It was owned by Sira Properties. If you knew that, why did you sign a Sira Properties trust balance sheet that made no reference to jewellery whatsoever?---Well, it could have been that, at the time, it wasn't owned by that, and that watch went missing. In other words, how is it that you can say Sira Properties owned the jewellery?---Because when I left I asked what I could take, what was mine, and he told me that the jewellery was never mine in the first place. So when you said on the last occasion that you believed, or that the jewellery was Sira Properties' jewellery, or that it was the owner, that was solely on the basis of what your husband told you. Is that right?---No. Yes and no. There was --- on the insurance documents it was always under Sira Properties. Now, just because it was under Sira Properties I still felt it was mine. He gave them to me as a gift. They were mine. But --- but they weren't. They were owned by Sira Properties. Then ... suddenly you and your husband cease to be the insured persons and Sira Properties became the insured person, and then when you had moved to [Port Douglas] there was notification that you and your husband were about to go back on the list?---That is what that --- I don't think that is correct though. We changed insurance brokers there. It was always Sira Properties. I was never under the impression it was mine legally. But emotionally, it should have been mine. It is --- that it wasn't mine to take. It belonged to Sira Properties, and I said, 'It is beside the point it is Sira Properties. It is still --- you gave it to me. It should be mine. I should be able to take it. In my view, it is perfectly clear from a reading of the transcript of the Registrar's examination which took place on 22 December 2005 that the bankrupt had stated a belief that the jewellery was given to her as a gift and, as she described it, "They were mine. " But also it is equally clear that she immediately proceeded to say "But --- but they weren't" and that "They were owned by Sira Properties". Elsewhere in the material, it is clear that the bankrupt confirmed that on the previous occasion when she gave evidence, the evidence was to the effect that the jewellery might be the property of Sira Properties. Whilst the court is prepared to make due allowance for the fact that when the application was made before this court on 23 December 2005 the transcript of the previous day's examination was not available, the fact remains that both senior counsel and Mr King were present both on 22 December 2005 before the Registrar and before this court upon the hearing of the urgent ex parte application on 23 December 2005. In my view, the making of ex parte orders by any court is a significant and serious process to be undertaken, and it should be undertaken with due care. Applying [Thomas A Edison] to the present case, it is clear in my view having regard to a comparison between the first King affidavit [(ie the affidavit described at [8])] and in particular paragraph 11 thereof [(ie the paragraph where what is set out in the first sentence at [8](g) appears)] and the limited extract of the evidence of the bankrupt that the court was not at the ex parte hearing provided with all the evidence which was then known to either the deponent and/or his client , and indeed counsel who appeared both before this court and the s.81 examination. For a bankrupt's evidence to be limited in the way it is sought to be limited in the first King affidavit, in my view can only result in the court being misled. It is the responsibility of parties seeking to make an ex parte application, to bring to the notice of the court all facts material to the determination of the right to that order and I accept that it is no excuse for any party to indicate that he or she was not aware of the importance of the material. As indicated by the High Court in [Thomas A Edison], uberrima fides is required. If a party induces a court to act in the absence of another party, and in doing so fails in its obligation, in my view, to paraphrase the words of the High Court, unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. It seems logical to me and irresistible that if the bankrupt or indeed if the First Respondent had been present upon the hearing of the application by this court on 23 December 2005, then the complete extract of the bankrupt's evidence would have been referred to along with other extracts during the course of the examination before the Registrar, indicating that a concession was made by the bankrupt that the jewellery was owned by the Second Respondent, even though the bankrupt believed the jewellery had been a gift and that it belonged to her or, to use her words, was "mine". The decision to proceed on an ex parte basis is a significant decision which should not be regarded as a decision to be taken lightly by legal practitioners. In this instance, the proceedings commenced arguably on the wrong form, failed to seek substantive relief, and more significantly relied upon what I find to be inadequate and misleading affidavit evidence in relation to the full extent of the evidence given concerning a crucial issue of significance to the court's deliberation, based upon the bankruptcy evidence of the previous day's section 81 examination. Having embarked upon the ex parte urgent application, then the Applicant does so at the Applicant's peril. The duty to act with utmost good faith is a significant duty, and for the reasons stated I am satisfied in this instance that that duty has not been discharged. In my view it follows that the orders made by the court on 23 December 2005 should therefore be discharged. That leaves the question of whether the court should in the circumstances grant leave to the Applicant to now amend the [FMCA] application retrospectively, to replicate the orders sought as interim orders in that part of the [FMCA] application referring to final orders. In my view, in the exercise of the discretion, whilst the court from a practical point of view may be tempted to permit the amendment, it would seem to be unfair and contrary to the interests of justice to permit an Applicant who has failed to exercise the utmost good faith in bringing an ex parte application to then convert that application, flawed as it clearly has been found to be, to an application for substantive relief. In my view the proper course is to refuse the application to amend and to simply dismiss the [FMCA] application and otherwise discharge the orders made by the court on 23 December 2005. IS LEAVE TO APPEAL REQUIRED? The first question is whether those orders are interlocutory or final. If the former, leave to appeal those orders is required. If the latter, an appeal from those orders lies as of right. 15 The Magistrate's orders of 13 April 2006 are interlocutory. They do not finally determine the rights of the parties. See Hall v Nominal Defendant [1966] HCA 36 ; (1966) 117 CLR 423 and Licul v Corney [1976] HCA 6 ; (1976) 180 CLR 213. 16 All that was determined by the granting and discharge of the mandatory injunction was who should have custody of the property the subject of the mandatory injunction for the time being . The mandatory injunction compelled Mr Ariss and the second respondent to deliver up to the applicant, or cause to be so delivered up, certain property. The discharge of the mandatory injunction compelled the applicant to return to Mr Ariss and the second respondent any property so delivered up. That is, the discharge of the mandatory injunction simply restored the status quo ante. 17 Notwithstanding that restoration, the real issue between the parties --- namely, who owns the property the subject of the mandatory injunction --- has not been finally determined. 18 The fact that the Magistrate dismissed the FMCA application is irrelevant to determining whether leave is required. 19 Further, the fact that the Magistrate determined that there should be an assessment of damages to be paid pursuant to the undertaking does not support the contention that leave is not required. The applicant relied on the decision of the Full Court in City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163 at 173-175 as authority for that proposition. I cannot see how City of Camberwell can be so relied upon. In that case, the trial judge, by agreement with the parties, decided liability before assessing damages. He decided that the defendant was indeed liable to the plaintiff. Though he did not make orders to that effect, a "judgment" that "the issues of liability raised by the [defendant] are not to be resolved in favour of the [defendant] and it is appropriate therefore to turn to the issues between the parties as to damages" was authenticated. Thus the appeal is as of right from 'a determination' within the meaning of s 10(2) of the Supreme Court Act 1986 (Vic). Further, the assessment of damages in this case results not from a decision on the merits as to liability (as in City of Camberwell ) but automatically upon the discharge of the mandatory injunction which was granted upon the giving of the undertaking. SHOULD LEAVE TO APPEAL BE GRANTED? First, whether the impugned decision is attended with sufficient doubt to warrant its reconsideration. Secondly, whether substantial injustice would result if leave were not granted, supposing that the impugned decision was wrong. ... It is asserted that the fact she had earlier given evidence contrary to the proposition the jewellery was hers was not disclosed. What the transcript of the evidence given by the bankrupt on 22 December 2005 discloses is that she did on occasion give contrary evidence. That is, on occasion she gave evidence that she thought that the jewellery was either that of Mr Ariss or [the second respondent]. However, what is critical is that she was examined as to why she might hold to that view. The cases establish that, on an application made ex parte, there must be disclosure of material facts. This was also disclosed. The best evidence that Mr Ariss and/or [the second respondent] would claim to be the owners of the jewellery, and the basis of that claim, was before the Federal Magistrates Court. There was direct evidence, of which the Court was informed, that Mr Ariss asserted the jewellery was his or [the second respondent's] and, on that basis, refused to return it to his wife. In those circumstances, the fact there was additional evidence from the bankrupt that, on the basis of the insureds' interest and on the basis of what her husband told her, she believed that the jewellery may be his or [the second respondent's] jewellery, was not material. The King ... affidavit disclosed that [the second respondent] or Mr Ariss would assert an entitlement to the jewellery. The ... Magistrate knew that was the case they would make and knew there was documentary evidence in support of that case, at least as to an arguable insurable interest, notwithstanding none of the jewellery appeared on the balance sheet of [the second respondent]. A party seeking an order ex parte must disclose all material facts. His submissions quoted at [21] are, to a large extent, beside the point. A reasonable person in the Magistrate's position who had the benefit of the transcript of the bankrupt's second examination (or an accurate summary thereof) would readily discern that the bankrupt was saying that though she did not own the jewellery in question, and that it was owned by the second respondent , she thought she was "emotionally" or, indeed, morally entitled to it. Mr King's affidavit did not disclose this to the Magistrate. That was a serious omission for an affidavit that purported to give an accurate account of the evidence given by the bankrupt at her second examination. Nor was that omission rectified before the Magistrate. The facts that should be disclosed go both to matters of liability and matters of discretion. If a fact is material in that it would be a matter to be taken into account by a court in the making of the decision to grant an injunction or in the formulation of an order that is to be made, it is a matter that ought to be disclosed. ) I think it clear that that test has been satisfied. A reasonable person in the Magistrate's position would have taken into account what the bankrupt was in fact saying at her second examination in deciding whether or not to grant the mandatory injunction. Undoubtedly, that information might have affected that decision. 25 The applicant contended that the Court should apply the test in Re South Downs Packers . In that case, Connolly J said at 566 that "[a] non-disclosure will not be material unless it be likely to influence the court in acceding to the application". (The emphasis is mine. ) Though I prefer to follow Milcap Publishing as it is a decision of this Court, the application of the test in Re South Downs Packers would not lead to a different result. 26 The applicant also contended that the Magistrate erred when he said at para 40 of his reasons (see the second passage quoted at [12]) that "the court was not ... provided with all the evidence which was then known to either the deponent and/or his client". (The emphasis is mine. ) His Honour posited and said he would apply the tests found in Thomas A Edison and Milcap Publishing . A fair reading of his reasons discloses that, notwithstanding the language of para 40, the Magistrate correctly applied those tests. At para 35, his Honour said that the respondents had contended that a comparison between Mr King's affidavit and the transcript of the bankrupt's second examination showed that the court "was clearly misled in relation to what could be described as a crucial issue" leading to the granting of the mandatory injunction. The "crucial issue" to which his Honour referred is that highlighted at [23]: that the bankrupt had conceded that she did not own the jewellery in question. The Magistrate's reference to "all the evidence" was a reference to all the evidence going to the "crucial issue". The comparison shows that the concession was not disclosed by Mr King's affidavit. The Magistrate's reference to "all the evidence then known " (emphasis added) shows that the Magistrate was engaging in the comparison. Clearly, the Magistrate was of the opinion that all material evidence on the crucial issue equated with all the evidence on the crucial issue. He was correct in that opinion. 27 Finally, the notice of appeal referred to at [3] says that the Magistrate erred in "failing to have regard to, or to apply, the decision in Re Bayliss (1987) 15 FCR 167 to which he was referred, to the case before him". Though the applicant's submissions mention Re Bayliss , the applicant's counsel did not mention it before me. In any case, I cannot see how Re Bayliss could have advanced the applicant's case as it stands for a proposition of a highly general nature. I can see no circumstance in this case that makes that proposition of especial significance. 28 The Magistrate's decision is not attended with sufficient doubt to warrant its reconsideration. I do not think it necessary to go on to consider whether substantial injustice would result if leave were not granted, supposing that the Magistrate's decision was wrong. The two limbs of the test in Décor Corporation cannot be considered in isolation from one another: see Décor Corporation at 398-399. The prospect that an appeal, if leave were granted, would be successful is so remote that it would be artificial to suppose that the decision below is wrong. See Applicant VMAO v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 427 at [22] . IS THE APPLICANT ENTITLED TO A STAY? That assumed that I would decide either that leave to appeal is not required or that leave is required and is granted. In the events that have occurred, no stay is sought. 30 Further, if I am incorrect and the Magistrate's orders of 13 April 2006 are final rather than interlocutory, I would nonetheless refuse to grant a stay. For the same reasons that I refused to grant leave to appeal, I would hold that the applicant has not demonstrated "a reason or an appropriate case to warrant the exercise of the discretion in his favour": Alexander v Cambridge Credit Corporation Ltd (rec apptd) (1985) 2 NSWLR 685 (Full Court) at 694 (and see Stirling Harbour Services Pty Ltd v Bunbury Port Authority [2000] FCA 87 at [13] per French J) or that he has a serious case to be tried and that the balance of convenience favours the granting of the stay: Stirling Harbour Services at [15]. The stay of certain of the Magistrate's orders of 13 April 2006 referred to at [13] is discharged. The applicant must pay the respondents' costs. I certify that the preceding thirty one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. | mandatory injunction obtained ex parte upon giving of undertaking as to damages injunction discharged for non-disclosure whether discharge interlocutory or final relevance of assessment of damages pursuant to undertaking mandatory injunction obtained ex parte injunction discharged for non-disclosure application for leave to appeal, if leave be required, from discharge and stay pending appeal whether leave should be granted extent of obligation of party seeking order ex parte to make disclosure practice and procedure practice and procedure |
The expression "external administration matter" is defined in s 580 to mean, inter alia , the winding up, under Ch 5 of the Act, of a company. 2 The defendant, Newpage Pty Ltd (Newpage), is a "company" because it is a company registered under the Act (see the definition of "company" in s 9 of the Act). It is being wound up pursuant to an order for winding up that was made in this proceeding on 25 January 2007. Therefore, the Court's power under s 581(4) is enlivened. 3 By interlocutory process filed in Court on 21 May 2007, the applicant, Mr Hamilton in his capacity as Official Liquidator of Newpage, sought the issue of a Letter of Request addressed to the High Court of Malaya requesting that Court to act in aid of, and to be auxiliary to, this Court in respect of the winding up of Newpage. Specifically, Mr Hamilton's objective was to obtain orders from the High Court of Malaya for the purpose of conducting an examination of Muhamad Sobri Bin Din and Sorahimi Bin Sidek who are residents of Malaysia. 4 On 20 June 2007 I made the orders sought for the following reasons. 5 Mr Hamilton had already conducted certain examinations pursuant to ss 596A and 596B of the Act. On 4 April 2007 in Melbourne, he conducted examinations of each of Mr Yii and Mr Parsons, who are respondents to other interlocutory processes filed in this proceeding. Mr Yii is the sole director of Newpage. Those examinations, and the examinations of other persons, are continuing. 6 Documents obtained by Mr Hamilton in the course of his inquiries refer to a transfer of $100,000.00 to KRI Development Sdn Bhd (KRI) from Newpage on 25 January 2006 and a "Put Option Agreement" between Mr Yii and KRI, executed by KRI under its common seal and witnessed by "Muhamad Sobri Din". A Deed of Variation was signed on behalf of KRI by Sorahimi Bin Sidek. Muhumad Sobri Bin Din and Sorahimi Bin Sidek are directors of KRI, a company formed and registered in Malaysia. Mr Hamilton states that "[w]ere each of Muhumad Sobri Bin Din and Sorahimi Bin Sidek in Australia, I would wish to examine each of them under Section 596B of the Corporations Act " regarding their dealings with Newpage. 7 Section 249 of the Companies Act 1965 (Malaysia ) provides, relevantly, for a procedure for the summoning of any person whom the Court deems capable of giving information concerning the promotion, formation, trade dealings, affairs or property of a company. This section is similar to s 596B of the Act which permits this Court to summon a person for examination about a corporation's "examinable affairs" if the Court is satisfied that the person has taken part or been concerned in examinable affairs of the corporation and has been or may have been, guilty of misconduct in relation to the corporation, or may be able to give information about "examinable affairs" of the corporation. The term "examinable affairs" is defined in s 9 of the Act to include "the promotion, formation, management, administration or winding up of the corporation". 8 The High Court of Malaya has jurisdiction in the winding up of companies formed and incorporated in Malaysia under the Companies Act 1965 (Malaysia): see s 4(1) of that Act. 9 It was my view that this Court should issue a Letter of Request to the High Court of Malaya as sought by Mr Hamilton because the two individuals mentioned may be able to give information about the examinable affairs of Newpage, and this Court would have summoned them for examination about Newpage's examinable affairs if they had resided in Australia. The reason why I thought a constraint of the former kind appropriate is one of broad principle and of general application. It is that it is conceivable that it may be open to the courts of some foreign countries (I have no particular countries in mind and certainly do not have Malaysia in mind) to make orders that would not be acceptable in Australia in the light of Australian public and legislative policy. | winding up letter of request to the court of a foreign country asking it to act in aid of, and to be auxiliary to, the court in a winding up of a company, by summoning persons to be examined high court of malaya considerations relevant to exercise of discretion form of letter of request corporations |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Citizenship to refuse to grant a protection visa to the appellant. The appellant entered Australia on 3 February 1999 on a Student visa. On 12 August 2002 he lodged an application for a protection visa with the (now) Department of Immigration and Citizenship. The appellant claimed that he had a well-founded fear of persecution on the basis of his political opinion due to his involvement with the People's Alliance ("PA"). The appellant claimed that he supported a PA candidate ("the candidate"), organised the local youth wing of the PA, and attended protests against the United National Party ("UNP"). He claimed that, as a result of his involvement, he was subjected to a number of incidents of persecution from supporters of the UNP. He claimed that he was assaulted by a mob when attending an anti-UNP protest in 1994 and that people later came with weapons to his aunt's house where he was living in hiding and inquired about him. He further claimed that, in June 1994, he was assaulted by a gang, which resulted in him sustaining an injury to his arm and requiring treatment in hospital. He said that the candidate he supported advised him to leave the country because he was being targeted by the UNP. He also claimed that, after the PA won the general election in December 1994, he stayed in Sri Lanka and continued to assist the PA and the candidate, and was involved in producing a report about people who disappeared during the UNP regime. He claimed that as a result of his involvement, he began receiving death threats from UNP supporters, but that he was not worried because at that stage the UNP was not in power. In 1998 the appellant decided to come to Australia to study and arrived in February of the following year. He stated that, in 2001, the UNP won the general election and started assaulting PA supporters. He claimed that, in 2002, UNP supporters went to his house with weapons and asked about his whereabouts. The candidate advised the appellant's parents to tell him not to return to Sri Lanka as his life would be in danger. A delegate of the first respondent refused the application for a protection visa on 29 August 2002. Thereafter the appellant appeared before the Tribunal on four occasions to challenge this decision. On 20 September 2002 the appellant applied to the Tribunal for a review of that decision. The Tribunal affirmed the decision under review in a decision signed on 25 November 2003 and handed down on 19 December 2003. On 26 April 2006, Connolly FM made orders setting aside the decision and remitting the matter to the Tribunal for determination according to law. The Tribunal, differently constituted, again affirmed the decision under review in a decision signed on 25 October 2006 and handed down on 14 November 2006. On 20 April 2007 McInnis FM made orders by consent setting aside the decision and remitting the matter to the Tribunal to be determined according to law. The Tribunal, again differently constituted, once more affirmed the decision under review in a decision signed on 17 August 2007 and handed down on 6 September 2007. On 18 December 2007 Burchardt FM made orders by consent setting aside the decision and remitting the matter to the Tribunal to be determined according to law. The Tribunal thus came to conduct yet another hearing. The resulting determination was again challenged in the Federal Magistrates Court, this time unsuccessfully. This appeal is brought from that decision. The appellant gave evidence to the Tribunal one each of the occasions on which he appeared before it. In addition, he submitted various documents and affidavits which he contended supported his case. They are comprehensive and carefully explained. Having thoroughly examined the various accounts given by the appellant and the material on which he relied, the Tribunal was led to the conclusion that he was not to be believed. It did not accept the claims on which his asserted entitlement to a protection visa rested. The Tribunal did not accept the appellant was a credible witness. In making this finding the Tribunal noted that the appellant gave inconsistent evidence at the various Tribunal hearings and in his written submissions regarding: his place of residence; whether his father's death was accidental or whether he was murdered for his political beliefs; his claimed involvement in PA youth groups; his claimed involvement in a protest march in Piliyandala in June 1994; the circumstances surrounding his alleged assault in June 1994; his address and changes of residence; the circumstances surrounding his claimed involvement in producing the report about people who disappeared during the UNP regime and the circumstances surrounding the alleged making of death threats against him. The Tribunal also noted that it was implausible that families of children who had disappeared would have given a 15 year old schoolboy any information or would have believed, as he claimed, that he was working for the government. The Tribunal further noted that letters submitted by the appellant, purportedly from the candidate, suggested that the appellant had been working for the party at a time when he was actually in Australia. The Tribunal referred to independent country information showing that Sri Lankan politicians sometimes sign letters without regard for the truth of their content and, as a result, gave greater to weight to other aspects of its adverse finding regarding the appellant's credibility than to the material contained in the letters signed by the politician. The Tribunal also found that the appellant tailored some of his evidence to deal with changing circumstances in Sri Lanka. It noted that he had claimed, for the first time, in a statutory declaration in June 2007, that his attackers at the 1994 demonstration were actually supporters of a particular UNP Minister ("the Minister"), who was an opponent of his father and uncle. The Tribunal found that this addition to the narrative was prompted by the Minister's decision to switch sides from the UNP to the PA in January 2007. The Tribunal therefore did not accept that the appellant or his family had any political involvement in Sri Lanka, or that he or his father suffered any persecution as a result of their alleged involvement. The Tribunal accordingly did not accept the appellant faced a real chance of persecution on the basis of his actual or imputed political opinion, or membership of a particular social group, in the reasonably foreseeable future if he returned to Sri Lanka. On 17 August 2008 the appellant filed an amended notice of appeal. The appellant claimed that the Tribunal had made an unreasonable decision; made a finding for which there was no evidence; took into account irrelevant considerations; failed to take into account relevant considerations; improperly exercised the power conferred on it by the Migration Act 1958 (Cth) ("the Act") and did not make its decision in good faith. His Honour chose to address the grounds described in the appellant's Contentions of Fact and Law rather than the Notice of Appeal because they were more comprehensive than those in the amended application. The appellant claimed that the Tribunal had a certain mindset that there would be no grounds for review because he had been to the Tribunal on three previous occasions. His Honour took this contention to be a claim of actual or apprehended bias and found that there was no evidence before the Court to support the contention that the Tribunal had a mindset opposed to the appellant or closed to argument and incapable of persuasion. His Honour was further satisfied that there was no evidence to support any claims of apprehended bias. His Honour found no error in relation to the Tribunal's findings about the appellant's residence as there was evidence before the Tribunal capable of justifying the conclusion at which it arrived. His Honour was satisfied that the Tribunal's assessment of the evidence in this regard was entirely appropriate. His Honour further found that the Tribunal had no duty to investigate the appellant's claims; rather that it was for the appellant to advance whatever evidence and claims he wished and for the Tribunal to decide whether his claim was made out. His Honour stated that the Tribunal was not under any duty to investigate the appellant's father's death and that, in any case, this issue had been put to him in a letter sent pursuant to s 424A of the Act. His Honour noted that merits review was not available to the appellant. He was satisfied that the Tribunal's finding as to the appellant's familiarity with the candidate was open to it on the evidence, and was relevant to the question of the appellant's claimed involvement in politics. His Honour was satisfied that the Tribunal's finding in relation to the appellant's involvement in PA youth groups was open to it on the evidence before it. His Honour was further satisfied that the Tribunal had considered the appellant's claim that the Minister had changed his political party allegiance but simply had not believed the appellant's claims in this regard. His Honour was further satisfied that the Tribunal did make a finding about the appellant's injury in 1994, accepting that he suffered an arm injury, but not accepting that it had been caused by any politically-motivated attack. His Honour also held that the Tribunal had considered the changes in government. His Honour stated that, the Tribunal had roundly disbelieved the appellant and had come to the conclusion that he did not have a well-founded fear of persecution. His Honour stated that although the Tribunal did not state in terms that the appellant did not have a subjective fear of persecution, in circumstances where the Tribunal found that the appellant had done nothing to give rise to any such fear, it was not surprising that the Tribunal did not feel it necessary to deal with that matter in terms. His Honour further held that the Tribunal did not need to consider state protection because of its findings that the appellant was not in need of such protection. Finally, his Honour also noted that many of the grounds were, in substance, seeking impermissible merits review by the Court. His Honour found no jurisdictional error on the part of the Tribunal and, therefore, dismissed the application. The notice contains essentially the same claims as were made before the Federal Magistrate. The grounds, in summary form, are that the Tribunal erred because of its findings of fact regarding the appellant's residence; his father's death; his repeated incorrect use of the candidate's name; the authenticity of the supporting letters and his involvement in PA youth groups. Further grounds for appeal included the Tribunal's lack of findings about the changing political landscape; whether the appellant had a subjective fear of persecution; his arm injury; and its failure to deal with the issue of state protection. The appellant appeared in person on the hearing of the appeal. He had the assistance of an interpreter. He relied on his written submissions. He also made some short oral submissions which restated parts of the written submissions. The appellant's written and oral submissions did not refer to all of the grounds which were advanced in his notice of appeal. The bulk of his written and oral submissions were directed to merits issues. An affidavit which he made in support of the appeal was sworn before a solicitor who has had a long-standing involvement with his case. I assume that the solicitor assisted the appellant in framing his grounds of appeal. In fairness to the appellant I consider (as did the Federal Magistrate) that I should deal with all the grounds he raised and not just those which were dealt with in submissions. The Tribunal found that the appellant had given different evidence about where he lived until he came to Australia. It noted that in, his original application, the appellant claimed that he had lived in Pamankada. In a statutory declaration made in 2006, however, he said his electorate was Piliyandala. The appellant explained this by saying that he occasionally stayed with his maternal grandmother in Piliyandala in order to do some political work in the area. The Tribunal found that there was a "clear inconsistency" in the appellant's evidence. The Tribunal found that, having regard to the appellant's original application, and contrary to the appellant's claims, he had not stayed with his grandmother in Suwarapola, Piliyandala, because he was doing some political work there. The Tribunal did not accept that Piliyandala was the appellant's electorate as he had claimed. The Tribunal considered that the inconsistency as to where he lived was relevant to his overall credibility. The Federal Magistrate found that, while there was evidence to the contrary, there was also evidence before the Tribunal which was capable of justifying the conclusion at which it arrived. His Honour was satisfied that the Tribunal did not fall into error in this regard. In my view his Honour was correct. The findings of the Tribunal were open to it on the evidence before it. This ground invites the Court to undertake a review of the fact finding of the Tribunal. To establish that there is a legal error in connection with a finding of the Tribunal, the appellant must be able to demonstrate that there was no basis whatsoever to support a finding made or inference drawn by the Tribunal: see Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 356. It can not be established that there was no basis for the Tribunal finding. Rather the Tribunal carefully considered the appellant's evidence before arriving at a conclusion, albeit adverse to the appellant. It is well-established that it is no part of the function of the court, in dealing with judicial review of an administrative decision, to engage in fact-finding about the merits of the appellants' case: see NAHI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 10 at [10] . The Court must be wary of turning a review of the Tribunal's decision into a reconsideration of the merits of the decision: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272. The first ground is not made out. Apart from the letter, there was no other evidence for this finding. At the first hearing before the Tribunal the appellant claimed that his father had been killed in a cycling accident, and produced a death certificate issued in respect of his father's death. In his 2006 statutory declaration, however, he claimed that his father had been murdered for his political beliefs. He submitted a letter from his grandmother to support this new claim. The Tribunal found that the appellant would not have told the first Tribunal that his father died in an accident while cycling if it were true that, as he claimed, his father was murdered for his political beliefs. The Tribunal gave greater weight to the appellant's original evidence which was supported by the death certificate than his later evidence supported by his grandmother's letter. The Tribunal found that the claim that his father was murdered for his political beliefs was a recent invention and it demonstrated that the appellant was prepared to tailor his evidence to what he perceived was his advantage without regard to the truth. I note that the Tribunal put this inconsistency to the appellant in its letter dated 20 February 2008, advising that it may find his father died in an accident and was not murdered and that it may give more weight to the death certificate than his grandmother's letter. The appellant was given an opportunity to respond, which he did in a letter dated 12 March 2008. The issue also appears to have been raised with the appellant at the hearing. The Tribunal considered all of the appellant's responses and his evidence, before reaching its conclusion. The finding of the Tribunal in this regard was open to it on the evidence. The weight the Tribunal gives to any piece of evidence is a matter for it to decide and there is no scope for judicial review simply because another decision-maker might give greater or lesser weight to a particular matter: see Abebe v Commonwealth (1999) 197 CLR 510 at 580 and NBKT v Minister for Immigration and Multicultural Affairs [2006] FCAFC 195 ; (2006) 156 FCR 419 at 440. The Court may not engage in fact-finding about the merits of the appellant's case. The second ground is not made out. The Tribunal identified a wrong issue in its quest to justify its conclusion that the appellant was never involved in politics. This ground also seems to be seeking merits review of the Tribunal decision. The Tribunal noted that the appellant incorrectly spelt the candidate's name in both the statement accompanying his original application and his statutory declaration dated 19 June 2007 (with different spellings each time). The appellant claimed that this was just a typing error. The Tribunal did not accept that he could have been a close supporter of the candidate for four years and not have been familiar with his last name. The Tribunal further found that, contrary to the submission of the appellant, the fact that that he had produced two letters signed by the candidate did not establish that they had a close relationship. In making this finding the Tribunal cited a report from the Department of Foreign Affairs and Trade ("DFAT") which indicated that politicians in Sri Lanka were prepared to sign letters without regard for the truth of the statements contained in those letters. As a result the Tribunal did not accept that the appellant had a close relationship with the candidate as claimed and found that this issue was relevant to the appellant's overall credibility. The issue of the appellant's political activity was clearly relevant and was the basis of his claim to be a refugee. Central to this claim was the appellant's claim that he had supported the candidate over a number of years. As noted by the Federal Magistrate, the appellant's ability to correctly identify and remember the spelling of the name of the candidate was clearly a relevant issue. Once again this ground seeks an impermissible merits review of one of the Tribunal's findings of fact. His Honour correctly found that the Tribunal's finding was clearly open to it and did not disclose any jurisdictional error. The third ground is not made out. The Tribunal based this finding on a nine year old DFAT report and the situation in Sri Lanka has since changed, factors not taken into account by the Tribunal. What I have already said about the Tribunal's reliance on country information in dealing with the previous ground also has relevance to this ground. The weight that the Tribunal ultimately gives to a piece of evidence is a matter for it to decide. In such circumstances, there is limited scope for judicial review: see NBKT at 440 and Lee v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 464 at [26] . Further, the Tribunal's choice and assessment of independent country information is a factual matter for it: see NAHI at [13]. In any case, even if it could be established that the Tribunal made an error of fact by relying on incorrect country information, this would not amount to a jurisdictional error: see NAHI at [10]. The findings of the Tribunal regarding the politicians in Sri Lanka, which was based on the DFAT report, were open to it on the evidence before it. There is no apparent error in the Tribunal's reliance on this report. The fourth ground is not made out. The Tribunal considered the appellant's evidence regarding his involvement with PA youth groups. The Tribunal noted that there were inconsistencies in his evidence as to where he had been involved with the groups, the name of the organisation and whether he held any position in any of those groups. The Tribunal put these inconsistencies to the appellant and considered his response. It concluded that the inconsistencies in his evidence in this regard suggested that he was not telling the truth about his involvement in these groups. The Tribunal also considered that this was relevant to his overall credibility. It is clear that the Tribunal's finding was based on a reasoned analysis of the appellant's evidence relating to the youth groups. It was not based on its findings regarding his other claims discussed in Grounds 1 through 4 (although I note that those findings were open to it on the evidence). This ground also seems to be seeking a review of the decision on its merits, which I note again is not the function of this Court. Accordingly, the fifth ground can not be made out. The Tribunal wrongly focused on the time the appellant left Sri Lanka and did not consider whether the appellant had a subjective fear of persecution. The appellant claimed, in the statement accompanying his application, that a protest march he attended in June 1994 had been dispersed by a mob of UNP supporters. This action was, he said, orchestrated by a Minister in the UNP government. In his statutory declaration dated 19 June 2007 the appellant claimed, for the first time, that the Minister was a Mr Lokuge. He stated that he had not mentioned this previously as he had concerns for the safety of members of his family that were still resident in Sri Lanka. The Tribunal did not accept the appellant's explanation for his failure to mention Mr Lokuge before June 2007. The Tribunal had regard to the fact that the appellant was represented by a barrister and solicitor and registered migration agent and did not accept that he believed that what he said to the Tribunal may be passed to the Sri Lankan police. The Tribunal found that the appellant's claims regarding Mr Lokuge were recent inventions prompted by Mr Lokuge's decision to switch sides from the UNP to the PA in January 2007. The Tribunal considered that this demonstrated that the appellant was prepared to tailor his claims without regard for the truth. The Federal Magistrate held that the Tribunal was clearly well aware that Mr Lokuge had changed his party allegiance, but that it had simply not believed what the appellant had said in this regard. His Honour was satisfied that the Tribunal did consider the changes in government, including the position of Mr Lokuge. His Honour further found that the Tribunal had roundly disbelieved the appellant and had come to the conclusion that he did not have a well-founded fear of persecution. His Honour held that, although the Tribunal did not state in terms that the appellant did not have a subjective fear of persecution, in circumstances where the Tribunal found that nothing had occurred which could to give rise to any such fear, it was not surprising that the Tribunal did not feel it necessary specifically to deal with that matter. His Honour was correct to so hold. The Tribunal considered all of the issues raised by the appellant. The Tribunal rejected his claims to fear harm based on its adverse credibility finding. It did not accept that he had a well-founded fear of being persecuted for reasons of his real or imputed political opinion or his membership of the 'particular social group' for the purposes of the Convention comprising his family or for any other Convention reasons if he returned to Sri Lanka. The Tribunal clearly turned its mind to the issue of whether the appellant had a well-founded fear of harm on return to Sri Lanka. Given that it found that he was not involved in politics as he claimed, and that it had subsequently rejected all his claims, it found that he did not have any such fear. The sixth ground must also fail. The appellant claimed that he was attacked while returning from one of the candidate's meetings at around midnight. He claimed that his arm was broken in three places and that he had been hospitalised for a number of weeks. The Federal Magistrate noted that the Tribunal stated, in its 424A letter, that it accepted that the appellant suffered a fracture of his arm in 1994. It indicated to him that it may not accept that the injury arose as a result of an assault by the UNP supporters. The Tribunal discussed the appellant's claims concerning his injury but it did not make a specific finding about the matter in its reasons. This is not surprising. As noted by his Honour the Tribunal, having regard to the view it had formed as to the appellant's credibility, did not accept that he was assaulted when, as a 15 year old, he was returning home from one the candidate's meetings at around midnight. As already noted the Tribunal accepted that the appellant suffered a fracture in his right arm in 1994, but did not accept the appellant's account of how he came to suffer the injury. The Tribunal had clearly considered this claim and made a finding on it. That finding was open to it on the evidence before it. The seventh ground also fails. His Honour noted that this matter does not arise given the Tribunal's findings given that it found that the appellant's circumstances were such that he did not need state protection. The Tribunal found that the appellant was not telling the truth about his claims to fear persecution and therefore rejected those claims, stating that it was not satisfied that the appellant had a well-founded fear of persecution for any Convention reason in Sri Lanka. Given this finding the Tribunal was not required to consider whether state protection was available to the appellant. The ground is not made out. The Federal Magistrate was correct to so hold. The appellant has not made out any of the grounds raised in his notice of appeal. The appeal should be dismissed with costs. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey. | refugee law review of decision of a federal magistrate whether the federal magistrate was correct in finding that there was no error of law in the decision of the refugee review tribunal migration |
It was not in dispute that, at the time of the incident, no employees or contractors of Telstra were working at or near the pit or the pit lid. The evidence was that the most recent time that the pit lid may have been moved to access the pit beneath was 8 September 2006 to locate a fault. Telstra's records indicated that the pit beneath the pit lid would have been accessed on less than 20 occasions between 1996 and the date of the incident. 2 Telstra owns and controls in excess of six million pits and pit lids throughout Australia. The pit lid is an access point to the pit. Pit lids and pits are regarded by Telstra as long term assets and are constructed as such. The pit is an underground void in which telecommunications cables are jointed and protected from the elements and from accidental or deliberate damage. The pit is installed to allow access to, and maintenance of, Telstra's underground network. The pit is accessed only when it is necessary to perform tasks such as connecting a new customer service or locating a fault. Telstra is responsible for maintaining its pits. 3 Telstra generated a health and safety incident report about the incident. Telstra provided that report to the second respondent, Comcare, on 15 November 2006. Telstra was obliged to report notifiable events to Comcare. On 16 November 2006 Telstra sought to withdraw the notification on the basis that it had been reported to Comcare in error. Telstra asserted that the incident was not a notifiable event because it had not occurred at a workplace under Telstra's control. 4 Comcare did not accept the withdrawal of the notification. By email dated 21 November 2006, Comcare informed Telstra that Comcare had commenced a reactive investigation into the incident and that Mr William Smith would be the investigator. In a subsequent email dated 21 November 2006, Comcare informed Telstra that the reactive investigation commenced by Mr Smith would examine Telstra's compliance with s 17 of the Occupational Health and Safety Act 1991 (Cth) ('the Act'). By letter dated 24 November 2006, Mr Smith sought the production of documents and a response to questions pursuant to s 43 of the Act. Various correspondence ensued. 5 By letter dated 26 February 2008, purportedly pursuant to s 53(4) of the Act (and on behalf of the third respondent), Comcare required Telstra to respond to recommendations contained in a report prepared by Mr Smith, purportedly under s 53(1) of the Act ('the report'). 6 The report found that the incident was a dangerous occurrence as defined in s 5 of the Act, and was therefore notifiable to Comcare under s 68 of the Act and reg 37A of the Occupational Health and Safety (Safety Arrangements) Regulations 1994 . There was no dispute, for the purposes of this proceeding, that the incident did qualify as a dangerous occurrence. 7 The report also concluded that Telstra breached s 17 of the Act in respect of the incident. 10 Premises is defined widely to include any place, including a place situated underground or under water and, in particular, includes a building or vessel and any structure whether fixed or moveable. It also includes a part of premises otherwise defined. In each of these cases (as in other specified instances) there is the availability of an appeal (s 48). 17 It may be that the more appropriate way to proceed is to ask whether it was open to Mr Smith to proceed under s 41 of the Act to conduct an investigation concerning a 'possible breach' of the Act, or to make a report under s 53(1) finding a breach of s 17 of the Act. However, in view of the parties' desire to have a judicial determination as to the application of the term 'workplace', and in light of the view I have adopted, I proceed to consider whether the pit and pit lid was 'a workplace' within the meaning of s 17 of the Act. 18 In my view, whether an incident referable to the Act occurs in a workplace (as defined) depends entirely on the specific facts and circumstances of any particular case. I proceed, therefore, by reference to the facts of this case, including Telstra's ownership of the pit and pit lid, the nature of Telstra's undertaking, and the use and purpose of the pit and pit lid, none of which are in factual contention. 19 Telstra did not dispute the proposition that when its employees or contractors are working in a pit, the pit (and pit lid) is a workplace within the meaning of s 5 of the Act, and that Telstra is, at that time, conducting its undertaking at that pit. Fundamentally, Telstra contended that a pit (and a pit lid) could not be a workplace within the meaning of the Act 'unless at the very least work is being conducted upon it or in the pit to which it provides access'. 20 Telstra referred to several decisions under similarly worded provisions to support its proposition that a pit is not a workplace at times when work is not being performed in the pit. Telstra argued that there is no reason to construe s 17 of the Act any differently from the other legislation using similar phrasing. Telstra also referred to the objects of the Act as set out above. Principally, Telstra referred to the object contained in s 3(b), namely 'to protect persons at or near workplaces from risks to health and safety arising out of the activities of such employees at work ' (emphasis added). 21 It is convenient to refer to some of the cases relied on by Telstra. 22 In WorkCover Authority of NSW (Inspector Paine) v Boral John Perry Industries Pty Limited t/as Boral Elevators (unreported, Industrial Relations Commission NSW, 8 August 1996) Maidment J found that the obligation cast upon the defendant by s 16(1) of the Occupational Health and Safety Act 1983 (NSW) ('the NSW Act') was confined to the periods when maintenance work was being conducted on a lift. His Honour found that the existence of a contractual obligation to regularly service a lift did not result in the lift being, at all times, a place of work of the lift maintenance company within the sense of s 16 of the NSW Act. 23 Justice Maidment referred to the decision of Fisher CJ in Inspector Clarke v WL Meinhardt & Partners Pty Ltd (unreported, Fisher CJ, 30 June 1992) concerning prosecutions under ss 15 and 16 of the NSW Act. In Meinhardt , a defendant employer had designed a safety support system, the purpose of which was to safely incorporate a historical façade into a new building on the same construction site. A different party had constructed the system. The façade collapsed. Two of the defendant employer's workers were on site at the time of the collapse, inspecting integral elements of the support system. The defendant employer submitted that its own office was its place of work, rather than the construction site. It applies equally to all kinds of work. On a building site it would include entering, moving about and leaving a site, as well as here, inspection or reinspection, maintenance and periodic checks. Whilst this work was being performed the employer is subject to the duties cast upon him by the Act. It is not, however, required by this legislation to ensure that the road surface is properly repaired such that no hazard will arise from the quality of the workmanship. Meinhardt and Partners Pty Ltd (unreported, Matter Nos 1212 & 1213 of 1990, 30 June 1992) the phrase "at work" has temporal connotations. Similarly, in our view, in respect of the duty under s 16(1), it is necessary to determine the temporal obligations on 3 September 1998 of the appellant. The legislation does not require the appellant to ensure the product of his work, his advice, directions and drawings, were devoid of hazard. No actual work was being performed or "being done" in the conduct of his undertaking at the site. In other words, the appellant was not giving advice, giving directions, or making drawings. The OH&S Act is directed to workplaces and does not impose an obligation to ensure that the product of that work is free from hazard: Boral Elevators . Clearly, the site was the builder's place of work, but there was no evidence before his Honour of a continuance of the work of the appellant. The obligation falls upon the prosecutor to demonstrate that the elements of s 16 have been proved unless there is a clear admission which there was not in this case. His Honour found that the existence of a contractual obligation to regularly service a lift did not result in the lift being, at all times, a place of work within the sense of s 16 of the Act. Nor was the particular site at the relevant time within the description in WorkCover Authority v Schrader (2002) 112 IR 284 at [64] (that is, the place of work was to be considered as including "areas that are affected by or in such proximity to what the defendant was contractually obliged to perform that they are properly considered to be the defendant's place of work"). The fact or existence of a plan that the appellant had prepared in relation to any particular location does not necessarily mean that the relevant location is his place of work. Such a construction is contrary to the ordinary reading of s 16(1). From time to time the defendant performed maintenance and repair work on an inclinator, but employees of the defendant were not at the premises either at the time of the accident or between the times specified in the summons. The sole question for the Court was whether the inclinator was the defendant's place of work within the meaning of s 16. Maidment J held that it was not, on the basis that the Act was not directed at general product liability, and did not require employers such as (for example) boat repairers to ensure the safety of the end product of their work as a boat, as opposed to as a place of work. Under s 16 he is required to conduct that maintenance work such that persons, not in his employment, are safe from risk whilst they are at his place of work. In the present case this includes ensuring that residents are not put at risk by the conduct of his undertaking while they were at his place of work as a place of work. This legislation does not require the employer to ensure that the product of his work is devoid of hazard. Thus, in my view, the obligation cast upon the defendant by s. 16 is confined to the periods during which maintenance work is being conducted. 28 In the case of WorkCover Authority of New South Wales (Inspector Maltby) v AGL Gas Networks Limited [2003] NSWIRComm 370 , Schmidt J rejected the contention that a gas pipeline installed by an employer, which it may need to return to for maintenance, was at all times the 'place of work' of the employer. Nor could the fact that at one time, the defendant had there performed work on the pipes, thereafter make that place the defendant's place of work. If that were the test, inevitably the result would be that anywhere that the defendant had at any time ever laid pipes or other parts of its system, would always remain thereafter the defendant's place of work, with ongoing obligations under s 16 of the Act resulting. It seems to me that unless the defendant is present at a particular location, doing work on its gas reticulation system, or perhaps having someone else perform such work, as for example when contractors were engaged to install the goldline pipe for the defendant, when, on the evidence it appeared also to have its own employees present at least at some times, such a pipe and the ground in which it lies, is not the defendant's place of work. Section 16 of the Act is concerned with safety, while non-employees are present at an employer's place of work. It is not concerned with ensuring that the product of such work thereafter remains free from hazard. It follows that this location was only the defendant's place of work on 10 November and not thereafter, when I have found that non-employees were exposed to the risk here in question. In Gill v Donald Humberstone & Co Ltd [1963] 3 AII ER 180, Lord Evershed considered that a working place must be a place where work was set to take place for an appreciably continuous period of time (at 188). In other cases, working place or workplace has been held to be a place where work is being done. 31 In this proceeding, the question is whether the pit and pit lid are at all times a workplace of Telstra for the purposes of the Act. There seemed no dispute that a pit is capable of being a workplace and that the pit lid could be a 'structure' or 'part' of the pit. 32 The cases which Telstra relied on were largely premised on the Boral Elevators case. I consider that Boral Elevators is distinguishable on its facts. Elevators are constructed for the very purpose of being used by people who are not necessarily elevator constructors nor maintenance workers. In shops, hotels and public buildings, they are provided for use by the general public. Elevators would not normally be regarded as, at all times, a workplace of a lift maintenance company, which may have contractual obligations of maintenance to the owner of the premises in which the elevator is situated, but does not possess, own or control the elevator itself. In that situation, an issue may arise as to whether a particular defendant is an employer at a particular workplace under its control. However, the elevator would normally be regarded as (part of) the workplace of, say, the owner of the shop, hotel or public building where its employees use or operate the elevator. In those circumstances, the elevator would always be the workplace of such an owner and employer. If the elevator was being repaired, then during that period, it could also be regarded as the workplace of the lift maintenance company engaged on site. 33 In the case of Telstra's pit and pit lid, each exists to be used and accessed by Telstra employees, and is available for such use and access at all times. Putting aside other persons having access to the pit (presumably with the authority Telstra) the principal function of the pit is to carry out Telstra's activities. Each pit and pit lid is owned and controlled at all times by Telstra. An important purpose and function of the pit is to facilitate work being performed for Telstra's other assets, so that Telstra can provide services to its customers. After all, the pit has been installed to allow access to, and maintenance of, Telstra's underground network. 34 Take also the case of AGL Gas Networks [2003] NSWIRComm 370 which is similarly distinguishable. The pipeline existed, once constructed, for the sole purpose of conveying utilities such as gas or water. Unlike a pit and pit lid, it had a purpose other than that of being a dedicated and specific workplace of a particular employer. That distinction underpins why the pipeline was not, at all times, a workplace. It was only a workplace of the construction company while under construction, and only a workplace of the particular employer engaged to undertake maintenance when the pipeline was being repaired or upgraded. No part of the pipeline was at all times a dedicated place for employees to attend for work. 35 Therefore, in the above examples, and in the operation of the Act, it may be that a particular place may not be a workplace at all times, or on all occasions, for the purposes of the Act. Nevertheless, such places become workplaces, where they otherwise are not, upon a particular activity taking place; that is, where a particular employer engages employees to undertake an employment activity, such as a lift maintenance company using its employees to repair a lift in a hotel. 36 However, as I have already indicated, this is not the situation here with Telstra, which at all times owns (and controls) the pit and pit lid, and which has created the pit and pit lid for the primary purpose of permitting its employees to carry out Telstra's activities. Just because an employee is not in attendance at any given time does not mean a place is not a 'workplace' at other times. A factory, which may at times be shut or not operating, is nevertheless a dedicated place for employees to work, and normally would at all times be considered a workplace of the particular employer who employed people at that factory. 37 The appropriate conclusion to reach in this proceeding is readily apparent if one focuses on the pit, rather than just the pit lid. The pit lid is, as I have said, included within the definition as part of the premises. The pit lid can be equated with the door of the workplace. The pit could hardly be described as anything other than a workplace in the ordinary sense of the term. The pit exists to house the telecommunication cables, but is primarily there to allow Telstra employees to carry out their duties as employees to access and maintain the underground network, once gaining access through the pit lid. The pit would not exist but for the existence of Telstra's business and its undertaking, and is at all times available for use by Telstra in undertaking its business. 38 Looking at the words of s 5 of the Act, the pit is a premises 'in which' the prescribed employees work. The words of the definition say that the place must be somewhere 'in which' Commonwealth employees work. A pit primarily used to access and maintain telecommunications infrastructure is a place 'in which' such employees work, in the sense that it is not a private place, nor a place disconnected with the work of such employees. The ordinary meaning of the words used in the definition of 'workplace' supports this construction, and to depart from this ordinary meaning can only be justified if to do so would be in accordance with a purposive construction: see, eg, Mills v Meeking [1990] HCA 6 ; (1990) 169 CLR 214 at [235] per Dawson J. 39 Telstra does point particularly to one object of the Act in aid of its purposive construction, namely to protect persons only arising from the activities of the employees at work. One must be careful of the use to be made of objects clauses in legislation: see Pearce & Geddes, Statutory Interpretation in Australia , (2006) (6 th ed) at [4.42]. However, in my view, this object is achieved by giving practical content to s 17 of the Act, not in the reading of the definition of 'workplace' as contended by Telstra. For instance, as the authorities relied on by Telstra indicate, the legislation there referred to does not require an employer to ensure that the product of the work is devoid of hazard. In my view, this is not because of a restricted meaning being given to the definition of 'workplace', but arises out of the scope of the obligations cast upon any defendant employer by s 17. 40 It is important to recall that definitions found in legislation are not to be treated as substantive provisions --- they are there as an aid to construction of the operative parts of the legislation. Consequently, the operation of any legislation must be viewed upon an examination of the substantive provisions themselves, interpreted in context and according to the defined sense of the words found therein. 41 As Telstra recognises, s 17 of the Act links the concepts of 'workplace', 'control' and 'undertaking': each have a role to play in prescribing the scope of s 17. In addition, an employer need only take 'all reasonably practicable steps' to ensure the prescribed persons are not exposed to risk to their health or safety. Apart from the construction of the term workplace, it does violence to the construction of s 17 when considered in light of the statutory objectives to argue that a pit lid sitting on a footpath over which the public and various authorities have access be regarded at all times as a workplace under the control of the Applicant and that any exposure to risk to health and safety, whenever and howsoever occurring, arises from the Applicant's undertaking. The Kirtley incident did not arise from the conduct of the Applicant's undertaking. 43 I interpolate that as to the factual issue of whether the incident did or did not arise from the conduct of Telstra's undertaking, there was no material before me to suggest that the risk to health and safety did not arise from the conduct of Telstra's undertaking. It was a matter open to Mr Smith to find. In any event, it seems to me that the reference to 'undertaking' is a reference to the employer's business. In the case of Telstra, the conduct of Telstra's undertaking would include the maintenance of underground cables, plant, pits and pit lids. However, this question was not the focus of argument before me. 44 I only refer to the above submission of Telstra, and the operation of s 17 of the Act, to show that even if one construes the term 'workplace' to cover the Telstra pit and pit lid at all times, this does not necessarily mean that s 17 will be applied to go further than the objects of the Act relied upon by Telstra. After all, as I have indicated, s 17 only requires the employer to take all reasonably practicable steps, and the objects of the Act may well inform and give practical content to what is required in this regard. 45 It is also to be recalled that the term 'workplace' is not just found in s 17, but is found throughout the Act, and must be interpreted in the same way, unless the context indicates otherwise. For instance, in s 42, the investigator is given a power of entry to search a workplace. I cannot see that power as being limited to the pit or lid in the way suggested by Telstra, namely when its employees or contractors are working in the pit. Once one comes to the conclusion reached above as to the nature and purpose of the pit and pit lid, then the inescapable conclusion is that it is a workplace to which the Act generally applies. 46 In my view, therefore, the pit and pit lid of Telstra was a 'workplace' at the relevant time of the incident. Was there a denial of procedural fairness to Telstra? Telstra argued that a person has the right to be heard prior to an administrative decision-maker making a decision which adversely affects the legal rights or legitimate expectations of a person (referring to Annetts v McCann [1990] HCA 57 ; (1990) 170 CLR 596 at 598). Telstra submitted that it was not given any, or adequate, opportunity to provide information and make submissions in respect of matters critical to the decision that it breached s 17 of the Act. Specifically, Telstra argued that, despite a direct request, it was not given notice of the adverse findings before the report was published, nor was Telstra given notice of, or an opportunity to respond to, the matters underlying the findings. 48 Accepting that procedural fairness must be accorded, the respondents contended that in the making of the report under s 53 of the Act, procedural fairness was afforded to Telstra. The respondents contended that throughout the process Telstra was legally represented, and took every opportunity it could to put arguments and submissions to Mr Smith and to Comcare. It was argued by the respondents that Telstra advanced its case in correspondence from its lawyers as early as 20 December 2006. Mr Smith made it clear Telstra was free to make any submissions it considered appropriate. Further, the respondents contended that Telstra's solicitors re-stated Telstra's contentions about the matter on 16 January 2007 and 30 October 2007. The level of communication, it was said, throughout the investigation made it clear that Telstra had more than a reasonable opportunity to be heard about whether it was in breach of s 17 of the Act. There was, it was contended, no 'practical injustice' to Telstra, which is the gravaman of denial of procedural fairness: see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 , 13-14 at [37]. 49 I consider that Telstra's complaint of lack of procedural fairness, and the other matters raised, are properly answered by recognising the scheme of the Act. 50 It is established principle that, in the case of a statutory power, the statutory context will be of central importance in determining the content of procedural fairness: see, eg, Salemi v MacKellar (No 2) [1977] HCA 26 ; (1977) 137 CLR 396 , 444; Kiao v West [1985] HCA 81 ; (1985) 159 CLR 550 , 584-85; Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation [1963] HCA 41 ; (1963) 113 CLR 475 , 503-504; and National Companies & Securities Commission v News Corp Ltd [1984] HCA 29 ; (1984) 156 CLR 296 , 326. 51 Undoubtedly, the consequences of any particular decision upon a person are important, but again, this is to be weighed in the balance in light of the statutory context. 52 The Act regulates the conduct of certain kinds of employers and employees for the purposes of protecting the health and safety of Commonwealth employees at work, and protecting the health and safety of members of the public who might be affected by the way in which Commonwealth employers and employees undertake their businesses and work. 53 One of the Act's regulatory mechanisms is the ability for Comcare to conduct investigations: see Pt 4, Div 2. An investigator is empowered by s 41(1) of the Act not only to investigate a breach or possible breach of the Act (s 41(1)(b)) but also simply to investigate whether the requirements of the Act are being complied with (s 41(1)(a)). Mr Smith exercised this power to conduct the investigation. 54 In the conduct of the investigation, an investigator may exercise powers to avoid immediate risks (see, for example, s 46 of the Act), or may form a view that the employer should be required to take positive action promptly to remedy a risk which exists: see s 47 of the Act (improvement notices). A formal process (including of appeal) is set out in respect of these powers. 55 By contrast, the provision of a report to the third respondent, the Commission, under s 53 of the Act, and the subsequent request by the Commission of an employer under s 53(4) is a more open ended and interactive process. No formal process nor appeal is provided for by the Act. The obligation imposed on an employer under s 53(4) is (in the absence of notices under ss 46 or 47 of the Act) simply to give Mr Smith particulars of any action proposed to be taken as a result of the report. 56 A more detailed inquiry and report process under the remainder of Div 3 of the Act may or may not then occur. It will definitely not occur in relation to Telstra, by reason of s 52 of the Act. Nevertheless, the Div 3 process is quite separate to proceedings for civil penalty or criminal offences under Pt 1 and Part 2 to Sch 2 of the Act. 57 The ambit or content of the duty to accord procedural fairness is obviously greater when proceedings for a breach of the Act are instituted pursuant to s 77 of the Act. Those proceedings may be civil and seek declarations and pecuniary penalties (see Sch 2 Pt 1 cll 2 and 4), or they may be criminal (see Sch 2 Pt 2 cll 18 and 21). 58 As I have said, the consequences of any particular decision upon a person are to be considered when determining the ambit of the content of procedural fairness. I do accept that the making of the report could lead to some impact upon the reputation of Telstra, but only to a very limited extent. This limited extent arises out of the operation of s 53(5) of the Act, which requires the report to be given after receipt by Telstra to a limited number of third persons. I am prepared to assume in favour of Telstra that the report was given to that limited number of third persons. Of course, the report is also seen by relevant personnel within Comcare and the Commission. There was no other evidence before me that Telstra would be otherwise affected by the report or Mr Smith's findings. 59 Focusing then on the scheme of the Act and the very limited impact on Telstra's reputation, in my view, Telstra was accorded procedural fairness by the opportunity it had prior to the report coming into existence. 60 Telstra was represented by lawyers, had taken the opportunity to put arguments and submissions, and was invited to do so. Telstra knew the essential issues being investigated, including the question of breach of s 17 of the Act. 61 It is not in all cases a pre-requisite for the according of procedural fairness that a draft of a report containing adverse findings be given for comment to the person the subject of the adverse findings: see, eg, Hoffman La Roche v Trade Secretary [1975] AC 295 at 369; Commissioner for the Australian Capital Territory Revenue v Alphaone Pty Ltd [1994] FCA 1074 ; (1994) 49 FCR 576 , at 590-91; Asiamet (No 1) Resources Pty Ltd v Federal Commissioner of Taxation [2003] FCA 35 ; (2003) 196 ALR 692 , at 713-14. 62 I do not have before me a situation where the decision-maker had undertaken to provide an opportunity for comment prior to making an adverse decision: see, eg, Wu v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 1242 ; (2002) 123 FCR 23 ; and WAJH v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 935. 63 Of course, critical issues must be identified by the decision-maker, and it may be that prior disclosure of an adverse conclusion will be necessary where that conclusion is not obvious, or anticipated, or perhaps to be reasonably anticipated. However, in the circumstances of this case, and in view of the opportunity given to Telstra, I do not consider that it was necessary for Telstra to have been given the opportunity to comment on any provisional conclusions. 64 Based on the communications passing between the parties, I find that Telstra had a clear appreciation of the issues involved, including the potential for a finding of failing to take reasonably practicable steps. 65 In these circumstances, and where the report of Mr Smith could have no legal consequences for Telstra other than the obligation to respond imposed by s 53 of the Act (not expressly enforceable), no further opportunity for Telstra to be heard needed to be provided. 66 No doubt a report unfavourable to an employer might result in the commencement of legal proceedings pursuant to s 77 of the Act. However, in my view, to condition the power to conduct an investigation with the content of an obligation to afford procedural fairness as contended by Telstra would inhibit the investigatory function so as to frustrate a fundamental purpose or object of the Act, which could well undermine the obvious purpose of an investigation under s 41 and the preparation of a report under s 53. 67 Therefore, I conclude that the making of the report by Mr Smith, including a conclusion that Telstra breached s 17, did not involve a denial of procedural fairness to Telstra. Did the Mr Smith fail to comply with s 53(2) of the Act by not including reasons for conclusions in the report? The assertion of the breach of s 17 of the Act (and that the incident was a dangerous incident) was not accompanied by any analysis of the elements of the offence (including, but not limited to, the meaning of workplace) created by s 17 and how those elements were satisfied in this case. 2. In particular, there was an assertion in the report that Telstra failed to take all reasonably practicable steps to ensure that people at or near pits or pit lids were not exposed to health and safety risks as a result of its undertaking, but the steps that Telstra should have taken were not identified, and it was not explained how any such steps were practicable. 3. There was no analysis or reasoning as to how a pit or a pit lid was said to be a workplace or a workplace under the control of Telstra at the time of the incident. 4. There was no analysis or reasoning as to how it is said that the incident arose as a result of Telstra's undertaking. 69 Telstra submitted that no breach of s 17 of the Act could occur unless there were reasonably practicable measures that could have been taken to negate or reduce the risk. Telstra referred to tort cases and argued that the investigator did not identify any 'alleviating action': (see Wyong Shire Council v Shirt [1980] HCA 12 ; (1980) 146 CLR 40 at 47-8). 70 Telstra submitted that if the investigator was entitled to make a finding of a breach of s 17 of the Act, and if he turned his mind to the correct legal test in respect of the elements of a breach of s 17, he nevertheless failed to comply with s 53(2) of the Act, because he failed to provide reasons for concluding that s 17 had been breached. Therefore, according to Telstra, the report was 'a purported report and a nullity': see Project Blue Sky v Australian Broadcasting Authority [1998] HCA 29 ; (1998) 194 CLR 355 , 388-91 at [91]-[93] per McHugh, Gummow, Kirby and Hayne JJ. 71 Telstra also referred to the decision of Cummins J in Director of Public Prosecutions v Esso Australia Pty Ltd [2001] VSC 103 in support of the contention that Mr Smith was obliged to state with particularity the reasonably practicable steps that should have been undertaken by Telstra. 72 The purpose of the requirement for reasons in this case, Telstra argued, was to enable the person the subject of an adverse finding to be informed of the basis for the reaching of the conclusion that s 17 of the Act had been breached and to enable a Court on review to determine if proper principle has been applied in reaching such a conclusion. Telstra then contended that this obligation necessarily required Mr Smith to set out the relevant evidence, material findings of fact and conclusions, and his reasons for making the relevant findings of fact and conclusions. 73 Telstra contended that in this case the investigator asserted that Telstra breached s 17 of the Act but gave no reasons to permit an understanding as to how the conclusion was reached. In particular, the investigator asserted the existence of each of the essential elements required to be established for a breach of s 17 but gave no reasons to justify such findings. There were no reasons given for the findings that the incident occurred at a workplace , under the control of Telstra, that the incident occurred as a result of Telstra's undertaking and that there were reasonably practicable measures that were available to Telstra. There was, it was said, on the face of the report, an obvious and fundamental failure to comply with s 53(2) of the Act. 74 It was submitted that the legislature chose to make the provision of reasons for any conclusions in a report a mandatory requirement for a valid report. The type of response required by s 53(4) of the Act, particularly when read in light of the objects of the Act as specified in s 3(b) of the Act regarding encouraging and assisting persons to comply with their obligations under the Act, required the provision of proper reasons. 75 Telstra contended that the finding that Telstra breached s 17 was a serious one. If the legislature required the investigator to make such a finding, it would be hardly surprising that the legislature would require the investigator to record the evidence relied on, and the reasons giving rise to a finding that each element of s 17 was breached and was established by the evidence. 76 Moreover, it was contended by Telstra that the requirement that the investigator expose his reasons for such a serious finding and the investigator's failure to do so supports the contention of Telstra that not only did the investigator fail to comply with s 53(2), he erred in law by failing to address and make findings about matters essential to the consideration of whether a breach of s 17 had occurred. 77 I start from the proposition that the obligation to give reasons is to be assessed in light of the statutory context in which the obligation appears. Section 53(2)(a) of the Act provides that the report prepared by the investigator must include the investigator's conclusions from conducting the investigation and the reasons for those conclusions. I accept that, by reason of the application of s 25D of the Acts Interpretation Act 1901 (Cth), s 53(2)(a) is to be construed as requiring an investigator to set out his or her material findings of facts and to refer to the evidence on which those findings are based. 78 However, there is no obligation to 'set out reasons for making' the findings of fact, which imposes another kind of obligation (see, eg, s 43(2B) of the Administrative Appeals Tribunal Act 1975 (Cth)). 79 Further, while there is plainly an obligation to give reasons, the statute requires an investigator to give reasons for his or her own conclusions. The term 'conclusions' in s 53(2) of the Act refers back to the task the investigator was authorised to perform under s 41(1), (2) or (3) as the case may be. Relevantly, the task in this case was performed pursuant to s 41(1). 80 In this statutory context, the first intended recipient of the report is the Commission (see s 53(1) of the Act) and the purpose of an investigator including reasons for his or her conclusions is to inform the Commission about what has been found as a result of the investigation. When the report is given to the employer (and to any relevant Minister: see s 53(3)(b)), the statute contemplates that an additional layer of information may be added by the Commission, including any comments the Commission wishes to make to the employer. The statutory context then contemplates an interactive process between the Commission, the employer and any health and safety committees of the employer, about what action, if any, can and should be taken in response to the investigator's report. 81 As I have alluded to previously, the investigator's role must be looked at in the overall context of the regulation of occupational health and safety issues as provided for in the Act. An investigator's report is not to be seen as a final and binding determination of whether an employer has breached, or is in possible breach of, s 17 of the Act. The investigator does not need to go through the exercise indicated by Cummins J in Esso [2001] VSC 103. Esso involved a trial process leading to a potential fine, which obviously required particularisation of each element of the alleged offence said to have been committed by the defendant. However, this does not mean that the report did not need to include 'conclusions' which could properly inform the employer of the investigator's view, but rather, that the obligation to include the conclusions is to be viewed in light of the objective of the giving of the report. The report is certainly not to be equated with the particulars of a criminal offence. 82 In any event, as I have indicated, an obligation to make 'material' findings of fact means those findings which the decision-maker considers material, rather than factual findings which are subsequently argued were 'necessary' or 'objectively' material: Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [10] , [33]-[34], [68]. If there is no finding expressed on a particular question of fact, such an omission might expose a decision-maker to attack on other grounds (for example, ignoring relevant material, taking into account irrelevant considerations, misunderstanding the nature of the task), but it will not be a breach of the statutory obligation to give reasons: Yusuf at [10], [37] and [69]. 83 Therefore, the relevant question to ask here is whether Mr Smith, in the report, set out his conclusions, the reasons for the conclusions and the findings of fact which he considered material, and referred to the evidence on which those findings were based. 84 In my view, the reasons provided by Mr Smith rationally related to the evidence found during the investigation and are comprehensible in themselves. The report did set out Mr Smith's conclusions, the reasons for the conclusions and the findings of fact which he considered material, and the evidence on which these findings were based. 87 Mr Smith did also note Telstra's advice to him that any schedule inspection service would cost tens of millions of dollars and would not overcome the need for reactive repairs. 88 Therefore, in my view, Mr Smith undertook the task required of him and the report did comply with s 53(2) of the Act. It was contended that if an investigator formed the view that a provision of the Act is, or has been, contravened, then a number of options are open under the Act which are inconsistent with the legislature intending to give an investigator the power to make findings that the Act has been breached. Telstra contended that if an investigator considers that the Act is being breached, then they could issue a prohibition or improvement notice (under s 46 or s 47 of the Act respectively), or the investigator or Comcare could institute proceedings for a breach of the Act under s 77, seeking declarations of contraventions, civil penalties or criminal sanctions. 90 I do not agree with the Telstra's principal submission that there is no power or requirement in s 41 or s 53 of the Act for an investigator to make a finding regarding the commission of breaches of the Act. Section 53 authorises and requires the investigator in a report to include his or her 'conclusions from conducting the investigation'. There is no difference between a 'finding' and a 'conclusion' which is material for this case. 91 The question is whether the investigator was empowered to make a finding or conclusion as to the breach of s 17 of the Act by Telstra. 92 Telstra relied upon principle adopted in Brinsmead v Commissioner, Tweed Shire Council Public Inquiry (2007) 69 NSWLR 438, 443 to the effect that 'the statutory power to inquire and report is not in the absence of clear words to be read as extending the power to make a finding of criminal guilt or other improper conduct' (at [17]). 93 Accepting this principle, and accepting that the finding that Telstra breached s 17 is equivalent to 'improper conduct', I consider that in the context of the legislative scheme, Mr Smith could find and conclude, as he did, that Telstra breached s 17 of the Act, and include that conclusion in the report. This is for the simple reason that s 41 of the Act empowers an investigator to conduct an investigation concerning a breach or possible breach of the Act, and the report of that investigation (in the case where the investigator considers there to be a breach) must necessarily include his conclusion from conducting the investigation. This seems to me to be the clearest indication, without more, that an investigator is not only empowered to so conclude, but is under a duty to include in his or her report any conclusion reached as to breach, or possible breach, of the Act. 94 Further, I do not accept Telstra's assertion that there was no material available to Mr Smith capable of satisfying him that there was a breach of s 17. There was such material available and Mr Smith properly took it into account. 95 Mr Smith examined each of the components of s 17. Mr Smith's examination of the incident and other faulty pit lids discloses that he took account of the nature of the risks posed by the pits. He assessed the scope of the injury and risk by taking appropriate statements. The risks to the public were obvious, and required no further elaboration. Mr Smith addressed the material relating to the safety of people at or near the pits. On the facts as found by Mr Smith, it was apparent that Telstra relied solely on feedback provided by members of the public (either directly or through local councils), and Telstra's in-field staff to identify damaged pits and pit lids requiring repair. Telstra advised that a scheduled inspection and maintenance program to manage the condition of its pits and pit lids would cost tens of millions of dollars and would not overcome the need for reactive repairs. However, Mr Smith concluded that, on the material before him, Telstra had not discharged its obligation to take reasonably practicable steps. 96 Therefore, in my view, the conclusion that Telstra breached s 17 of the Act was open to Mr Smith on the material before him, and was to be included in the report. 98 Nothing I have included within these reasons should be interpreted as an acceptance by me that Telstra has in fact breached s 17 of the Act. In these proceedings, Telstra's main contention focussed upon the definition of 'workplace'. In considering whether Telstra has been in breach of s 17 of the Act, the definition of 'workplace' is just one component of the operation of that provision. Necessarily, the scope of Telstra's attack on the report of Mr Smith, seeking as it does to have the report at this stage set aside, is necessarily confined to the matters argued by Telstra before me and does not involve an assessment of whether the conclusion reached by Mr Smith was, on the merits, right or wrong. 99 At the conclusion of oral submissions, Telstra contended that if it was unsuccessful in this application in setting aside the report, it must provide a response, and if Comcare or the Commission were to take no further action, then the finding of Mr Smith will remain on the record. 100 This is undoubtedly true. However, apart from any publication of that finding under s 53(5) of the Act, to personnel within the Commission and Comcare, and as a result of this proceeding (in which no confidentiality order was sought), the report of the investigator will presumably have no further publication. In any event, the report stands as the opinion of one person, which Telstra can accept or reject. Telstra still has the opportunity to meet and address the views of Mr Smith. Telstra is unrestricted in how it deals with the conclusions reached in the report. While the report may be given to a confined number of third parties, the report is not meant to be a public document. If the report is not acted on by any of the respondents, this itself may assist in the impact it may otherwise have on Teltra's reputation. In any event, assuming the report remains on the record, and assuming it may, to a very limited extent, affect Telstra's reputation, this in itself does not form a basis to set aside the report on the grounds contended for by Telstra. 101 In my view, for the foregoing reasons, the application should be dismissed. I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | procedural fairness whether requirement to give prior notice of adverse findings whether applicant denied right to be heard extent of right to be heard determined by legislative provision matter of fact applicant had legal representation applicant corresponded with decision-maker no breach definitions not treated as substantive provisions use of objects clauses departing from ordinary meaning of words meaning of 'workplace' fact specific consideration site principal purpose was for company's undertaking site at all times a workplace administrative law statutory interpretation occupational health and safety |
Sandos relies on a number of grounds. Before recounting the grounds, it is desirable to say something about the relevant provisions of the Act. Under s 459C(2) of the Act, in an application to the Court to wind up a company in insolvency under s 259P of the Act, the Court must presume that the company is insolvent if, during or after the period of three months ending on the day when the application was made, the company has failed to comply with a statutory demand. 3 However, under s 459G, a company may apply to the Court for an order setting aside a statutory demand. Such an application may only be made within 21 days after the demand is served. Within those 21 days, an affidavit supporting the application must be filed and a copy of the application and the supporting affidavit must be served on the person who served the demand on the company. If the substantiated amount is at least $2000, the Court may make an order varying the demand as specified in the order and declaring the demand to have had effect, as so varied, as from when the demand was served on the company. 6 Under s 459F of the Act, if, as at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with the demand at the end of that period. However, a statutory demand has no effect while an order setting the demand aside is in force. Unless the Court makes an order setting the demand aside, the Court must dismiss the application. An order under s 459H or s 459J may be made subject to conditions. A dispute arose in relation to a claim by Sandos for variation works. On 13 November 2006 an adjudication certificate was issued under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Building Act ). The certificate was for the sum of $131,943.22. Judgment was subsequently entered for Sandos against Southern in the District Court of New South Wales at Wollongong, on the basis of that certificate. 8 On 10 November 2006, a garnishee order was issued by the District Court addressed to the Commonwealth Bank of Australia (the Bank). Following service of the garnishee order, the Bank paid to Sandos the sum of $59,158.53 on 13 November 2006. That amount, together with an administrative charge of $13, was debited to Southern's account with the Bank. 9 On 9 February 2007, the second and third defendants, Gideon Isaak Rathner and David John Coyne (the Liquidators), were appointed as administrators of Southern. At the second meeting of the creditors of Southern, held on 2 March 2007, the creditors resolved that Southern be wound up and that the Liquidators be appointed as joint and several liquidators. I understand that within a period of six months prior to the commencement of the winding up you received monies as a result of attaching a debt or debts due to [Southern] . Pursuant to section 569 of the Corporations Act 2001 and as a result of the liquidation I now demand repayment of those monies net of the taxed costs of your proceedings. I attach a copy of the Garnishee Order and a copy of the bank statement of [Sandos] showing $59,171.53 being removed under the Garnishee Order. Pursuant to s 569 of the Corporations Act 2001 and as a result of the liquidation I now demand repayment of those monies net of the taxed costs of your proceedings. Your client company and its directors were put on prior notice by us on several occasions not to accept receipt of our client's money and not to dispose of such money. Further, our clients are willing to pursue the directors of [Sandos] personally if the funds owing are not immediately recovered from their company. In the light of the earlier correspondence, it is clear that the Liquidators' solicitors intended to refer to s 569 of the Act. 13 Section 569 relevantly provides that, where a creditor has instituted proceedings to attach a debt due to a company within six months immediately before the commencement of the winding up of the company and that company commences to be wound up, the creditor must pay to the liquidator an amount equal to the amount, if any, received by the creditor as a result of the attachment, less an amount in respect of the costs of the attachment, being an amount agreed between the creditor and the liquidator or, if no agreement is reached, an amount equal to the taxed cost of that attachment. 14 The draft statutory demand attached to the letter from the Liquidators' solicitors of 8 March 2007 purported to be in accordance with Form 509H. The Company owes Southern NSW Maintenance Pty Ltd (in Liquidation)... the amount of $121,800.44 being the total of the amounts of the debts described in the Schedule. Attached is the affidavit of Gideon Isaak Rathner, dated... verifying that the amount is due and payable by the Company. The draft statutory demand provided for signature by Mr Rathner in his capacity as " joint and several liquidator ". 16 Sandos' solicitors apparently understood that the Liquidators' solicitors intended to refer to s 569. The statutory demand was generally in the form of the draft attached to the letter of 8 March 2007. However, it referred to an amount of $49,171.53 as the amount of the debt that " the Creditor " required Sandos to pay. The schedule referred to the sum of $49,171.53 as " being the sum garnisheed by the Company on or about 13 November 2006 less costs ". I am one of the liquidators of [Southern] in respect of a debt owed by [Sandos] to [Southern] relating to a sum of $49,171.53 garnisheed by [Sandos] on or about 13 November 2006. With respect to the debt mentioned in paragraph 1 of this affidavit, I have inspected the business records of [Southern] in relation to [Sandos's] account with [Southern] . The debt mentioned in paragraph 1 of this affidavit is due and payable by [Sandos] . I believe that there is no genuine dispute about the existence or amount of the debt. They referred to the same matters that were referred to in their letter of 8 March 2007. (2) The amount of the costs of the garnishee have not been determined. (3) There is a defect in the demand as a result of which substantial injustice will be caused. (4) If there is a debt owing, it is a debt owing to the liquidators and not to Southern. Under s 500, any attachment put in force against the property of a company after the passing of a resolution for voluntary winding up is void. The winding up of Southern is taken to have commenced on 9 February 2007, when the creditors resolved that Southern be wound up. That is relevant for the operation of s 569. 22 Section 569 also performs a function related to that performed by Division 2 of Part 5.7B. Division 2 deals with voidable transactions. Division 2 consists of ss 588FA to 588FJ. Under s 588FA, a transaction is an unfair preference given by a company to a creditor of the company if, relevantly, the transaction results in a creditor receiving from the company, in respect of an unsecured debt, more than the creditor would receive from the company in respect of the debt if the transaction was set aside and the creditor were to prove for the debt in a winding up of the company. Under s 588FC, a transaction of a company is an insolvent transaction if it is an unfair preference given by the company and the transaction is entered into at a time when the company is insolvent or the company becomes insolvent because of matters including entering into the transaction. 23 Under s 588FE, a transaction is voidable if it is an insolvent transaction of a company and it was entered into during the six months ending on the relation-back day or after that day on or before the day when the winding up of the company began. Under s 588FF, where, on the application of a company's liquidator, the Court is satisfied that a transaction is voidable under s 588FE, the Court may make an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction. A relation-back day is the day on which the winding up is taken to have begun. 24 Section 569 is also cognate with s 468. Under s 468, any disposition of property of a company being wound up by the Court, other than an exempt disposition, made after the commencement of the winding up by the Court is, unless the Court otherwise orders, void. 25 Sandos contended that, because the Court has a power to ameliorate the effect of s 569, on the ground that but for Southern's trickery or abuse of process, the garnishee proceeding would have been completed more than six months before the commencement of the winding up, any liability under s 569 is no more than prospective or contingent. Sandos says that because there is a residual discretion vested in the Court to relieve a creditor from the consequences of s 569 and there is a possibility that the Court would do so in the present circumstances, there is a genuine dispute between Sandos and Southern about the existence of any claimed debt. Alternatively, there is a reason why the demand should be set aside, to enable the question of the possible exercise of discretion to be ventilated. 26 Section 468 of the Act provides that any disposition of property of a company, other than an exempt disposition, made after the commencement of the winding up of the company by the Court is void, unless the Court otherwise orders. In an application under s 468 or its equivalent, the Court has a discretion to order that a disposition of property is not void. It may be that, where a creditor has been prevented by force or by fraud or trickery from issuing execution or attachment prior to the commencement of a winding up, the Court would order that the execution or attachment is not void (see Armorduct Manufacturing Company Ltd v General Incandescent Company Ltd [1911] 2 KB 143 at 147. 27 However, there is no power given to the Court under s 569 to order that s 569 not apply. In any event, there is simply no evidence before the Court to suggest that there was any fraud or trickery that resulted in any delay in obtaining the garnishee order that resulted in the payment from the Bank to Sandos. Accordingly, there is no basis for suggesting that this ground for setting aside the statutory demand has any substance. It says that, since that amount has not been determined, it is not possible to determine the amount payable. 29 The amount of the payment pursuant to the garnishee order was $59,158.53. However, the statutory demand claims a debt of $49,171.53. The difference is explained by evidence given on behalf of the Liquidators. Mr Coyne says that an allowance was made for up to $10,000 for the costs of the garnishee order. There is no evidence from Sandos that the costs of the garnishee order are likely to exceed $10,000. There is no substance in this ground. Rather, the affidavit attached to the statutory demand refers to business records in relation to Sandos' account with Southern and asserts that there is a debt due and payable by Sandos. Sandos says that the absence of a clear statement that a claim was being made under s 569 is a formal defect or, alternatively, another reason why the demand should be set aside. However, the correspondence that preceded the statutory demand made it abundantly clear that the Liquidators were asserting an entitlement under s 569, even if the statutory demand itself did not make that explicit. 31 I do not consider that any substantial injustice has been caused. There is no evidence from Sandos to indicate that it did not know the basis of the claim made by the statutory demand. It is quite apparent from the arguments that have been advanced and the correspondence that preceded the statutory demand that Sandos was well aware that the Liquidators claim was based on s 569. There is no substance in this ground. Sandos says that there is no debt due to Southern; there is only a sum payable to the Liquidators. 33 Sandos points out that, in a proceeding under Division 2 of Part 5.7B of the Act, in respect of an insolvent transaction, the liquidator is a necessary party to a proceeding for recovery. Moneys paid in circumstances that create a preference, and which are recoverable under Division 2, are moneys recoverable for the benefit of the creditors of the company generally. Such moneys are not property of the company in liquidation; nor are they moneys owed by the recipient as a debt to the company. Accordingly, a liquidator must sue in his or her own name, in the interest of the creditors, to recover a payment that is void as against the liquidator (see Bibra Lake Holdings Pty Ltd v Firmadoor Australia Pty Ltd 7 (1992) ACSR 380 at 386). 34 An insolvent transaction that is an unfair preference is voidable. There are defences to a claim for payment under Division 2. However, there is no apparent defence to a claim under s 569. It is clear that what is to be paid to a liquidator under that section is the amount recovered by way of attachment, in this case the garnishee order to the Bank. I consider that money received by a liquidator pursuant to s 569 is received by the liquidator as agent for his or her company. 35 Sandos does not contend that the liability that arises by operation of s 569 is not a debt within the meaning of s 459E. Rather, it contends that that debt is owed to the Liquidators and not to Southern. The statutory demand in this case was signed on behalf of Southern by one of the Liquidators in his capacity as one of Southern's joint and several liquidators. Accordingly, it was a demand by Southern and not a demand by the Liquidators. 36 Any moneys received by the Liquidators or received by Sandos will be available as part of the fund available on the winding up of Sandos. While Sandos, notwithstanding that it is being wound up, continues as a separate corporate entity, whose mind is that of its liquidators, there is but one fund available for application in the winding up of Sandos. It is clear enough that the demand related to the sum garnisheed by Sandos from the Bank. Clearly, the demand was being made under s 569 of the Act. I do not consider that the fact the demand purports to be by Southern rather than by the Liquidators is anything more than a formal defect, if it is indeed a defect. I have already concluded that no substantial injustice has been caused by the form of the demand. 37 There is no basis for concluding that there is a genuine dispute between Sandos and either Southern or the Liquidators as to whether s 569 operates. I do not consider that there is a basis for setting aside the demand on this final ground. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | application to set aside statutory demand whether prospective or contingent liability whether genuine dispute as to whether s 569 corporation act 2001 (cth) operates. corporations |
They are all presently represented by the law firm Atanaskovic Hartnell. A direction has been made to prevent that firm, for the purposes of the examinations, from acting for all three of the examinees. The Applicants have commenced the present proceedings seeking judicial review of that direction. 2 In my opinion, the Applicants are entitled to the relief they seek and the direction should be set aside. 3 It is necessary to say, first, something of the facts. Secured Bond Ltd was involved, so ASIC alleged, in an illegal managed investment scheme called the "Master Fund" or "Secured Bond Ltd Master Fund". By 2 September 2008, those responsible for the investigation believed that a number of persons, who did not hold financial services licences, had improperly offered investment advice to investors based in New South Wales in relation to the Master Fund. They also believed that the Master Fund had the features of a managed investment scheme but was not, as it should have been, registered. 5 ASIC's investigators were also aware by that date of a witness, Mr Matthew, who told them that he had met twice with two of the Applicants, Mr Collard and Ms Li, and that they had solicited from him an investment in the Master Fund. That meeting had been organised by the third Applicant, Ms Zeng. Ms Zeng appeared subsequently to have witnessed Mr Matthew's signature on a document (called by ASIC "the Master Fund Contract") and to have provided him, on a slip of paper, the details of the bank account into which he should transfer the funds for investment in the Master Fund. The investigators also appeared to suspect that substantial sums had been deposited into various overseas accounts. 6 On 2 September 2008 ASIC commenced proceedings in the Equity Division of the Supreme Court of New South Wales against a number of persons and entities in relation to the Secured Bond Master Fund. Amongst the persons joined to the proceedings were the Applicants. ASIC sought a range of interlocutory orders including asset preservation orders in respect of a number of persons and entities including the Applicants, orders that the Defendants, including the Applicants, file an affidavit as to their assets and liabilities, orders requiring the Applicants to surrender their passports to the Court and "repatriation orders" by which the return to Australia of certain funds was to be achieved. ASIC's originating process also sought final relief which included the winding up of the Master Fund, the appointment of a receiver to the property of all of the defendants and the return of investor funds. 7 The evidence before me does not disclose whether ASIC obtained any of the interlocutory relief ex parte, although it does appear that there was an inter partes hearing of some description on 4 September 2008. What is clear, however, is that on 7 October 2008 the Supreme Court made asset preservation orders, orders requiring the surrender of the Applicants' passports and fund repatriation orders. These orders were expressed to expire on 12 December 2008. The orders dealing with the issue of fund repatriation were made on 14 October 2008. 8 The Applicants retained the services of Messrs Atanaskovic Hartnell on 3 September 2008, that is, the day after ASIC's proceedings in the Supreme Court were commenced. A partner of that firm, Mr Anthony Geoffrey Hartnell, went on the record for the Applicants in those proceedings. Atanaskovic Hartnell had not previously been involved with any of the Applicants. 9 As one of its powers of investigation, ASIC has the ability to summon a person to appear before inspectors and to answer questions under oath. That power is contained in s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act ") to which it will be necessary, shortly, to return. Its materiality for present purposes arises from the fact that on 11 September 2008 ASIC served on the Applicants notices pursuant to s 19 requiring each to be examined on oath before two of ASIC's in-house lawyers on Monday 13, Wednesday 15 and Thursday 16 October 2008. The examinations were to take place at ASIC's Sydney offices. The notice to each examinee explained that it was issued in relation to ASIC's investigation into suspected contraventions of the Corporations Act 2001 (Cth) ("the Corporations Act ") and the ASIC Act by persons including the Applicants and various companies also appearing in ASIC's statement of claim in the Supreme Court. 10 At various conferences on Friday 3 October 2008 and Monday 6 October 2008 Mr Hartnell received, or had confirmed, instructions from each of the Applicants to appear for them at their respective s 19 examinations. These instructions were separately received. 11 Reference has already been made to a series of orders made by the Supreme Court on Tuesday 7 October 2008. On that day there was a directions hearing in those proceedings. Mr Hartnell attended that directions hearing on behalf of the Applicants. At that time he had a conversation with Ms Dodds who is both a lawyer with ASIC and also one of the two persons before whom the s 19 examinations were to take place. I am therefore giving you notice that I intend to attend in all the three examinations, so you have the time to think about that. Ms Dodds: It may not be a big issue. However, you have a conflict of interest. Mr Hartnell: Isn't that a question for myself and my clients? However, on Friday 10 October 2008 the two lawyers who were to conduct the examination --- Ms Dodds and Mr Yon Astar --- wrote a letter to Mr Hartnell. 13 The first sentence of this paragraph suggests two things which are at variance with Mr Hartnell's account. First, it suggests that Mr Hartnell made a request of ASIC to inform him as to whether it objected to him appearing at all three examinations whereas Mr Hartnell's account has him merely informing them that he would attend. Secondly, it suggests that the encounter --- whether it was a request or a statement --- occurred on Wednesday 8 October 2008. Mr Hartnell swore before me that he did not recall making the request suggested in ASIC's letter on that day but did recall the conversation with Ms Dodds I have set out. ASIC led no evidence from Ms Dodds and Mr Hartnell was not cross-examined to suggest his account was incorrect. In that circumstance, I accept Mr Hartnell's account. The evidence does not disclose any other discussions between officers of ASIC and Atanaskovic Hartnell about ASIC's perception of a conflict of interest either before the discussion between Mr Hartnell and Ms Dodds on Tuesday 7 October 2008 or thereafter and I find there were none. 14 ASIC's letter of Friday 10 October 2008 was received by Atanaskovic Hartnell by facsimile at about 2 pm that day. Apart from informing Atanaskovic Hartnell that it would not be permitted to represent all three examinees, it also rescheduled the dates for the examinations of Mr Collard and Ms Li to Monday 20 October 2008 and Wednesday 22 October 2008 respectively; Ms Zeng's date for examination remained unchanged at Thursday 16 October 2008. 15 On Tuesday 14 October 2008, Atanaskovic Hartnell responded to the letter of Friday 10 October 2008. It is not necessary to set out that letter. For present purposes two points were made. First, it was pointed out that Atanaskovic Hartnell had been retained in the proceedings since early September and that a significant amount of work had been done. Secondly, pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act "), Atanaskovic Hartnell sought the provision of reasons for the direction to exclude it from the examinations. Accordingly there is no requirement for written reasons to be provided in respect to such a decision. 17 On Wednesday 15 October 2008 the present proceedings were commenced by the Applicants. The proceedings as finally constituted named ASIC, Ms Dodds and Mr Astar as Respondents and sought orders setting aside the direction made on Friday 10 October 2008 to exclude Atanaskovic Hartnell from appearing at all of the examinations. 18 I accept that during the period 2 September 2008 to 15 October 2008 Atanaskovic Hartnell performed work for the Applicants in relation both to the Supreme Court proceedings and the s 19 examinations. Its account for the period 2 September 2008 to 17 October 2008 shows that two partners were working on the matter along with three employed solicitors and three law clerks. The account contains a number of narrative entries dealing with the s 19 issues. All of those, except one, appear to be concerned with the consequences of the direction excluding Atanaskovic Hartnell from the examinations. Only one --- "considering Mrs Li's affidavit and section 19 notice" --- appears to be independent of that issue. Despite that, it is reasonable to infer, and I do, that some work must have been done in relation to the s 19 examinations which did not relate to the present proceedings. I infer that from Mr Hartnell's evidence that he received separate instructions in conference from the Applicants in relation to the s 19 examinations on Friday 3 October 2008 and Monday 6 October 2008 and from the obvious necessity for such work to be done. The absence of much explicit reference to such work being done in the narrative of the bill is not inconsistent with that conclusion for the narrative is framed in general terms. 19 On 22 October 2008 ASIC produced a document entitled "REASONS FOR DECISION" which purported to be reasons pursuant to s 13 of the ADJR Act . These reasons were signed by Mr David McGuiness. By a subsequent letter dated 27 October 2008 ASIC indicated that it regarded itself as the decision-maker. (a) The identity and authority of the decision-maker. ASIC contended that it had given the direction. The Applicants denied that the power to exclude Atanaskovic Hartnell from the examinations was a power which was vested in ASIC. They submitted that the power was vested in the inspectors. The inspectors were joined to the proceedings against this possibility. (b) The reasonable grounds issue. The Applicants submitted that the Full Court's decision in Australian Securities Commission v Bell (1991) 32 FCR 517 meant that the inspectors' direction was liable to be set aside unless they --- the inspectors --- demonstrated during the present proceeding that there were reasonable grounds for a bona fide belief on their part that to allow Atanaskovic Hartnell to represent all three of the Applicants would be likely to prejudice the investigation. ASIC, on the other hand, argued that Bell was concerned with the evidential consequences of the regulator failing to provide any reasons for the making of such a direction. Since ASIC furnished reasons for its direction it followed that the principle was inapplicable. Even if that were not so, ASIC argued that the materials before the Court showed that there were reasonable grounds for a bona fide belief on its or the inspectors' part that to allow the Atanaskovic Hartnell to represent all three Applicants would be likely to prejudice the investigation. (c) The procedural fairness issue. As an alternative, the Applicants argued that the power to exclude their lawyers from the examinations was a power the exercise of which attracted an obligation of procedural fairness. Since the inspectors did not give the Applicants any opportunity to argue that the direction should not be made, it followed, so the argument ran, that they had denied the Applicants procedural fairness. ASIC, on the other hand, denied that the power to exclude the Applicants' legal advisers from an examination was a power the exercise of which was conditioned upon adherence to requirements of procedural fairness. It pointed to the fact that the decision to summon the Applicants for examination in the first place was not subject to those requirements and asked, rhetorically, how in the midst of a process in which procedural fairness did not figure largely such an obligation might be found to exist. Against the possibility that it might be found to exist, ASIC submitted that, in the circumstances, the content of the obligation would be diminished to such a low level that it should be found that the obligation had been discharged. The Applicants made no express submission about that question but did submit that if ASIC was the decision-maker (as it submitted) then it had no power to give the direction. This was because the power to exclude a person from an examination was conferred by s 22(1) of the ASIC Act and that provision conferred power not on ASIC but on the inspector conducting the examination. 22 It is necessary in the first instance to identify with clarity who gave the direction. There are three matters bearing on this issue. First, there is the letter of Friday 10 October 2008 written by Ms Dodds and Mr Astar which is on the letterhead of ASIC and is signed by both Ms Dodds and Mr Astar in their stated capacity as "Lawyer, Deterrence". 24 The s 19 notices themselves were also signed by Ms Dodds and Mr Astar. For present purposes, it suffices to observe that the sentence quoted assumes a distinction between "we" and "ASIC". That distinction is observed in other parts of the letter. 25 If by the use of the word "we" Ms Dodds and Mr Astar had intended to signify the actions and motives of ASIC, it is more likely that they would have referred to "our investigation" rather than "ASIC's investigation". 26 Secondly, there is the document dated 22 October 2007 signed by Mr McGuinness and entitled "REASONS FOR DECISION". That document uses language throughout which assumes that the entity responsible for giving the direction was ASIC. In any event, the reasons were issued 12 days after the event. Accordingly, I am inclined to place more weight on the letter of Friday 10 October 2008. 28 Thirdly, there is the absence of any evidence from ASIC as to how the direction was given. The question, however, of who (as between ASIC, Ms Dodds and Mr Astar) gave that direction (as opposed to the question of the weight which was to be given to the reasons of Wednesday 22 October 2008) , only became important during the course of the hearing. In that circumstance, this deficiency in the evidence is not forensically significant. 29 That being so, the only matter which is especially helpful is the letter of Friday 10 October 2008 itself. Although the matter could be clearer, the better view is that by their use of the word "we" Ms Dodds and Mr Astar intended to refer to themselves rather than ASIC. It follows that the letter of Friday 10 October 2008 evidences a direction given by them, and not ASIC, to exclude Atanaskovic Hartnell. 30 Ms Dodds and Mr Astar were the persons nominated in each of the s 19 notices as the persons before whom the examinations were to take place. As such they were the "inspectors" within the meaning of s 20 of the ASIC Act . 31 Ms Collins, who appeared with Ms Mitchelmore for the Applicants, submitted that this was not a conferral of jurisdiction on ASIC but rather upon the inspectors conducting the examinations. ASIC denied this. Mr Halley SC, who appeared on ASIC's behalf with Ms Allars, submitted that the exercise by the inspectors of the power under s 22(1) was the exercise of a power delegated to them by ASIC. This mattered because s 102(6) of the ASIC Act deemed an act done by a delegate of ASIC to be done by ASIC itself. 32 Before the power in 22(1) could be seen as having been delegated to the inspectors it would be necessary for the power to be capable of being exercised by ASIC itself for it is not possible to delegate a function or power which is not possessed by the delegant: the stream cannot rise higher than the source. Note: Failure to comply with a requirement made under this subsection is an offence (see section 63). 34 This argument should be rejected. Section 19(2) authorises ASIC to summon a person for examination before an inspector. Section 22(1) authorises the inspector to give directions as to who may be present during the examination. There is no warrant for reading s 19(1) as the source of the authority to give such a direction. In any event, the authority of this Court establishes that the source of the power is s 22(1) itself: Australian Securities Commission v Bell (1991) 32 FCR 517 at 521 per Lockhart J, 528-529 per Sheppard J. 35 Other provisions in Division 2 of Part 3 of the ASIC Act observe a distinction between ASIC on the one hand and the inspectors on the other. ASIC has the powers and functions explicitly conferred on it by ss 19(1) , 19 (2), 25 and 27 (2). By contrast, an inspector has functions and powers conferred on him or her by ss 21(1) , 21 (3), 22 (1), 23 (2), 24 (1), 24 (2)(a) and 24 (2)(b). If, as ASIC submits, all of the powers and functions of an inspector derive from the power conferred on ASIC by s 19(2) , then this distinction between an inspector and ASIC in Division 2 of Part 3 is merely a textual oddity having no significance. That view is contrary to the general principle of statutory construction that in construing a set of provisions each word must be given meaning: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 29 ; (1998) 194 CLR 355 at 382 per McHugh, Gummow, Kirby and Hayne JJ. For those reasons, on its proper construction s 22(1) confers a power on an inspector in his or her own right and not upon ASIC. 36 This means that ASIC's arguments that it gave the direction in question and that it had authority to do so must both be rejected. This conclusion has two consequences. First, the proper respondents to these proceedings are the inspectors themselves and not ASIC. Secondly, the inspectors were, in fact, clothed with authority to give the direction by s 22(1). For present purposes this means that the Applicants' claim against ASIC must be dismissed. (3) Subsection (2) is an offence of strict liability. Note: For strict liability , see section 6.1 of the Criminal Code . (2) If, in the inspector's opinion, a person is trying to obstruct the examination by exercising rights under subsection (1), the inspector may require the person to stop addressing the inspector, or examining the examinee, as the case requires. Note: Failure to comply with a requirement made under this subsection is an offence (see section 63). (3) An offence under subsection 63(4) relating to subsection (2) of this section is an offence of strict liability. Note: For strict liability , see section 6.1 of the Criminal Code . However, the following propositions should be accepted. This conclusion was reversed by the Full Court: Australian Securities Commission v Bell (1991) 32 FCR 517 at 521 per Lockhart J, 528-529 per Sheppard J, 532-533 per Burchett J. The binding nature of that conclusion is not open to doubt. It follows that the section contemplates the possibility that a person may be excluded from the entire examination and not just part of it. Logically, such a direction could not be given during the examination. Consequently, the power in s 22(1) is capable of being exercised once an inspector has assumed office as such following appointment by ASIC under s 19(2). 41 In this case, the direction itself was given by the letter of 10 October 2008. It is important to emphasise that the decision in question is the giving of a direction. Section 22(1) does not authorise the making of a decision to exclude which is then followed by a ministerial act of implementation constituted by the direction. Rather, s 22(1) authorises the giving of a direction. At various points in the argument there appeared to be an assumption that there was an anterior decision to the direction contained in the letter of 10 October 2008. However, this assumption is unwarranted. The power conferred by s 22(1) is the power to direct; the letter of Friday 10 October 2008 is that direction. However, at least two members of the Full Court thought that the right was conferred on the lawyer: Australian Securities Commission v Bell (1991) 32 FCR 517 at 528 per Sheppard J, 532 per Burchett J. The matter is complicated because Burchett J also thought (at 532) that the client had a right to have his lawyer's right observed. Lockhart J adverted to the question (at 519) but did not answer it. 43 In Stockbridge v Ogilvie (1993) 43 FCR 244 examinees sought judicial review of a direction given by an inspector appointed by the Australian Securities Commission to exclude their lawyer. French J appeared to assume (at 254), without debate, that the right created by s 23(1) was conferred on the examinee's lawyer although it may be admitted that this is far from clear. In Macquarie Advisory Group Pty Ltd (rec apptd) v Australian Securities and Investments Commission (1999) 33 ACSR 106 at 108 [6] the parties, and Byrne J, assumed that the right was conferred on the examinee. In Gangemi v Australian Securities and Investments Commission [2003] FCA 494 ; (2003) 129 FCR 284 at 297 [38] French J assumed without discussion that the right was conferred on the examinee. 44 Bell requires the conclusion, with which I agree, that the right is at least conferred on the examinee's lawyer. It is an open question whether the right is also conferred on the examinee. The right referred to by Burchett J in Bell as the right to have the lawyer's right enforced does not appear, with respect, to have a textual foundation. The right assumed to be vested in the examinee in Gangemi and Re Macquarie Advisory Group was the right in s 23(1) itself rather than the right adverted to by Burchett J. 45 Only one judge (Sheppard J) has considered the matter in any detail. The statements by French J in Stockbridge and Gangemi do not appear to me to be intended to be taken as considered statements on the question and the statement by Byrne J is certainly not. 46 The text of s 23(1) is, I think, plain. The right is conferred on the examinee's lawyer. In that regard, its wording is different from s 25(4) of the National Crime Authority Act 1984 (Cth) which provided, in part, that "a person giving evidence may be represented by a legal practitioner" and which was held by the Full Court in National Crime Authority v A (1988) 18 FCR 439 at 446 per Bowen CJ, Sheppard and Morling JJ to operate as a conferral of a right upon a witness. 47 The notion that rights are conferred on lawyers rather than their clients is neither novel nor surprising. The right to file an originating process is conferred on a solicitor just as the right of audience is conferred on both solicitors and barristers. In each of those cases the right thereby conferred is to be exercised by the lawyer in accordance with his or her legal and equitable duties. To conclude that the right conferred by s 23(1) on a lawyer is to be exercised for the benefit of the client (and in accordance with lawful instructions) does not make it necessary to construe s 23(1) as conferring a right on the client. That Act did not confer on the Authority an explicit power to exclude a lawyer. However, s 19 of the Act conferred on the Authority the power to do all things necessary to be done for or in connexion with the performance of its functions. In National Crime Authority v A (1988) 18 FCR 439 at 446 the Full Court held that that power extended to the exclusion of a lawyer from an examination notwithstanding s 25(4). However, that meant that the extent of the power was coterminous with the degree of the necessity. Hence, the Full Court held (at 448) that the power to exclude a lawyer arose if the Authority "concludes on reasonable grounds and in good faith that to allow the representation either will, or may, prejudice the investigation which it is obliged to carry out". 49 There was nothing novel about that conclusion. The fact that the power actually used depended upon the existence of a relevant necessity meant that an absence of such a necessity entailed ultra vires action. In that sense, it was for the Authority to show that its action was within power and to do that it needed to so show the necessity which activated the power in s 19. 50 In Bell that test appears to have been grafted onto ss 22 and 23 of the former (but relevantly identical) Australian Securities Commission Act 1989 (Cth). Notwithstanding that s 22 expressly conferred a power to exclude which was absent from the National Crime Authority Act 1984 (Cth), Lockhart J concluded (at 521) that the power conferred by s 22(1) was subject to the same limitation that the Authority was subject to in National Crime Authority v A, namely, that the inspector must form the view that there are "reasonable grounds for a bona fide belief" on the inspector's part that to allow the particular lawyer to appear "will or is likely to prejudice the investigation which he is obliged to carry out pursuant to the requirements of the Act". 51 The mechanism underpinning this reasoning appears to be the need to reconcile apparently contradictory provisions. It is true that s 22(1) is not expressed to be subject to the same limitation as s 25 of the National Crime Authority Act 1984 (Cth), namely, that the step sought to be justified had to be "necessary". However, to prevent the power to exclude in s 22(1) from devouring the whole of the operation of s 23(1) , which entitled the lawyer to be present, it was necessary to place limits on the extent of the power thereby conferred. Lockhart J identified the limitation as one of reasonable necessity which was explicit in National Crime Authority v A . the lawyer] may be excluded. However, such a qualification upon the express entitlement conferred by the Act cannot be stretched beyond what the court can say is necessarily required for the carrying out of the examination for which the statute provides. 52 Mr Halley submitted that Bell was better understood as a case where the evidential burden was shifted to the Commission by the paucity of the reasons it initially proffered: cf. Public Service Board of New South Wales v Osmond [1986] HCA 7 ; (1986) 159 CLR 656 at 663-664 per Gibbs CJ with whom Wilson, Brennan and Dawson JJ agreed. There is no doubt that Sheppard J approached the matter on that basis: see Bell 32 FCR 517 at 531. However, I do not think it was the way in which Lockhart and Burchett JJ approached it. 53 Where, as here, it is alleged that ASIC has acted outside its power in making an exclusion direction under s 22(1), ASIC is required to prove that the making of the order was "necessary" in the sense used in Bell . The reasonable necessity is based on the views of the inspector --- if it appears necessary to the inspector then that will suffice provided that his or her belief is reasonably held. Put another way, the encroachment of the power in s 22(1) into the field of operation of s 23(1) is subject to a condition precedent, namely, the satisfaction of the inspector that the encroachment is necessary. And, of course, it is not to be presumed that Parliament intended that the inspector's view could be formed capriciously --- hence, not only must be the opinion be formed but is must be reasonably held: cf. Buck v Bavone [1976] HCA 24 ; (1976) 135 CLR 110 at 118-119 per Gibbs J; Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at 654 per Gummow J; Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5 ; (2000) 199 CLR 135 at 150 [34] per Gleeson CJ, Gummow, Kirby and Hayne JJ. 54 The opinion which matters is that of the inspector. The only issue for the Court is whether that opinion is held on reasonable grounds and in good faith. Once that threshold is passed, the fact that the Court might not have made the direction itself is of no moment because the state of satisfaction which expands the operation of s 22(1) into the domain of s 23(1) is that of the inspector and not that of the Court: cf. Gangemi v Australian Securities and Investments Commission [2003] FCA 494 ; (2003) 129 FCR 284 at 297 [39] per French J; Stockbridge v Ogilvie (1993) 43 FCR 244 at 255 per French J. 55 Finally, two further consequences of the analysis in Bell should be noted. First, the limitation on the power in s 22(1) only arises where its field of operation intersects with the rights conferred by s 23(1). Where that is not the case the limitation does not arise. Where the power in s 22(1) is used to exclude a person from an examination who is not a lawyer to whom s 23(1) applies then the issue of whether a direction is ultra vires will be very unlikely to arise. This is because, outside that area of intersection, the provision confers an express authority in plain terms. 56 Secondly, it is the examination process itself against which the necessity is measured. This directs attention to the purposes of the persons conducting it; namely, the inspectors. An analytical framework which treats ASIC as the decision-maker, which I have rejected, is apt impermissibly to blur the distinction between the purpose of an inspector in conducting an examination and the purpose of ASIC in conducting an investigation. The presence of a belief by ASIC held on reasonable grounds and in good faith that the exclusion of a lawyer was necessary for the purposes of its investigation would not, per se, suffice for s 22(1) purposes. The relevant purpose is the proper conduct of the examination and the relevant person to have that purpose is the inspector conducting that examination. There was a debate between the parties as to whether the statement of reasons of 22 October 2008 could be received into evidence. The debate was resolved by an agreement that the reasons could be tendered but that the Applicants could make submissions as to the weight, if any, which should be accorded to those reasons. The parties also agreed that if I concluded that the inspectors were the relevant decision-makers then the reasons should be read as their reasons. 58 For present purposes, the question is whether the reasons of 22 October 2008 are the reasons for the decision. ASIC contended that they should be so treated; the Applicants that they should be given no weight at all. I have found this a difficult issue to resolve. Because of the agreement of the parties that the statement of reasons was to be admitted into evidence it is unnecessary to resolve the interesting evidential question of how a statement of reasons, delivered sometime after the decision to which they are appurtenant, is admissible. 61 These facts, both favourable and unfavourable, are capable of supporting an inference that the statement of reasons of 22 October 2008 does not reflect the true reasons of the inspectors. It would be fair to say that the opposite inference is also open on the facts. However, neither the inspectors nor Mr McGuinness were called to give evidence before me to explain how the decision was made or how the statement of reasons of 22 October 2008 was generated. At the end of the hearing, there was little evidence beyond the letter of 10 October 2008 and the statement of reasons of 22 October 2008 themselves to explain the decision-making process. 62 It was apparent at the start of the proceeding that ASIC wished to have the inspectors removed as parties which, given their status of employees, was understandable. I have already indicated that no particular criticism can be made as to the failure by ASIC or the inspectors to prove which of them gave the direction since that issue really only arose at the hearing. 63 However, that does not explain why neither Mr McGuinness nor the inspectors were called to give evidence as to why the statement of reasons of 22 October 2008 should be taken as the reasons for the decision when it was produced 12 days after the direction and seven days after the commencement of these proceedings. This is particularly so when the statement of reasons was admitted with ASIC's agreement that the Applicants would still be entitled to submit that it should be given no weight. The status and value of the statement of reasons was, therefore, a significant matter in contest. 64 In those circumstances, the failure to call either the inspectors or Mr McGuinness permits me more comfortably to draw the inference to which I have already referred viz that the statement of reasons of 22 October 2008 does not reflect the true basis for the actions of the inspectors on 10 October 2008 when they gave the direction: Jones v Dunkel (1959) 101 CLR 298 at 308 per Kitto J, 312 per Menzies J, and 320-321 per Windeyer J. I so conclude. It follows that I do not think that any reliance should be placed upon those reasons. 65 For completeness, it is to be noted that ASIC had a similar inference drawn against it for failing to put on evidence as to the decision-making process in Bell 32 FCR 517 at 525 per Lockhart J, 531 per Sheppard J and, arguably, at 533 per Burchett J. Further, such evidence was put before the Court in Macquarie Advisory Group Pty Ltd v Australian Securities and Investments Commission (1999) 33 ACSR 106 at 108 [8] per Byrne J and in Gangemi v Australian Securities and Investments Commission [2003] FCA 494 ; (2003) 129 FCR 284 at 290-291 [19] - [20] per French J. Whilst it is true that in both Gangemi and Stockbridge that the reasons of the inspectors were before the Court it is also true that those reasons were delivered contemporaneously with the direction. The significance of such evidence in the present case was obvious, therefore, not only because the Applicants explicitly signalled their intention to doubt the usefulness of the statement of reasons of 22 October 2008 but also from the course of authorities dealing with s 22(1). 66 The question is whether the inspectors have established that the direction was made for the purpose of securing the integrity of the examinations on reasonable grounds and in good faith. The only evidence of that purpose that is both reliable and available is the letter of 10 October 2008 which constituted the direction. It establishes, clearly in my view, that the direction was made for the purpose of securing the integrity of the examination process. Further, it is appropriate to accept that the letter does not disclose an absence of good faith. The real debate is whether it discloses reasonable grounds. 67 The letter, and hence the inspectors, make three points. First, they say that there is a conflict of interest between Mr Collard, Ms Li and Ms Zeng in relation to the matters under investigation by ASIC. Secondly, the examination is to be used to ask questions which are relevant to that conflict of interest or will expose it more fully. 68 For reasons I have already given, prejudice to ASIC's investigation is not what activates the power under s 22(1). The inquiry must be directed to the integrity of the examinations rather than the investigation. However, it is appropriate to assume, since no point was taken about this, that the prejudice to the investigation corresponds with prejudice to the examinations. 69 The difficulty is that it is impossible to see why Atanaskovic Hartnell must be excluded. Accepting, as I do, the risk that accidental or subconscious disclosure may occur, it is impossible to gauge what that risk means in the current situation. Unless there is some indication of what the material is that may be accidentally disclosed, it is impossible to say anything as to whether the integrity of the examination requires that information to be protected by the making of a s 22(1) direction. 70 During argument Mr Halley put the proposition that wherever there were differing accounts between proposed examinees a s 22(1) direction could always be made against an examinee's lawyer. I do not think that can be accepted. The question is always whether there are reasonable grounds for such a direction. The differences between the accounts of proposed examinees may be trivial or obviously anodyne. For example, if two examinees differed in their recollection of the date of some well-known event then it could not be the case that the inspectors would have reasonable grounds for excluding their lawyer from representing both. Once that is accepted, as I think it must be, this necessitates an examination, in each case, of the differences between the accounts, the significance of those differences and the risk that joint representation poses to the examination having regard to those matters. Of course, this is not an exhaustive statement of when exclusion may be appropriate. For example, the lawyer's own involvement in the events in question is another matter altogether. But where the exclusion is based upon conflicts of interest between the witnesses it is not sufficient merely to state that such a conflict exists. 71 That approach may, of course, require that confidential evidence be given about the relevant concerns in this Court. This was expressly contemplated in Bell by Lockhart J (at 32 FCR 521) and Sheppard J (at 32 FCR 532) both of whom indicated that the processes of the Court could be adapted to deal with the exigencies obtaining in such a state of affairs. Consistent with that observation French J received a confidential affidavit in Gangemi (at 129 FCR 290 [20]). 72 In this case, however, there is nothing in the letter of 10 October 2008 to indicate what the conflict was between the accounts of the Applicants, why those conflicts mattered or what it was that made it necessary for Atanaskovic Hartnell to be excluded. An inference is open that because those matters are not dealt with in the letter of 10 October 2008 that the inspectors did not, in fact, turn their minds to those matters. I may more readily draw that inference in circumstances where the inspectors did not give evidence before me as to these matters: Jones v Dunkel (1959) 101 CLR 298 at 308 per Kitto J, 312 per Menzies J, and 320-321 per Windeyer J. 73 I am conscious that ASIC subsequently produced a set of reasons on 22 October 2008. I have previously come to the conclusion that this set of reasons is not to be given any weight. Be that as it may, it might be thought that a belief on ASIC or the inspectors' parts that the second set of reasons would stand as the reasons for the direction may provide an explanation as to why no evidence was given by the inspectors or Mr McGuinness as to their grounds for the giving of the direction on 10 October 2008. If that explanation were to be accepted as legitimate it would prevent the drawing of the inference to which I have referred. I do think that it is possible that the second set of reasons provides some explanation for the absence of evidence from the inspectors or Mr McGuinness. However, it is difficult to know whether that it so or whether the decision not to call them was made by other people for possibly other reasons. 74 Ultimately, I think that it would be conjecture on my part to conclude that the reason the inspectors and/or ASIC did not give evidence about the grounds underpinning the letter of 10 October 2008 was because they, or their advisers, believed that the second set of reasons would perform that function for them. In that circumstance, I do not think that I can accept such a view as a sufficient or adequate reason for their not having been called such as would prevent the drawing of the inference to which I have referred. Accordingly, the only grounds that the inspectors had were the grounds set out in the letter of 10 October 2008, and those grounds were not adequate in the requisite sense. 75 My conclusion would have been the same even if I had reached the view that the statement of reasons did reflect the inspectors' reasons for giving the direction. 1.2 Mr Collard, Ms Li and Ms Zeng (the " Examinees ") are three of the thirteen defendants to proceedings commenced by ASIC on 2 September 2008 pursuant to section 1323 of the Corporations Act 2001 (Cth) in New South Wales Supreme Court, being matter number 4532 of 2008. The Examinees are represented by Mr Tony Hartnell of Atanaskovic Hartnell in those proceedings. 1.3 On 7 October 2008, Mr Hartnell informed an officer of ASIC that he had been instructed to represent each of Mr Collard, Ms Li and Ms Zeng at the Examinations. Mr Hartnell asked the officer to notify him whether ASIC had any objection to him, either alone or with other lawyers from Atanaskovic Hartnell, representing each of the Examinees at their Examinations. The officer agreed to consider the matter further and provide him with a formal response. 1.4 On 10 October 2008, ASIC sent a letter to Atanaskovic Hartnell in the following terms. Further to Mr Hartnell's request on 8 October 2008 that we inform you whether we had any objection to Atanaskovic Hartnell representing each of Mr Collard, Ms Li and Ms Zeng at their examinations, we have now considered the matter and formed the view that it will not be possible for Mr Collard, Ms Li and Ms Zeng to have the same legal representatives, or different representatives each from Atanaskovic Hartnell, at their examinations. We intend to ask questions at the examinations which are relevant to, or will expose more fully, those conflicts of interest. We also intend to give a non-disclosure direction to each examinee. If Mr Collard, Ms Li and Ms Zeng had the same legal representatives, or different representatives each from Atanaskovic Hartnell, present at their examinations, we believe this would result in prejudice to ASIC's investigation. 2.2 Any decision to exclude Mr Hartnell or lawyers from Atanaskovic Hartnell from attending all three Examinations is made pursuant to sections 22 and 23 of the ASIC Act . In particular, section 22(1) provides that the Examinations must take place in private and the ASIC inspectors conducting the Examinations may give directions about who may be present during them. 3. ASIC does object to Mr Hartnell alone, or together with other lawyers from Atanaskovic Hartnell, representing more than one Examinee at the Examinations. The matters taken into account by ASIC in relation to this are set out below. 3.4 ASIC has also considered its own objectives in conducting the Examinations. The Examinations are being conducted because ASIC believes that the Examinees can give information to ASIC which is relevant to a matter that it is investigating. 3.5 One of the matters which ASIC is investigating is the role played by each of the Examinees in the matters which are the subject of ASIC's investigation. In considering the request, ASIC has had regard to information it currently has about the roles played by each Examinee. [ The remainder of the paragraph was by consent redacted by ASIC. 3.8 ASIC has considered the risk that an Examinee would not be truthful, frank or forthcoming in the course of an examination when accompanied by a legal representative he or she knew was also acting for other Examinees in the same investigation. 3.9 ASIC has also taken into consideration the fact that the Examinations will take place in private pursuant to section 22 of the ASIC Act and that, in accordance with ASIC's usual practice, confidentiality directions will be given at each examination preventing the examinee and any legal representative from disclosing to any person the questions asked, or any information or documents provided to, or by, the examinee during the examination for a specified period of time. Prior knowledge of these matters could affect the answers given by the subsequent Examinee, thereby prejudicing ASIC's investigation. 3.11 ASIC has also had regard to the risk that an Examinee's legal representative could unintentionally disclose information to another Examinee, who in turn could seek to influence the testimony of a further Examinee or third party from whom ASIC subsequently sought information or assistance. 3.12 ASIC has had regard to the actual or potential arrangements Atanaskovic Hartnell could put in place to allow different lawyers from that firm to represent each of the Examinees. However in considering this, ASIC has also had regard to statements made to its officer by Mr Hartnell that he personally would be representing each of the Examinees at their Examinations. 3.13 ASIC also had regard to the difficulty for a lawyer to ignore information obtained by him or her in the course of one of the Examinations in order to avoid divulging that information, or deriving any use from it, when preparing other Examinees for their Examinations, or when representing those subsequent Examinees at their Examinations. 3.14 ASIC has concluded that its investigation would be prejudiced if the Examinees had the same legal representatives present at their Examinations. ASIC has also concluded that its investigation would be prejudiced if the Examinees had different representatives, each from Atanaskovic Hartnell, present at their examinations. It is true that the reasons underscore some differences between the accounts of Mr Collard, Ms Li and Ms Zeng. However, I am unable to fathom why those differences matter or why, assuming the differences did matter, they justified the exclusion of Atanaskovic Hartnell. However, in case I am incorrect in my conclusions, it is appropriate to record my view that the power in s 22(1) is subject to an obligation to afford the lawyer or his or her client an opportunity to make submissions as to why such a direction should not be given. That did not occur in this case. Even if the direction were otherwise within power it should be set aside on the ground of a breach of the requirements of procedural fairness. 78 The question of whether the power in s 22(1) attracts a procedural fairness obligation has received little consideration. Sheppard J in Bell (32 FCR 516 at 532) thought that such an obligation did exist. Neither Lockhart nor Burchett JJ considered the issue. None of the decisions in Re Macquarie Advisory Group Ltd (33 ACSR 106), Stockbridge (43 FCR 244) or Gangemi (129 FCR 284) deals with the question. 79 I have already set out s 23(1) and my conclusion that it confers a right on the examinee's lawyer and not the examinee. That right is sufficient to attract the rules of procedural fairness: Annetts v McCann [1990] HCA 57 ; (1990) 170 CLR 596 at 598 per Mason CJ, Deane and McHugh JJ. ASIC argued that the exercise of investigative powers was not generally subject to the rules of procedural fairness. It instanced Ryan v Australian Securities and Investments Commission (2007) 158 FCR 301 at 317-323 [53]-[72] per Gyles J. The decision under challenge in that case, however, was a decision by ASIC to confer "eligible applicant" status on a person. The only effect of that was to permit such a person to apply for the issue of examination summonses which might result in the examination of a person. In any event, where, as here, the exercise of a power is anterior to that which has a direct effect upon the party, there is no such requirement. 80 It is clear that his Honour was dealing with the initiation of investigative functions. That principle may well apply to mean that there is no obligation to afford procedural fairness prior to issuing a s 19 notice --- however, once that process is commenced, s 23(1) confers a right on a lawyer to be present at the examination. Section 22(1) may be used to extirpate that right but such an action affects expressly conferred rights. It is not to the point, in that context, that the mechanism by which the examination process itself is commenced does not carry with it a procedural fairness obligation. 81 It follows that the inspectors were required to afford procedural fairness to Atanaskovic Hartnell prior to making the direction of 10 October 2008. That would mean that the firm could challenge the decision if it chose to do so. However, the right of the lawyer conferred by s 23(1) is, generally speaking, a right in respect of which the lawyer will owe fiduciary duties to his or her client. The duties thereby erected generate in the client a sufficient interest also to attract an obligation of procedural fairness. Accordingly, the giving of a direction excluding a lawyer from an examination will require the affording of procedural fairness both to the lawyer and his or her client. In practical terms, these obligations may often be discharged simultaneously. 82 Of course, the procedural fairness obligation arises because of the right conferred by s 23(1). Where s 22(1) is utilised to exclude a person from an examination who does not have a right to be present I express no opinion as to whether a procedural fairness obligation arises. There may be much to be said for the view, however, that it would be difficult in such circumstances to identify a sufficient right or interest. 83 Granted that such an obligation existed, what were the inspectors to do? They needed to provide Atanaskovic Hartnell with an opportunity to persuade the inspectors that the direction should not be given. This was not done and breach is established. There may be difficult cases where the inspectors have before them confidential information the very nature of which requires that it not be shown to the lawyer or to his or her client. However, the inspectors did not suggest that they had relied on any such information in the present proceeding. There was a redacted portion of the reasons of 22 October 2008 but there was no intimation of what had been redacted. In any event, the Applicants did not complain that prejudicial but relevant material had been taken into account thereby: cf. Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 at 95 [15] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ. 84 Where confidential but prejudicial information is taken into account by a decision-maker, the Court may fashion its own procedures to determine whether the nature of the information is such as to reduce the obligation of procedural fairness to nothing: Nicopoulos v Commissioner for Corrective Services [2004] NSWSC 562 ; (2004) 148 A Crim R 74 at [100] - [104] per Smart AJ; Hussain v Minister for Foreign Affairs [2008] FCAFC 128 ; (2008) 169 FCR 241 at 275-276 [143] - [144] per Weinberg, Bennett and Edmonds JJ. However, the difficult issues which may arise in that context were not ventilated in the present proceedings. 85 It follows that had the direction been within power that there would have been a breach of the requirements of procedural fairness. Although I have determined that the inspectors are the proper parties to the litigation, ASIC indicated throughout that it did not wish its inspectors to be exposed personally. In those circumstances, although the application has failed insofar as it was against ASIC because ASIC did not give the direction, the appropriate order is that ASIC meet the costs of the Applicants of the proceeding. I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. | australian securities and investments commission examinations power to exclude examinee's lawyer from examinations power exercisable by inspectors rather than commission power only enlivened where inspectors believe in good faith and on reasonable grounds that exclusion is necessary exercise of power attracts obligation of procedural fairness corporations |
It raises a limited but difficult issue concerning the interpretation of s 9-15 of the GST Act, the full title of which is A New Tax System (Goods and Services Tax) Act 1999 (Cth). The matter is a test case and is receiving test-case funding. The applicant seeks declarations concerning its liability to pay goods and services tax in respect of transactions described below. The applicant company is incorporated under the Corporations (Tasmania) Act 1990 (Tas) and is wholly owned by the State of Tasmania. It operates a passenger, vehicle and freight ferry service between Tasmania and the Australian mainland trading under the name "Spirit of Tasmania". In September 1996 the Commonwealth Government established the Bass Strait Passenger Vehicle Equalisation Scheme (the Scheme) for the purpose of reducing "the cost of seagoing travel for eligible passenger vehicles". The Scheme is funded under the Appropriation Act (No 1) 2007-2008 (Cth). It is listed as an "Administered programme" of the Department of Transport and Regional Services in the Portfolio Budget Statements for 2007-2008. The Scheme operates under a Ministerial Direction approved on 1 September 2002. The written directions given by the Minister state that it applies where a rebate has been granted to an eligible passenger "who is booked to travel on a Bass Strait passenger service or Bass Strait vehicle service"; clause 4.1. The rebate may be allowed by the Service Operator who may then claim reimbursement. Alternately an eligible passenger may claim reimbursement directly. In practice, and relevantly for the present case, the Scheme operates by the Commonwealth reimbursing the applicant. On 17 April 2008 Mr J Egan of 9 Hampstead Drive, Hoppers Crossing, Victoria used the applicant's internet site, www.spiritoftasmania.com.au to book a return crossing of Bass Strait on the vessel named the Spirit of Tasmania. The booking was for two adults and included the transport of a Mitsubishi Magna motor vehicle. Departure was from Melbourne for Devonport on 6 May 2008, returning from Devonport to Melbourne on 17 May 2008. The total price of $574 included GST. The parties agree that Mr Egan was an "eligible passenger" and the applicant is a "Service Operator" as defined under the Scheme. When making the booking Mr Egan confirmed that he had read and accepted the Fee Conditions and the Terms and Conditions of carriage by checking the relevant box on the internet booking form. These conditions made no mention of the Scheme however the standard car fares page of the site stated that the listed prices included the deduction of the Bass Strait Passenger Vehicle Equalisation Scheme rebate of $168 each way for a standard car. A reservation confirmation sent on completion of the booking confirmed the details of the reservation and the total price of $574 (including GST). The document also refers to the rebate of $336 payable under the Scheme. The total amount of the claim for that period was $1,958,729.00, which included $336.00 in respect of Mr Egan's transport. On 4 June 2008 the Applicant received the amount of $1,958,729.00 by bank deposit from Centrelink by way of reimbursement under the Scheme for the period from 28 April 2008 to 25 May 2008. This included $336.00 in respect of Mr Egan's transport. Ultimately the issue between the parties is whether the applicant must pay GST only in respect of the amount it actually receives from its customers or in respect of the sum of that amount and the amount of the rebate paid by the Commonwealth under the Scheme. This depends on whether the amount received by the applicant from the Commonwealth under the Scheme is consideration within the meaning of s 9-15 of the GST Act and, if it would otherwise be consideration, whether it falls within the exemption in s 9-15(3)(c). If the payment made under the Scheme is not consideration the applicant's supply of services will not be a taxable supply within the meaning of the GST Act; s 9-5(a). Consequently the supply would not attract GST under s 9-40 of the GST Act. The parties seek to resolve these broader issues in the context of the specific service provided to Mr Egan described in [5] above. I will deal with the issues in the same order as they were dealt with at the trial, namely by addressing first the s 9-15(3)(c) question and then considering the question of consideration under s 9-15. The definition is very wide and goes beyond the meaning of consideration at common law. The respondent contends that s 9-15(3)(c) is not satisfied as the relevant payment was not "specifically" covered by an appropriation under Australian law. The Commissioner submits that s 9-15(3)(c) is to be interpreted consistently with ss 81 and 83 of the Commonwealth Constitution when it is being applied in the context of a payment by a Commonwealth entity to another government related entity. As this interpretation raises questions as to the interpretation of the Commonwealth Constitution the respondent issued notices under s 78B of the Judiciary Act 1903 (Cth). Neither the Commonwealth nor any of the States sought to intervene in this proceeding. Section 81 provides for "one Consolidated Revenue Fund" from which withdrawals may be made only under appropriation authorised by Parliament. While it is beyond doubt that s 9- 15 should be interpreted consistently with the Constitution and in particular with ss 81 and 83 , the point adds little to the analysis. If the exception to the definition of consideration in s 9 - 15 (c) is to apply, the first requirement is that the payment in issue must have been made by one "government related entity" to another government related entity. It was incorporated under the Corporations (Tasmania) Act 1990 (Tas) and is wholly owned by the State of Tasmania. It was set up by the State of Tasmania to manage and facilitate the operation of a shipping service to and from Tasmania. Similarly the Department of Transport and Regional Services is clearly a Department of State of the Commonwealth and therefore is also a government related entity. It only remains to consider whether the payment of the rebate is "specifically covered by an appropriation under an Australian law". The parties accept that the Scheme is funded under the Appropriation Act (No 1) 2007-2008 (Cth) ( Appropriation Act ). The issue then is whether it is "specifically" covered by this appropriation. In addressing this aspect of question 1 it is necessary to determine which of the range of meanings attributed to the word "specifically" applies in this case. In making that determination the word, specifically, must be given some work to do. In other words, for a payment to be specifically covered by an appropriation something more is needed than would be the case for a payment merely to be covered by an appropriation. Considering the context of "specifically" in s 9-15(3)(c) and the need for it to add something to the meaning of the requirement of the subsection, I am of the opinion that it means "expressly" or "explicitly". The payment to the government related entity must be expressly or explicitly covered by the appropriation. Schedule 1 of the Appropriation Act appropriates the sum of $846,521,000 to "Transport and Regional Services". The Schedule identifies two outcomes for the Department of Transport and Regional Services, Outcome 1 of which is "Fostering an efficient, sustainable, competitive, safe and secure transport system". In the Portfolio Budget Statements for 2007-08, the appropriation for transport and regional services in respect of Outcome 1 allocates funds between administered and departmental expenditures. The "Bass Strait Passenger Vehicle Equalisation Scheme" is listed among the administered programmes for Outcome 1 in the Portfolio Budget Statements for 2007-08. This is a defined term, meaning the Portfolio Budget Statements that were tabled in the Senate or the House of Representatives in relation to the Bill for the Appropriation Act... Those statements, prepared by Ministers for the budget estimates process, contained information on proposed agency activities in support of spending proposed by the Appropriation Bill. Such statements explain and seek to justify the appropriations proposed. They are scrutinised as part of the budget process. They reflect government policy as it affects budgetary planning. ... In Sch1 to the Appropriation Act, for each agency of each portfolio there is a statement of an outcome, or a number of outcomes. Reference has already been made to the generality, and political content, of some of these objectives. Furthermore, in most cases, neither departmental outputs (goods and services provided) nor administered expenses could possibly be the sole sources of influence contributing to or bearing upon the stated outcome. Their Honours commented that appropriation acts treated departmental and administered items differently and that funds for departmental items "need not be applied to activities in respect of a designated outcome" but may be expended only on "departmental expenditure". By implication they accepted that funds allocated to administered items must be applied to activities in respect of a designated outcome. They are essentially the cost of running agencies, for example, salaries and other day-to-day operating expenses. The bulk of appropriations in the Bill are for departmental expenses. Administered expenses are those that agencies administer on the Government's behalf. While most administered expenses are funded through special appropriations, some are funded through the Bill. The "regional partnerships" program and the Bass Strait Passenger Vehicle Equalisation Scheme are examples of administered expenses funded through the Bill. They call in aid the decision of the majority in Combet , where it was held that expenditure on a program of advertising instituted by the government to provide information about, and to promote its proposed "workplace relations reform package" was lawfully authorised under the Appropriation Act (No 1) 2005-2006 (Cth). In my view the decision in Combet does not assist the applicant. That case was concerned with whether the particular expenditure was lawful. That is not an issue here. There has been no challenge to the legality of the expenditure under the Scheme; there is no question that the expenditure is covered by a valid appropriation. The references to the Scheme mentioned above are undoubtedly sufficient to establish that the expenditure under the Scheme is lawful. The issue is whether payments under the scheme are specifically covered. While it may be that the Scheme is specifically covered by the Appropriation Act these references are not sufficient to establish that payments under the Scheme are specifically covered. Under the Scheme, payments may be made to any Service Operator which transports eligible passengers on the Bass Strait crossings or to the individual passengers. The Scheme operates generally, not specifically. It does not require that the recipient of the payments be a government related entity. I note, however, that the subsection, in referring to the payment that must be specifically covered, uses the definite article. It is the payment that is made to the government related entity that must be specifically covered. It is not sufficient for the payment to be consistent with a specified purpose. As such, it allows for payment to the operator of a commercial shipping service carrying passengers or passenger vehicles between Tasmania and the mainland whether or not that "Service Operator" is a "government related entity". TT-Line falls within the Scheme not because it is a "government related entity" but because it operates a commercial shipping service. There was some evidence of two other small operators. Even if the evidence had established that the applicant had a monopoly it would not have advanced the matter. It is clear from the words of subsection (c) that it is not sufficient for payment merely to be made by one government related entity to another. In order for such payment to be specifically covered by an appropriation it would, at the very least, be necessary for payments to be limited to government related entities. That fact that the Scheme allows for payment to a non-government related entity indicates that the appropriation is limited to a purpose not to a payee or class of payees. This is sufficient to dispose of the issue under s 9-15(3)(c) even if, as a matter of fact, no payments were made to non-government related entities. The question should, however, be addressed directly. As previously mentioned the concept of consideration in the GST Act is broader than under the common law of contract; Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 ; (2005) 221 CLR 496 at 518. The statutory definition extends to "any payment, or any act or forbearance" that is "in connection with a supply of anything" or "in response to or for the inducement of a supply of anything"; s 9-15(1). The reimbursement of the deduction allowed to Mr Egan was a payment made under the Scheme the express purpose of which was to reduce the cost of such travel services. It was clearly a payment "in connection with" the supply of the travel services to Mr Egan and might also be described as having been made "in response to or for the inducement of" the supply of travel services to Mr Egan. That being so, the fact the consideration for the supply of services to Mr Egan flowed in part from the third party (the Commonwealth) and that Mr Egan was never under any obligation to pay the full (unrebated) amount is not to the point. Similarly, I do not think it is necessary to resort, as the Commissioner did in submissions, to the concept of a practical business relationship between the reimbursement paid to the applicant and the travel services supplied to Mr Egan, although I accept that there was such a relationship. It is sufficient to note that the circumstances of the payment made in the context of the Scheme fall squarely within the words of the Statute. In written submissions the applicant relied on the decision of the European Court of Justice in Tolsma v Inspecteur der Omzetbelasting Leeuwarden [1994] BVC 117 as "instructive". The case involved a busker who played his barrel organ in public with the purpose of soliciting money from passers-by. The Court held that, as any payments made by the passers-by were voluntary, there was no consideration within the meaning of Article 2(1) of the Sixth Directive. The decision is clearly inapplicable in the light of the express statement in s 9-15(2); see [10] above. The applicant also relied on the decision of the New Zealand Court of Appeal in Commissioner of Inland Revenue v New Zealand Refining Co Ltd (1997) 18 NZTC 13 ,187 in which the Court held that certain payments made by the Crown to the New Zealand Refining Co Ltd were not consideration for the supply of services by the taxpayer to its customers but were made to resolve a dispute between them. The definition of consideration in the New Zealand GST Act ( Goods and Services Tax Act 1985 (NZ)) was similar to the definition in s 9-15. It extended to payments, acts or forbearance "whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of any goods and services". The payments in question were made after the NZ government moved from a protective policy pursuant to which it gave the taxpayer assurances as to the level of profits it would receive in a series of support letters and moved to a policy of deregulation. The government negotiated an end to the support letters and in return agreed to certain payments including $85 million over three years conditional on the refinery remaining operational on each annual payment date. One of their associated purposes is to assist the refinery to continue its operations and avoid closure. In that sense the payments can also be said to be in respect of the continued operation of the refinery. That however does not of itself mean they are also in respect of the supply of services to customers. The payments are not for the individual services received by the oil companies, and bear no relationship to their extent, quality or even to their delivery in a form which would entitle NZRC to some form of emolument from its customers . In the sense that they are in part to assist the refinery's operations they form an unspecified contribution to its operating expenses, and are not part of the value of the supply of services to the oil companies. An injection of money into an existing business, whether to meet operational expenses, to repay debt, or to provide capital for expansion and in each case made for the purpose of maintaining financial viability is not in my view a payment in respect of the supply of the services which will ultimately result or flow from a continuation of the business operations. In our view the payments related to the structure or framework within which supplies of services were expected to be made. They were to compensate NZRC for the removal of the protections given by the Support Letters and its exposure to the hot winds of competition. ... The payments were received in the course of the taxable activity of NZRC but they were not in consideration for any supply made by it. Here there is a definite supply to the eligible passenger (Mr Egan). The applicant's right to reimbursement of the rebate allowed to Mr Egan was contingent upon the supply of travel services to him. If the applicant had failed to provide those services then pursuant to clause 13.2 of the Scheme, the reimbursement would have to be repaid. Two further decisions of the European Court of Justice to which the applicant referred can be similarly distinguished. They are Mohr v Finanzamt Bad Segeberg [1996] BVC 293 and Landboden-Agrardienste GmbH & Co KG v Finanzamt Calau [1998] BVC 70. Both these cases concerned responses to government incentives in relation to agricultural production which were held not to constitute the provision of a supply. The respondent submitted that to overcome this difficulty the applicant could simply charge GST on the full price of the fare including any rebate. The Commissioner also contends that its construction promotes the objects of the GST Act. They will be entitled to register, will pay GST or make voluntary or notional payments where necessary and will be entitled to claim input tax credits in the same way as non-Government organisations. All such payments will be included in GST revenue. It is supported by comments made in the Explanatory Memorandum to the Bill that introduced the exception in s 9-15(3)(c). In any event, the ordinary and natural meaning of the words of s 9-15(3)(c) are sufficiently clear as to make it unnecessary to pursue this issue further. It follows from the above that, as the exception in 9-15(3)(c) does not apply here, the applicant made a taxable supply to Mr Egan and is therefore liable to GST on the amount paid to it under the Scheme. For these reasons the application must be dismissed. As this is a test case and is receiving test case funding there will be no order as to costs. | a new tax system (goods and services tax) act 1999 s 9-15 whether rebate paid under the bass strait passenger vehicle equalisation scheme attracts gst meaning of "specifically covered" in s 9-15(3)(c) meaning of "consideration" in s 9-15 taxation |
In 1999 she purchased a pharmacy business known as Karingal Hub Pharmacy in the Karingal Hub Shopping Centre in Frankston, Victoria (the Pharmacy Business). She carried on the Pharmacy Business until sometime during the year ended 30 June 2003 (the 2003 Year). During the 2003 Year the applicant sold the Pharmacy Business to Flavia Andrieri. It was introduced to the Act by the New Business Tax System (Capital Gains Tax) Act 1999 (Cth). Subdivision 152-A is concerned with Basic conditions for relief under this Division . If the basic conditions are satisfied, then a small business entity may be able to reduce its capital gains using the small business concessions in this Division. One of them is the word "entity", which has the meaning given by s 960-100. By reference to these provisions, the applicant submits that where a CGT asset of a partnership is disposed of: The one exception to the legislation's focus on the partners' personal interests in assets of a partnership, ignoring the partnership as an entity, is said to be s 152-15(b), set out at [8]. The applicant contends that the control provisions in s 152-30 do not provide any specific mechanism for determining the existence of control in relation to a partnership. On the other hand, detailed rules are provided in relation to companies and trusts. Only s 152-30(2)(a) is not expressly directed to specific entities (companies and discretionary trusts). The applicant submits that par (a) does not provide a test for determining control of a partnership because a partner does not have a right to receive "any distribution of income or capital" made by the partnership. That, it is said, is because partners have direct ownership interests in the assets of a partnership and direct responsibility for its liabilities. Thus they own their proportionate shares of the net assets, including the income and capital. While a shareholder in a company and a beneficiary of a trust are entitled to distributions, partners are not. It is submitted that a 'distribution' involves an alienation from one person to another. It is said that the absence of any test for control of a partnership shows that Parliament did not intend partnerships to be included in the range of entities that can be connected with a taxpayer for the purposes of the maximum net asset value test. The applicant places reliance on the Explanatory Memorandum to the Bill that introduced Division 152 (the 1999 Memorandum). This, it is said, does not refer to a partnership in relation to an entity being connected with another entity. She points out that the headings in the Memorandum's explanation of what became s 152-30 --- Connected with --- control of a company or trust and Connected with --- control of a discretionary trust - indicate that the section as a whole is concerned only with those entities. The applicant's proportionate share of the interest in the assets of the partnerships of which she was a member is brought to account in the maximum net asset value test under s 152-15(a)(i) as part of the "net value of the CGT assets of yours". For the reasons summarised above, the applicant submits that a contrary intention for the purposes of the definition of "entity" is shown to exist, so that that word does not include a partnership in relation to the maximum net asset value test in s 152-15. He says that the capital gains scheme expressly treats partnerships as entities, albeit they are not treated as taxpayers. It is said that the Guide's treatment of partnerships as entities confirms that the definition in s 960-100 is to be applied to "entity" in s 152-15(a)(ii). The Commissioner contends that because the legislative scheme does not ignore partnerships as entities, it is wrong to characterise s 152-15(b) as an exception to the regime. He submits that the words "a CGT asset of the partnership" in par (b) confirms the treatment of partnerships as entities. He says it could not be suggested that a disposal of a CGT asset to a partnership would not give rise to a CGT event. Section 152-15(b) was repealed by the Tax Laws Amendment (2006 Measures No 7) Act 2007 (Cth). The respondent relies on the Explanatory Memorandum to the Bill that became the 2007 Act (2007 Memorandum), which states that the repeal was to address Recommendation 6.8 of a Report by the Board of Taxation on "Post-implementation review of the quality and effectiveness of the small businesses capital gains tax concessions" (October 2005). This Report is said to show that its authors treated a partnership as an entity connected with a taxpayer for the purposes of the small business concession provisions. The Commissioner contends that s 152-20 does not assist the applicant's case, because where an entity is connected with the taxpayer, the mechanism adopted to avoid double counting of interests in entities and assets held by them, is to require the net value of the assets of the entities to be taken into account, whereas shares, units and "other interests" in connected entities are disregarded: s 152-20(2). He says that by this means, a taxpayer's shareholding in a company or interest in a partnership holding business assets is not taken into account. Rather, it is the value of the assets employed in the business carried on by the connected entity that must be ascertained. The Commissioner takes issue with the applicant's submission that "distribution" is not an apt word to describe a partner's entitlement to income and capital. He necessarily accepts the applicant's starting point, namely that the partners own the income and capital of a partnership. However, he points to decided cases in which "distribution" is used to describe the disbursement of the income and capital of a partnership: Henderson v Commissioner of Taxation (1970) 119 CLR 612 at 621-622 per Windeyer J and St George Bank Ltd v Commissioner of Taxation (2009) 256 ALR 391 at 410. The Commissioner seeks to refute the applicant's contention that "distribute" contemplates an alienation from one person to another, by resort to the primary meaning of the word in the Oxford English Dictionary --- "the action of dividing and dealing out or bestowing in portions among a number of recipients; apportionment; allotment". Finally the Commissioner points out that the construction propounded by the applicant leads to different results depending on the particular kinds of entities used to conduct a business. Thus a taxpayer holding 40% of the shares in a corporation carrying on business with net assets of $12.5 million would not be entitled to relief, but a taxpayer with a 40% interest in a partnership holding identical business assets could be so entitled if the net value of the interest in partnership was less than $5 million. This would not accord similar treatment to taxpayers who are in objectively similar situations. Cf Ben-Odeco Ltd v Powlson (Inspector of Taxes) [1978] 1 WLR 1093 at 1098. Elsewhere in the Act where partnership entities are included, an appropriate test has been specified. An example is s 820-865 concerning control of a partnership for thin capitalisation purposes. The applicant contends that s 152-20(2)(a) does not avoid the double counting of assets in the maximum net asset value test. The section can only exclude "equity interests (or ownership styled interests) in a connected entity " from the test. It does not include assets owned by the connected entity . Nor does it include CGT assets of the taxpayer (for whom the test is being applied) that are not "equity or ownership styled interests in a connected entity". Assuming a partnership can be a connected entity, s 152-20(2)(a) could only exclude any residual equity styled interest in the partnership that is a separate and stand alone CGT asset of the partner (s 108-5(2)(d)) and is not otherwise a CGT asset of the partnership which is deemed to be a CGT asset of the partnership (s 108-5(2)(c)). The Board of Taxation Report was not tabled or considered at the time of the enactment of ss 152-15 and 152-30, and cannot throw light on Parliament's intention in enacting those provisions. It is sufficient to say that clauses 1.22, 1.23, 1.24 and 1.25 deal respectively with what became s 152-30(2)(c), (5), (4) and (6), which the 1999 Memorandum attributes to the comparable clauses of the Bill. All of these provisions relate to discretionary trusts, and are dealt with under the subheading Connected with --- control of a discretionary trust . Sub-sections (7) and (8) deal with indirect control of an entity. The only other provision of the 1999 Memorandum relevant for present purposes is clause 1.14, which deals with what became s 152-20(2)(b). What is important in clause 1.14 of the 1999 Memorandum is that the meaning of the words --- "the entity is an individual" --- is explained as "a small business entity that is not a company or trust". Thus, what is not clear from the provisions of the Act themselves, is made clear by the 1999 Memorandum, namely that the "other entities" with which s 152-30 is concerned are companies and trusts. Although an individual can be an entity (as in s 152-20(2)(b)), it cannot be "the other entity" in s 152-30(2)(b) because "the first entity" cannot beneficially own an individual or interests in an individual. Hence, once the Memorandum has by clause 1.14 disclosed that the only entities with which the provisions deal are individuals, companies and trusts, it has correctly headed the clauses of the Bill that became s 152-30(1), (2)(a) and (b) and (3) --- Connected with --- control of a company or trust . Resort to the 1999 Memorandum is of course authorised by s 15AB(2)(e) of the Acts Interpretation Act 1901 (Cth). The Commissioner submitted that while the heading to clause 1.19 made clear that what became s 152-30(1) was limited to companies and trusts, clause 1.20 was not so clearly confined. I do not agree. First clause 1.19 (and s 152-30(1)(a)) describes the way in which, in the balance of the provision, one entity controls another. Second, the heading applies not only to clause 1.19 but to clauses 1.20 and 1.21 as well. It is quite clear that the 1999 Memorandum treats all three clauses as dealing with companies and trusts alone. The Commissioner also sought support from Division 17A of the 1936 Act --- Roll-over relief for certain disposals of assets related to small businesses . This Division consisted of ss 160ZZPJA to s 160ZZPZ. Section 160ZZPK contained definitions applicable to "this Division, unless the contrary intention appears". The word "entity" meant any of an individual, a partnership, a company and a trust. Section 160ZZPL(2) is to the same general effect as s 152-20(2)(a). Subsections (2) and (4) of s 160ZZPN are to the same general effect as s 152-30(2) and (3). Under that law a partnership could be an entity connected with a taxpayer. The difficulty with this submission is that the two schemes, though both dealing with the same general topic, are in vital respects different. Rather than assisting the Commissioner, a comparison shows that whereas under Division 17A a partnership could be an entity connected with a taxpayer, that was not carried over into the legislation that is applicable to this case. Section 160ZZPP(4) in its original form plainly treated as an entity connected with the taxpayer a partnership that was connected with the taxpayer. I note in passing that "entity" was defined specifically for Division 17A so as to include a partnership as well as an individual, a company and a trust. That is unlike the Act, which defines the word for all its purposes. I conclude therefore that the provisions of Division 17A do not assist the Commissioner. The Commissioner also relied on the Board of Taxation Report. Paragraphs 6.83-6.85 of this Report, as the Commissioner pointed out, proceeded on the basis that because of the definition of "entity" in s 960-100(1), a partnership is an entity for the purposes of Division 152. The Commissioner conceded that because the Report was not in existence at the time when the provisions in question were enacted, and were only someone's opinion about their meaning some time afterwards, there were difficulties in extracting much from it. Counsel said that the Commissioner "only put it as ...giving your Honour some reassurance that what I put to you is consistent with the statutory regime because the Act was subsequently amended in 2007". The amendment referred to was the repeal of s 152-15(b) effected by the Tax Laws Amendment (2006 Measures No 7) Act 2007 , s 22. There are several reasons why the Report is of no assistance to the Commissioner. The principal one, which he acknowledged, was that it throws no light on what Parliament intended when the scheme in the form it took in 2003 was enacted. As I have said, the Board proceeded on the basis that a partnership could be an entity for s 152 purposes because the definition in s 960-100(1) included a partnership. That is the very question in issue here. It cannot be resolved by resort to the Board's opinion based as it was on the definition the applicability of which is said in this case to be excluded by a contrary intention. The Commissioner relied on the statement in the Guide to Division 106 that the Division sets out the cases where a capital gain or loss is made by "someone other than the entity to which a CGT event happens". This was said to show first, that the capital gain scheme expressly treats partnerships as entities, and second, that the definition in s 960-100 applies to "entity" in s 152-15(a)(ii). Division 106 is headed Entity making the gain or loss . Subdivision 106-A deals with a capital gain or loss from a CGT event happening in relation to a partnership. The partnership is thus the Guide's "entity to which a CGT event happens". The "[entities] making the gain or loss" are the partners individually. It is plain that s 106 treats a partnership as an entity. But that is because it is a body to which a CGT event has happened. Division 106 was introduced by the Tax Law Improvement Act (No 1) 1998 (Cth). The Explanatory Memorandum to the Bill which became that Act explains that the Division contains special rules "for identifying the entity that makes a capital gain or loss in circumstances where more than one entity is involved in a CGT event". It goes on to say that in some cases, although an entity is involved in the CGT event, it is another entity which accounts for the capital gain or loss. After identifying the six cases with which the Division deals, it says that in relation to partnerships, "it is the partners who make a capital gain or loss from a CGT event and not the partnerships". Section 106 is in the same position as s 152-15(b), which applies the maximum net asset value test to a partnership where a CGT event happens in relation to a CGT asset of the partnership. The "control" provisions in s 152-30 are in a different position, and the extrinsic material shows that for "control" purposes a partnership is not treated as an "entity". In other words "entity" does not mean the same thing whenever it is encountered. In the same way that a body politic (one of the entities in s 960-100) would not be an entity for the purposes of s 152-30, it may be for some other purpose. An individual (one of the entities in s 960-100) is not an entity for the purposes of s 152-30(2)(a), though he or she would be for the purposes of s 106-60, which deals with enforcing a security held over an asset. Accordingly, while I accept that the Guide to s 106 shows that the capital gains scheme does, when appropriate, treat partnerships as entities, I do not accept the generality of the submission that the scheme expressly treats partnerships as entities, in the sense that whenever the word "entity" appears it can be replaced by "partnership". In particular I do not accept that the fact that the Guide to s 106 identifies a partnership as an entity leads to the conclusion that a partnership is an entity for the purposes of s 152-15(a)(ii) and s 152-30. The Commissioner's related submission is that the words "a CGT asset of the partnership" in s 152-15(b) confirms the treatment of partnerships as entities. What I have said at [48]-[49] requires the rejection of this submission. In view of the conclusion I have reached on the basis of the 1999 Memorandum, I need not resolve the issue recorded at [25] and [26]. The legislative intention may, perhaps, be more easily seen ... where the statutory definition adds to or subtracts from what, apart from the definition, would be the meaning of the particular word in the statutory command: see, eg, R v Brewer [1942] HCA 33 ; (1942) 66 CLR 535 ; YZ Finance Co Pty Ltd v Cummings [1964] HCA 12 ; (1964) 109 CLR 395. Since s 152-30 defines when one entity is connected to another for the purposes of s 152-15(a)(ii), a partnership is not an "entity" for the purposes of par (a)(ii). It follows from the determination that a partnership is not an entity for the purpose of those provisions, that it was not the intention of the legislature that par (d) of the definition of "entity" in s 960-100 should apply to those provisions. Accordingly a contrary intention appears for the purposes of s 995. | capital gains small business entity concession limit on net value of assets of business and related entities whether partnership a related entity of "individual" small business taxpayer income tax |
The application filed by Access For All Alliance (Hervey Bay) Inc on 5 May 2005 be dismissed. 2. Access For All Alliance (Hervey Bay) Inc pay Hervey Bay City Council's costs of and incidental to the application, to be taxed if not otherwise agreed. Mr Green for the respondent neither consented to nor opposed this course. While it is usual that costs follow the event, in the circumstances of this case I indicated to the parties that I would entertain receiving written submissions from the applicant as to costs, and a written reply from the respondent, and gave orders to this effect. 6 The applicant filed written submissions on costs on 9 May 2007. The respondent's written submissions on costs in reply were filed on 17 May 2007. This is because an order for costs is not a punishment of the party against whom the order is made, but is intended to serve to indemnify a successful party against the expense to which it has been put by the litigation ( Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534; Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72; King v Yurisich (No 2) [2007] FCAFC 51 at [19] ). 8 As noted by McHugh J in Oshlack 193 CLR at 97, the traditional exceptions to the usual order as to costs focussed on the conduct of the successful party where its conduct disentitled it to the beneficial exercise of the judicial discretion. 10 The issue for consideration in this case is whether there is anything about these proceedings which would persuade me to exercise my discretion to depart from the usual course (cf Ruddock v Vadarlis [2001] FCA 1865 ; 115 FCR 229; Oshlack [1998] HCA 11 ; 193 CLR 72; Tate v Rafin [2000] FCA 1582). Such a departure requires, as a general proposition, a valid special reason ( Edgley v Federal Capital Press of Australia Pty Ltd [2001] FCA 379 ; (2001) 108 FCR 1 at 25 per Beaumont ACJ, Higgins and Gyles JJ agreeing). The reason why this is so is that each discretionary decision must turn on a consideration of the relevant circumstances of that case and the application of general principle. At a practical level, if one looks at another case and takes one or two factors said to be analogous and supporting a particular conclusion, there will almost inevitably be other factors distinguishable or pointing the other way. One can easily get lost in a 'wilderness of single instances. In the absence of an allegation of discrimination per se it was not possible for the Court to make a finding of unlawful conduct by the respondent. 2. The reference to equivalent access in the Disability Standards for Public Transport 2002 required that any allegation of a breach of the Standards be supported by evidence of discrimination. 3. The applicant required the Federal Attorney-General's consent to make a complaint of a breach of the Standards, which was the initiating process for the proceedings, or the Attorney-General should be the complainant. Instead, the success of the respondent was based on the acceptance by the Court of the submissions filed by the Acting Disability Discrimination Commissioner ("the Commissioner"). In this case, the application of the respondent for summary dismissal was wholly successful. It is also clear that the submissions of the Commissioner were very helpful, in particular with regard to the issue of whether the rights which the applicant was seeking to assert were private or public rights, and with respect to issues relevant to "aggrieved person" in the meaning of the DD Act upon which my decision eventually turned. 18 In this case, the applicant had clearly anticipated that its standing would be a key issue and had made extensive written submissions on this point. However while it is true that the written submissions of the respondent focussed on issues of public as distinct from private rights, rather than standing under the DD Act, it is also the case that issues of standing under the DD Act in the context of whether the applicant was an "aggrieved person" were addressed at some length at the hearing by Mr Fleming QC for the respondent in oral submissions (TS QUD76/2006 5 September 2006 pp 16-21). As the respondent submitted (correctly in my view), submissions often take a more refined form when they are argued orally and with the benefit of outlines provided by opposing parties. It is this very process of opposing arguments which forms the basis of our adversarial system that assists courts in identifying and deciding the proper issues before it, and this is precisely what happened in this case. While clearly some arguments put before the Court by the respondent in its application for summary dismissal were not accepted, nonetheless it is not unusual for a successful party to advance a number of alternative arguments to the Court and be ultimately successful on only some of them. I agree with the respondent that this result does not mean that the respondent was "successful only in part" in this case. The circumstances in Griffiths [2006] FCAFC 196 ; 157 FCR 112 bear no resemblance to the facts of the proceedings currently before me. In this case the respondent claimed that the applicant did not have standing to prosecute its claim, and this was my finding. In relation to the respondent's application for the applicant's claim to be summarily dismissed, there were no aspects on which, in the final analysis, the applicant was successful. The respondent was successful in achieving the order it sought. The applicant was not in this instance advocating for the rights of individuals who could not access the public transport system by reason of the alleged breaches. The decision of the High Court in Oshlack [1998] HCA 11 ; 193 CLR 72 and the decision of the Full Court of the Federal Court in Ruddock v Vadarlis [2001] FCA 1865 ; 115 FCR 229 are illustrations of this point. 26 In my view however this litigation could not be characterised as proceedings in the public interest as in Oshlack [1998] HCA 11 ; 193 CLR 72 and Ruddock v Vadarlis [2001] FCA 1865 ; 115 FCR 229 for the following reasons. 27 First, it is clear from a number of cases that the fact that the case is a human rights and/or discrimination case does not of itself automatically characterise the proceedings as being in the public interest with the result that the court should divert from usual orders as to costs ( Sluggett v HREOC [2002] FCA 1060 and Fetherson v Peninsula Health (No 2) [2004] FCA 594). Similar considerations apply where, for example, the proceedings are instituted by a litigant with a view to protection of the environment ( Australian Conservation Foundation Incorporated v The Commonwealth of Australia [1979] HCA 1 ; (1980) 146 CLR 493; Save the Ridge Inc v Commonwealth (2006) 230 ALR 411). 28 Second, while I accept the submission of the applicant that its application was brought to effect change in the area of disability discrimination and could not be characterised as being for personal or financial benefit, I also note that the applicant commenced discrimination proceedings in the name of an incorporated association, where, as is clear from my judgment in Access For All Alliance [2007] FCA 615 , particularly at [47] --- [63], the weight of the case law is against such an organisation having standing to do so. The applicant has caused the respondent to incur costs in seeking to have these proceedings dismissed. 29 Third, although the objective of the applicant was to test the application of the Disability Standards in this case, and indeed the respondent had indicated that, had the litigation progressed, the constitutional validity of the Disability Standards would have been challenged, the issue actually in dispute between the parties at the time the case was dismissed was limited to the standing of the applicant to prosecute its claim at all. While this was an issue of considerable interest, and of importance to the parties in this case, the standing of entities such as the applicant to bring litigation of this nature cannot in my view be considered to be an issue of public interest so as to cause the Court to depart from the usual orders as to costs. 30 Fourth, as the judgment demonstrated, my decision was reached on the facts of the case before me, in light of the interpretation of the relevant legislation and consideration of the abundance of case law relevant to standing of incorporated associations to commence proceedings of this nature. Again, in my view these issues did not raise novel issues of law of public importance. 31 Fifth, the fact that the applicant's claim was dismissed for want of standing distinguishes this case from cases such as Oshlack [1998] HCA 11 ; 193 CLR 72 and Ruddock v Vadarlis [2001] FCA 1865 ; 115 FCR 229, where the plaintiff did have standing and the merits of the case could be properly explored by the Court. Unlike in those cases, in the case before me issues of substance were not ultimately resolved. In this context I note comments of Aickin J in Australian Conservation Foundation 146 CLR at 512. 32 Finally, unlike Ruddock v Vadarlis [2001] FCA 1865 ; 115 FCR 229, the issues agitated by the applicant in this case did not raise matters concerning, for example, fundamental issues such as the liberty of individuals who were unable to take action on their own behalf to determine their rights. As was made clear by my judgment, the DD Act protects the rights of aggrieved persons and provides statutory authority for such persons to make complaints. A person with standing can commence an action pursuant to the DD Act as to the application and interpretation of the Disability Standards and the DD Act. While of importance, in my view the litigation in this case was not of itself of such "public interest" as to warrant a departure from usual rules as to costs. 33 Accordingly, I am not persuaded that the proceedings were of "public interest" to disentitle the successful respondent from an order for costs. Thus, the court may properly depart form the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute. The applicant relies on the affidavit of Ms Banks affirmed on 8 May 2007 which sets out the history of the matter, in particular pointing out that at no time did the Council challenge the applicant's standing to lodge a complaint under s 46PO HREOC Act, before the Commission or prior to 5 September 2006, and that the hearing on 5 September was intended to address all issues including constitutional questions but the respondent failed to comply with the requirements of s 78B Judiciary Act 1903 (Cth) with the result that constitutional questions could not be considered at that hearing. 36 The respondent submits that its solicitors had earlier written to the applicant advising that Queensland Transport was intending on conducting an audit with a view to funding upgrade of non-complaint bus stops, and invited the applicant to end the litigation so that the respondent could properly participate in the State Government funded process for upgrading bus stops. This proposal was rejected by the applicant. The respondent had indicated at the time to the applicant that this process would likely provide, in practical terms, an outcome equal or better than what might be achieved in the course of the litigation. 37 The respondent further submits that it did not challenge the applicant's standing to lodge a complaint during the HREOC process in the hope that the substantive issues between the parties could be resolved, however it was clearly raised at the hearing. Further, the respondent pursued all avenues open to it in relation to the liability alleged by the complainant, one of which involved an argument as to the constitutional basis for the relevant legislation. 38 It appears that the respondent did attempt to engage with the applicant prior to the commencement of litigation and it is possible that the litigation in this case could have been avoided. However, one would expect that the same could be said in relation to almost all litigation. In relation to the respondent raising the issue of standing, as indicated in my judgment Access For All Alliance [2007] FCA 615 at [38] I did not accept the applicant's submissions at that time that the only avenue open to the respondent in the circumstances would have been to bring an application under the ADJR Act to challenge the acceptance by HREOC of the complaint. The standing of the applicant was addressed at the hearing by both parties, although not in written submissions by the respondent. 39 There is no misconduct that I can identify with respect to the constitutional arguments put by the respondent or the failure of the respondent to comply with the Judiciary Act 1903 (Cth). Indeed, overall the conduct of the respondent in the proceedings has not been out of the ordinary, in my view is not misconduct as described by McHugh J in Oshlack [1998] HCA 11 ; 193 CLR 72, and does not warrant a departure from the usual order as to costs for a successful litigant. The order made 2 May 2007 that Access For All Alliance (Hervey Bay) Inc pay Hervey Bay City Council's costs of and incidental to the application, to be taxed if not otherwise agreed, is confirmed. | whether proceedings of such a nature as to persuade the court to exercise discretion to depart from the ordinary rule as to costs substantive proceedings concerned the issue of locus standi of incorporated association to bring an action pursuant to the disability discrimination act 1992 (cth) whether success in part whether proceedings in the public interest conduct of the parties costs |
A principal member of the Veterans' Review Board ('the Board') dismissed Mr Goulding's review application after Mr Goulding was supposedly given a written notice under that section. Mr Goulding appealed that decision to the Administrative Appeals Tribunal ('the Tribunal') which concluded that the notice had not been effectively served and set aside the principal member's decision. The Repatriation Commission ('the Commission') has appealed the Tribunal's decision to this Court on three questions of law it says arise from that decision. For various periods during those 10 years he was on operational duties. On 27 February 2004, he lodged a claim for a disability pension under the Veterans' Act with the Commonwealth Department of Veterans' Affairs. That claim was partly granted and partly refused by a delegate of the Commission. Mr Goulding applied to the Board for a review of that decision on 23 May 2005. Initially he was unrepresented, but he subsequently appointed an RSL advocate to represent him. For various reasons, Mr Goulding's review application proceeded at a slow pace. By late May 2007 two years had elapsed since it was first lodged. 3 Section 155AA of the Veterans' Act sets a standard review period of two years for such review applications. If, at the end of that period, a principal member of the Board considers the applicant should be ready to proceed at a hearing, he or she may give a written notice to the applicant under s 155AA(4) of the Veterans' Act requesting him to provide a written statement; either saying he was ready to proceed to a hearing, or explaining why he was not. 4 Acting under this provision, in late May 2007, a principal member of the Board sent a s 155AA notice to Mr Goulding at his brother's address in Darwin. At that time Mr Goulding was away from Darwin, visiting East Timor. His usual place of residence was Coral House, a home for ex-servicemen in Darwin, and he was using his brother's address as a mailing address while he was away. 5 When the s 155AA notice arrived at Mr Goulding's brother's address, his brother contacted Mr Goulding by telephone and read the contents of the notice to him. Mr Goulding did not actually sight the notice or read the contents for himself until he returned to Darwin in late July 2007. After the telephone conversation with his brother, Mr Goulding contacted his RSL advocate, who in turn contacted the Board. From this contact, the advocate was given to understand that they, i.e. Mr Goulding and the advocate, could deal with the notice when Mr Goulding returned to Darwin. The advocate passed this information onto Mr Goulding and, as a consequence, he did not provide a statement in response to the s 155AA notice. 6 Section 155AA(5) of the Veterans' Act provides that if the applicant does not provide a written statement in response to the s 155AA notice within 28 days, the principal member must dismiss the review application and notify the applicant accordingly. Since the principal member concerned had not received a written statement from Mr Goulding by early July 2007, he proceeded to dismiss Mr Goulding's review application under that provision. That appeal was heard in December 2007 and the Tribunal delivered its decision on 2 April 2008. 8 In its decision the Tribunal set out the factual background to the dispute along the lines set out above. It then turned to consider the legal issues. It follows the Principal Member should not have dismissed the application to the [Board]. The decision under review is therefore set aside. The Tribunal decides in substitution that the application has not been dismissed. Order 53 r 3(2)(b) of the Federal Court Rules requires the notice of appeal to state "the question of law to be raised on the appeal". 11 These provisions have been considered in a number of decisions of this Court, many of which were conveniently summarised by Marshall J in Hartnett v Migration Agents Registration Authority [2004] FCA 50 at [50] . 12 In addition to this summary, the following principles, stated in various other decisions, are relevant to this decision: the jurisdiction of this Court is dependent upon a question of law being identified: Brown v Repatriation Commission [2006] FCA 914 at [7] ; these requirements (above) are applied strictly: Lambe v Director-General of Social Services (1981) 4 ALD 362 at 264 and Bishop v Department of Education, Employment and Workplace Relations [2008] FCA 1118 at [5] ; on an appeal of this kind, this Court should proceed with restraint and not inflate questions of fact into questions of law: Blackwood Hodge (Aust) Pty Ltd v Collector of Customs (NSW) [No 2] [1980] FCA 96 ; (1980) 3 ALD 38 at 50, Federal Commissioner of Taxation v Swift (1989) 18 ALD 679 at 693 and Politis v Federal Commissioner of Taxation (1988) 16 ALD 707 at 708; and the reasons of the Tribunal should not be read over zealously, or with a keen eye for error: Minister for Immigration and Ethnic Affairs v Wu Shan Laing [1996] HCA 6 ; (1996) 185 CLR 259 at 272 and 291. (b) Whether it was open to the Tribunal to conclude, on the facts that it found, that a written notice had not been given to [Mr Goulding]. (c) Whether the Tribunal erred in law by failing to consider a submission worthy of serious consideration and seriously advanced to it, namely, that [Mr Goulding] had been given a written notice under s 155AA(4) of the [Veterans' Act] because the notice had been sent to, and received at, an address nominated by him, the notice had been read to him on the telephone by his brother, and he was aware of the contents of the notice. The Tribunal in the present case mistakenly concluded that the notice must be mailed to a veteran's residential address. Section 28A(1) is facultative, not mandatory. It sets out a number of ways in which a document "may" --- not "must" --- "be served. It was not open to the Tribunal member, as a matter of law, to read down the terms of section 155A(4) by introducing into it a requirement that does not appear in the section. " The content of the notice had unquestionably been brought to Mr Goulding's attention. As the Tribunal correctly observed in its decision, s 155AA does not itself specify how the principal member is to give the written notice to the applicant. Furthermore, it was common ground between counsel before me that the Veterans' Act does not contain a provision that specifies how the principal member is to give a written notice under s 155AA(4), as, for example, the Migration Act 1958 does in s 441A. In that event, it seems to me, that a principal member has to rely upon an appropriate provision in some other statute e.g. s 28A of the Acts Interpretation Act : see Repatriation Commission v Gordon (' Gordon ') (1991) 100 ALR 255. 17 At this juncture, I should note that it also ultimately emerged as common ground between counsel before me that: s 28A of the Acts Interpretation Act did not apply on the facts in this case because the s 155AA notice was not sent to Mr Goulding's place of residence last known to the Board and that s 29 of the Acts Interpretation Act did not apply in this case because the Veterans' Act did not authorise the notice to be served by post. I would add that even if the latter concession is not correct because s 28A provides the necessary authorisation (see Deputy Commissioner of Taxation v Meredith (' Meredith' ) (2007) 69 ATR 876 at [64] per Basten JA), the end result will be the same because of the former concession that s 28A did not apply on the facts. I do not agree that the Tribunal characterised s 28A of the Acts Interpretation Act as a mandatory provision, or treated it as a provision that prescribed the manner in which a s 155AA notice must be given. From my reading of the Tribunal's decision, I consider it did the following. First, as noted above, it correctly observed that s 155AA of the Veterans' Act did not specify how a s 155AA notice was to be given. Secondly, it considered the two provisions of other statutes that had been specifically put forward by the parties: s 163 of the Evidence Act (by the Commission) and s 28A of the Acts Interpretation Act (by Mr Goulding), to establish whether the necessary written notice was given under s 155AA(4). Thirdly, it correctly decided that s 163 did not apply in the circumstances because it dealt more generally with correspondence from Commonwealth agencies and, more significantly, provided for a presumption as to when that correspondence had been sent, not when it was received: see further [29] below. Finally, it correctly decided that, in contrast, s 28A of the Acts Interpretation Act applied to the service of documents, which included giving a notice and it was therefore the apposite provision of the two provisions put forward, for giving a written notice under s 155AA(4) of the Veterans' Act. 19 Conversely, from my reading of the Tribunal's decision, I do not consider it expressed, or even implied, the conclusion that s 28A of the Acts Interpretation Act was a mandatory provision, or that a s 155AA notice must be given in accordance with that section. Instead, I consider that the Tribunal quite correctly construed the two --- and only two --- statutory provisions put forward by the parties to establish whether the necessary written notice was given under s 155AA(4) and decided that, so construed, one addressed the situation at hand, and the other did not. 20 In this respect it is important to bear in mind that s 44(1) of the AAT Act makes it clear that the question of law that is raised on appeal before this Court must be "from [the] decision of the Tribunal". That means, in my view, that an appellant may not misconstrue the effect of the Tribunal's decision, extract a question of law from that misconstruction and put that question of law before this Court on appeal. I consider this is all the more so given the importance of identifying a proper question of law to found this court's jurisdiction and the strict approach taken to that requirement in the decisions I have referred to above: see at [11] and [12]. For these reasons I do not consider that the question of law stated in paragraph 2(a) of the Commission's notice of appeal states a proper question of law within the terms of s 44(1) of the AAT Act. In this question of law, the Commission is essentially saying that, given its findings of fact, viz that the notice was posted to Mr Gordon at his brother's address and the contents of the notice were read out to Mr Goulding by his brother, the Tribunal could not find the s 155AA notice had not been "effectively served". The problem for the Commission with this question of law, in the form stated, is that is not what the Tribunal actually concluded. 22 The words "effectively served" appear in the last paragraph of the Tribunal's decision: see [9] above. When those words are read in the context of that paragraph as a whole, particularly the words earlier in the sentence in which they appear, I consider that the Tribunal has clearly limited that conclusion to service under s 28A of the Acts Interpretation Act . In other words, the Tribunal concluded that Mr Goulding had not been effectively served under s 28A because: "The notice [was] sent by the [Board] to [him] at his brother's address ...". 23 I do not consider the Tribunal was there stating that conclusion for all purposes. And, the reason why the Tribunal was not stating that conclusion for all purposes is obvious: it was not asked to. As I have pointed out above (see [18]), the Tribunal was presented with two, and only two, statutory provisions relating to service of the s 155AA notice --- one by each party. It decided that one of those provisions addressed the situation at hand i.e. s 28A of the Acts Interpretation Act ; and the other did not i.e. s 163 of the Evidence Act . It then proceeded to apply s 28A to the facts and concluded that the notice had not been "effectively served" under that section. As I have noted above, it is now common ground that the Tribunal was correct in reaching that conclusion about the application of s 28A. 24 For these reasons, I consider that the second question of law, stated in paragraph 2(b) of the Commission's notice of appeal, as with the first question of law, misconstrues what the Tribunal actually decided and it has, therefore, not identified a question of law that actually arises from the Tribunal's decision. Put another way, I do not consider it states a proper question of law within the terms of s 44(1) of the AAT Act. it does not rely upon the Tribunal's decision at all, but rather relies upon a submission that the Commission says the Tribunal did not decide, and should have. The Commission says that submission was to the effect that: the s 155AA notice was given to Mr Goulding because it was sent to, and received at, an address nominated by him, the notice was read to him on the telephone by his brother, and he was aware of the contents of the notice. 26 While it is not mentioned in this third question of law, the Commission's view of the construction of s 163 of the Evidence Act is fundamental to this submission. Service of the s 155AA(4) notice upon the applicant is deemed to have been effective on the fifth business day after 24 May 2007, the date on which the notice was prepared --- s 163(1) Evidence Act 1995 . The date of the notice was Thursday 24 May 2007, and the fifth business day after that date was 31 May 2007. 28 In my view this construction of s 163 of the Evidence Act is wrong. Instead I consider the Tribunal was quite correct in concluding, as it did (see [8(b)(i)] above), that s 163 of the Evidence Act provides for a presumption as to when Commonwealth correspondence has been sent , and it does not provide for a presumption as to when that correspondence is received. I consider this comes from both the plain meaning of the words used in the section and the purpose of the section. I should add that in reaching this conclusion, I am forced to reach a different conclusion from that reached by Rares J in SZGMB v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 437 , a decision that was relied upon by the Commission before me. In that case, his Honour concluded that: "the effect of s 163 is that the letter is presumed to have been received on the fifth business day after the date it bears. " at [26]. I would also add that Giles J. came to the same conclusion as I have above about s 163 , in Meredith at [21]. 29 The purpose of s 163 is not contained in the Australian Law Reform Commission, Evidence , Final Report No 38 (1987), or the explanatory memorandum for the Evidence Bill, 1993, or the second reading speech for the Evidence Bill, 1993. However, an explanation of its purpose is contained in a publication produced by the Commonwealth Attorney-General's Department: Bellamy G and Meibusch P. 'Commonwealth Evidence Law' Aus Info (2 nd ed 1998). [163.3] The presumption in s. 163 is directed to proving dispatch to a particular person of a computer produced notice or item of correspondence that has been sent by post to the person as part of a bulk computer mailout by a Commonwealth agency. In some mailouts, a very large number of items of correspondence (hundreds of thousands) can be involved. [163.4] Some of the large Commonwealth service delivery departments use commercial mailing houses to dispatch bulk mail. The presumption of postage on the fifth business day makes allowance for the time a mailing house may need to dispatch bulk mail. However, the section applies to all letters from Commonwealth agencies. [163.5] A party who wishes to probe that a letter etc. was posted on a day other than the fifth business day after it was prepared need do no more than it would do apart from this section, namely lead evidence of the time and date the letter was posted. This commentary explains why such a presumption was created in relation to the sending of letters from a Commonwealth agency and how this presumption differs from the presumption created by s 160. 30 Having mentioned s 160 of the Evidence Act , I should deal with an alternate submission the Commission's counsel put in the dying stages of the hearing before me. It was that if s 163 of the Evidence Act did not apply to prove service of the s 155AA notice, then s 160 did. In my view the short answer to this submission is that all s 160 does is to create a presumption as to the time of receipt of the s 155AA notice at Mr Goulding's brother's address: I do not consider it creates a presumption as to the giving or serving of the notice on Mr Goulding: see the discussion in Deputy Commissioner of Taxation v Trio Site Services Pty Ltd [2007] FCA 776 at [26] --- [30] per Lindgren J and Meredith at [60] --- [65] per Basten JA and at [20] --- [24] per Giles J dissenting. To make the link between the presumed receipt of the notice and the process of giving or serving of the notice under s 155AA, I consider the Commission needs to show that the Board has either complied with ss 29 and 28A of the Acts Interpretation Act , or some other similar provision that creates a presumption that service is effected if certain steps are taken. It has done neither. I do not therefore accept that s 160 of the Evidence Act applied to prove service of the s 155AA notice. 31 I might add that I consider there are at least two further problems with the Commission's late reliance on s 160 of the Evidence Act . First, it has not been identified as a question of law in any of the three questions of law which found the jurisdiction of this Court. Secondly, I consider the question whether the Board complied with s 160 , is either a question of fact, or a mixed question of fact and law, neither of which can be relied upon as a question of law: see the decisions summarised at [11] and [12] above. 32 It follows that, having correctly concluded that the Commission's construction of s 163 of the Evidence Act , which was fundamental to this submission, was wrong, I do not consider the Tribunal was obligated to give this submission any further consideration, and it committed no error of law in failing to do so. Furthermore, I do not consider the Tribunal committed any error of law in failing to consider the submission stated in the Commission's third question of law. This appeal must therefore be dismissed. I will hear the parties on the question of costs. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. | appeal from administrative appeals tribunal whether either s 160 or s 163 of the evidence act 1995 creates a presumption of receipt of notice misapprehension as to correct law what constitutes "effective service" under s 28a of the acts interpretation act 1901 what constitutes the giving of written notice in accordance with s 155aa of the veterans' entitlements act 1986 (cth) administrative law |
4 The fifth defendant Stephen McDougall was the moving force behind the FUELbanc scheme. His sons Messrs Timothy McDougall and Matthew McDougall, the sixth and seventh defendants, were also involved but to a lesser extent. 5 The orders sought by ASIC are not opposed. 7 Under the FullTank scheme participants would pay a flat "Membership Fee" and a "Plan Fee". They were issued with a debit card which could be used to purchase fuel and other goods at service stations through the EFTPOS system. The debit card would be loaded each week with a nominated amount for purchases. The promise held out was that over a given period participants could receive an effective discount of 50 per cent. For example, for a Plan Fee of $250 the participant was promised $25 worth of fuel per week for 20 weeks. 8 The FUELbanc scheme also involves debit cards issued for the purchase of fuel. Its distinguishing feature, however, is the use of a barter system known as "E Banc" in which goods and services are exchanged for barter units known as "trade dollars" as well as ordinary Australian currency. E Banc is operated by E Banc Trade Pty Ltd. That company is not connected with the defendants and is not involved in the present proceeding. E Banc maintains a central register where its members' barter units and balances and unit transfers are recorded. 9 Under the FUELbanc scheme, participants stipulate a "weekly fuel requirement" in dollars and pay the total amount, either 26 times or 52 times the weekly amount, half in cash and half in E Banc "trade dollars", in addition to a "joining" or "setup" fee of $99. It is stated that the participant must become a member of FUELbanc. 10 In return, FUELbanc promises to pay each Sunday the weekly amount into a debit card for use by the participant at service stations. 13 In fact, as ASIC's investigations have revealed, what has happened with participants' money is very different. 14 Stephen McDougall's idea was that the cash contribution (or at least some of it) would be invested with Paycards Investments outside Australia to produce the return necessary to fund the crediting of participants' debit cards. This would require a return of more than 100 per cent. Over 58 per cent of funds disbursed ($257,000) are part of 317 transactions of less than $6000 each to unidentified accounts. Of this $80,000, approximately $63,000 has been transferred offshore for investment in gold coin bullion. 16 Some "trade dollars" have been used to pay part of the purchase price of real estate brought by Stephen McDougall. He claims that this purchase was for Paycards Investments but the transaction appears to play no part in funding debit cards. 17 In substance the credits available to participants on their debit cards were funded from participants' contributions. 18 Scheme funds have been used for the McDougalls' own purposes such as the leasing of motor vehicles for themselves and friends. 20 The McDougalls could not tell ASIC where most of the FUELbanc money had gone, except that Stephen McDougall said it was invested offshore in unspecified high yield programs on the internet. He estimated that there was approximately just under $1 million invested generating returns of 5 to 20 per cent per month. He said that information as to theses investments had been kept from other directors as it was his responsibility to protect what he described as his "intellectual property". 21 In Mr Price's opinion, the FUELbanc scheme may be a Ponzi scheme. Taking its name from the famous American fraudster Carlo Ponzi (1882-1949) and his postal coupon scam of 1920, a Ponzi scheme is one where deposits of new participants are relied on to make payments to existing participants. 22 According to Stephen McDougall, the scheme needed to generate returns of 3 per cent per week or 160 per cent per annum to be able to meet its weekly commitments to members. In fact, ASIC says, the required return for FUELbanc to be able to meet its weekly commitments to participants without relying on the contributions of new participants is between 375 per cent per annum and 1980 per cent per annum. 23 Stephen McDougall has not candidly revealed in a way that can be confidently corroborated what he has done with scheme funds and ASIC has not been able to locate them. 27 Section 601ED(5) provides that a person must not "operate in this jurisdiction" a managed investment scheme that is required to be registered under s 601EB unless the scheme is so registered. 28 Section 601EE(1)(a) provides that if a person operates a managed investment scheme in contravention of s 601ED(5) , ASIC may apply to the Court to have the scheme wound up. Participants contribute money and money's worth as consideration to acquire rights to benefits produced by the scheme namely the FUELbanc debit card and the rights and benefits which come with it. Those contributions are pooled or used in a common enterprise to produce financial benefits for the members who hold interests in the scheme. The participants do not have day-to-day control over the operation of the scheme. 30 The scheme required registration under s 601ED(1)(a) because it had more than 20 members. The scheme has not been registered. 31 The defendants have been operating the scheme in contravention of s 601ED(5). The corporate defendants were integral to the planned cycle of solicitation, investment and distribution of scheme funds. Stephen McDougall was also the directing and guiding mind of the corporate defendants and the scheme as a whole. 32 The "body corporate" exception (see [25] above) does not apply. The purpose of this exception is to ensure that the ordinary engagement of a company in commercial activities does not come within the managed investment scheme regime. The contract created by a company's constitution (see now Corporations Act s 140(1)) only affords rights or imposes obligations on a member in his or her capacity as a member: Hickman v Kent or Romney Marsh Sheep Breeders' Association [1915] 1 Ch 881 at 897. The essence of the FUELbanc scheme is that a participant provides "trade dollars" and cash in return for a promise to provide credit for the purchase of fuel over a future period. The legal foundation for this arrangement is not membership of the company but the contractual relationship between the company and the participant. Relevantly for present purposes, the participant becomes a member of the scheme whether or not he or she becomes a member of the company. (In any event, ASIC has been unable to discover any membership registers, minutes or other records which might prove that participants in fact became members. The participant intends that FUELbanc will use the contribution to generate a financial return or other benefit for him or her and FUELbanc intends that the contribution will be used to generate a financial return or other benefit for the participants. In all these respects the contribution is caught even if no return or benefit is in fact generated. 35 The FUELbanc scheme is a "financial product" because it is a facility through which participants make a financial investment: s 763A(1)(a). 36 FUELbanc is the "issuer" of that product because it is the person responsible for the obligations owed to the "client" (the participant) under the terms of the facility that is the financial product: s 761E(4)(a). 37 Because FUELbanc is issuing a financial product it is "dealing" in that product: s 766C(1)(b). 38 Because FUELbanc is dealing in a financial product it is "provid(ing) a financial service": s 766A(1)(b). 39 FUELbanc is therefore carrying on a "financial services business" within the meaning of s 761A and must hold an Australian financial services licence to do so: s 911A(1). 40 No defendant holds an Australian financial services licence. Against the latter two defendants the order sought is that the proceeding be dismissed with no order as to costs. 42 In respect of the FUELbanc unregistered managed investment scheme, was Stephen McDougall a person "operat(ing)" the scheme within the meaning of s 601EE? 44 Here there is no doubt that Stephen McDougall formulated the scheme and managed its day to day operations. He was thus one of those operating the scheme. 45 As to Stephen McDougall's liability for carrying on a financial services business without a licence, the same reasoning applies. In any event he would clearly have aided, abetted, counselled and procured FUELbanc to contravene the Act: s 1324(1)(c). From January 2006 to July 2006 the first, second, third, fourth and fifth defendants contravened s 601ED(5) of the Corporations Act 2001 (Cth) by operating the unregistered managed investment scheme defined in the Schedule to this Order ("the scheme") which required registration as a managed investment scheme but was not so registered. 2. From January 2006 to July 2006 the first, second, third, fourth and fifth defendants contravened s 911A of the Corporations Act 2001 (Cth) by carrying on a financial services business in this jurisdiction by offering interests in the scheme without holding an Australian financial services licence. His Honour declined to make a declaration against two individuals involved on the ground that the possibility of a prosecution was open and ASIC had refused to give any undertaking that prosecution would not follow. One should not make a declaration which might be falsified by a subsequent acquittal in proceedings between the same parties. 49 Section 21(1) has as its ancestor O XXV r 5 of the Rules of the Supreme Court 1883 (Eng) which developed from the first English legislative provision, s 50 of the Chancery Procedure Act 1852 (UK): see Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 108-109 per Hill J. Although prior to the English legislation mentioned courts of that country had a "deep suspicion" of the declaration of right (Zamir and Woolf The Declaratory Judgment , second edition, 1993, at 11), it seems as though this reluctance only extended to the grant of "pure" declaratory relief. They simply record, in a formal way, the conclusion which the Court has reached, on the evidence, as to the legal consequences of specific conduct of the defendants. The effect on any future hypothetical criminal prosecution would be the same whether this Court now granted declarations together with injunctions or granted injunctions only. Either way there would be a finding of a court as to the lawfulness of the conduct the subject of the criminal proceeding. 51 While courts are still reluctant to grant declaratory relief on issues which are theoretical or hypothetical (see Zamir and Woolf, op cit, 117 et seq), the Intertax argument against the grant of declaratory relief is based on a hypothetical fact, indeed a hypothesis upon a hypothesis --- that there will be a prosecution and that such prosecution will result in an acquittal. 52 There is high authority against the supposed limitation on the exercise of the discretionary power to grant declaratory relief. In Sankey v Whitlam [1978] HCA 43 ; (1978) 142 CLR 1 the High Court, in respect of then current committal proceedings (ie actual, not hypothetical, criminal proceedings) made declarations that (i) certain documents were privileged from production and that (ii) the information laid against Mr Whitlam was bad in law. ), as amended, or O. 26, r. 19 of the Rules of this Court, is a very wide one: Forster v. Jododex Aust. Pty. Ltd . [1972] HCA 61 ; (1972) 127 CLR 421, at pp 435-436 . It is clear enough that the power of the court is not excluded because the matter as to which a declaration is sought may fall for decision in criminal proceedings. Indeed in Dyson v. Attorney-General [1911] 1 KB 410, which is one of the foundations of the law on this subject, it was held that the court had power to make a declaration that the plaintiff was not under any obligation to comply with the requisitions contained in a notice sent to him by the Commissioners of Inland Revenue, notwithstanding that neglect to comply with the notice was an offence --- see especially per Farwell L.J. [1911]1 KB, at p 422. Since that time there have been many cases in which the courts have made declarations in relation to questions which could have fallen for decision in criminal proceedings. The case concerned a pine plantation investment scheme which the Corporate Affairs Commission (NSW) alleged involved the issuing or offering of an "interest" contrary to s 76(1) of the Companies Act 1961 (NSW). The trial judge made a declaration to the effect alleged and granted injunctions. The Court of Appeal dismissed the appeal but said that it was not a proper case for the grant of declarations, which were "little more than prefatory averments to the grant of an injunction". The High Court dismissed the substantive appeal. The parties accepted that an injunction was no longer necessary since the conduct in question was not continuing. The High Court nevertheless granted a declaration substantially to the effect of that granted by the trial judge. 54 The contraventions the subject of the declaration in Australian Softwood carried criminal penalties: Companies Act, s 86(1). Murphy J thought this was a positive reason for the grant of a declaration. Certainly his Honour saw the possibility, indeed desirability, of criminal proceedings as no reason for refusing a declaration. This represents more than $200,000 in deposits and promises to pay instalments of well over a million dollars. Presumably all those who have been party to offences against the Companies Act in relation to the issues are liable to criminal proceedings, at least with the consent of the Minister (see s 381). In these circumstances, and because the respondent did not press in this Court for the injunction, I agree the relief should be confined to appropriate declarations. In my opinion it was proper to grant a declaration in the present case although it is now agreed that an injunction is not an appropriate remedy. 56 In Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 Young J gave detailed consideration to the appropriateness of declarations in respect of breaches of the Companies (New South Wales) Code dealing with prescribed interests and offers to the public. Criminal proceedings were not only possible; they had taken place and the individual primarily involved had been convicted and was serving a term of imprisonment. 57 His Honour observed (at 603) that while ordinarily a declaration is not made that a defendant has committed a crime, there was no doubt that there was jurisdiction to make such a declaration in a proper case: Imperial Tobacco Limited v Attorney-General [1981] AC 718 at 750, Sankey v Whitlam . Thus it was appropriate in many cases for a business person who is told by a regulatory authority that he or she cannot do something to apply for a declaration that the view is erroneous. Conversely, the right was mutual; the Crown could also obtain a declaration that the person's conduct contravened the law. That practice, which was common in New South Wales, had been given the "seal of approval" by the High Court in Australian Softwood . 58 In the particular circumstances of the case, however, Young J (at 616) saw no utility in pronouncing declarations. The injunctions already made dealt with the issues between the parties, the receivership orders were still in place and the making of a declaration would be unsatisfactory because of the possibly incomplete factual material before the court and also because it might embarrass investors' claims. This latter aspect included the fact that investors had subscribed to at least eleven different schemes, the funds of which had become irretrievably mixed. 59 Transphere does not provide any support for the limitation of the discretion to make declarations in cases like the present; indeed it is to the contrary. 60 A number of courts have made declarations in cases involving contraventions which carried criminal penalties, albeit with no express discussion of the point raised in Intertax . Nevertheless, the consistent practice is a matter of considerable weight. The cases are: Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd [2006] QCA 540 (Queensland Court of Appeal), Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (2006) 57 ACSR 553 (Hargrave J, Supreme Court of Victoria), McDougall (Young J, Federal Court), Australian Securities and Investments Commission v Preston [2005] FCA 1805 (Finkelstein J, Federal Court), Australian Securities and Investments Commission v Drury Management Pty Ltd [2004] QSC 68 (Jones J, Supreme Court of Queensland), Australian Securities and Investments Commission v Young [2003] QSC 29 ; (2003) 21 ACLC 655 (Muir J, Supreme Court of Queensland), Pegasus (Davies AJ, Supreme Court of New South Wales), Australian Securities and Investments Commission v Hutchings (2001) 19 ACLC 1454 (Windeyer J, Supreme Court New South Wales), Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 (Austin J, Supreme Court of New South Wales). 61 I conclude that I should not follow Intertax . It is appropriate to make the declarations sought. It is sometimes said that a declaration is an appropriate way of marking the Court's disapproval of the contravening conduct: see eg McDougall at [55]. While certainly the conduct of the corporate defendants and Stephen McDougall has been reprehensible, the actual declarations do no more than declare the bare facts that the defendants operated an unregistered managed investment scheme and carried on a financial services business without a licence. The declarations would be equally appropriate if the defendants' business had been carried on with exemplary prudence and meticulous bookkeeping. A more satisfactory rationale may be that the right declared will be a public right. Declarations as to the contraventions provide a formal vindication of the law's operation. 62 Two final points. First, declarations will not usually be made when the only material before the Court is the consent of the parties: BMI Limited v Federated Clerks Union of Australia (1983) 51 ALR 401 at 412. As will have been apparent, in the present case ASIC has presented evidence and submissions. 63 Secondly, it is said there must be "a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought": Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448, Forster v Jododex Australia Pty Limited [1972] HCA 61 ; (1972) 127 CLR 421 at 437, Transphere at 605. 64 In the present case the defendants were represented but did not oppose the making of the declarations sought, or indeed any orders sought. Transphere is to an extent comparable in that the defendant in that case appeared and did not oppose the declaration. However, he we not legally represented. Young J (at 605-608) extensively reviewed the case law. His Honour (at 608) accepted the submission that the law as to declaratory judgments had developed to such a stage that declaration should be made unless there are proper grounds to the contrary, subject to the proviso that a "legitimate and powerful" factor against the grant would be the possibility of embarrassment in a practical sense to a non-party. As has been noted ([58] above) his Honour found that in the circumstances of the case before him such embarrassment did exist and on that ground declined a declaration. 65 One of the authorities discussed by Young J was BMI . 66 In BMI not only was there no contradictor, but the particular question that was the subject of the proposed declaration had become academic. Moreover, there were a number of contrary arguments on the merits; see 414-415. The Full Court did not propound any binding proposition of law, still less one which would bind single judges deciding cases under investor protection provisions of corporations legislation. 67 The suggestion of retaining counsel to put a contrary argument as amicus curiae raises the practical question as to who should foot the bill. Certainly it would be unreasonable to impose on the generosity of counsel who have volunteered for pro bono schemes. It is no function of the Court itself to expend money on filling a supposed gap in the range of arguments presented to it by the parties. And ASIC has limited public funds to spend on its important law enforcement functions. 68 In the present case, there being no suggestion of any embarrassment to non-parties in the present case, I will follow the principle accepted by Young J in Transphere . Pursuant to s 1324(1) of the Corporations Act 2001 (Cth) the fifth defendant be permanently restrained whether by himself, his servants or agents or otherwise from further operating or promoting the scheme. 2. 3. The scheme be wound up pursuant to s 601EE(1) of the Corporations Act 2001 (Cth). 5. Pursuant to s 601EE(2) George Georges and Adrian Brown (who were appointed receivers of the property of the scheme and to report on the scheme by Order of Justice Young made 20 July 2006) be appointed joint and several liquidators of the scheme. 6. The liquidators have the power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with the winding up of the scheme, or incidental to the attainment of the winding up of the scheme, including the powers identified in s 477 of the Corporations Act 2001 (Cth) as each reference there to a "company" were a reference to the scheme. 7. The reasonable costs and expenses of the winding up of the scheme be paid out of the assets of the scheme. 8. To the extent that the sum paid to the liquidators under Order 7 is insufficient to meet the reasonable remuneration, costs fees and expenses of the liquidators, any shortfall is to be paid by the fifth defendant. 9. Pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth) the first, second, third and fourth defendants be wound up and that George Georges and Adrian Brown be appointed joint and several liquidators. 10. The restraining orders extended by Order made on 19 December 2006 (and originally made by paragraphs 11 and 12 of the Orders made on 20 July 2006) against the fifth, sixth and seventh defendants be vacated. 11. Paragraph 4 of the Order made on 17 July 2006, that the fifth to seventh defendants deliver up their passports, be vacated and the Registry make any passport delivered up in accordance with the order available for collection by the relevant defendant at the registry office where it is presently held. 12. The fifth defendant deliver his passport to his trustee in bankruptcy forthwith, pursuant to s 77(1)(a)(ii) of the Bankruptcy Act 1966 (Cth). 13. The fifth defendant not leave Australia during the period of his bankruptcy until 7 days after he has given ASIC written notice of his request to his trustee in bankruptcy for consent to leave Australia pursuant to s 272(1)(c) of the Bankruptcy Act 1966 (Cth). 14. The fifth defendant pay the plaintiff's costs of this proceeding including reserved costs. 15. The proceeding be dismissed against the sixth and seventh defendants with no order as to costs. 16. The proceeding otherwise be dismissed. Investors give money and barter units known as "trade dollars" to the first defendant in exchange for a promise to pay weekly instalments into a debit card for use by each investor at service stations. 2. The first to fifth defendants invested or were to invest the money and barter units received from investors to produce the benefit of the credit to be provided on debit cards. | managed investment schemes financial services business scheme in which participants subscribe barter units and australian currency in return for debit card providing weekly credits for fuel purchase at service stations defendant smcd formulated and managed scheme scheme not registered no australian financial services licence corporations |
Subsets and Splits