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federal_court_of_australia:fca/single/2012/2012fca0856
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2012-12-11 00:00:00
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SZQUY v Minister for Immigration and Citizenship [2012] FCA 856
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2012/2012fca0856
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2024-09-13T22:50:15.468400+10:00
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FEDERAL COURT OF AUSTRALIA
SZQUY v Minister for Immigration and Citizenship [2012] FCA 856
Citation: SZQUY v Minister for Immigration and Citizenship [2012] FCA 856
Appeal from: SZQUY v Minister for Immigration and Citizenship [2012] FMCA 319
Parties: SZQUY v MINISTER FOR IMMIGRATION AND CITIZENSHIP and REFUGEE REVIEW TRIBUNAL
File number: NSD 568 of 2012
Judge: KENNY J
Date of judgment: 11 December 2012
Catchwords: MIGRATION — refusal of a protection visa — appeal from the Federal Magistrates Court — appeal dismissed.
Legislation: Migration Act 1958 (Cth)
Cases cited: SZNMJ v Minister for Immigration and Citizenship (2009) 112 ALD 284
SZQUY v Minister for Immigration [2012] FMCA 319 Yilmaz v Minister for Immigration and Multicultural Affairs (2000) 100 FCR 495
Minister for Immigration and Citizenship v SZNVW (2010) 183 FCR 575
NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470
SZFNX v Minister for Immigration and Citizenship (2010) 116 ALD 85; [2010] FCA 562
SZKJV v Minister for Immigration and Citizenship (2011) 120 ALD 52; [2011] FCA 80
Date of hearing: 15 August 2012 and 7 December 2012
Place: Sydney and Melbourne
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 39
Counsel for the Appellant: The appellant appeared in person with the assistance of an interpreter
Counsel for the First Respondent: Mr T Reilly
Solicitor for the Respondents: Minter Ellison
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 568 of 2012
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZQUY
Appellant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: KENNY J
DATE OF ORDER: 11 DECEMBER 2012
WHERE MADE: MELBOURNe via video conference with sydney
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the first respondent's costs of the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 568 of 2012
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZQUY
Appellant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: KENNY J
DATE: 11 DECEMBER 2012
PLACE: MELBOURNE VIA VIDEO CONFERENCE WITH SYDNEY
REASONS FOR JUDGMENT
1 This is an appeal from a judgment of the Federal Magistrates Court dismissing an application for judicial review of a decision of the Refugee Review Tribunal ("Tribunal"). That decision affirmed the decision of a delegate of the Minister for Immigration and Citizenship ("the Minister") not to grant the appellant a Protection (Class XA) visa ("protection visa").
2 The appeal was initially listed for hearing on 15 August 2012. On that day, the appellant, who was not legally represented, applied through an interpreter for an adjournment. The Minister, who appeared by his solicitor, opposed the adjournment application. After some discussion, for the reasons stated that day, the Court adjourned the hearing to 20 November 2012 upon the basis that the appellant was to file and serve any medical certificates, reports or evidence concerning his mental health by 28 September 2012. As explained below, the hearing was later rescheduled for 7 December 2012.
3 At the 15 August 2012 hearing, the appellant stated that he had met with an accident on 19 August 2010, after the Tribunal hearing on 2 February 2010, as a result of which he suffered mental ill-health and his eyesight and movement were adversely affected. The appellant stated that he remained in ill-health and that he had further medical appointments at the end of the month. The appellant said that he had been unable to understand the Court's 7 August 2012 letter in which he was advised to bring evidence of his continuing ill-health to the hearing if he wished to pursue a foreshadowed adjournment application. The appellant also sought pro bono legal representation in this Court, referring to his mental ill-health.
4 In compliance with the Court's order, the appellant subsequently filed an affidavit that he had sworn on 24 September 2012, with numerous attachments. Of most relevance was a copy of a medical assessment dated 30 August 2012 and signed by Dr Julian Parmegiani. This document recorded that Dr Parmegiani assessed the appellant as having a post-traumatic stress disorder amounting to a 6% permanent impairment. In the same document, Dr Parmegiani is recorded as stating that at the time of the assessment, the appellant
enjoyed reading, writing, poetry and keeping a diary. He studied English, Japanese and accounting. He was able to maintain concentration for hours.
5 The appellant's affidavit and accompanying attachments failed to show that, by reason of ill-health, he was unable adequately to conduct this appeal and participate in the hearing of it.
6 At the 7 December hearing, the appellant again sought an adjournment, citing ill-health and his lack of legal representation. Once again, the Minister opposed this course. On this occasion, for the reasons stated that day, the Court declined to grant an adjournment. In the course of discussion, the Court reminded the appellant that the appellant had been informed on 12 November 2012, through an interpreter, that the Court would make no referral for pro bono legal assistance for him and, unless he acquired representation in some other way, he would need to represent himself. A file note at the time recorded that, after some discussion, the appellant indicated that he would be able to represent himself if given an extra two weeks. With this in mind, the hearing of the appellant's appeal was rescheduled to 7 December 2012.
7 Subject to one matter, the Minister relied on written submissions dated 8 August 2012. Save for material relevant to his adjournment application, the appellant did not file any written material in support of his appeal.
8 At the 7 December hearing, the appellant remained unrepresented, although he retained the assistance of an interpreter. The Minister was represented by counsel. The Tribunal had earlier indicated that it submitted to any order the Court may make, save as to costs.
9 For the reasons stated below, I would dismiss the appeal as disclosing no error.
BACKGROUND
10 The appellant is a citizen of Bangladesh who arrived in Australia on 7 August 2009 as the holder of a Visitor (Class TR) visa.
11 The appellant applied for a protection visa on 31 August 2009. On 27 November 2009, a delegate of the Minister decided to refuse to grant the appellant a protection visa.
12 In completing his visa application forms and in an accompanying document headed "Detail[ed] Reason [sic] about Applying for a Protection visa" submitted to the Minister's Department, the appellant claimed to fear persecution in Bangladesh by reason of his political opinion and his work for the Bangladesh Nationalist Party ("the BNP"). He also submitted various other copy documents, including a birth certificate, academic records, records of the discontinuance of his studies in Hong Kong, flight details and a letter signed by an intern clinical psychologist and supervising clinical psychologist at STARTTS, stating that the appellant displayed signs of depression and post-traumatic stress, together with an email from an Asylum Seekers Centre caseworker.
13 On 15 December 2009, the appellant applied to the Tribunal for a review of the delegate's decision. A letter accompanying his review application disputed various aspects of the delegate's decision. In January 2010, the appellant appointed the Refugee Advice + Casework Service (Aust) Inc as his representative in the Tribunal proceeding and, on 1 February 2010, the representative provided the Tribunal with the appellant's statutory declaration of the same date together with additional documents.
14 The appellant appeared before the Tribunal at a hearing on 2 February 2010 to give evidence and present arguments, with his representative present. The Tribunal's statement of decision and reasons indicated that the Tribunal put a number of matters to the appellant for his comment or response in compliance with s 424AA of the Migration Act 1958 (Cth).
15 After the hearing, the appellant's representative lodged another statutory declaration dated 11 March 2011 with the Tribunal, seeking to clarify some factual matters, together with some corroborative documents. Included in the corroborative material was a short note written by a psychiatrist, advising that she had reviewed the appellant on 22 February 2010 and diagnosed him with an episode of major depression.
16 On 13 October 2011, the Tribunal affirmed the decision under review.
THE TRIBUNAL'S DECISION
Capacity to participate in the hearing
17 Under the heading "Findings and Reasons" and referring to SZNMJ v Minister for Immigration and Citizenship (2009) 112 ALD 284; [2009] FCA 1345, the Tribunal specifically considered whether the appellant had the capacity to participate effectively in the hearing. The Tribunal accepted that the psychologist's and psychiatrist's reports mentioned above were "relevant in assessing whether the applicant [now the appellant] had the capacity to participate in the Tribunal hearing", although neither expressed any explicit opinion on the matter. The Tribunal stated that it did not appear to it that the appellant "had any difficulty recalling things". The Tribunal concluded:
Putting to one side some obvious mistakes on which I would not in any event place any weight, I consider that the applicant was able to recall the events which he claims have occurred. He was able to answer my questions and to address the issues which I raised with him in relation to his claims. I consider that he was able to participate effectively in the hearing before the Tribunal.
Claims considered
18 Turning to the appellant's claims, the Tribunal concluded that it did not accept that he feared persecution in Bangladesh because the Tribunal did not accept that he was telling the truth about having been threatened or involved in the BNP or its student wing. The Tribunal gave the following specific reasons for doubting the credibility of the appellant's claims:
(a) the appellant's lack of any understanding of the essential ideology of the BNP cast doubt on his claimed involvement with the party or its student wing;
(b) there were a number of contradictions in the appellant's evidence about joining the student wing of the BNP while at college;
(c) the inclusion of the same transliteration of the name of the student wing of the BNP in the appellant's statements and his supporting evidence indicated that supporting documents purportedly from Alhaj Badal Sarder and Dr Enamul Khan were in fact written by the appellant — a matter that diminished the weight to be attached to those documents;
(d) Dr Khan did not apparently hold the position at the Jagannath University as the appellant claimed and the emails purportedly from Dr Khan were sent from a 'yahoo.com' address. This matter diminished the weight to be attached to the emails; and
(e) the appellant's claims were found to contain contradictions.
19 For these reasons the Tribunal did not accept that the appellant was involved in the BNP or its student wing in Bangladesh or Hong Kong. Nor did the Tribunal accept that he was threatened as a result. The Tribunal commented that, in so finding, it had given greater weight to its identified concerns "with the applicant's evidence than … to the letters which he produced from Dr Khan and Mr Sarder" — these being letters that the Tribunal considered had been drafted by the appellant in any event. While the Tribunal accepted that the appellant's father had died in August 2009, it noted that the death certificate relied on by the appellant said "nothing as to the reasons why his father was killed". Since the Tribunal did not accept that the appellant had been involved in the BNP, it did not accept that his father had been killed because of this involvement.
20 Accordingly, the Tribunal did not accept that there was a real chance that the appellant would be persecuted for reason of his political opinion if he returned to Bangladesh in the reasonably foreseeable future, and affirmed the delegate's decision.
THE FEDERAL MAGISTRATES COURT
21 The appellant sought judicial review of the Tribunal's decision in the Federal Magistrates Court. There were three grounds:
1. I thik [sic] RRT not understant [sic] my explanation and
2. RRT misunderstant [sic] my answer during my hearning [sic]
3. Not get justice from RRT
22 The appellant appeared at a hearing in the Federal Magistrates Court on 3 April 2012 and presented oral submissions in support of his application, with assistance from an interpreter.
23 The learned Federal Magistrate interpreted the appellant's first ground to be a complaint that the Tribunal did not accept his account — a complaint that did not disclose jurisdictional error. His Honour noted that "it is quite clear from the length of the decision record that the Tribunal listened with considerable care to those explanations given by the applicant and then raised with him the concerns that it had in regard to them": SZQUY v Minister for Immigration [2012] FMCA 319 ("SZQUY") at [10]. There was nothing to indicate that the Tribunal had misunderstood the purport of his account. Further, his Honour did "not believe there is any suggestion being made by the applicant that the reference to not understanding was a reference to poor translation but if it was the applicant has in no way established any fault and certainly not the type of fault that would vitiate the hearing itself": SZQUY at [10]. Hence, his Honour rejected the first ground.
24 As to the appellant's second ground, his Honour found no error in the Tribunal's approach to the question whether the appellant's mental condition was such as to preclude him having a full and fair hearing: SZQUY at [13]. As his Honour said, the Tribunal "examined the psychological evidence put forward by the applicant and assessed him on the basis of the responses he gave at the actual hearing": SZQUY at [13]. His Honour further noted that the appellant had a representative of RACS with him at the Tribunal hearing and RACS had assisted him to obtain some medical reports. There was no other matter that apparently bore on this ground.
25 The Federal Magistrate did not regard the appellant's third ground as adding anything. As a result, his Honour held that neither the second nor third grounds were made out.
26 Further, according to the Federal Magistrate's reasons for judgment, at the hearing in the Federal Magistrates Court, the appellant said that his life was at risk in Bangladesh and he challenged the sufficiency of the hearing before the delegate. His Honour noted that "[t]he main thrust of [his] argument … seemed to be that he needed an adjournment in order to respond properly to the Minister's submissions": SZQUY at [16]. His Honour declined to grant an adjournment, on the basis there was "little utility in it": SZQUY at [17].
27 At the conclusion of the parties' submissions, his Honour dismissed the application with costs.
THE APPEAL
28 The appellant stated his grounds of appeal as:
1. Request to review First Respondent's decision
2. Looking for fair justice
Additionally, in his Notice of Appeal, under the heading "Orders sought", the appellant said:
1. First Respondent misunderstand my explanation.
2. Not get justice from First Respond[ent].
3. Kind request to review this decision because still believe has a reasonable prospect of success.
29 The appellant's grounds of appeal apparently alleged errors on the part of the delegate, although, as the Federal Magistrate noted, any deficiencies on the delegate's part are not matters that affect the Tribunal's hearing. For present purposes, the decision of the Tribunal is the decision that determines the outcome of the appellant's protection visa application unless the appellant were able to show jurisdictional error on the Tribunal's part. Deficiencies on the delegate's part would not of themselves establish jurisdictional error on the part of the Tribunal. As the Full Court of this Court said in Yilmaz v Minister for Immigration and Multicultural Affairs (2000) 100 FCR 495 at 515 [92], the Tribunal's decision "supersedes the original decision". The Federal Magistrate's reasons for judgment disclose no appellable error in this regard.
30 The appellant may have intended to challenge the Federal Magistrate's judgment on the basis that his Honour should have found that the Tribunal misunderstood the appellant's explanation and did not accord him justice. Understood in this way, the appeal would nonetheless fail. I accept that, as his Honour noted, the Tribunal conscientiously set out the appellant's claims and the evidence and other material before it concerning those claims; and the manner in which it made its findings and reached its decision disclosed no jurisdictional error. The fact that the Tribunal made findings that were adverse to the appellant, without more, does not show that the Tribunal misunderstood the appellant's explanation; and does not indicate jurisdictional error. The appellant has not identified any other matter that might show a want of understanding on the Tribunal's part of a kind that might amount to jurisdictional error. There was nothing to support the claim that the Tribunal misunderstood the appellant's claims, evidence or explanations.
31 Further, there is nothing in the Tribunal's statement of decision and reasons or shown elsewhere to indicate that the appellant did not "get justice". The fact that the Tribunal did not ultimately decide in the appellant's favour does not of itself establish a want of justice.
32 In substance, the appellant's complaint is that the Tribunal failed to accept the appellant's version of events and denied him a protection visa; and that the Federal Magistrate should have held in the appellant's favour. This complaint does not disclose any relevant error.
33 Only the delegate and the Tribunal were competent to consider the merits of the appellant's application. It was not open to the Federal Magistrate to reconsider whether or not the appellant should be granted a protection visa: on judicial review, his Honour could only intervene if there were jurisdictional error shown in the Tribunal's decision. His Honour held that none was shown. I can discern no error in his Honour's judgment. So far as I can tell, the appellant is not seeking to raise any error on the Tribunal's part that could constitute jurisdictional error and which, arguably, the Federal Magistrate ought to have detected. On an appeal from his Honour's judgment, the Court cannot engage in an evaluation of the merits of the appellant's protection visa application.
34 Though not directly raised by the appellant, there is also no reason to suppose that the Tribunal erred in its approach to the question whether the appellant's mental condition was such as to preclude a full and fair hearing: see Minister for Immigration and Citizenship v SZNVW (2010) 183 FCR 575 at 581–583 [17]–[22].
35 At the hearing on 7 December 2012, counsel for the Minister specifically drew attention to the fact that, whilst the Tribunal had afforded the appellant a hearing on 2 February 2010 and received a final submission on the appellant's behalf in March 2010, the Tribunal had not made its decision until 13 October 2011. In this connection, counsel properly referred to the High Court's decision in NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470 ("NAIS") and to two decisions of this Court considering NAIS, namely, SZFNX v Minister for Immigration and Citizenship (2010) 116 ALD 85; [2010] FCA 562 ("SZFNX") and SZKJV v Minister for Immigration and Citizenship (2011) 120 ALD 52; [2011] FCA 80 ("SZKJV"). Counsel submitted that NAIS should be distinguished from the present case because the delay involved in NAIS was about four and a half years — and therefore much longer than in the appellant's case — and the Tribunal in NAIS based its decision in part on the relevant applicant's demeanour — whereas in the present appellant's case, the Tribunal's decision had been made on the basis of a careful analysis of the evidence.
36 The judgments in NAIS are discussed in detail in SZFNX at 108–111 [132]–[147] and SZKJV at 57–59 [24]–[33]. I refer to those discussions without repeating them.
37 Whether or not delay in the decision-making process created a real and substantial risk that the Tribunal's capacity to assess the appellant was impaired (NAIS at 476 [10] per Gleeson CJ; compare 501 [102] per Kirby J and 526 [172] per Callinan and Heydon JJ) depends on the circumstances of the particular case. I accept that, as counsel for the Minister submitted in this appeal, NAIS is relevantly distinguishable from the present case. The delay in NAIS was much lengthier than in this case. In NAIS the Tribunal's adverse demeanour-based findings were the basis of a decision adverse to the applicant; whereas, in the present case, the Tribunal reached an adverse decision after a conscientious examination of the evidence presented by the appellant, which it discussed in a detailed statement of reasons. There is little to justify a conclusion that the procedures followed by the Tribunal in this case resulted in unfairness to the appellant. Rather, the considerations mentioned indicate that there was no jurisdictional error of the kind identified in NAIS. I note that the same kinds of considerations also led the Court to conclude that there was no relevant jurisdictional error in SZFNX and SZKJV.
38 The delivery of judgment should not be deferred, as the appellant sought at the most recent hearing, there being no tenable basis on which this might be done.
39 For the reasons stated, the appeal should be dismissed, with costs.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate:
Dated: 11 December 2012
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federal_court_of_australia:fca/single/2020/2020fca1524
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2020-10-21 00:00:00
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Norouzi v The Director of the Professional Services Review Agency [2020] FCA 1524
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca1524
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2024-09-13T22:50:16.147619+10:00
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Federal Court of Australia
Norouzi v The Director of the Professional Services Review Agency [2020] FCA 1524
File number: QUD 173 of 2020
Judgment of: LOGAN J
Date of judgment: 21 October 2020
Catchwords: ADMINISTRATIVE LAW – Judicial Review – Professional Services Review Scheme under Part VAA of the Health Insurance Act 1973 (Cth) (the Act) – where Professional Services Review Committee (the committee) found applicant doctor engaged in "inappropriate practice" as defined in s 82 – where Determining Authority directed applicant should be reprimanded, counselled, partially disqualified and required to repay amount – where application for judicial review of committee's decision filed 183 days after applicant had been given notice of that decision and after Determining Authority had made its decision – whether extension of time should be granted under Administrative Decisions (Judicial Review) Act 1977 (Cth) – whether relief under s 398(1) of the Judiciary Act 1903 (Cth) should be refused as a matter of discretion on the basis of delay in respect of committee's decision - whether the committee's decision involved an error of law – whether the committee's decision involved a breach of the rules of natural justice – whether the Determining Authority misunderstood its function in relation to s 106U(1)(cb) of the Act – whether the Determining Authority's direction as to repayment of the whole amount was legally unreasonable – whether the Determining Authority's direction as to partial disqualification was legally unreasonable
HEALTH LAW – Health Insurance Act 1973 (Cth) "inappropriate practice" pursuant to s 82(1) – construction of reg 2.15.1 of the Health Insurance (General Medical Services Table) Regulation 2016
Legislation: Constitution ss 51, 75, 81, 83
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 3, 8, 11, 15, 16
Health Insurance Act 1973 (Cth) ss 3, 79A, 80, 81, 82, 86, 93, 94, 96, 106G, 106K, 106KD, 106L, 106Q, 106SA, 106TA, 106TB, 106U, Pt VAA
Judiciary Act 1903 (Cth) s 39B
Health Insurance (General Medical Services Table) Regulations 2016 reg 2.15.1
Cases cited: British Medical Association v The Commonwealth (1949) 79 CLR 201
Daley v Child Support Registrar [2020] FCAFC 161
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Jamsek v ZG Operations Australia Pty Ltd (2020) 297 IR 210
Leung v Minister for Immigration and Multicultural Affairs (1997) 79 FCR 400
Lucic v Nolan (1982) 45 ALR 411
Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541
Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597
Nithianantha v Commonwealth of Australia [2018] FCA 2063
Qidwai v Brown [1984] 1 NSWLR 100
Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82
Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 426
Reece v Webber (2011) 192 FCR 254
Selia v Commonwealth of Australia [2017] FCA 7
Sevdalis v Director of Professional Services Review (No 2) [2016] FCA 433
Sevdalis v Director of Professional Services Review [2017] FCAFC 9
Wong v The Commonwealth (2009) 236 CLR 573
Division: General Division
Registry: Queensland
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 111
Date of hearing: 17 – 18 September 2020
Counsel for the Applicant: Mr G Rebetzke
Solicitor for the Applicant: Gardner Legal & Regulatory
Counsel for the Respondents: Ms K Slack
Solicitor for the Respondent: Sparke Helmore Lawyers
ORDERS
QUD 173 of 2020
BETWEEN: DR HAMID NOROUZI
Applicant
AND: THE DIRECTOR OF THE PROFESSIONAL SERVICES REVIEW AGENCY
First Respondent
PROFESSIONAL SERVICES REVIEW COMMITTEE NO. 1187
Second Respondent
DETERMINING AUTHORITY (AS ESTABLISHED UNDER S106Q OF THE HEALTH INSURANCE ACT 1973)
Third Respondent
order made by: LOGAN J
DATE OF ORDER: 21 OCTOBER 2020
THE COURT ORDERS THAT:
1. As to the second respondent's decision by its final report of 11 November 2019:
(a) insofar as the applicant has applied under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) for an extension of time within which to apply for an order of review in respect of that decision, that application be dismissed; and
(b) the application for orders under s 39B of the Judiciary Act 1903 (Cth) (Judiciary Act) in respect of that decision be dismissed.
2. As to the third respondent's final determination made on 11 May 2020:
(a) the direction that the applicant repay the amount of $459,555.55, being the medicare benefits that were paid for the MBS items 597 and 599 services in connection with which the applicant was found by the second respondent to have engaged in inappropriate practice, less the amount for the item that the applicant repaid voluntarily, be quashed;
(b) the question as to whether the applicant ought to be directed to repay, in whole or in part, the said amount of $459,555.55 be remitted to the third respondent for reconsideration according to law; and
(c) save as aforesaid, the application for orders under the ADJR Act and the Judiciary Act in respect of that determination be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
LOGAN J:
1 Dr Hamid Norouzi, the applicant, has instituted judicial review proceedings in respect of decisions adverse to him made under the Professional Services Review Scheme (scheme), established under Pt VAA of the Health Insurance Act 1973 (Cth) (HIA).
2 In 1946, s 51 of the Constitution was amended so as to add, by the insertion of placitum (xxiiiA), a new head of Commonwealth legislative power, a power to make laws with respect to, "The provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances". That placitum is the apparent source of legislative competence for the HIA.
3 Uninstructed by authority, one might perhaps be forgiven for thinking that the HIA offered a paradigm example of a violation of the parenthetical qualification to that placitum, which prohibits civil conscription. The prospect that a medical practitioner might be able to practise without agreeing to accept, as part of the HIA's medicare benefits system, assignments from patients of the benefits for which the HIA provides in payment for professional services provided is very unlikely. An integral part of eligibility to receive such assignments is a medical practitioner's subjection to the scheme.
4 Under the scheme, medical (and certain other health) practitioners can be found to have engaged in "inappropriate practice", a term defined in s 82 of the HIA. Such a finding was made in respect of Dr Norouzi on 11 November 2019 by the second respondent, a professional services review committee (committee) (designated as "Professional Services Review Committee No. 1187), established under Pt VAA of the HIA. That is one of the adverse decisions which Dr Norouzi seeks to challenge.
5 As a sequel to the committee's decision, the third respondent, a Determining Authority established under s 106Q within Pt VAA of the HIA, decided, by a final determination made on 11 May 2020, that the following consequences (listed together with the related statutory provision) should, by direction, be visited upon Dr Norouzi:
(a) the first respondent, the Director of Professional Services Review (Director), or the Director's nominee, reprimand Dr Norouzi (s 106U(1)(a) of the HIA); and
(b) the Director, or the Director's nominee, counsel Dr Norouzi (s 106U(1)(b) of the HIA); and
(c) Dr Norouzi repay the amount of $459,555.55, being the medicare benefits that were paid for the Medicare Benefits Schedule (MBS) items 597 and 599 services in connection with which Dr Norouzi was found to have engaged in inappropriate practice, less the amount for the item that Dr Norouzi repaid voluntarily (s 106U(1)(cb) of the HIA); and
(d) Dr Norouzi be disqualified from rendering MBS items 585, 588, 591 and 594 services for a period of 6 months starting when the determination takes effect (s 106U(1)(g)(i) and s 106U(3)(b) of the HIA).
6 The Determining Authority's decision is the other adverse decision which Dr Norouzi seeks to challenge.
7 Impressionistically, it might perhaps be thought there is practical compulsion for participation in the medicare system, including subjection to the scheme, such that the legislative provision for the making of each of these adverse decisions is an incident of a form of civil conscription.
8 However, that impression is at odds with authority at ultimate appellate level. In Wong v The Commonwealth (2009) 236 CLR 573 (Wong), a challenge to the validity of the scheme, based on an asserted violation of the parenthetical qualification mentioned, was rejected by an emphatic majority of the High Court. The view which prevailed in Wong as to the effect of the HIA, as evidenced by its citation with approval by Hayne, Crennan and Kiefel JJ, at [226], was that first expressed by Dixon J in a dissenting judgment in British Medical Association v The Commonwealth (1949) 79 CLR 201, at 278, in respect of a predecessor legislative scheme which also looked to s 51(xxiiiA) for its source of legislative competence, "[t]here is no compulsion to serve as a medical [practitioner], to attend patients, to render medical services to patients, or to act in any other medical capacity, whether regularly or occasionally, over a period of time, however short, or intermittently". In Wong, only Heydon J, at [278], in dissent, saw invalidity in, that "the practical compulsion created by ss 10, 20 and 20A on medical practitioners to operate under the medicare scheme means that the Commonwealth is directing them, through its legislation, to comply with Pt VAA".
9 Recognising the recent and emphatic conclusion that the HIA, including the scheme, did not constitute a form of civil conscription but declining to allege that the scheme was not a law with respect to medical and dental services (left open by Hayne, Crennan and Kiefel JJ in Wong, at [215]), Dr Norouzi did not contend that it could have no lawful application to him.
10 It will be necessary later in these reasons for judgment to return to Wong in order to consider, by reference to observations about the scheme made in that case and to the extent necessary in the circumstances, certain submissions made on behalf of Dr Norouzi about the committee's finding.
11 Dr Norouzi instituted judicial review proceedings on 7 June 2020. In both its original and final, further amended form, his originating application invokes this Court's jurisdiction under s 39B(1) of the Judiciary Act 1903 (Cth) (Judiciary Act) and, further or alternatively, at least seeks to invoke this Court's jurisdiction under s 8 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act).
12 It is necessary to add a qualification about the invocation of the Court's jurisdiction under the ADJR Act because, in circumstances such as the present where a decision and related reasons were furnished in writing, s 11(1) and s 11(3) of the ADJR Act require that an application be filed by the 28th day after the statement of the terms of that decision and its accompanying reasons were furnished to an applicant. The Court is granted a discretion to extend that time: s 11(1)(c) of the ADJR Act.
13 As to the committee's decision, the originating application was filed no less than 181 days after that event.
14 With the Determining Authority, the committee submits that, insofar as Dr Norouzi seeks under the ADJR Act to challenge its decision, the application has been made outside the prescribed 28 day period and that there is no occasion for the granting to Dr Norouzi of an extension of time. They further submit, as to the alternative invocation of jurisdiction under s 39B of the Judiciary Act in respect of the committee's decision, that, while no formal time limit is applicable, the granting of relief in the exercise of that jurisdiction is discretionary. They submit that, here, the delay is so gross that the Court ought, as a matter of discretion and in all of the circumstances, to decline to grant relief in the exercise of that s 39B jurisdiction. Submissions on the extension of time point, as with other issues in the proceeding, were not separately advanced on behalf of the Director.
15 That the granting of relief under s 39B is discretionary and that delay by an applicant in the institution of proceedings is a relevant consideration in that regard were recently confirmed by the Full Court in Daley v Child Support Registrar [2020] FCAFC 161, at [43], by analogy with observations made in relation to the High Court's jurisdiction under s 75(v) of the Constitution in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82, at [53].
16 It is convenient first to consider whether, in relation to the committee's decision and as to the ADJR Act, an extension ought to be granted to Dr Norouzi and, as to the Judiciary Act, whether the Court ought to decline to grant relief.
17 That there is, in respect of the committee's decision and as to the ADJR Act, a need for an extension of time is, in my view, settled by s 3(3) of that Act, which provides:
(3) Where provision is made by an enactment for the making of a report or recommendation before a decision is made in the exercise of a power under that enactment or under another law, the making of such a report or recommendation shall itself be deemed, for the purposes of this Act, to be the making of a decision.
Whatever doubt there might have been, given the staged process for which the scheme provides, as to whether the committee's decision, as opposed to that of a Determining Authority, had the necessary quality of finality in order to amount to a decision for the purposes of the ADJR Act is put to rest by this subsection. That is because the HIA makes a final report by the committee a precursor to the exercise of power by a Determining Authority. The presence of s 3(3) in the ADJR Act makes it unnecessary to reach any concluded view on what might otherwise have been the position in its absence. That acknowledged, it is only within the remit of a committee to reach a conclusion as to whether there has been "inappropriate practice". That inclines me to the view that a committee's decision would have the requisite quality of finality about it in any event.
18 The discretion under the ADJR Act to grant an extension of time to an applicant is not fettered. Nonetheless, in the few years following the commencement of that Act, a number of considerations commended themselves to various judges of the Court as relevant, in the circumstances of a given case, to the exercise of that discretion. These considerations were notably collected and analysed by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 (Hunter Valley Developments), at 348 – 350, which has proved an enduringly authoritative source of guidance. It must be emphasised that these considerations are neither exhaustive nor to be applied uncritically as if some form of check list and divorced from the circumstances of a given case.
19 One of the early cases to which Wilcox J referred in Hunter Valley Developments was Lucic v Nolan (1982) 45 ALR 411 (Lucic v Nolan) in which Fitzgerald J had, at 416, observed that the prescription of a time limit meant that the prima facie position was that an application brought out of time ought not to be entertained. This observation was referred to with approval by Tracey J in Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 426, at [12], in the analogous context of the granting of an extension of time within which to appeal, in a passage recently in turn approved by Anderson J (with whom Perram and Wigney JJ agreed in this regard) in Jamsek v ZG Operations Australia Pty Ltd (2020) 297 IR 210, at [158]. To hold that this is the prima facie position is really but a way of emphasising that it is for an applicant to demonstrate that there is occasion for the granting of an extension. To put it higher than that, by requiring, for example, special circumstances to be demonstrated, would be to add an unwarranted gloss to the text of s 11(1)(c) of the ADJR Act.
20 Determining whether there is occasion may, in turn, often require a multi-factorial evaluation in which not all of the factors in a given case may tend in favour of or against the granting of an extension. Overwhelmingly however, usually, an applicant will have to provide by evidence an adequate explanation for the delay.
21 In this case, Dr Norouzi provided no personal evidentiary explanation, by affidavit or otherwise. Seemingly recognising this deficiency, it was instead submitted on his behalf: "It may be inferred that the explanation for the delay is that the disciplinary process outlined in Part VAA of the [HIA] had not been completed. Dr Norouzi participated in that ongoing process by providing two submissions to the [Determining Authority]." Another submission was that there could be no prejudice to the committee by the granting of an extension of time. It was further submitted that, as jurisdiction had alternatively and in any event been invoked by reliance upon s 39B of the Judiciary Act, which was not subject to a time limitation in relation to institution, that was itself reason to grant the extension. The latter proposition was said to be supported by an approach taken by Mortimer J in Sevdalis v Director of Professional Services Review (No 2) [2016] FCA 433 (Sevdalis v Director of Professional Services Review (No 2)), at [25].
22 The prospective merits of a proposed application under the ADJR Act can be relevant to whether or not to grant an extension. That does not mean that an applicant must demonstrate that he is likely to succeed, only that there is sufficient merit to warrant the granting of an extension. It is perfectly possible for there to be such merit and yet for an application ultimately to fail after a substantive hearing. Further, it does not necessarily follow that demonstration of merit in prospective grounds of review on the basis mentioned will always supply a determinative answer in relation to whether or not to grant an extension. As Finkelstein J noted in Leung v Minister for Immigration and Multicultural Affairs (1997) 79 FCR 400, at 413, in a passage referred to with approval by Gleeson CJ in Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597, at [12], "an invalid administrative decision can have operational effect".
23 Just as an "operational effect" may, especially after a lengthy lapse of time, persuade a court in the exercise of a discretion, not to grant what has come to be termed in recent times federally as a "constitutional writ", so too, in relation to the granting under the ADJR Act of an extension of time, may an operational effect mitigate against the granting of an extension. The purpose of a power to grant an extension of time is the attainment of justice. That is not necessarily coincident with the advancement of the interests of an applicant.
24 In his pleadings, Dr Norouzi did not distinguish between proposed grounds of review under the ADJR Act and jurisdictional error grounds under s 39B of the Judiciary Act in respect of the committee's decision. As they came to be pleaded in the further amended originating application, the grounds of challenge to the committee's decision were as follows:
1. The decision involved an error of law or was otherwise contrary to law by the Committee misconceiving the nature of its function or asking itself a wrong question or identifying the wrong issue by forming its own "view about what it means for urgent treatment to be required", rather than addressing whether conduct in connection with rendering or initiating services would be unacceptable to either the general body of medical practitioners, or the general body of general practitioners.
1A. The decision involved an error of law by applying the wrong test. The Committee purported to apply s82(1)(d) of the [HIA], which considers the Applicant's conduct by reference to the "general body of [medical practitioners]". The Committee ought to have applied the test set out in s82 (1)(a) of the [HIA], which considers Applicant's conduct by reference to the "general body of general practitioners".
2. The decision involved an error of law by misconstruing or misapplying the phrase "patient's medical condition requires urgent treatment" in Items 597 and 599 of Schedule 1 of the Health Insurance (General Medical Services Table) Regulation 2016 (Cth).
Particulars
(a) The Committee took an impermissibly narrow interpretation of "treatment" by excluding reassurance, advice, advice and instructions, diagnosis, ruling out of differential diagnoses, and urgent assessment from "treatment" having regard to the scope, nature and purpose of the clause 2.15.1 and items 597 and 599 of Schedule 1 of the Health Insurance (General Medical Services Table) Regulation 2016 (Cth).
(b) The Committee took an impermissibly narrow approach to "treatment could not be delayed until the start of the next in-hours period".
(c) The Committee failed to consider whether the Applicant's opinion as to the urgency of treatment would be acceptable to the general body of medical practitioners in the circumstances that existed and on the information available when the opinion was formed, and, in turn, whether the decision to bill the service as item 597 or 599 was conduct which would be unacceptable to the general body of relevant practitioners.
3. The making of the decision was an improper exercise of power by taking irrelevant considerations into account, namely, the findings that the regulatory requirements of MBS items 597 and 599 were not met in circumstances in which:
(a) The decisions "to bill an urgent rather than non-urgent Medicare item" were not "conduct" in connection with rendering or initiating services for the purposes of section 82 of the [HIA];
(b) The Committee misconstrued or misapplied the requirements of items 597 and 599;
(c) There was no logical pathway to the findings that the regulatory requirements of MBS items 597 and 599 were not met because the Committee failed to make critical intermediate findings of fact which were probative to the questions of whether, in relation to each professional attendance:
(i) The Applicant was of the opinion that the patient's medical condition required treatment within the unbroken after-hours period in, or before, which the attendance was requested;
(ii) In the circumstances that existed and on the information available when the opinion was formed, the Applicant's opinion would be acceptable to the general body of medical practitioners; and
(iii) The treatment identified as being required within the unbroken after-hours period could not be delayed until the start of the next in-hours period.
4. In the alternative to ground 3(c), that a breach of the rules of natural justice occurred or a breach of the procedures required by sections 106H, 106KD(1A) and 106L(1B) of the [HIA], when read together with section 25D of the Acts Interpretation Act 1901 (Cth), to provide the Applicant, for his response, the reasons on which the Committee intended to base its finding of inappropriate practice including findings on material questions of fact.
5. The decision involved an error of law in that the Committee could not reasonably conclude that the conduct would be unacceptable to the general body of medical practitioners in circumstances in which it had received reputable minority opinion evidence that the conduct was not unacceptable to general practitioners practising in after-hours medical deputising services.
6. The decision involved a breach of the rules of natural justice in that the Committee failed to properly consider the submissions of the Applicant.
[sic]
25 The detailed bases upon which the Determining Authority and the committee opposed the granting of an extension will be evident enough from what follows, which takes up and expands upon those bases.
26 The committee's final report containing its decision of 11 November 2019 and related reasons were conveyed to Dr Norouzi on behalf of the committee under cover of a letter of 11 December 2019. Dr Norouzi received the decision and reasons the following day, 12 December 2019.
27 The giving of the committee's report to Dr Norouzi was required by s 106L(3)(a) of the HIA. That provision also required the committee to give a copy of its final report to the Director. Thereafter, s 106L(3)(b) of the HIA required that there be a pause of at least one month by providing that the committee was to "give the final report to the Determining Authority not earlier than 1 month after the day on which a copy of the report is given to the person under review".
28 The HIA does not expressly state, either in the description in s 80 of the "main features" of the scheme or otherwise, that the purpose of this one month pause is to enable the person under review, here Dr Norouzi, to institute an application for review under the ADJR Act (or the Judiciary Act) of the committee's decision within the time provided by that Act. However, when regard is had to s 106TB of the HIA, that to me does seem to be the purpose of the one month specification in s 106L(3)(b).
29 By s 106SA of the HIA, the Determining Authority is obliged to "give the person under review a written invitation to make written submissions to the Authority, having regard to the Committee's final report and any information given by the Director under section 106S, about the directions the Authority should make in the draft determination relating to the person". In the ordinary course of events, that invitation must be given within one month after the Determining Authority has been given the committee's final report: s 106SA(3) of the HIA. However, that period for the doing of that act is one of those which s 106TB terms an "original action period".
30 Section 106TB expressly contemplates that the doing of an act such as the extending of a Determining Authority's invitation within a related original action period might be prevented by an injunction or other court order. Implicit in s 106TB is the proposition that the jurisdiction of a court of competent jurisdiction might have been invoked so as, presently materially, to challenge the final report (decision) of the committee and that such a court might be persuaded that progression of the statutory processes ordained by Pt VAA of the HIA should be stayed, pending the hearing and determination on its merits of the court challenge. One way in which the decision of a committee might be challenged in a court of competent jurisdiction is by an application made under the ADJR Act within the time prescribed by that Act. In turn, a court seized with such an application might stay the operation of a committee decision under review by an order made pursuant to s 15 of the ADJR Act. Another means of challenge is, of course, by way of an application under s 39B of the Judiciary Act.
31 This feature of Pt VAA was relevantly highlighted by the Determining Authority and the committee in opposing the granting of an extension of time.
32 There are other indications within Pt VAA of the HIA that Parliament contemplated that reasonable expedition would attend the scheme's processes. At the very outset of the processes, if the Director decides to review the provision of services by a person, the Director cannot, without consequence, leave that decision unactioned. If, before the end of the period of 12 months after making the decision, the Director has not either referred the matter to a committee, reached an agreement with a practitioner or decided to take no further action, the effect of s 94(1) of the HIA is "the Director is taken to have made a decision at the end of that period to take no further action in relation to the review".
33 Although s 106G(5) of the HIA provides in respect of a committee that, "Failure to give the final report to the Determining Authority within the period of 6 months, or that period as extended, does not affect the validity of that report", s 106G nonetheless makes elaborate provision in relation to what is at least an aspirational, timely completion of a committee's function. Inbuilt into the completion of a committee's function is the allowance of an opportunity to a person under review to make submissions suggesting changes to a draft report of the committee but a one month time period attends that opportunity: s 106KD(3) of the HIA.
34 All of the various time limits specified in Pt VAA which attend processes which occur prior to the giving of the committee's report to the Determining Authority can be seen to balance reasonable expedition with procedural fairness to a person under review and also to manifest the desirability of closure in respect of the review of the provision of a service and the contingency that there may be a repayment obligation in respect of the benefit paid or other consequences in respect of the provision of that service.
35 Another evident purpose in the various specified time limits is that there be reasonable proximity between any review and the provision of the service concerned. At the very outset of the Pt VAA processes, in relation to the request by the Chief Executive Medicare to the Director to review provision of services, s 86(2) of the HIA ordains that, "The period specified in the request must fall within the 2 year period immediately preceding the request".
36 In Lucic v Nolan, at 416, Fitzgerald J, having observed in respect of public administration decisions that it seemed a "broadly accurate" feature of the ADJR Act that there was "a legislative intention that certain standards are to be observed in respect of such decisions and actions", stated:
[That] is not the only public interest to be served. Other matters of proper public concern which are readily identifiable as relevant to the review of administrative acts and decisions include the need for finality in disputes, the efficient use of public resources, the appropriate allocation and expenditure of public funds …
37 In my view, such public interest considerations loom large in the present case and tell against the granting of an extension of time.
38 The review period with which the committee was concerned covered the period from 1 September 2016 to 31 August 2017 inclusive (Review Period). Were the committee's decision to be quashed, under s 16 of the ADJR Act if an extension were granted (or quashed by certiorari in aid of relief under s 39B akin to a constitutional writ), in excess of four years would have elapsed since the commencement of the period within which the provision of particular services under claimed item numbers occurred.
39 The Court could not, on judicial review, reach any conclusions of its own as to whether inappropriate practice had occurred in substitution for those of the committee. Depending upon the basis of quashing, the submissions of the parties, and the pleaded review grounds including alleged denial of natural justice, a remitter to the committee as presently constituted may not be apt were Dr Norouzi to succeed in his application. It might be necessary to remit the matter to the Director to set up a different committee under s 93(1) of the HIA. The HIA provides for ad hoc, bespoke committees drawn from a panel of practitioners (some of whom are additionally appointed as Deputy Directors of Professional Services Review – see Division 2 of Pt VAA). Dr Norouzi would have to be offered an opportunity to challenge the appointments to any reconstituted committee: s 96, HIA.
40 In any event, even if the matter were apt for remitter to the existing, respondent committee, there is, in light of the experience offered by the progress of committee proceedings to date in this matter, at least a realistic contingency that committee deliberations on remitter might not be finalised this year.
41 Were the committee's decision to be set aside, it would necessarily follow that the Determining Authority's decision would also have to be set aside.
42 Under the scheme, the provision of the committee's final report is not just a condition precedent to the processes and decision of the Determining Authority. The Determining Authority's decision is informed by that committee report, as well as any submissions which the person under review cares to make in response to an invitation: s 106SA(1) of the HIA. Even if it were otherwise valid, a decision of the Determining Authority could not stand if the committee's decision were quashed. All of the expenditure of public funds entailed in the deliberations of the Determining Authority to reach that decision would necessarily be set at nought if the committee's decision were set aside.
43 A decision of the committee to issue a final report, as in the present case, is not unexaminable on judicial review. However, when an application under the ADJR Act is not made within the time prescribed or when the court's jurisdiction under s 39B of the Judiciary Act is not invoked within a reasonable time after such a decision, those engaged in the administration of the HIA are entitled to assume that this particular phase of the staged processes ordained by Pt VAA of that Act is a closed chapter. I accept the submission made on behalf of the committee and the Determining Authority that it is antithetical to the integrity of the scheme for an extension of time to be granted to challenge a committee's decision after a lengthy delay. Having regard to the ordained progression of a review by a committee, an unexplained, six month delay in the institution of a challenge may readily be classified as such a lengthy delay.
44 Apart from the wasting of the expenditure of public funds (and the related time of professionally qualified persons) relating to the Determining Authority's decision, other public administration consequences flowing from a lengthy delay can be envisaged in the ordinary course of public administration according to law. As a matter of constitutional law, expenditures under the HIA must be paid by parliamentary appropriation from Commonwealth Consolidated Revenue: s 81 and s 83 of the Constitution. The Minister and those advising him for this purpose would be entitled to assume, when preparing budget estimates for parliamentary consideration of expenditure likely to be incurred in the administration of the HIA, that no provision need be made for the contingency of a fresh review, perhaps by a differently constituted committee. Similarly, the Director would be entitled to assume that those members of the panel who constituted the committee in the present case can be redeployed if needs be to another committee and that there is no need to make provision for the contingency that other panel members might have to be found to replace them in the event that it was necessary again to undertake the review. Such panel members, too, could be deployed to other tasks if needs be. There was no direct evidence of such consequences. The point of mentioning them is to highlight that public administration is neither static nor able to draw upon an inexhaustible supply of human and financial resources. It is inherently likely that there will be an opportunity cost in public administration by permitting, after a lengthy delay, challenges on judicial review to administrative decisions hitherto, for good reason, entitled to be regarded as final.
45 Of course, in a personal sense, neither the members of the committee, the Determining Authority nor the Director might suffer prejudice by the granting of an extension of time to Dr Norouzi but that says nothing about the impact on an efficient use of public resources, a consideration highlighted by Fitzgerald J in Lucic v Nolan.
46 Contrary to Dr Norouzi's submission, the evidence does not support an inference that he was always intending to challenge the committee's decision but considered that this must await the completion of the last of the Pt VAA stages via the Determining Authority making a decision. There is not a hint in Dr Norouzi's then solicitor's letter of 28 January 2020 to the Determining Authority that he regards the committee's decision as unlawful and reserves his rights to challenge it. Rather, as is made pellucid by paragraph 1.2 of that letter, his then stance was to accept the conclusion of inappropriate practice but to put forward submissions in mitigation as to the consequences which ought to follow from that in a decision by the Determining Authority:
1.2 This finding, together with the substantial practice and billing changes undertaken by Dr Norouzi demonstrates insight into the matters raised, and the significant emotional and financial burden arising from this prolonged process, offers the Determining Authority assurance that the concerns about practice will not be repeated. It is submitted that Dr Norouzi's practice should be viewed as best placed on the low end of the scale of inappropriate practice, and a corresponding minimum sanction imposed.
[Emphasis added]
47 This was not a layperson's correspondence but rather emanated from a reputable firm of solicitors, acting on Dr Norouzi's behalf. It would be quite inappropriate to draw any inference from the contents of the letter as to what legal advice, if any, Dr Norouzi had by then received as to the existence of rights of challenge by judicial review to the committee's decision or the merits of the same. I draw no such inference. He did, however, patently have access to a source of such advice. It is likewise patent that the letter does not foreshadow any challenge and does not request that the Determining Authority stay its processes pending such a challenge.
48 Like observations may be made in relation to Dr Norouzi's solicitor's letter of 3 April 2020, which took up the ordained opportunity to make submissions concerning the draft determination of the Determining Authority.
49 What is obvious is that it was only when a determination not to his liking was made by the Determining Authority that forensic ingenuity was deployed on behalf of Dr Norouzi in an endeavour to discern legal error in the committee's decision. Perhaps that had earlier occurred, perhaps it had not. That matters not. What does matter is that there was no hint either to the committee, or the Determining Authority or to the Director before the Determining Authority's decision of any such error. Dr Norouzi was apparently content to allow the statutory processes under Pt VAA of the HIA to continue. The appearance is that of a person who has rested on his rights.
50 Sevdalis v Director of Professional Services Review (No 2) offers no support for the proposition that, because an alternative jurisdictional foundation is offered by s 39B of the Judiciary Act, which has no ordained time limit for the institution of a proceeding, it necessarily follows that an extension of time must be granted to an applicant who seeks further or alternatively to invoke the Court's jurisdiction under the ADJR Act but has not so done within the time limit specified by that Act. Sevdalis v Director of Professional Services Review (No 2) is just an example of a case where respondents chose not to oppose the granting of an extension of time under the ADJR Act and, in those circumstances and given the alternative invocation of jurisdiction under the Judiciary Act, Mortimer J was disposed to grant an extension. There is no elaborate reasoning for that conclusion nor, with respect, was there any need for that, given the stance adopted by the respondents.
51 Because the discretion is not fettered, in theory, but unusually, an extension of time might be granted even where there is no, or no persuasive, explanation for delay and even where it was possible to discern some subversion of efficient public administration. The prospective merits of a proposed application under the ADJR Act might be such that the interests of justice nonetheless demanded an extension in the circumstances of a given case. As mentioned already, an extension decision can be multi-factorial and relevant factors can interplay. A truly calamitous sequel to an administrative decision obviously devoid of any lawful authority might require the granting of an extension of time even after substantial delay.
52 That is not this case.
53 Here, the prospective merits do not, as a matter of impression, appear to me to be such, when considered in conjunction with the factors already mentioned, as to warrant the granting of an extension.
54 Confidence in prospects is not enlivened by a flawed underlying premise for the proposed ADJR Act grounds. That premise is that the committee applied an incorrect standard to Dr Norouzi in assessing inappropriate practice, because he was a general practitioner and the committee ought therefore to have applied the test ordained by s 82(1)(a) of the HIA, rather than that ordained by s 82(1)(d).
55 Section 82(1) of the HIA materially provided:
82 Definitions of inappropriate practice
Unacceptable conduct
(1) A practitioner engages in inappropriate practice if the practitioner's conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that:
(a) if the practitioner rendered or initiated the services as a general practitioner–the conduct would be unacceptable to the general body of general practitioners; or
…
(d) if the practitioner rendered or initiated the services as neither a general practitioner nor a specialist but as a member of a particular profession(-)the conduct would be unacceptable to the general body of the members of that profession.
56 As a matter of ordinary English usage, one might perhaps describe Dr Norouzi, who was not a member of any specialist college during the Review Period, as a general practitioner. However, s 3 of the HIA gives the term "general practitioner" a particular meaning for the purposes of that Act:
"general practitioner" means:
(a) a medical practitioner in respect of whom a determination under section 3EA is in force; or
(b) a person registered under section 3F as a vocationally registered general practitioner; or
(c) a medical practitioner of a kind specified in the regulations.
57 On the evidence, none of the paragraphs of the definition was applicable to Dr Norouzi. Thus, s 82(1)(a) of the HIA was inapplicable to him. Instead, having regard to paragraph (a) of the definition of "practitioner" in s 81 of the HIA, it was his status as a medical practitioner which brought him within the ambit of the test specified in s 82(1)(d) of the HIA, and only that test. That being so, the relevant test was whether the conduct would be unacceptable to the general body of medical practitioners. That was the test applied by the committee.
58 The subject referred to the committee by the Director pursuant to s 93(1) of the HIA for investigation and report was the rendering or initiation of services under MBS items 597 and 599 during the Review Period. During the Review Period, MBS items 597 and 599 were in similar terms. Each applied to "urgent" attendances but at different "after hours" times.
59 Exemplifying what s 80(9) of the HIA describes as a feature of the scheme, s 106K of the HIA permits a committee investigating the provision of services included in a particular class of referred services to have regard only to a sample of the services included in the class. The committee adopted this practice in the discharge of its peer review, investigating and reporting function. Its adoption of this practice is not gainsaid by Dr Norouzi.
60 The committee's final report discloses that, in respect of the referral, the committee found that Dr Norouzi had engaged in inappropriate practice on two distinct bases:
(a) as to 8 of the services reviewed, the committee found he engaged in inappropriate practice as a result of record-keeping deficiencies and clinical decisions; and
(b) as to 38 of the services reviewed, the committee found that the criterion in MBS items 597 and 599 that "the patient's condition requires urgent medical treatment", as defined in reg 2.15.1 of the Health Insurance (General Medical Services Table) Regulation 2016, was not met.
61 No challenge was sought to be made to the finding on the first of these bases with respect to particular services. It was so much of the decision as was based on the reg 2.15.1 finding to which the grounds of review were directed.
62 Over the Review Period, there was a succession of the Health Insurance (General Medical Services Table) Regulations 2016. However, the text of reg 2.15.1 remained the substantially the same throughout:
2.15.1 Meaning of patient's medical condition requires urgent treatment
(1) For items 597 to 600, a patient's medical condition requires urgent treatment if:
(a) medical opinion is to the effect that the patient's medical condition requires treatment within the unbroken after-hours period in, or before, which the attendance mentioned in the item was requested; and
(b) treatment could not be delayed until the start of the next in-hours period.
(2) For the purposes of subclause (1), medical opinion is to a particular effect if:
(a) the attending practitioner is of that opinion; and
(b) in the circumstances that existed and on the information available when the opinion was formed, that opinion would be acceptable to the general body of medical practitioners.
63 A notable feature of reg 2.15.1 is its succession of conjunctions. Within reg 2.15.1(1), the presence of the conjunction "and" means that both the paragraph (a) criterion and the paragraph (b) criterion must be met. Again flowing from the presence of the conjunction "and", for the purposes of reg 2.15.1(2), medical opinion is only to a particular effect if each of the reg 2.15.1(2) criteria is met. Equally, if the criterion in reg 2.15.1(1)(b) is not met, because it is concluded that treatment could be delayed until the start of the next in-hours period, the effect of the conjunction is that it is immaterial whether the criterion in reg 2.15.1(1)(a) is met. In turn and consequentially, it becomes irrelevant in this circumstance to consider whether each of the reg 2.15.1(2) criteria is met.
64 In respect of the 38 services sampled, the committee found that the patient's condition did not require urgent treatment, because it was not satisfied that the treatment could not be delayed until the start of the next in-hours period; hence it was not satisfied that reg 2.15.1(1)(b) was met.
65 A committee is not a lay tribunal, entirely reliant on the presence of expert opinion from others in order to make findings of fact calling for expertise. It is constituted as a group of professional peers, charged with investigating whether there has been inappropriate practice and then making consequential findings against specified criteria. It is expected that members of a committee will "bring to his deliberations that knowledge and experience which qualified him for appointment": Reece v Webber (2011) 192 FCR 254, at [50]; see also Selia v Commonwealth of Australia [2017] FCA 7, at [104], per Perry J.
66 As to those criteria and as summarised by Hayne, Crennan and Kiefel JJ in Wong, at [223]:
First, the conduct must be 'in connection with rendering or initiating services' for which a Medicare benefit or a pharmaceutical benefit is payable. Secondly, the conduct must be such as a Committee could reasonably conclude would be unacceptable to the general body of relevant practitioners.
The use of the word "reasonably" in the s 82(1) chapeau confirms what might have been treated in any event as implicit, which is that, "conduct is to be measured [by] an objectively determined standard": Wong, at [218].
67 Dr Norouzi tendered to the committee a document entitled "peer review of medical consult notes for Dr Hamid Norouzi". It was, as the committee noted, put forward as "evidence of the views of the general body of general practitioners practising in after-hours medical deputising services" because of the regulatory rule that Dr Norouzi's opinion in relation to urgency "would be acceptable to the general body of medical practitioners".
68 As to this report, the committee stated in its reasons, at [83]:
83. At best, the report is evidence that another doctor thought Dr Norouzi's billing decisions were generally appropriate, but:
a. Its author and that person's qualifications are unknown beyond what appears in the post-hearing submission, which says the author had over 10 years' experience as a medical practitioner in Australia, 3 years' experience in deputising, and was currently working as a general practitioner. Dr Norouzi said it was written by another doctor working in similar circumstances to himself. Nonetheless, the Committee had no real basis to assess the author's expertise or objectivity.
b. The author presumably did not have the benefit of a forensic examination to the extent the Committee did, including asking detailed questions of Dr Norouzi.
c. The accuracy of the document is questionable. In the example extracted above, the patient did not have a temperature of 39° - that was history – whereas Dr Norouzi found the patient's temperature to be 37° when he attended.
d. The test applied by the report's author in order to conclude that the criteria for item 597 were "met" is not apparent. There is no reference, for example, to a need for treatment that could not wait until the next in-hours period. Each summary merely involves repeating what is in the clinical record and then an assertion that billing MBS item 597 or 599 was appropriate.
e. For some services, the conclusion that a service would have met item requirements was simply untenable. Service 29 of appendix 1 involved a history of a single, resolved episode of epistaxis and an examination finding of dry mucus in the nostril. The report states quite summarily that "billing and management is consistent with other doctors working in the after-hours field."
[footnote reference omitted]
69 The committee later recorded, at [84], by reference to these observations, that it was not "particularly assisted" by the report.
70 Dr Norouzi's judicial review ground 5, in particular, seeks to find error in the committee's discounting of this report. Support for this error is said to be found in the citation of Qidwai v Brown [1984] 1 NSWLR 100 (Qidwai v Brown), at 105, by French CJ and Gummow J in in their joint judgment in Wong, at [64], fn 90 in the course of their discussion of the heritage of the inappropriate practice test found in s 82 of the HIA. In the footnote referenced part of Qidwai v Brown, Priestley JA had stated, in respect of the "infamous conduct" criterion once used in the United Kingdom and in many Australian States as a professional disciplinary criterion:
In applying this test in regard to a rule of professional practice it would be of relevance, but not conclusive, to see whether the rule said to be broken was one, as in Meehan's case, "as to which there was no suggestion of doubt or difference of opinion in the profession".
From this it was said to follow that the committee's discounting of the report evinced error, because that report demonstrated that there was "doubt or difference of opinion in the profession".
71 This submission cannot be accepted. It seeks to substitute an observation in respect of a different statutory test for the text chosen by Parliament in s 82(1)(d) of the HIA.
72 The whole point of the committee system for which Pt VAA provides is that a committee is entitled to reach its own views, on the basis of the professional training, knowledge and experience of its members, as to whether it would be "reasonable to conclude" that the conduct would be "unacceptable to the general body of [in this case medical practitioners]". The latter, and nothing else, is the material test. I respectfully agree with an observation made by Farrell J in Nithianantha v Commonwealth of Australia [2018] FCA 2063, at [193], that conduct may be "unacceptable to the general body of medical practitioners", "notwithstanding that some practitioners may have had a different view". Equally, it is possible to envisage cases where it would be reasonable for a committee to conclude the general body of medical practitioners might allow that there is more than one clinical approach open in relation to the rendering of a particular service. As it is, for just the reasons it gave, this committee was not obliged to reach such a conclusion in the present case.
73 It was also put that, in various ways, the committee took an impermissibly narrow interpretation of "treatment". Regard to the committee's final report discloses that this submission is also one predicated on a false premise. The committee accepted that the services provided by Dr Norouzi constituted treatment. For example:
(a) In Appendix 1, Table 3, service 21, the Committee stated, "…the Committee does not accept that reassurance and education is treatment of a kind that would usually be required urgently…". Self-evidently, the committee has accepted that reassurance and education is treatment demurring only on the basis that it is not "usually" urgent.
(b) In Appendix 2, Table 3, service 11, the committee stated, "The only treatment provided was reassurance, which was not urgently required in the circumstances". Again self-evidently, the committee has accepted that reassurance is treatment, demurring only on the basis that it is not urgent "in the circumstances".
(c) In Appendix 2, Table 3, service 14, the committee stated, "The reassurance and advice afforded to the patient's parents were not treatment of a kind that could not wait to the next in-hours period". Once again self-evidently, the committee has accepted that reassurance and advice were treatment, demurring only on the basis that it was treatment that could have waited.
74 The conception of treatment adopted by the committee was that it extended to reassurance of a patient. That was exactly the conception promoted by Dr Norouzi in the present case. It is neither necessary nor desirable in these circumstances to question the correctness of that conception. It is sufficient to assume it to be correct. On the basis of that assumption and for the reasons just given, the false premise is evident.
75 The committee made it plain in its final report (at [92]) that it was "not critical, in [relation to] any service, of Dr Norouzi's decision to see a patient. It is the decision to bill an urgent rather than non-urgent medicare item that is in issue".
76 For the items the subject of the committee's investigation, the meaning of whether a "patient's medical condition requires urgent treatment" was specified by reg 2.15.1 of the Health Insurance (General Medical Services Table) Regulation 2016. As soon as the committee concluded in respect of the 38 services in question that it was not satisfied that the treatment could not be delayed until the start of the next in-hours period, it became unnecessary, for reasons already given, for it to look to the criterion in reg 2.15.1(1)(a) and thus to the criteria in reg 2.15.1(2). Its conclusion that reg 2.15.1(1)(b) was not satisfied removed this need.
77 Dr Norouzi submitted that, "The limited access to general practitioners in the area in which Dr Norouzi practised should have led the committee to then find that treatment that could not have been delayed until the next time the patient could obtain medical treatment met the requirements of 'urgent treatment'. If this submission had any merit, and it is not necessary to express any concluded view on that subject, it would be because the specification, "in the circumstances that existed and on the information available" in reg 2.15.1(2)(2) embraced a patient's geographic location and their inability, flowing from that location, to access transport and their condition that, in terms of reg 2.15.1(1)(a), their "requires treatment within the unbroken after-hours period in, or before, which the attendance mentioned in the item was requested". I find it impossible though to see that there is any room for a patient's geographic location in the reg 2.15.1(2)(b) criterion. That criterion looks to me wholly related to the patient's medical condition itself and whether, in respect of that condition, "treatment could not be delayed until the start of the next in-hours period".
78 As it was entitled to do, the committee reached its own conclusion, in respect of the medical conditions disclosed in the 38 services, that treatment could be delayed until the start of the next in-hours period. That being so, and for reasons already mentioned, consideration of reg 2.15.1(1)(a), and thus of the criteria in reg 2.15.1(2), became unnecessary.
79 A corollary of this last conclusion is that, insofar as Dr Norouzi's last submission is predicated upon an alleged denial of procedural fairness constituted by a failure by the committee to address submissions that went to reg 2.15.1(1)(a) related issues, it was unnecessary for the committee to do this, in light of the reg 2.15.1(1)(b) criterion conclusion.
80 A more general foundation for an alleged denial of procedural fairness by the committee looks likewise devoid of merit. As it was required so to do, the committee furnished its draft report to Dr Norouzi for such submissions in respect of it as he was disposed to make. He made submissions to the committee in response. It is patent from the committee's final report that the committee took those submissions into account and actively engaged with them.
81 Judicial review grounds 3(a) and 3(b) were not expressly addressed in Dr Norouzi's submissions. I assume from this that they were not regarded as having sufficient merit to warrant the granting of an extension of time under the ADJR Act. As to ground 3(c), all that need be added to the observations already made in relation to the absence of any need in the circumstances for the committee to address reg 2.15.1(1)(a) and thus the criteria in reg 2.15.1(2) in light of the conclusion about reg 2.15.1(1)(b), is that a finding of fact is not "critical" if it is unnecessary.
82 These conclusions as to prospective merits perhaps state the position more emphatically than necessary in relation to an extension of time application. However, truly, I see no prospective merit in the grounds.
83 When the absence of prospective merit is taken into account in conjunction with the other considerations mentioned above, this is not a case for the granting of an extension of time under the ADJR Act. Neither, taking into account those same considerations and especially in light of the lengthy delay in the initiation of proceedings, is it a case where it would be apt, as a matter of discretion, to grant any relief under s 39B of the Judiciary Act in respect of the committee's decision.
84 That leaves for consideration the challenge to the Determining Authority's decision. No extension of time requirement attends so much of that challenge as invokes the ADJR Act as an alternative source of jurisdiction to s 39B of the Judiciary Act.
85 As pleaded in the further amended originating application, the grounds of review are:
1. The Authority misunderstood its function and thereby constructively failed to carry out its statutory task with respect to the direction that the Applicant repay the whole amount of Medicare benefits that were paid for the MBS item 597 and 599 services, in connection with which the Applicant was found by the Committee to have engaged in inappropriate practice in the amount of $459,555.55 (less the amount for the item that the Applicant voluntarily repaid).
Particulars
(a) The Authority was required by section 106U(1)(cb) of the [HIA] to make a direction that the Applicant repay to the Commonwealth the whole or a part of the relevant Medicare benefits;
(b) The Authority wrongly considered itself bound by the Committee decision to direct that the whole of the relevant Medicare benefits be repaid; and
(c) The Authority wrongly held it was not its role to embark on an inquiry as to whether it was appropriate to order part repayment of the relevant Medicare benefits.
2. The direction that the Applicant repay the whole amount of Medicare benefits that were paid for the MBS item 597 and 599 services, in connection with which the Applicant was found by the Committee to have engaged in inappropriate practice in the amount of $459,555.55 (less the amount for the item that the Applicant voluntarily repaid), was an exercise of a power that is so unreasonable that no reasonable person could have so exercised it and was otherwise contrary to law as being legally unreasonable.
Particulars
(a) The findings of inappropriate practice were based upon the use of urgent MBS item numbers;
(b) Services were actually provided by the Applicant;
(c) It was possible for the Authority to quantify the amount which the Commonwealth should have received if the non-urgent item numbers were used in lieu of the urgent item numbers;
(d) The direction effectively treats the services as not having occurred at all;
(e) The direction results in a windfall to the Commonwealth;
(f) Further, the evidence was that the Applicant received only 50% of the Medicare benefits, 50% having been paid to his employer; and
(g) In the circumstances, the direction was an exercise of power which was so disproportionate to the objectives of Part VAA of the [HIA] as to fall outside the area of decisional freedom for a reasonable decision-maker with a due appreciation of its statutory responsibilities.
3. The direction that the Applicant be disqualified from rendering MBS item 585, 588, 591 and 594 services for a period of 6 months, was an exercise of a power that is so unreasonable, that no reasonable person could have so exercised it and was otherwise contrary to law as being legally unreasonable.
Particulars
(a) The Committee's findings of inappropriate conduct were based upon the relevant patient conditions not requiring "urgent treatment" which was an element of MBS items 597 and 599;
(b) The new MBS item numbers 585, 588, 591 and 594 do not require an element of "urgent treatment"; rather they all require "urgent assessment";
(c) The services found to be inappropriate practice by the Committee required at least "urgent assessment";
(d) There is no rational basis for disqualifying the Applicant's right to render the new MBS item services;
(e) The direction involves punishment of the Applicant that goes beyond the protective objectives of Part VAA of the [HIA] and is otherwise disproportionate; and
(f) The exercise of power to make the direction was one which no reasonable decision-maker with a due appreciation for its responsibilities could have exercised in the circumstances.
[sic]
86 By his then solicitors, Dr Norouzi put to the Determining Authority that, in respect of any repayment requirement, he ought not be required to repay the whole of the medicare benefit amounts but rather only the difference between the urgent item numbers incorrectly ascribed to the provision of the service and non-urgent item numbers which would have been applicable to the provision of the service. This submission was advanced on the basis that the committee had not found that the service was not rendered, only that it had been wrongly itemised. To require payment of the whole when a service was in fact performed and for which there was an applicable item number would, it was submitted, result in a windfall gain to the Commonwealth.
87 The submission was developed in this way by Dr Norouzi's then solicitors in their letter of 3 April 2020 to the Determining Authority:
2.6 Dr Norouzi previously submitted that the repayment amount should be limited to the difference the billing of either MBS item 597 and 599 on each attendance, with the respective non-urgent item numbers depending on the length of the consultation (eg. MBS items 5003, 5023, 5043). It is submitted that this approach considers the findings of inappropriate practice by the Committee and does not, as the Determining Authority contended in the Draft Determination, require speculation. It is merely a question of fact, which may be answered by reference to the records provided to the Committee.
2.7 This approach is consistent with the PSR's objective of ensuring the integrity of health practitioners and that Medicare benefits are accessed fairly, in accordance with the Medicare Benefit Schedule. It is submitted that the Draft Determination is contrary to this objective as it would allow Medicare to benefit, rather than reinstating the position each party would have been in if it were not for the findings of inappropriate practice by the Committee.
[footnote reference omitted]
88 A separate proposition advanced by Dr Norouzi in relation to repayment was that any repayment requirement should also be reduced so as to take into account his arrangement with the House Call Doctor service, pursuant to which he received but 50% of the medicare benefits paid for the provision of the services.
89 Neither of these propositions was accepted by the Determining Authority.
90 As to the first proposition, the Determining Authority reasoned, at [32]:
32. The Committee found inappropriate practice based on its consideration the MBS item services before it. The Determining Authority rejects the proposition that the question of whether Dr Norouzi met the requirements for other types of services can be determined by reference to the Committee's Report. The Committee made no such findings and the Determining Authority is bound by the findings that were made. The Determining Authority remains of the view that such issues were not relevant to the Committee's investigation and would involve speculation. It is not the Determining Authority's role to embark on such an inquiry.
91 As to the second proposition, that based on Dr Norouzi's fee-splitting arrangement with House Call Doctor Service, the Determining Authority reasoned that, even though he may not have retained the full medicare benefits in respect of services covered by the inappropriate practice finding, "the Commonwealth nevertheless expended those monies".
92 At the forefront of the first ground is an alleged failure on the part of the Determining Authority to understand the nature and extent of its powers, especially that conferred by s 106U(1)(cb) of the HIA:
106U Content of draft and final determinations
(1) A draft determination or a final determination must contain one or more of the following directions:
…
(cb) if any medicare benefits or dental benefits for a class of services:
(i) that were rendered or initiated by the person under review, by an employee of the person under review, or by an employee of a body corporate of which the person under review is an officer; and
(ii) in connection with the rendering or initiation of which, or of a proportion of which, the person under review or such an employee is stated in a report under section 106L, based on a finding made under subsection 106K(2), to have engaged in inappropriate practice;
have been paid (whether or not to the person under review)—that the person under review repay to the Commonwealth the whole or a part of the medicare benefits or dental benefits that were paid for the services or that proportion of the services, as the case may be;
[Emphasis added]
93 After following the required preliminaries, the Determining Authority's role was to make "a final determination in accordance with section 106U relating to the person under review": s 106TA of the HIA. It is s 106TA which gives practical voice to the feature of the scheme described in s 80(10) of the HIA, "If a Committee finds that the person under review has engaged in inappropriate practice, the finding will be reported to the Determining Authority. The Determining Authority decides what action to take".
94 It may readily be accepted that it is not the role of a Determining Authority to make any findings inconsistent with a finding of inappropriate practice in a final report of a committee. Reading s 106TA and s 106U(1)(cb) of the HIA together, it is, however, manifestly within the remit of the Determining Authority to decide whether to require repayment to the Commonwealth of the whole or a part of the medicare benefits that were paid. The emphasised words in s 106U(1)(cb) of the HIA make this clear.
95 In the circumstances of the present case, the Determining Authority was expressly requested on behalf of Dr Norouzi to exercise its power to require but part payment of the medicare benefits. It is not in any way evident either from [32] or [34] of its reasons, which look to be the critical paragraphs, or otherwise, that the Determining Authority even appreciated that it had power to require part payment. Reading the reasons as a whole and without an eye for error, the better view is that it did not.
96 Further, the part payment submission was directed to the findings of the committee that found inappropriate practice grounded in non-urgent treatment. The particular findings may be illustrated by that in respect of the service at Appendix 2, Table 3, randomly selected service number 12, 18 April 2017. Save for the characterisation as "urgent", the committee's findings take the performance of the service as described in Dr Norouzi's clinical notes (as extracted) as a given and then proceeds:
The Committee is of the opinion that the general body of medical practitioners would find Dr Norouzi's conduct in connection with the rendering of this service unacceptable for the following reasons:
The regulatory requirements of MBS item 599 were not met. Specifically, the patient's condition as diagnosed, namely a viral infection, did not require urgent treatment. Treatment was conservative (monitoring only) and advice to this effect could have waited until the next in-hours period.
97 The Determining Authority has failed to appreciate that the committee's findings include that the services claimed to have been provided were provided but not, for the reason given by the committee, in a way that met the regulatory requirements of, in the example cited, MBS item 599.
98 It was put on behalf of the Determining Authority that the course it adopted was consistent with the views expressed by Mortimer J in Sevdalis v Director of Professional Services Review (No 2), at [81] – [82]. In particular, at [81], Mortimer J stated, "There is no scope for the Determining Authority to proceed on the basis of different, additional or inconsistent factual findings to those made by the Committee".
99 A subsequent appeal from the orders made by Mortimer J in the original jurisdiction was dismissed: Sevdalis v Director of Professional Services Review [2017] FCAFC 9 (Sevdalis). One aspect of that appeal concerned the legality of the Determining Authority's decision to require full payment of the medicare benefits which had been paid. In the penultimate, [39], of the Full Court's reasons for judgment, it is stated:
The Determining Authority had regard to the appellant's submission that he should only be directed to make a partial repayment of the Medicare benefits in issue but decided, nonetheless, to direct Dr Sevdalis to repay the whole of the Medicare benefits received by him as it was open to do.
This statement must be considered in the context of the very different circumstances of that case, which materially included findings by a committee, described, at [38], in this way by the Full Court:
[The Determining Authority] had before it the statement of concerns produced by the Committee under the Act where a Committee concludes that a doctor is causing or is likely to cause a significant threat to the life or health of patients. The Committee's statement of concerns outlined features of Dr Sevdalis' treatment of his patients in relation to the examined services where the Committee concluded that there was a likelihood that the treatment would cause significant threat to the health of his patients.
100 While the Full Court did not, in terms, expressly approve the statement made by Mortimer J in the original jurisdiction in relation to the scope of the Determining Authority's role, it certainly did not cast any doubt on its correctness. It was just not necessary to consider the subject, given the issues on the appeal.
101 With respect, I do not disagree with the statements made by Mortimer J in Sevdalis v Director of Professional Services Review (No 2), at [81] – [82]. But it does not contradict a finding of a committee that a service was provided but claimed on the basis of an incorrectly specified item number, to appreciate that, in the circumstances found by that committee, a scheduled item number was always applicable to the service. That is this case. There were "non-urgent" item numbers which were put forward as applicable on the basis of the findings made by the committee.
102 The object of the scheme is expressed by s 79A of the HIA to be:
79A Object of this Part
The object of this Part is to protect the integrity of the Commonwealth medicare benefits, dental benefits and pharmaceutical benefits programs and, in doing so:
(a) protect patients and the community in general from the risks associated with inappropriate practice; and
(b) protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice.
103 If it were the case that any service tainted in any way by a committee finding of inappropriate practice had to be repaid in full, there would have been no point to the inclusion as an alternative in s 106U(1)(cb) of "in part". As was observed in Wong, at [215], there is in Pt VAA a very large conception of what constitutes inappropriate practice. Some provision of services yielding a finding of inappropriate practice will be the result of findings such as made by the committee in Sevdalis v Director of Professional Services Review (No 2); others will be the result of findings such as those made by the committee in the present case. As to a requirement for repayment, there is no "one size fits all" sequel in the subsequent decision by a Determining Authority. That decision must, inherently, be specific to the particular findings of the committee. And by express provision in s 106U(1)(cb) of the HIA, that necessarily includes the contingency of requiring part payment on the basis of those findings. In this case, and with all due respect, the Determining Authority has conspicuously failed to appreciate this in circumstances where it was expressly asked to address that subject.
104 The repayment obligation which can be required pursuant to s 106U(1)(cb) of the HIA is responsive to the object of protecting the revenue of the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice. It is not penal. That part payment is a contingency surely recognises that the result of inappropriate practice as found by a committee in some cases may require something less than repayment of the whole in order to protect the revenue of the Commonwealth. The object is certainly not enrichment of the Commonwealth in a manner inconsistent with the findings of a committee. In contrast, a decision under s 106U(1)(a) to impose a reprimand is obviously penal. In truth, s 106U provides for some penal and some protective decisions by a Determining Authority.
105 It by no means follows from the foregoing that each of the propositions put forward on behalf of Dr Norouzi offers a basis for deciding part payment only is apt. Those propositions are qualitatively different. For example, there is nothing in law which would make it follow from a committee finding that a service was rendered, and the point that, in law, and consistently with the basis of that finding, a scheduled item number, albeit not that claimed, was applicable, such that there was always an amount that, if correctly claimed, was payable, that there ought to be a further reduction of any part payment on the basis of an intramural arrangement between Dr Norouzi and House Call Doctor service. Further and fundamentally, the evaluation of such propositions is a matter for the Determining Authority, not for the Court.
106 Ground 2 is also directed to the repayment aspect of the Determining Authority's decision but alleges unreasonableness. In my view, the flaw in the decision in relation to repayment is misapprehension of an ability to require part payment and that engaging with the submissions made to it did not require any departure from the committee's findings, only intellectual engagement with them and the MBS.
107 In the event that I am mistaken as to this flaw, it would seem to me necessarily to follow from the approach of the Full Court in Sevdalis, which was, with respect, tolerant of a rather ordinary standard of administrative decision-making by the Determining Authority, that the decision as to requiring repayment was not unreasonable. It would just be that the Determining Authority had engaged with the submission and chosen, albeit for reasons briefly expressed, to adopt a decision with which some, perhaps even many, might not agree but which was, objectively, open. Whatever one might have thought based on earlier pronouncements at ultimate appellate level, the present disposition at that level is to regard a conclusion of unreasonableness as truly exceptional: Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 (SZVFW), at [11], [52], and [135].
108 SZVFW is also fatal to ground 3, which also requires a conclusion of unreasonableness to succeed. Having regard to the particulars furnished under this ground and as correspondingly developed in submissions, it is, on analysis, really a solicitation to merits review. As particularised, a persuasive case is made out as to why the particular disqualification might not have been imposed by the Determining Authority. But that does not mean that, objectively, the disqualification imposed was unreasonable. It was just one of a range of possible outcomes.
109 Further, the disqualification authority found in s 106U(1)(g) of the HIA is not keyed to the very services reviewed by the committee. As was correctly pointed out on behalf of the Determining Authority, "'Urgency' remains a key consideration in MBS items 585, 588, 591 and 594". Given the presently material basis of the inappropriate practice findings by the committee, and for the reasons given by the Determining Authority, a concern as to Dr Norouzi's understanding of "urgency" was logically and rationally connected with those findings and the disqualification. This is evident from the following passage in the Determining Authority's reasons ([36] and [37]):
36 … [The] Determining Authority is satisfied that it is important that he be given a period of time to familiarise himself with the requirements of the new item numbers to help ensure that the purposes of the scheme are met into the future.
37 In this regard, the Determining Authority notes Dr Norouzi's further submission that in circumstances where he has ceased practising in the after-hours medical deputising sector and no longer renders after-hours MBS items, the proposed disqualification would have no practical effect. That may well be the case. Equally, however, the potential impact on Dr Norouzi and his patients would be limited for as long as he does not render those MBS item services.
110 The result therefore is that Dr Norouzi has succeeded only insofar as he has challenged the repayment determination.
111 Reading s 106U and s 106TA of the HIA together, the intention appears to be that a Determining Authority will make one final determination, which may contain one or more directions. I can see no basis for the setting aside or quashing of the whole of the final determination, only the direction as to repayment. On that subject, the matter will have to be remitted to the Determining Authority for reconsideration according to law. It will be necessary to hear from the parties as to costs.
I certify that the preceding one hundred and eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.
Associate:
Dated: 21 October 2020
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2014-12-16 00:00:00
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Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining & Energy Union [2014] FCA 1373
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2014/2014fca1373
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2024-09-13T22:50:16.737847+10:00
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FEDERAL COURT OF AUSTRALIA
Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining & Energy Union [2014] FCA 1373
Citation: Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining & Energy Union [2014] FCA 1373
Parties: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION, BILL OLIVER, ELIAS SPERNOVASILIS, SHAUN REARDON, DEREK CHRISTOPHER, BILLY BEATTIE and THEO THEODOROU
File number: VID 321 of 2012
Judge: JESSUP J
Date of judgment: 16 December 2014
Catchwords: INDUSTRIAL LAW – unlawful industrial action – whether conduct of respondents amounted to a ban, restriction or limitation on the performance of building work – whether such building work was being done in accordance with the terms of an industrial instrument – whether the ban, restriction or limitation was in connection with an industrial dispute – whether respondents organised or took action to coerce a building contractor to employ or to engage a person – whether respondents organised or took action to coerce a building contractor to cease allocating its employee representatives to the building site
Legislation: Building and Construction Industry Improvement Act 2005 (Cth) ss 5, 36, 37, 38, 43, 49
Fair Work (Registered Organisations) Act 2009 (Cth)
Cases cited: Cahill v Construction, Forestry, Mining and Energy Union (No 2) (2008) 170 FCR 357
Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463
Williams v Automotive, Food, Metals, Engineering, Printing Kindred Industries Union (2009) 178 IR 458
Williams v Construction, Forestry, Mining and Energy Union (2009) 179 IR 441
Date of hearing: 14-16 July 2014
Place: Melbourne
Division: FAIR WORK DIVISION
Category: Catchwords
Number of paragraphs: 67
Counsel for the Applicant: R Dalton with M Follett
Solicitor for the Applicant: DLA Piper
Counsel for the Respondents: R Reitano with J Fetter
Solicitor for the Respondents: Slater & Gordon
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION VID 321 of 2012
BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE
Applicant
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
First Respondent
BILL OLIVER
Second Respondent
ELIAS SPERNOVASILIS
Third Respondent
SHAUN REARDON
Fourth Respondent
DEREK CHRISTOPHER
Fifth Respondent
BILLY BEATTIE
Sixth Respondent
THEO THEODOROU
Seventh Respondent
JUDGE: JESSUP J
DATE OF ORDER: 16 DECEMBER 2014
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The applicant pay the respondents' costs.
3. The applicant have liberty to apply, within seven days, for the previous order to be set aside or varied.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION VID 321 of 2012
BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE
Applicant
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
First Respondent
BILL OLIVER
Second Respondent
ELIAS SPERNOVASILIS
Third Respondent
SHAUN REARDON
Fourth Respondent
DEREK CHRISTOPHER
Fifth Respondent
BILLY BEATTIE
Sixth Respondent
THEO THEODOROU
Seventh Respondent
JUDGE: JESSUP J
DATE: 16 DECEMBER 2014
PLACE: MELBOURNE
REASONS FOR JUDGMENT
1 This application is brought under s 49 of the Building and Construction Industry Improvement Act 2005 (Cth) ("the Act") for alleged contraventions of ss 38 and 43 of that Act by the respondents at the "Yarra's Edge" Tower 8 complex, a high rise residential apartment construction project ("the project") at 1 Point Park Crescent, Docklands, Victoria ("the site").
2 The applicant is the Director of the Fair Work Building Industry Inspectorate. The first respondent, the Construction, Forestry, Mining and Energy Union ("the CFMEU") is a trade union registered as an organisation pursuant to the Fair Work (Registered Organisations) Act 2009 (Cth). The second respondent, Bill Oliver ("Oliver") was, at relevant times, the secretary of the Victorian branch of the Construction and General Division of the CFMEU. The remaining respondents, Elias Spernovasilis, Shaun Reardon, Derek Christopher, Billy Beattie and Theo Theodorou were employed by the CFMEU as organisers in that branch.
3 By a contract made on 26 November 2010, Mirvac Constructions (Vic) Pty Ltd ("Mirvac") engaged Grocon Constructors (Victoria) Pty Ltd ("Grocon") to build the project. Grocon engaged Select Cranes and Rigging Pty Ltd ("Select Cranes") to erect the tower crane that would be used on the project. By 17 February 2011, the base upon which the tower crane would be located had been constructed. On that day, the first sections of the tower crane were to be delivered to the site. The employees of Select Cranes and Grocon who were to be involved in the erection of the crane had been inducted and were on site ready to work. At about 11:25 am on that day, a Select Cranes mobile crane, which would be used in the erection of the tower crane, arrived at one of the gates, Gate 10, at the site.
4 At this point, a man wearing a black T-shirt bearing the letters "CFMEU" spoke to the driver of the mobile crane, following which the crane was taken away from Gate 10 and parked in a side street nearby where semi-trailers carrying the tower crane sections were also waiting for entry to the site. The man in the black T-shirt was not alone at Gate 10: he was in the company of a number of other similarly clad men, amongst whom were the respondents Spernovasilis, Reardon, Christopher and Beattie. It is to be inferred that (1) it was their intention to prevail upon the driver of the mobile crane not to bring the crane through Gate 10 and on to the site, and (2) the driver was prepared to act conformably with that intention. A director of Select Cranes, who was present, refused to instruct his driver to make any further attempt to bring the mobile crane on to the site. It is to be inferred that he, like his driver, was prepared to act conformably with the apparent intention of the men in black T-shirts.
5 Inquiries made by representatives of Grocon of representatives of Mirvac as to the nature of the problem which was, evidently, preventing the mobile crane from entering the site produced responses which, while described in the evidence in some detail, may be sufficiently summarised as inconclusive and unhelpful. Notwithstanding that, at about 1:50 pm Mirvac gave Grocon a written direction to proceed with the erection of the tower crane without delay.
6 At about 3:30 pm, a Grocon manager, Andrew Brinzi, arrived at Gate 3 at the site driving Grocon's own mobile crane. The respondents Reardon and Spernovasilis were standing at that gate, and they were soon joined by Christopher, Beattie and others. Reardon and another man secured the gate in the closed position using a piece of scrap metal. Brinzi told these men to get out of the way, and tooted his horn, but the men would not allow him to pass through Gate 3. After a pause of about 15-30 minutes, Brinzi again attempted to move the mobile crane on to the site, but Spernovasilis, Reardon, Beattie and others present blocked the way.
7 At about 4:20 pm, at the direction of a site representative of Mirvac, Brinzi drove the Grocon mobile crane to Gate 10 at the site. By the time he arrived there, Spernovasilis, Reardon, Beattie and others had made their way there from Gate 3, and closed and locked Gate 10 too. Grocon's entreaties to Mirvac to unlock this gate were met with responses which were, to say the least, unhelpful, but nothing turns on the detail of them. The fact is that the gate had been locked by the respondents referred to and others, and remained locked.
8 That remained the position at the end of the working day on 17 February 2011: Grocon was prevented from bringing the required mobile crane - either Select Cranes' or its own – on to the site.
9 When he learned of the problems which Grocon was encountering bringing the Select Cranes mobile crane on to the site on 17 February 2011, Grocon's employee relations manager, John Van Camp, telephoned the National Secretary of the Construction Division of the CFMEU, and was later called back by the respondent Oliver. Van Camp asked Oliver what was the reason for the picket line at the site. Oliver replied that it was "about [the] four man crane crew", and that the CFMEU did not want Grocon's "roving representatives coming onto this project". Van Camp indicated to Oliver that he was "happy to sit down and have discussions about these issues" and that Grocon "would like the picket line to disappear". Oliver's reply was that such discussions were "not going to happen". Oliver informed Van Camp that the respondent Spernovasilis, the CFMEU organiser who was responsible for the Docklands area, wanted to have a dialogue about these issues, but was not prepared to have the picket lifted while discussions were being arranged.
10 As Van Camp explained in his evidence, in Grocon's practice, a tower crane is normally manned by a crew of three, a crane driver and two dogmen. The CFMEU took the position that a crew of four should be employed on a tower crane. Grocon had not accepted that position. This manning issue was the first of the two reasons given by Oliver for the imposition of the picket at the site.
11 The second reason related to the representation of Grocon's employees working on the project. The industrial agreement between Grocon and the CFMEU - which, I infer, was applicable generally to Grocon's operations and not just at the project – contained the following provision:
An employee representative shall, upon notification to the company, be recognised as the accredited representative of the employees and, if an employee seeks representation by the representative, that representative will be allowed all necessary time during working hours to submit to the company employment related matters affecting the employees he/she represents. At all other times the employee representative will perform productive work within his/her range of qualifications and competence. Further, the employee representative shall be allowed reasonable time during working hours to attend to such job matters affecting the employees. Prior to dismissal or transfer of an employee representative two days written notice shall be given to the employee representative. Payment in lieu of notice shall not be given. In the event of a dispute about the decision of the company to transfer or dismiss an employee representative, the matter will be dealt with in accordance with the dispute settlement procedure of this agreement.
It seems to have been anticipated, when this agreement was negotiated, that the representational activities of such an employee would, or at least might, occupy a substantial amount of his or her time, as the agreement also provided for the representative to be supplied, by Grocon, with facilities for the purpose, including a fixed telephone, table and chairs, a filing cabinet, air conditioning and heating, access to stationery and other administrative facilities and a private lockable area.
12 It seems to have been the practice of Grocon's employees - a practice seemingly encouraged and facilitated by Grocon itself - to have their representatives appointed, and acting, as such with respect to different construction sites at which Grocon was, at any one time, engaged. Thus the one representative would commonly have responsibility to act as such at a number of sites. This is what Oliver meant when he referred to "roving representatives". In contradistinction to that, what the CFMEU wanted was for the representative of Grocon's employees to be someone nominated by the CFMEU, not necessarily an employee of Grocon at all. In this particular instance at the project, the CFMEU proposed that an employee of Mirvac, also engaged at the site, should be the representative of Grocon's employees. This difference of approach as between Grocon and the CFMEU was the second reason for the picket at the site on 17 February 2011.
13 Returning to the goings-on at the site as such, some time after 7:00 am on 18 February 2011 Brinzi arrived at Gate 3 in the Grocon mobile crane. He drove the crane towards the gate, but there were about 16 people, including Reardon, Beattie, Christopher and Theodorou, blocking his way. They remained in place notwithstanding Brinzi tooting his horn. That remained the situation for the remainder of that day, until the events to which I next refer.
14 After the conclusion of work at the site that day, and after those who had blocked Brinzi's access to the site had departed, Grocon prevailed upon the site representatives of Mirvac to re-open Gate 3. Brinzi then drove the mobile crane through the gate and on to the site. There followed an unseemly interchange between representatives of Grocon and representatives of Mirvac on the subject whether the former would be permitted to place the mobile crane in the position from which it would operate in the erection of the tower crane, but ultimately the Grocon view prevailed and the mobile crane was placed in that position.
15 At about 8:30 am on 19 February 2011 (a Saturday), a Grocon riggers' truck arrived near the site adjacent to Gate 3. This truck carried equipment which was to be used in the erection of the tower crane. Brinzi attempted to drive the truck on to the site by way of Gate 3. However, his path was blocked by a group which included Theodorou, Spernovasilis, Reardon, Christopher and Beattie. Brinzi asked them if he was allowed to bring the truck on to the site, and was told, "no chance". He reversed the truck away from the entrance, and parked it nearby.
16 At about 10:00 am, a Select Cranes semi-trailer carrying tower crane sections arrived at Gate 3. The group referred to in the previous paragraph ensured that the gate was shut, blocking the entrance. The driver of this semi-trailer told a Grocon representative that he was "not getting involved".
17 At about 12:30 pm, the Grocon employees who were present to carry out work on the erection of the tower crane were stood down, and no further attempt was made that day to bring any Grocon or Select Cranes vehicle on to the site.
18 On the morning of 21 February 2011, Brinzi again drove the riggers' truck towards Gate 3, but his path was again blocked by a group of about eight or ten persons, none of whom was identified in the evidence. Brinzi then removed the truck from the vicinity.
19 On the same day, Grocon instituted a proceeding in the Supreme Court of Victoria in which it sought an interlocutory injunction preventing the CFMEU and its organisers from continuing the picket at the site. An injunction to that effect was granted on 22 February 2011.
20 In a conference held on 25 February 2011, the dispute which had led to the picketing at the site was, at least for the time being, resolved.
21 The tower crane was erected at the site without incident on Saturday 26 February 2011.
22 It is alleged by the applicant that, by their conduct over the period 17-21 February 2011, the respondents Spernovasilis, Reardon, Christopher, Beattie and Theodorou:
(a) imposed a ban, restriction or limitation on the performance of tower crane erection work at the site; and
(b) organised or took action with intent to coerce Grocon or Mirvac:
• to run the tower crane activities with a crew of four, thereby employing or engaging an additional worker on that crew;
• not to allocate the employee representative responsibility on the site to Grocon's "roving representative";
• to allocate the employee representative responsibility on the site to CFMEU-preferred persons;
• to designate to CFMEU-preferred persons the duties and responsibilities of employee representative on the site.
As will be apparent shortly, in these allegations, category (a) invokes what was s 38, and category (b) invokes what was s 43, of the Act.
23 Consideration of these allegations requires, in the first instance, a tabulation of the respondents who, by their participation in activities at Gate 3 or Gate 10, and either by inferred persuasion or direct interference, prevented the admission to the site of machinery or components necessary for the erection of the tower crane. On the findings I have made above, that tabulation is as follows:
Respondent Dates
Spernovasilis 17, 19 Feb
Reardon 17, 18, 19 Feb
Christopher 17, 18, 19 Feb
Beattie 17, 18, 19 Feb
Theodorou 18, 19 Feb
On the other day 21 February 2011, I am not satisfied that these individual respondents, or any of them, took action of the kind referred to.
24 The next question is whether the activities of the relevant respondents at Gate 3 and Gate 10 amounted to contraventions of s 38 or s 43 of the Act.
25 Section 38 of the Act provided that "[a] person must not engage in unlawful industrial action". "Unlawful industrial action" was defined in s 37 of the Act as "building industrial action" which was "industrially motivated" and "constitutionally connected", and which was not "excluded action". None of those qualifiers is presently relevant. The only controversy relates to the question whether the action taken by the respondents at the gates to the site was "building industrial action".
26 With certain presently irrelevant exclusions, that term was defined in s 36 of the Act as:
(a) the performance of building work in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to building work, the result of which is a restriction or limitation on, or a delay in, the performance of the work, where:
(i) the terms and conditions of the work are prescribed, wholly or partly, by an industrial instrument or an order of an industrial body; or
(ii) the work is performed, or the practice is adopted, in connection with an industrial dispute (within the meaning of subsection (4)); or
(b) a ban, limitation or restriction on the performance of building work, or on acceptance of or offering for building work, in accordance with the terms and conditions prescribed by an industrial instrument or by an order of an industrial body; or
(c) a ban, limitation or restriction on the performance of building work, or on acceptance of or offering for building work, that is adopted in connection with an industrial dispute (within the meaning of subsection (4)); or
(d) a failure or refusal by persons to attend for building work or a failure or refusal to perform any work at all by persons who attend for building work ….
Only paras (b) and (c) of this definition are relevant to the issues in the present case.
27 "Building work" was defined in s 5 of the Act in terms which included the following:
(a) the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land, whether or not the buildings, structures or works are permanent;
…
(d) any operation that is part of, or is preparatory to, or is for rendering complete, work covered by paragraph (a), (b) or (c), for example:
(i) site clearance, earth moving, excavation, tunnelling and boring;
(ii) the laying of foundations;
(iii) the erection, maintenance or dismantling of scaffolding;
(iv) the prefabrication of made to order components to form part of any building, structure or works, whether carried out on site or off site;
(v) site restoration, landscaping and the provision of roadways and other access works ….
28 For the purposes of the definition of "building industrial action" in s 36 of the Act, "industrial dispute" was defined in subs (4) thereof to mean:
(a) an industrial dispute (including a threatened, impending or probable industrial dispute) that is about matters pertaining to the relationship between employers and employees; or
(b) a situation that is likely to give rise to an industrial dispute of the kind referred to in paragraph (a); or
(c) a dispute arising between 2 or more industrial associations, or within an industrial association, as to the rights, status or functions of members of the associations or association in relation to the employment of those members; or
(d) a dispute arising between employers and employees, or between members of different industrial associations, as to the demarcation of functions of employees or classes of employees; or
(e) a dispute about the representation of the industrial interests of employees by an industrial association of employees.
29 The questions which arise under s 38 are:
1. whether the conduct of the respondents amounted to a ban, limitation or restriction on the performance of building work; and
2. if so, whether:
(a) the building work, if performed, accepted or made the subject of an offer, was or would have been done in accordance with the terms and conditions prescribed by an industrial instrument or by an order of an industrial body; or
(b) the ban etc was adopted in connection with an industrial dispute.
30 In the applicant's case, the "work" upon the performance of which there was a ban, limitation or restriction was the work involved in the erection of the tower crane. For these purposes, the applicant did not rely on the work of the driver of the truck carrying the tower crane sections as the relevant "work". He did, however, rely on the work of the driver of the original mobile crane - that is, the person presumptively employed by Select Cranes - and on the work of Brinzi in his various attempts to bring the Grocon mobile crane, and the riggers' truck, on to the site. He relied also on the intended work of the employees of Select Cranes and Grocon in unloading the tower crane sections and the erection of the crane. There was no evidence, nor even suggestion, of any direct attempt to prevent these employees from erecting the crane or from otherwise carrying out their normal work. For them, the problem was that the wherewithal for the doing of their work had not been allowed on to the site.
31 It is established on the pleadings that the work of these employees of Select Cranes and Grocon was, or would have been, done in accordance with terms and conditions prescribed by an industrial instrument. However, it is not so established, and it does not otherwise appear from the evidence, that the work of the driver of the Select Cranes mobile crane was, or would have been, done in accordance with terms and conditions prescribed by such an instrument.
32 As to Andrew Brinzi, the applicant accepted that, because of his managerial position, the work he was performing when he attempted to drive the Grocon mobile crane, and later the riggers' truck, on to the site was not, or would not have been, done in accordance with terms and conditions prescribed by an industrial instrument or by an order of an industrial body. It was submitted on behalf of the applicant, however, that, to the extent that there was a ban, limitation or restriction on his work, it was adopted in connection with an industrial dispute. It was put that the CFMEU was in dispute with Grocon about the manning of the tower crane and the recognition of employee representatives, and that it was in connection with that dispute that the conduct of the CFMEU organisers at the gates to the site was engaged in. This submission, to which the respondents had no credible answer, must be accepted.
33 Thus the "work", the performance of which might have been the subject of a ban, limitation or restriction within the meaning of the definition of "building industrial action" in the Act, was, on the applicant's case, either or both of the work of the employees of Select Cranes and Grocon who were going to unload the tower crane sections and to erect the crane on site, and the work of Brinzi in attempting to bring the Grocon mobile crane and riggers' truck on to the site. It remains to consider whether the respondents' conduct was such as imposed a ban etc on that work.
34 I commence with the work of the employees of Select Cranes and Grocon who would have unloaded the sections of the tower crane, and erected that crane. Here, the applicant put his case two ways. First, it was said that the conduct of the respondents Spernovasilis, Reardon, Christopher, Beattie and Theodorou at the gates to the site was, as such, a restriction or limitation on the performance of that work, and secondly, it was said that that conduct was indicative of the fact that a ban had been placed by the CFMEU on the performance of that work. The respondents contested those propositions. They submitted that there was no ban, limitation or restriction on any such work. The evidence, they submitted, was concerned only with the events which took place at the gates to the site as such.
35 At each of these levels, the respondents relied upon the judgment of the Full Court in Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 as authority for the proposition that picketing activity did not come within provisions the equivalent of paras (b) and (c) of the definition of "building industrial action". In that judgment, Wilcox and Cooper JJ made a distinction between two kinds of picketing: one which did no more than communicate information and one which involved preventing or hindering people from working, or from offering for or accepting work. The former would not amount to a "ban limitation or restriction on the performance of work". However:
On the other hand, if the picket takes the form of preventing or hindering people from performing, accepting or offering for work, its effect is to limit or restrict the performance of work, or the acceptance of, or offering for, work. Such conduct may be regarded as falling literally within par (c) of the definition of "industrial action". However, consistently with the tentative view of the Full Court in [Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1988) 89 FCR 200], we think the paragraph ought to be read as applying only to limitations on the work of those imposing the ban. The history of the legislation and policy considerations persuade us it is likely Parliament intended to confine the paragraph in this way.
(91 FCR at 486 [52]).
36 Their Honours then considered "the history of the legislation and policy considerations", and concluded:
As we have already observed, picketing which does not involve obstruction and besetting does not fall within the definition of "industrial action"; it does not relate to the performance of work in the circumstances specified in par (a), (b), (c) or (d) of the definition. Such conduct does not need the protection of s 170MT(2) because it is not actionable by anyone. Only picketing which involves obstruction and besetting, and is therefore an actionable tort, gives rise to policy considerations as to whether it was intended to be protected from suit, or should be so covered if the language will permit.
Picketing which interferes with a person's liberty and freedom of movement infringes that person's common law rights; in particular, the right to free passage in public places and on public roads and footpaths: see Williams v Hursey at 78-79; Melbourne Corporation v Barry (1922) 31 CLR 174 at 196, 206; City of Keilor v O'Donohue (197l) 126 CLR 353 at 363; Fourmile v Selpam Pty Ltd (1998) 80 FCR 151 at 186. There is a presumption in the interpretation of statutes that there is no intention to interfere with common law rights or basic common law doctrines unless the words of the statute expressly or necessarily require that result: Baker v Campbell (1983) 153 CLR 52 at 123.
To interpret par (c) of the definition of "industrial action" in such a way as to include picketing infringing upon the rights and freedoms of others, would be to confer statutory immunity on such conduct; provided only it was engaged in upon proper notice to the employer and for the purposes of negotiating a certified agreement or an AWA. It would authorise interference with the rights, not only of the employer, but also of other affected persons who, but for the immunity, would have a right of action at common law. The interpretation would substitute, for a remedy in common law courts of competent jurisdiction, a mere right to apply to the Commission for an order prohibiting the conduct. Bearing in mind the presumption mentioned in the last paragraph, we do not think the definition should be interpreted in that way. We do not discern a clear indication in the Act that Parliament contemplated that picketing involving obstruction and besetting, and which therefore amounts to an actionable tort, may be protected industrial action, provided only it did not involve, or was not likely to involve, personal injury, wilful or reckless destruction of property or unlawful taking, keeping or use of property.
(91 FCR at 491-492 [71]-[73]).
37 The "policy considerations" to which their Honours referred were, of course, substantially informed by the statutory context in which the term "industrial action" arose under the Workplace Relations Act 1996 (Cth) ("the WR Act"), namely, the provision of an immunity from civil suit to a party who engaged in industrial action pursuant to a bargaining notice given under that Act. That context is not presently relevant, but the legislature's enactment of the definition of "building industrial action" in 2005 by reference to the template which had been the subject of detailed consideration by the Full Court in Davids Distribution leaves little scope to suppose that their Honours' interpretation was not intended to be adopted.
38 It was not, however, by reference to such a simple truism that Kenny J decided the point which arose in Cahill v Construction, Forestry, Mining and Energy Union (No 2) (2008) 170 FCR 357. In disposing of a no-case submission, her Honour held that a ban, limitation or restriction on the performance of work which had been imposed directly by a union official came within the terms of the definition of "building industrial action" in s 36 of the Act, notwithstanding that it had not been imposed by the employees to whose work it applied. Her Honour undertook a detailed consideration of Davids Distribution, and held:
… I accept that the Full Court in Davids 91 FCR 463 was concerned with the scope of "protected action", as the passage set out at [41] above shows. Here the Full Court reasoned that, to the extent that picketing involved obstruction and "besetting", it could constitute "industrial action", but that it did not do so because such conduct was an actionable tort in respect of which the Parliament was not to be taken to have conferred statutory immunity. Subject to what appears at [49] below, this reasoning is independent of, and separate from, the Full Court's earlier conclusion that para (c) of the definition of "industrial action" ought to be construed so as to extend only to bans, limitations and restrictions imposed by employees performing the work in question.
(170 FCR at 375 [43]).
39 Commencing with the question whether the observations of Wilcox and Cooper JJ in Davids Distribution had been obiter, Kenny J said:
The status of the observations in Davids 91 FCR 463 is less clear, but, plainly enough, as already noted, the focus of Davids was on picketing. Accordingly, the observations in Davids on the scope of the definition of "industrial action" in s 4(1) of the WR Act are to be considered in this light. Furthermore, it is to be borne in mind that the Full Court in each case was not concerned with the BCII Act but with the WR Act, being different though related legislation. Whilst I must take such guidance from Davids and [Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1988) 89 FCR 200] as I can, they provide no clear and definitive answer to the question whether or not the words "a ban, limitation or restriction on the performance of building work" in paras (b) and (c) of the definition of "building industrial action" in s 36(1) of the BCII Act refer to a ban, limitation, or restriction imposed only by employees, or can extend to union action.
(170 FCR at 377 [49]).
40 Cahill was not a picketing case. In a situation of the kind with which Kenny J was confronted, there could, with respect, be very little doubt as to the applicability of the definition of "building industrial action". I said something on this subject in Williams v Construction, Forestry, Mining and Energy Union (2009) 179 IR 441, 474-475 [95] and, having reconsidered the matter, there is nothing which I would wish to add to that. However, the present case is not one in which a traditional work ban was imposed by a union official. Although the connotation of "picketing" is variable, the defining feature of the action taken by the respondents is that it involved procuring vehicles not to enter the site, or preventing them from doing so. As a matter of normal industrial relations terminology, it is convenient to describe this kind of action as picketing.
41 Uninstructed by authority, I would analyse the application of the definition of "building industrial action" to picketing situations as follows. To prevent, even by direct physical means, the entry of a person or vehicle on to a site where work is being, or would be, carried out does not, of itself, amount to a ban, limitation or restriction upon the performance of that work. It may have the effect that the work cannot be performed, and it may even have been intended to have that effect. But it would not, in my view, be a ban, limitation or restriction upon the performance of the work. The paradigm instance of such a picket might be, for example, preventing the delivery of some supplies which are essential to one aspect of the work of some specialised group of workers. In this example, the workers themselves would be waiting on site, ready to work, and their union would presumptively have no ban etc on them doing so. The fact that they did not work would be the consequence of the supplies not being at hand. Those picketing the entrance to the site would not, in my view, be imposing a ban, limitation or restriction on the performance of the work of the specialised workers.
42 On the other hand, a picket may operate in such a way that it does amount to such a ban, or at least to a limitation or restriction. Another way of achieving the same industrial objective as that discussed in the previous paragraph may be for the picketers to prevent the specialised workers themselves from entering the site. Indeed, a traditional form of the industrial picket had as its object preventing workers who chose not to strike with their fellows from continuing to work. This may, at least to an extent, have been the situation in Davids Distribution. Whether or not it was, it is not difficult to appreciate the sense in which Wilcox and Cooper JJ held that, if a picket took the form of preventing or hindering people from performing, accepting or offering for work, its effect was a restriction or limitation upon such things. With respect, I would say that, in the circumstances postulated, a restriction or limitation upon the performance of work might be more than merely the effect of picketing of this kind: it may, and in my opinion would, be the appropriate characterisation of the conduct itself.
43 Had I been free to decide the present case by reference to the reasoning set out in the two preceding paragraphs, I would have held that the conduct of the CFMEU organisers at the gates to the site amounted to a restriction or limitation on the performance of Brinzi's work, but not on the performance of the work to be done by the Select Cranes and Grocon employees who were waiting on the site, ready to unload and then to erect the tower crane.
44 The present area is not, however, free of authority. I am unable to read the reasons of Wilcox and Cooper JJ in Davids Distribution as involving anything less than the proposition that picketing, even if obstructive, was not to be understood as amounting to a ban, limitation or restriction on the performance of work, within the terms of the definition of "industrial action" with which their Honours were concerned, unless the "work" under consideration was that of employees who were participating in, or who had otherwise imposed, the conduct which constituted the picket. There is, in my view, no escape from the proposition that this aspect of the definition "ought to be read as applying only to limitations on the work of those imposing the ban": Davids Distribution 91 FCR at 486 [52]. I recognise, of course, that their Honours were strongly influenced by considerations of legislative policy which were informed by the provisions, and the objects, of the WR Act, but the adoption, effectively unaltered, of the same definition by the draftsman of the Act in 2005, six years after the publication of their Honours' reasons, leaves no scope for misunderstanding Parliament's intention.
45 I recognise also that the interpretation preferred by their Honours in Davids Distribution was not taken to its logical, and literal, conclusion in Cahill when Kenny J was confronted with a conventional work ban imposed by a union official. If that were the fact situation in the present case, I would follow her Honour, as I did in Williams v CFMEU. But such is not the present fact situation. The present case is concerned with picketing, and does not, in my view, fall within the exception to Davids Distribution which Kenny J recognised in Cahill. I was informed by counsel for the applicant that this is the first occasion, in a final adjudication, upon which a court has been required to rule upon the question whether, because of Davids Distribution, picketing can ever be described as a ban, limitation or restriction on the performance of building work in the context in which that expression is used in the definition of "building industrial action", or in an analogous context. My own judgment in Williams v Automotive, Food, Metals, Engineering, Printing Kindred Industries Union (2009) 178 IR 458, 465-466 [31], where I held that Cahill did not deal with picketing situations, was interlocutory. The result is that Davids Distribution remains the most recent, directly applicable, binding authority. For reasons given above, I am unable to distinguish it.
46 In the present case, the restriction on the performance of building work which was presumptively brought about by the conduct of the respondents Spernovasilis, Reardon, Christopher, Beattie and Theodorou in preventing mobile cranes, and a truck carrying tower crane components, from entering the site was not imposed by those doing, or who would do, the work concerned. It follows that, by acting in this way, those respondents did not engage in building industrial action within the meaning of the Act.
47 At trial, there was some discussion of the question whether it might be inferred from the fact of the picket, from the nature of the deliveries that were prevented from entering the site, from the respondent Oliver's statements to Van Camp on 17 February 2011 and from the CFMEU's omission to call evidence that the CFMEU had imposed a ban on the performance of tower crane erection work at the site. If the facts were to be seen in this light, the picket, although not a ban etc in its own right, might nonetheless have been a circumstance from which the existence of a ban might be inferred. To the extent that the applicant's case might be understood as relying on such a construct of the facts, I would hold that it does not come within the Further Amended Statement of Claim. The only primary contravenors, as alleged by the applicant, were Spernovasilis, Reardon, Christopher, Beattie and Theodorou. As alleged, the CFMEU's liability was derivative. It follows that, if these organisers did not contravene s 38 in relation to the unloader/erector employees of Select Cranes and Grocon, the CFMEU cannot be liable for having done so.
48 Oliver was not alleged to have contravened s 38 of the Act in a primary sense. His liability was said to arise as an accessory under s 48(2) of the Act. Since I have, in relation to those unloaders and erectors, rejected the applicant's case in relation to those alleged to be primarily liable under s 38, it follows that there was no contravention to which Oliver could have been an accessory under s 48(2).
49 I turn next to consider whether the conduct of the CFMEU organisers at the gates to the site was a ban, limitation or restriction upon the work of Andrew Brinzi. It will be recalled that he attempted to bring the Grocon mobile crane and the riggers' truck on to the site, but was physically impeded from doing so by those organisers. As a matter of normal language, what they did was to limit or to restrict the performance of his work. However, this limitation or restriction was applied by persons other than the one who would otherwise have performed the work, Brinzi himself. The notion that the legislation might have contemplated that the definition would be satisfied in a case, such as the present, only where the truck driver whose entry on to a site was banned, limited or restricted by himself or herself does strike one as odd, but, on another way of looking at it, it may be no more than a reflection of the fact that the definition was concerned only with conventional industrial action where workers, or their union, placed bans on work which they would normally be expected to perform.
50 In the circumstances, because of their Honours' ruling in Davids Distribution, I must hold that the conduct of the organisers in preventing the entry on to the site of the vehicles driven by Andrew Brinzi was not a ban, limitation or restriction on the performance of his work and was not, therefore, building industrial action within the meaning of the Act.
51 It follows that the applicant's case under s 38 of the Act must be rejected.
52 Turning next to the applicant's case under s 43 of the Act, subs (1) thereof provided as follows:
A person (the first person) must not organise or take action, or threaten to organise or take action, with intent to coerce another person (the second person):
(a) to employ, or not employ, a person as a building employee; or
(b) to engage, or not engage, a person as a building contractor; or
(c) to allocate, or not allocate, particular responsibilities to a building employee or building contractor; or
(d) to designate a building employee or building contractor as having, or not having, particular duties or responsibilities.
On the applicant's case here, the respondents were the first persons within this provision, and either Grocon or Mirvac, or both, was or were the second person or persons.
53 I would commence by putting Mirvac to one side. There is nothing in the facts of the case from which any intention to coerce Mirvac might be inferred.
54 On the findings made above, there is no difficulty in concluding that, at least on 17, 18 and 19 February 2011, the individual respondents (although not necessarily all of them on every such day) took action with intent to coerce Grocon to agree to a crew of four on the operation of the tower crane and to agree also to some proposition, the detail of which is not so clear (and to which I shall have to give further consideration below), in relation to the representation of employees on the project. The contentious issue is whether such action came within the terms of s 43(1).
55 Commencing with the manning issue, the applicant relied first on paras (a) and (b) of s 43(1), and contended that it was the individual respondents' intent to coerce Grocon to "run the tower crane activities with a four man crew, thereby employing or engaging an additional worker on the tower crane crew". The only evidence of the intent of those on the picket was Van Camp's evidence of his conversation with Oliver. Oliver did not require or request Grocon to employ or to engage a person: he required that the crew used to operate the tower crane be four strong. Of itself, the intent conveyed by those words would not fall within para (a) or para (b) of s 43(1) of the Act.
56 The problematic aspect of the applicant's allegation lies in so much of it as is introduced by the adverb "thereby". The allegation is that the addition of a fourth member to the existing (proposed) crane crew would inevitably require the employment or the engagement of an additional worker. In my view, this allegation cannot be sustained. It is based upon a misapprehension of the content of the prohibition in the Act and, in any event, has not been made good on the facts.
57 Section 43(1) was concerned with the thing which the target of the presumptive coercion was placed under pressure to do, as a matter of the actor's "intent". It was not concerned with the effect or consequences of the target acting as demanded. I accept that, in discerning the intent of the putative wrongdoer, the court would not be confined to the immediate consequences of what he or she demanded. The wrongdoer may use conduct A as a means of coercing a builder into following course B. At one level, that is what happened in the present case: the respondents at the picket were preventing the admission of the mobile crane to the site as a means of coercing Grocon into employing a crew of four on the tower crane. But the focus under s 43(1) must be on the intent of the wrongdoer, rather than on the consequences - even the inevitable consequences - of the target acting as intended. In the passage commencing "thereby" in this allegation, the applicant seeks to invoke a prohibition which goes beyond anything for which the Act provided.
58 Turning to the facts, there was nothing in the evidence that would sustain a finding that the implementation of a four-man crew on the tower crane would inevitably require Grocon to employ or to engage any person. Indeed, some evidence given by Mr Van Camp would seem to suggest that it would not. He said:
If the work is all over one level geographically, it might be only necessary to have two dogmen, depending on where the crane is located and where the loads are to be picked up from and placed. If you are working on a multi-storey project, it makes commercial sense to have more dogmen because what you don't want is the crane waiting while a dogman travels between floors. So it's not uncommon for us to have high degree of dogmen interspersed throughout a project that is able to assist as required.
On most occasions, Grocon's crane crew are principally working as dogmen. As a business, Grocon look upon what is most effective from a production point of view and although we have got people within the business who are not principally engaged as dogmen, but they do hold dogman qualifications and are quite versed in that skill. This gives Grocon, a degree of flexibility that would normally not exist otherwise.
In relation to his conversation with the respondent Oliver referred to in para 9 above, Mr Van Camp said:
I told Oliver that it was Grocon's policy to have a three-man crane crew and that Grocon would continue to utilise a three-man crane crew. If however, we felt that there was a need from a production or an efficiency point of view that we needed more, we would make that decision; but we weren't going to be artificially told by anyone, including Mirvac, that we needed more than three.
59 Likewise, Grocon's Victorian Health, Safety and Environmental Manager, Joe Brinzi, said in his evidence that, at a meeting held at the start of every day, tasks were identified which required additional crewing, that crane crewing was "activity based", and that decisions with respect to crane crewing were made at those meetings.
60 For the reasons I have given, I reject the applicant's case that the individual respondents took their coercive action with the intent referred to in s 43(1)(a) or (b) of the Act.
61 I turn next to so much of the applicant's s 43 case as related to the employee representative issue. Here reliance was placed on paras (c) and (d) of s 43(1). It was alleged that the individual respondents had the intent of coercing Grocon (1) not to allocate employee representative responsibility on the site to Grocon's "roving representatives", (2) to allocate employee representative responsibility on the site to "CFMEU-preferred persons", and (3) to designate to "certain CFMEU-preferred persons" the duties and responsibilities of employee representative on the site.
62 Notwithstanding the spare terms in which Oliver expressed the nature of this demand in his conversation with Van Camp on 17 February 2011, there is no doubt but that his, and inferentially the other individual respondents', intent was to coerce Grocon to agree to a regime under which it would accept as employee representatives, for the purposes of the provision in the industrial agreement to which I have referred in para 11 above, persons who were not in its own employ at all but who were employed by Mirvac. From that factual starting point, the question is whether that intent fell within the terms of s 43(1)(c) or (d).
63 I would hold not. The relevant provision in the industrial agreement was concerned with the recognition by Grocon of an employees' representative, with allowing that representative to have time away from work for the performance of his or her representative functions and with the provision to that representative of certain facilities. To describe these things as the allocation of responsibilities, or as the designation of the representative as the employee or contractor with particular duties or responsibilities, would involve a most unnatural straining of the statutory language. Under the agreement, it was the employees themselves who would take the steps that might, arguably, be so described. It was not their employer, Grocon.
64 Of course, the present question is not whether the respondents' intent was such as might have been accommodated within the regime contemplated by the industrial agreement, it is whether that intent was of a kind referred to in s 43(1), an issue which must be considered in its own right. However, given that Mr Oliver did not use the words of the statute in expressing his, and the other respondents', intent, it is inevitable that the court will look at the regulatory context in which Grocon was operating when attempting to understand the practical connotation of what he did say. If there were some readily apparent step which satisfied the statutory conditions and which it was within Grocon's power to take, either as employer or as party to the industrial agreement, it might be a simple matter to infer that Oliver had the intent to coerce Grocon to take that step. There was, however, no such step.
65 At base, the essence of Oliver's demand was that Grocon accept as representatives under the industrial agreement persons who were not its own employees, give them access to so much of the site as was under Grocon's control, permit them to interact with its own employees in the same way as would be the entitlement of representatives who were its own employees, and provide for them the range of facilities that such representatives would enjoy. In my view, such a demand did not come within the terms of paras (c) or (d) of s 43(1) of the Act.
66 It follows from the above reasons that the application must be dismissed.
67 I am not aware of any reason why costs would not follow the event but, lest there be one, I shall reserve to the applicant liberty to apply within seven days.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.
Associate:
Dated: 16 December 2014
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federal_court_of_australia:fca/single/1997/1997fca1138
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1997-10-29 00:00:00
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Fuller, Donald v Minister for Primary Industries & Energy [1997] FCA 1138
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1997/1997fca1138
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2024-09-13T22:50:18.753919+10:00
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FEDERAL COURT OF AUSTRALIA
ADMINISTRATIVE LAW - application for leave to appeal from refusal to grant an extension of time to file proceedings under the Administrative Decisions (Judicial Review) Act 1977 - futility of intended proceeding and availability of relief by application for review under the Administrative Appeals Tribunal Act 1975.
Administrative Decisions (Judicial Review) Act 1977
Biological Control Act 1984 (Cth)
Agricultural and Veterinary Chemicals Code Act 1994 (Cth)
Veterinary Chemicals Code Act 1994 (Cth)
Federal Court of Australia Act 1976 (Cth)
Swan Portland Cement Ltd v Comptroller-General of Customs (1989) 25 FCR 523 distinguished
Hall v The Nominal Defendant (1966) 117 CLR 423 applied
Barrett v The Minister of State for Immigration, Local Government and Ethnic Affairs (1989) 18 ALD 129 applied
Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 applied
Jarrett v Seymour (1993) 46 FCR 557 applied
DONALD FULLER v MINISTER FOR PRIMARY INDUSTRIES AND ENERGY and NATIONAL REGISTRATION AUTHORITY
WAG 94 OF 1997
BURCHETT, LEE AND CARR JJ
PERTH
29 OCTOBER 1997
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAG 94 of 1997
GENERAL DIVISION
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: DONALD FULLER
Applicant
AND: MINISTER FOR PRIMARY INDUSTRIES AND ENERGY
First Respondent
NATIONAL REGISTRATION AUTHORITY
Second Respondent
JUDGES: BURCHETT, LEE AND CARR JJ
DATE OF ORDER: 29 OCTOBER 1997
WHERE MADE: PERTH
THE COURT ORDERS THAT:
Leave to appeal be refused with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAG 94 of 1997
GENERAL DIVISION
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: DONALD FULLER
Applicant
AND: MINISTER FOR PRIMARY INDUSTRIES AND ENERGY
First Respondent
NATIONAL REGISTRATION AUTHORITY
Second Respondent
JUDGES: BURCHETT, LEE AND CARR JJ
DATE: 29 OCTOBER 1997
PLACE: PERTH
REASONS FOR JUDGMENT
BURCHETT AND LEE JJ:
The applicant, Mr Fuller, sought an extension of time to bring proceedings under the Administrative Decisions (Judicial Review) Act 1977 in respect of certain decisions of each of the respondents made in respect of the biological control of rabbits by means of the rabbit calicivirus. The application was refused by French J on 7 August 1997 for reasons then stated by him in detail. Among those reasons was "the absence of a succinct and clear statement of grounds of review in the application itself and the impression that emerges from the various materials put before the Court that this is in substance a challenge to the merits of decisions which have to be taken on the basis of expertise and scientific evaluations."
Mr Fuller filed a purported notice of appeal against his Honour's dismissal of his application and, the matter being held by this Full Court to be interlocutory, sought leave to appeal. That leave was refused with costs. We now deliver our reasons.
Despite the comment of French J concerning the absence of any clear statement of grounds, and a further comment that fraud had been alleged without any specification of the basis of that charge, the argument presented to us over about a full day still omitted any clarification or particularisation of the sweeping allegations made by Mr Fuller. His lengthy submission was entirely concerned with issues going to the scientific merits of the programme with which the impugned decisions were concerned.
This Court is not the place for debate about the conclusions of scientists in proceedings for judicial review of administrative decisions. There is on foot, the Court was informed, an application to the Administrative Appeals Tribunal (AAT) for merits review which raises the same fundamental questions. That application was not brought by Mr Fuller, but by a body in which he is an important figure. He has already conducted one case on its behalf in opposition to the decisions in question. For all that appears, he could have been, had he so chosen, a party to the application in the AAT. At all events, the existence of the AAT proceedings is a relevant matter. The likelihood that an extension of time would simply multiply the proceedings in which Mr Fuller has an interest, in which the essential issues relate to the merits of the calicivirus programme, is a strong reason to refuse the application. Cf. Swan Portland Cement Ltd v Comptroller-General of Customs (1989) 25 FCR 523 at 530.
But the fundamental weakness in Mr Fuller's application is that, despite the enormous amount of work he has done in the compilation of some seven volumes of appeal books, he has still failed to identify grounds for judicial, as distinct from merits, review. And the nature and content of his oral presentation to this Court confirm that the failure is not one of legal drafting, but of substance. In the circumstances, a grant of an extension of time would be a futility.
It was for these reasons that the Court refused leave to appeal.
I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of their Honours Justice Burchett and Justice Lee
Associate:
Dated: 29 October 1997
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAG 94 of 1997
general division
on appeal from a judge of the federal court of australia
BETWEEN: DONALD FULLER
Applicant
AND: MINISTER FOR PRIMARY INDUSTRIES AND ENERGY
First Respondent
NATIONAL REGISTRATION AUTHORITY
Second Respondent
JUDGES: BURCHETT, LEE & CARR JJ
DATE: 29 OCTOBER 1997
PLACE: PERTH
REASONS FOR JUDGMENT
CARR J:
Introduction
This is an application for leave to appeal from a judgment of a judge of this Court, given on 7 August 1997, refusing the applicant's motion for an extension of time in which to apply for an order of review of the decisions referred to below. Interlocutory relief, which the applicant sought in the same motion, was also denied.
The applicant sought review of two decisions. The first decision, made by the Minister for Primary Industries and Energy on 13 September 1996, was to declare Rabbit Calicivirus Disease organism to be an agent organism for the purposes of the Biological Control Act 1984 (Cth) ("the Minister's Declaration"). The second decision, made on 16 September 1996, by the National Registration Authority for Agricultural and Veterinary Chemicals ("the NRA") was to register the Rabbit Calicivirus Injection as a chemical product under the Agricultural and Veterinary Chemicals Code Act 1994 (Cth). The relevant statutory provisions are set out in the reasons for judgment of the learned primary judge.
It is necessary to set out some of the factual background of this and a preceding matter. On 10 October 1996 an organisation called the Defence Coalition Against RCD Inc. ("the Defence Coalition") filed an application in this Court seeking orders under the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") seeking review of the Minister's Declaration. I shall refer to those proceedings as "the First Application". On 18 October 1996 the Defence Coalition filed a motion seeking orders that the NRA be joined as second respondent to the First Application and that interlocutory relief be granted in the form of a "suspension" of the Authority's decision to register the Rabbit Calicivirus Injection.
On 23 October 1996 Nicholson J dismissed the claim for interlocutory relief and stood over the motion for joinder. On 25 October 1996 a motion was filed on behalf of the Minister seeking an order that the First Application be dismissed. That motion was based on two grounds. First, that there was no reasonable basis for the application. The second ground was that the Defence Coalition was not a person whose interests were adversely affected by the Minister's decision, and was thus not a "person aggrieved" within the meaning of that expression in the ADJR Act.
The applicant in these proceedings (Mr Donald Fuller) was at all material times a member of the committee of the Defence Coalition and in fact represented the Defence Coalition in the proceedings before Nicholson J. On 20 February 1997 Nicholson J heard argument in respect of the Minister's motion. On 12 March 1997 Nicholson J dismissed the First Application and ordered the Defence Coalition to pay the Minister's costs. His Honour held that the Defence Coalition lacked the necessary standing to qualify as a "person aggrieved" for the purpose of bringing the First Application. He said:
"The true position is the decision does not affect the members of the applicant differently from ordinary members of the public except in relation to their emotional and intellectual interest in the subject matter of the decision. On the applicant's case it is not shown that success in the action would relieve it of a detriment or disadvantage to which it would otherwise have been subject to an extent greater than an ordinary member of the community."
On 10 April 1997 Mr Fuller filed an application on his own behalf for an extension of time in which to apply for an order of review of the two abovementioned decisions. The learned primary judge heard that motion on 13 June 1997 and delivered a reserved judgment on 7 August 1997. His Honour stated that on the basis of "the obviously contentious evidence and the questionable legal case disclosed thus far" he would not, if time were to be extended, grant interlocutory relief. His Honour noted that the relevant delay appeared to be in the order of nearly three months.
As his Honour observed, the substance of the basis for the application for an extension of time seemed to be that it was the failure of the Defence Coalition in the Federal Court which gave rise to the perceived need for the applicant to bring a personal application for review. There was evidence before his Honour (from Mr Fuller) that his reluctance to become involved as an applicant in the First Application related to his desire not to expose himself to the potential costs of that litigation. His Honour expressed the following conclusions:
"The discretion of the Court to extend time to bring an application under the AD(JR) Act is a broad one to be exercised by reference to a variety of factors which may differ from case to case. These include the nature and seriousness of the issues sought to be raised in proceedings and the explanation for the delay which has occurred. [There then followed a citation from Johns v Australian Securities Commission (1992) 108 ALR 405 at p 413] ... There is no doubt from Mr Fuller's perspective that he regards the issues raised in this matter as of utmost seriousness in the public interest. However, the delay which has ensued would appear to have resulted from his own choice to effectively proceed to the challenge of the decision through the vehicle of the Defence Coalition. In that sense the delay which has occurred is as a result of his own decision. Also relevant to the exercise of my discretion is the absence of a succinct and clear statement of grounds of review in the application itself and the impression that emerges from the various materials put before the Court that this is in substance a challenge to the merits of decisions which have to be taken on the basis of expertise and scientific evaluations."
His Honour refused an extension of time for the bringing of an application for an order of review of the two abovementioned decisions.
Reasoning
The cases establish that an order refusing an extension of time allowed for commencing proceedings is an interlocutory judgment - see for example Hall v The Nominal Defendant (1966) 117 CLR 423; Barrett v The Minister of State for Immigration, Local Government and Ethnic Affairs (1989) 18 ALD 129. Accordingly, an appeal from such an order is conditioned upon the grant of leave to appeal - see s 24(1A) of the Federal Court of Australia Act 1976 (Cth).
The traditional test to be applied in respect of an application for leave to appeal in these circumstances is to ask two questions, namely:
1. Is the order attended with sufficient doubt to warrant it being considered by a Full Court?
2. If the judgment is wrong, would it work substantial injustice?
This second factor is particularly important if the interlocutory order is, in effect, final. [In practical terms, I would regard the judgment at first instance as falling into that category.] This approach has fairly recently been approved in cases such as Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 and Jarrett v Seymour (1993) 46 FCR 557.
In my view, the primary judge's order is not attended with sufficient doubt. On the contrary, I think that it was plainly correct. The reason advanced by the applicant for the delay was, in the circumstances, not one which could amount to an acceptable explanation for the delay. The applicant has not simply stood by and allowed another party to bring an unsuccessful application for judicial review of administrative action and, upon dismissal of that application, sought an extension of time so that he could personally relitigate the same subject matter. As mentioned above, the applicant was a committee member of the Defence Coalition and conducted its case in the First Application. He was thus fully aware of all aspects of the proceedings. Had he wished to advance his own personal case, he had every opportunity to join in those proceedings with the Defence Coalition. He chose not to do so because, at that stage of the proceedings (i.e. before judgment was given against the Defence Coalition), he did not want to expose himself to an order for costs. Furthermore, in almost a day of addressing us, the applicant demonstrated that he had no succinct or clear statement of grounds of review. He thus confirmed the conclusion expressed by the primary judge in the last sentence of the passage which I have set out above.
Even if the judgment at first instance were wrong (which in my view is quite clearly not the case), no substantial injustice would result. I refer to the pending merits review proceedings mentioned to in the joint judgment of Burchett and Lee JJ, which I have had the advantage of reading.
For the foregoing reasons I joined in the decision to refuse leave to appeal.
I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Carr
A/g Associate:
Dated: 29 October 1997
Counsel for the Applicant: Mr D Fuller appeared in person
Counsel for the First Respondent: Mr P R Macliver
Solicitor for the First Respondent: Australian Government Solicitor
Counsel for the Second Respondent: Mr W S Martin with Mr M Van Brakel
Solicitors for the Second Respondent Messrs Clayton Utz
Date of Hearing: 15 October 1997
Date of Judgment: 29 October 1997
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federal_court_of_australia:fca/single/1999/1999fca0605
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1999-04-01 00:00:00
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Gillow v George Weston Foods Ltd [1999] FCA 605
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1999/1999fca0605
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2024-09-13T22:50:20.082927+10:00
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FEDERAL COURT OF AUSTRALIA
Gillow v George Weston Foods Ltd [1999] FCA 605
ROBIN WALTER GILLOW & MARY POULIOS v GEORGE WESTON FOODS LTD
V 95 OF 1999
NORTH J
1 APRIL 1999
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 95 OF 1999
BETWEEN: ROBIN WALTER GILLOW
First Applicant
MARY POULIOS
Second Applicant
AND: GEORGE WESTON FOODS LTD.
Respondent
JUDGE: NORTH J
DATE OF ORDER: 1 APRIL 1999
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The application for interim relief made by the second applicant is dismissed.
2. The application for interim relief made by the first applicant and a directions hearing is adjourned until 10:15 a.m. on 26 April 1999.
3. The proceeding is referred to the mediation of Registrar Efthim at 2:15 p.m. on 14 April 1999, and the Registrar is to report the outcome of the mediation to the court by 23 April 1999.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 95 OF 1999
BETWEEN: ROBIN WALTER GILLOW
First Applicant
MARY POULIOS
Second Applicant
AND: GEORGE WESTON FOODS LTD.
Respondent
JUDGE: NORTH J
DATE: 1 APRIL 1999
PLACE: MELBOURNE
EX TEMPORE REASONS FOR JUDGMENT
1 This is an application for interim relief by Robin Walter Gillow and Mary Poulios. The respondent is their employer, George Weston Foods Ltd. Mr Gillow and Ms Poulios seek orders that, until the final determination of this matter or further order of the Court, the respondent by itself, its servants or agents (a) roster Mr Gillow to work in his current employment in the loading bay area of the bakery referred to in the statement of claim for at least as many hours per week as any other casual worker in that area, and in any event not less than 85 per cent of the hours rostered for permanent employees in that area; (b) roster Ms Poulios to work in her former employment in the crumpet line of the bakery referred to in the statement of claim for as many hours per week as any other casual worker on that line, and in any event not less than 85 per cent of the hours rostered for permanent employees on that line.
2 The claim for interim relief is based upon the allegation that the respondent has acted in breach of section 298K of the Workplace Relations Act 1996 (Cth) (the Act) which relevantly provides:
An employer must not for a prohibited reason or for reasons that include a prohibited reason do or threaten to do any of the following ...
(b) injure an employee in his or her employment,
(c) alter the position of an employee to the employee's prejudice.
3 The prohibited reason relied upon in this application is to be found in section 298L(1)(a) of the Act as follows:
Conduct referred to in subsection 298K(1) or (2) is for a prohibited reason if it is carried out because the employee, independent contractor or other person concerned:
(a) is, has been, proposes to become or has at any time proposed to become and officer, delegate or member of an industrial association;...
4 In essence, the applicants complain that they, as casual employees of the respondent, have suffered a reduction of work hours for the reason that they have joined the Automotive Food Metals Engineering Printing and Kindred Industries' Union (the Metals Union) and/or because they resigned from the Liquor, Hospitality and Miscellaneous Workers' Union (the Miscellaneous Workers' Union).
5 In order to obtain interim relief in accordance with general principles, the applicants must demonstrate a serious issue to be tried and that the balance of convenience favours the grant of an injunction. It is convenient to deal with the claims for orders by each of the applicants separately. I first deal with the claim by Ms Poulios.
6 In relation to the question of the existence of a serious issue to be tried in respect of Ms Poulios, and indeed on the balance of convenience, I have come to a clear view. In my view she should not have interim orders made in her favour, principally for two reasons. The first is that I am not satisfied on the material that she has in fact suffered any reduction in her hours of work. The summary of hours worked over a number of years compared with recent hours worked, does not reveal a significant difference. This is confirmed by a comparison of the hours worked in January and February in the last three years.
7 Thus, Ms Poulios has not satisfied me that there is a serious issue to be tried, that she has suffered any prejudice or injury in her employment as is required.
8 But even if I were satisfied that Ms Poulios had made out a serious issue to be tried, there is not sufficient evidence that the balance of convenience favours the grant of interim relief. Mr Borenstein, who appeared on behalf of the applicants, frankly acknowledged that Ms Poulios could not say by reference to specific evidence that she would be prejudiced between now and the trial of the action by failing to earn what she said she previously had been earning.
9 Mr Borenstein also put on behalf of Ms Poulios that the balance of convenience favoured the making of orders because she would, in the absence of orders, be pressured into joining the Miscellaneous Workers' Union. The difficulty with this argument is that Ms Poulios herself does not rely upon this potential pressure on her as a reason for interim relief. For those reasons I refuse to make orders in favour of Ms Poulios.
10 In relation to Mr Gillow, the position is different. There is no doubt in his case that he has suffered a recent reduction in hours worked by comparison to pre‑December 1998 working hours. I do not accept the argument of the respondent that Mr Gillow's situation fails to amount thereby to an injury or alteration of position within the meaning of section 298K(1)(b) and (c). That is to say, I do not accept that, even if the reduction in hours was the result of a general policy to reduce casual hours, it is not a relevant injury or alteration to the prejudice of Mr Gillow within the meaning of the section.
11 Dr Jessup who appeared with Mr Wheelahan for the respondent, argued that Mr Gillow could not establish a serious issue to be tried in the absence of evidence that Mr Gillow was eligible to be a member of the Metals Union. That, he said, was a requirement for liability and the onus of proof of membership lay upon the applicants. In my view Mr Gillow has sufficiently established the basis for liability under sections 298K(1) and 298L(1)(a) by deposing to the fact that he joined the Metals Union. However, I need not rely upon this matter to find that Mr Gillow has established a serious issue to be tried. Rather, I base that conclusion upon the fact that there is evidence that Mr Gillow resigned from the Miscellaneous Workers' Union and that his failure to remain a member of that union is arguably one of the reasons which motivated the respondent to shift Mr Gillow from the bakery into the loading area and thereby to cause him to suffer a reduction in his hours of work.
12 Dr Jessup, however, contended that the primary basis upon which the applicants had always put their case was that the conduct of the respondent was motivated by the applicants joining the Metals Union and not by the applicants failing to join or resigning from the Miscellaneous Workers' Union. On the evidence as a whole, it is arguable at this stage of the proceedings that such a distinction is too fine and that in truth the applicants' contention involves either or both of the propositions that the respondent's conduct was motivated by a disfavour against the applicants joining the Metals Union and resigning from the Miscellaneous Workers' Union.
13 I move to the question of the balance of convenience in respect of Mr Gillow. I do so against the background that Mr Gillow's claim, although raising a serious issue to be tried, does not raise a strong claim. There is considerable difficulty in his case. Mr Gillow deposes that the reduction of hours made his financial position extremely difficult. His evidence arouses sympathy and makes a strong claim that Mr Gillow be given some protection by orders of the Court until the trial of the action.
14 Against that, however, is the evidence that towards the end of 1998, apparently irrespective of the events surrounding Mr Gillow, the respondent changed its policy relating to the use of casual workers. Thereafter as a matter of general policy and without any prohibited reason the respondent intended to ensure that casual workers were used for no more than approximately 24 hours per week. I approach the making of orders compelling the respondent to offer Mr Gillow a specified number of hours or a number of hours formulated by reference to the maximum hours worked by other casual employees, with a deal of reticence.
15 One reason is that the respondent is entitled to change its policy for reasons it regards as proper, provided it is not influenced by any prohibited reason. Another is that orders in favour of Mr Gillow will necessarily cause disadvantage to other employees. Their position should be taken into account in a general way although their particular circumstances were not before the Court.
16 I am called upon in this application to make the orders in the terms sought by Mr Gillow. Although I hold that he is entitled to the protection of some orders of the Court, I am not satisfied that the orders proposed are appropriate in the circumstances. Rather, I intend to refer the matter to mediation by a registrar of the Court, which will occur at 2:15 pm on 14 April 1999, and give liberty to Mr Gillow to return to Court if the matter is not resolved at the mediation and he wishes to argue in light of the findings I have made that some other form of appropriate orders should be made.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.
Associate:
Dated: 1 April 1999
Counsel for the Applicant: H Borenstein
Solicitor for the Applicant: Maurice Blackburn & Co
Counsel for the Respondent: C Jessup QC
Solicitor for the Respondent: Corrs Chambers Westgarth
Date of Hearing: 1 April 1999
Date of Judgment: 1 April 1999
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FEDERAL COURT OF AUSTRALIA
A v Boulton [2004] FCAFC 101
PRACTICE & PROCEDURE – statutory interpretation – Australian Crime Commission – appeal from a single Judge – examination for purposes of a 'special operation/investigation' – where appellant not yet charged but claimed that a charge was imminent –whether Australian Crime Commission Act 2002 (Cth) abrogates privilege against self-incrimination.
Australian Constitution, Ch III
Judiciary Act 1903 (Cth) ss 39B, 78A(1)
Administrative Decisions (Judicial Review) Act 1977 (Cth) s 5
Australian Crime Commission Act 2002 (Cth) ss 4, 7A, 12(1), 24A, 25A, 28, 29, 30, 46B
National Crime Authority Legislation Amendment Act 2001 (Cth)
Acts Interpretation Act 1901 (Cth), s 15AB
Hammond v The Commonwealth (1982) 152 CLR 188 cited
HKSAR v Lee Ming Tee (2001) 4 HKCFAR 133 cited
Mansfield v Australian Crime Commission [2003] FCA 1059 cited
Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 referred to
Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 referred to
Sorby v The Commonwealth (1983) 152 CLR 281 considered
Re Bolton; ex parte Beane (1987) 162 CLR 514 referred to
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 192 ALR 561 cited
Hamilton v Oades (1989) 166 CLR 486 cited
Hill v Crook (1873) LR 6 HL 265 referred to
Bropho v Western Australia (1990) 171 CLR 1 referred to
R v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13 referred to
Griffin v Pantzer [2004] FCAFC 113 referred to
Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 referred to
Police Service Board v Morris (1985) 156 CLR 397 referred to
Mortimer v Brown (1970) 122 CLR 493 referred to
Clyne v Commissioner of Taxation (1985) 8 FCR 130 referred to
Australian Securities and Investments Commission v Loiterton (2000) 101 FCR 370 referred to
Grant v Deputy Commissioner of Taxation [2000] FCA 1298 referred to
C v National Crime Authority (1987) 78 ALR 338 referred to
R v Holmes (unreported, Supreme Court of Tasmania, Cox CJ, 17 December 1996) referred to
Re Mining Houses of Australia Ltd (1981) ACLC 40-744 referred to
Re Bull [1998] 2 Qd R 224 cited
Sogelease Australia Ltd v Griffin [2003] NSWSC 178 cited
A V WILLIAM MCLEAN BOULTON, EXAMINER, AUSTRALIAN CRIME COMMISSION, AUSTRALIAN CRIME COMMISSION AND ATTORNEY-GENERAL OF THE COMMONWEALTH
V 198 OF 2004
BEAUMONT, DOWSETT & KENNY JJ
30 JUNE 2004
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 198 OF 2004
AN APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: A
APPELLANT
AND: WILLIAM MCLEAN BOULTON, EXAMINER, AUSTRALIAN CRIME COMMISSION
FIRST RESPONDENT
AUSTRALIAN CRIME COMMISSION
SECOND RESPONDENT
ATTORNEY-GENERAL OF THE COMMONWEALTH
THIRD RESPONDENT
JUDGES: BEAUMONT, DOWSETT & KENNY JJ
DATE OF ORDER: 30 JUNE 2004
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the costs of the first and second respondents; no order be made for the costs of the third respondent.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 198 OF 2004
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: A
APPELLANT
AND: WILLIAM MCLEAN BOULTON, EXAMINER, AUSTRALIAN CRIME COMMISSION
FIRST RESPONDENT
AUSTRALIAN CRIME COMMISSION
SECOND RESPONDENT
ATTORNEY-GENERAL OF THE COMMONWEALTH
THIRD RESPONDENT
JUDGES: BEAUMONT, DOWSETT & KENNY JJ
DATE: 30 JUNE 2004
PLACE: MELBOURNE
REASONS FOR JUDGMENT
BEAUMONT J:
1 I agree with the orders proposed by Kenny J and with her Honour's reasons.
I certify that the preceding one (1) numbered paragraphs is a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.
Associate:
Dated: 30 June 2004
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 198 OF 2004
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: A
APPELLANT
AND: WILLIAM MCLEAN BOULTON, EXAMINER, AUSTRALIAN CRIME COMMISSION
FIRST RESPONDENT
AUSTRALIAN CRIME COMMISSION
SECOND RESPONDENT
ATTORNEY-GENERAL OF THE COMMONWEALTH
THIRD RESPONDENT
JUDGES: BEAUMONT, DOWSETT & KENNY JJ
DATE: 30 JUNE 2004
PLACE: MELBOURNE
REASONS FOR JUDGMENT
DOWSETT j:
2 I agree with the orders proposed by Kenny J and with her Honour's reasons.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.
Associate:
Dated: 30 June 2004
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 198 OF 2004
BETWEEN: A
APPELLANT
AND: WILLIAM MCLEAN BOULTON, EXAMINER, AUSTRALIAN CRIME COMMISSION
FIRST RESPONDENT
AUSTRALIAN CRIME COMMISSION
SECOND RESPONDENT
ATTORNEY-GENERAL OF THE COMMONWEALTH
THIRD RESPONDENT
JUDGES: BEAUMONT, DOWSETT & KENNY JJ
DATE: 30 JUNE 2004
PLACE: MELBOURNE
REASONS FOR JUDGMENT
KENNY J:
Introduction
3 This is an appeal from a judgment of a single Judge of this Court.
4 The appellant applied to this Court for judicial review (pursuant to s 39B of the Judiciary Act 1903 (Cth) and s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth)) of a decision by the first respondent, an examiner appointed under the Australian Crime Commission Act 2002 (Cth) ('the Act'). By his decision, the first respondent required the appellant to answer questions put during the course of an examination by the first respondent.
5 The context of the first respondent's decision was that the appellant had received a summons requiring him to appear before the first respondent to give evidence concerning an alleged illegal importation of cigarettes. The appellant appeared before the first respondent and, by his counsel, submitted that he was not required to answer the first respondent's questions, claiming, as a preliminary point that, on the true construction of the Act, his common law privilege against self-incrimination still existed.
6 On 27 May 2003, the first respondent decided that the Act abrogated the privilege against self-incrimination, so that the appellant was not justified in refusing to answer the questions; and that it was not improper to examine the appellant, notwithstanding the appellant's claim that he was likely, in the future, to be charged with offences relating to the subject matter of the examination.
7 The appellant then, as has been said, moved this Court for judicial review of the first respondent's decision. The Attorney-General of the Commonwealth, pursuant to s 78A(1) of the Judiciary Act 1903 (Cth), intervened in the matter. The application was dismissed by the primary Judge (see A v Boulton [2004] FCA 56). The appellant now appeals from that judgment.
The statutory scheme
(a) General
8 By virtue of the Act and the Australian Crime Commission Establishment Act 2002 (Cth), the second respondent has replaced the National Crime Authority.
9 The Act confers coercive powers upon the second respondent to investigate 'serious and organised' crime, that is, an offence involving two or more offenders, substantial planning and organisation and, ordinarily, involving the use of sophisticated methods and techniques; and which is committed, amongst other things, in conjunction with other offences of a like kind, and, again amongst other things, is a "serious offence" within the meaning of the Proceeds of Crime Act 2002 (Cth).
10 The Act describes the second respondent's functions as follows (s 7A):
'(a) to collect, correlate, analyse and disseminate criminal information and intelligence and to maintain a national database of that information and intelligence;
(b) …
(c) to investigate, when authorised by the Board, matters relating to federally relevant criminal activity;
(d) to provide reports to the Board on the outcomes of those operations or investigations;
(e) to provide strategic criminal intelligence assessments, and any other criminal information and intelligence, to the Board;
(f) …
(g) such other functions as are conferred on the ACC by other provisions of this Act or by any other Act.'
11 Section 12(1) provides that where the second respondent, in carrying out an operation/investigation, obtains evidence of an offence against a law of the Commonwealth, or of a State or Territory, being evidence that would be admissible in a prosecution for that offence, the second respondent's Chief Executive Officer must assemble the evidence, and give it to the Attorney-General of the Commonwealth or the State, as the case requires, or the relevant law enforcement agency.
(b) The conduct of examinations
12 Section 46B provides for the appointment of examiners, who must have been enrolled as legal practitioners for a period of at least five years prior to their appointment (s 46B(3)).
13 The Act also confers coercive powers upon examiners in this respect. Section 24A provides that an examiner may conduct an examination for the purposes of a 'special ACC operation/investigation'. Section 4 defines that expression as:
'(a) an intelligence operation that the [second respondent] is undertaking and that [its] Board has determined to be a special operation; or
(b) an investigation into matters relating to federally relevant criminal activity that the [second respondent] is conducting and that the Board has determined to be a special investigation.'
14 Section 4 also defines the expression 'federally relevant criminal activity' as:
'(a) a relevant criminal activity, where the serious and organised crime is an offence against a law of the Commonwealth or of a Territory; or
(b) a relevant criminal activity, where the serious and organised crime:
(i) is an offence against a law of a State; and
(ii) has a federal aspect.'
(The term 'federal aspect' is defined in s 4 as having the meaning given by s 4A(2), the provisions of which are unnecessary to mention.)
15 Subsection 25A(1) provides that an examiner may regulate the conduct of proceedings at an examination, as he or she thinks fit. Subsection 25A(3) provides that an examination must be held in private, and authorises the examiner to give directions as to the persons who may be present. Subsection 25A(2) provides that a person giving evidence may be represented by a legal practitioner who may, pursuant to subs 25A(6), so far as the examiner thinks appropriate, examine or cross-examine any witness on any matter that the examiner considers relevant to the ACC operation/investigation. Subsection 25A(9) provides that the examiner has wide powers to direct that evidence given at, or the contents of any document produced at, or any information relating to, an examination not be published.
16 Subsection 28(1) authorises an examiner to summon a person to appear before the examiner at an examination to give evidence and to produce such documents or other things (if any) as are referred to in the summons. Before issuing such a summons, the examiner must be satisfied that it is reasonable in all the circumstances to do so, and record in writing the reasons for the issue of the summons. By subs 28(2), a summons under subsection (1) must be accompanied by a copy of the determination of the Board that the intelligence operation is a 'special operation', or that the investigation into matters relating to 'federally relevant criminal activity' is a 'special investigation'. Subsection 28(3) provides that the summons must set out, so far as is reasonably practicable, the general nature of the matters in relation to which the examiner intends to question the person, though nothing in the subsection prevents the examiner from questioning the person in relation to any matter that relates to a special ACC operation/investigation. Annexed to the summons issued in this matter was a lengthy statement of the general nature of the allegations that a relevant offence may have been committed, including allegations of defrauding the Commonwealth by evasion of tax, customs duty or excise duty, money laundering, offences under the Customs Act 1901 (Cth) or the Excise Act 1901 (Cth), corruption of a Commonwealth officer and bribery of a Commonwealth public official.
17 Subsection 28(4) provides that an examiner who is holding an examination may require a person appearing at the examination to produce a document or other thing. Subsection 28(5) provides that an examiner may, at an examination, take evidence on oath or affirmation.
18 Subsection 29(1) authorises an examiner, by notice in writing, to require a person to attend at a time and place specified in the notice, before a person specified in the notice, and to produce at that time and place to the person so specified a document or thing specified in the notice, being a document or thing relevant to a special ACC operation/investigation. Subsection 29(3A) provides that a person who refuses or fails to comply with a notice commits an indictable offence, punishable upon conviction by a fine not exceeding 200 penalty units or imprisonment for a period not exceeding five years.
Failure to answer questions at an examination
19 Subsection 30(1) provides that a person served, as prescribed, with a summons shall not fail to attend. The failure to answer questions is dealt with by s 30(2) and (3) as follows:
'(2) A person appearing as a witness at an examination before an examiner shall not:
(a) when required pursuant to section 28 either to take an oath or make an affirmation – refuse or fail to comply with the requirement;
(b) refuse or fail to answer a question that he or she is required to answer by the examiner; or
(c) refuse or fail to produce a document or thing that he or she was required to produce by a summons under this Act served on him or her as prescribed.
(3) Where:
(a) a legal practitioner is required to answer a question or produce a document at an examination before an examiner; and
(b) the answer to the question would disclose, or the document contains, a privileged communication made by or to the legal practitioner in his or her capacity as a legal practitioner;
the legal practitioner is entitled to refuse to comply with the requirement unless the person to whom or by whom the communication was made agrees to the legal practitioner complying with the requirement but, where the legal practitioner refuses to comply with the requirement, he or she shall, if so required by the examiner, give the examiner the name and address of the person to whom or by whom the communication was made.' (Emphasis added.)
Subsection 30(3) does not, however, affect the law relating to legal professional privilege (s 30(9)).
20 Subsections 30(4) and (5) deal with the use of immunity available in some cases, if self-incrimination is claimed, as follows:
'Use immunity available in some cases if self-incrimination claimed
(4) Subsection (5) limits the use that can be made of any answers given at an examination before an examiner, or documents or things produced at an examination before an examiner. That subsection only applies if:
(a) a person appearing as a witness at an examination before an examiner:
(i) answers a question that he or she is required to answer by the examiner; or
(ii) produces a document or thing that he or she was required to produce by a summons under this Act served on him or her as prescribed; and
…
(c) before answering the question or producing the document or thing, the person claims that the answer, or the production of the document or thing, might tend to incriminate the person or make the person liable to a penalty.
(5) The answer, or the document or thing, is not admissible in evidence against the person in:
(a) a criminal proceeding; or
(b) a proceeding for the imposition of a penalty;
other than:
(c) confiscation proceedings; or
(d) a proceeding in respect of:
(i) in the case of an answer — the falsity of the answer; or
(ii) in the case of the production of a document — the falsity of any statement contained in the document.'
A person who contravenes subs 30(1), (2) or (3) is guilty of an indictable offence (s 30(6)).
The appellant's case before the primary Judge
21 By his application for an order of review, the appellant sought review of the first respondent's decision, purportedly under the Act, determining that the appellant was required to answer questions to be put by the first respondent by way of examination under the issued summons; alternatively, the appellant sought review of these matters as conduct of the second respondent in obtaining evidence for dissemination under the Act.
22 In his application, the appellant claimed that the proceeding involved a matter arising under the Constitution, or involving its interpretation for several reasons, to be mentioned below.
23 The appellant then claimed:
'1. A declaration that the applicant is entitled to rely on the privilege against self-incrimination and thereby refuse to answer questions under Summons No. MS8.
2. An injunction restraining the continuation of the examination under Summons No. MS8.
3. A prohibition on the continuation of the examination under Summons No. MS8.
4. An order quashing the aforesaid decision of the first respondent.
5. An order that the affidavit of Glenda Black in support of a search warrant related to the Summons MS8 be provided to the applicant.
6. An order that Glenda Black attend the examination under Summons MS8 and be cross-examined on behalf of the applicant.
7. Such other orders under section 16 of the Administrative Decisions (Judicial Review) Act 1977 as this Honourable Court deems appropriate.'
(It may be noted here that no claim was made at first instance, or before us, that these proceedings did not raise, in the constitutional sense, a 'matter' for consideration (cf. Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570–571).)
24 Counsel for the appellant, Mr Faris QC, advanced several (alternative) contentions as follows:
· the Act did not abrogate the privilege against self-incrimination;
· if, contrary to his primary contention, the Act did abrogate the privilege, it would be beyond power; and
· the second respondent should not be permitted to examine the appellant in relation to a crime for which he was being investigated, and in relation to which, he believed, he was shortly to be charged.
THe decision of the primary Judge
25 It will be convenient to deal with his Honour's consideration of each of the appellant's submissions in turn.
Did the Act abrogate the privilege?
26 His Honour noted the appellant's submission that subs 30(4) limited the use of any answers given at an examination by a witness who claimed that the answers 'might tend to incriminate' him or her. However, counsel submitted that subsection (4) had to be read in conjunction with s 30(5), which conferred what he described as 'direct use immunity' on the person, where he or she had claimed the privilege. Again, because subs 30(5) only conferred a 'partial' immunity, there was no necessary implication of abrogation. Specifically, Mr Faris contended:
'…we say the privilege is abrogated only in cases where the protection afforded in section 30 effectively protects the witness in all circumstances, and here it only effectively protects the witness with relation to answers.' (emphasis added by his Honour)
27 Rejecting the argument, the Judge said:
'Mr Faris's submission stated the effect of s 30(5) too narrowly. The subsection provides protection not merely against the use of answers but also against the admissibility of documents or things produced. Nonetheless, he was correct in noting that the subsection does not provide protection against the use of evidence derived from such answers, documents or things.'
28 Citing Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 ("Pyneboard") at 341, his Honour observed that an intention to abrogate the privilege may be more readily implied in matters where an obligation is imposed in general terms to assist an administrative agency to secure information about an offence.
29 The primary Judge noted that, after the conclusion of argument, the decision in Mansfield v Australian Crime Commission [2003] FCA 1059 ("Mansfield") was given, in which Carr J had held that the Act had abrogated the privilege. Carr J had said:
'… the obvious purpose of subsections (4) and (5) is to protect an examinee from the consequences of abrogation of the privilege against self-incrimination. I can think of no other purpose for these provisions. As Mason Wilson and Dawson JJ noted in [Sorby v The Commonwealth (1983) 152 CLR 281] at 310-311, when a legislature abrogates that privilege, it often gives compensatory protection to the witness. Not only do I think that abrogation of that privilege is to be implied from these three subsections, but I think that it is necessarily to be so implied. There is nothing else in the statutory context which points in any other direction and in particular no provision removing the obligation to answer on the basis of a reasonable excuse, as was the case in relation to the State Act in Sorby.'
30 His Honour, agreeing with Carr J, said (at [100]):
'… the Act abrogates the privilege against self-incrimination. It does so by necessary implication. It provides some compensation to witnesses who are compelled to incriminate themselves. However, that compensation was deliberately limited to use immunity, and did not extend to derivative use immunity. Contrary to Mr Faris's submission, it does not follow that the privilege has not been abrogated, or that it has been "partially" abrogated at most. Rather, the privilege has been entirely abrogated, though there has been "partial" compensation by way of use immunity.'
31 His Honour observed that he was fortified in his conclusion by the reasons of the Court of Final Appeal of the Hong Kong Special Administrative Region in HKSAR v Lee Ming Tee (2001) 4 HKCFAR 133 ("Lee Ming Tee"), citing, amongst others, the following passage from that reasoning:
'Where, as in the present case, the words of the statute clearly abrogate the privilege and substitute for it a limited direct use prohibition, the privilege is abrogated in its entirety and the scope of the substituted protections, if any, becomes a matter of statutory construction.'
If the Act purported to abrogate, was it beyond power?
32 Counsel for the appellant conceded that since the High Court had repeatedly held that Parliament could validly abrogate that privilege, this was only a formal submission.
Should the respondents question a person who believes he is 'about to be charged'?
33 His Honour noted the submission of counsel for the appellant that, once a body with coercive investigative powers, such as the second respondent, has formed the view that a person has committed an offence, and decided that that person should be charged, it cannot question that person, under compulsion, regarding the circumstances of that offence. Counsel submitted that the second respondent was acting beyond its powers in proposing to question the applicant.
34 Mr Faris sought to distinguish between questions directed towards obtaining 'general intelligence or investigative material', which might be permissible, and questions put to "an accused person or a person about to be accused", which were not. He submitted that the appellant fell into the latter category.
35 Counsel relied primarily upon Hammond v The Commonwealth (1982) 152 CLR 188 ("Hammond") in support of his contention, submitting that it would be a contempt of court for a Royal Commissioner to question a person facing charges about the subject matter of those charges. He also sought to invoke other policy considerations, including those that underlie the privilege, and what he described as 'the interests of fairness and justice'.
36 The Judge was unable to accept the contention. He said (at [127] – [129]):
'In Hammond, Gibbs CJ said at 198:
"Once it is accepted that the plaintiff will be bound, on pain of punishment, to answer questions designed to establish that he is guilty of the offence with which he is charged, it seems to me inescapably to follow, in the circumstances of this case, that there is a real risk that the administration of justice will be interfered with. … [T]he fact that the plaintiff has been examined, in detail, as to the circumstances of the alleged offence, is very likely to prejudice him in his defence." (emphasis added)
I am unable to accept Mr Faris's contention that there is no material difference between a person who has been charged with an offence, and a person who may be "about to be charged". There can never be any certainty that a person "about to be charged" will in fact be charged.
Likewise, I am unable to accept Mr Faris's submission that the use of coercive powers to question a person "about to be charged" necessarily amounts to an interference with the administration of justice. …'
The appellant's grounds of appeal
37 The appellant commenced his written outline of argument, by submitting that:
'(a) [the] privilege is part of the common law of human rights based on the protection of personal freedom and human dignity, and
(b) it is based on a deep seated belief that those who allege the commission of a crime should prove it themselves and not be able to compel the accused to prove it for them, and
(c) the privilege is a fundamental common law right which protects a person from being compelled to answer questions or produce documents or things if to do so might tend to incriminate that person, and
(d) the privilege protects the person not only from incriminating himself directly under a compulsory process, but also from making a disclosure that might lead to incrimination, or to the discovery of real evidence of an incriminating character.
38 In this outline, the appellant contended that the primary judge should not have followed Carr J in Mansfield; rather, he should have held that the Act did not abrogate the privilege, by necessary implication, because:
(a) Subsections 30(4) and (5) provided limited compensation for a person refusing to answer on the ground of a claim of self-incrimination in that compensation did not extend beyond use immunity to derivative or indirect use immunity; and
(b) The right of persons under examination to refuse to answer questions was preserved by subs 30(2), which provides that a person shall not refuse or fail to answer a question that he or she is required to answer by the examiner; and this implies that the examiner must, upon a question being put to a person, first decide whether to require the person to answer that question; and
(c) Therefore, total abrogation of the privilege was not a necessary implication, but merely an available implication standing beside another or others, and, in those circumstances, Parliament should not be taken to have abrogated the privilege in the absence of a provision expressly doing so.
39 In his written outline and oral submissions, the appellant rested his case primarily on the proposition (which was undisputed) that the courts would not conclude that a statute abrogated the privilege unless the terms of the statute made this legislative intent clear, either expressly or by necessary implication. The appellant observed that, had Parliament wanted to make its intention unmistakable, it could have stated expressly that a person may not refuse to answer a question on the ground that the answer would have a tendency to incriminate him or her. In his outline, the appellant contended that, in the case of the Act:
'[S]uch abrogation is not a matter of necessary inference: the privilege has not been abrogated by necessary implication. While an inference of total abrogation is reasonably open, and even strongly indicated, that is not enough, in all the circumstances. Unless the implication is a necessary one, that is to say that there are no other implications which are left open by the Parliament, the Court should be slow to reach a conclusion that the abrogation of a fundamental common law right has been achieved by Parliament.'
40 The appellant's case was that, whilst the Act could reasonably be construed as abrogating the privilege, the Act left open other implications. In his written outline, the appellant contended that:
'[T]here is another available interpretation of s 30 which is open, on the words of the section, and which is consistent with a partial rather than total abrogation of the privilege. Section 30(2)(b) provides that a person appearing as a witness at an examination before an examiner shall not refuse or fail to answer a question that he or she is required to answer by the examiner. This implies the possibility that a question may be asked to which, after intervening process, an examiner may decide not to require the witness to answer. The dichotomy between questions which are required to be answered and those which are not implies a filtering process; and such a filtering process may well embody a process of challenge by the witness to a requirement to answer on the ground that the question has a tendency to incriminate him or her. The provision reflects and has the same logical function as a provision that a witness is not required to answer if he or she has a reasonable excuse for not answering. According to this interpretation, subsection 4 is limited (and so it expressly provides) to the case where a witness answers a question "that he or she is required to answer by the examiner". There is room for the operation of the privilege, in a general way, offered by the words used in s 30.'
41 The appellant submitted that the primary judge erred in adopting and applying the reasoning in Lee Ming Tee, when that case was clearly distinguishable from the case under consideration on the basis that the provision before the Court in that case, s 145(3A) of the Companies Ordinance (Cap 32), differed in a material respect from s 30(2), in that the former provision required a person to answer 'a question put to him under this section by an inspector', whereas s 30(2) provided that a person shall not refuse or fail to answer a question that he or she 'is required to answer by the examiner'.
42 In his written outline of argument, the appellant also argued that:
· The primary judge erred in holding that the principle in Hammond (that is, that a person who has been charged with an offence should not be required to answer questions designed to establish that he is guilty of that offence) ought not to be extended to a case where an investigating authority has formed the belief that the person, to be questioned, has committed certain offences, and intends to charge such person with those offences.
· His Honour erred in limiting the rationale of the principle in Hammond to the circumstance that the examination of the person charged would constitute contempt of court, when in fact the rationale of such principle is broader; namely, that it is fundamentally wrong to subject a person who has been charged with offences to a compulsory process of examination on the very matters which are the subject of the charges, where (seen in the light of the broader rationale) there were powerful and compelling reasons to apply the Hammond principle to cases where the investigating authority had formed a belief that the person, to be examined, had committed offences and the authority intended to charge that person with those offences.
· It should have been held that it was fundamentally wrong to subject the appellant to a compulsory process of examination on the very matters in respect of which the investigating authority held a belief that he had committed offences, and intended to charge him, and the examiner should have accorded the appellant the opportunity to call for examination of the investigating officer and to have produced for inspection the affidavit sworn by her in support of the application for a search warrant, in order that the appellant might lay the necessary evidentiary foundation for a submission that he should not be questioned in relation to those matters.
· His Honour erred in holding that Parliament could validly abrogate the privilege against self-incrimination because:
(a) it contravened a constitutional immunity against self-incrimination contained in the interstices of the express provisions of the Constitution;
(b) it would be contrary to s 80 of the Constitution; and
(c) it would infringe or usurp the judicial power of the Commonwealth contrary to the doctrine of separation of powers mandated by Chapter III of the Constitution.
43 At the hearing of the appeal, however, counsel for the appellant informed the Court that he did no more than formally submit that:
(1) Parliament could not validly abrogate the privilege against self-incrimination; and
(2) The principle in Hammond ought to be extended to the case where the prosecuting authority has formed the belief that a person to be questioned has committed certain offences, and intends to charge such a person with those offences.
As the primary judge noted, the High Court of Australia has held on more than one occasion that Parliament can validly abrogate the privilege against self-incrimination. The appellant has not, moreover, shown that there was error in his Honour's conclusion that the principle in Hammond was not to be extended as the appellant contended. I say no more of the appellant's submissions on these matters.
44 Also in oral argument, the appellant made a formal submission to the effect that Parliament can only abrogate a fundamental common law right, such as the privilege against self-incrimination, if it does so expressly. I reject this submission as contrary to the authorities, which are mentioned below. At the hearing of the appeal, the case for the appellant was that Parliament had not totally abrogated the privilege against self-incrimination in examinations conducted under s 24A of the Act, because the Act did not, as a matter of necessary implication, require this result. The appellant submitted that the primary judge erred in deciding to the contrary.
45 In oral argument, counsel for the appellant maintained that before the Act could be construed as abrogating the privilege by necessary implication:
'[T]he words used must logically entail the conclusion of abrogation. There must be no other meaning open.'
46 On the hearing of the appeal, counsel did not abandon the "filtering process" argument set out in the appellant's written outline, although it was not to the forefront of his oral submissions. He did, however, observe that a question of privilege could arise in a number of ways, not only by virtue of the examiner's questions, but also in the questioning of counsel assisting the examiner and other participants in the examination. In this connection, the task of the examiner was, he submitted, to decide whether, in light of relevant matters, the examiner should require the witness to answer a question.
47 Also on the hearing of the appeal, the appellant's counsel advanced another argument in support of his contention that the privilege was not abrogated by "necessary implication". This argument depended on the language of the heading to ss 30(4) and (5) and the terms of these particular provisions. The appellant's counsel observed that, before a witness could gain the benefit of the "use immunity" in s 30(5), the conditions stipulated in s 30(4) had first to be satisfied. As counsel noted, in the case of answers given at an examination before an examiner, the use immunity was available only if (1) the person appearing as a witness at the examination answered a question that he or she was required to answer by the examiner (s 30(4)(a)(i)); and (2) before answering the question, the person claimed that the answer might tend to incriminate him or make him liable to a penalty (s 30(4)(c)). (There are other requirements before a use immunity can be gained in connection with the production of a document or thing: see s 30(4)(a)(ii), (b) and (c)). Counsel contended that, having regard to the reference in the heading to the availability of use immunity "in some cases if self-incrimination [is] claimed" and the terms of ss 30(4) and (5), the use immunity was available only in the event that these conditions were satisfied andthe witness actually answered the examiner's question. It followed, so counsel said, that the Act contemplated that there could be other cases where the witness could properly decline to answer the examiner's question. Counsel submitted that s 30(2) contained the only statutory authority to compel an answer, but, given the generality of the words of this provision, s 30(2) ought not to be construed as abrogating the privilege against self-incrimination, which was in the nature of a fundamental right.
48 In relation to these arguments, in both written and oral form, counsel relied on the approach taken in a number of authorities, including Sorby v The Commonwealth (1983) 152 CLR 281 ("Sorby") at 294-296 per Gibbs CJ and 311 per Murphy J; Re Bolton; ex parte Beane (1987) 162 CLR 514 at 517-518 per Mason CJ, Wilson and Dawson JJ; and Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 192 ALR 561 ("Daniels") at 573 per McHugh J and 587-589 per Kirby J. He contrasted statements in the authorities concerning the express statutory abrogation of the privilege, including Hamilton v Oades (1989) 166 CLR 486 ("Hamilton v Oades") at 496 per Mason CJ and Lee Ming Tee at 156-157. The appellant submitted that the decision in Lee Ming Tee did not support the conclusion reached by the primary judge.
THE SUBMISSIONS OF THE THIRD RESPONDENT
49 In a written outline of submissions, the Commonwealth Attorney-General acknowledged that, following the decision in Sorby, the appellant was entitled to claim the privilege against self-incrimination in order to refuse to answer questions asked by the examiner unless the Act abrogated the privilege. In order to preserve his rights, however, the third respondent formally submitted that the privilege against self-incrimination did not apply in administrative proceedings generally, including examinations under the Act.
50 On this appeal, the third respondent's case was that the Act abrogated the privilege and, though it did not affect the result, the appellant's test of "necessary implication" was unsupported by authority and should not be adopted. In his written outline, the third respondent submitted that the features of the Act, which, taken together, implied that the privilege was abrogated, were:
'[T]he purpose for which coercive powers are conferred on the ACC, which is to facilitate the investigation of serious criminal activity in circumstances where persons with relevant information will frequently refuse to speak voluntarily with criminal investigators. The purpose of a statutory investigative regime is of great importance in determining whether the privilege has been abrogated;
[Section] 30(2)(a), which imposes upon a witness an unqualified obligation to answer questions. That is, the obligation applies whether or not the witness has a "reasonable excuse" for refusing to answer;
[Section] 30(4) and (5), which prevent the direct use of the evidence that is provided by a person against that person in subsequent criminal proceedings or proceedings for a penalty, provided that the person has claimed that the evidence is incriminating or may expose him or her to a penalty before providing it; and
[T]he legislative history of s 30, which demonstrates that one of the purposes of that section is to abrogate the privilege against self-incrimination.'
51 Also in his written outline, the third respondent contended that:
· There could be no "partial" abrogation of the privilege. The privilege was not, he said, a rule that related to the admissibility of evidence in subsequent proceedings. The sole concern of the privilege was whether a person was required by law to answer a question. If the privilege was abrogated, it followed that Parliament intended that a person must answer the questions that were asked, though it might subsequently become necessary to determine whether an answer (or evidence derived from an answer) could be used in evidence in a proceeding.
· The appellant's submission that an examiner should not require a person to answer a question unless the direct use immunity in s 30(5) provided a sufficient protection was misconceived, because the relevant question was not whether the examiner should require a person to answer an incriminating question, but whether the examiner could require the person to answer. This question should be answered in the affirmative, because Parliament plainly intended s 30 to impose an unqualified obligation to answer questions that an examiner required to be answered.
· By virtue of the Act, the examiner has control of the examination and, in consequence, might not require a person to answer a question if the examiner considered it inappropriate (because the question was irrelevant, ambiguous and the like). The mere existence of some discretion not to require an answer did not mean that the examiner was unable to require the answer to be given.
· Legislation could reveal an intention to abrogate the privilege against self-incrimination, whether or not an evidential immunity was conferred that wholly or partly replaced the privilege. The views expressed by Gibbs CJ and Murphy J in Sorby at 294-295 and 312 should not be followed; rather the views of Mason, Wilson and Dawson JJ in Sorby at 310-311 should be preferred. The enactment of a direct use immunity implied that Parliament intended to abrogate the privilege.
· The decision in Lee Ming Tee was not central to the reasoning of the primary judge, although it was consistent with his decision.
The third respondent adopted the reasoning of the primary judge concerning the principle in Hammond and reiterated that Parliament could validly abrogate the privilege.
52 At the hearing of the appeal, the Solicitor-General for the Commonwealth referred to Hill v Crook (1873) LR 6 HL 265 at 276-277 per Lord Chelmsford; Bropho v Western Australia (1990) 171 CLR 1 at 21 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ; and Hamilton v Oades at 495, in support of his submission that the expression "necessary implication" had "a meaning of its own, independent of the two words which make it up" and, although it required a high standard of satisfaction, it did not require "absolute necessity". The Solicitor-General elucidated the matters that, in his contention, led to the conclusion that the abrogation of the privilege was a matter of necessary implication. Amongst other things, he submitted that the privilege was a single privilege with different aspects, and that the purpose of s 30(5) was not to encourage a person to give an answer, but to confer a limited immunity.
53 Acknowledging the principle in R v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13, the first and second respondents kept their submissions within a narrow compass and it is unnecessary to set them out here.
consideration
54 I commence the consideration of the parties' submissions with the proposition that legislation will not be construed so as to deprive a person of an important common law right, privilege or immunity, if otherwise available, "unless a legislative intent to do so clearly emerges, whether by express words or necessary implication": see Sorby at 309 per Mason, Wilson and Dawson JJ, 289-290 per Gibbs CJ and 311 per Murphy J; Hamilton v Oades at 495 per Mason CJ, 500 per Deane and Gaudron JJ (dissenting in the result) and 509 per Dawson J; Daniels at 565, per Gleeson CJ, Gaudron, Gummow and Hayne JJ; and Griffin v Pantzer [2004] FCAFC 113 ("Griffin v Pantzer") at [46] per Allsop J (with whom Ryan and Heerey JJ agreed). In Daniels, Gleeson CJ, Gaudron, Gummow and Hayne JJ observed at 565:
'It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect. That rule, the expression of which in this court can be traced to Potter v Minahan [(1908) 7 CLR 277 at 304 per O'Connor J], was the foundation for the decision in Baker v Campbell [(1983) 153 CLR 52]. It is a rule which, subject to one possible exception, has been strictly applied by this court since the decision in Re Bolton; Ex parte Beane [(1987) 162 CLR 514]. Cases in which it has since been applied include Bropho v Western Australia [(1990) 171 CLR 1], Coco v R [(1994) 179 CLR 427] and Commissioner of Australian Federal Police v Propend Finance Pty Ltd [(1997) 188 CLR 501].'
55 As their Honours indicated, the phrase "necessary implication" means that the courts will not discern a legislative intention to abrogate an important common law right or privilege unless this intention appears clearly and unmistakably from the legislation considered as a whole, having regard to its language, character and purpose: see also Sorby at 289 per Gibbs CJ and 309 per Mason, Wilson and Dawson JJ and Pyneboard at 341 per Mason ACJ, Wilson and Dawson JJ. Mason CJ stated in Hamilton v Oades at 495:
'[T]he phrase 'necessary implication' imports a high degree of certainty as to legislative intention.'
It does not follow from this, however, that the phrase "necessary implication" requires that all other possible implications must be excluded and that the implication that the privilege is abrogated arises as a matter of absolute necessity. I reject the appellant's submissions in this regard.
56 Since the Act does not abrogate the privilege against self-incrimination expressly, unless it does so by necessary implication, in an examination under s 24A, an examinee would be entitled to refuse a question asked by an examiner if the answer would expose, or would have a tendency to expose, the examinee to conviction for a crime: see Griffin v Pantzer at [37]-[43] per Allsop J. If the Act did not abrogate the privilege, the privilege would protect the appellant not only from incriminating himself directly in the examination, but also from making a disclosure that might lead to self-incrimination or to the discovery of real evidence of an incriminating character: see Sorby at 310 per Mason, Wilson and Dawson JJ. For the reasons that follow, however, I am of the view that, having regard to the language, character and purpose of the Act, a legislative intent is necessarily to be implied that an examinee does not have the privilege in an examination under the Act.
57 The statutory character and purpose is apparent from the terms of the Act. As already observed, the functions of the second respondent, which are set out in s 7A, include the undertaking of intelligence operations and investigations of matters relating to federally relevant criminal activity, as defined in s 4(1): see s 7A(b) and (c). Pursuant to s 24A an examiner may conduct an examination for the purposes of a special ACC operation/investigation, as defined in s 4(1): see also s 7C(3). At the conclusion of an examination, the examiner must give the head of the special ACC operation/investigation a record of the proceedings of the examination, and any documents or other things given to the examiner at, or in connection with, the examination: see s 25A(15). Plainly enough, the purpose of an examination conducted under s 24A is to obtain information in order to further an investigation of serious and organised criminal activity, ordinarily involving sophisticated methods and techniques, in circumstances where persons with relevant information would frequently be expected to refuse to volunteer that information.
58 Pursuant to s 30(2) of the Act, the obligation to answer a question that the examiner requires an examinee to answer is expressed in general terms. The purpose of an examination would, in large part, be defeated if the obligation expressed in s 30(2) were subject to the privilege: compare Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 at 394 per Gibbs CJ, Mason and Dawson JJ; Police Service Board v Morris (1985) 156 CLR 397 at 409 per Wilson and Dawson JJ; Mortimer v Brown (1970) 122 CLR 493 at 496 per Kitto J; Pyneboard at 341 and 343 per Mason ACJ, Wilson and Dawson JJ; and Daniels at 573 per McHugh J.
59 The language of s 30(2) is apt to create not only a general but also an unqualified obligation to provide answers when required. I accept that the relevant question is whether, by virtue of s 30(2), an examiner can require a person to answer a question notwithstanding that the answer would tend to incriminate him or her. It must be borne in mind that the statutory provisions concerning examinations contemplate that a question might be asked of a witness in an examination by persons other than an examiner, including by counsel assisting the examiner or by counsel for a witness: see s 25A(6). Broadly speaking, however, Div 2 of Pt II of the Act reposes responsibility for the conduct of the examination in the examiner. The examiner may decide not to require a question to be answered by a witness at an examination, for example, on the ground of relevance or ambiguity. In this event, a failure by a witness to answer a question in the examination would not attract a penalty under s 30(6). If, however, the examiner does require a question to be answered by such a witness, a failure to do so would attract a penalty.
60 In some respects, the provisions for examination under the Act resemble the statutory schemes for public examination under the companies legislation considered in Mortimer v Brown at 495 per Barwick CJ and 502-503 per Walsh J (with whom Windeyer and Owen JJ agreed) and Hamilton v Oades at 497 per Mason CJ: compare also Pyneboard at 341 per Mason ACJ, Wilson and Dawson JJ; Clyne v Commissioner of Taxation (1985) 8 FCR 130 at 134-135 per Morling J; Australian Securities and Investments Commission v Loiterton (2000) 101 FCR 370 at 376 per Mathews J; and Grant v Deputy Commissioner of Taxation [2000] FCA 1298 at [21]-[23], [31]. As these authorities demonstrate, it does not follow from the existence of a discretion not to require a question to be answered that the examiner is unable to require the question to be answered. In the context of a public examination under the companies legislation, Mason CJ observed in Hamilton v Oades at 497 that:
'In the light of the statutory provisions and the public purposes which I have outlined it would be going too far altogether to view the existence of the discretion as requiring ordinarily the giving of directions which will protect the witness from the consequences of abrogation of the privilege in so far as they include the derivative use of the answers of the witness. To give such directions as a matter of course would be to frustrate the statutory purpose.'
61 I reject the appellant's submissions that the statutory conferral of a discretion of this kind has the same function as a provision that permits a witness to decline to answer a question if he or she has a reasonable excuse for not doing so. Whilst a reasonable excuse provision enables a witness to decline to answer in appropriate circumstances, s 30(2) enables an examiner to require an answer to be given.
62 There is no "reasonable excuse" or analogous provision in the Act of the kind that proved critical in Sorby, where Mason, Wilson and Dawson JJ held that, bearing in mind the reasonable excuse provisions in s 10(4) and s 14(1)(ii) of the Commissions of Inquiry Act 1950 (Qld) (see below), there was no sufficient indication that the privilege against self-incrimination had been taken away: see Sorby at 310-311.
63 The judgment of Mason, Wilson and Dawson JJ in Sorby also assists in comprehending the relationship between the use immunity conferred by s 30(5) and the privilege against self-incrimination. Although their Honours devoted most of their attention to the Royal Commissions Act 1902 (Cth) and the effect of its amendment by the Royal Commissions Amendment Act 1982 (Cth), they also considered whether the Commissions of Inquiry Act 1950 (Qld) abrogated the privilege against self-incrimination. Section 9(2) of the Queensland Act provided that a witness who refused to answer a question was guilty of a contempt of the Commission. Section 10(4) provided, however, that a witness could not be punished for refusing to answer if he or she had a "reasonable excuse". Section 14(1)(ii) made it clear that a witness was not obliged to produce any book, document or thing if he had a reasonable excuse for refusing. Section 14(2) conferred a use immunity on witnesses that was not materially different to s 30(5) of the Act. In connection with the Commissions of Inquiry Act 1950 (Qld), Mason, Wilson and Dawson JJ said at 310-311:
'[T]he presence of s 14(2) then provokes the question: What purpose is the sub-section intended to serve if it is not to protect the witness from the consequences of abrogation of the privilege? When a legislature abrogates the privilege against self-incrimination it often gives compensatory protection to the witness by providing, as s 14(2) does, that an answer shall not be admissible in civil and criminal proceedings other than in proceedings for contempt or for an offence under the Act. … If, therefore, the sub-section had stood alone in the context of an Act which imposed an obligation on a witness to answer all relevant questions, there might well be substance in the submission that its presence was consistent only with a legislative intention to abrogate the privilege. However, the sub-section does not stand alone in the State Act. The context furnishes provisions in s 10(4) and s 14(1)(ii) which protect a witness in respect both of a refusal to answer questions and to produce documents if he has a reasonable excuse. There is no sufficient indication in the Act that a witness is not entitled to that protection if the reason for his refusal is a well-grounded claim to the privilege against self-incrimination.'
Their Honours held that the State Act did not abrogate the privilege against self-incrimination, because witnesses were permitted by that Act to refuse to answer questions or produce documents if they had a reasonable excuse and their claim of privilege against self-incrimination could constitute such an excuse. Absent the "reasonable excuse" provision, however, their Honours would apparently have inferred, from the existence of the use immunity, that the privilege had been abrogated.
64 It is convenient to interpolate here that I would not, as the appellant invited the Court to do, adopt the approach of Gibbs CJ and Murphy J in Sorby. Their Honours held that the use immunity conferred by s 6DD of the Royal Commissions Act 1902 (Cth), prior to its amendment in 1983, did not demonstrate with sufficient clarity a legislative intent to abrogate the privilege against self-incrimination: see Sorby at 294-295 per Gibbs CJ and 312 per Murphy J. In so concluding, as the Solicitor-General for the Commonwealth observed at the hearing of this appeal, they relied heavily on United States authority: see Sorby at 292-294 per Gibbs CJ and 312 per Murphy J. These authorities are directed to the question whether a law that purports to abrogate the privilege against self-incrimination is consistent with the Fifth Amendment to the United States Constitution. The constitutional nature of this question is materially different from the statutory question of construction which arises on this appeal: compare Sorby at 316 per Brennan J. The United States authorities provide little assistance to the question that arises in the present case.
65 The provision for a use immunity in s 30(5) gives a very clear indication of a legislative intent to abrogate the privilege of self-incrimination. As the Solicitor-General observed, however, ss 30(4) and 30(5)(c) and (d) have the effect that the use immunity in s 30(5)(a) and (b) is available in some, but not all, cases in which a witness appearing at an examination claims the privilege. That is, by virtue of s 30(4), the use of answers given at an examination is limited only if the answers are those of a person appearing as a witness at the examination made in response to a question that the examiner requires the person to answer and if, before answering, the person claims that the answer might tend to incriminate him or her or make him or her liable to a penalty. If these conditions are satisfied, by virtue of s 30(5)(a) and (b), the answer is not admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of a penalty. The answer is not, however, made inadmissible in proceedings of the kind described in s 30(5)(c) and (d). It follows, then, as the heading to ss 30(4) and (5) indicates, that a use immunity is available in some, but not all, cases in which the privilege against self-incrimination is claimed. It follows that I reject the construction of these provisions that the appellant advocated at the hearing of the appeal.
66 In this analysis, it is impossible to regard s 30(5) as being in the nature of an encouragement to a person to answer and, in so doing, to waive the privilege that he or she would otherwise be entitled to claim. Such a construction sits ill with the fact that the failure to answer a question that the examiner requires a witness to answer would constitute an offence as provided by s 30(6) of the Act. It is manifestly clear that the Act deprives a witness of the benefit of the privilege against self-incrimination, although it provides limited compensation in the form of the use immunity in s 30(5) of the Act, providing the conditions in s 30(4) are satisfied.
67 This conclusion is confirmed by the legislative history of the Act. Briefly, the Australian Crime Commission Establishment Act 2002 (Cth) renamed the National Crime Authority Act 1984 (Cth) ("the NCA Act") as the Australian Crime Commission Act 2002 (Cth). Whilst Schedule 1 of the Australian Crime Establishment Act 2002 (Cth) made a number of amendments to the NCA Act, the second respondent generally retained the powers that were available to the NCA. The history of the NCA Act is therefore of relevance in the present discussion.
68 When first enacted, the NCA Act permitted a witness to refuse to answer a question put to him or her at a hearing before the NCA on the ground that the answer to a question might tend to incriminate him or her. Such a claim was, pursuant to s 30(4) of the NCA Act, as it then was, "a reasonable excuse". If, however, a witness had been given an undertaking in writing by the Commonwealth Director of Public Prosecutions or the relevant state Attorney-General that an answer, or information obtained as a direct or indirect consequence of an answer, would not be used in evidence in any proceeding against him or her, then it was not a reasonable excuse to fail to answer a question on the basis that the answer might tend to incriminate him or her: see NCA Act, ss 30(5) and (7) prior to its amendment in 2001. The National Crime Authority Legislation Amendment Act 2001 (Cth) amended the NCA Act, by repealing the former ss 30(4), (5) and (7) and introducing provisions in the form of ss 30(4) and (5) in the current Act.
69 If there were any doubt about the significance, for present purposes, of this legislative history, it could not survive consideration of the second reading speech of the National Crime Authority Legislation Amendment Bill 2000 and the Revised Explanatory Memorandum for the Bill: see Acts Interpretation Act 1901 (Cth), s 15AB(1)(a). The second reading speech recorded (see Senate, Hansard, 7 December 2000 p 21028) that:
'The National Crime Authority does not deal with simple street level crime, but with the web of complex criminal activity engaged in by highly skilled and resourceful criminal syndicates.
…
The Bill will also allow an investigatory body to derive evidence from self-incriminatory evidence given by a person at a hearing, and for a prosecuting authority to use that derived evidence against the person at a later trial. In other words, a person's self-incriminatory admissions won't themselves be able to be used as evidence against that person, but will be able to be used to find other evidence that verifies those admissions or is otherwise relevant to the proceedings.
However, the Bill will specifically provide that once a witness has claimed that the answer to a question might tend to incriminate him or her, then any evidence that the person gives cannot be used against the person at any later trial. The existing mechanism for a special undertaking by the DPP will not be required; this protection will be clearly set out in the legislation.'
70 The Revised Explanatory Memorandum accompanying the Bill stated, at p 10, that:
'Under the proposed scheme, if a witness appearing at a hearing before the Authority claims that the answer to a question or the production of certain documents or a thing might tend to incriminate the person:
· The person must answer the question or produce the document or thing.
· It is an offence for the person to fail to answer the question or to produce the document or thing.
· But, the answer or document or thing is not admissible in evidence against the person in any later criminal proceedings or a proceeding for the imposition of a penalty (subject to the existing false evidence exception) without the need for an undertaking.'
The Memorandum added, at p 10, that:
'[A]s a consequence of the omission of the defence of reasonable excuse … a person will no longer be able to claim that he or she has a reasonable excuse for failing to answer a question on the ground that the evidence might tend to incriminate him or her.'
71 If the Act were not construed as taking away the privilege against self-incrimination in an examination before an examiner, the purpose of the amendments made by the National Crime Authority Legislation Amendment Act 2001 (Cth) would be defeated.
72 In summary, for the reasons stated, I conclude that no error is shown in the judgment of the primary judge and that, as a matter of necessary implication, the Act abrogated any privilege against self-incrimination that the appellant might otherwise have had in an examination under the Act. As the primary judge observed, the decision of the Hong Kong Court of Final Appeal in Lee Ming Tee, particularly at 166-170, is entirely consistent with the conclusion I have reached. There is a helpful discussion of Lee Ming Tee in his Honour's reasons for judgment (see A v Boulton [2004] FCA 56 at [101]-[125]). It is unnecessary to add further to this discussion.
an additional matter
73 In the course of the hearing of this appeal, there was some discussion of the procedure that had been used to bring this matter before the court. Generally speaking, it is desirable that a claim for the privilege against self-incrimination be made in response to a specific question or questions before a proceeding is instituted to challenge a ruling concerning the availability of the privilege: see C v National Crime Authority (1987) 78 ALR 338 at 342-343 per Northrop J; R v Holmes (unreported, Supreme Court of Tasmania, Cox CJ, 17 December 1996) at 7; and Re Mining Houses of Australia Ltd (1981) ACLC 40-744 at 33,344. This is because, in the absence of a question, no claim for privilege arises that can properly be considered. There may not, however, be an immutable rule as the decisions in Re Bull [1998] 2 Qd R 224 and Sogelease Australia Ltd v Griffin [2003] NSWSC 178 ("Sogelease") indicate. In the former case, Moynihan J held at 227 that, in this regard, each case turns on its own facts and that, in some circumstance, "[a] a court or tribunal may well be able to 'see for itself' if, for example, the nature of the witness's connection with particular events being canvassed is obvious and incriminatory". In Sogelease, in the context of a discovery dispute, Palmer J adopted a similar approach, observing at [17]-[18]:
'Mr Lindsay's proposition that a "blanket objection" cannot be taken on the ground of privilege against self incrimination is correct as a general rule: see eg Spokes v Grosvenor Hotel Co [1897] 2 QB 124, at 132-133; C v National Crime Authority (1987) 78 ALR 338, at 343. But the rule is general, not immutable. Its rationale is to prevent persons from abusing the privilege by invoking it too readily to avoid making disclosures which may well be prejudicial but do not really have a tendency to incriminate. Thus, it is usual to require the privilege to be claimed separately for each disclosure so that the Court may see for itself that the claim is justified.
However, there may be cases in which the Court can readily see from the surrounding circumstances that all disclosures within a certain area of enquiry are likely to have a tendency to incriminate. In such a case, there is no point in requiring the person claiming the privilege to perform the tedious ritual of objecting separately to all the questions asked or all the disclosures sought: the Court will permit and uphold a blanket objection: see eg Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412, at 423 per Kirby P.'
74 The present case may very well fall within the second class of cases, although no argument was directed to this question. Since I would not, in any event, grant the declaratory and other relief that the appellant seeks, it is unnecessary to explore this matter further.
75 Accordingly, I would dismiss the appeal. I would order that the appellant pay the costs of the first and second respondents and that no order be made for the costs of the third respondent.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate:
Dated: 30 June 2004
Counsel for the Appellant: Dr J F Bleechmore
Solicitor for the Appellant: Ellinghaus & Lindner
Counsel for the Respondents: Mr A G Southall QC with Mr J M Buxton
Solicitor for the Respondents: Australian Crime Commission
Counsel for the Intervener: Mr D Bennett QC Solicitor-General for the Commonwealth with Dr S Donaghue
Solicitor for the Intervener: Australian Government Solicitor
Date of Hearing: 3 May 2004
Date of Judgment: 30 June 2004
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Ali v Minister for Immigration and Border Protection [2020] FCA 191
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca0191
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2024-09-13T22:50:20.310223+10:00
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FEDERAL COURT OF AUSTRALIA
Ali v Minister for Immigration and Border Protection [2020] FCA 191
Appeal from: Application for extension of time and for leave to appeal: Ali v Minister for Immigration & Anor [2018] FCCA 3461
File number: VID 7 of 2019
Judge: KENNY J
Date of judgment: 24 February 2020
Catchwords: MIGRATION – Application for extension of time and leave to appeal from dismissal of application for judicial review by the Federal Circuit Court – failure of the applicant to appear at the hearing in the Federal Court – application dismissed
Legislation: Federal Court of Australia Act 1976 (Cth) ss 24(1A), 25(2), 25(2B), 25(2BA)
Migration Act 1958 (Cth) ss 362B, 362C
Migration Regulations 1994 (Cth) Schedule 2, cl 820.211
Federal Circuit Court Rules 2001 (Cth) s 13.03C
Federal Court Rules 2011 (Cth) rr 35.14, 35.33
Cases cited: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
FBS18 v Minister for Home Affairs [2019] FCAFC 196
House v The King (1936) 55 CLR 499
Malecaj v Minister for Immigration and Border Protection [2016] FCA 1508
MZYEZ v Minister for Immigration and Citizenship [2010] FCA 530
Nugawela v Commissioner of Taxation [2019] FCAFC 206
Date of hearing: 24 February 2020
Registry: Victoria
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 47
Counsel for the Applicant: The Applicant did not appear
Counsel for the First Respondent: Mr C Hibbard
Solicitor for the First Respondent: Clayton Utz
Counsel for the Second Respondent: The Second Respondent filed a submitting notice save as to costs
ORDERS
VID 7 of 2019
BETWEEN: MUHAMMAD ARSLAN ALI
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
JUDGE: KENNY J
DATE OF ORDER: 24 February 2020
THE COURT ORDERS THAT:
1. The application for an extension of time and leave to appeal be dismissed.
2. The applicant pay the first respondent's costs of the application, as agreed or assessed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Delivered ex tempore, revised from transcript)
KENNY J:
1 This is an application for an extension of time and leave to appeal from the judgment of the Federal Circuit Court of Australia delivered on 22 November 2018. That judgment, bearing the citation Ali v Minister for Immigration & Anor [2018] FCCA 3461, dismissed an application to reinstate the applicant's application for judicial review of a decision of the Administrative Appeals Tribunal made on 9 May 2017. The primary judge had earlier dismissed the proceeding under rule 13.03C(1)(c) of the Federal Circuit Court Rules 2001 when the applicant failed to attend a hearing on 3 September 2018.
2 The Tribunal's decision of 9 May 2017, which was made under s 362B(1E) of the Migration Act 1958 (Cth), had confirmed the Tribunal's previous decision to dismiss the applicant's application for review of a decision to refuse to grant the applicant a Partner (Temporary) (Class UK) Subclass 820 visa. On 10 April 2017, the Tribunal had dismissed the applicant's application under s 362B(1A)(b) on the basis of the applicant's non-appearance before the Tribunal.
3 The applicant requires leave to appeal as the judgment he wishes to challenge is interlocutory: see s 24(1A) of the Federal Court of Australia Act 1976 (Cth). An application for leave to appeal must be filed within 14 days of the judgment sought to be appealed: see Federal Court Rules 2011 (Cth) r 35.13. The applicant filed an application for an extension of time for leave to appeal on 7 January 2019, which was 32 days out of time. He, therefore, requires an extension of time in which to seek leave to appeal.
4 The respondent Minister appeared by counsel at the hearing today. The applicant, having been called, has not appeared at the hearing. The Minister has applied for the appeal to be dismissed on the basis that the applicant has failed to appear, in exercise of the power in either r 35.33 of the Federal Court Rules or s 25(2B)(bb)(ii) of the Federal Court of Australia Act. This latter provision empowers a single judge to make an order that an appeal to the Court be dismissed for the failure of the appellant to attend a hearing relating to the appeal.
5 While s 25(2B)(bb)(ii) refers in its terms only to the dismissal of an appeal, s 25(2BA) of that Act provides that in s 25(2B) a reference to an appeal includes a reference to an application of the kind mentioned in s 25(2). Section 25(2) refers to applications for an extension of time and for leave to appeal. Section 25(2B)(bb)(ii) therefore would apply in the present case, as would r 35.33 of the Federal Court Rules.
6 In the circumstances of this case, it seems to me that it would be most appropriate to dismiss the application for an extension of time and leave to appeal under s 25(2B)(bb)(ii) of the Federal Court of Australia Act, having regard to the fact that the applicant did not appear at the hearing today and the following facts.
7 First, the applicant has been given adequate notice that his application was to be heard today. On 6 February 2019, Registrar McCormick made directions for the hearing and conduct of this application, including that the lawyers for the Minister notify each other party in writing of the date to be fixed by the Court for the hearing of the application.
8 Leaving aside earlier items of correspondence, I note that on 24 July 2019 and 30 July 2019, Chambers notified the applicant via email that his hearing had been listed for 5 December 2019 at 10:15 am. The latter email had a letter attached to it, which was also sent by post on 30 July 2019 to the street address provided by the applicant. This letter stated that it was important that the applicant attend his hearing, and that if he did not do so, the Court might proceed in his absence. In an email sent to Chambers on 30 July 2019 the applicant confirmed receipt of the emails sent on 24 and 30 July 2019.
9 On 1 November 2019, Chambers staff sent the applicant an email proposing that his hearing would be re-listed for today, 24 February 2020. On 7 November 2019, Chambers staff sent the applicant an email stating that his hearing had been re-listed for the new date. On the same day, the applicant confirmed receipt of the email sent on 7 November 2019. On 12 December 2019, Chambers staff sent the applicant an email reminding him that his hearing on 24 February 2020 would be proceeding, that it was important he attend, and that if he did not attend, the Court may proceed in his absence.
10 On 14 February 2020, Chambers staff sent the applicant a further email reminding him that his hearing was today, 24 February 2020 at 10:15 am; that it was important he attend his hearing, and that if he did not attend, the Court might proceed in his absence. A letter was also sent to the street address provided by the applicant on 17 February 2020 repeating these matters.
11 The Minister has also advised the applicant of the hearing today. In serving on the applicant his submissions dated 14 February 2020, the Minister advised, in paragraph 2 of those submissions, that this application had been listed for hearing at 10.15 am on 24 February 2020. In a covering letter also dated 14 February 2020, the Minister's lawyers advised:
We refer to the above matter and enclose by way of service the first respondent's submissions dated 14 February 2020 as filed in the Federal Court. Please contact [the named author] if you have any queries.
12 The Court has not received any further communication from the applicant, and the applicant has not attended today. In the circumstances I have outlined, I would dismiss the application as the Minister has sought. I am fortified in my view that this is the appropriate order to make by the apparent lack of merits in the present application, and I propose to explain hereafter my reasons for arriving at this view.
Background
13 The applicant arrived in Australia on 28 January 2011 on a Student (Subclass 472) visa, which expired on 12 June 2013. The applicant subsequently applied for a Protection (Class XA) visa on 13 June 2013. That application was refused by the Minister's delegate on 12 November 2014.
14 On 2 February 2016, the applicant applied for a Partner (Temporary) (Class UK) (Subclass 820) visa (temporary partner visa) and a Partner (Residence) (Class BS) (Subclass 801) visa (permanent partner visa). In making this application, he relied on his relationship with an Australian citizen, who was his sponsor for the application.
15 On 17 October 2016, a delegate of the respondent Minister refused the application for the temporary partner visa, on the basis that the applicant did not satisfy the criteria in cl 820.211 in Sch 2 of the Migration Regulations 1994 (Cth) since he did not satisfy the criteria in cl 3001 of Sch 3 of those Regulations. The delegate also refused the application for the permanent partner visa, on the basis that the applicant did not hold a temporary partner visa as required by the Migration Regulations.
16 On 2 November 2016, the applicant applied to the Tribunal for review of the delegate's decision. On 22 February 2017, the Tribunal invited the applicant to attend a hearing in Melbourne on 10 April 2017. On 24 February 2017, the applicant telephoned the Tribunal and confirmed he had received the invitation. The applicant confirmed on 8 March 2017 that he and his sponsor would attend the hearing. Reminders were subsequently sent to the mobile number provided by the applicant to the Tribunal, although they were unable to be delivered.
17 On 5 April 2011, the applicant attempted to contact a case officer responsible for the grant of a separate bridging visa, rather than the Tribunal, seeking an adjournment of the forthcoming Tribunal hearing. No communication was sent to the Tribunal at this time.
18 On 10 April 2017, pursuant to s 362B(1A)(b) of the Migration Act, the Tribunal dismissed the application for review of the delegate's decision because the applicant failed to attend the hearing and the Tribunal had not been given any satisfactory reason for his non-attendance.
19 The applicant was informed of this decision by email dated 24 April 2017. He was also informed that he could apply to the Tribunal for reinstatement of his review application within 14 days of receipt of the Tribunal's decision. That email stated that failure to apply for reinstatement within the 14-day period would result in confirmation of the dismissal decision. The applicant did not apply for reinstatement.
20 On 9 May 2017, having heard nothing from the applicant, the Tribunal confirmed the dismissal of the application for review pursuant to s 362B(1E) of the Migration Act.
21 On 13 June 2017, the applicant applied to the Federal Circuit Court for judicial review of the decision of 9 May 2017. On 23 March 2018, the Minister's solicitors invited the applicant, by letter, to amend his application to seek review of both the Tribunal's decisions, including the decision of 10 April 2017. The applicant took no action in response to this invitation.
22 On Friday, 31 August 2018, at 5pm, the applicant emailed the Federal Circuit Court seeking an adjournment of the hearing fixed for Monday 3 September 2018, on the basis that he was prevented from appearing before the Federal Circuit Court on that day due to "a medical condition that requires investigation which will require an adjournment until after 10 September 2018". Various documents were attached, including a medical certificate completed on 31 August 2018, stating that the applicant "has a medical condition and will be unfit for work or study from Friday, 31 August 2018 to Monday 10 September 2018 inclusive". The primary judge also stated (at [7]) that:
Additionally included were a Clinical Labs general pathology request form pertaining to the Applicant undergoing a blood test, with the clinical notes being "health check tiredness"; a Richmond Family Medical Clinic receipt for the Applicant's attendance upon Dr Huy Tan Nguyen in respect of a payment by the Applicant of $50; and a referral for the Applicant from Dr Huy Tan Nguyen to Dr David Cunnington being a sleep apnoea diagnostic referral.
23 The first respondent's solicitors replied to the applicant, stating that the first respondent did not consent to the applicant's request for an adjournment. The applicant made no response, and did not attend the hearing on 3 September 2018.
24 The primary judge went on to state (at [10]):
The Court considered the Applicant's reasons for not attending the hearing to be wholly inadequate. The materials provided by the Applicant did not contain sufficient information to have any "meaningful" bearing on the Applicant's claimed inability to appear, as that term was used by Pagone J in MZZTC v Minister for Immigration and Border Protection [2015] FCA 1209 when summarising the decision of Lindgren J in NAKX v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1559, wherein Lindgren J considered the circumstances in which a medical certificate could be used to justify an Applicant's inability to appear in Court. His Honour described, at paragraph 6, the need for the medical certificate to address the "critical question" being:
"whether, and if so why, the medical condition would prevent the appellant from travelling to the Court and participating effectively in a court hearing."
25 As already noted, the applicant's judicial review application was dismissed pursuant to r 13.03C(1)(c) of the Federal Circuit Court Rules due to his failure to appear at the hearing on 3 September 2018.
26 On 11 October 2018, the applicant filed an application for reinstatement of his application for judicial review. This application was supported by an affidavit referring to his earlier request for an adjournment. The applicant was also permitted to rely on the documents that he had sent to the Court and the first respondent in support of his application for an adjournment on 31 August 2018.
27 The primary judge dismissed the applicant's reinstatement application, holding (at [12]) that "there was, and is, no adequate reason for the Applicant's failure to attend Court on 3 September 2018" and that "it is not in the interests of the administration of justice for the application to be reinstated because the substantive application is not arguable".
28 As already stated, the applicant filed this application for an extension of time and leave to appeal on 7 January 2019. That application states as follows:
1. My application to the Federal Circuit Court was refused on 22 November 2018
2. When this happened I checked my visa status on the Immigration VEVO system it told me that my bridging visa expires on 20 December 2018 which I took to be the date I must lodge my Federal Court application
3. On 18 December 2018 I got a quote from a lawyer to represent me and the lawyer told me that I needed to lodge this application within 21 days and to lodge straight away with a request of an extension of time which I did on 20 December
4. On 20 December I was told at the Court that the forms I used were wrong and was given these forms to lodge which I am now doing
29 In support of his application, the applicant filed an affidavit on 7 January 2019 substantially stating the same thing. No further written submissions were filed by the applicant in support of his application.
30 The Minister filed written submissions in response to the application on 14 February 2020, which he relied on at the hearing.
Consideration
31 The principles applicable to the exercise of the Court's discretion to grant an exercise of time in which to appeal pursuant to r 35.14 are well-established: see, for example, Nugawela v Commissioner of Taxation [2019] FCAFC 206. So too are the principles applicable to an application for leave to appeal.
32 In written submissions filed in opposition to the application before the Court, the Minister conceded that the applicant's delay was not long; that some explanation had been given for the delay; and that the prejudice to the Minister if an extension of time was granted was minimal. In these circumstances, the question whether an extension of time should be granted turns very largely on the prospective merits of the proposed appeal. As will be seen, the same considerations would dictate the outcome of a grant of leave to appeal.
33 Besides a supporting affidavit, the applicant filed a draft notice of appeal, in the following terms. This indicated that the applicant's proposed grounds of appeal were:
1. The decision of the AAT and the FCCA is affected by jurisdictional error.
2. The AAT and/or the FCCA took into account irrelevant matters, facts and evidence and failed to take into account relevant facts, matters and evidence.
3. The AAT and/or the FCCA did not conduct a hearing in a fair and just manner and/or according to law.
4. The AAT and/or FCCA hearing and decision is unreasonable in all circumstances of the case.
5. The AAT and/or the FCCA erred in law and/or fact, and thereby fell into jurisdictional error, when it failed to give proper consideration to and weight to the evidence presented.
6. The AAT and/or the FCCA erred in law and or fact, and thereby fell into jurisdictional error, when it summarily dismissed the evidence presented.
7. The FCCA failed to take all the above into account and thereby erred and such to dismiss my appeal is wrong in law and or fact and/or unreasonable.
34 These proposed grounds were misconceived in so far as they directly challenged any decision of the AAT. I would treat them as challenging the exercise by the primary judge of the discretion not to reinstate the applicant's judicial review application.
35 A challenge to the exercise by the primary judge of the discretion not to reinstate a proceeding is governed by the principles set forth in House v The King (1936) 55 CLR 499 at 504-505. In considering the question of reinstatement, the primary judge was required to determine whether or not reinstatement was in the interests of justice: see FBS18 v Minister for Home Affairs [2019] FCAFC 196 at [50]. In conformity with the approach ordinarily adopted, the primary judge considered: (a) whether there was a reasonable excuse for the applicant's absence from the hearing in which the proceeding was dismissed for non-appearance; and (b) whether the applicant has a reasonably arguable prospect of success on the substantive application: see, for example, MZYEZ v Minister for Immigration and Citizenship [2010] FCA 530 at [7]. It was unnecessary in this case for her Honour to address the other frequently addressed consideration, namely, the nature of any prejudice that might flow to the Minister from the reinstatement. It may be accepted that her Honour proceeded on the basis that there was none.
36 As already indicated, the primary judge found that the applicant had not advanced an adequate reason for his failure to attend because he had failed to show whether and for what reason his medical condition would prevent him from travelling to court and participating effectively in the hearing. I can discern no error in her Honour's finding in this regard. None of the medical documents adequately addressed these issues.
37 The primary judge also held that the substantive application was not arguable. Her Honour reached this conclusion after examining the apparent merit of the applicant's judicial review application. Although the applicant had not sought review of the 10 April 2017 decision, her Honour found (at [36]) that there was nothing in the evidence before the Federal Circuit Court to indicate that the Tribunal was in breach of the requirements in Part 5, Division 5 of the Migration Act with respect to that decision or the subsequent decision of 9 May 2017. The primary judge found (at [40]):
There is no evidence before the Court that the Tribunal was made aware of the Applicant's request, to "Carolyn", for an adjournment. It cannot be found that the Tribunal failed to afford procedural fairness to the Applicant in proceeding to make a decision pursuant to s 362B(1A)(b) of the Act rather than adjourning the hearing, on this basis.
38 Her Honour continued (at [41]-[42]):
The Applicant was invited to a hearing pursuant to s 360 of the Act and he did not appear. The Tribunal had the power, in those circumstances, by written statement under s 362C of the Act to dismiss the application without any consideration of the application or information before the Tribunal. Furthermore, the Tribunal's statement dated 10 April 2017 complied with the requirements of s 362C(2) of the Act.
By its email to the Applicant on 24 April 2017, the Tribunal complied with the requirements in s 362C(5) and (6) of the Act.
(Citations omitted)
39 As to the 9 May 2017 decision, her Honour said (at [43]-[44]):
As the Applicant did not apply for reinstatement of the application, the Tribunal was required to confirm the dismissal of the application by written statement under s 368 of the Act. …
It is apparent that the Tribunal correctly applied the law that was relevant to its decision, that being governed by s 362B of the Act.
(Citations omitted)
40 There is no indication of any error in her Honour's finding that the Tribunal complied with the statutory scheme in ss 362B and 362C of the Migration Act when it made the original and confirmation decisions. Since the applicant had not applied to have his Tribunal application reinstated, the Tribunal was required by s 362B(1E) to confirm the dismissal of the application in the decision of 9 May 2017.
41 The primary judge also considered whether the applicant's case was affected by the considerations discussed in Malecaj v Minister for Immigration and Border Protection [2016] FCA 1508. Her Honour explained that this issue had become relevant because (at [46]):
During the course of the proceedings, the First Respondent brought to the Court's attention that the Tribunal had regard to the Department's movement records on the day of the Tribunal hearing ('movement records'). Those movement records demonstrated that the Applicant was offshore at the time of the Tribunal hearing and that his bridging visa was in effect until 28 April 2017, being some 14 days after the hearing date.
42 As her Honour correctly stated, in Malecaj, Pagone J held that the Tribunal unreasonably exercised its discretion to proceed to make a decision without taking further action to allow or enable the applicant to appear before it, in circumstances where it was aware that the applicant did not receive the hearing invitation and was unable to attend the hearing because he was lawfully and temporarily absent from Australia.
43 The circumstances that were said (at [48]) to distinguish the applicant's case from Malecaj were as follows:
(a) the Tribunal sent the Applicant an acknowledgement letter dated 4 November 2016 which stated if he decided to travel overseas he should advise the Tribunal of the approximate travel dates for his travel and his overseas contact details;
(b) on 24 February 2017 the Applicant telephoned the Tribunal and indicated that he had received the hearing invitation;
(c) on 28 February 2017, the Department informed the Applicant that he was responsible for informing the Tribunal of his travel dates as there is a possibility that he may be contacted for an interview. The letter also stated that for the relevant contact details, the Applicant should consult the letter he received from the Tribunal;
(d) on 8 March 2017, the Applicant returned a response to hearing invitation form which indicated that he would attend the hearing on 10 April 2017; and
(e) the Tribunal elected to dismiss the application for review under s 362B of the Act rather than to make a decision on the review and therefore the application was subject to a right to seek reinstatement. The Applicant did not make such an election.
44 In these circumstances, the primary judge determined that the applicant's case was different to Malecaj. I can discern no error in her Honour's conclusion. I can also discern no error in her Honour's subsequent conclusion that the Tribunal did not act unreasonably, in the circumstances of the applicant's case, in exercising its discretion to proceed to dismiss the application for review.
45 In all the circumstances, it was open to the primary judge to conclude that it was not in the interests of the administration of justice to reinstate the proceeding and her Honour's decision does not disclose any error of the kind contemplated in House v The King. In particular, the applicant has failed to identify that the primary judge took into account irrelevant considerations and failed to take into account relevant ones; that her Honour's decision was unreasonable in the relevant sense; or affected by any other error. The proposed appeal would appear to have no prospects of success. This fortifies my conclusion that this is an appropriate case to dismiss the current application for want of appearance.
46 If the extension of time were to be granted, it is clear that, for the reasons I have expressed, the decision of the primary judge is not attended by sufficient doubt to warrant reconsideration on appeal (see Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 399); and that leave to appeal should not be granted.
Disposition
47 I would, accordingly, dismiss the application for an extension of time and leave to appeal under s 25(2B)(bb)(ii) of the Federal Court of Australia Act, with costs.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate:
Dated: 24 February 2020
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Akram v Minister for Immigration and Border Protection [2018] FCA 1800
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2018/2018fca1800
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2024-09-13T22:50:20.331071+10:00
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FEDERAL COURT OF AUSTRALIA
Akram v Minister for Immigration and Border Protection [2018] FCA 1800
Appeal from: Application for extension of time and leave to appeal: Akram v Minister for Immigration [2018] FCCA 1856
File number: NSD 1338 of 2018
Judge: PERRAM J
Date of judgment: 19 November 2018
Catchwords: MIGRATION – application for extension of time and leave to appeal from Federal Circuit Court – whether Court erred in dismissing appeal on show cause basis from Administrative Appeals Tribunal – where Applicant applied for medical treatment visa outside prescribed time limit
Date of hearing: 19 November 2018
Registry: New South Wales
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 4
Counsel for the Applicant: The Applicant appeared in person with the assistance of an interpreter
Solicitor for the First Respondent: A Nanson of Australian Government Solicitor
Counsel for the Second Respondent: The Second Respondent filed a submitting notice save as to costs
ORDERS
NSD 1338 of 2018
BETWEEN: MUHAMMAD AKRAM
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
JUDGE: PERRAM J
DATE OF ORDER: 19 NOVEMBER 2018
THE COURT ORDERS THAT:
1. The application for extension of time and leave to appeal be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
PERRAM J:
1 This is an application for an extension of time for an application for leave to appeal from orders made by the Federal Circuit Court on 11 July 2018. That Court ordered that Mr Akram's proceedings be dismissed because he had no arguable case for relief and did this on a show cause basis. His proceeding in the Court below sought to quash a decision of the Administrative Appeals Tribunal affirming an anterior decision of a delegate of the Minister refusing to grant him a Medical Treatment (Visitor) (Class UB) visa. Mr Akram missed the deadline for his application for leave to appeal to this Court by two days and I would not regard that as a significant dispositive matter.
2 However, he still needs leave to appeal because a dismissal at a show cause hearing is deemed to be interlocutory. Mr Akram's appeal has, in my view, no prospects of success and I decline to extend the time to apply for leave to appeal. The Tribunal's conclusion that he was not eligible for the visa was unquestionably correct. One of the eligibility criteria for the visa is that an applicant must apply for the visa within 28 days of the last day upon which the visa holder held a substantive visa. Mr Akram's last substantive visa expired on 30 October 2012 and he applied for the Medical Treatment visa on 16 June 2016. He is, therefore, not eligible for this kind of visa. Even if error was shown in the processes of the Tribunal, the relief would be refused in that circumstance.
3 In the Federal Circuit Court, four errors were alleged and each was rejected by the judge. First, no procedural unfairness was found in the Tribunal's non-consideration of the medical evidence in circumstances where Mr Akram was not eligible for the visa. Secondly, the Tribunal had not misconstrued one of the eligibility criteria requiring that an applicant had turned 50 years of age and there was no doubt that Mr Akram had not reached that age. Thirdly, the fact that his condition had deteriorated after his substantive visa had expired was irrelevant to the 28-day time limit prescribed in the eligibility criteria which did not permit that to be taken into account. Fourthly, the Tribunal had not acted unreasonably in not considering his medical condition when he was not eligible, on any view, for the visa.
4 Each of these considerations was plainly correct and the application for an extension of time is therefore refused with costs
I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.
Associate:
Dated: 19 November 2018
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EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Limited [2011] FCAFC 47
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FEDERAL COURT OF AUSTRALIA
EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Limited [2011] FCAFC 47
Citation: EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Limited [2011] FCAFC 47
Appeal from: Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (2010) 263 ALR 155; [2010] FCA 29
Larrikin Music Publishing Pty Ltd (ACN 003 839 432) v EMI Songs Australia Pty Limited (ACN 000 063 267) [2010] FCA 242
Parties: EMI SONGS AUSTRALIA PTY LIMITED (ACN 000 063 267), EMI MUSIC PUBLISHING AUSTRALIA PTY LIMITED (ACN 000 040 951) v LARRIKIN MUSIC PUBLISHING PTY LIMITED (ACN 003 839 432)
EMI SONGS AUSTRALIA PTY LIMITED (ACN 000 063 267), EMI MUSIC PUBLISHING AUSTRALIA PTY LIMITED (ACN 000 040 951) and COLIN JAMES HAY v LARRIKIN MUSIC PUBLISHING PTY LIMITED (ACN 003 839 432) and RONALD GRAHAM STRYKERT
File number(s): NSD 183 of 2010
NSD 350 of 2010
Judges: EMMETT, JAGOT AND NICHOLAS JJ
Date of judgment: 31 March 2011
Catchwords: INTELLECTUAL PROPERTY – infringement of copyright in musical works – whether recordings of a musical work infringed copyright in an earlier musical work by reproducing in material form a substantial part of the earlier work
INTELLECTUAL PROPERTY – infringement of copyright in musical works – approach to be taken in determining question of infringement – assessment of originality and substantial part in context of musical works – identification of part of copyright work that manifests its originality – whether limitation of evidence of originality to composition of copyright work as a round meant that performance as a round was required in order for infringement to be made out – whether copying musical ideas and commonplaces that are not themselves original can constitute infringement – whether air or melody taken was substantially the same as the original
INTELLECTUAL PROPERTY – infringement of copyright in musical works – objective similarity between copyright work and alleged infringing work – causal connection between copyright work and alleged infringing work – degree to which determining objective similarity depends on aural perception and expert evidence – whether part taken from copyright work is required to constitute a substantial part of alleged infringing work
INTELLECTUAL PROPERTY – infringement of copyright in musical works – applicability of principles from compilation cases – whether finding of animus furandi was required in order for infringement to be made out
INTELLECTUAL PROPERTY – subsistence of copyright in musical works – development and history of copyright in musical works – balance of competing public interests in extending copyright protection to musical works – extent to which musical scores and recordings are coterminous with musical works they represent
INTELLECTUAL PROPERTY – infringement of copyright in musical works – whether alleged infringers of copyright in a musical work authorised further infringements of copyright in that work by the grant of licences
PRACTICE AND PROCEDURE – circumstances in which appellate court will revisit conclusions of primary judge – whether primary judge applied an erroneous principle or was plainly and obviously wrong
Legislation: Copyright Act 1912 (Cth) s 8
Copyright Act 1968 (Cth) ss 10, 13, 14, 22, 31, 32, 36
Fair Trading Act 1989 (NSW)
Patents Act 1990 (Cth)
Trade Practices Act 1974 (Cth)
Copyright Act 1842 (UK) (5 & 6 Vict. c. 45) s 20
Copyright Act 1911 (UK) ss 1, 19
Statute of Anne 1710 (UK) (8 Anne c. 19)
Cases cited: Austin v Columbia Graphophone Company Ltd [1917-1923] MacG Cop Cas 398
Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300
Baigent v Random House Group Ltd (2007) 72 IPR 195
Branir v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
Carlisle Homes Pty Ltd v Barrett Property Group Pty Ltd [2009] FCAFC 31
CBS Records Australia Limited v Guy Gross (1989) 15 IPR 385
Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557
D'Almaine v Boosey (1835) 1 Y & C Ex 288
Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] 1 All ER 700
Dixon Investments Pty Limited v Hall (1990) 18 IPR 490
Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415
Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 172 FCR 580; [2008] FCAFC 197
Francis Day & Hunter Ltd v Bron [1963] 1 Ch 587
G Ricordi & Co (London) Ltd v Clayton & Waller Ltd [1928-1935] MacG Cop Cas 154
Grignon v Roussel (1991) 38 CPR (3d) 4
Hawkes & Son (London) Ltd v Paramount Film Service Ltd [1934] 1 Ch 593
IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458
Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273
Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (2010) 263 ALR 155; [2010] FCA 29
Larrikin Music Publishing Pty Ltd (ACN 003 839 432) v EMI Songs Australia Pty Limited (ACN 000 063 267) [2010] FCA 242
Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (No 2) (2010) 270 ALR 481; [2010] FCA 698
Leslie v Young & Sons [1894] AC 335
Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd (2008) 248 ALR 364; [2008] FCAFC 46
Sands & McDougall Proprietary Limited v Robinson (1917) 23 CLR 49
S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354
S. W. Hart & Co Pty Limited v Edwards Hot Water Systems (1985) 159 CLR 466
University of New South Wales v Moorhouse (1975) 133 CLR 1
Vawdrey Australia Pty Ltd v Krueger Transport Equipment Pty Ltd (2009) 261 ALR 269
Warren v Coombes (1979) 142 CLR 531
WEA International Inc v Hanimex Corporation Limited (1987) 17 FCR 274
Date of hearing: 9, 10 and 11 August 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 268
Counsel for the appellants in both matters: Mr J Gleeson SC and Mr C Dimitriadis
Solicitors for the appellants in both matters: TressCox Lawyers
Counsel for the respondent in NSD 183 of 2010: Mr R Lancaster SC and Mr N Murray
Solicitors for the respondent in NSD 183 of 2010: Simpsons Lawyers
Counsel for the first, second and third cross-respondents in NSD 350 of 2010: Mr J Gleeson SC and Mr C Dimitriadis
Solicitors for the first, second and third cross-respondents in NSD 350 of 2010: TressCox Lawyers
Counsel for the first respondent/cross-appellant in NSD 350 of 2010: Mr R Lancaster SC and Mr N Murray
Solicitors for the first respondent/cross-appellant in NSD 350 of 2010: Simpsons Lawyers
Counsel for the second respondent/fourth cross-respondent in NSD 350 of 2010: The second respondent/fourth cross-respondent did not appear
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 183 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED (ACN 000 063 267)
First Appellant
EMI MUSIC PUBLISHING AUSTRALIA PTY LIMITED (ACN 000 040 951)
Second Appellant
AND: LARRIKIN MUSIC PUBLISHING PTY LIMITED (ACN 003 839 432)
Respondent
JUDGES: EMMETT, JAGOT AND NICHOLAS JJ
DATE OF ORDER: 31 March 2011
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellants pay the respondent's costs of the appeal as agreed or taxed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 350 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED
First Appellant / First Cross-Respondent
EMI MUSIC PUBLISHING AUSTRALIA PTY LTD
Second Appellant / Second Cross-Respondent
COLIN JAMES HAY
Third Appellant / Third Cross-Respondent
AND: LARRIKIN MUSIC PUBLISHING PTY LTD
First Respondent / Cross-Appellant
RONALD GRAHAM STRYKERT
Second Respondent / Fourth Cross-Respondent
JUDGES: EMMETT, JAGOT AND NICHOLAS JJ
DATE OF ORDER: 31 March 2011
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellants pay the first respondent's costs of the appeal as agreed or taxed.
3. The cross-appeal be allowed in part.
4. The order of 23 August 2010 that the proceedings otherwise be dismissed be set aside.
5. The respondent's case in respect of authorisation as pleaded in paragraphs 48 to 51 of the second further amended statement of claim in proceeding NSD 145 of 2008 (excluding that claim insofar as it relates to the Qantas advertisements) be remitted to the trial judge for determination in accordance with law.
6. The parties file and serve written submissions on costs of the cross-appeal within 14 days and any submissions in reply within a further 7 days thereafter.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 183 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED (ACN 000 063 267)
First Appellant
EMI MUSIC PUBLISHING AUSTRALIA PTY LIMITED (ACN 000 040 951)
Second Appellant
AND: LARRIKIN MUSIC PUBLISHING PTY LIMITED (ACN 003 839 432)
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 350 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED
First Appellant / First Cross-Respondent
EMI MUSIC PUBLISHING AUSTRALIA PTY LTD
Second Appellant / Second Cross-Respondent
COLIN JAMES HAY
Third Appellant / Third Cross-Respondent
AND: LARRIKIN MUSIC PUBLISHING PTY LTD
First Respondent / Cross-Appellant
RONALD GRAHAM STRYKERT
Second Respondent / Fourth Cross-Respondent
JUDGES: EMMETT, JAGOT AND NICHOLAS JJ
DATE: 31 March 2011
PLACE: SYDNEY
REASONS FOR JUDGMENT
EMMETT J
INTRODUCTION [1]
THE WORKS IN QUESTION [9]
Kookaburra [13]
Down Under [17]
The Qantas Advertisements [27]
DEVELOPMENT OF COPYRIGHT [28]
THE RELEVANT STATUTORY PROVISIONS [40]
SOME LEGAL PRINCIPLES [45]
THE DECISION OF THE PRIMARY JUDGE [58]
THE ISSUES IN THE APPEALS AND THE CROSS-APPEAL [62]
INFRINGEMENT BY THE IMPUGNED RECORDINGS [66]
The Complaints of the EMI Companies and Mr Hay [67]
Whether the Full Court Should Reconsider Infringement [71]
Comparison between Kookaburra and Relevant Versions of Down Under [82]
Conclusion as to Infringement [98]
INFRINGEMENT BY QANTAS ADVERTISEMENTS [102]
AUTHORISATION OF INFRINGEMENT IN RESPECT OF OTHER WORKS [103]
CONCLUSION [104]
INTRODUCTION
1 The principal question in these two appeals is whether recordings of performances of an iconic Australian musical work known as "Down Under", performed by a group known as "Men At Work", involved the reproduction in a material form of a substantial part of another iconic Australian musical work, "Kookaburra Sits in the Old Gum Tree" (Kookaburra), so as to constitute infringement of the copyright subsisting in Kookaburra under the Copyright Act 1968 (Cth) (the Copyright Act). Larrikin Music Publishing Pty Limited (Larrikin), a respondent in both appeals, is the owner of the copyright in Kookaburra. Larrikin contends that the copyright has been infringed by EMI Songs Australia Pty Limited and EMI Music Publishing Australia Pty Limited (together the EMI Companies), the first and second appellants in both appeals, and by Mr Colin Hay and Mr Ronald Strykert, respectively an appellant and a respondent in one of the appeals.
2 Larrikin commenced a proceeding in the Court (NSD 145 of 2008) against the EMI Companies and Messrs Hay and Strykert in which it claimed relief for infringement of its copyright in Kookaburra. Larrikin alleged that the EMI Companies and Messrs Hay and Strykert infringed its copyright in Kookaburra by making two recordings of Down Under, one in 1979 (the 1979 Recording) and one in 1981 (the 1981 Recording). It also alleged that the EMI Companies infringed its copyright in Kookaburra by authorising acts of infringement in relation to other works, including two advertisements published by Qantas Airways Limited (the Qantas Advertisements). Subsequently, the EMI Companies commenced a proceeding against Larrikin (NSD 340 of 2008), alleging unjustifiable threats on the part of Larrikin. The two proceedings, NSD 145 of 2008 and NSD 340 of 2008, had overlapping issues, and were managed in tandem by a judge of the Court (the primary judge). Discrete issues were dealt with by the primary judge in three separate hearings.
3 For reasons published on 30 July 2009, the primary judge determined, as a preliminary issue, that, with effect from 21 March 1990, Larrikin has been the owner of the copyright in Kookaburra. That question was common to both NSD 145 of 2008 and NSD 340 of 2008. While that determination was originally the subject of grounds of appeal, those grounds have been abandoned. Thus, it is common ground, for present purposes, that Larrikin is the owner of the copyright in Kookaburra.
4 On 27 October 2009, the primary judge made orders that certain further issues be determined separately from the other remaining issues in the two proceedings. Those issues included whether the 1979 Recording and the 1981 Recording (together the Impugned Recordings) and the Qantas Advertisements involved the reproduction in a material form of a substantial part of Kookaburra. For reasons published on 4 February 2010, the primary judge concluded that the Impugned Recordings infringed Larrikin's copyright in Kookaburra. However, his Honour determined that the Qantas Advertisements did not involve the doing of any act comprised in the copyright in Kookaburra. In the light of the conclusion that the Impugned Recordings infringed copyright, his Honour ordered that NSD 340 of 2010 be dismissed, since Larrikin's threats were not, in those circumstances, unjustified.
5 On 17 March 2010, the primary judge made orders to reflect his conclusions of 4 February 2010 and also made orders for the further conduct of NSD 145 of 2008. On that day, his Honour gave reasons for those orders. On 6 July 2010, his Honour made orders in NSD 145 of 2008 on the issue of quantum, for reasons that he published on that day. It will be necessary to refer to the reasons of 6 July 2010 in so far as they reflect upon his Honour's approach to questions of infringement. However, there is presently no appeal from the orders of 6 July 2010.
6 On 25 February 2010, the EMI Companies filed notice of appeal (NSD 183 of 2010) from the order made on 4 February 2010 dismissing NSD 340 of 2008. Larrikin is the respondent to that appeal. That notice of appeal was filed as of right.
7 Since the orders made on 17 March 2010 did not finally dispose of NSD 145 of 2008, they are interlocutory and, accordingly, there is no appeal as of right. The EMI Companies and Mr Hay filed an application for leave to appeal (NSD 350 of 2010) from those orders. Larrikin and Mr Strykert are named as respondents to that application. The proposed grounds of appeal in NSD 350 of 2010 were identical to those in NSD 183 of 2010. Larrikin foreshadowed a cross-appeal in NSD 350 of 2010 from the orders made on 17 March 2010 in relation to the Qantas Advertisements and other issues of alleged infringement.
8 The application for leave to appeal in NSD 350 of 2010 and the appeal in NSD 183 of 2010 were listed for hearing together. Larrikin did not oppose the grant of leave. Mr Strykert has not appeared. In the circumstances, since the orders of 17 March 2010 determined substantive questions against the EMI Companies and Mr Hay, the Full Court granted leave to appeal (see EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Limited [2010] FCAFC 110), and heard full argument, on the notice of appeal and the notice of cross-appeal filed in NSD 350 of 2010, at the same time as hearing the argument in NSD 183 of 2010.
THE WORKS IN QUESTION
9 In considering whether an alleged infringing work constitutes an infringement of a musical work, it is necessary to regard music as a language, with its own vocabulary and structure. Music must be understood, by analogy, in the way in which traditional language is understood.
10 It is important to identify precisely the relevant work in which copyright subsists. The Copyright Act offers no definition of musical work. The musical work in which copyright subsists is an abstract concept. That concept may be indicated or evidenced by a notated musical score or a sound recording. However, the musical score or sound recording is not the musical work.
11 It is necessary, when identifying the precise work in which copyright subsists, to identify also that part of the musical work that manifests its originality. A melody, excerpt or phrase in a completed work is capable of manifesting originality. However, the copying of musical ideas and commonplace building blocks and motifs from a musical work, which are not themselves original, will not normally constitute infringement of that musical work (see, for example, Ronald S. Rosen, Music and Copyright (Oxford University Press, 2008) at 2-3).
12 It is convenient to describe separately each of the musical works in issue in the appeals.
Kookaburra
13 Kookaburra was written and composed by Ms Marion Sinclair. It was published in 1934 in the Girl Guides publication, "Three Rounds by Marion Sinclair", in the form set out in Schedule 1 to these reasons. As notated in Schedule 1, the music of Kookaburra is in the key of F major. Dr Andrew Ford, a composer, writer and broadcaster, who gave evidence before the primary judge, transposed Kookaburra into the key of D major. Dr Ford's transposition, which was referred to as Example A, is set out in Schedule 2 to these reasons. Aside from the transposition, the versions of Kookaburra in Schedules 1 and 2 exhibit several small differences. However, the differences are irrelevant for present purposes.
14 Kookaburra, clearly enough, is a short musical work. When notated as shown in Schedule 1, it consists of eight bars. In Schedule 2, it consists of only four bars. The parties consistently described Kookaburra as a four-bar work.
15 Kookaburra was published with lyrics, which provide the title of the work and indicate that it was intended to be sung to those lyrics. There is no separate musical accompaniment shown in Schedule 1. Kookaburra was published as a "Round in 4 Parts". That indicates that it was to be sung by four voices or four groups of voices, such that each of the parts is continuously repeated. When sung as a round, the four phrases shown in Schedule 1 would be progressively heard over the top of each other. Thus, even if Kookaburra were sung through as a round only once, it would consist of seven bars rather than four. The notation of Kookaburra set out in Schedule 3 to these reasons illustrates how Kookaburra might be sung through as a round three times.
16 It was not disputed that Kookaburra was an original composition, although there was no evidence as to the degree of skill involved in its composition, other than that skill was involved in writing the work as a round. Dr Ford described writing a round as "a tricky and rather amusing business", because all the phrases have to fit on top of each other. By that he should probably be understood as saying that, as well as each phrase making independent sense as a melody, the phrases must be capable of harmonising against each other.
Down Under
17 Down Under was composed in 1978 by Messrs Hay and Strykert and was originally arranged to be performed as a duet. Mr Hay initially composed the lyrics, verses, choruses and chord structure of the work on his acoustic guitar. The bass line was composed by Mr Strykert, who added some guitar embellishments. Mr Hay jotted down the original version of Down Under in his notebook in about May 1978. As originally written, Down Under's musical elements did not include the flute phrase described below, which is critical for the present appeals. Messrs Hay and Strykert began to perform Down Under live in clubs and other venues around Melbourne in 1978.
18 The performance group Men at Work was formed in 1979. Men at Work started as a trio, consisting of Messrs Hay and Strykert and a third person playing drums. Mr Greg Ham joined Men at Work in the middle of 1979. Mr Ham is classically trained and can play and read music. He plays a number of instruments, including the flute.
19 The lyrics, vocal melody, chords and bass line were already established when Mr Ham first heard Down Under. Mr Ham sought to complement those elements with another instrumental part, especially one that would consolidate the tongue-in-cheek nature of Down Under. Mr Ham added flute phrases, which incorporated a part of Kookaburra. Mr Ham was aware of Kookaburra, having apparently heard it when at primary school in Australia in the late 1950s. His aim in adding the flute phrase to Down Under was to inject the song with Australian flavour. He said that the flute phrase fitted rhythmically into Down Under, and to the percussion section at the start of the song, which, in the 1981 Recording, is played on beer bottles with different amounts of water in them. Mr Ham described the flute phrase as an "Aussie clichÉ melody", and said that he thought of it as an "Irish/Australian style melody".
20 The 1979 Recording is of an arrangement of Down Under, in the key of B minor, performed by Men at Work. It was published on the B side of a seven inch single recording titled Key Punch Operator. The version of Down Under in the 1979 Recording included the relevant flute phrases.
21 By 1980, Men at Work had grown to five musicians and were performing regularly at venues around Melbourne. The songs that they performed included Down Under. The version of Down Under that they performed live was close to, though not identical to, the version in the 1979 Recording. No two live performances, of course, were identical to each other.
22 The 1981 Recording is of a further performance of Down Under by Men at Work, recorded as part of an album entitled Business as Usual. The version of Down Under in the 1981 Recording also includes the relevant flute phrases, though it differs from the version in the 1979 Recording in some respects. The version of Down Under in the 1981 Recording is also in the key of B minor. It is described as having a strong "ska/reggae feel" and a recurring rhythmic motif in the guitar. It is arranged for vocals, guitar, bass, percussion and flute. The version of Down Under in the 1981 Recording is ninety-three bars long. It, too, is different from the versions that were performed live.
23 Dr Ford identified what he called the basic hook of Down Under, which he referred to as Example C when notated. The basic hook is as follows:
Dr Ford identified the basic hook as an element of a longer, four-bar hook in Down Under, which is first heard in an incomplete form, and which, when notated in this form, he referred to as Example D. The longer hook is as follows:
Dr Ford said that, in bar 1 of Example D, the flute plays a version of the basic hook, but with two extra notes. The flute is silent in bar 2. Bar 3 contains the basic hook, and bar 4 presents the first quotation from Kookaburra, namely, the second phrase of Kookaburra.
24 The full version of the longer hook was referred to by Dr Ford as Example E when notated, and is as follows:
Dr Ford said that bars 1 and 3 of Example E present the basic hook, while bars 2 and 4 present direct quotes from the first and second phrases respectively of Kookaburra.
25 Examples C, D and E are played on the flute in the respective versions of Down Under in which they appear. Example E appears once in the 1979 Recording. In the 1981 Recording, Example D appears once and Example E twice. Thus the pattern of notes from Kookaburra appears in five out of the ninety-three bars of the version of Down Under in the 1981 Recording. Each bar is separated from the others by material that is not derived from Kookaburra.
26 The EMI Companies attach some significance to the fact that any resemblance between any part of Kookaburra and the versions of Down Under in the Impugned Recordings went unnoticed by the general public, as well as by Larrikin, for more than 20 years, notwithstanding that both were well known iconic Australian compositions. Larrikin has owned the copyright in Kookaburra since 1990, but did not perceive the resemblance until it was pointed out in the course of a popular television panel programme in 2007, in which participants were invited to listen to one of the Impugned Recordings, and to identify the iconic piece of music, a passage from which was said to be reproduced in the Impugned Recording.
The Qantas Advertisements
27 The Qantas Advertisements consist of two thirty-second videos, each of which contains a languid orchestral version of a part of Down Under. The Qantas Advertisements contain the second bar of Kookaburra, in a form similar to that notated in Example D. There are also certain musical embellishments in the Qantas Advertisements. Thus, there is a glissando, which was described as a "slide in pitch like a swanee whistle". However, a note for note comparison shows a reproduction in the Qantas Advertisements of the second bar of Kookaburra.
DEVELOPMENT OF COPYRIGHT
28 The word substantial is susceptible of some degree of ambiguity, and its meaning for the purposes of s 14 of the Copyright Act will be influenced by its context. The relevant context includes the development of copyright protection for specific kinds of works (see IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 239 CLR 458 (IceTV) at [154]). Accordingly, I shall first say something about the history of copyright in musical works.
29 Just as nature abhors a vacuum, so the law abhors a monopoly. Copyright is an exception to the law's abhorrence of monopolies (see IceTV at [28]). Copyright legislation strikes a balance of competing interests and competing policy considerations. Relevantly, it is concerned with rewarding authors of original literary, artistic and musical works with commercial benefits, having regard to the fact that such works in turn benefit the public (see IceTV at [24]).
30 The Romans disliked monopolies just as much as common lawyers. The Emperor Zeno, at the end of the fifth century, provided that no-one was to be permitted to monopolise the sale of certain commodities. Zeno's measure stipulated that, should anyone practice monopoly, he would be deprived of all his property and sentenced to perpetual exile, and that those venturing to fix the prices of their merchandise or bind themselves by any illegal contracts of that kind would be punished by a fine. Further, any tribunal that did not enforce the laws as to monopolies was also to be punished by a fine (see Justinian's Code, Book 4 Title 59).
31 However, the Romans recognised no exception for copyright. They recognised no monopoly in the result of literary, artistic or musical effort. Rather, the Romans were concerned only with ownership of the physical embodiment of a literary, artistic or musical work. That is to say, they analysed the question in terms of accessio and specificatio. Thus, writing on paper or parchment, even in letters of gold, accedes to or becomes part of the paper or parchment by the doctrine of accessio. For example, if an author writes a poem, history or speech on another's paper or parchment, that other person remains the owner of the paper or parchment. However, if the paper or parchment is in the possession of the author and the owner seeks to recover it, that owner will be required to compensate the author for the loss of the writing, assuming that the author acquired possession of the paper or parchment in good faith (see Justinian's Institutes Book 2.1.33). On the other hand, if the owner is in possession of the paper or parchment, the author has no claim against the owner. The requirement to give compensation as a condition of obtaining possession of the paper or parchment indicates that Roman jurists recognised some proprietary interest in the work that was done. There was nothing to stop the author from writing the poem, history or speech down on another paper or parchment. Nor, of course, was there anything to stop the owner of the paper or parchment from copying the work and distributing the copies by sale or otherwise.
32 The position under Roman law was different if someone paints a picture on another's board or canvas. A picture or painting by a famous artist was regarded as being of far greater value than the canvas or board on which it was painted. The Roman jurists regarded it as ridiculous to say that the paint acceded to the board or canvas, irrespective of the quality of the painting or picture. However, where the original owner of the canvas or board has possession of the painting or picture, and the painter claims return of the painting, the painter will be required to compensate the owner of the board for the value of the board or canvas. Even if the painter is in possession, the owner of the board or canvas is given an action to recover its value (Institutes 2.1.34).
33 The question of a sculptor who uses somebody else's bronze, silver or gold to make an artistic work is dealt with by Roman law under the rubric of specificatio, making a new thing or species out of different materials. If the maker owns the materials, no difficulty arises. However, when somebody else's materials are used, the position varies. If the new thing can be turned back into its materials, its owner is the one who owned the materials. If not, its maker is its owner. The completed artistic work, made from bronze, silver or gold, can be turned back into raw bronze, silver or gold. Hence the owner of the materials is the owner of the work. However, things such as wine, oil or grain cannot be made back into grapes, olives or corn. Hence, the wine, oil or grain belongs to the maker, subject to rights of compensation for the loss of materials. On the other hand, when the maker uses materials belonging both to the maker and to someone else, the maker is regarded as the owner of the product, having contributed not only the work but also part of the materials (Institutes 2.1.25). Thus, the Romans did recognise that the author of or maker of a thing had an interest in the product by reason of the effort in producing the product. Nevertheless, that was not a proprietary right that could be alienated by the author or maker, separately from the alienation of the object.
34 Of course, the problems of multiple copying and reproduction that began with the invention of printing, and were exacerbated by the development of digitalisation and dissemination by means of the internet, were not problems known to the Romans. Printing technology provided the first realistic opportunity for authors to realise the potential economic benefits of their work. That led to intervention by the state.
35 For example, in 1469, the Governors of Venice granted to John of Spira, a printer, the exclusive rights to publish both Cicero's and Pliny's letters for five years. Others in Venice and elsewhere quickly began seeking and securing the exclusive privilege to publish particular works in specific localities. The mid-to-late fifteenth century witnessed a rise in the creation of copyright, taking the guise of an exclusive right granted by the state to a publisher.
36 By the early sixteenth century, the English Crown had begun granting to individual printers exclusive rights to publish specific books. A Royal Charter of 1556 gave the Stationers' Company, a printers' guild that dominated all publishing in London at the time, exclusive and perpetual rights in books that were duly registered with it. However, the rights granted by the Royal Charter had nothing to do with rewarding authors. Rather, the grant was much more concerned with the control of the press by the Crown. The Charter made it clear that church and state were never to be subjected to heresy, scandal or descent. Nevertheless, the result was that publishers enjoyed a state-sanctioned monopoly over what appeared in print.
37 In that context, the Westminster Parliament enacted the Statute of Anne (8 Anne c. 19), which came into force in 1710, giving the authors or proprietors of books the sole liberty of printing and reprinting for the term of 14 years, renewable once if the author was still living. The privilege was not automatic. Authors and publishers had to apply for it, pay a fee and register the relevant work. The Statute of Anne is the significant forebear of English, and, therefore, Australian copyright legislation.
38 The Statute of Anne did not deal with musical works as such. However, the monopoly extended to a book that recorded a musical work as sheet music. By s 20 of the Copyright Act 1842 (5 & 6 Vict. c. 45) (the 1842 Act), the sole liberty of representing a musical composition, performing a musical composition, or causing or permitting a musical composition to be represented or performed, was to endure and be the property of the author for the term provided for the duration of copyright in books. In the 1842 Act, book was defined as including a sheet of music.
39 By s 1(1) of the Copyright Act 1911 (UK) (the 1911 Act), copyright was to subsist in, relevantly, every original musical work. Under s 1(2) of the 1911 Act, copyright was defined as the sole right to produce or reproduce the work, or any substantial part thereof, in any material form whatsoever and to perform the work, or any substantial part thereof, in public. That was the first statutory recognition of copyright in a substantial part of a work. Copyright was also to include the sole right, in the case of a musical work, to make any contrivance by means of which the work might be mechanically performed or delivered. There was no definition of musical work in the 1911 Act. However, s 19(2) provided that it would not be an infringement of copyright in any musical work to make contrivances by means of which the work might be mechanically performed, if the contrivances had previously been made with the consent or acquiescence of the owner of the copyright, notice had been given of intention to make the contrivances and the applicable royalty had been paid. Section 19(2)(ii) further provided that, for the purposes of that provision, a musical work was to be deemed to include any words so closely associated therewith as to form part of the same work. Section 8 of the Copyright Act 1912 (Cth) (the 1912 Act) provided that the 1911 Act was to be in force in Australia from 1 July 1912.
THE RELEVANT STATUTORY PROVISIONS
40 The Copyright Act replaced the 1912 Act. Under s 13(1) of the Copyright Act, an act comprised in the copyright in a work, including a musical work, is any act that, under the Copyright Act, the owner of the copyright has the exclusive right to do. Section 13(2) provides that the exclusive right to do an act in relation to a work includes the exclusive right to authorise a person to do that act in relation to that work. Under s 14, a reference to the doing of an act in relation to a work includes a reference to the doing of that act in relation to a substantial part of the work and a reference to a reproduction of a work includes a reference to a reproduction of a substantial part of the work.
41 Section 31 of the Copyright Act deals with the nature of copyright in original works. Relevantly, copyright, in relation to a musical work, is the exclusive right to do all or any of the following acts:
(i) to reproduce the work in material form,
(iii) to perform the work in public,
(iv) to communicate the work to the public,
(vi) to make an adaptation of the work.
The generality of (i) is not affected by (vi). There is no definition of musical work.
42 Section 32 of the Copyright Act provides, relevantly, that copyright subsists in an original musical work that is unpublished, provided the author has a relevant connection with Australia at the time when the work was made. Under s 22, a work is made when the work is first reduced to writing or to some other material form. Under s 10, writing means a mode of representing or reproducing words, figures or symbols in a visible form, and material form, in relation to a work, includes any form of storage of the work.
43 Under s 32(2), where an original musical work has been published, copyright subsists in the work (or, if copyright subsisted before its first publication, copyright continues to subsist in the work), if the first publication took place in Australia, the author had a relevant connection with Australia at the time of first publication, or the author died before that time but had a relevant connection with Australia immediately before his or her death.
44 Under s 36(1), the copyright in a musical work is infringed by a person who does in Australia, or authorises the doing in Australia of, any act comprised in the copyright, unless the person is the owner of the copyright or has been licensed by the owner of the copyright. Section 36(1A) provides that, in determining whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a musical work, the following matters must be taken into account:
(a) the extent, if any, of the person's power to prevent the doing of the act concerned,
(b) the nature of any relationship existing between the person and the person who did the act concerned, and
(c) whether the person took any reasonable steps to prevent or avoid the doing of the act.
Other matters may also be taken into account.
SOME LEGAL PRINCIPLES
45 Certain musical works, such as operas, may be regarded as containing or consisting of several smaller, discrete works. Copyright may subsist in an air or melody and may be infringed by copying part of that air or melody, as well as by copying the whole of the air or melody. There will be an infringement if that in which the whole meritorious part of the original work consists is incorporated in a new work (see D'Almaine v Boosey (1835) 1 Y & C Ex 288 at 301-2).
46 The copyright in an original work will also be infringed by the taking from that work, without any material alteration, of all of the bars that consecutively form an entire air or melody. On the other hand, to take the bars in a different order, or broken by the intersection of other bars, will not necessarily be an infringement. Infringement depends upon whether the air or melody taken is substantially the same as the original. The mere adaptation of an air or melody, by transferring it from one instrument to another, does not alter the original subject, if the ear tells one it is the same. The adaptation or accompaniment does not change it. There will be infringement where the original work, though adapted to a different purpose from that of the original, can still be recognised by the ear (see D'Almaine v Boosey at 302).
47 Infringement does not depend upon whether the actual notes are taken (Austin v Columbia Graphophone Company Ltd [1917-1923] MacG Cop Cas 398 at 408). Determining infringement is not a question of note for note comparison, but of whether the substance of the original copyright work is taken (see Austin v Columbia at 415). There will be infringement where a new work is arrived at by way of imitation and appropriation (see Austin v Columbia at 421).
48 In order to establish infringement of copyright in a musical work, it must be shown that the work said to have been infringed has been copied or that a substantial part of it has been copied (see G Ricordi & Co (London) Ltd v Clayton & Waller Ltd [1928-1935] MacG Cop Cas 154 at 162). The originality of a particular musical work may be due, not to the sequence of the notes, but to the treatment, accentuation and orchestration by the composer. It is the musical work as a whole that is entitled to the protection of copyright. It may be that the part that is taken is so small a part of the original music work as not to constitute an infringement, because it is not a substantial part of the musical work in which copyright subsists. While eight bars of a particular air, constituting about a quarter of the work, may form a substantial part of that work, there may be no infringement if the eight bars in question are not the most distinctive or important part of the original air (see G Ricordi & Co at 162).
49 When dealing with the word substantial in the context of infringement of copyright in a musical work, it is appropriate to consider whether or not the amount of the copyright musical work that is taken is so slender that it would be impossible to recognise it (see Hawkes & Son (London) Ltd v Paramount Film Service Ltd [1934] 1 Ch 593 at 604). However, even though the alleged infringement is not very prolonged in its reproduction, there will nevertheless be infringement if what is reproduced is a substantial, vital and essential part of the original (Hawkes v Paramount at 606). Further, there will be infringement if the bars of a musical work that are taken contain what constitutes the principal air or melody of the copyright work, which anyone who heard the alleged infringing work would recognise as being the essential air or melody of the copyright work (see Hawkes v Paramount at 609).
50 It may be appropriate, in determining whether one musical work infringes the copyright in another, to analyse the musical features and structure of each, stating points of similarity or difference (see Francis Day & Hunter Ltd v Bron [1963] 1 Ch 587 at 609-10). For example, the following may be compared:
the structure of two works;
whether particular bars of the copyright work are an essential part of that work, and whether the theme of those bars has been borrowed in the alleged infringing work;
whether the theme of the copyright work, despite being built up of musical commonplaces or clichÉs, combines those devices originally;
whether there is a noticeable correspondence, on a note for note comparison, between the two works;
whether the harmonic structure of parts of the two works is the same;
the importance of time and/or rhythm in each work.
In such a comparison, the question is whether the degree of similarity can be said to be definite or considerable (see Francis Day at 610).
51 There is no warrant for suggesting that reproduction, within the meaning of the Copyright Act, occurs only when identity is achieved (see Francis Day at 611-12). Rather, reproduction involves a sufficient degree of objective similarity between the two works, as well as some causal connection between the copyright work and the alleged infringing work (see Francis Day at 614). Thus, determining the question of infringement involves both an objective and a subjective stage. At the objective stage, the inquiry is whether the alleged infringing work is similar to the copyright work. That is a purely objective question of fact, depending to a large degree on aural perception, but also somewhat on expert evidence. The subjective stage involves the question of whether the alleged infringer copied the copyright work, or whether the alleged infringing work is an independent work (see Francis Day at 618).
52 Whether an alleged infringer has copied a substantial part depends much more on the quality than on the quantity of what has been taken. In any case, what amounts to a substantial reproduction cannot be defined in precise terms, but is a matter of fact and degree (see S. W. Hart & Co Pty Limited v Edwards Hot Water Systems (1985) 159 CLR 466 at 472). A part that, by itself, has no originality will not normally be a substantial part of the copyright work and reproduction of that part will therefore not be an infringement. There is no copyright in some unoriginal part of a whole in which copyright subsists (see CBS Records Australia Limited v Guy Gross (1989) 15 IPR 385 at 395).
53 In order for infringement to occur, what is taken must be a substantial part of the copyright work. However, the taken part need not form a substantial part of the alleged infringing work. There may be a taking of a substantial part even if the overall appearance of the alleged infringing work is very different from the work in which copyright subsists. Whether what has been taken constitutes a substantial part of the copyright work depends upon its importance to the copyright work, not upon its importance to the alleged infringing work (see Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] 1 All ER 700 at 708-9).
54 Where emphasis is to be placed upon the originality of the copyright work's expression, the essential or material features of that work must be ascertained by considering the originality of the part allegedly taken (see Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300 at 305). A significant element is the importance that the alleged substantial part bears in relation to the work as a whole. If it is a vital or material part, even though quantitatively it may be only a small part, it may nevertheless be sufficient. There will be infringement if the alleged infringing work bears a similarity to a substantial part of the copyright work, even if it differs markedly in other ways. It is not necessary that there be a substantial similarity overall between the two works (see Dixon Investments Pty Limited v Hall (1990) 18 IPR 490 at 494-5).
55 While the question of whether a substantial part has been copied is one of fact and degree, a critical factor in the assessment of the quality of what is copied is the originality of the part that is copied. Originality means that the creation or production of the copyright work required some independent intellectual effort (see IceTV at [32]-[33]). The more that the copyright work is simple or lacking in substantial originality, the greater the degree of taking that will be needed before the substantial part test will be satisfied (see IceTV at [40]).
56 There is imprecision in the criteria devised by legislatures to strike a balance between the competing interests involved in copyright protection. That imprecision is apparent in the term "substantial part" (see IceTV at [67]-[69]). The purpose of copyright law is to balance the public interest in promoting the encouragement of musical and other works by providing a just reward for the creator with the public interest in maintaining a robust public domain in which further works are produced (see IceTV at [71]).
57 Comparison between what was taken and the whole of the copyright work may be distorted by a meditation upon the protection given by the Copyright Act against misappropriation of any investment of skill and labour by the author. The statutory requirement that the part of a work taken must be substantial assumes that there can be some measure of legitimate appropriation of that investment (see IceTV at [157]).
THE DECISION OF THE PRIMARY JUDGE
58 In his reasons of 4 February 2010, the primary judge determined that what was taken from Kookaburra and reproduced in the Impugned Recordings was not trivial in either a qualitative or a quantitative sense. His Honour considered that, while Kookaburra is a short work and is not reproduced in Down Under as a round, there was no suggestion that Kookaburra is so simple, or lacking in substantial originality, that a note for note reproduction of the entire work was required in order to meet the substantial part test. His Honour considered that the 'short answer' to the qualitative test requirement was to be found in the fact that Mr Hay sang the words of Kookaburra to the tune of the flute phrase during some of his performances of Down Under. His Honour considered that that fact was a sufficient illustration that the qualitative test was met, notwithstanding the fact that Kookaburra's words are not sung in either of the Impugned Recordings. His Honour considered that, while the reproduction of parts of Kookaburra in the Impugned Recordings did not completely correspond with Kookaburra, because of the separation of the bars of Kookaburra, Mr Hay's singing of the words showed that a substantial part was taken. Although his Honour accepted that the question of quantity was secondary to that of quality, his Honour considered it noteworthy that two of the four bars of Kookaburra, constituting '50% of the song', are reproduced in the Impugned Recordings. His Honour concluded that each of the Impugned Recordings reproduced a substantial part of Kookaburra.
59 His Honour characterised the essential question in relation to the Qantas Advertisements as whether, when considered aurally, there was a sufficient degree of objective similarity to Kookaburra and, in particular, whether the Qantas Advertisements contain a substantial part of Kookaburra. His Honour found it quite difficult to detect the second bar of Kookaburra as played in the Qantas Advertisements. His Honour did not consider that the quotation of the second bar of Kookaburra constituted, without more, the reproduction of a substantial part of Kookaburra.
60 As part of its case for infringement, Larrikin claimed for past performance income. Larrikin had assigned its performance rights in Kookaburra to the Australian Performing Rights Association (APRA), as the collecting society under the Copyright Act representing music copyright owners. Past performances of Down Under that included the relevant flute phrase did not constitute an infringement, since APRA authorised the songs to be performed and APRA was the owner of the performance rights. However, Larrikin contends that, but for the making of certain representations by the EMI Companies and Mr Hay to APRA, APRA would have given a percentage of the performance royalties to Larrikin. Larrikin also claimed the income earned as a licence fee paid by the Australasian Mechanical Copyright Owners Society (AMCOS), the collecting society under the Copyright Act for music publishers in relation to licences for the reproduction of musical works. Larrikin contends that, since APRA manages the business of AMCOS, the making of a representation to APRA also involves the making of the representation to AMCOS.
61 The primary judge concluded that the representations constituted misleading and deceptive conduct, in contravention of the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1989 (NSW), once the fact of infringement was established. Larrikin, therefore, was entitled to recover damages. The question of what proportion of the income from Down Under ought to be paid to Larrikin was determined following a further hearing and was the subject of the orders made on 6 July 2010. No question as to that proportion is presently before the Full Court.
THE ISSUES IN THE APPEALS AND THE CROSS-APPEAL
62 The principal question in the appeals is whether the Impugned Recordings involved a reproduction of a substantial part of Kookaburra. If they did, both appeals should be dismissed. If they did not, both appeals should be allowed and orders should be made accordingly.
63 The second question is whether either or both of the Qantas Advertisements involved the reproduction of a substantial part of Kookaburra. If the answer is yes in respect of either advertisement, it is necessary to consider the third question in relation to that advertisement.
64 The third question is whether the EMI Companies authorised infringement of copyright in Kookaburra by granting licences in respect of various works including the Qantas Advertisements. If neither of the Qantas Advertisements involved the reproduction of a substantial part of Kookaburra, it is still necessary to consider the question of authorisation in relation to works other than the Qantas Advertisements. There is an issue as to whether the question of authorisation in respect of other works was properly before the primary judge. If it was, that question will require resolution by the Full Court. If there was such authorisation, a further question arises as to whether injunctive relief should be ordered, or whether the question of injunctive relief should be remitted for further consideration. In any event, if such authorisation is found, the consideration of pecuniary relief should be remitted for further consideration. There are also certain procedural questions arising out of the primary judge's treatment of Larrikin's claims that the EMI Companies authorised acts of infringement in respect of other works.
65 If the EMI Companies did not authorise any infringement in respect of the Qantas Advertisements or any other works, the cross-appeal in NSD 350 of 2010 should be dismissed.
INFRINGEMENT BY THE IMPUGNED RECORDINGS
66 In the light of the principles summarised above, the correct approach in an action for an infringement of copyright in a musical work may be summarised as follows:
Identification of the work in which copyright subsists. That arises from s 32, which directs attention to the copyright work. There must be a work that, relevantly, is an original musical work. There must also be the requisite connection with Australia.
Identification, in the alleged infringing work, of the part taken, derived or copied from the copyright work. That directs attention to the alleged infringing work and requires an inquiry as to what it reproduces from the copyright work. Reproduction requires there to be both sufficient objective similarity between the two works and a causal link between the two works.
Determination of whether the part taken constitutes a substantial part of the copyright work. That is a primarily qualitative matter. The question is whether the alleged infringement reproduces that which made the copyright work an original musical work. However, the Copyright Act recognises that there may be some measure of appropriation that does not constitute infringement.
(See Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 172 FCR 580 at [41] and [42]).
The Complaints of the EMI Companies and Mr Hay
67 The EMI Companies and Mr Hay complain that the primary judge erred in the following respects:
failing to attend to the requirement to identify what, viewing Kookaburra as a whole, constituted it as an original musical work entitled to copyright protection;
failing to attend to the requirement that the context of copyright law's protection of original musical works influences the meaning, for infringement purposes, to be given to substantial part;
failing to attend to the requirement that quality is much more important than quantity when assessing substantiality;
failing to consider the various public interests balanced by statutory copyright protection;
failing to attend to the requirement that, in the face of original works of only modest skill and labour, it must be clearly established by the copyright owner, looking at the work as a whole, that there has been a substantial reproduction in the particular use of the work made by the alleged infringer;
failing to attend to the requirement to identify that the authors of Down Under were acting animus furandi;
applying an overly mechanistic analysis by considering whether there was objective similarity, where there was a causal connection, and then, subsequently and separately, whether the bars of Kookaburra reproduced in the Impugned Recordings formed a substantial part of Kookaburra, without attending to the foregoing requirements;
failing to apply the D'Almaine v Boosey test that there is no infringement of copyright in music unless the air taken is substantially the same with the original;
failing to conclude that, looking at Kookaburra as a whole and attending to such originality as it had, there had not been a substantial reproduction in the particular use made of Kookaburra in taking two of its bars, separating them, removing any round and using such bars as part of a flute riff, which formed a subordinate part of a much longer, more complex, and obviously different original musical work; and
failing to conclude that, in such circumstances, the incorporation of the two bars of Kookaburra was at most a form of tribute to Kookaburra, which might be amusing or of interest to the highly sensitised or educated musical ear, but was otherwise unlikely to be separately noticed by the ordinary listener.
They say that, consequent upon those errors, the primary judge erred in the following respects:
placing undue weight on the similarities, and insufficient weight on the differences, appearing from a comparison between Kookaburra, on the one hand, and the versions of Down Under in the Impugned Recordings, on the other hand;
placing insufficient weight on the fact that any similarity between Kookaburra, on the one hand, and the versions of Down Under in the Impugned Recordings, on the other hand, had gone unnoticed for many years, including by Larrikin;
placing insufficient weight on the fact that he had become sensitised by the evidence to the similarity between the respective melodies;
holding that the evidence of Mr Hay singing the words of Kookaburra in performances of Down Under that are not impugned supported a finding of objective similarity;
holding that the failure to call Mr Ham supported a finding of subjective similarity;
apparently preferring the evidence of Dr Ford to the other expert called;
placing insufficient weight on the proposition that the simpler or more lacking in originality the copyright work, the greater the degree of taking that will be required in order for there to be infringement;
placing insufficient weight on the fact that there was no evidence as to the degree of skill involved in the composition of Kookaburra, aside from the fact of its composition as a round;
placing insufficient weight on the fact that neither of the Impugned Recordings made use of Kookaburra as a round; and
placing undue weight on a quantitative assessment of the part of Kookaburra said to have been reproduced, as opposed to a qualitative assessment of the importance of that part.
68 The 'overly mechanistic analysis' of which the EMI Companies and Mr Hay complain involved addressing the question of infringement in a series of separate stages or questions. They say that, while his Honour was conscious of the more fundamental legal principles that they list, he failed to incorporate them into the essence of his analysis. They contend that the primary judge's adoption of such a fragmented approach meant that, when his Honour came to assess the substantiality of the use of Kookaburra that was made in the Impugned Recordings, his Honour did not focus on the notes as they appear and are heard in the Impugned Recordings. Rather, they say, his Honour limited his consideration to the significance of the notes in Kookaburra. As a result, his Honour is said to have failed to apply the applicable principles regarding the making of a comparison between the whole of each work, as well as the test that there was no infringement unless the air taken is substantially the same with the original.
69 The EMI Companies and Mr Hay draw attention to the different approach adopted by the primary judge in his reasons of 6 July 2010, when his Honour came to assessing the proportion of income from the Impugned Recordings that should be paid to Larrikin. In those reasons, his Honour observed that his reasons of 4 February 2010 were concerned only with the question of whether the flute phrase, or certain examples of it, reproduced a substantial part of Kookaburra. That question, his Honour said, focussed in particular upon the qualitative significance of the bars of Kookaburra that were reproduced in the Impugned Recordings. His Honour said that, at that stage, he was not concerned with the musical significance, either qualitative or quantitative, of the bars from Kookaburra in the Impugned Recordings, considered as a whole. The primary judge concluded, in his reasons of 6 July 2010, that the musical significance of the relevant notes from Kookaburra in the Impugned Recordings was small.
70 The EMI Companies and Mr Hay also complain that the primary judge failed properly to consider what constituted Kookaburra as an original musical work and to attend to such originality in assessing the use that was made of the part of the melody of Kookaburra in the Impugned Recordings. They say that that is a fundamental requirement, particularly where the copyright work is a short or simple work, since the simpler or more lacking in originality the copyright work, the greater the degree of taking that will be required for infringement.
Whether the Full Court Should Reconsider Infringement
71 The question of whether an alleged infringing work reproduces a substantial part of a copyright work has been described as a kind of jury question. It involves questions of impression and degree. Accordingly, an appeal court would not normally depart from the finding of a trial judge without being persuaded that the trial judge applied an erroneous principle, or that the decision of the trial judge was plainly and obviously wrong. I am disposed to conclude, in the present case, that the primary judge may have erred in principle in some respects, and, therefore, that it is open to the Full Court to reconsider de novo the question of infringement.
72 First, the primary judge found, based on the evidence of Mr Hay, that for a period of about two or three years from around 2002, when he performed Down Under at concerts, Mr Hay would sometimes sing the words of Kookaburra at about the middle of the song, when he reached the relevant flute phrase. That finding is unexceptionable in itself. However, his Honour ought not to have relied upon it as support for either the finding that there was objective similarity between the respective works or the finding that a substantial part of Kookaburra had been reproduced. In particular, his Honour ought not to have held that that evidence yielded the 'short answer' to the qualitative test.
73 There was no issue as to whether a performance of Down Under that involved the singing with lyrics of two bars of Kookaburra, as a round or otherwise, would be a reproduction of a substantial part of Kookaburra. Further, as the primary judge found in his reasons of 6 July 2010, Mr Hay had sung the words of Kookaburra as an amusing historical reference to Kookaburra. I consider that his Honour correctly concluded, in those reasons, that the most that could be said of that evidence was that it demonstrated that the flute phrases in the versions of Down Under in the Impugned Recordings contained quotes from Kookaburra.
74 Secondly, his Honour also considered it noteworthy that two of the bars of Kookaburra, constituting '50% of the song', were reproduced in the Impugned Recordings. His Honour acknowledged that statistic to be quantitative, and thus secondary. However, that statistic ignores the fact that Kookaburra's performance as a round would involve at least seven aurally unique bars, for the reasons indicated above. The two bars of manuscript, therefore, do not represent 50% of the musical work that Kookaburra comprises.
75 The primary judge thus identified two matters that he considered were sufficient to establish reproduction of a substantial part of Kookaburra, notwithstanding that the Impugned Recordings did not reproduce Kookaburra as a round. The first matter was Mr Hay's evidence regarding other performances of Down Under, which have no relevance. The second matter was the quantity of the part taken. However, even if it were correct to characterise what was taken as being 50%, the quantity of what was taken is, at best, of secondary significance, and cannot be relied upon as being, in effect, the sole factor in determining substantiality. Far from paying due regard to what constituted Kookaburra as an original musical work, and taking that into account in assessing substantiality, his Honour relied on two matters, one of which (Mr Hay's evidence) was irrelevant, and the other of which (quantity) could not operate as the sole criterion for the assessment.
76 Thirdly, the primary judge touched on the question of originality in dealing with the contention, advanced by the EMI Companies and Mr Hay, that there was no evidence as to the degree of skill involved in the composition of Kookaburra, except that skill was involved in writing it as a round. His Honour implicitly accepted that contention, but sought to qualify it with Dr Ford's evidence that writing a round is a 'tricky and rather amusing business', because all the phrases have to fit on top of each other. His Honour accepted that a round is characterised by all the phrases fitting on top of each other, and that that aspect of Kookaburra was not reproduced in the Impugned Recordings. Neither of the Impugned Recordings contains each of Kookaburra's four bars. Rather, both contain two of its bars, which appear separately, with other musical elements interspersed between them, shorn of the lyrics of Kookaburra, and deprived of the relationship that would emerge during performance of Kookaburra as a round.
77 The EMI Companies and Mr Hay contended before the primary judge that, on the evidence before his Honour, in particular Dr Ford's evidence, the only originality lay in the writing of Kookaburra as a round. Accordingly, when his Honour said that it was not suggested by the EMI Companies and Mr Hay that Kookaburra was so simple or lacking in substantial originality that a note for note reproduction of the entire work was required to meet the substantial part test, his Honour made an inapposite observation, because the contention before him was that the failure to take any aspect of Kookaburra that characterised it as a round meant that no substantial part was taken. The reference to the hypothetical circumstance of an exact note-for-note reproduction of the entire work is not an answer to the substance of that contention.
78 Fourthly, when considering the criteria relevant to objective similarity, the primary judge divided the process in a somewhat mechanistic fashion. The finding of objective similarity was based on a consideration of certain elements of Kookaburra, namely, melody, key, tempo, harmony and structure. His Honour considered each element in isolation from the others, and his Honour appeared to give melody greater weight than the other elements, without explaining the basis for that approach.
79 Fifthly, the reasons given by the primary judge on 6 July 2010, for concluding that the musical significance of the relevant notes of Kookaburra in the Impugned Recordings was small, included the following:
The notes from Kookaburra appear in the Impugned Recordings as fragments of melody, and it is not easy to detect them, as is plain from the fact that the resemblance went unnoticed, even to Larrikin, for some 20 years.
The primary judge was only able to detect the resemblance between the relevant bars of Kookaburra and the Impugned Recordings with the assistance of the experts and of Mr Hay, and his Honour accepted that there was force in the submission that he had become sensitised to the similarities.
The two bars of Kookaburra that are reproduced form a relatively small part of the musical elements that give the versions of Down Under in the Impugned Recordings their 'significant musical quality overall'. The primary judge found the most important other elements to be the introductory flute line (which does not include the notes from Kookaburra), the verses and chorus, Mr Hay's distinctive voice, and the recurring rhythmic keyboard and flute passages, which give the alleged infringing versions their overall reggae sound.
While the bars reproduced from Kookaburra formed an important part of the flute phrases, they were not the sole foundation for the flute part in the Impugned Recordings. They were, for example, preceded by the basic hook of Down Under, which owed nothing to Kookaburra.
There are constant thematic references to Australia throughout the versions of Down Under in the Impugned Recordings, and the reference to Kookaburra is only one of them.
The producer of the 1981 Recording gave evidence that the song Down Under stands on its own.
80 The EMI Companies and Mr Hay contend that, had the primary judge adopted the proper approach to the assessment of substantial reproduction, and paid due regard to a comparison between the respective works as a whole, those matters would have borne upon his determination, and his Honour would have concluded that no substantial part of Kookaburra had been reproduced. I accept that the findings made by his Honour in his reasons on quantum are, to some degree, antithetical to the conclusion that what appears in the versions of Down Under in the Impugned Recordings reproduces a substantial part of Kookaburra, and that the considerations just listed should perhaps have played a greater part in the determination of the question of whether there was infringement.
81 By reason of the matters set out above, it is at least arguable that the primary judge made errors in his approach to the assessment of reproduction of a substantial part. Therefore, the Full Court should make its own assessment in the light of the evidence. This is not a case in which the trial judge may be asserted to have enjoyed any significant advantages. There were no live performances at the hearing. The alleged infringing versions of Down Under are those embodied in the 1979 Recording and in the 1981 Recording. Kookaburra was published in the form of musical notation as shown in Schedule 1. A recording of Kookaburra being sung as a round was in evidence, although that recording includes more than the work described in the notation in Schedule 1. The Full Court has been able to listen to all of the recordings and, accordingly, is in as good a position as the primary judge to determine the question of infringement.
Comparison between Kookaburra and Relevant Versions of Down Under
82 In the light of the legal principles summarised above, the question is whether the evidence established that, having regard to Kookaburra as a whole, there was a reproduction of a substantial part of it in the particular use made in the Impugned Recordings of two of its phrases, without either lyrics or any relationship in the nature of a round. It is important to have regard to the part said to have been taken from Kookaburra, not only as it appears in Kookaburra as originally published, but also in the context in which it appears in the Impugned Recordings. Regard must be had to the whole of each work in making that assessment, and attention must be given to what it was that constituted Kookaburra as an original work. On the other hand, in order for there to be infringement, it is not necessary that the part of Kookaburra taken constitute a substantial part of the Impugned Recordings.
83 There was evidence before the primary judge that the composition of Kookaburra as a round involved some skill and originality. The EMI Companies and Mr Hay contend that the evidence established no skill or originality other than that required to compose Kookaburra as a round. There was no express evidence to the effect that the four phrases shown in Schedule 1, by themselves, constituted original works or, taken in isolation, constituted original parts of works. However, I consider that each of Kookaburra's phrases, having been brought to fruition through the application of skill and originality in writing Kookaburra as a round, consequently manifests the application of skill and originality.
84 Even accepting the limited evidence of originality before the primary judge, I do not consider that reproduction of a substantial part of Kookaburra requires reproduction of Kookaburra as a round. The limitation of originality to a work's composition as a round does not mean that performance of that work as a round is necessary in order to reproduce that which gives the work its originality. I consider that the Impugned Recordings, in reproducing the first two phrases of Kookaburra, thereby reproduced that which constitutes Kookaburra as an original work.
85 There was no suggestion that the effort involved in the composition of Kookaburra's four phrases was so slight that no copyright would subsist in them, standing alone. It is clear enough that there was skill and originality involved in the composition of those bars as a stand-alone piece of music. Dr Ford said that Kookaburra's first two bars (or phrases), being the parts reproduced in the Impugned Recordings, are its 'signature'. That proposition, if accepted, is independent of any performance of Kookaburra as a round. Certainly, the complete work evidenced by the notation in Schedule 1 may, on a fair analysis, for the reasons indicated above, involve more than four discrete phrases. Nevertheless, reproducing two of the four phrases shown in Schedule 1 involves reproduction of at least a part of the musical work first published in 1934, being, though brief, an important and significant part whose composition may be said to have involved skill and originality. I consider that those phrases constituted an essential air or melody of the copyright work. To the extent that the contentions of the EMI Companies and Mr Hay conflate Kookaburra's brevity and relative simplicity with a lack of originality, they ought not to be accepted.
86 A consideration of the similarities and differences between Kookaburra and the versions of Down Under in the Impugned Recordings gives the impression that there is, within the versions of Down Under in each of the Impugned Recordings, with respect to the critical features of a musical work, an adoption of the individual effort that Ms Sinclair bestowed upon Kookaburra, which gave to it its distinct characteristics and individuality. There is a reasonably ready aural perception that the versions of Down Under in the Impugned Recordings contain a recognisable part of Kookaburra. A similarity between part of Kookaburra and the flute phrase is clearly perceptible. True it is that that similarity went largely unnoticed for in excess of 20 years, notwithstanding that each work is said to be an iconic Australian work. Nevertheless, the question is one of objective similarity. The aural resemblance need not be resounding or obvious. The relevant test is not the effect upon a casual listener of the whole of the versions of Down Under in the Impugned Recordings. Sensitised though the primary judge may have been to the similarity, it is not erroneous to direct oneself to the relevant parts of the works, to listen to the works a number of times, and to accept the assistance of the views of experts, in determining the question of objective similarity. In those respects, I do not consider that the primary judge erred.
87 Further, the issue of who first noticed the infringement, and when, is not of itself relevant to the question of objective similarity. That question is to be determined by reference to aural perception and, though its resolution may depend somewhat on expert evidence, evidence of the lack of subjective perceptions of persons connected with the owner of the copyright is not of assistance in resolving it.
88 Certainly, Kookaburra was published as a four-part round to be performed with lyrics, and is not reproduced in that manner in the Impugned Recordings. Further, it is integral to Kookaburra, as published, that the phrases will be progressively sung over the top of each other, building up to a four-voice texture. In that form, Kookaburra can be said to have seven aurally unique bars, only one of which, the first, is reproduced in the Impugned Recordings. In the versions of Down Under in the Impugned Recordings, on the other hand, the notes from Kookaburra appear only as part of the phrases that make up an ornamental flute line.
89 However, those dissimilarities in the structures of the respective works are not determinative. As I have said, the reproduction of the melody of Kookaburra in the form in which it was published, as shown in Schedule 1, is a reproduction of that which constitutes Kookaburra as an original work, or gives it its creativity. Kookaburra would make perfect sense as a work if sung as one linear melody. That is one possible realisation of the musical work that was first published by Ms Sinclair and that is evidenced in Schedule 1. As Down Under itself shows, a musical work may exist in multiple versions, and musical scores are not necessarily coterminous with the works they represent.
90 There are limited features of similarity between Kookaburra and Down Under in terms of key, harmony, tempo and rhythm. Kookaburra was written in a major key. The relevant bars in the Impugned Recordings appear as part of an overall work in a minor key. The harmony in Kookaburra arises both from its character as a round, and the implied harmonies suggested by casting its melody in a specific key. The versions of Down Under in the Impugned Recordings have a highly distinctive harmony, arising from the voice of Mr Hay, singing very different lyrics, and the mix of instruments. While, as a result, the bars in question in the Impugned Recordings may, in some sense, sound different from Kookaburra, the melody is nevertheless clearly recognisable. Dr Ford described the change in underlying harmony as 'a bit like shining a different light' on the relevant melodic phrase. Although, as the primary judge observed, that might differentiate the listener's impressions of the same notes in the two works, I do not consider that it meaningfully detracts from the objective similarity between the works.
91 Kookaburra, as published, has no indications of tempo or rhythm, and the relevant versions of Down Under have their own highly distinctive tempo and rhythm. However, it is implicit in what appears in Schedule 1 that the work must be sung at a tempo suited to the capabilities of the human voice, especially as regards enunciation and breathing. The versions of Down Under plausibly reproduce the melody at such a tempo. Further, the phrases of Kookaburra, as reproduced in the Impugned Recordings, do not alter Kookaburra's underlying rhythmic pulse or tactus.
92 It is true that the works do not represent similar musical genres or styles. Kookaburra is a folk melody, children's song or nursery rhyme, while Down Under was characterised as a rock anthem, and is influenced by ska and/or reggae. There is no similarity between the respective natures and objects of the works. Nevertheless, such quotation of Kookaburra as appears in the versions of Down Under in the Impugned Recordings was intended to be perceived by listeners as just that, namely, a quotation, or a reproduction, of part of Kookaburra, and the musical genres or styles associated with Kookaburra. Neither the existence of the quotation or reproduction, nor its capacity to be discerned, is affected by casting it as a tribute or reference to an Australian clichÉ or iconic melody. The flute phrases in the Impugned Recordings are a clear departure from the genre of a rock anthem, and therefore distinguish the part taken from Kookaburra from the other parts and musical elements of Down Under. The listener will hear a reproduction of part of Kookaburra.
93 It is also true that there is only a limited similarity of notes. Only five of the ninety-three bars in the 1981 Recording contain notes in the flute phrases that are similar to any part of Kookaburra. The first phrase in Schedule 1 mirrors the flute phrase in bars 23 and 51, and the second phrase in Schedule 1 mirrors the flute phrase in bars 5, 25 and 53 of that version of Down Under. However, in assessing objective similarity, quantity is secondary to quality. When one compares the relevant bars of Schedule 1 with the relevant bars of the versions of Down Under in the Impugned Recordings, there is a very close similarity, if not a complete identity. While the appearances of phrases from Schedule 1 may be sparse in the overall context of the Impugned Recordings, the flute is the dominant musical element when the phrases do appear.
94 It is true that the relevant phrases from Kookaburra, when reproduced in the Impugned Recordings, appear separately and interspersed with other musical material. In the 1981 Recording, on the first occasion when the flute phrase appears, the fourth bar is similar to the first phrase of Schedule 1, but no other bars of Kookaburra appear. On the second and third occasions, the second and fourth bars of the flute phrase are similar to the first and third phrases of Schedule 1, but are not consecutive. The basic hook of Down Under is interpolated. Similar observations are applicable to the version of Down Under in the 1979 Recording. However, the consistent reproduction of the melodic excerpt from Kookaburra as a discrete whole is a much more significant consideration, which, together with the other matters outlined above, suggests that the air or melody taken is substantially the same as in Kookaburra.
95 There was no evidence before the primary judge that the EMI Companies, Mr Hay, Mr Strykert or Mr Ham took any part of Kookaburra with the intention of taking advantage of the skill and labour of Ms Sinclair in composing Kookaburra, in order to save effort on their part. Certainly, no advantage was taken of Kookaburra as a round. Mr Hay was open regarding the tribute made to Kookaburra. Mr Ham said in an affidavit, which was not read, but relevant parts of which were tendered by Larrikin, that he recognised the melody that he referenced as "an Australian clichÉ". He did not identify it as Kookaburra as such. No inference was available from the failure to call Mr Ham beyond what was apparent on the face of the affidavit. Consequently, neither the evidence of Mr Hay nor that of Mr Ham supported a finding that there was any animus furandi.
96 In any event, I do not consider that there is any requirement that there be a finding of animus furandi before there will be infringement.
97 A four-part round is a musical idea, explicable in the abstract. That idea is not capable of copyright protection, just as other musical ideas and commonplace building blocks and motifs, such as bare musical genres, harmonic clichÉs and the like, are not capable of copyright protection. However, the specific melodies or phrases that constitute the expression of the idea of a four-part round will, in total, constitute an original musical work. Further, each melody or phrase may, by virtue of its importance in the overall schema of such an original musical work, constitute a substantial part of that work. I consider that the first two phrases of Kookaburra's melody, as published by Ms Sinclair in the form shown in Schedule 1, constitute a substantial part of Kookaburra.
Conclusion as to Infringement
98 In all of the circumstances, and taking all of the matters set out above into account, I consider that both Impugned Recordings reproduce a substantial part of Kookaburra. Accordingly, there has been an infringement of copyright. However, I have some disquiet about that conclusion in the circumstances of this case.
99 The better view of the taking of the melody from Kookaburra is not that the melody was taken, animus furandi, in order to save effort on the part of the composer of Down Under, by appropriating the results of Ms Sinclair's efforts. Rather, the quotation or reproduction of the melody of Kookaburra appears by way of tribute to the iconicity of Kookaburra, and as one of a number of references made in Down Under to Australian icons.
100 If, as I have concluded, the relevant versions of Down Under involve an infringement of copyright, many years after the death of Ms Sinclair, and enforceable at the behest of an assignee, then some of the underlying concepts of modern copyright may require rethinking. While there are good policy reasons for encouraging the intellectual and artistic effort that produces literary, artistic and musical works, by rewarding the author or composer with some form of monopoly in relation to his or her work (see Ice TV at [24]), it may be that the extent of that monopoly, both in terms of time and extent of restriction, ought not necessarily be the same for every work. For example, it is arguably anomalous that the extent of the monopoly granted in respect of inventions under the Patents Act 1990 (Cth), being a limited period following disclosure, is significantly less than the monopoly granted in respect of artistic, literary or musical works, being a fixed period following the death of the author or composer, irrespective of the age of the author or composer at the time of publication.
101 Of course, the significance of the anomalous operation of the Copyright Act can be addressed in terms of the remedies and relief granted in respect of infringement. Nevertheless, one may wonder whether the framers of the Statute of Anne and its descendants would have regarded the taking of the melody of Kookaburra in the Impugned Recordings as infringement, rather than as a fair use that did not in any way detract from the benefit given to Ms Sinclair for her intellectual effort in producing Kookaburra.
INFRINGEMENT BY QANTAS ADVERTISEMENTS
102 I have read in draft form the reasons of Jagot J for concluding that the primary judge made no error in dealing with the Qantas Advertisements. I agree with her Honour's reasons for that conclusion. Since there is no act of infringement in relation to the Qantas Advertisements, it follows that the EMI Companies did not authorise any act of infringement.
AUTHORISATION OF INFRINGEMENT IN RESPECT OF OTHER WORKS
103 The question of authorisation of infringement in relation to other works is by no means straightforward. It may be that dealing with issues at separate hearings has unnecessarily confused matters. In any event, I agree with Jagot J, for the reasons given by her Honour, that the primary judge has not dealt with the contentions of Larrikin as to the possible authorisation of acts of infringement in respect of other works. To that extent, the cross-appeal should be allowed. I agree with the observations made by Jagot J as to the procedural question raised in the cross-appeal, and the manner in which her Honour proposes that it be dealt with.
CONCLUSION
104 I consider that both appeals should be dismissed. I agree with the orders proposed by Jagot J. In relation to the cross-appeal in NSD 350 of 2010, I also agree with the orders proposed by Jagot J.
I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate:
Dated: 31 March 2011
SCHEDULE 1
Kookaburra as Originally Published
SCHEDULE 2
Dr Ford's Transcription of Kookaburra
SCHEDULE 3
Kookaburra Notated as a Round
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 183 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED
First Appellant
EMI MUSIC PUBLISHING AUSTRALIA PTY LTD
Second Appellant
AND: LARRIKIN MUSIC PUBLISHING PTY LTD
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 350 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED
First Appellant / First Cross-Respondent
EMI MUSIC PUBLISHING AUSTRALIA PTY LTD
Second Appellant / Second Cross-Respondent
COLIN JAMES HAY
Third Appellant / Third Cross-Respondent
AND: LARRIKIN MUSIC PUBLISHING PTY LTD
First Respondent / Cross-Appellant
RONALD GRAHAM STRYKERT
Second Respondent / Fourth Cross-Respondent
JUDGES: EMMETT, JAGOT AND NICHOLAS JJ
DATE: 31 MARCH 2011
PLACE: SYDNEY
REASONS FOR JUDGMENT
JAGOT J
THE ISSUES [105]
BACKGROUND [106]
REASONS OF 4 FEBRUARY 2010 [118]
Kookaburra and Down Under [118]
The Qantas advertisements [158]
Authorisation [161]
REASONS OF 17 MARCH 2010 [162]
APPROACH TO THE ISSUES [166]
1979 and 1981 recordings of down under [168]
Contentions of EMI parties and Mr Hay [168]
Discussion [185]
The Qantas advertisements [228]
Contentions of Larrikin [228]
Discussion [233]
Authorisation [238]
THE ISSUES
105 The issues in this matter are whether the trial judge was in error in deciding that:
(1) two sound recordings of the song Down Under (known as the 1979 and 1981 recordings) infringed copyright in the musical work "Kookaburra sits in the old gumtree" (Kookaburra) because they reproduced a substantial part of that work;
(2) two sound recordings of versions of part of Down Under as they appear in Qantas advertisements "A380" and "Most Experienced" did not infringe the copyright in Kookaburra because they did not reproduce a substantial part of that work;
(3) he should dispose of the question whether Larrikin Music Publishing Pty Ltd (Larrikin), the holder of copyright in Kookaburra, had established that the holders of copyright in Down Under, EMI Songs Australia Pty Limited and EMI Music Publishing Australia Pty Limited (the EMI parties), authorised infringements of the copyright in Kookaburra by the grant of licences in respect of Down Under;
(4) Larrikin had not established that the EMI parties authorised infringements of the copyright in Kookaburra by the grant of licences in respect of Down Under; and
(5) injunctions should not be made restraining the EMI parties from continuing to authorise infringements of the copyright in Kookaburra by the grant of licences in respect of Down Under.
BACKGROUND
106 These issues arise pursuant to two notices of appeal, a notice of contention and a notice of cross-appeal. To understand those documents it is necessary to identify the proceedings before the trial judge and the orders subject to challenge.
107 Proceeding No NSD 340 of 2008 involved the claim of the EMI parties that Larrikin had made unjustifiable threats of copyright infringement within the meaning of s 202(1) of the Copyright Act 1968 (Cth) on the basis that Down Under does not infringe copyright in Kookaburra. Proceeding No NSD 145 of 2008 involved the claims of Larrikin that Down Under infringed copyright as it reproduced a substantial part of Kookaburra and that the EMI parties had authorised infringements by the grant of licences in respect of Down Under including, but not limited to, the Qantas advertisements.
108 On 27 October 2009 the trial judge made orders including order 1 that five issues be heard and determined separately from the other remaining issues in the proceedings, being:
(a) whether the making of the 1979 Recording involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed copyright in Kookaburra;
(b) whether the making of the 1981 Recording involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed copyright in Kookaburra;
(c) whether either of the Qantas Advertisements involved the doing of any act comprised in the copyright, in particular the reproduction in a material form of a substantial part, of Kookaburra and thereby infringed copyright in Kookaburra;
(d) the trade practices claims made in paragraphs 68 – 77 of the Further Amended Statement of Claim, except the quantification of any damages;
(e) the unjust enrichment claim made in paragraph 67 of the Further Amended Statement of Claim, except the quantification of any restitution.
109 As part of these orders of 27 October 2009 the trial judge noted in order 3 that:
…the parties agree that the resolution of the issues identified above will be taken to resolve the same issue in relation to other acts, namely the following uses or reproductions:
(a) as to the 1979 Recording: (no other examples presently in the evidence);
(b) as to the 1981 Recording:
(i) Down Under (1) and (2), Men at Work '81 – 85, The Works, 1986 [Ford, 28/9/09. Tracks 2 and 3];
(ii) Down Under, Men at Work, Contraband – The Best of Men At Work, 1996, [Ford, 28/9/09, Tracks 2 and 3];
(iii) Down Under, Men at Work, Brazil [Live] 1998 [Ford, 28/9/09, Track 5];
(iv) Down Under, Karaoke Version, Un-named, Karaoke Aussie Rock, 1998 [Ford, 28/9/09, Track 6];
(v) Down Under, Men at Work, Men At Work; Super Hits 2000 [Ford, 28/9/09, Track 7];
(vi) Down Under, Men at Work, Men at Work: Super Hits, 2003 [Ford, 28/9/09, pg 8, Track 08];
(vii) Down Under, Colin Hay, Man@Work, 2003 [Ford, 28/9/09, Track 09];
(viii) Down Under (acoustic version), Colin Hay Man@Work, 2003 [Ford, 28/9/09, Track 10];
(ix) Down Under, Men at Work, Rock Hits, 2003 [Ford, 28/9/09, Track 11];
(x) Down Under, Men at Work, The Essential Men at Work, 2003 ] [Ford, 28/9/09, Track 12];
(xi) Down Under, Lee Kernaghan, The Big Ones [Ford, 28/9/09, Track 13];
(xii) Down Under (Bonus Track), Lee Kernaghan, The Big Ones [Ford, 28/9/09, Track 14];
(xiii) Down Under, Countdown Singers, Awesome 80s, 2004 [Ford, 28/9/09, Track 15];
(xiv) Land Down Under (Aboriginal Remix), Red Sands Dreaming, A Global Cultural Collective, 2004 [Ford, 28/9/09, Track 16];
(xv) Down Under, OPM, For them Asses, 2005, [Ford, 28/9/09, Track 17];
(xvi) Down Under (karaoke version) unnamed, Karaoke – 80s Male Pop (vol 14), 2006[Ford, 28/9/09, Track 18];
(xvii) the cinematograph film "Kangaroo Jack";
(xviii) the cinematograph film being the trailer for the cinematograph film "Finding Nemo";
(xix) Down Under, Men at Work, Original Video Clip [Ford, 28/9/09, Video 1];
(xx) Down Under, Colin Hay and Cecilia Noel, live recording [Ford, 28/9/09, Video 2];
(xxi) Down Under, Colin Hay and Ringo's All-Starr Band, live recording [Ford, 28/9/09, Video 3];
(xxii) Down Under, unnamed, Crocodile Dundee in L.A. [Ford, 28/9/09 Video 4].
(c) as to the Qantas Advertisements: (no other examples presently in the evidence).
110 Order 4 of the orders of 27 October 2009 is as follows:
4. Subject to the matters set out above, and subject to any future agreement between the parties, the remaining issues in the proceedings be heard and determined at a later date. The Court notes that those matters include the resolution (if necessary) of:
(a) the determination of the applicant's percentage interest and any other entitlement to APRA and AMCOS income in relation to Down Under;
(b) the identification of other acts done by, or authorised by, the respondents in the period of 6 years prior to the commencement of proceedings against the third to sixth respondents; the determination of which if any of the categories referred to in orders 1 and 3 (a), (b) or (c) those acts fall within or whether they otherwise infringe copyright in Kookaburra;
(c) the quantification of any damages or profits for infringement of copyright and/or the quantification of any damages for misleading or deceptive conduct and/or the quantification of any restitution.
111 The hearing in respect of both proceedings took place on 27-30 October 2009.
112 On 4 February 2010 the trial judge published reasons for judgment in Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (2010) 263 ALR 155; [2010] FCA 29. In these reasons the trial judge concluded that the 1979 and 1981 recordings of Down Under infringed copyright in Kookaburra. The trial judge also decided that the copyright holder, Larrikin, was entitled to recover damages for these infringements under the Trade Practices Act 1974 (Cth) or Fair Trading Act 1989 (NSW). The trial judge rejected claims that the Qantas advertisements "A380" and "Most Experienced" infringed the copyright in Kookaburra. He also rejected claims that the EMI parties authorised infringements of copyright by the granting of licences in respect of Down Under.
113 On 17 March 2010 the trial judge published a second set of reasons in which he rejected an application by Larrikin for further discovery of all licenses granted and other reproductions of Down Under with which the respondents had been involved since 2002 and other documents said to be relevant to a claim for additional damages under s 115(4) of the Copyright Act (Larrikin Music Publishing Pty Ltd (ACN 003 839 432) v EMI Songs Australia Pty Limited (ACN 000 063 267) [2010] FCA 242).
114 Consequential on the publication of these reasons the trial judge made orders on 4 February and 17 March 2010. On 4 February 2010, in proceeding No NSD 340 of 2008, the trial judge ordered that the matter be dismissed. On 17 March 2010, in proceeding No NSD 145 of 2008, the trial judge made orders reflecting the two sets of reasons for judgment by answering the separate questions and fixing dates for the further hearing of Larrikin's "percentage interest and other any other entitlement to… income in relation to Down Under". Subsequently, on 23 August 2010, the trial judge ordered that proceeding No NSD 145 of 2008 be otherwise dismissed (apart from certain orders already made, the calculation of damages payable to Larrikin and any orders for costs).
115 Order 3 of the orders of 17 March 2010 is in these terms:
3. The preliminary questions reserved for determination by paragraph 1 of the orders made on 27 October 2009 be answered as follows:
(a) the making of the 1979 Recording involved the reproduction in a material form of a substantial part of Kookaburra and thereby infringed copyright in Kookaburra;
(b) the making of the 1981 Recording involved the reproduction in a material form of a substantial part of Kookaburra and thereby infringed copyright in Kookaburra;
(c) the Qantas Advertisements did not involve the doing of any act comprised in the copyright of Kookaburra, in particular the reproduction in a material form of a substantial part of Kookaburra, and thereby did not infringe copyright in Kookaburra;
(d) the Third, Fourth, Fifth and Sixth Respondents are liable with respect to the trade practices claims made in paragraphs 68-77 of the Further Amended Statement of Claim, including the amendments to paragraphs 70 and 72 as reflected in the proposed Second Further Amended Statement of Claim in relation to which leave to amend was granted; and
(e) the Third, Fourth, Fifth and Sixth Respondents are not liable with respect to the unjust enrichment claims made in paragraph 67 of the Further Amended Statement of Claim, or in paragraphs 67A and 67B of the proposed Second Further Amended Statement of Claim in relation to which leave to amend was granted.
116 By order 7 of the orders of 17 March 2010 the trial judge reserved all questions of costs.
117 The grant of leave to appeal against the trial judge's orders in proceeding No NSD 145 of 2008 was not opposed and was granted on the first day of the hearing of the appeals. By notice of appeal the EMI parties and Colin James Hay appealed from the orders in proceeding No NSD 145 of 2008 answering the separate questions (a), (b) and (d) adversely to them. By another notice of appeal the EMI parties also appealed against the orders dismissing proceeding No NSD 340 of 2008. The grounds of appeal are effectively the same and directed to alleged errors by the trial judge in determining whether Down Under reproduced a substantial part of Kookaburra. By a notice of cross-appeal Larrikin appealed from the orders in proceeding No NSD 145 of 2008 answering the separate question 3(c) adversely to it (relating to the Qantas advertisements) and otherwise dismissing the proceeding and reserving all questions of costs.
REASONS OF 4 FEBRUARY 2010
Kookaburra and Down Under
118 The trial judge described Kookaburra (at [1]) as:
…an iconic Australian round, written and composed in 1934 by Miss Marion Sinclair. It is a short musical work, being described and analysed for the purpose of this proceeding as consisting of only four bars.
119 The trial judge said (at [2]) that two of the four bars of Kookaburra:
… are reproduced in the 1981 recording of another iconic Australian composition, the pop song "Down Under" performed and recorded by the group Men at Work. The two bars are a part of the flute riff which was added to Down Under after it was first composed.
120 As to whether Down Under infringed the copyright in Kookaburra the trial judge (at [7]-[12]) said that:
[7] The effect of the relevant provisions of the Copyright Act 1968 (Cth) is that copyright is infringed where a person, without the license of the owner of the copyright, reproduces a substantial part of the work: see ss 10, 13, 14(1), 31(1)(a) and 36(1).
[8] In order for there to be a "reproduction" within the law of copyright, there must be an objective similarity between the two works and a causal connection between the plaintiff's work and that of the defendant: S. W. Hart & Co Proprietary Limited v Edwards Hot Water Systems (1985) 159 CLR 466 ("S. W. Hart") at 472.
[9] The second element, namely a causal connection between the works, is not disputed by the principal respondents in these proceedings.
[10] Thus, there remain two principal issues. The first is whether there is a sufficient degree of objective similarity between the flute riff in Down Under and the two bars of Kookaburra.
[11] The second issue is whether, if I am of the view that there is the requisite similarity, the bars of Kookaburra which are reproduced are a substantial part of that work. That question is to be determined by a quantitative and qualitative consideration of the bars which are reproduced.
121 At [32]-[68] the trial judge identified the relevant principles in orthodox terms, namely:
(1) Copyright protects the particular form of expression of the author's work (at [40]-[41] citing IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 239 CLR 458; [2009] HCA 14 at [28], [70] and [102]).
(2) Reproduction "means copying and does not include the case where an author produces a substantially similar result by independent work, without copying" (at [49]-[50] citing Francis Day & Hunter Ltd v Bron [1963] 1 Ch 587 at 618 and 623-624 and SW Hart & Co Proprietary Limited v Edwards Hot Water Systems (1985) 159 CLR 466 at 472).
(3) The question whether a substantial part has been copied depends more on the quality than the quantity of what has been taken (at [35] and [42] citing Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 276 and IceTV at [30], [155] and [170]).
(4) What amounts to a reproduction of a substantial part involves questions of fact and degree and depends on the circumstances of each case (at [37] citing SW Hart at 472 and 482).
(5) The question of the objective similarity of musical works is "not to be determined by a note for note comparison but is to be determined by the eye as well as by the ear" and depends to a "large degree upon the aural perception of the judge and upon the expert evidence" (at [51] citing Francis Day v Bron at 608 and 618).
(6) The reproduction need not be identical to comprise the taking of a substantial part so that "if you take from the composition of an author all those bars consecutively which form the entire air or melody, without any material alteration, it is a piracy; though … you might take them in a different order or broken by the intersection of others, like words, in such a manner as should not be a piracy. It must depend on whether the air taken is substantially the same with the original" (at [52]-[53] citing D'Almaine v Boosey (1835) 1 Y. & C. Ex. 288 at 302).
(7) Because the focus is the quality of what is taken the "degree of originality in the expression of the part of the work that is reproduced" is relevant so that "the more simple or lacking in substantial originality the copyright work, the greater degree of taking will be needed before the substantial part test is satisfied" (at [56] citing IceTV at [40] and the quote therein from Garnett et al (eds), Copinger and Skone James on Copyright (15th ed, 2005) at 385).
(8) The "substantial part" test "reflects the competing policy considerations which underlie the Copyright Act by permitting a measure of legitimate appropriation of an original work" (at [57] citing IceTV at [28] and [157]) which his Honour described as a concept "subsumed in the substantial part test" rather than as creating a separate doctrine of legitimate appropriation (at [59]).
(9) The comparison between the works involves three steps (at [60] citing Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd (2008) 248 ALR 364; [2008] FCAFC 46 at [23]; Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 172 FCR 580; [2008] FCAFC 197 at [41]):
The first is to identify the work in suit in which copyright subsists. The second is to identify in the allegedly infringing work the part that is said to have been derived or copied from the copyright work. The third is to determine whether the part taken is a substantial part of the copyright work.
(10) The "copied features must be a substantial part of the copyright work, but they need not be a substantial part of the infringing work, the overall appearance of which may be very different from the copyright work" (at [62] citing Designers Guild Ltd v Russell Williams (Textiles) Ltd (trading as Washington D.C.) [2000] 1 WLR 2416 at 2425).
(11) The "structure, notes and melody, harmony and other features of the songs" are all relevant (at [64] citing Francis Day v Bron at 592-596).
122 The trial judge (at [69]-[70]) identified Kookaburra, as published in 1934, as an original work in which copyright subsists. The work was published in the Girl Guides publication "Three Rounds by Marion Sinclair" in 1934 in the following form:
123 The trial judge (at [71]) said that:
In the "Three Rounds" publication, Kookaburra was transcribed in the key of F major. As noted on the manuscript, the song was composed as a round in four parts; that is, it was intended to be sung by four voices or groups of voices in a way in which all the parts continuously repeat.
124 The trial judge (at [72]-[74]) described Down Under as written and composed in 1978 by Mr Hay and Ronald Strykert (the second respondent in proceeding No NSD 145 of 2008). In the 1979 version of Down Under (the B-side to a single released by Men at Work, "Key Punch Operator") an improvised flute solo by Greg Ham appears. In the 1981 version of Down Under (on the album by Men at Work "Business as Usual") Mr Ham's flute riff also appears.
125 The trial judge (at [75]-[84]) recorded parts of the evidence of Dr Andrew Ford, composer, writer and broadcaster.
126 Dr Ford transposed Kookaburra into D major in what became Example A as follows:
127 Dr Ford identified what he called the "basic hook" of Down Under as Example C, being:
128 Dr Ford identified this basic hook as one element of a longer four bar hook in Down Under which is first heard in the song in an incomplete form which he described as Example D as follows:
129 The full version of the longer hook, Example E, is:
130 Examples C, D and E are played on the flute in Down Under.
131 Dr Ford described Example D as follows:
… in bar 1, the flute plays a version of the basic hook (with two extra notes); the second phrase (bar 2) is completely missing and is replaced by a simple rhythmic fill; bar 3 contains the basic hook; and the fourth phrase (bar 4) is the first quotation from Kookaburra, containing the second phrase of Kookaburra.
132 Dr Ford described Example E as:
… bars 1 and 3 are the basic hook, while bars 2 and 4 are … direct quotes from Kookaburra.
133 According to Dr Ford Example E appears once in the 1979 recording at 1:18 into the melody. In the 1981 recording Example D appears once and Example E twice.
134 The trial judge described the evolution of Down Under at [85]-[100] including Mr Ham's evidence (at [98]-[99]) that:
[98] … his aim in adding the flute to Down Under was to try to inject some Australian flavour into the song. He said the flute section which he added fitted rhythmically to Down Under and the percussion/drum section at the start of the song, which is in fact played on beer bottles with different amounts of water in them.
[99] Mr Ham pointed out that the lyrics, vocal melody, chords and bass line were already established when he first heard Down Under. He looked for a complementary part for his instruments, and especially one which fell into the "tongue in cheek" nature of the song. He described the flute line as "an Aussie clichÉ melody", or what he thought was an "Irish-Australian style melody".
135 The trial judge dealt with the expert evidence in greater detail at [121]-[156], the experts being Dr Ford and Mr John Armiger, composer, musician and teacher.
136 Dr Ford's evidence was to the effect that: - (i) the first two bars of Kookaburra are its signature. Although this is because of the lyrics, it is also the first thing you hear of the melody and so it "sticks in your head" (at [121]), (ii) the fact that Kookaburra was notated in F major is not important when a listener compares the differences and similarities between Kookaburra and Down Under even though Down Under is played in B minor (at [124]-129]), (iii) the difference between the major and minor keys in Kookaburra and Down Under means that "the melody [that is, of the sound of Kookaburra and the relevant passages in Down Under] is identical, but the chord that underpins it is different, and it gives a slightly different feeling … it's a bit like shining a different light on it" so that "the impression that one receives from the same notes in the two songs is different" (at [130]-[131]), (iv) while the first and second phrases from Kookaburra are separated in Down Under by the basic hook "[s]o we do hear them differently" (at [133]), this is not a "large difference" as "the ear connects the two pairs of phrases in Example E with each other because they follow on from each other" (at 137]), (v) the tempo of Down Under is "probably a little bit faster than the tempo at which one would sing Kookaburra", but this is not of significance (at [138]), and (vi) the flute in Down Under in the 1981 recording slurs the final two notes in common with the words "tree" and "he" (or "tree-ee" and "he-ee") in Kookaburra, "as though it's a memory of the song, or a reference to the song", although slurring of the voice and flute are common musical devices (at [140]-[141]).
137 Mr Armiger's evidence was to the effect that: - (i) the shared phrases of Kookaburra and Down Under "occupy a different space in the melody of Down Under and perform a different musical function to that in Kookaburra", being "an answering 'lick' which follow naturally from the call, or basic hook in Dr Ford's Example C, which is original and distinctive to Down Under" with the consequence that "[w]e do not hear those shared notes as a melody of their own but as part of a longer melody. Because of this, most listeners would probably be unaware of the correspondence between the two fragments of melody" (at [143]-[144]), and (ii) the new minor key harmonic context in Down Under alters the mood of the melody from "jolly" or "observational" in Kookaburra to "whimsical" or "wistful" in Down Under (at [146]). In cross-examination Mr Armiger: - (i) agreed that the first bar of Kookaburra could be regarded as the signature of that song and perhaps the second bar (although his acceptance of the latter proposition was not unequivocal) (at [148]), but he could certainly pick the tune immediately from the first two bars (at [149]), (ii) accepted that Kookaburra plays an important, even essential, function in the flute riff in Down Under (at [150]), (iii) agreed that it does not matter what key the song is sung in because the relative pitch remains the same which is "why the listener finds it easy to perceive that it is the same song" (at [153]-[154]), and (iv) agreed that the "stepping down of a minor third from the second to the fourth bar in example E is precisely the same stepping down as occurs between the first and second bars of Kookaburra" which is "another feature of objective similarity between the part of Kookaburra used in Down Under and Kookaburra itself" (at [155]).
138 At [157]-[208] the trial judge dealt with the issue of objective similarity. At [157]-[158] the trial judge said:
[157] In my opinion, there is a sufficient degree of objective similarity between the bars of Kookaburra which are seen and heard in Down Under to amount to a reproduction of a part of Miss Sinclair's round. The question of whether it is a reproduction of a substantial part of that work is a different question which I will address later.
[158] The view which I have reached as to reproduction of a part of Kookaburra follows from my aural comparison of the musical elements, as well as my visual comparison of the notated songs, with particular assistance from the evidence of the experts.
139 At [159] the trial judge referred to the assistance he had received from Dr Ford whom he described as an "impressive witness". However, the trial judge also considered that that there was not much real dispute between Dr Ford's evidence and that of Mr Armiger.
140 At [160]-[162] the trial judge summarised his reasoning process as follows:
[160] The relevant musical elements that I have considered are melody, key, tempo, harmony and structure.
[161] But perhaps the clearest illustration of the objective similarity is to be found in Mr Hay's frank admission of a causal connection between the two melodies and the fact that he sang the relevant bars of Kookaburra when performing Down Under at a number of concerts over a period of time from about 2002.
[162] The failure to call Mr Ham and the admissions which were tendered from his affidavit reinforce the conclusion I have reached.
141 The trial judge then dealt with each of the identified musical elements.
142 As to melody, the trial judge identified (at [163]) the "relevant comparison" as between:
the melody of the flute riff when it plays the fourth bar of Dr Ford's Example D, and the second bar of Kookaburra; and
the melody of the flute riff when it plays the second and fourth bars of Dr Ford's Example E, and the first and second bars of Kookaburra.
143 The trial judge said (at [164]):
With the assistance of Dr Ford and Mr Armiger's evidence, as well as that of Mr Hay, I was able to detect a sufficient degree of objective similarity between the melody to meet the test stated in the authorities.
144 The trial judge referred to Dr Ford's description of these two melodies (as defined in [163]) as "exact", "identical" and "too long … to be coincidental" (at [165]-[166]) and to Mr Armiger's evidence that the two were "shared phrases" (at [167]), and described Mr Hay's evidence as putting the question of objective similarity between the two "beyond any real doubt" (at [168]). Mr Hay accepted that the fourth bar of Down Under is a "direct reference to Kookaburra" and that "the fourth bar of [Dr Ford's] Example D and the second and fourth bars of Example E are 'unmistakably' the melody of Kookaburra" (at [168]). The trial judge also said (at [169]):
This is graphically illustrated by the fact that Mr Hay has on occasions sung the words of Kookaburra where the flute riff would ordinarily be played in Down Under.
145 The trial judge accepted (at [171]) that he may have become "sensitised to the similarity between the melodies so as to be able to hear the objective similarity between them" but did not consider that this "overcomes the force of the expert evidence and the conclusion which seems to follow almost inevitably from the frank admissions made by Mr Hay". The trial judge continued (at [172]):
In any event, the test is that of the ordinary reasonably experienced listener and the comparison is not concerned with deceptive similarity as in a passing-off action: Francis Day & Hunter at 610, 623-624; Russell William Textiles at 2425 [Designers Guild Ltd v Russell Williams (Textiles) Ltd (trading as Washington D.C.) [2000] 1 WLR 2416].
146 The trial judge recognised that "the shared phrases in the melodies occupy a different space in the full sentence of the melody of Down Under than that which they occupy in Kookaburra" but considered that an issue of musical structure (at [173]).
147 As to key, the trial judge acknowledged Kookaburra was notated in F major and "the quotation from Kookaburra in Down Under in D major, although it is set against a background of B minor", but accepted Dr Ford's evidence that "ultimately nothing turns on this" (at [176]) because the precise key or pitch is not relevant to an appreciation or recognition of a tune and Mr Armiger agreed that "choice of key was insignificant, as it is the relative pitches within the song which allow the listener to identify the song" (at [176]-[177]). Further, the trial judge accepted Dr Ford's evidence that, apart from pitch, the two melodies "not merely resemble each other, they are note-for-note the same" (at [178]).
148 As to tempo and rhythm, the trial judge identified the dispute between the parties (Dr Ford's evidence to the effect that the tempo of the two was "more or less" the same and Mr Armiger's that "Kookaburra has a folk-style, four-four or two-four square rhythm, the accompaniment to Down Under is in more of a reggae style, which places a different emphasis on a different beat") (at [179]-[182]). The trial judge concluded that nothing turned on the issue of rhythm as "it is possible to do a song in lots of different ways" and the tempo of the melodies is more or less the same (at [184]-[185]). Further, that the slur on "tree-ee" and "he-ee" is "a distinctive element of the melody and rhythm of Kookaburra which is replicated in Down Under" (at [186]).
149 As to harmony, the trial judge noted that Mr Armiger's evidence relating to the different keys concerned the underlying harmony of the flute riff in Down Under (at [188]). The trial judge found, however, that "the difference in harmony does not make the phrases from Kookaburra unrecognisable" but, as Dr Ford said, was "a bit like shining a different light on it" (at 189]). In this context the trial judge referred to D'Almaine v Boosey (at 302) to the effect that "the mere adaptation of an air by transferring it from one instrument to another does not alter the original subject" (at [189]) and Grignon v Roussel (1991) 38 CPR (3d) 4 in which it was held that there was "sufficient objective similarity in melodic, harmonic and rhythmic terms, notwithstanding minor differences resulting from arrangement or substitution of chords" (at [191]).
150 As to context and structure, the trial judge described the different structural context of the flute riff in Down Under compared to Kookaburra as at "the heart of the respondents' answer to the claim of reproduction" (at [192]). The trial judge noted Larrikin's acceptance that the 1981 recording of Down Under is a much more layered song than Ms Sinclair's round and continued (at [195]):
But the question of structure is not concerned with the structure of the entirety of the three minute recording. Rather, it turns solely upon the structure of the flute riff and the separation and punctuation of the bars of Kookaburra by Men at Work's distinctive sound in what Dr Ford called "the basic hook".
151 The trial judge concluded (at [196]) that:
In my opinion, this question is resolved by Dr Ford's evidence that the separation of the notes does not make them different, but means that we hear them differently.
152 In reaching this conclusion the trial judge had regard to Mr Armiger's evidence about the separation of the phrases from Kookaburra in the flute riff of Down Under and their different musical function and context creating an "integrated musical statement". The trial judge also noted Mr Armiger's agreement that the notes from Kookaburra play "an important, indeed essential function" in the flute riff of Down Under (at [197]-[198]). For these reasons the trial judge did not consider the separation of the Kookaburra phrases in the Down Under flute riff to be material (at [199]). Although it was said in D'Almaine v Boosey that "if one does not take the bars of a composition sequentially, but breaks them up by the 'intersection of others' it may not be an infringement", the trial judge described this as a question of fact in respect of which he was "satisfied that the melody is the same and the separation or punctuation does not overcome the conclusion of reproduction" (at [200]-[201]).
153 The trial judge repeated the respondents' rhetorical question (at [202]) "if both Kookaburra and Down Under are such icons, and the similarities so strong, why did it take so long for anyone to recognise the connection". In considering this fact the trial judge referred to the evidence that the connection was exposed in the television program "Spicks and Specks" (a television show on the ABC) in 2007. This evidence was described by the trial judge as follows:
[204] The question which was asked was "… name the Australian nursery rhyme that this riff has been based on". A part of Down Under, including Dr Ford's Example E, was then played. The panel did not answer immediately and the excerpt from Down Under was played again. The host then said "this bit especially" and one of the panel members made the link.
[205] Once the first panel member gave the correct answer, the others recognised the connection.
154 The trial judge acknowledged that the panel members "are not the ordinary reasonably experienced listener and that even they had difficulty in recognising the connection between the songs" but concluded this was not "sufficient to overcome the conclusion that the relevant degree of objective similarity is made out" (at [206]). In a passage emphasised by the EMI parties and Mr Hay in this appeal the trial judge then said:
[207] What Spicks and Specks does show is that there are difficulties in the recognition of the work, but a sensitised listener can detect the aural resemblance between the bars of Kookaburra and the flute riff of Down Under.
[208] For reasons which I have already given, this is sufficient to satisfy the test of objective similarity.
155 The trial judge also referred to Mr Ham's affidavit and the fact he was not called to give evidence (at [209]-[217]). Although the trial judge accepted that Mr Hay was not aware of the appropriation of the bars of Kookaburra until much later, the trial judge noted that Mr Ham (who added the flute riff to Down under) said "his aim in adding the flute line was to try to inject some Australian flavour into the song" (at [211]). The trial judge inferred from this admission, and the failure to call Mr Ham, that Mr Ham had "deliberately reproduced a part of Kookaburra, an iconic Australian melody, for the purpose and with the intention of evoking an Australian flavour in the flute riff" (at [214]).
156 The trial judge then moved to the question whether the flute riff in Down Under involved the reproduction of a substantial part of Kookaburra (at [218]-[229]). He described Dr Ford's evidence as directed to the question of objective similarity with his comments on the quality of what was taken limited to that characterising the first two bars of Kookaburra as the signature of that song (at [218]). The trial judge noted Mr Armiger's acceptance of that description, but the trial judge did not consider such a description as "sufficient of itself to give rise to a finding that what has been taken is a substantial part of the copyright work" (at [219]).
157 The trial judge described the question of reproduction of a substantial part and the emphasis on the quality of what was taken as involving a "subjective element" (at [220]). He continued (in passages also emphasised in this appeal by the EMI parties and Mr Hay) as follows:
[221] If the question before me were limited to determining whether Dr Ford's Example D is a substantial part, I would have some difficulty in answering it. But here, there is a reproduction of two bars or phrases of Kookaburra, albeit with the separation and punctuation of the basic hook.
[222] The respondents submitted that the present case falls within the principle referred to in IceTV that the more simple the copyright work the greater degree of taking will be required.
[223] There was no dispute between the parties that the composition of Kookaburra was original. The respondents submitted that there was no evidence as to the degree of skill involved in its composition, except that it involved skill in writing the work as a round.
[224] That submission should be qualified by Dr Ford's evidence that writing a round is a "tricky and rather amusing business" because all the phrases have to fit on top of each other.
[225] I do not consider that what was taken from Kookaburra in Dr Ford's Example E was trivial in a qualitative or quantitative sense.
[226] It is true that Kookaburra is a short work and that it is not reproduced in Down Under as a round. But it was not suggested by the respondents that Kookaburra is so simple or lacking in substantial originality that a note for note reproduction of the entire work was required to meet the "substantial part" test.
[227] Nor could any such submission be sustained. The short answer to the qualitative test is to be found in Mr Hay's performance of the words of Kookaburra to the tune of the flute riff in Down Under. In my opinion, that was a sufficient illustration that the qualitative test is met.
[228] The reproduction did not completely correspond to the phrases of Kookaburra because of the separation to which I have referred. But Mr Hay's performance of the words of Kookaburra shows that a substantial part was taken.
[229] Moreover, although the question of quantity is secondary to that of quality, it is worthwhile noting that two of the four bars or phrases of Kookaburra have been reproduced in Down Under (or 50% of the song).
The Qantas advertisements
158 The trial judge described the Qantas advertisements as consisting of "two thirty second videos, each of which contains a languid orchestral version of a part of Down Under" (at [230]). Further, that the advertisements "contain only the second bar of Kookaburra and are similar to Dr Ford's Example D" (at [231]). He identified the issues as "whether the advertisements reproduce a substantial part of Kookaburra" (at [231] and "whether certain musical embellishments in the advertisements sufficiently alter the melody so as to overcome the allegation of reproduction" (at [232]).
159 After referring to Dr Ford's acceptance that the Qantas advertisements included an additional grace note or "glissando" (described as a slide in pitch "like a swanee whistle") (at [233]), the trial judge said this addition "does not alter the fact that a note-for-note comparison shows a reproduction of the second bar of Kookaburra in the Qantas advertisements" (at [234]). The trial judge said, however, that the "essential question is whether, when considered aurally, there is a sufficient degree of objective similarity to Kookaburra and in particular whether it constitutes a substantial part" (at [235]). He answered that question in these terms:
[236] I do not consider those questions to be easy to answer. Even with the assistance of the experts, I find it quite difficult to detect the second bar of Kookaburra when it is played in the advertisements.
[237] In any event, I do not consider that the quotation of the second bar of Kookaburra constitutes, without more, the reproduction of a substantial part of the song.
[238] As I have already said, in my view the question of what constitutes a substantial part does not turn on its description as "the signature". Nevertheless, it is to be noted that Dr Ford did not say that the second phrase of Kookaburra, taken on its own, was the signature of the piece.
[239] Nor in my view does the evidence of Mr Armiger, when carefully considered, endorse the proposition that the second bar alone is the signature of the song.
[240] So too, in my opinion, Mr Armiger's evidence in cross-examination, when read in light of his re-examination, does not establish that the ordinary reasonably experienced listener would recognise the second bar.
[241] The inference which arises from the failure of the respondents to call Mr Ham is not sufficient to support a finding that the inclusion of the second bar of Kookaburra by itself amounts to the reproduction of a substantial part.
160 For these reasons the trial judge concluded that the 1979 and 1981 recordings of Down Under reproduced a substantial part of Kookaburra whereas the Qantas advertisements did not (at [242]).
Authorisation
161 The trial judge dealt with the question of authorisation as follows:
[318] As I have found for Larrikin in the misrepresentation claim above, I do not need to consider this submission in great detail, but I will deal with it briefly.
[319] Section 13(2) of the Copyright Act provides that for the purposes of that Act, the exclusive right to do an act in relation to a work includes the exclusive right to authorise a person to do an act in relation to that work.
[320] However, difficulties arise in making out the claim for authorisation against the EMI parties because I am required to address the mandatory considerations set out in s 36(1A) of the Copyright Act. These include the question of whether the EMI parties took any reasonable steps to prevent or avoid the doing of the infringing act: see s 36(1A)(c).
[321] The question of whether the EMI parties took any such steps turns on whether they knew or had reason to suspect that the making of a sound recording of Down Under constituted an infringement of copyright in Kookaburra: University of New South Wales v Moorhouse (1975) 133 CLR 1 at 12-13 per Gibbs J.
[322] Whilst it is true that Mr Hay may have had such knowledge from about 2002, I am not satisfied that this has been established against the EMI parties.
REASONS OF 17 MARCH 2010
162 Following a further hearing on 3 March 2010 the trial judge published a further set of reasons. Those reasons dealt with Larrikin's application for further discovery including all licences and other reproductions of Down Under with which the respondents have been involved since 2002 (at [2]). The trial judge rejected this application for reasons as follows.
163 First, the trial judge said the only remaining issue for determination was "the 'percentage interest' payable to Larrikin by reason of the reproduction of a substantial part of Kookaburra" (at [4]).
164 Second, the trial judge described this as apparent from the procedural history of the matter which he then described (at [5]-[20]). Accordingly: - (i) on 17 December 2008 the trial judge ordered that all issues of liability be determined separately and that the parties exchange categories of documents for discovery, and listed the proceedings for hearing, (ii) Larrikin sought and was granted limited discovery on the basis that the documents were necessary to prove infringement with the precise quantum being calculated by "bean counters" rather than the Court, (iii) Larrikin's written opening before the October hearing identified the issues as all issues of liability including that the EMI parties authorised copyright infringements, (iv) on 23 October 2009 Larrikin applied to vacate the hearing due to its senior counsel being appointed a judge, and (v) this application was refused but the trial judge made new orders for a separate hearing by consent, being the orders of 23 October 2009 referred to above.
165 After summarising the submissions for Larrikin in support of its application for further discovery, essentially to the effect that the orders of 23 October 2009 left substantial questions of fact and law in relation to liability for copyright infringement undetermined, the trial judge recorded his conclusion in these terms:
[27] The short answer to Mr Lancaster's submission that the first three questions were limited to the narrow issue of whether the specified recordings of Down Under reproduced a substantial part of Kookaburra is that it fails to take account of the full terms of the questions. Each of the first three questions asks whether the recording "involved the doing of any act comprised in the copyright". It is that phrase which informs the meaning of the questions.
[28] Section 31 of the Copyright Act lists the rights of the owner of the copyright in a work. These include the right to reproduce the work in a material form. But it does not follow that the questions were limited to whether Down Under reproduced a substantial part of Kookaburra.
[29] This is because s 13(2) provides that the exclusive right to do an act includes the exclusive right to authorise a person to do that act. Moreover, s 36 provides that copyright is infringed by a person who, without the licence of the owner, does or authorises the doing in Australia of an act comprised in the copyright.
[30] The hearing seems to me to have been conducted on the basis that authorisation fell within the first three questions. It was referred to specifically in Larrikin's closing submissions.
[31] Even if I am wrong in that view, I do not consider that the course proposed by Mr Lancaster ought to be permitted as a matter of case management. The stage which this case had reached on 27 October 2009, the considerations referred to by the High Court in AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 and the purpose of "quick, inexpensive and efficient" resolution of disputes stated in the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth), all point in favour of the rationing of further use of the Court processes.
[32] This case was ready to proceed to trial on 26 October 2009. Evidence had been filed on all issues of liability and all issues relating to Larrikin's percentage interest. All that was to be deferred was "bean counting". By that stage it was too late to seek further discovery on anything except the "bean counting" issue, but that was to be dealt with after my decision on the issues of liability and percentage entitlement.
[33] It is true that the course which appears to have been adopted to manage discovery was that samples of licence agreements would be produced by the EMI companies so as to enable the issue of infringement to be dealt with. Reference was made in the course of directions to the possibility of many hundreds of licences having been granted. Plainly, not all of those would have been needed to deal with the preliminary issue even in the form it took in the orders made in December 2008.
[34] What was contemplated was that the case would be conducted on the basis of the licences thus far discovered and that any further licences would be produced after determination of liability and "percentage". The other licences would be relevant to the extent of exploitation and would therefore be relevant to damages or an account of profits. They were not to be produced to permit Larrikin to have a second bite at the cherry on the question of authorisation.
…
[36] Order 4(b) has to be considered in light of the procedural history referred to above and in the light of order 4 as a whole. Plainly, orders 4(a) and 4(c) provide for the percentage issue to be deferred as well as for the deferral of damages or an account of profits. What order 4(b) seems to me to have contemplated was the deferral of the identification of other licences which would be relevant to the quantification of damages or an account of profits.
[37] It is true that the words "or authorised" were referred to in order 4(b) but it does not follow that what was contemplated by the order was that the issue of authorisation was to be litigated afresh in relation to each further possible licence of Down Under.
[38] All that seems to me to have been intended was that order 4(b) was to make it clear that there may be other licences apart from the 22 uses stated or reproductions listed in order No 3. That was to be for the protection of Larrikin in the quantification of damages or an account of profits, not a carte blanche for further litigation on issues which would follow as a matter of course from the litigation by way of sample that formed the first stage of the hearing.
…
[40] Even if it be correct that the issue of authorisation was not covered by the orders of 27 October, the principal question going to liability was plainly dealt with and decided. I do not consider that any further Court resources or Court processes should be devoted to this case until the issue of quantum in the sense referred to in this proceeding, i.e. the percentage issue, has been decided.
APPROACH TO THE ISSUES
166 Before dealing with the parties' grounds of challenge it is appropriate to record that it was common ground that the approach to be adopted in resolving these grounds was identified in Metricon Homes at [20] in which the question of reproduction of a substantial part of a work was described as "a kind of jury question", being:
… questions involving matters of impression and degree with the consequence that an appeal court would not depart from the finding of a primary judge without being persuaded that it was erroneous in principle, or plainly and obviously wrong …
167 If persuaded of an error of principle or that the trial judge's conclusions are plainly wrong then the appellate court must make its own assessment based on the evidence.
1979 and 1981 recordings of down under
Contentions of EMI parties and Mr Hay
168 The EMI parties and Mr Hay submitted that the trial judge made five key errors of principle described as: - (i) adoption of an overly mechanistic analysis, (ii) failure properly to consider originality, (iii) failure to give due weight to the differences in aural perception, (iv) failure to inquire into animus furandi (that is, intending to take advantage of the skill and labour of the first author), and (v) erroneous reliance on the evidence of Mr Hay and Mr Ham. In oral submissions it became apparent that the first three grounds of challenge (at least) overlapped and contained other alleged errors of principle. Accordingly, those grounds will be dealt with together.
169 The EMI parties and Mr Hay submitted that while the trial judge recorded the more fundamental principles of relevance he did not incorporate them into the essence of his analysis. He did not do so because of an overly rigid application of the three stage approach identified in SW Hart at 472 (namely, objective similarity, causal connection and substantiality of part taken). This was said to lead to a "fragmented approach" in which the trial judge, when dealing with the third element (whether a substantial part was taken) was no longer focussing on the notes as they appear and are heard in Down Under but "limited his consideration to the significance of the notes in Kookaburra". According to the EMI parties and Mr Hay this was impermissible as the trial judge was required to compare the whole of the works to determine whether "the air taken is substantially the same with the original" (D'Almaine v Boosey at 302).
170 This requirement to compare the whole of each work, submitted the EMI parties and Mr Hay, was confirmed in IceTv (at [37]-[38], [157], [169]) and the High Court's emphasis on the need to consider the copyright work in suit as a whole to determine what constitutes it as an original work entitled to copyright protection, recognising that there may be some measure of legitimate appropriation without any infringement of copyright. As put in the submissions in reply, the trial judge was required to:
… have regard to the notes said to be taken not only as they appear in Kookaburra, but also in the context in which they appear in the 1979 and 1981 recordings. Regard must be had to the whole of each work in making the assessment, and attention given to what it was that constituted Kookaburra as an original work.
171 The trial judge's allegedly impermissible approach was said to be disclosed by another set of reasons published on 6 July 2010 dealing with quantum (Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2010] FCA 698). In those reasons, the trial judge described the reasons of 4 February 2010 as:
[135] … concerned only with the question of whether the flute riff, or certain examples of it, reproduce a substantial part of Kookaburra. This question focussed in particular upon the qualitative significance of the bars of Kookaburra that were reproduced in Down Under. It was not concerned with the musical significance, either qualitative or quantitative, of the bars from Kookaburra in Down Under considered as a whole.
172 According to the EMI parties and Mr Hay it was legitimate to examine the trial judge's reasons of 6 July 2010 to ascertain the findings he would have made had he considered (as they said he ought to have done) the whole of each of the works in determining the question whether Down Under reproduced a substantial part of Kookaburra. When he undertook that exercise in the context of quantum the trial judge (correctly, it is said by the EMI parties and Mr Hay) found that: - (i) the musical significance of the relevant notes in Down Under was small, with the notes appearing as a fragment of a melody, such that they went unnoticed for 20 years, (ii) he could detect the relevant notes in Down Under only with expert assistance (having become sensitised thereby and by repeat listening), and (iii) the musical quality of Down Under is given by other musical elements including the introductory flute line (containing no notes from Kookaburra), the verses and chorus, Mr Hay's distinctive voice, and the recurring rhythmic keyboard and flute which give the song its overall reggae sound ([2010] FCA 698 at [137]-[139], [143]-[163]). The EMI parties and Mr Hay thus submitted that:
… it is clear from his Honour's reasons of 6 July 2010 that, had his Honour adopted the correct approach to the assessment of substantial reproduction and paid due regard to a comparison between the respective works as a whole, he would have concluded that no substantial part of Kookaburra had been reproduced.
… The above findings made by his Honour in the 6 July 2010 reasons, and the evidence on which those findings are based, are antithetical to the satisfaction of the D'Almaine v Boosey test.
173 The essence of the case about the trial judge's alleged failure to consider what constituted Kookaburra as an original work protected by copyright was founded on the trial judge's reasons of 4 February 2010 at [223]-[226] quoted above. According to the EMI parties and Mr Hay several points emerge from these paragraphs: - (i) the trial judge accepted that there was no evidence as to the degree of skill involved in the composition of Kookaburra, except that it involved skill in writing the work as a round, (ii) the so-called qualification in [224] is misconceived as the very point of the submissions made by the EMI parties and Mr Hay was that the only originality lay in the writing of Kookaburra as a round, (iii) no aspect of Kookaburra as a round was taken in Down Under, (iv) the phrases of Kookaburra taken "did not contain each of the four phrases (bars) from Kookaburra, and the two that it did mirror appeared separately, interspersed between other musical elements in the flute phrase of Down Under (indeed, on the first occasion, only one of them appeared), shorn of the Kookaburra lyrics and deprived of the relationship to each other emerging from a round", and (v) the last sentence in [226] is inapposite as the submission was that the failure to take any aspect of Kookaburra that characterised it as a round meant that no substantial part was taken.
174 According to the EMI parties and Mr Hay the only concession they made about Kookaburra's originality was its status as a round. They submitted that no other evidence supported a finding of any other aspect of originality. They did not bear any onus to prove Kookaburra lacked originality. The case should have failed because, as submitted to the trial judge, "the most significant element of its author's skill and labour of expression – writing a round – was not reproduced" (emphasis in original). Instead an approach was adopted, contrary to IceTV at [157], treating each individual part of the work as something worth protecting in its own right.
175 In oral submissions the EMI parties and Mr Hay listed six matters said to deprive the two bars of Kookaburra taken in Down Under of essential characteristics that resided in Kookaburra and five matters in Down Under said to change the character of how the notes are heard.
176 The six matters are that in Down Under: - (i) there is no use of any lyrics, (ii) there is no use of a round, (iii) there is no context of a nursery rhyme or folk melody, (iv) two of the four bars of Kookaburra are not used at all, (v) to the extent that any bar is referenced, it is robbed of its relationship to the surrounding bars, and (vi) the two bars that do appear do so as "fragments" of a melody difficult to detect ([2010] FCA 698 at [138]). The EMI parties and Mr Hay subsequently accepted that the relevant copyright was Kookaburra as a musical work so the first point was immaterial. However, in so doing they said that it must also follow that Dr Ford's evidence about the first two bars of Kookaburra being its "signature" (and related evidence) could not have been material to the trial judge's findings because their signature status depended on the lyrics.
177 The five matters said to change the character of how the notes are heard are that: - (i) within the flute riff itself, the two bars referring to Kookaburra are incorporated within a new, larger integrated musical statement, (ii) there is a change in harmony and the bars in question are heard in a minor key, (iii) the flute riff is but one of a number of ornaments, and no part of Kookaburra is incorporated into a central verse of chorus of Down Under, (iv) the flute riff co-operates with other features of Down Under, including lyrics and title, to achieve a rock anthem celebrating aspects of Australia, and (v) the reggae rhythm infuses the whole of Down Under.
178 As it was put in the submissions in reply:
If elements of the second work are such as to obscure (as in this case) any similarity between it and the copyright work, there can be no substantial reproduction.
179 Instead of undertaking this type of analysis of the works as a whole the EMI parties and Mr Hay submitted that the trial judge identified two matters which he considered sufficient to establish reproduction of a substantial part of Kookaburra, namely, Mr Hay's performances and the quantity of what was taken. Both were said to involve errors: the latter on the basis of the established principles emphasising that the required focus was the quality of what was taken rather than the quantity, and the former for reasons dealt with separately by the EMI parties and Mr Hay and identified below.
180 These matters were all said to be relevant to the trial judge's alleged error in failing to give weight to the aural perception of the two works. If this had been done, the EMI parties and Mr Hay submitted, the reason the similarity went unnoticed in two iconic Australian songs for 20 years would have been apparent to the trial judge – an aural assessment discloses the differences between the two works such that only a sensitised listener assisted by expert evidence and with repeated listening, not an ordinary reasonable listener, can detect the similarity. This "sensitised listener", submitted the EMI parties and Mr Hay, involved the wrong test. The relevant listener is the ordinary, reasonably experienced listener uninstructed by experts such as Dr Ford, Mr Armiger and Mr Hay. The EMI parties and Mr Hay acknowledged that the trial judge dealt with melody, key, harmony, tempo, and structure but said he did so in a mechanistic fashion by considering each element in isolation from the others and giving melody greater weight than all other elements without any evidence to support such an approach. According to the EMI parties and Mr Hay:
… the inability of his Honour, Mr Lurie as principal of [Larrikin], or the public generally to perceive any aural similarity in an untutored fashion ought to have been taken by his Honour as an almost conclusive factor weighing against a finding that a substantial part of Kookaburra had been reproduced.
181 The EMI parties and Mr Hay said that the trial judge failed to inquire about animus furandi, which was described as necessary in IceTv at [171]. In this regard there was no evidence of animus furandi. As to the findings about Mr Ham, the reasons of 6 July 2010 ([2010] FCA 698 at [176]-[178]) made clear that there was no finding that "Mr Ham deliberately appropriated the relevant bars from Kookaburra in order to capitalise upon the reputation of that work… [T]he flute line … was introduced deliberately to give the song an Australian flavour".
182 The fifth class of alleged error was described as the trial judge's erroneous reliance on the evidence of Mr Hay and Mr Ham.
183 The EMI parties and Mr Hay submitted that the fact that Mr Hay sometimes sang the lyrics of Kookaburra during performances of Down Under when the flute riff would have been played is immaterial. Those performances were not alleged to infringe copyright and whether the playing and singing of the lyrics together with two of the four bars of Kookaburra would turn Down Under into a reproduction of a substantial part was not the issue. In any event, as the reasons of 6 July 2010 disclosed ([2010] FCA 698 at [169]-[170]), Mr Hay sung the words of Kookaburra as "an amusing historical reference to it", the relevance of that evidence being limited to the fact that it "demonstrates that Example E of the flute line contained quotes from Kookaburra".
184 The trial judge's alleged error in respect of Mr Ham's evidence was to use the part of the affidavit tendered and Mr Ham's absence to support an inference that he had "deliberately included the bars from Kookaburra in the flute line" for the purpose of injecting an Australian flavour (at [216] of the 4 February 2010 reasons). However, Mr Ham's affidavit as tendered said only that he recognised the melody as an Australian clichÉ and not as Kookaburra as such. According to the EMI parties and Mr Hay the "mere adding by Mr Ham of that tribute did not amount to the reproduction of a substantial part of Kookaburra, and no inference was available from the failure to call him beyond what was already apparent on the face of his affidavit".
Discussion
185 For the reasons given below the contentions of the EMI parties and Mr Hay should not be accepted.
186 Neither D'Almaine v Boosey nor IceTV requires the approach the EMI parties and Mr Hay advocated. The test is not whether, considered overall, Down Under is similar to Kookaburra (Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 at 497). It is whether a substantial part of the copyright work has been taken (s 14(1) of the Copyright Act).
187 In Elwood Clothing, Lindgren, Goldberg and Bennett JJ (at [41]) agreed with the statement in Metricon Homes at [23] that the "correct approach" is:
(1) to identify the work in suit in which copyright subsists,
(2) to identify in the alleged infringing work the part taken (ie derived or copied) from the work in suit, and
(3) to determine whether the part taken constitutes a substantial part of the work in suit.
188 In Dixon Investments at 494 it was explained that the third step in this approach involves consideration of the significance of the part taken to the work – that is the copyright work – as a whole so that a "a vital or material part, even though it may be only a small part of it [the copyright work] in quantity … may nevertheless be sufficient".
189 To the same effect are the observations of Mason CJ (in dissent in the result but not about the principles of copyright involved) in Autodesk Inc v Dyason (No 2) (1992) 176 CLR 300 at 305.
190 In Designers Guild v Russell Williams at 2425 this focus on what was taken is the reason for the statement by Lord Millett that "while the copied features must be a substantial part of the copyright work, they need not form a substantial part of defendant's work … Thus the overall appearance of the defendant's work may be very different from the copyright work. But it does not follow that the defendant's work does not infringe the plaintiff's copyright". Lord Millett (albeit dealing with a design case) described the correct approach as one in which once the judge "has found that the defendants' design incorporates features taken from the copyright work, the question is whether what has been taken constitutes all or a substantial part of the copyright work. This is a matter of impression, for whether the part taken is substantial must be determined by its quality rather than its quantity. It depends upon its importance to the copyright work. It does not depend upon its importance to the defendants' work" (at 2426).
191 This principle – that is, the importance of the part taken to the copyright work in order to determine whether a substantial part of that work has been reproduced – is also referred to in G Ricordi & Co (London), Ltd v Clayton & Waller, Ltd [1930] Mac CC 154. Although the outcome in that case turned on lack of reproduction, Luxmore J said (at 162 ) that "while it is quite true that eight bars of a particular air may form a substantial part of that air…the eight bars from the [copyright work in suit] are not the most distinctive or important part of that air at all".
192 In Francis Day v Bron it was common ground that the first eight bars of the copyright work were a substantial part of that work (at 609). The question was one of reproduction in circumstances where the alleged infringer's evidence that no conscious copying had occurred was accepted. In that context, Wilberforce J at first instance analysed the structure, theme, notes, harmonic structure, and rhythm of the two songs and found that the degree of similarity was such that an ordinary experienced listener might think that perhaps one had come from the other. The appellate court agreed, noting that reproduction does not require identity and citing in support D'Almaine v Boosey amongst other decisions (at 612)
193 Properly analysed D'Almaine v Boosey and IceTV do not stand for any contrary proposition.
194 In D'Almaine v Boosey the airs of the operatic copyright work had been taken albeit with some adaptations as necessary to re-arrange an opera as quadrilles for dancing. It is in this context that it was said that it is "the air or melody which is the invention of the author so taking the whole air is a piracy whilst taking part with alterations such as in a different order or broken by the intersection of other airs might not be piracy, the result depending on whether the air taken is substantially the same with the original". In other words, D'Almaine v Boosey recognised that it is the air taken as it appears in the works which is relevant to the question of reproduction with "the ear [telling you] whether it is the same".
195 The copyright work in suit in Ice TV involved a compilation in the form of a weekly television schedule. This context is important, as the reasons for judgment disclose. The alleged infringer accepted that the copyright subsisted in the weekly schedules but denied that its taking of individual items from the compilation infringed copyright (at [11]). The issues for resolution were thus determined in this particular factual context. As French CJ, Crennan and Kiefel JJ said at [30]-[31], the principle that it is necessary to consider not only the extent of what was copied but also its quality "has a long provenance and… is particularly apposite when considering a compilation". The relevance of the status of the copyright work as a compilation was further emphasised by the heading before [72] of their reasons, "Compilations and 'substantial part'". In that section their Honours cited another compilation case, Leslie v Young & Sons [1894] AC 335 at 341 to the effect that, in such a case (that is, dealing with a compilation), "it ought to be clearly established that, looking at these tables as a whole, there has been a substantial appropriation by the one party of the independent labour of the other, before any proceeding on the ground of copyright can be justified". The reference by Gummow, Heydon and Hayne JJ to "legitimate appropriation" at [157] is also to be understood in this context. The concept of "legitimate appropriation" to which their Honours referred, as the trial judge said in the present case, does not involve the creation of any new principle; it reflects the fact that the statute requires that a substantial part of the copyright work be reproduced before there is infringement. As Larrikin submitted, legitimate appropriation is appropriation of a non-substantial part of a copyright work. As the reasons in [157] disclose, the question whether the slivers of information taken themselves were original works was seen by their Honours as a distraction in that case from the task of comparing "what was taken and the whole of the work in suit". This is the background leading to the statement at [169] that it was necessary for the copyright owner to establish clearly that "looking at the Weekly Schedule [the copyright work] as a whole, there has been a substantial reproduction in the particular use by IceTV".
196 It is apparent from this discussion that the approach of the EMI parties and Mr Hay is inconsistent with established principle insofar as it involves propositions that the trial judge erred by:
first, adopting an overly mechanistic or fragmented approach in his consideration of objective similarity and substantial part; and
second, having determined objective similarity by focusing on the copyright work (Kookaburra) and not the alleged infringing work (Down Under) to determine whether a substantial part of Kookaburra had been reproduced.
In answering both questions in favour of Larrikin it necessarily followed that the trial judge found that the appropriation of Kookaburra in Down Under was not a "legitimate appropriation" as referred to in IceTV.
197 The discussion of the relevant authorities above shows that the trial judge's approach of dealing with objective similarity and substantiality sequentially was orthodox and did not involve any impermissible fragmentation of the relevant inquiry. A fair reading of his reasons of 4 February 2010 does not support a conclusion that he determined the case merely by an impermissible "note for note comparison" (Austin v Columbia Graphophone Company Ltd [1923] Mac CC 398 at 415). That is not to say, however, that the notes are irrelevant. As stated in Austin v Columbia Graphophone at 409 "music must be treated by the ear as well as by the eye". In Francis Day v Bron Wilberforce J at first instance, whose approach was said by the EMI parties and Mr Hay to disclose the error in that of the trial judge, considered the same range of matters as the trial judge in the present case including the notes.
198 The trial judge considered "aural comparison of the musical elements, as well as my visual comparison of the notated songs" (at [158]), as well as melody, key, tempo, harmony and structure. It is true that the trial judge defined the relevant melodies (at [163]) as involving a comparison between, first, the flute riff in Down Under when it plays the fourth bar of Dr Ford's Example D, and the second bar of Kookaburra and, second, the flute riff in Down Under when it plays the second and fourth bars of Dr Ford's Example E, and the first and second bars of Kookaburra. This involved the trial judge in doing nothing more than implementing the first two steps of what was described as the correct approach in Metricon Homes at [23] and Elwood Clothing at [41] by:
(1) identifying the work in suit in which copyright subsists (that is, Kookaburra);
(2) identifying in the alleged infringing work (that is, Down Under) the part taken (i.e. derived or copied) from the work in suit (that is, the flute riff in Down Under when it plays the fourth bar of Dr Ford's Example D and the second and fourth bars of Dr Ford's Example E); and
(3) determining whether the part taken constitutes a substantial part of the work in suit (that is, by reference to the importance of the part taken to Kookaburra, not to Down Under).
199 It is not the case that, by this definition of the relevant melody, the trial judge failed to consider the other factors which he identified as relevant including the aural perception, key, tempo, harmony and structure of the part taken from Kookaburra as it appears in Down Under. The trial judge also considered the facts that Down Under was in a different key, had a somewhat different rhythm, and involved a different harmonic shape due to the difference in key, and that the part taken from Kookaburra as it appears in the flute riff in Down Under involves a different structure in which bars of Kookaburra are separated and punctuated by Men at Work's distinctive sound and the basic hook of Down Under. As the trial judge correctly said (at [195]), the question of structure is not concerned with the entirety of the three-minute recording of Down Under. It is concerned with the flute riff in which the parts taken from Kookaburra appear. For the trial judge to have done otherwise and adopted the approach of the EMI parties and Mr Hay of determining objective similarity by reference to the whole of Down Under, would have involved a departure from established principle. Equally, for the trial judge to have determined substantiality by reference to the importance (or lack of importance) of the part taken from Kookaburra to Down Under rather than the importance of the part taken to Kookaburra itself (that is, by looking at the quality of what was taken by reference to the alleged infringing work as a whole and not the copyright work as a whole) would have been inconsistent with principle.
200 Nor can there be any real complaint about the trial judge having dealt with melody, key, tempo and rhythm, harmony and context and structure sequentially in his reasons. No doubt it was convenient to arrange the reasons in this way with separate headings for each factor. But the substance of the factors does not support an inference that the trial judge dealt with each factor in artificial isolation from all other factors. For example, it is apparent that in dealing with melody the trial judge was well aware of the separation of the bars from Kookaburra as they appear in the flute riff. This underlies Mr Armiger's evidence referred to in this part of the reasons (at [167]) of the "shared phrases" in the two as part of the "answering" flute melody in Down Under. In the same section similarities between notes are also identified (at [170]). In dealing with key the trial judge referred to the aural perception of the tune (at [176]) and the relative pitches allowing a listener to identify the songs (at [177]). In dealing with tempo and rhythm, the trial judge dealt with the slur at the end of the bars in Kookaburra as they appear in the flute riff in Down Under. In dealing with harmony, the trial judge considered the recognisability of the bars from Kookaburra as such when they appear in the flute riff in Down Under (at [189]). In dealing with context and structure, the trial judge dealt with the submission of the EMI parties and Mr Hay that "harmony, structure and, to a lesser extent, key affect how one hears a work" (at [193]) as well as the separation of the bars of Kookaburra as they appear in the flute riff by Men at Work's distinctive sound in the basic hook of Down Under (at [195]).
201 This analysis shows that the submissions of the EMI parties and Mr Hay that the trial judge's approach was "overly mechanistic" and "fragmented" cannot be accepted.
202 For the purpose of determining objective similarity the trial judge was assisted by experts for both sides. In addition to their contention that the trial judge had become a sensitised listener and incorrectly applied his sensitised ear to the task overly assisted by expert evidence, the EMI parties and Mr Hay suggested that there was some error in such expert evidence being available at all. To the extent that this was suggested, it should be rejected. The use of expert evidence to assist in resolving the issue of objective similarity is orthodox. For example, evidence for the same purpose was admitted in Austin v Columbia Graphophone, D'Almaine v Boosey, Francis Day v Bron, G Ricordi v Clayton, and CBS Records Australia Ltd v Gross (1989) 15 IPR 385. More to the point, the EMI parties and Mr Hay relied on the expert evidence of Mr Armiger addressing the same issue. No error can be sustained merely because the trial judge used the expert evidence the parties chose to make available to him. The error, if there be one, is confined to the contention that the trial judge applied the wrong test to the task – namely, that of a sensitised listener overly assisted by expert evidence rather than the ordinary reasonable listener. Before dealing with this issue it is appropriate to resolve the contention that the trial judge failed to have regard to the fact that the evidence supported a finding that the originality of Kookaburra lay only in its status as a round with the consequence that, as Down Under reproduced no part of the round, the claim for copyright infringement should have been dismissed.
203 It is true that Ms Sinclair composed Kookaburra as a round. It was entered into a competition for the creation of rounds, was described as a round in the 1934 Girl Guides edition and was consistently identified thereafter by Ms Sinclair as a round. The trial judge was aware of that fact and the nature of a round. He described Kookaburra as an "iconic Australian round" at [1], referred to Dr Ford's evidence describing it as a round at [13], identified the full title of the work (Kookaburra Round in 4 Parts) at [70], explained the nature of a round at [71] (a song "intended to be sung by four voices or groups of voices in a way in which all the parts continuously repeat"), referred to Dr Ford's evidence that Ms Sinclair intended it to be sung as a round at [126], and compared Down Under's more layered structure to Ms Sinclair's round at [195]. The trial judge also specifically considered the submission that there was no evidence as to the degree of skill involved in the composition of Kookaburra other than its composition as a round (at [223]-[225], quoted above).
204 According to the EMI parties and Mr Hay the reasons at [223]-[225] disclose a misconception by the trial judge of their case and a consequent failure to consider the limited originality of Kookaburra as a round in circumstances where the round was not reproduced in any way in Down Under. The misconception, they said, is evident from the trial judge's reference to a qualification in [224] that Dr Ford had given evidence that writing a round is a "tricky and rather amusing business" because all the phrases have to fit on top of each other. The EMI parties and Mr Hay submitted that, properly understood, this was not a qualification to their contention that Kookaburra's originality derived only from its composition as a round. Rather, Dr Ford's evidence confirmed that contention. Larrikin submitted that [224] disclosed no misconception. The trial judge's description of the qualification presented by Dr Ford's evidence was correct. The effect of that evidence was that all the phrases had to fit on top of each other to form the round. Hence, there was skill and originality in the work as a whole both as a series of phrases or melody and as a melody forming a round.
205 The EMI parties and Mr Hay sought to dismiss Larrikin's submission as involving some, apparently impermissible, dual original status of Kookaburra. Larrikin's submission, however, should be accepted. The trial judge must be inferred to have used the word "qualified" in [224] deliberately. The context makes this plain. He was dealing directly with the submission about lack of skill in the writing of Kookaburra other than as a round in [223]. He then referred to the need to qualify that submission by reference to Dr Ford's evidence in [224]. The qualification refers to all the phrases of the song having to fit over the top of each other. Thus, and contrary to the submission of the EMI parties and Mr Hay, there was evidence of the skill involved in the composition of all the phrases of Kookaburra. This conclusion is supported by other references in the reasons where the evidence discloses the distinctive and recognisable melody of Kookaburra whether sung as a round or not (for example, at [121] and [149], [168]).
206 On the basis of the evidence before him, the trial judge was entitled to conclude that there was skill in the composition of Kookaburra as a song with a melody capable of being sung as a round. It cannot be said that, in treating Kookaburra as a song capable of being sung as such or as a round, the trial judge failed to consider what constituted Kookaburra as an original musical work. Nor can it be said that the trial judge impermissibly treated each individual note of Kookaburra as a "sliver" (to use the word from IceTV) independently subject to copyright protection. This was not a case in which the bars of Kookaburra that appear in Down Under could be said to have no originality and thus fall outside copyright protection as referred to in IceTv (at [37] citing Ladbroke (Football) Ltd at 293, itself a case involving a compilation in the form of a football betting coupon).
207 Against these conclusions it is apparent that the trial judge's alleged failure to consider the aural perception of the bars from Kookaburra as they appear in Down Under cannot be sustained. It follows that this aspect of the case of the EMI parties and Mr Hay comes down to the propositions that the trial judge applied the wrong test to the issue of aural perception, being that of a sensitised listener inappropriately assisted by expert evidence; and that further, had he not applied this incorrect test, the almost determinative significance of the fact that no one noticed the similarity for some 20 years would have been apparent.
208 The phrase "ordinary reasonably experienced listener" was used in Francis Day v Bron at 596 in a conclusion that the degree of similarity was sufficient for such a listener to think that one might have come from the other. In G Ricordi v Clayton, to which the EMI parties and Mr Hay also referred in this context, there was evidence from one expert that the resemblance of the part alleged to have been taken from the copyright work was very strong while another expert said the resemblance was of the very slightest character. The present case, it must be recalled, is different. All of the expert witnesses recognised that the flute riff in Down Under directly and unmistakably quoted, borrowed or took two bars from Kookaburra. This is consistent with the fact that once the panel members of Spicks and Specks had been directed to the relevant part of the flute riff all ultimately said that they could recognise the bars taken from Kookaburra. However, as the trial judge recognised, the panel members are musical experts and not the ordinary reasonably experienced listener (at [206]).
209 It is clear from the trial judge's reasons that he was aware of the approach of the ordinary reasonably experienced listener to objective similarity. He referred to that phrase as the relevant test at [172] and [206]. At [172] the trial judge in fact said:
In any event, the test is that of the ordinary reasonably experienced listener and the comparison is not concerned with deceptive similarity as in a passing-off action: Francis Day & Hunter at 610, 623-624; Russell William Textiles at 2425.
210 Having correctly identified the relevant test, the question is whether, in referring to the "sensitised listener" and making the use of the expert evidence as he did, the trial judge in fact failed to apply the test he had identified. To answer this question the passages from the reasons on which the EMI parties and Mr Hay relied must be considered in context.
211 At [171] the trial judge accepted that there was force in the submission that he had become sensitised to the similarities between the melodies so as to be able to hear objective similarity between them. The trial judge said he did not think this overcame the force of the expert evidence and the conclusion which seems to follow inevitably from the frank admissions by Mr Hay. Both of the latter findings are said to involve error and are also addressed below.
212 At [207], after referring to the test of the ordinary reasonably experienced listener at [206], the trial judge said that Spicks and Specks showed that "there are difficulties in the recognition of the work, but a sensitised listener can detect the aural resemblance between the bars of Kookaburra and the flute riff of Down Under".
213 It is apparent from [171] that the trial judge could hear the objective similarity between Kookaburra and part of the flute riff in Down Under. By "sensitised listener" the trial judge could not have meant expert listener. It is clear from the context that he meant an ordinary reasonably experienced listener who had heard the relevant parts of the works more than once and, perhaps, repeatedly. As Larrikin submitted, however, the task the trial judge was addressing was objective similarity. There is no principle that the ordinary reasonably experienced listener may not hear a work or part of it more than once. Nor do the cases suggest that the trial judge was not entitled to have regard to the expert evidence when determining objective similarity. Moreover, and as noted, all of the expert evidence was to the same effect at least insofar as it established that the flute riff in Down Under directly borrowed bars from Kookaburra. The fact that Mr Armiger described these borrowings as "shared phrases" confirms the taking of bars from Kookaburra.
214 It is also difficult to accept the contention that the trial judge erred in relying on Mr Hay's evidence. At [161] the trial judge referred to Mr Hay's evidence that he sang the relevant bars of Kookaburra when performing Down Under at a number of concerts since 2002. At [168] the trial judge referred to Mr Hay's agreement that the fourth bar of Down Under is a direct reference to Kookaburra and the fourth bar of Example D and the second and fourth bars of Example E are unmistakably the melody of Kookaburra. It may be accepted that Mr Hay, as a musician, has a skilled ear and is not himself the ordinary reasonably experienced listener. But, as noted, if the trial judge was entitled to have regard to expert evidence on the question of objective similarity (as he was) then he was also entitled to have regard to Mr Hay's evidence.
215 Nothing in the trial judge's reasons suggests that he somehow mistakenly believed that the lyrics of Kookaburra had any significance to the copyright work in question – the description at [121] of Dr Ford's evidence indicates to the contrary. The trial judge referred to Dr Ford's evidence about the opening two bars being the signature of that work and continued:
Although he agreed that it is a signature because of the lyrics, he said it is also the first thing you hear so it is the part of the melody that "sticks in your head".
216 There cannot be much doubt that, in referring to the signature of Kookaburra thereafter, the trial judge was intending to refer to that part of Dr Ford's evidence he found relevant – namely, the first two bars are the melody that "sticks in your head".
217 Once the trial judge's sensitivity to the irrelevance of the lyrics themselves is recognised it becomes apparent that he did not find Mr Hay's singing of the Kookaburra lyrics important by reason of the lyrics. Rather, it must be inferred that the trial judge considered it important that the melody conveyed by the singing of the lyrics of Kookaburra (as the Spicks and Specks panel member put it – the "dah dah dah…") fitted over the top of the flute riff from Down Under. The fact that Mr Hay's performances are not the infringement sued upon, in this context, is immaterial. As the trial judge put it, the capacity to sing the Kookaburra melody directly over the relevant parts of the Down Under flute riff "graphically" illustrates that the fourth bar of Example D and the second and fourth bars of Example E are unmistakably the melody of Kookaburra. The trial judge was entitled to use that evidence as he did.
218 Analysed in this way it is apparent that none of these aspects of the challenge to the trial judge's decision can be sustained as an error of principle. The trial judge could detect the similarity between the two pieces. He identified and applied the test of the ordinary reasonably experienced listener to objective similarity. He accepted that he may have become a sensitised listener. He made use of the expert evidence to support the finding of objective similarity. In all these respects the trial judge's reasoning was orthodox.
219 While dealing with the evidentiary issues it is convenient to consider the alleged error in respect of Mr Ham's evidence. In short, there was no error. A part of Mr Ham's affidavit was tendered but he was not called to give evidence. The affidavit said that Mr Ham had heard Kookaburra as a child, had wanted to inject an Australian flavour into the flute riff and did so aiming for an Australian clichÉ. As Mr Ham was not called, the trial judge correctly said that he could infer his evidence would not have assisted the EMI parties and Mr Hay. In this context the trial judge was entitled to infer that Mr Ham deliberately reproduced a part of Kookaburra, an iconic Australian melody, for the purpose and with the intention of injecting Australian flavour into the flute riff. It is not to the point that Mr Ham may not have labelled the work he was borrowing as "Kookaburra". It was open to the trial judge to infer from Mr Ham's affidavit and the failure to call him that Mr Ham knew he was reproducing a specific iconic Australian melody.
220 As the EMI parties and Mr Hay submitted, it may be accepted that in a case where what has been taken is so slight or so different in the alleged infringing work from the copyright work that it cannot be recognised at all, a conclusion that there has been no reproduction of a substantial part of the copyright work should follow. So much is clear from the observations to that effect in Hawkes and Son (London), Limited v Paramount Film Service, Limited [1934] 1 Ch 593 at 604. In the result in that case, however, it was found that the part taken "would be recognised by any person" and was held to be substantial. The present case was not one in which the part taken from the copyright work (Kookaburra) could not be recognised at all in the infringing work (Down Under). The experts all recognised it as an unmistakable direct borrowing (unlike, for example, the debate on that issue in G Ricordi v Clayton). The trial judge recognised the shared melody. In fact, he described the melody as "the same" despite the separation of the notes from Kookaburra in the flute riff (at [201]).
221 As to animus furandi, it must again be said that the references in IceTV on which the EMI parties and Mr Hay relied (at [55] and [171]) are in the context of a compilation case. In such a case, where fine questions might arise in distinguishing between the protection of information and the form in which information is conveyed or expressed, the intention of the alleged infringer may take on considerable significance. Despite this, French CJ, Crennan and Kiefel JJ described such an inquiry, given their other conclusions, as unnecessary at [55]. It is difficult to accept that such an inquiry is necessary in every case given, for example, that subconscious copying may infringe copyright. Provided the test of causal connection is satisfied, an intention to take advantage of the labour of another is not required in order for an action for copyright infringement to be sustained. No doubt, if such an intention exists, causal connection will be proved and other findings may be more readily made against the alleged infringer. But it cannot be said that the trial judge erred by not making a positive finding about animus furandi one way or another.
222 It must also be concluded that the other tests propounded by the EMI parties and Mr Hay involve taking statements from decisions out of the context in which they appear and inappropriately elevating them to a level of principle applicable in all cases.
223 One such test was whether there had been a "manifest wholesale adoption of the individual work which Ms Sinclair had bestowed upon Kookaburra and which had given to it its distinct characteristics and individuality". This statement was said to derive from the reasons of Isaacs J in Sands & McDougall Proprietary Limited v Robinson (1917) 23 CLR 49 at 53. However, it is clear from the context of this statement that his Honour was not expressing a test or principle. He was making a factual finding that the differences between the two maps in question did not change the fact that the infringing map disclosed a manifest wholesale adoption of the individual work of the copyright map which gave it its distinct characteristics and individuality.
224 Another test was whether Larrikin had "clearly established… that, looking at Kookaburra as a whole, there had been a substantial reproduction in the particular use [by the EMI parties and Mr Hay] in the 1979 and 1981 recordings of two bars of Kookaburra". This is derived from IceTV at [75] and [169]. However, [75] is a reference to Leslie v Young & Sons at 341 in which it was said that, although a compilation or abstract involving independent labour may be protected by copyright, "when you come to such a subject matter as that with which we are dealing, it ought to be clearly established that, looking at these tables as a whole, there has been a substantial appropriation by the one party of the independent labour of the other, before any proceeding on the ground of copyright can be justified". The copyright work being dealt with in Leslie v Young & Sons was railway timetables. The House of Lords explained the difference between a mere order of trains issued by a railway company, which could not be the subject of copyright, and an abridgment of rail times such as in connection with tours in a particular locality, which could be the subject of such protection. This reflects the basic proposition that copyright does not protect facts or information or ideas but the form of their expression to the world (Ice TV at [26] and [28]). This proposition underpins the particular approach to compilations evident in cases dealing with works of that nature. In [169] Gummow, Heydon and Hayne JJ also referred to Leslie v Young & Sons in the context of emphasising the theme of that decision that "in a case such as the present" it ought to be "clearly established… that, looking at the Weekly Schedule as a whole, there has been a substantial reproduction in the particular use by IceTV".
225 In other words, the decisions on which the EMI parties and Mr Hay relied to support their tests either turned on their facts or involved compilations in which the courts in question emphasised the nature of the works said to be protected by copyright as compilations. In the context of copyright, where the expression of ideas and information is protected, but not the ideas or information themselves, the approach which the courts adopted to ascertain whether there had been a substantial reproduction is explicable. The emphasis on context in the decisions shows that the proposed tests are not well-founded in the authorities. Kookaburra is not a compilation. It is a musical work the creation of which, on the evidence before the trial judge, involved the "tricky" and "amusing" business of ensuring that each phrase of the song fitted over the top of each other. Nothing about that context warrants the approach which the EMI parties and Mr Hay advocated nor, indeed, any different approach from that which the trial judge adopted based on Francis Day v Bron (at [20], [33], [44]-[49]), SW Hart (at [32]-[38]) and IceTV (at [39]-[41], [55]-[59]), as well as Austin v Columbia Graphophone (at [51]) and D'Almaine v Boosey (at [52]-[53]).
226 With these conclusions in mind it is apparent that the matters of difference on which the EMI parties and Mr Hay relied are insufficient to support a finding that the trial judge erred in principle or was plainly wrong in concluding that the flute riff of Down Under reproduced a substantial part of Kookaburra. As Larrikin submitted, the decisions on which the EMI parties and Mr Hay relied to support the materiality of these differences do not suggest that they represent the minimum criteria for a finding of reproduction of a substantial part of a copyright work. Accordingly, while it may be accepted that there is not a "ready" aural perception of the bars of Kookaburra in the flute riff of Down Under, the bars are there and, as the trial judge found, can be heard once attention is directed to them. In terms of objective similarity, the bars are reproduced albeit in a different key and embedded in a different structure. It may also be accepted the Kookaburra and Down Under are different genres, but that does not overcome the fact that the bars of Kookaburra have been borrowed for the flute riff. Similarly, although the works are of a different structure, the bars of Kookaburra are nevertheless present in the flute riff and recognisable as such. Down Under is a much longer work so that it may be said that only 5 bars out of Down Under's total of 93 bars involve Kookaburra. But, as noted, those bars are objectively similar and the issue of substantiality is to be determined by reference to Kookaburra, not Down Under. The bars from Kookaburra are interspersed with the basic hook of Down Under but they can nevertheless be recognised as Kookaburra. The key is different but the effect of the evidence before the trial judge was that it is relative pitch that makes a song recognisable and the different key was like "shining a different light" on the bars from Kookaburra as they appear in the flute riff in Down Under. The same may be said of Down Under's distinctive reggae sound. The status of Kookaburra as a round has been discussed above. Characterising the borrowing as a tribute does not alter the fact of the borrowing.
227 In a case such as the present, where it is often said that questions of fact and degree are involved, an appellate court should not interfere with a trial judge's decision unless persuaded it is based on erroneous principle or plainly wrong. For the reasons given above, neither criterion for appellate intervention is satisfied in respect of the trial judge's finding that the 1979 and 1981 recordings of Down Under reproduce a substantial part of Kookaburra and thus infringe the copyright in Kookaburra. It follows that the appeal must be dismissed and the notice of contention is immaterial.
THE QANTAS ADVERTISEMENTS
Contentions of Larrikin
228 Larrikin submitted that the trial judge was plainly wrong in concluding that the Qantas advertisements did not reproduce a substantial part of Kookaburra. According to Larrikin the trial judge's operative finding is at [237] (of the 4 February 2010 reasons) where his Honour said:
In any event, I do not consider that the quotation of the second bar of Kookaburra constitutes, without more, the reproduction of a substantial part of the song.
229 Larrikin thus contended that the preceding paragraph, [236], in which the trial judge said that even with the assistance of experts he found it quite difficult to detect the second bar of Kookaburra when it is played in the advertisements was not material, his Honour having said only that he found it difficult to recognise and not that he could not recognise it.
230 While Larrikin accepted a "measure of deference" should be applied to the conclusion of the trial judge on matters of impression and degree in a case such as this, it submitted that it is clear from the trial judge's conclusion that he must have applied "an excessively demanding test in respect of the quality and quantity of the taken portion". Larrikin supported this submission by a number of propositions.
231 As to objective similarity, Larrikin submitted, first, that the process of comparison had to start with the fact that the advertisements note-for-note reproduced the second bar of Kookaburra. Second, the fact that the advertisements adopt a languid orchestral version of Down Under does not distract the ear from recognising the Kookaburra melody in the advertisements. Third, the glissando is a minor difference that does not detract from the objective similarity of the works.
232 As to reproduction of a substantial part, Larrikin submitted that Kookaburra is a short work, being a song in four bars. In terms of quantity, the second bar is thus one quarter of the song. More significantly, in terms of quality, the second bar is an essential and material part of Kookaburra. In common with the first bar it conveys the iconic melody of Kookaburra.
Discussion
233 The difficulty for Larrikin's submissions on the cross-appeal concerning the Qantas advertisements is that nothing in the trial judge's reasons suggests any error of principle (as discussed above) and it is difficult to see any basis for the claim that the trial judge's conclusion was plainly wrong. It is by no means apparent from the conclusion alone that the trial judge must have applied an excessively demanding test.
234 The trial judge accepted that the Qantas advertisements included a note-for-note reproduction of the second bar of Kookaburra (at [234]). He correctly identified that the essential question, however, was to be determined by an aural comparison (at [235]). The finding at [236], that even with the assistance of experts he found it quite difficult to detect the second bar of Kookaburra when it is played in the advertisements, cannot be dismissed as immaterial as Larrikin proposed. The trial judge is recording an important factual finding – to the effect that even with expert assistance he found the task of aural recognition of Kookaburra in the advertisements quite difficult. Further to that, the trial judge considered the whole of the expert evidence and concluded that it did not support the conclusion that the ordinary reasonably experienced listener would recognise the second bar of Kookaburra (at [240]).
235 The trial judge was not distracted from his task by the references to the signature of the song. As discussed above, by signature, the trial judge meant the melody. The trial judge was not in error by analysing the expert evidence in terms of the second bar of Kookaburra in isolation from the first bar – it is only the second bar in isolation that appears in the Qantas advertisements. Contrary to Larrikin's submissions the evidence of Dr Ford and Mr Armiger cannot properly be understood as having been to the effect that the second bar of Kookaburra, in isolation, was the signature of the song.
236 The trial judge was entitled on the evidence to reach the conclusion he did. Larrikin's alternative case (not pleaded but referred to in written submissions) based on the Qantas advertisements involving an adaptation of Kookaburra (ss 13(2), 31(1)(a)(iv) and 10(1) defining an adaptation of a musical work as an "arrangement or transcription of the work"), cannot overcome the trial judge's conclusion that there is no reproduction of a substantial part of Kookaburra in the advertisements.
237 There being no error of principle and no sound basis for the proposition that the trial judge's conclusion was plainly wrong, this aspect of the cross-appeal must fail.
AUTHORISATION
238 Larrikin's first contention in respect of the trial judge's reasons on the authorisation issue ([318]-[322] of the 4 February 2010 reasons) – that the trial judge should not have dealt with that issue at all – may be dismissed immediately. It may be accepted that paragraph 4 of the separate questions (contained in the orders of 27 October 2009) refers to certain issues being heard and determined at a separate date. However, it is clear from the course of the hearing that the trial judge was seized of the authorisation question not only in respect of the Qantas advertisements (with which he did not need to deal given his finding that there had not been any reproduction of a substantial part) but also in respect of all other alleged acts of authorisation. For example:
in opening submissions the EMI parties and Mr Hay noted the lack of specificity in Larrikin's case on authorisation and (contrary to Larrikin's suggestion) made plain that authorisation was in issue;
Larrikin itself opened on the question of authorisation both in writing and orally. While it sought to characterise the issue as a straightforward one about which there could be no real dispute, the matter was put in issue by the EMI parties and Mr Hay in their opening in response and thus it was for Larrikin to prove its authorisation case; and
Larrikin's closing submissions also dealt with the knowledge of the EMI parties and Mr Hay of the reproduction of part of Kookaburra in the specific context of its alleged authorisation of copyright infringements not only by the Qantas advertisements but also the licensing by the EMI parties and Mr Hay of the use of Down Under.
239 Against this background Larrikin is not entitled to point to the text of the separate questions and submit that the trial judge should not have dealt with the question of authorisation at all.
240 Nor, as noted, can Larrikin's submission that authorisation was not in dispute be accepted. A proper reading of the pleadings and the submissions of the EMI parties and Mr Hay provides no support for that submission. The EMI parties and Mr Hay admitted granting licences to use Down Under, but this was in the context of their denial that Down Under infringed copyright in Kookaburra and specific denial of Larrikin's claim of them authorising infringements of the copyright in Kookaburra. For this reason Larrikin's submission that "no point was taken by the EMI parties to suggest that the admitted granting of licences did not otherwise amount to authorisation of acts comprised in the copyright of Kookaburra" is unsustainable.
241 It is also not the case that authorisation must be an outstanding issue because that issue logically follows on from any finding of the reproduction of a substantial part of Kookaburra in Down Under. If Larrikin's submission is correct, then the Qantas advertisements should not have been dealt with at the hearing – but both parties made extensive submissions about those advertisements.
242 Nor can it be said, as Larrikin proposed, that the limited discovery of samples of licences indicated an acceptance by the EMI parties and Mr Hay that there was no issue between the parties that the grant of a licence in respect of Down Under involved an authorisation of the infringement of the copyright in Kookaburra. The pleadings, openings and submissions of the parties disclosed the EMI parties' and Mr Hay's denial of any such proposition. Moreover, and as the trial judge said in his reasons of 17 March 2010 (at [33]-[34]), discovery by samples is not uncommon. It does not suggest that the issue remains for later determination. It is not the case that this approach to discovery was inconsistent with the position of the EMI parties and Mr Hay that the terms of any particular licence would be relevant to the authorisation question.
243 Larrikin's second contention is that, in any event, the trial judge erred in his approach to the question of authorisation. Larrikin's case was that the grant of licences by the EMI parties and Mr Hay in respect of Down Under involved a species of authorisation that has nothing to do with authorisation as considered in University of New South Wales v Moorhouse (1975) 133 CLR 1. The grant of a licence in respect of Down Under, said Larrikin, is an express grant. Moorhouse, however, involved authorisation by the University having the means of infringement (photocopiers) under its control – and making the means available to other persons knowing or suspecting the means might be used for the purpose of committing an infringement – and taking no steps to limit the use of the means to legitimate uses (per Gibbs J at 13), or authorisation by unqualified invitation to use the photocopiers (per Jacobs J at 23). The present case, submitted Larrikin, is different. The present case concerns an express grant of authority to reproduce Down Under (and thus, it said, also Kookaburra as it appears in Down Under). This is a kind of authorisation recognised long before Moorhouse. It was described by Gummow J in WEA International Inc v Hanimex Corporation Limited (1987) 17 FCR 274 at 285 as involving a situation where a defendant purports to "confer on a third party… a right or authority to perform activity which in truth would be, if carried out, an infringement of the plaintiff's copyright". Authorisation by this conferral or express grant does not depend on the defendant's knowledge. Moorhouse expanded the concept of authorisation as explained by Gummow J at 286 so that express permission was no longer necessary, authorisation thereafter including acts or omissions involving sanctioning, approving or countenancing the infringement (in which Gibbs J alone described knowledge or at least a reasonable suspicion as a necessary element).
244 For these reasons Larrikin submitted that the trial judge was in error in determining its authorisation case on the basis of lack of satisfaction that the EMI parties and Mr Hay had knowledge that Down Under reproduced parts of Kookaburra from about 2002 and thus were not in a position to take any steps to prevent the infringement, as referred to in s 36(1A)(c) of the Copyright Act (at [320]-[322] of the 4 February 2010 reasons). According to Larrikin that was not the relevant inquiry and, even on the basis of Moorhouse, could not have been determinative of the question of authorisation. In the case of an express grant of permission to reproduce Down Under by licence the factors in s 36(1A), said Larrikin, are of limited, if any, weight (that is, power to prevent the act, nature of the relationship between the person and the person doing the act, and whether the person took any reasonable steps to prevent or avoid the doing of the act).
245 Larrikin submitted further that the trial judge's reasons on the authorisation case were inadequate (citing Carlisle Homes Pty Ltd v Barrett Property Group Pty Ltd [2009] FCAFC 31 at [45]). Although the trial judge was not bound by the way in which the case was put by the parties, Larrikin said the reasons in [318]-[322] (where authorisation is dealt with) do not address the parties' contentions about the issue. On the approach of both parties Moorhouse was of little, if any, relevance because the case was one involving the express grant of licences.
246 The EMI parties and Mr Hay answered this submission of error and inadequate reasons in two ways.
247 First, the EMI parties and Mr Hay said (consistent with their position before the trial judge) that it was wrong of Larrikin to assume that the mere grant of a licence to a third party in respect of Down Under would inevitably lead to a conclusion of authorisation. The principle referred to in WEA International v Hanimex involved permission to perform an activity which, if carried out, would necessarily involve a copyright infringement. To determine that issue the terms of the licences would need to be examined. This may be so but it is not an answer to Larrikin's case that the trial judge erred in the two ways identified.
248 Second, the EMI parties and Mr Hay said that Larrikin's allegations of error and inadequate reasons should not be accepted in circumstances where Larrikin's case on authorisation remained as scant as it had been before the primary judge. Sample licences were in evidence yet, apart from the Qantas licence, Larrikin's case was "devoid of any specificity of argument as to the terms of individual licences or how they might amount to authorisation". According to the EMI parties and Mr Hay, in these circumstances, the brevity of the trial judge's reasons was commensurate with the cursory treatment Larrikin gave to the question of authorisation, choosing not to descend into the detail of any of the licences in evidence. Further, according to the EMI parties and Mr Hay, given that Larrikin had not established authorisation by reference to the actual terms of any licence, it was not an error by the trial judge to deal with the question of authorisation by reference to the broader principles of Moorhouse and recognise that the considerations in s 36(1A) are mandatory.
249 It is true that Larrikin's case on the grant of the licences lacked detail. Nevertheless, Larrikin's case was to the effect that the grant of a licence by the EMI parties to reproduce Down Under necessarily involved authorisation of the kind referred to in WEA International v Hanimex. The EMI parties and Mr Hay's case was that it could not be assumed that a licence to reproduce Down Under would involve any infringement of copyright in Kookaburra. For example, Down Under appears in many forms not involving Kookaburra. As composed by Mr Hay and Mr Strykert no part of Kookaburra appeared in Down Under. The terms of the licence would determine the subject matter and scope of the licence.
250 Whatever might be said of the cursory nature of Larrikin's case on authorisation by the grant of licences, the trial judge's reasons at [318]-[322] do not deal with the parties' respective contentions. While the trial judge was correct to note that the considerations in s 36(1A) of the Copyright Act are mandatory, those considerations, in the context of the case as put (albeit in an abbreviated form by Larrikin), are to be assessed in light of the competing arguments about the licences themselves. Whether it be characterised as an error of principle (in that the trial judge has not considered the s 36(1A) matters in the actual factual context of the express grant of licences) or as inadequate reasons (in that the trial judge has not dealt with the issues of substance the parties raised, even if in an attenuated form, on the question of authorisation), this aspect of Larrikin's cross-appeal must be allowed. However, this does not extend to the licence in respect of the Qantas advertisements. Given the trial judge's conclusion that the Qantas advertisements did not involve a reproduction of a substantial part of Kookaburra it is not necessary to deal with the question of authorisation by the grant of the licence by the EMI parties to Qantas. The trial judge's finding against Larrikin on the Qantas advertisements stands.
251 The three remaining aspects of Larrikin's cross-appeal may be dealt with briefly. The liability of the EMI parties under ss 36 and 115 of the Copyright Act in respect of damages and an account of profits turns on the question of authorisation. The authorisation case (other than in respect of the licence to Qantas) must be remitted to the trial judge. So too the trial judge's refusal to order injunctions against the EMI parties depends on the authorisation case. Larrikin's complaint against the trial judge's reservation of all issues of costs (order 7 of the orders of 17 March 2010) is misconceived. Costs have merely been reserved. Deferring the resolution of costs was a matter within the trial judge's discretion. No error of principle has been (or could be) pointed to in respect of that exercise of discretion.
252 The other point which should be noted is that in his reasons of 17 March 2010 the trial judge rejected Larrikin's application for further discovery about the licences and a further hearing on that issue. The trial judge explained his reasons for so doing. Nothing in Larrikin's case exposes any error of principle in the trial judge's decision to decline to order further discovery. The trial judge provided cogent reasons for his conclusion that no further discovery should be ordered. The rejection of Larrikin's application for further discovery was a matter quintessentially within the trial judge's discretion involving an issue of practice and procedure and going to the heart of the trial judge's management of the case. There is no basis for inferring that the rejection of the application was wrong in principle or unjust. Accordingly, insofar as Larrikin sought to challenge that exercise of discretion, its case must be rejected. On the other hand, the EMI parties said that if the trial judge erred on the question of authorisation the orders remitting that aspect of the matter to the trial judge should be framed so as to preserve the trial judge's rejection of Larrikin's application for further discovery. The conclusion to which these competing submissions give rise is that the continuing management of the matter is for the trial judge to determine.
253 Orders should be made dismissing the appeals and allowing the cross-appeal to the extent only of setting aside the order made on 23 August 2010 that proceeding No NSD 145 of 2008 be otherwise dismissed with a consequential order remitting to the trial judge the question of authorisation as pleaded in paragraphs 48 to 51 of the second further amended statement of claim in proceeding No NSD 145 of 2008. The question of authorisation in respect of the Qantas advertisements does not arise given the conclusions above. No other limit on the extent of the order for remittal is, however, appropriate. The EMI parties should pay the costs of the appeals. Costs of the cross-appeal may be argued.
I certify that the preceding one hundred and forty-nine (149) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.
Associate:
Dated: 31 March 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 183 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED
First Appellant
EMI MUSIC PUBLISHING AUSTRALIA PTY LTD
Second Appellant
AND: LARRIKIN MUSIC PUBLISHING PTY LTD
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 350 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: EMI SONGS AUSTRALIA PTY LIMITED
First Appellant / First Cross-Respondent
EMI MUSIC PUBLISHING AUSTRALIA PTY LTD
Second Appellant / Second Cross-Respondent
COLIN JAMES HAY
Third Appellant / Third Cross-Respondent
AND: LARRIKIN MUSIC PUBLISHING PTY LTD
First Respondent / Cross-Appellant
RONALD GRAHAM STRYKERT
Second Respondent / Fourth Cross-Respondent
JUDGES: EMMETT, JAGOT AND NICHOLAS JJ
DATE: 31 MARCH 2011
PLACE: SYDNEY
REASONS FOR JUDGMENT
Nicholas J
254 I have had the advantage of reading the draft reasons for judgment of Jagot J. I agree with the orders proposed by her Honour and with her Honour's reasons. I wish to add some observations of my own in relation to the following matters.
The role of the appellate court
255 In defending the primary judge's findings that the 1979 and 1981 recordings of Down Under reproduce a substantial part of the musical work Kookaburra, Larrikin relied upon the decision of the Full Court in Metricon Homes Pty Ltd v Barrett Property Group Pty Limited (2008) 248 ALR 364 where the Full Court referred with approval to the reasons of Weinberg J in Eagle Homes Pty Limited v Austec Homes Pty Ltd (1999) 87 FCR 415 at [119] including a statement by his Honour which in the words of the Full Court at [20]:
… characterised the questions of whether or not a particular drawing reproduces another drawing, or a substantial part of another drawing, as questions involving matters of impression and degree with the consequence that an appeal court would not depart from the finding of a primary judge without being persuaded that it was erroneous in principle, or plainly and obviously wrong …
256 That statement was referred to with approval by a Full Court in Vawdrey Australia Pty Ltd v Krueger Transport Equipment Pty Ltd (2009) 261 ALR 269 at [43] per Moore and Bennett JJ and at [77] per Lindgren J. However, the point does not appear to have been fully argued in any of the cases.
257 Larrikin argued that these statements of principle should be applied in the circumstances of the appeal against the relevant findings of reproduction of a substantial part which, Larrikin argued, were not affected by any error of principle. It is fair to say that the EMI parties did not contest that the approach argued for by Larrikin was correct. Rather, they argued that the relevant findings were affected by errors of principle which justified this Court setting them aside.
258 It cannot be doubted that the question whether the 1979 recording and the 1981 recording of Down Under reproduced a substantial part of Kookaburra was a matter in relation to which the views of the primary judge must be given particular respect and weight unless they are shown to have been affected by some error of principle: see SW Hart & Co Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 478 per Gibbs CJ. It is against that background that an appellant seeking to set aside a primary judge's decision based upon a view of matters involving questions of impression and degree must persuade an appellate court that such a view is wrong. The appellant may do this by attempting to demonstrate, as the EMI parties sought to do here, that the primary judge's decision on the relevant question was affected by an error of principle. But if the appellant cannot establish that the primary judge's decision was affected by any such error, the decision in Metricon suggests that an appellant may only succeed if the view taken by the primary judge is shown to be "plainly and obviously wrong": cf Warren v Coombes (1979) 142 CLR 531 at 522.
259 I think this may be going too far. It is one thing to say that an appellate court must give "particular weight" or full weight to the primary judge's evaluation upon such an issue where no question of principle is involved. But it is quite another thing to say that the appellate court may differ from the primary judge on such an issue only if it is satisfied that the decision under appeal is plainly and obviously wrong. How much weight the primary judge's evaluation must be given depends upon the nature and extent of the perceived advantages enjoyed by the trial judge. Those advantages are by no means uniform in every case.
260 In Branir v Owston Nominees (No 2) (2001) 117 FCR 424 Allsop J (with whom Drummond and Mansfield JJ agreed) referred with approval to the observation of Hill J in Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557 at 573 that the notion of "giving full weight" to the view appealed from should not be taken too far: see also S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 359-360 (Hill, RD Nicholson and Emmett JJ). Allsop J stopped short of holding that there must be a demonstration of "plain and obvious" error before an appellate court could conclude that a decision based upon a view involving questions of impression and degree should be set aside. His Honour said (at [29]) that "a sufficiently clear difference of opinion" may require that the primary judge's decision be set aside but that the question of how extensive the difference of opinion must be before an appellate court intervenes will depend upon the extent of the perceived advantages enjoyed by a trial judge in any given case.
261 So far as my decision in the present case is concerned, nothing turns on whether the Metricon or some less stringent approach to appellate intervention in matters of this kind is adopted. Not only am I not persuaded that the primary judge's findings that the relevant recordings of Down Under reproduce a substantial part of Kookaburra was affected by error, I am also not persuaded that those findings were in themselves wrong. The same is true of the findings to the opposite effect which were made by the primary judge in relation to the Qantas advertisements.
The issue of substantiality
262 The EMI parties placed considerable reliance on what they said was the failure of the primary judge "to consider what constituted Kookaburra as an original musical work and to attend to such originality in assessing the use that was made in the relevant recordings of Down Under." They further submitted that on the evidence before his Honour "the only originality lay in the writing of Kookaburra as a round." They drew attention to what was said to be a lack of evidence as to the degree of skill involved in the composition except that it involved skill in writing it as a round. Dr Ford's evidence was that this is a "tricky and rather amusing business" because all the phrases have to fit on top of each other. It followed, so the submission went, that since the two bars of Kookaburra which the primary judge found to be a substantial part were not shown to possess any separate originality, his Honour's finding that they amounted to a substantial part could not be sustained.
263 The submission wrongly assumes that the originality of the work in suit depended upon it being in the nature of a round. I do not doubt that skill and effort went into writing the music and lyrics for Kookaburra so that they could be performed as a round. Equally, however, I do not doubt that Miss Sinclair's musical work is original irrespective of whether it was composed by her as a round. Provided that the musical work originated with Miss Sinclair, in the sense that it was the product of her own independent intellectual effort, then the statutory requirement that the work be original is satisfied.
264 It is not necessary for the owner of copyright in a work to prove that a part of his or her work which has been copied would be protected as an original work in its own right before it can be held to constitute a substantial part. In Baigent v Random House Group Ltd (2007) 72 IPR 195 Mummery LJ at [132] described this proposition as being "fundamental to the proper conduct of copyright litigation." His Lordship said:
… on the issue of infringement, it is wrong to take the parts of the original copyright work that have been copied in the alleged infringing work, to isolate them from the whole original copyright work and then to conclude that 'a substantial part' of the original copyright work has not been copied because there was no copyright in the copied parts on their own".
In deciding whether a part of a work which has been copied is a substantial part of a work it is sometimes convenient to ask whether the part would be protected as a work in its own right. But this is merely a convenient shortcut and it will not always lead to the correct result: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 277 per Lord Reid.
265 The question whether a part of a work is a substantial part is to be determined by a consideration of its quality. In assessing the quality of the part of the work in issue it may be necessary to consider whether the part was copied from another source or whether it is commonplace. This is because the reproduction of a part of a work which does not originate with the author will not be a substantial part of the work: IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 at [37] per French CJ, Crennan and Kiefel JJ citing Ladbroke at 293 per Lord Pearce. Thus, if it was found that the first two bars of Kookaburra were borrowed by Miss Sinclair from another source or that they were no more than commonplace musical phases then this would have supported the conclusion that the two bars did not amount to a substantial part of the work.
266 As the primary judge found, Kookaburra is a relatively short piece consisting of only four bars. It was so described and analysed by both experts, Dr Ford and Mr Armiger. Dr Ford's evidence was that the first two bars of Kookaburra is the part of the melody that "sticks in your head". And Mr Armiger agreed that if he heard the first two bars of Kookaburra, he would pick the tune immediately. It seems to me that their evidence indicates that the first two bars represent an important part of the work. That is hardly surprising given the relationship that these two bars have to the work as a whole. They are the first to be heard in any performance of the work and they make up a relatively large portion of what is a short but distinctive piece of music.
267 While both experts appear to have accepted that Kookaburra is a relatively simple work, none suggested that any part of it lacked originality in the relevant sense. There was certainly no suggestion from either expert that any part of the composition had been borrowed by Miss Sinclair from any other source or that any of the musical phrases that make up the work was commonplace. The part of the work which the primary judge found to have been reproduced in the 1979 and 1981 recordings of Down Under was that part of the melody of Kookaburra which appears in the first two bars of the work. I think the evidence of the experts supported the view of the primary judge that this constitutes a substantial part of the work.
268 Except in relation to the issue of authorisation, I am not persuaded that the primary judge erred in any relevant respect whether in relation to the 1979 and 1981 recordings of Down Under or the Qantas advertisements. On the issue of authorisation I agree with what Jagot J has written. The matter will need to go back to the primary judge on that issue. As to further discovery, I also wish to emphasise that this is a question for his Honour to determine in the exercise of his discretion. The history of the proceedings as recounted by his Honour in his reasons for judgment delivered on 17 March 2010 is of obvious relevance to that question.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.
Associate:
Dated: 31 March 2011
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1998-12-04 00:00:00
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Giraffe World Australia Pty Ltd v Australian Competition & Consumer Commission [1998] FCA 1560
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1998/1998fca1560
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2024-09-13T22:50:23.001490+10:00
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FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE Ð application by respondent (ÒACCCÓ) for summary dismissal or striking out of pleadings Ð whether pleadings disclose a reasonable cause of action arising out of earlier proceeding by ACCC against company Ð defamation of company by ACCC Ð whether pleaded defamatory imputations capable of being conveyed by information issued by ACCC about its earlier proceeding Ð whether appropriate to determine capacity when dispute as to nature and extent of publication of matter complained of Ð whether aggravated and exemplary damages properly pleaded and particularised Ð injurious falsehood Ð whether elements of tort properly pleaded Ð abuse of process Ð whether elements of tort properly pleaded Ð misleading and deceptive conduct Ð whether acts complained of Òin trade or commerceÓ Ð misuse of market power Ð whether properly pleaded that respondent Òtook advantage ofÓ alleged market power Ð misfeasance in public office Ð whether elements of tort properly pleaded Ð intentional infliction of economic harm and interference with contractual relations Ð whether elements of torts properly pleaded Ð judicial review Ð whether decisions of ACCC to commence earlier proceeding and to issue information about it Òdecisions made under an enactmentÓ within the meaning of s 3 (1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) Ð whether proceeding should continue under Part IVA of Federal Court of Australia Act 1976 (Cth) Ð whether causes of action pleaded on behalf of group members.
WORDS AND PHRASES Ð Òunder an enactmentÓ
Federal Court of Australia Act 1976 (Cth), s 33N
Defamation Act 1974 (NSW), s 46.
Administrative Decisions (Judicial Review) Act 1977 (Cth), s 3 (1)
Trade Practices Act 1974 (Cth)
National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514, referred to
Australian Building Industries Pty Ltd v Stramit Corporation Ltd, unreported, FCA/FC, 1 December 1997, referred to
Sims v Wran [1984] 1 NSWLR 317, considered
McNicol v ACT Health Authority unreported, SC/ACT, referred to
Lazarus v Deutsche Lufthansa AG (1985) 1 NSWLR 188, referred to
Love v Mirror Newspapers Ltd [1980] 2 NSWLR, considered
Monte v Mirror Newspapers Ltd [1979] 2 NSWLR, referred to
Capital and Counties Bank Ltd v George Henty and Sons (1882) 7 App Cas 741, considered
Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293, considered
Rigby v John Fairfax Group Pty Ltd unreported, CA (NSW), 1 February 1996, referred to
Jones v TCN Channel Nine Pty Ltd, unreported, SC (NSW)/Hunt CJ at CL, 7 April 1992, considered
P J Holdings Australia Pty Ltd v Hughes (1979) 25 ALR 538, considered
Watt v General Television Corp Pty Ltd [1998] 3 VR 501, referred to
Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796, considered
White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, considered
Hanrahan v Ainsworth (1990) 22 NSWLR 73, referred to
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, considered
Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177, referred to
Sanders v Snell (1998) 157 ALR 491, considered
Northern Territory v Mengel (1995) 185 CLR 307, considered
Allen v Flood [1898] AC 1, referred to
McKernan v Fraser (1931) 46 CLR 343, referred to
General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164, applied
Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation, unreported, FCA/Davies J, 7 November 1993, referred to
Ruddy v Deputy Commissioner of Taxation, unreported, FCA/Kiefel J, 2 April 1998, referred to
Salerno v National Crime Authority (1997) 144 ALR 709, referred to
GIRAFFE WORLD AUSTRALIA PTY LIMITED (ACN 078 012 521) V AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
NG 711 of 1998
JUDGE: LINDGREN J
DATE: 4 DECEMBER 1998
PLACE: SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG 711 of 1998
BETWEEN: GIRAFFE WORLD AUSTRALIA PTY LIMITED (ACN 078 012 521)
Applicant
AND: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Respondent
JUDGE: LINDGREN J
DATE OF ORDER: 4 DECEMBER 1998
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The proceeding be dismissed in relation to the claims for relief in pars 4 (a) (viii), (c) and (d) and 5 of the application filed on 14 July 1998;
2. The following paragraphs of the statement of claim filed on 14 July 1998 be struck out: 3 and 4, 8-10, 29-33, 34-36, 37-39, 40 and 41, 42 and 43, 44 and 45, and 46-49;
3. The proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976 (Cth);
4. The proceeding be listed at 4.15 pm on 8 December 1998 for the purpose of the making of further orders and directions, including an order as to the costs of the respondentÕs motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG 711 of 1998
BETWEEN: GIRAFFE WORLD AUSTRALIA PTY LIMITED (ACN 078 012 521)
Applicant
AND: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Respondent
JUDGE: LINDGREN J
DATE: 4 DECEMBER 1998
PLACE: SYDNEY
REASONS FOR JUDGMENT
INTRODUCTION
The respondent (Òthe ACCCÓ) moves by an amended notice of motion filed on 30 October 1998 for an order that the proceeding be dismissed either in whole or in part pursuant to O 20 r 2 of the Federal Court Rules, or, in the alternative, an order that the application and statement of claim be struck out in whole or in part pursuant to O 11 r 16. In addition, it moves for an order pursuant to s 33N of the Federal Court of Australia Act 1976 (Cth) (Òthe FCA ActÓ) that the proceeding no longer continue under Part IVA of that Act.
The motion is misconceived in so far as it seeks an order striking out the application pursuant to O 11 r 16. That rule deals only with pleadings. Pleadings are defined in O1 r 4 to include a statement of claim but not an application.
In the alternative to a striking out of that part of the statement of claim relating to defamation, the ACCC seeks to Òraise the following point of lawÓ, purportedly pursuant to O 11 r 9:
Òthat the matters complained of are not capable of bearing any one or more of the imputations pleaded in paragraph 23 of the Statement of Claim, and thus defaming the Plaintiff [sic - applicant] or any of the other Group Members.Ó
Order 20 r 2 provides, relevantly,
Ò(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding -
(a) no reasonable cause of action is disclosed;
(b) É; or
(c) É;
the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceedingÓ.
Order 11 r 16 provides, relevantly,
ÒWhere a pleading Ð
(a) discloses no reasonable cause of action É
(b) É; or
(c) É;
the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck outÓ.
Order 11 r 9 provides, relevantly,
ÒA party may by his pleading raise any point of lawÓ.
But a notice of motion is not a pleading. Order 11 r 9 is apt to have permitted the ACCC to raise, in its defence, the point of law that the matters complained of were not capable of giving rise to the imputations pleaded. The ACCC should have moved pursuant to O 29 r 2 for an order that this question of law be decided separately from any other question in the proceeding and before any trial. The parties have made submissions on the question mentioned and the procedural irregularity has not proved an obstacle to my dealing with it.
The principles and authorities relating to applications for summary dismissal and for a striking out represent well trodden territory. For recent reviews of them, see National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 at 528-529 and Australian Building Industries Pty Ltd v Stramit Corporation Ltd (unreported, FCA/FC, 1 December 1997) at 24-27. In the present case, the applicant (ÒGiraffe WorldÓ) has pleaded numerous causes of action. A decision that some or all of them should be struck out has the potential to reduce substantially the burden of preparing for trial and the burden of the trial itself. Therefore there is merit in pursuing the present inquiry. Even if Giraffe World should be given leave to re-plead a cause of action struck out, its better articulation may narrow the issues to be litigated on the final hearing and result in a substantial saving of time.
BACKGROUND
The proceeding was commenced on 14 July 1998. It is related to proceeding NG 421 of 1998, commenced on 6 May 1998, in which the ACCC is applicant and Giraffe World is first respondent. In that proceeding, the ACCC alleges that Giraffe World engaged and is engaging in conduct that contravenes ss 52 (misleading or deceptive conduct), 57 (pyramid selling) and 61 (referral selling) of the Trade Practices Act 1974 (Cth) (Òthe TP ActÓ). On 6 May, interlocutory orders were made ex parte with effect until the return date of Friday 8 May, some of which, in effect, restrained Giraffe World from carrying on its business (that business was described in an interlocutory judgment in that proceeding, reported at (1998) 156 ALR 273). On 8 May, those orders were extended until 5 pm on Monday 11 May. However, they were not continued beyond that date and Giraffe World has been able to carry on its business, although ÒMareva injunctionsÓ have been in place against it.
The present proceeding arises out of two complaints by Giraffe World about certain conduct of the ACCC relating to proceeding NG 421 of 1998. First, Giraffe World complains that the ACCCÕs act in commencing that proceeding, and particularly in seeking ex parte interlocutory orders, in effect shutting down Giraffe WorldÕs business, was precipitous, particularly in light of the fact that the parties were at the time in communication about the question whether any aspect of that business contravened the TP Act. Second, Giraffe World complains about a media release issued by the ACCC on Thursday 7 May relating to proceeding NG 421 of 1998 and the ex parte relief granted the preceding day (a copy is Schedule A to the application) and a Department of Fair Trading memorandum on the same subject distributed, apparently among members of that Department, on 19 May (a copy is Schedule B to the application).
Schedule A is as follows:
ÒEx parte injunctions against pyramid selling scheme
Ex parte injunctions have been granted against Giraffe World Australia, its directors and other individuals over an alleged pyramid selling scheme after Australian Competition and Consumer Commission Federal Court action.
The ACCC alleged that Giraffe WorldÕs conduct contravened the referral selling and pyramid provisions of the Trade Practices Act 1974. The ACCC also alleged Giraffe World made false representations about its negative ion mats.
ÔThe ACCC sought the interlocutory orders after a number of complaints from consumers about the scheme,Õ ACCC Chairman, Professor Allan Fels, said today. ÔIt is understood more than 5,000 consumers were recruited, with more expected as Giraffe World opened Melbourne and Brisbane premises.
ÔThe scheme is believed to have been operating since July 1997. It involves purchasing a device, an Ôion-matÕ for $2,900. For an additional $350 consumers can join a Grow Rich scheme where they get a commission for recruiting new members. The commission increases according to the customers introduced.
ÔThe ACCC plans representative proceedings on behalf of consumers who suffered loss after taking part in the Giraffe World scheme.Õ
In the Federal Court, Sydney yesterday Justice Kevin Lindgren ordered:
á that the other respondents be restrained from inducing any persons to participate in the Giraffe World Grow Rich scheme or any similar scheme;
á that the respondents be restrained from promoting, advertising, holding out or participating in the Giraffe World Grow Rich scheme or any similar scheme; and
á that the respondents be restrained from removing from the jurisdiction disposing of, mortgaging, assigning, charging or otherwise dealing with their assets other than for specific living business and legal expenses.
A directions hearing will be held at the Federal Court, Sydney on 8 May at 9.30 am.
For further information about this media release:
Professor Allan Fels, Chairman, É
Ms Lin Enright, Director, Public Relations É
MR 83/98
7 May 1998Ó.
There is no evidence of the extent to which the Schedule A news release was exposed in the media. However, there is evidence that it was posted on the Internet. There is also in evidence a computer print-out from the Internet dated 29 October 1998, showing that Schedule A was still accessible on the Internet as at that date, albeit with the following addition at the foot of the page:
Ò* The ex parte injunctions have been lifted. Giraffe World is continuing to carry on business. The case is proceeding on an injunction basis and no longer as a representative action. The next directions hearing is set down for 13 October 1998.Ó
The evidence does not reveal when this footnote was added.
Schedule B is as follows:
ÒCSD CONSUMER/MARKET PLACE CIRCULAR Ð MC 98/0/039
SUBJECT Ð GIRAFFE WORLD AUSTRALIA
Recently the Australian Competition and Consumer Commission (ACCC) was successful in gaining an ex parte injunction in the Federal Court against Giraffe World Australia, its directors and other individuals. Among other things, the injunction restrained the respondents from promoting the scheme or similar schemes and effectively froze the companyÕs assets.
The ACCC alleged that Giraffe WorldÕs conduct contravened the referral selling and pyramid selling provisions of the Trade Practices Act 1974. The ACCC also alleged that Giraffe World made false representations about its negative ion mats that are sold as part of the scheme.
The scheme involved purchasing the negative ion mats for $2,900. For an extra $350 consumers can join a Grow Rich scheme where they get a commission for recruiting new members. The latter aspect identifies the scheme as an illegal pyramid scheme.
The matter returned to the Federal Court on 8 May 1998 and the respondents were successful in having the injunction É [according to evidence led by the ACCC the word ÒliftedÓ appears here in the original] upon giving undertakings to quarantine all monies taken by the business during the Court process. The respondents have also lodged proceedings with the Court, on technical grounds, against ACCCÕs action.
INSTRUCTIONS
At the ACCCÕs request, all consumer complaints and enquiries relating to Giraffe World are to be forwarded immediately to Shane Adams on 9230 9120 or Geoff Williams on 9239 9128 of the ACCC.
ACCC fax number for urgent referral is 9223 1092.
Saroj Chand
Communications Unit
For further information regarding this circular please contact Bob Laughton, Fair Trading Investigations on telephone: É
This information will be available in CAS.Ó
I refer to the provenance and exposure of Schedule B immediately below.
REASONING
Publication of the words in Schedule B
The ACCC submits that it did not publish Schedule B and that in those circumstances no cause of action is maintainable against the ACCC in respect of it. Paragraphs 21 and 25 of the statement of claim plead simply that:
Ò21 On 19 May 1998, the Respondent published of, and concerning the Applicant, the words set out in Schedule ÔBÕ hereto.
....
25 On 19 May 1998, the Respondent published of, and concerning the Applicant, the words set out in Schedule ÔBÕ hereto.Ó
The evidence of Geoffrey Williams, the officer of the ACCC with responsibility for the conduct of the investigation into Giraffe World and for proceeding NG 421 of 1998, is that Schedule B was not published by the ACCC and that he had not seen the document until he read a copy annexed to an affidavit of Robin Han, a director of Giraffe World, sworn on 21 May 1998. He states that no document similar to Schedule B was forwarded by the ACCC to the Department of Fair Trading.
Malcolm Finger, an officer of the Department of Fair Trading, states that after he had a telephone conversation with Mr Williams in mid-May 1998, he caused information about proceeding NG 421 of 1998 to be given to his DepartmentÕs Customer Service and Community Education Division, which sent Schedule B by electronic mail to Departmental staff in New South Wales. Apparently, the purpose of this dissemination was to assist staff in Òanswering telephone and counter enquiriesÓ from the public. However, Mr Finger states that Schedule B has not been provided to persons outside the Department and, in particular, that it has not been made available on the Internet. This conflicts with the evidence given by Mr Han in his affidavit that the copy of Schedule B annexed to his affidavit is Òa copy of [a] printout from the InternetÓ. Giraffe World has not adduced further evidence establishing how Schedule B came into the possession of Mr Han.
The present evidence is clearly to the effect that the words in Schedule B were composed and published by officers of the Department of Fair Trading and not by officers of the ACCC. It therefore seems clear that Giraffe World will not be able to support par 21 or par 25 of its statement of claim on the final hearing. However, it appears from the evidence of Mr Finger that Schedule B was based on information provided to him over the telephone by Mr Williams of the ACCC. Perhaps Giraffe World will wish to amend to plead publication and republication.
Giraffe World submits that it is premature for the issue of publication to be decided finally at this stage and that it should have the opportunity of proving publication by the ACCC at trial after the ACCC has given discovery and answered any interrogatories to be administered.
I agree that the issue of the ACCCÕs responsibility for publication and republication of Òthe words set out in Schedule BÓ and therefore of any defamatory imputations arising from them, should not be determined finally on the present motion. It may emerge on the final hearing that Mr Williams provided the substance of the information contained in Schedule B to Mr Finger knowing that the natural and probable result would be its republication. If so it would be at least arguable that the ACCC, through Mr Williams, was responsible for their publication: see, for example, Sims v Wran [1984] 1 NSWLR 317 at 320 (politician making statement at press conference responsible for republication by press). Of course the fact, if established, that the document was distributed only to Departmental staff would not mean that there was no publication at all (see McNicol v ACT Health Authority (unreported, SC/ACT, Kelly J, 23 September 1988)) and would only have only an impact on damages and, possibly, the availability of certain defences, such as qualified privilege. It may also emerge that even if the words in Schedule B themselves were not republished to members of the public, the information conveyed by them was given orally by Departmental staff in response to inquiries from the public and, again, that the ACCC ought to have foreseen republication of that kind.
It follows that causes of action based on responsibility of the ACCC for publication and republication of the words in Schedule B are not so obviously untenable that they cannot possibly succeed. However, the present pars 21 and 25 of the statement of claim are quite inadequate to inform the ACCC of the publication and republications for which it is sought to be made liable: cf Lazarus v Deutsche Lufthansa AG (1985) 1 NSWLR 188 (Hunt J) at 193; Sims v Wran, above, at 320. Those advising Giraffe World should pay particular attention to s 9 of the Defamation Act 1974 (NSW). If the parties cannot agree on a form of direction to be made for a time for amendment of the existing pleading in the present respect or supply of particulars or both, I will formulate a direction.
I turn now to the causes of action pleaded by Giraffe World.
Defamation
In relation to the publication of Schedule ÒAÓ, Giraffe World pleads simply as follows:
Ò17. On 7 May 1998 the Respondent published of, and concerning the Applicant, a Media Release, as set out in Schedule ÔAÕ hereto.
....
22. On 7 May 1998 the Respondent published of, and concerning the Applicant, the words set out in Schedule ÔAÕ hereto.
....
24. The words set out in Schedule ÔAÕ were issued in the form of a Media Release published throughout the States the [sic] Territories of Australia and intended for republication by the media generally.Ó
The statement of claim identifies ten imputations defamatory of Giraffe World said to arise from Schedule A. On the hearing of the ACCCÕs motion, Giraffe World identified a further seven defamatory imputations which it would seek to include in a foreshadowed amended statement of claim. Argument on the motion has proceeded with reference to all seventeen imputations, which are as follows:
Ò(i) the Applicant had engaged in a pyramid selling scheme contrary to the Trade Practices Act.
(ii) the Applicant was reasonably suspected of having engaged in a pyramid selling scheme contrary to the provisions of the Trade Practices Act.
(iii) the conduct of the Applicant was such as to warrant proceedings being brought against it for having engaged in a pyramid selling scheme contrary to the provisions of the Trade Practices Act.
(iv) the Applicant had engaged in a referral selling scheme contrary to the Trade Practices Act.
(v) the Applicant was reasonably suspected of having engaged in a referral selling scheme contrary to the provisions of the Trade Practices Act.
(vi) the conduct of the Applicant was such as to warrant proceedings being brought against it for having engaged in a referral selling scheme contrary to the provisions of the Trade Practices Act.
(vii) the Applicant made false representations about its negative ion mats.
(viii) the Applicant had induced persons to pay money for a worthless ion mat.
(ix) the Applicant had induced persons to their financial detriment to participate in the Giraffe World Grow Rich Scheme.
(x) the Applicant by obtaining moneys from more than 5,000 consumers had thereby cheated the Australian public of approximately 15 million dollars.
(xi) the Applicant had been found by the Federal Court to have engaged in a pyramid selling scheme contrary to the provisions of the Trade Practices Act.
(xii) the Applicant had been found by the Federal Court to have engaged in a referral selling scheme contrary to the provisions of the Trade Practices Act.
(xiii) the Applicant had been found by the Federal Court to have made false representations about its negative ion mats.
(xiv) the Applicant had been found by the Federal Court to have induced persons to pay money for a worthless ion mat.
(xv) the Applicant had been found by the Federal Court to have induced persons to their financial detriment to participate in the Giraffe World Grow Rich Scheme.
(xvi) the Applicant had been found by the Federal Court to have obtained moneys from more than 5,000 consumers and thereby cheated the Australian public of approximately 15 million dollars.
(xvii) the Applicant had been found by the Federal Court to have disposed of or been in the process of disposing of proceeds of monies obtained pursuant to its business scheme and false representations.Ó
Giraffe WorldÕs pleaded publication of the words in Schedule B was set out earlier. The statement of claim identifies nine imputations defamatory of Giraffe World said to arise from those words. They are the same as the first nine imputations set out above which are said to arise from Schedule A.
Giraffe World claims that, by reason of the publication of Schedules A and B, it Òhas been greatly injured in its credit and reputationÓ. It claims damages including exemplary and aggravated damages.
The ACCCÕs principal submission in relation to the causes of action in defamation is that the imputations pleaded are not capable of being borne by the matter complained of (the words of Schedules A and B). It submits that the procedure properly to be adopted on its motion is one analogous to that followed in defamation proceedings by the Supreme Court of New South Wales where a separate hearing is sometimes held on the questions of law whether the matter complained of is capable of giving rise to the imputations pleaded and whether the imputations pleaded are capable of defaming the plaintiff: see Love v Mirror Newspapers Ltd [1980] 2 NSWLR 112 at 122-123; Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 668; and RitchieÕs Supreme Court Procedure New South Wales at par [67.11.3].
There is difficulty in dealing at this stage with the question whether the words in Schedule B, in particular, were capable of conveying the imputations pleaded: the nature and extent of publication is not clear. In Love v Mirror Newspapers Ltd, Hunt J considered whether a question of the present kind should be determined prior to the hearing. His Honour said (at 123-124):
ÒAn order [that the question whether the matter complained of was capable of conveying the imputations pleaded be separately determined] would probably not be made where evidence other than the matter complained of itself was relevant to that decision, for example, where proof of extrinsic facts was required either to identify the plaintiff: Consolidated Trust Co Ltd v Browne (1948) 49 SR (NSW) 86; 66 WN 7; or to give the matter complained of a secondary or extended meaning: Grubb v Bristol United Press Ltd [1963] 1 QB 309 at pp 326, 328, 329; cf Searle v Mirror Newspapers Ltd [1974] 1 NSWLR 180; or where, for any reason, facts had to be assumed for the purpose of deciding the question of law: World Hosts Pty Ltd v Mirror Newspapers Ltd [1975] 2 NSWLR 16; reversed at pp 717, 718, 722; Tilling v Whiteman [1980] AC 1 at p 17. This is because there may be, and sometimes is a world of difference between the extrinsic facts of which particulars have been supplied and the extrinsic facts themselves as revealed by the evidence which is given at the hearing: Vlasic v Federal Capital Press of Australia Pty Ltd (1976) 9 ACTR 1 at pp 5, 6.
The procedure provided by Pt 31 [of the Supreme Court Rules (NSW); cf O 29 of the Federal Court Rules] can be used only where the judge has before him the same material as would the trial judge in the ordinary defamation trial: cf Blair v Mirror Newspapers Ltd [1970] 2 NSWLR 604 at p 605, that is to say, it is appropriate only where the evidence consists of the matter complained of itself and where there is no dispute as to the manner and the occasion of publication: Capital and Counties Bank Ltd v George Henty and Sons (1882) 7 App Cas 741 at pp 744, 771; English and Scottish Co-operative Properties Mortgage and Investment Society Ltd v Odhams Press Ltd [1940] 1 KB 440 at pp 452, 453.Ó (emphasis supplied)
As Lord Blackburn said in the Capital and Counties Bank case referred to by Hunt J,
Òthe manner of the publication, and the things relative to which the words are published, and which the person publishing knew, or ought to have known, would influence those to whom it was published in putting a meaning on the words, are all material in determining whether the writing is calculated to convey a libellous imputation. There are no words so plain that they may not be published with reference to such circumstances, and to such persons knowing these circumstances, as to convey a meaning very different from that which would be understood from the same words used under different circumstancesÓ. (at 771)
In the present case, the meaning which might reasonably have been attributed to the words in Schedule B by an officer of the Department of Fair Trading may differ from the meaning which might reasonably have been attributed to them by a member of the public who inquired of the Department about Giraffe World. Moreover, although there is no doubt that the words in Schedule A were published by the ACCC, it is not clear at this stage whether it was published only to media organisations and to the public via the Internet, or whether some or all of those words were republished by the media organisations. Again, the manner and extent of publication will have a bearing on the imputations which the words of Schedule A might reasonably be said to have been capable of conveying.
These concerns are amplified when one examines the ACCCÕs principal submission in support of its claim that the imputations should be struck out. That submission is that the words refer to a grant of ex parte interlocutory injunctions after allegations were made by the ACCC about Giraffe WorldÕs business. The ACCC seeks to call in aid cases such as Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293, where it was held that a report stating simply that a person has been arrested and charged with an offence is not capable of bearing an imputation that the person has in fact committed the offence. But in the present case, the references to the granting of an injunction take the report beyond a mere statement that a proceeding has been commenced. As Giraffe World points out, the words of Schedules A and B are capable of being read by non-lawyers (as to which see Farquhar v Bottom [1980] 2 NSWLR 380 at 386 and the cases there cited) as suggesting that the ACCCÕs allegations were accepted by the Court as having been made out (cf the use of the past tense, ÒallegedÓ) since they had led to the making of orders restraining Giraffe World from carrying on business. Although a lawyer would understand the reference to injunctions which were both Òex parteÓ and ÒinterlocutoryÓ as meaning that the ACCC had shown, in the absence of evidence or submissions from Giraffe World, nothing more than a serious question to be tried warranting injunctive relief for a day or two, in effect to safeguard the short period between Giraffe WorldÕs becoming aware of the proceeding and its coming before the Court, a non-lawyer might not have had this understanding. In those circumstances, it is crucial to know the nature and extent of publication before a decision can be made whether the pleaded imputations were capable of being conveyed.
At this stage, therefore, I do not think that the imputations should be struck out. They are not so hopeless that they could not possibly be conveyed, at least to a member of the public to whom the words of Schedule A or B were communicated, or who was given the information in Schedule B orally or in writing in response to an inquiry directed to the Department of Fair Trading. (See, for example, Rigby v John Fairfax Group Pty Ltd (unreported, CA(NSW), 1 February 1996) where it was held that a report which goes beyond a mere statement that an accused has been arrested and charged with an offence may carry the imputation that the accused is guilty, depending upon the words used and the nature of the publication.)
The ACCC also complains of the pleading that Giraffe World claims Òdamages including exemplary and aggravated damagesÓ. It submits, first, that no basis for such damages has been pleaded, and, second, that exemplary damages are not available for defamation under the law of New South Wales: see Defamation Act 1974 (NSW) s 46 (3) (a).
In Jones v TCN Channel Nine Pty Ltd (unreported, SC(NSW), 7 April 1992), Hunt CJ at CL held that that s 46 (3) of the Defamation Act 1974 (NSW) has the effect that a plaintiff may not, in an action commenced in New South Wales, claim exemplary damages in respect of publication within or outsideNew South Wales. Pursuant to ss 79 and 80 of the Judiciary Act 1903 (Cth), to the extent that the laws of the Commonwealth are, inter alia, insufficient to provide adequate remedies, this Court is to apply Òthe common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is heldÓ. However, since no submissions were addressed to the question whether exemplary damages are not available in this case, both in respect of publication inside and outside New South Wales, I need not consider this matter further.
There are no rules of this Court equivalent to Pt 16 rr 5A and 5B of the Rules of the Supreme Court of New South Wales, which provide that particulars must be given of the facts and matters relied upon in support of a claim for, respectively, exemplary damages and aggravated compensatory damages. It has been said that Ò[o]n occasions, to plead the constitutive facts which give rise to the cause of action (eg in a case of trespass to land or person, or a case of defamation) will suffice to indicate that, if those facts are proved, an award of aggravated or exemplary damages will be appropriateÓ: P J Holdings Australia Pty Ltd v Hughes (1979) 25 ALR 538 (QLD/Dunn J) at 541-2. In this case, for example, the pleading in par 20 of the statement of claim that Ò[a]s of 13 May 1998 [the ACCC] was still distributing and publishingÓ Schedule A, that is, after the interlocutory injunction was lifted, might be relied upon to support the claim for aggravated or exemplary damages. But if other matters are to be relied upon, such as a failure to apologise when requested to do so, they must be particularised sufficiently to ensure that the ACCC is not taken by surprise at the hearing: P J Holdings Australia Pty Ltd v Hughes at 540-541; see also Watt v General Television Corp Pty Ltd [1998] 3 VR 501 (Hedigan J) at 506.
For the above reasons, I decline to dismiss Giraffe WorldÕs claim for relief based on the cause of action in defamation and I decline to strike out the paragraphs of the statement of claim which plead that cause of action. The parties should attempt to agree on any direction to be made in relation to a time for amendment of the statement of claim or the supply of particulars or both.
Injurious falsehood
Giraffe World pleads a case of injurious falsehood based on the imputations set out above which are said to arise from the words of Schedules A and B. Those imputations are said to have been false and to have been calculated to harm Giraffe WorldÕs business and to disparage its product, the ion mat, in the eyes of Òconsumers and the public generallyÓ. The publication of the words in question is alleged to have been malicious in that, Òinter aliaÓ the manner and extent of publication was excessive, the ACCC knew or ought to have known that the imputations were false and the publications were Òa form of grandstandingÓ by the ACCC motivated by Òa desire to obtain publicity and agrandisement [sic].Ó It is then pleaded that Giraffe World has been greatly injured in its credit and reputation by reason of the injurious falsehood. Giraffe World claims damages including exemplary and aggravated damages.
Contrary to the ACCCÕs submission, it is clear that Giraffe World pleads damage to its business reputation generally (presumably including the Grow Rich Scheme described at (1998) 156 ALR at 276-277) as well as to the repute of its product, the ion mat.
The elements of injurious falsehood, set out in cases such as Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796 at 799 (Hunt J), are:
a) that a statement was made of and concerning the plaintiffÕs goods or business;
b) that the statement was false;
c) that the defendant published the statement to a third person;
d) that the publication of the statement was malicious (i.e. mala fide or with lack of good faith); and
e) that the publication caused the plaintiff particular and identifiable loss or damage.
The ACCC submits that the tort of injurious falsehood is concerned with the Òcasting of false aspersions on the quality of merchandiseÓ and that this concept is distinct from that of a false allegation that a person has misrepresented the qualities of his or her product. With respect, it is hard to grasp this distinction. A statement that a tablet held out by its manufacturer as a Òheadache tabletÓ does not cure headaches is not different in substance from a statement that the manufacturer has falsely represented that its tablet does cure headaches.
According to the late Professor Fleming, the tort of injurious falsehood Òprotects an interest in the disposability of oneÕs property, products or businessÓ: The Law of Torts (9th ed, 1998), p 778. A statement that false representations have been made about a product by its manufacturer or distributor will reflect upon the reputed quality of the product and may tend to affect its disposability. Similarly, an allegation that a business has been carried on in contravention of the TP Act involves an adverse reflection on that business that might well affect its profitability and hence its disposability.
The ACCC also complains about the importation into the pleading of injurious falsehood of the pleaded defamatory imputations. It points out that the latter relate to Giraffe WorldÕs reputation, whereas the proper question in injurious falsehood is one of reputation, not of a person, but of goods or of a business. The ACCC also submits that the statement of claim does not make clear which imputations relate to the ion mat and which to the business. While it would no doubt be possible for the ACCC to understand in general terms the case which is made against it in this respect, Giraffe World must plead distinctly those imputations it says reflect adversely upon the quality of the ion mat and, separately, those which it says reflect adversely upon Giraffe WorldÕs business.
Finally, the ACCC submits that the pleading is deficient in that no loss or damage is pleaded. I agree. The suffering of particular identifiable loss or damage is, as noted above, an essential element of the tort of injurious falsehood. Giraffe World must plead such loss or damage and, as with the cause of action in defamation, the basis upon which aggravated and exemplary damages are claimed.
Paragraphs 29 to 33 of the statement of claim which plead the cause of action in injurious falsehood do not disclose a reasonable cause of action and will be struck out.
Abuse of process
Giraffe World pleads in par 34 of its statement of claim, under the heading ÒClaim of Abuse of ProcessÓ, that the ACCC commenced proceeding NG 421 of 1998 seeking, with other relief, the ex parte injunctions, without notice to Giraffe World despite the fact that ÒnegotiationsÓ were taking place between the parties regarding the subject matter of that proceeding. Giraffe World also complains that the ex parte injunctions were sought without full disclosure to the Court of those negotiations or of the ÒcauseÓ of the negotiations and without reasonable cause for urgency. It pleads that the ACCC Òthereby abused legal process, including the process of this Honourable Court to the detriment of the RespondentÓ. Giraffe World claim damages, including exemplary and aggravated damages, for that abuse of process.
The leading authorities on the tort of collateral abuse of process were reviewed recently by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 239-240 in the following terms:
ÒThe concept of Ôabuse of processÕ in this context involves a party using court proceedings and procedures for a purpose unrelated to the objectives which the Court process is designed to achieve. The concept of Ôabuse of processÕ was considered extensively by the High Court in Williams v Spautz (1992) 174 CLR 509. The decision (per Mason CJ, Dawson, Toohey and McHugh JJ at 523) makes it clear that:
Ôcentral to the tort of abuse of process is the requirement that the party who has instituted the proceeding has done so for a purpose or to effect an object beyond that which the legal process offers.Õ
It is the predominant purpose of the litigation which is the relevant criterion and it is not necessary for the improper purpose to be the sole purpose of the litigation before abuse of process can be established: Metall & Rohstoff v Donaldson Inc [1990] 1QB 391 at 469; Williams v Spautz at 529. It is important to distinguish between the motive for a proceeding and the purpose of the proceeding because it is the purpose of the proceeding rather than the motivation for it which establishes the abuse where that purpose is to obtain relief not within the scope of the remedy available within the proceedings: Williams v Spautz at 529, 534Ð5.
The essence of the tort of abuse of process being the use of legal process in order to accomplish an extraneous purpose was recently restated by the Full Court of the Federal Court in Emanuele v Hedley (Fed C of A, Wilcox, Miles and RD Nicholson JJ, 19 June 1998, unreported) at 16.
A similar approach has been taken in the United Kingdom. In Goldsmith v Sperrings Ltd [1977] 1 WLR 478 the majority of the Court of Appeal held that the plaintiffÕs purpose in pursuing actions against a number of secondary distributors of the ÔPrivate EyeÕ magazine was to vindicate and to protect his reputation by the use of all remedies afforded him by the law which purpose could not be an abuse of the CourtÕs process. The Court relied upon the following passage from the judgment of Lord Evershed MR in Re Majory [1955] Ch 600 at 623:
ÔÉ court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist ÉÕ
Bridge LJ understood Ôcollateral advantageÕ as follows (at 503):
ÔThe phrase manifestly cannot embrace every advantage sought or obtained by a litigant which it is beyond the courtÕs power to grant him. Actions are settled quite properly every day on terms which a court could not itself impose upon an unwilling defendant. An apology in libel, an agreement to adhere to a contract of which the court could not order specific performance, an agreement after obstruction of an existing right of way to grant an alternative right of way over the defendantÕs land - these are a few obvious examples of such proper settlement. In my judgment, one can certainly go so far as to say that when a litigant sues to redress a grievance no object which he may seek to obtain can be condemned as a collateral advantage if it is reasonably related to the provision of some form of redress for that grievance. On the other hand, if it can be shown that a litigant is pursuing an ulterior purpose unrelated to the subject matter of the litigation and that, but for his ulterior purpose, he would not have commenced proceedings at all, that is an abuse of process.ÕÓ
Goldberg J held (at 240) that there was an abuse of process in
Òinstituting a proceeding not for the purpose of vindicating a right but for the purpose of delaying or deferring the time for payment of an obligation where the proceeding has no or little prospect of successÓ.
On the other hand, his Honour noted that it was legitimate to commence a proceeding to Òvindicate a right but with the aim of settling or compromising the claim before the trialÓ (at 240). See also Hanrahan v Ainsworth (1990) 22 NSWLR 73 at 96A (Kirby P), 99A-B (Mahoney JA) and 120C-G (Clarke JA).
In this case, Giraffe World has not pleaded any improper purpose of the ACCC in commencing proceeding NG 421 of 1998. Although the ACCCÕs conduct described in par 34 of the statement of claim could perhaps be relevant to proof of such a purpose, in the absence of a distinct identification of a purpose which is ÒimproperÓ for present purposes, the statement of claims fails to plead an essential element of the cause of action.
Giraffe World submits that Ò[t]here is more than enough material to raise an inference that the proceedings were commenced for the ulterior purpose of shutting down the negotiations, grandstanding, and obtaining initial orders prejudicial to Giraffe WorldÓ. The first of these suggested purposes, Òshutting down negotiationsÓ, is not the kind of purpose contemplated by the authorities. It may have been a by-product of the commencement of the proceeding but the ACCC did not need to commence the proceeding in order to Òshut downÓ the negotiations and was entitled to do so without first seeking comment from Giraffe World in relation to the issue of the legality of its conduct. Premature and unreasonably sudden commencement of litigation can be accommodated by special orders for costs. The second suggested purpose, ÒgrandstandingÓ, is, without more, meaningless. The third suggested purpose, Òobtaining initial orders prejudicial to Giraffe WorldÓ, is again not the kind of improper purpose which will support a claim of abuse of process. On the contrary, the obtaining of orders, interlocutory or final, is a proper purpose for commencing proceedings.
Giraffe World must plead that the ACCC commenced proceeding NG 421 of 1998 for Òan ulterior purpose unrelated to the subject matter of the litigationÓ.
Paragraphs 34 to 36 of the statement of claim do not disclose a reasonable cause of action and will be struck out.
Misleading and deceptive conduct (TP Act s 52)
Giraffe World pleads that the ACCC contravened s 52 of the TP Act by publishing the words set out in Schedules A and B in trade or commerce:
Òin that the imputations contained [in Schedules A and B] and the facts giving rise to the said imputations were untrue and/or misleading or deceptive and/or likely to mislead or deceive.Ó
The ACCC submits that the publication of Schedules A and B was not in trade or commerce.
There is affidavit evidence of Michael Gottaas, the ACCCÕs Finance Manager, to the effect that the ACCCÕs revenue falls into two categories. First, there are fines and costs imposed for breaches of the TP Act and miscellaneous fees (such as fees for responding to applications pursuant to the Freedom of Information Act 1982 (Cth)), all of which are paid into the Consolidated Revenue Fund of the Commonwealth and over which the ACCC has no further control. Second, there are the proceeds of publication and subscription sales, seminar registration fees and speakersÕ fees, all of which are also paid into that Fund but which may be drawn on by the ACCC to meet its annual expenses. This second source of revenue is provided for by s 171A (1) of the TP Act which provides:
ÒThe Commission may make a charge of an amount, or at a rate, determined by the Commission for:
(a) supplying a person with material published by the Commission in the course of carrying out its functions or exercising its powers; or
(b) permitting a person to attend or take part in a prescribed activity arranged by or on behalf of the Commission for the purpose of carrying out any of its functions.Ó
I do not decide whether the ACCC engages in some respects Òin trade or commerceÓ. Nonetheless, the expression Òin trade or commerceÓ poses difficulty for Giraffe WorldÕs claim, because, so far as the pleading reveals, the ACCC did not publish the words in Schedules A and B Òin trade or commerceÓ. In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, the majority of Mason CJ, Deane, Dawson and Gaudron JJ said (at 603-604):
Òit is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. . . . What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public. In some areas, the dividing line between what is and what is not conduct "in trade or commerce" may be less clear and may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character.Ó
Even if there should be some respect in which the ACCC engages in trade or commerce, it is inadequate for Giraffe World simply to plead that the ACCC published the words in Schedules A and B Òin trade or commerceÓ. It must identify the Òmaterial factsÓ constituting the particular trade or commerce in question and the connection (said to satisfy the word ÒinÓ) between the publishing of the words in Schedules A and B and that trade or commerce (see O 11 r 2).
If this cause of action is to be pressed, Giraffe World would also need to particularise the statements which it alleges are misleading and deceptive and the respects in which they are so. Finally, it would be necessary for Giraffe World to plead and particularise loss or damage caused by the allegedly misleading or deceptive conduct. The current pleading is wholly inadequate to put the ACCC on notice of the case which Giraffe World seeks to make.
Paragraphs 37 to 39 of the statement of claim do not disclose a reasonable cause of action and will be struck out.
Misuse of market power (TP Act s 46)
Giraffe World pleads in par 40 that the ACCC is Òa corporation with a substantial degree of power in the Australian market for goods or servicesÓ. It then pleads that by virtue of the words set out in Schedules A and B and the conduct referred to under the heading ÒClaim of Abuse of ProcessÓ:
Òthe Applicant [sic Ð Respondent] took advantage of its power for the purpose of preventing the entry of persons [presumably Giraffe World] into the health products market and/or deterring or preventing persons from engaging in competitive conduct in that market.Ó
The ACCC submits that it does not participate in any market for goods or services, does not exercise power in any such market, and in any event does not participate in any market in which Giraffe World is engaged. These, however, are matters of evidence.
But this is not to say that the pleading is adequate. There is no explanation of how it is said that the ACCC possesses Òa substantial degree of power in the Australian market for goods and servicesÓ. The ACCC regulatory and enforcement function in the public interest under the TP Act is not power Òin a marketÓ. Paragraph 40 of the statement of claim does not adequately identify the ÒmarketÓ in which it is said the ACCC has a substantial degree of power. Ò[T]he Australian market for goods and servicesÓ is far too broad and does not accommodate the notion of substitutability associated with the notion of a market: see s 4E of the TP Act and, for example, Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 at 188 (Mason CJ and Wilson J), 195 (Deane J), 199 (Dawson J), 210 (Toohey J).
There is also a fundamental difficulty with the proposition that the ACCC, assuming it to have had the requisite market power, Ò[took] advantage ofÓ that power in publishing the words in Schedules A and B and in engaging in the conduct described under the heading ÒAbuse of ProcessÓ. The pleading does not reveal any connection between the ACCCÕs supposed market power and the act of publication: it would have been open to anyone, including a competitor of Giraffe World, to commence an action such as proceeding NG 421 of 1998 or publish the words in Schedules A and B. Any nexus between market power and the conduct complained of required by the words Òtake advantage ofÓ is lacking.
If this cause of action is to be pressed, it needs to be completely re-pleaded in order to put the ACCC on notice of the case it is to meet at trial.
Paragraphs 40 and 41 of the statement of claim do not disclose a reasonable cause of action and will be struck out.
Abuse of statutory power
Giraffe World pleads in par 43 that by publishing the words in Schedules A and B and by engaging in the conduct described under the heading ÒClaim of Abuse of ProcessÓ, ÒMisleading and Deceptive ConductÓ and ÒMisuse of Market PowerÓ the ACCC Òabused its statutory powers and/or acted contrary to its statutory powers and duties to the detriment of the ApplicantÓ.
I am not aware of a tort described as Òabuse of statutory powerÓ. Giraffe World points to no authority for the existence of a cause of action so described. Perhaps it seeks to make out a case of Òmisfeasance in public officeÓ. Although the elements of this tort are not completely settled (see Sanders v Snell (1998) 157 ALR 491 at 504), Giraffe World will establish liability if it can show that the ACCC is a Òpublic officerÓ for the purpose of the tort; that the act complained of was an invalid or unauthorised act; that the ACCC acted maliciously in the sense that it intended to cause Giraffe World harm or knew that the act was invalid or unauthorised; that the act complained of was done in the purported discharge of the ACCCÕs public duties; and that the act caused Giraffe World to suffer loss and damage: see Northern Territory v Mengel (1995) 185 CLR 307 at 345-348 (Mason CJ, Dawson, Toohey, Gaudron, McHugh JJ), 355-360 (Brennan J), 370-371 (Deane J). The statement of claim does not come close to pleading such a case.
Paragraphs 42 and 43 of the statement of claim do not disclose a reasonable cause of action and will be struck out.
Intentional infliction of economic harm/intentional interference with contractual relations
Giraffe World pleads in pars 44 and 45 of the statement of claim that by publishing the words in Schedules A and B and Òby reason of the matters set out aboveÓ, the ACCC Òintentionally inflicted economic harm on the ApplicantÓ and Òintentionally interfered with the contractual relations between the Applicant and consumers and/or potential consumers or members to the detriment of the ApplicantÓ.
There is no cause of action of Òintentional infliction of economic harmÓ. As the High Court has recently said in Sanders v Snell (1998) 157 ALR 491 (at 500):
ÒThe tort that is emerging, or has emerged in the United Kingdom, is a tort of interference with trade or business interests by an unlawful act directed at the persons injured. The element of unlawfulness is essential to the definition of the tort. Otherwise, conduct of the most unremarkable kind would be tortious. Any person engaged in trade or commerce will daily act deliberately to further that traderÕs economic interests by obtaining business that otherwise would go to a trade rival. The whole focus of the business of many, if not all, traders is to compete with trade rivals and by advancing their own economic interests, inevitably harm the economic interests of their rivals. In many cases the traderÕs conduct will be directed specifically at a particular rival. But, if the means of competition employed are lawful, and those means cause no breach of obligation, there is no warrant for holding the trader liable to the rival for the economic consequences of that competitive conduct. The fact that the conduct is engaged in deliberately or is directed specifically at the person who suffers economic detriment is not enough to make the conduct tortious. It may or may not, in given circumstances, give rise to statutory remedies.Ó (emphasis in original)
The statement of claim does not plead, let alone particularise, an allegation that the ACCC acted unlawfully.
The failure to plead unlawfulness also disposes of Giraffe WorldÕs claim that the ACCC interfered with Giraffe WorldÕs contractual relations with potential customers. As the late Professor Fleming stated in The Law of Torts (9th ed, 1998):
ÒÉ in the absence of unlawful means, it is not actionable to dissuade anyone from entering into, or renewing a contract with the plaintiff: while contractual rights are protected, mere expectancies are not.Ó (at 757)
See also Allen v Flood [1898] AC 1 at 126-127 (Lord Herschell), 172 (Lord Davey); McKernan v Fraser (1931) 46 CLR 343 at 358-359 (Dixon J), 369-370 (Evatt J).
In so far as Giraffe World pleads that the ACCC interfered with Giraffe WorldÕs existing contractual relations, the problem is that it has not identified the contractual relations in question or how the ACCC is said to have interfered with them. The contracts in issue in proceeding NG 421 of 1998 are contracts by which Giraffe World sells the Òion matÓ and a contract whereby Giraffe World pays commission to members of the Grow Rich Club upon their introducing new members. Since the contracts of sale are, on their face, fully executed, they cannot represent the contractual relations with which the ACCC has interfered. In relation to the second group of contracts mentioned, the members have paid their membership fees and have not promised Giraffe World to do anything further. The contract is, however, contingently executory on Giraffe WorldÕs side, in that if a member of the Grow Rich Club chooses to introduce a new member, Giraffe World will become obliged to pay a commission to the introducing member.
It is hard to see how publication of the words in Schedules A and B can be said to have caused Giraffe World not to discharge this contingent executory obligation. An injunction restraining it from carrying on its business might have prevented it from performing such an obligation to members, but the injunction would be an order of the Court, not an act of the ACCC and, in any event, an order relieving Giraffe World from an obligation is not obviously something by which it, as distinct from the introducing member, would be aggrieved.
Giraffe WorldÕs complaint in respect of the existing Grow Rich Club contracts with members may be that the ACCC has dissuaded members from exercising their contractual right to introduce new members for commission, with the result that Giraffe WorldÕs business has not enjoyed expansion which would otherwise have occurred. It suffices to say that such a novel cause of action is not pleaded.
Paragraphs 44 and 45 of the statement of claim do not disclose a reasonable cause of action and will be struck out.
Judicial review of administrative decisions under an enactment
Giraffe World complains about the ACCCÕs decisions to seek ex parte injunctions and to publish the words in schedules A and B. It seeks orders pursuant to s 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (Òthe AD(JR) ActÓ) that those decisions be set aside, Òan order declaring [its] rights in respect of the decisionsÓ, and an order that the ACCC publish appropriate apologies or retractions.
The ACCC submits that proper grounds of review are not set out and that the decision to seek ex parte injunctions, at least, is spent, with the result that the Court should not, as a matter of discretion, entertain the application in so far as it relates to that decision.
It seems to me that there is a more fundamental difficulty with the application under the AD(JR) Act. This is that neither decision impugned is a Òdecision to which [the AD(JR) Act] appliesÓ as defined in s 3 (1) of that Act, which states:
Òdecision to which this Act applies means a decision of an administrative character made, proposed to be made, or required to be made, as the case may be (whether in the exercise of a discretion or not) under an enactmentÉÓ.
In relation to the decision to publish the words in Schedules A and B, it is clear, leaving aside the question whether there was a ÒdecisionÓ for the purposes of the AD(JR) Act, that that decision was not made Òunder an enactmentÓ. Giraffe World points to s 28 (1) of the TP Act which provides:
ÒIn addition to any other functions conferred on the Commission, the Commission has the following functions:
(a) to make available to persons engaged in trade or commerce and other interested persons general information for their guidance with respect to the carrying out of the functions, or the exercise of the powers, of the Commission under this Act;
(b) to examine critically, and report to the Minister on, the laws in force in Australia relating to the protection of consumers in respect of matters referred to the Commission by the Minister, being matters with respect to which the Parliament has power to make laws;
(c) to conduct research in relation to matters affecting the interests of consumers, being matters with respect to which the Parliament has power to make laws;
(ca) to conduct research and undertake studies on matters that are referred to the Commission by the Council and that relate to the CommissionÕs other functions;
(d) to make available to the public general information in relation to matters affecting the interests of consumers, being matters with respect to which the Parliament has power to make laws; and
(e) to make known for the guidance of consumers the rights and obligations of persons under provisions of laws in force in Australia that are designed to protect the interests of consumers.Ó
The publishing of the words in Schedules A and B (I assume for the moment in Giraffe WorldÕs favour, that the words in Schedule B as well as those in Schedule A were published by the ACCC to the public) may be said to come within s 28 (1) (a), (d) or (e). However, in my view, that does not lead to the conclusion that the decision to publish was made ÒunderÓ such a provision. In General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 at 172, Davies and Einfeld JJ held that the AD(JR) Act is Òconcerned with decisions which, being authorised or required by an enactment, are given force or effect by the enactment or by a principle of law applicable to the enactmentÓ (emphasis supplied). The decision to publish the words in Schedules A and B was not Ògiven force or effectÓ by s 28 (1). Section 28 (1) describes in general terms certain functions which the Parliament has given to the ACCC for it to perform by such means as may be lawfully open to it. The particular decisions to issue the media release (Schedule A) or to provide the information to the Department of Fair Trading (said to have given rise to Schedule B) are not provided for at all in s 28(1) but are decisions taken in the exercise of an aspect of the ACCCÕs capacity as a legal person in the course of the performance of its functions.
Similarly, I find it hard to see how it can be said that the decision to seek ex parte interlocutory injunctions (again I assume in Giraffe WorldÕs favour this ÒdecisionÓ within the meaning of the AD(JR) Act: cf Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation (unreported, FCA/Davies J, 5 November 1993); Ruddy v Deputy Commissioner of Taxation (unreported, FCA/Kiefel J, 2 April 1998)), was a decision Òmade under an enactmentÓ. Any ÒpersonÓ may seek an injunction, including an interlocutory injunction, pursuant to s 80 of the TP Act. Although s 80 provides that Òthe Commission [the ACCC] or any other personÓ may apply for injunctive relief, the ACCC, being a body corporate entitled to sue in its own name (see s 6A (2) (a) and (d) of the TPA) is a person (see s 22 (1) (a) of the Acts Interpretation Act 1901 (Cth)) and, as such, would have been entitled to apply for the injunction even had it not been not specifically named in s 80. Just as a decision by a statutory authority to enter into a contract is not a decision made Òunder an enactmentÓ even though the legal personality which gives it the capacity to do so is derived from a statute (see General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 (FC) at 173 (Davies and Einfeld JJ)), so the decision to commence a proceeding which may be commenced by any person is not a decision made under an enactment: see also Salerno v National Crime Authority (1997) 144 ALR 709 (FCA/FC) (decision to raid applicantÕs home pursuant to search warrant).
For the above reasons, the application, in so far as it seeks relief pursuant to the AD(JR) Act, will be dismissed and paragraphs 46 to 49 of the statement of claim will be struck out.
Representative proceedings
As noted earlier, the ACCC seeks an order under s 33N (1) of the FCA Act that the proceeding no longer continue under Part IVA of that Act. That subsection provides as follows:
ÒThe Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:
(a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or
(b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or
(c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or
(d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.Ó
Section 33C of the FCA Act provides as follows:
Ò(1) Subject to this Part, where:
(a) 7 or more persons have claims against the same person; and
(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
(c) the claims of all those persons give rise to a substantial common issue of law or fact;
a proceeding may be commenced by one or more of those persons as representing some or all of them.
(2) A representative proceeding may be commenced:
(a) whether or not the relief sought:
(i) is, or includes, equitable relief; or
(ii) consists of, or includes, damages; or
(iii) includes claims for damages that would require individual assessment; or
(iv) is the same for each person represented; and
(b) whether or not the proceeding:
(i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or
(ii) involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.Ó
According to the application filed on 14 July 1998, Giraffe World commenced the proceeding on behalf of itself and as a representative party. The application identified the Ògroup membersÓ on whose behalf the proceeding was brought as Giraffe World and seven individuals named in Schedule A to the application. These were seven individuals associated with Giraffe World in various ways who, with Giraffe World itself were respondents to proceeding NG 421 of 1998. So far as the statement of claim reveals, none of the individuals has a claim against the ACCC and the proceeding was always incompetent as a proceeding under Part IVA of the FC Act. The position is not saved by pars 8-10 of the statement of claim which identify the seven group members as Òa director and chairmanÓ of Giraffe World, Òa shareholder in and President ofÓ Giraffe World, and five individuals who were Òpurchasers of ion mats É and É involved in the direct selling operationsÉÓ. These bare facts do not complete a pleading of claims of the seven individuals.
Giraffe WorldÕs submissions in the present respect are relevantly as follows:
ÒThe relevant group are principally those who were initially attacked by the ACCC and put to substantial distress. The ACCC alleged a commonality which it now seeks to deny.
It will be a matter for trial for the Applicants to prove they were identified as persons defamed. Part of the identification material would include that upon which the ACCC seeks to rely on in its case.
With the possible exception of the judicial review matter the natural persons have all suffered from the actions of the ACCC. There [sic] claims should be recognised and heard by the Court.
It is submitted that this is a thoroughly inappropriate strike out application which should be dismissed with indemnity costs.Ó
These submissions make it clear that, with the possible exception of the cause of action for defamation, reliance is placed on nothing more than the ÒpositionsÓ of the seven individuals described earlier. At present there is no pleading of defamation of the individuals. A pleading of defamation of the individuals would involve different allegations (a pleading of different imputations, for example) from those in the existing statement of claim, although there would be some overlap. I will not have time prior to the final hearing (see below) to entertain a further motion relating to the state of the pleadings. The existing statement of claim does not even attempt to satisfy s 33C of the FCA Act.
For the above reasons, it is ÒinappropriateÓ that the claims be pursued by means of a representative proceeding. Accordingly, an order will be made under s 33N, the application, in so far as it seeks relief on behalf of the group members, will be dismissed and paragraphs 3 and 4 and 8 to 10 of the statement of claim will be struck out.
CONCLUSION
For the above reasons, the Court orders that:
1. The proceeding be dismissed in relation to the claims for relief in pars 4 (a) (viii), (c) and (d) and 5 of the application filed on 14 July 1998;
2. The following paragraphs of the statement of claim filed on 14 July 1998 be struck out: 3 and 4, 8-10, 29-33, 34-36, 37-39, 40 and 41, 42 and 43, 44 and 45, and 46-49;
3. The proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976 (Cth);
4. The proceeding be listed at 4.15 pm on 8 December 1998 for the purpose of the making of further orders and directions, including an order as to the costs of the respondentÕs motion.
Giraffe World should give serious consideration to its prospects of success in relation to the causes of action the subject of the paragraphs struck out, and the costs that may be incurred if they are repleaded and are unsuccessfully pressed at trial. Proceeding NG 421 of 1998 is fixed for hearing from 12 to 23 April 1999 and I have previously indicated that it is my intention, but this is always subject to review, that the present proceeding be heard simultaneously with that proceeding. Given this time constraint, it will not be possible for the ACCC to bring and have heard and determined by me, a further motion for summary dismissal or striking out in relation to any amended application or statement of claim. In those circumstances, if Giraffe World defectively re-pleads a cause of action, or re-pleads it satisfactorily but it transpires that the claim for relief based upon it was unreasonably pressed, it may be appropriate that a special costs order be made against Giraffe World.
I will hear the parties on any further orders now to be made, including any order as to costs of the ACCCÕs motion.
I certify that this and the preceding twenty eight (28) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.
Associate:
Dated: 4 December 1998
Counsel for the Applicant: Mr M J Neil QC with Mr N F Francey
Solicitor for the Applicant: Blessington Judd
Counsel for the Respondent: Mr R A Conti QC with Mr S White
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 3, 4 November 1998
Date of Judgment: 4 December 1998
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Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd [2005] FCAFC 49
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FEDERAL COURT OF AUSTRALIA
Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd [2005] FCAFC 49
CORPORATIONS – CONTRACTS - administration - deed of company arrangement – proof of debt - breach of contract – right to terminate for breach – whether structure of contractual arrangements such as to disentitle innocent party from terminating for serious breach of contract – repudiation and serious breach of contract discussed.
Corporations Act 2001 (Cth) ss 553, 1321
Amann Australia Pty Ltd v The Commonwealth of Australia (1990) 22 FCR 527 referred to
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 cited
Bentsen v Taylor [1893] 2 QB 274 cited
Bowes v Chaleyer (1923) 32 CLR 159 cited
Bridge v Campbell Discount Co Ltd [1962] AC 600 referred to
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 cited
Concut Pty Ltd v Worrell (2000) 75 ALJR 312 cited
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 cited
Decro-Wall International SA v Practitioners in Marketing Ltd[1971] 1 WLR 361 cited
Foran v Wight (1989) 168 CLR 385 cited
Fullers' Theatres Ltd v Musgrove (1923) 31 CLR 524 cited
Holland v Wiltshire (1954) 90 CLR 409 discussed
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 cited
Honner v Ashton (1979) 1 BPR 9478 discussed
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 discussed
In re Asphaltic Wood Pavement Co (Lee & Chapman's case) (1885) LR 30 Ch D 216 discussed
Larratt v Bankers & Traders' Insurance Co (1941) 41 SR 215 cited
Legione v Hateley (1983) 152 CLR 406 referred to
Mersey Steel & Iron Co Ltd v Naylor, Benzon & Co (1884) 9 App Cas 434 cited
Pacific Carriers Ltd v BNP Paribas (2004) 208 ALR 213 cited
Panoutsos v Raymond Hadley Corporation of New York [1917] 2 KB 473 cited
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 referred to
Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Aust) Pty Ltd (1978) 139 CLR 231 discussed
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 cited
Rawson v Hobbs (1961) 107 CLR 466 referred to
Ross T Smyth & Co Ltd v T D Baily Son & Co [1940] 3 All ER 60 cited
Sargent v ASL Developments Ltd (1974) 131 CLR 634 referred to
Shevill v The Builders Licensing Board (1982) 149 CLR 620 referred to
Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 cited
Suisse Atlantique Societe D'Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 referred to
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 cited
United Australia Ltd v Barclays Bank Ltd [1941] AC 1 cited
Wallis, Son & Wells v Pratt & Haynes [1910] 2 KB 1003 cited
Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 cited
IN THE MATTER OF NATIONAL EXPRESS GROUP AUSTRALIA (SWANSTON TRAMS) PTY LTD (RECEIVER AND MANAGER APPOINTED) SUBJECT TO A DEED OF COMPANY ARRANGEMENT) SIMON ALEXANDER WALLACE SMITH & ANOR v THIESS INFRACO (SWANSTON) PTY LTD
V 1145 of 2004
FRENCH, WEINBERG & ALLSOP JJ
30 MARCH 2005
MELBOURNE AND SYDNEY BY VIDEOLINK
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 1145 of 2004
On appeal from a single judge of the Federal Court of Australia
BETWEEN: SIMON ALEXANDER WALLACE-SMITH
FIRST APPELLANT
PETER GEORGE YATES
SECOND APPELLANT
AND: THIESS INFRACO (SWANSTON) PTY LTD
RESPONDENT
JUDGES: FRENCH, WEINBERG & ALLSOP JJ
DATE OF ORDER: 30 MARCH 2005
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellants pay the respondent's costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 1145 of 2004
On appeal from a single judge of the Federal Court of Australia
BETWEEN: SIMON ALEXANDER WALLACE-SMITH
FIRST APPELLANT
PETER GEORGE YATES
SECOND APPELLANT
AND: THIESS INFRACO (SWANSTON) PTY LTD
RESPONDENT
JUDGES: FRENCH, WEINBERG & ALLSOP JJ
DATE: 30 MARCH 2005
PLACE: MELBOURNE
REASONS FOR JUDGMENT
french j
Introduction
1 The privatisation of the public transport system of trams and trains in Victoria in 1999 was effected by an elaborate array of contracts between the Government of Victoria, the companies which undertook to operate the system and those who agreed to provide maintenance and other support services. It was an important element of those contractual arrangements that the Government retained the power to direct parties to some of the contracts to continue to provide the agreed services notwithstanding that there may have been breach entitling them to terminate those contracts and withdraw their services. These provisions allowed the Government to ensure continuity in the provision of important public facilities notwithstanding that one or other of the private parties may have failed to meet its contractual obligations.
2 In 1999, members of the National Express Group of Companies were granted franchises to operate tram and train systems in Melbourne. As it turned out their projections had been optimistic and their operations were not financially viable. Their UK-based parent company decided in 2002 to cease supporting them financially.
3 One of the companies, which was operating Melbourne Trams, National Express Group Australia (Swanston Trams) Pty Ltd (NX Swanston) ceased to meet its obligations to pay an important infrastructure maintenance provider, Thiess Infraco (Swanston) Pty Ltd (Thiess Swanston). These payments were due to be made in respect of the maintenance of the tram system and pursuant to an agreement with Thiess Swanston known as the Swanston Infrastructure Maintenance Agreement (IMA). Thiess Swanston, which had also entered into an agreement (the Direct Agreement) directly with the Director of Public Transport (the Director), gave notices of default to both NX Swanston and the Director. The Director appointed receivers to NX Swanston under securities it held over that company. Subsequently, voluntary administrators were appointed and, in July 2003, a Deed of Company Arrangement was entered into by the company and its creditors.
4 Pursuant to the Direct Agreement, Thiess Swanston was required by the Director, on 24 December 2002, to continue to meet its obligations under the IMA upon the basis that the receivers would step into the shoes of NX Swanston. Thiess Swanston was paid for its services by the receivers from that time. In September 2003, Thiess Swanston, NX Swanston, the Director and the receivers entered into a Settlement Deed extending the operation of the IMA pending entry into a new agreement upon which the old IMA would terminate. Such termination was expressly stated to be for a breach by NX Swanston of the original IMA. No new agreement was made pursuant to the Settlement Deed. In September 2003, Thiess Swanston lodged a proof of debt under the Deed of Company Arrangement. $6,860,909 of the proof related to unpaid progress claims from November and December 2002. The balance of $20,623,499 related to loss of profits. The latter component of the claim was lodged as a contingent claim under the Deed of Company Arrangement. The relevant contingency was termination of the IMA for breach by NX Swanston and associated with that breach a right to claim damages for loss of bargain. At the time that the claim was lodged, because of restrictions, imposed by the IMA, upon the right to terminate it, that contingency had not occurred.
5 On 17 April 2004, an agreement, called a Transfer Agreement, was made under which the assets and employees used by Thiess Swanston to provide infrastructure maintenance services were transferred to another company, MetroLink Victoria Pty Ltd (MetroLink), and the original IMA terminated. Termination was stated to be for breaches by NX Swanston of the original IMA.
6 On 1 April 2004, the administrators of the Deed of Company Arrangement rejected Thiess Swanston's claim for loss of profits on the basis that it had no contractual right to terminate the IMA upon the appointment of the receivers and managers on 22 December 2002. Accordingly, it was said to have no claim for loss of profits under the Deed.
7 On 7 September 2004, after hearing an application by Thiess Swanston challenging the administrators' decision, Finkelstein J made an order that they admit the proof in full but subject to valuation. The administrators have appealed against his Honour's decision.
8 In substance the administrators assert that the right to terminate the IMA was extinguished by the provisions of that agreement and related contractual documents. Alternatively it is put that the right to terminate the IMA for breach by NX Swanston was effectively lost by its affirmation under the terms of the Settlement Deed and later the Transfer Agreement of April 2004. A further alternative argument is that the IMA was terminated consensually by the Transfer Agreement and that such termination did not constitute acceptance of a repudiation of the IMA. The right to terminate having been either extinguished, lost or abandoned, the contingency upon which the claim for loss of profits depended, namely termination for breach by Thiess Swanston, never arose.
9 For the reasons which I have set out below, in my opinion these contentions, reflected in the various grounds of appeal, are not made out. The appeal should be dismissed.
Factual and Procedural Background
10 In 1999, the Victorian Government undertook the privatisation of its public trains and trams transport system. The National Express Group of Companies was a bidder for franchises to operate those parts of the system known as Bayside Trains, Swanston Trams and Yarra Trams. The Group's holding company is National Express Group PLC, a British publicly listed corporation.
11 In anticipation of the grant of franchises National Express Group (Australia) Pty Ltd entered into an Infrastructure Maintenance Agreement (IMA) with Thiess Contractors Pty Ltd (Thiess Contractors). That agreement was dated 14 May 1999. It provided that, in the event that the National Express Group was awarded the franchises the IMA would record the terms and conditions upon which Thiess Contractors would provide infrastructure maintenance services.
12 The National Express Group was awarded the franchise. Franchise Agreements were made with respect to the train system and the two tram networks. In relation to Swanston Trams a Franchise Agreement was made on 25 June 1999 between the Director and NX Australia (Swanston Trams) Pty Ltd (NX Swanston). The recitals to the agreement recorded that the Director and NX Swanston had entered into an Infrastructure Lease for the lease of 'tram infrastructure' to NX Swanston for the 'franchise period' which was a term of 12 years (recital A). NX Swanston had agreed 'to operate tramway passenger services on that tram infrastructure on the terms of this agreement' (recital B). NX Swanston and the Infrastructure Maintenance Service Provider, defined relevantly as a subsidiary of Thiess Contractors, would enter into an Infrastructure Maintenance Service Agreement for the maintenance of the tram infrastructure (recital D). The franchise agreement also required that the Infrastructure Maintenance Service Provider enter into a separate agreement with the Director which was to be designated a 'Franchise Entity Direct Agreement' (recital C). The term 'Franchise Entity' covered not only the Infrastructure Maintenance Service Provider but also other service providers under the Franchise Agreements.
13 The term of the Franchise Agreement was 12 years (cl 4.2) subject to a right on the part of the Director unilaterally to extend the agreement for a period of up to six months. Clause 18 of the Franchise Agreement dealt with its termination. It defined various 'termination events' which were expressed largely in terms of breaches by the franchisee but extended to breaches by Franchisee Entities of the obligations under contracts to which they were party. One of the termination events defined in cl 18 was the valid termination of a Transaction Document (cl 18.1(2)), ie, in effect, any of the various contractual documents established under the franchise system (cl 1.1). Clause 18.2 provided for termination of the Franchise Agreement by the Director on written notice to the franchisee, NX Swanston. Clause 18.3 provided:
'Notwithstanding any rule of law or equity to the contrary, this agreement may not be terminated except as provided in clause 18.2.'
14 Upon the execution of the Franchise Agreement, the IMA of 14 May 1999 was novated by a Deed of Novation dated 23 July 1999. That Deed reconstituted the IMA as two agreements, with identical terms, one relating to the Swanston tram network and the other relating to the Bayside train system. Under the Deed in its application to the Swanston tram network, the parties to the IMA became NX Swanston and Thiess Swanston. National Express Group Australia (Bayside Trains) Pty Ltd (NX Bayside) and Thiess Infraco (Bayside) Pty Ltd (Thiess Bayside) became the parties to the agreement in its application to the Bayside train network.
15 The Deed of Novation provided that, from its Effective Date, NX Swanston had rights against and owed obligations to Thiess Swanston in connection with the IMA and vice versa as if each were a party to it in place of NX Australia and Thiess Contractors respectively (cl 3.1(a)). Events of default under the former composite IMA were separated out so that events of default relevant to the IMA-Bayside did not constitute events of default for the purposes of the IMA-Swanston (Schedule 1 cl 10).
16 The term of the IMA was three years (cl 4.1 and definition of 'Term' in cl 1.1). The term could be extended at the discretion of NX Swanston for up to three successive periods of three years allowing for a maximum total period of 12 years. The agreement contained provisions relating to its termination and that of 'Key Contracts'. Key Contracts were defined in the IMA by reference to their definition in the Franchise Agreement. That definition included:
'Any agreement or arrangement for the provision of Rolling Stock or Infrastructure maintenance services.' (Franchise Agreement cl 1.1 Schedule 16 Pt 1 Item 5)
The Franchise Agreement required NX Swanston to procure that Thiess Swanston would not, except as permitted by its terms, 'avoid, release, surrender, terminate, rescind, discharge (other than by performance) or accept the repudiation of ... a Key Contract' (cl 23.5(a)(i)). The agreement provided that a franchise entity, for which read Thiess Swanston, could terminate a Key Contract, for which read the IMA, if the Director were reasonably satisfied that it was '... no longer necessary for the Franchise Entity to have the benefit of the Key Contract'; or 'that Franchise Entity has made adequate alternative arrangements for the continued operation of the Franchise Business' (cl 23.5(b)). If a franchise entity were to terminate a Key Contract ' ... in breach of this Agreement' (sic) then the Franchisee was required to procure the Franchise Entity, at the request of the Director, to enter into an agreement immediately following that request with each counter party to the Key Contract in the terms set out in the relevant Direct Agreement (cl 23.5(c)).
17 As required of NX Swanston by cl 23 of the Franchise Agreement, the IMA between NX Swanston and Thiess Swanston contained limitations on termination in cl 24. Thiess Swanston acknowledged that the IMA was a Key Contract and agreed to cooperate in the implementation of a Direct Agreement with the Director (cl 24.2(c)). Of importance in this case is cl 24.4 of the IMA which provided:
'24.4 Termination of Key Contracts
(a) Thiess must not, except as permitted by paragraph (b):
(i) avoid, release, surrender, terminate, rescind, discharge (other than by performance) or accept the repudiation of;
(ii) suspend the performance of any of its obligations under; or
(iii) do or permit anything that would enable or give grounds to another party to do anything referred to in sub-paragraph (i) or (ii) in relation to,
this Agreement.
(b) Thiess may terminate a Key Contract if the Director is reasonably satisfied that:
(i) it is no longer necessary [for]Thiess to have the benefit of the Key Contract; or
(ii) Thiess has made adequate alternative arrangements for the continued operation of the Franchise Business.
(c) If Thiess terminates a Key Contract in breach of this Agreement, Thiess must, at the request of the Director, enter into an agreement immediately following that request with each counterparty to the Key Contract on the terms set out in the relevant Direct Agreement.'
The language of cl 18.3 of the Swanston Franchise Agreement, which set the termination provisions for that agreement expressly against 'any rule of law or equity to the contrary', was not replicated in the IMA.
18 Clause 34.1 of the IMA set out a dispute resolution process and provided for termination by NX Swanston if an 'Event of Default' occurred. The definition of 'Event of Default' in cl 34.1(a) applied to defaults by either party including non-payment of amounts due (cl 34.1(a)(i)) and Insolvency Events (cl 34.1(a)(iv)). The definition included defaults defined by reference to Thiess Swanston only (cl 34.1(b)). The processes of giving notice of default, referral to dispute resolution, the provision of time for remedying defaults and the rights of termination were all formulated on the assumption of a default by Thiess Swanston. Despite the bilateral aspects of the definition no provision was made in cl 34 conferring any rights on Thiess Swanston in the event of a default by NX Swanston. The right of NX Swanston to terminate for default by Thiess Swanston was set out at cl 34.6.
19 Under cl 36, if a Force Majeure event continued for more than 30 business days the party not affected by it could terminate the agreement on 14 days' notice. Force Majeure events were defined in cl 1.1 but none of those definitions is relevant for present purposes.
20 Under cl 11(c)(ii) of the IMA Thiess Swanston agreed, and undertook to NX Swanston, to enter into a Direct Agreement with the Director. That clause provided:
'Thiess agrees to:
...
(ii) execute and provide to the Franchisee upon request the Franchise Entity Direct Agreement and the Franchisee Deed of Charge, and Thiess undertakes to the Franchisee to comply with the requirements of each of those deeds;'
In discharge of that obligation Thiess Swanston entered into the Direct Agreement on 26 July 1999. Its object was to ensure, inter alia, that Thiess Swanston would be contractually obligated to the Government of Victoria in relation to the provision of infrastructure maintenance services under its IMA with NX Swanston.
21 The Direct Agreement contained a provision limiting the rights of Thiess Swanston to terminate or suspend performance of its obligations under the IMA. Under cl 5.1, absent default, Thiess Swanston could only terminate or suspend the performance of its obligations in accordance with the terms of the IMA if it had given the Director not less than six months prior notice. It could not, without the consent of the Director, terminate or suspend its performance during the last 12 months of the term of the IMA or any extension of it. Clause 5.2 dealt with termination or suspension for default. Thiess Swanston could only terminate or suspend the 'performance of its obligations' under the IMA for default if it had given a notice to the Director and to NX Swanston setting out the default (cl 5.2(a)(i)) and if either of the following conditions was satisfied:
'A. if the Default is capable of remedy, the Default has not been remedied within 30 days of the date on which the Default Notice is given to the Director and the Franchisee or such longer period as is allowed for remedy of the Default under the Contract; or
B. if the Default is not capable of remedy, all of the obligations of the Franchisee under the Contract do not commence and continue to be performed within 30 days of the date on which the Default Notice is given to the Director and the Franchisee or such longer period as is allowed under the Contract.'
Termination of the performance of obligations under the IMA for default was prohibited under certain circumstances. By cl 5.2(b) it was provided:
'The Franchise Entity may not terminate, or suspend the performance of its obligations under, the Contract as a result of a Default if:
(i) the Director has notified the Franchise Entity that he or she is entitled to exercise his or her step-in right under the Franchise Agreement or the Security has become enforceable; and
(ii) an Enforcing Party is performing all of the Franchisee's obligations under the Contract.'
The term 'Enforcing Party' was defined in cl 1.1 as:
'... the Director, or any receiver, receiver and manager, agent, attorney or nominee appointed or acting under the Security or the Franchise Agreement.'
The prohibition in cl 5.2 bears the construction that it related to the performance of the obligations of Thiess Swanston under the IMA and not to termination of the agreement itself. Clause 24.4(a)(i) of the IMA on the other hand was directed to termination of 'this agreement'. Clause 24.4(b) was directed to termination of 'a Key Contract'. This distinction in language suggests that cl 5.2 of the Direct Agreement was concerned to impose an obligation on Thiess Swanston to continue to provide maintenance services. That obligation derived its force from the Direct Agreement and did not depend upon the continuing existence of the IMA.
22 Clause 5.3 provided for 'Cure Rights' whereby an Enforcing Party on becoming aware of the default could take steps to remedy or procure the remedy of the default or commence and continue to perform the obligations of the franchisee under the contract. The termination and suspension provisions contained in the Franchise Agreement, the IMA and the Direct Agreement may be seen as part of a scheme to ensure that the Victorian Government was in a position to maintain the continuity of public transport services uninterrupted by purely contractual events. The relationship between the qualifications upon the right to terminate recognised by the Direct Agreement and those imposed by the IMA was a matter of debate on the hearing of this appeal.
23 There were other agreements made by NX Swanston relevant to the operation of the Swanston tram franchise. A Fleet Maintenance Agreement (New Rolling Stock) dated 31 March 2000 was made between NX Swanston and Siemrail (Vic) Trams Pty Ltd. Both parties could terminate the agreement in certain circumstances (cl 28.1). A Manufacture and Supply Agreement (Swanston Trams) dated 31 March 2000 was made between NX Swanston, Siemens Ltd and GATX Rail (SW-1) Pty Ltd. Siemens could terminate this agreement under certain circumstances (cl 25.1 and 25.8).
24 The members of the National Express Group commenced operating train and tram services in Victoria under their respective franchise agreements. Thiess Swanston provided maintenance services as required and was paid for those services in accordance with the terms of the IMA until December 2002. On 3 December 2002, the company sent its November progress payment claim dated 1 December 2002 to NX Swanston in the amount of $3,989,731 (excluding GST) pursuant to the provisions of the IMA (cls 10.2(a) and 10.2(b)). Payment was due on 17 December 2002 (cl 10.3(a)).
25 As it turned out the National Express companies were unable to operate profitably. On 16 December 2002, the National Express Group PLC, the British parent company for the Group, gave formal notice to the Victorian Government that it would stop providing funds to enable its 'train and tram subsidiaries to meet their liabilities as and when they fell due with effect from December 2002'. On the same day, the Minister for Transport announced that the NX franchisees would surrender their franchises with effect from 23 December 2002.
26 Thiess Bayside, in reference to its own situation and that of Thiess Swanston, wrote to the National Express Group on 17 December 2002 referring to the announcement that parent company funding to the National Express subsidiaries would cease and seeking clarification of the position as it had received no notice to that effect itself. The National Express Group replied to Thiess Swanston and Thiess Bayside the same day that it was in negotiation with the Victorian Government for an orderly handover of the franchise businesses once funding ceased.
27 The amount of $3,989,731 due to Thiess Swanston on 17 December 2002 was not paid. On 19 December 2002, Mr Don Johnson, a director of Thiess Swanston, sent a letter to the Director and to the Chief Operating Officer of the National Express Group by way of 'Default Notice pursuant to clause 5.2 of the Direct Agreement specifying that a Default under the IMA has occurred'. The letter referred to the press release from National Express Group PLC. It referred also to the confirmation by NX Swanston that it was not in a position to advise Thiess Swanston whether it would pay amounts that were due and that would become due to it under the IMA. Thiess Swanston was owed the sum of $3.989 million under the IMA in respect of its November progress payment claim which was due and payable on 17 December 2002. The default specified was:
'The failure by National Express Group Australia (Swanston Trams) Pty Ltd, in breach of the IMA, to pay the sum of $3.989m currently due and payable to Thiess Infraco.'
The notice was served on the Director on 20 December 2002.
28 On 22 December 2002, acting under securities granted by NX Swanston, the Director appointed receivers and managers over its assets. Thiess Swanston sent a second default notice dated 23 December 2002 to the Director and to the Chief Operating Officer of NX Swanston in the following terms:
'This is a Default Notice under the Direct Agreement.
The Default is the appointment of a receiver and manager to National Express (Swanston Trams) which we were advised by the receiver occurred on 22 December 2002. The appointment of a receiver and manager constitutes an Event of Default and an Insolvency Event under the Infrastructure Maintenance Agreement.'
On 23 December 2002, Simon Alexander Wallace-Smith and Robert William Whitton were appointed, pursuant to s 436A of the Corporations Act 2001 (Cth), as joint and several voluntary administrators of the companies in the National Express Group including NX Swanston.
29 On 24 December 2002, the Director sent a letter to Thiess Swanston stating that, pursuant to the Direct Agreement, it was not entitled to terminate or suspend its obligations under the IMA. A notice, pursuant to cls 3(b) and 5.2(b) of the Direct Agreement was attached to the letter:
'I give notice that:
(a) The Security (as that term is defined in the Direct Agreement) given by NX Australia (Swanston Trams) Pty Ltd ACN 087 494 997 ("the Franchisee") in favour of the Director of Public Transport, became enforceable on 22 December 2002; and
(b) An Enforcing Party (as that term is defined in the Direct Agreement) is performing all of the Franchisee's obligations under the Contract (as that term is defined in the Direct Agreement).'
The 'Enforcing Party' comprised the receivers appointed by the Director. As appears below, Thiess Swanston continued to provide maintenance services as required by the IMA until 18 April 2004 when the work was transferred to another company. It was paid for its services by the receivers who were by statute personally liable to make those payments (s 419 Corporations Act).
30 On 24 December 2002, Thiess Swanston lodged a further progress claim dated 1 January 2003 with NX Swanston in the amount of $7,682,838.22 excluding GST due on 14 January 2003. The balance said to be due, including the unpaid claim, was $11,314,569.89. With GST it was $12,446,026.88. On 30 December 2002, the receivers disclaimed liability for outstanding debts incurred by NX Swanston and NX Bayside before their appointment. They suggested any claims be referred to the administrators. The progress claim dated 1 January was due for payment on 14 January 2003 pursuant to cl 10.3(a) of the IMA. It was not paid and Thiess Swanston sent the Director and NX Swanston a third default notice dated 22 January 2003 pursuant to cl 5.2 of the Swanston Direct Agreement. This notice claimed a sum due of $3.691 million pursuant to the progress payment claim for December 2002. The amount stated appears to have been in error. On the same day Thiess Swanston sent a letter to the Director seeking 'immediate clarification from the Director as to whether the Enforcing Party will perform this obligation ...'. The company expressly reserved its right to terminate the IMA.
31 On 23 June 2003, the creditors of each of the affected companies in the National Express Group resolved that the companies execute a Deed of Company Arrangement in accordance with a proposal put to the creditors. On 26 June 2003, Robert Whitton resigned as a voluntary administrator. On 1 July 2003, the appellants were appointed, by order of Finkelstein J, as administrators of the Deed of Company Arrangement, pursuant to s 447 of the Corporations Act. The Deed itself was executed on or about 14 July 2003 by NX Swanston, NX Bayside, other companies in the National Express Group, the Director, each of the Receivers and Managers and the appellants as the administrators. Under the terms of the Deed the Director and the National Express Group PLC contributed a total of $30 million to the Available Property. This was to be established as a fund for the unsecured creditors of the companies covered by the Deed.
32 The Deed of Company Arrangement provided for the Franchisee companies (including NX Swanston) to be released from all claims against them upon receipt of the contributions from the National Express Group and from the Director (cl 9.1). Creditors with claims were thereupon entitled to make equivalent claims against the amounts contributed (the Available Property) and to prove for them (cl 9.5). Clause 14 provided for the making of claims and the preparation by the administrators of an Admitted List.
33 The kinds of matters which could be the subject of Claim and therefore an Equivalent Claim against the Available Property appears from the definition of 'Claim' in cl 1.1 of the Deed:
'Claim means a debt payable by, or claim against, a Franchise Company (based in contract, tort, statute or otherwise, present or future, certain or contingent, ascertained or sounding only in damages), being a debt or claim arising on or before the Appointment Date but does not include a claim against a Franchise Company for Employee Entitlements.'
Clause 14.2 of the Deed applied to the proof of Equivalent Claims the provisions of Subdivisions A, B, C and E of Div 6 of Pt 5.6 of the Corporations Act (other than ss 553(1A) and 554F) and regulations 5.6.39 to 5.6.44 and 5.6.46 to 5.6.57 of the Corporations Regulations 2001 with appropriate modifications.
34 On 9 September 2003, the Director, NX Swanston, NX Bayside, Thiess Swanston and Thiess Bayside and the receivers entered into a Settlement Deed. The recitals of the Settlement Deed referred to the making of the IMAs, the Direct Agreement and the appointment of the receivers and managers. It recited that the parties had agreed to settle their differences on issues arising out of the receivership on the terms set out in the Deed.
35 The Settlement Deed extended the term of the Swanston IMA on and from the date of the Deed. These parties were required to negotiate in good faith an agreement to replace and supersede the original IMA. The Deed provided in cl 2.2(c):
'If [Thiess Swanston] and NX Swanston do not enter into the New Swanston IMA on or before 31 December 2003, [Thiess Swanston] and NX Swanston will continue to be bound by the Original Swanston IMA.'
Thiess Swanston acknowledged and agreed that until the new Swanston IMA was entered into, it and NX Swanston would '... continue to be bound by the Original Swanston IMA' (cl 2.2(d)(i)). The Original Swanston IMA would terminate on commencement of the New Swanston IMA (cl 2.2(d)(iii)). The New Swanston IMA would terminate on the date that the receivers ceased to carry out the business of NX Swanston unless certain events occurred (cl 2.2(d)(iv)). This clause differed from the equivalent provision of the Settlement Deed for the Bayside train system. Under that provision the New Bayside IMA or the Original Bayside IMA, as the case might be, would terminate on the date that the receivers ceased to operate the business of NX Bayside (cl 2.1(c)(iv)).
36 It was agreed under the Deed of Settlement that the termination of the Original Swanston IMA pursuant to cl 2.2(d) would be for 'breaches by NX Swanston of the Original Swanston IMA which occurred before 22 December 2002' (cl 2.2(e)). This was no doubt intended to avoid any suggestion that Thiess Swanston was permanently waiving its right to terminate or electing to affirm the IMA. The Director consented to the termination and replacement of the Original Swanston IMA (cl 2.2(f)) and did so pursuant to cl 4.1(b) of the Direct Agreement and cl 2.4 of the Swanston Franchise Agreement.
37 Thiess Swanston covenanted in favour of the Director and NX Swanston that it would 'not seek to terminate the Original Swanston IMA or the New Swanston IMA by reason of an Insolvency Event occurring in relation to NX Swanston (cl 2.2(g))'. 'Insolvency Event' was defined in the Deed and included the stopping or suspension or threat to stop or suspend payment of all or a class of debts.
38 On or about 17 April 2004, the assets and employees utilised by Thiess Swanston to provide infrastructure maintenance services were transferred to MetroLink under the terms of the M>Tram Transfer Agreement (Infrastructure Maintenance) (Transfer Agreement) to which the Director was a party. M>Tram was the designation given in the Transfer Agreement to NX Swanston. The Transfer Agreement provided for the IMA to terminate on commencement of a new Franchise Agreement dated 19 February 2004 between the Director and MetroLink. The termination was stated to be for breaches by NX Swanston of the IMA which had occurred before 22 December 2002 (cl 2(a)).
39 Clause 2 of the Transfer Agreement was in the following terms:
'2. EXISTING INFRASTRUCTURE MAINTENANCE AGREEMENT
M>Tram and the Transferor acknowledge and agree that:
(a) the Existing Infrastructure Maintenance Agreement will terminate on commencement of the Franchise Agreement for breaches by M>Tram of the Existing Infrastructure Maintenance Agreement which occurred before 22 December 2002;
(b) until the Completion Date each is bound by and must continue to perform its obligations under the Existing Infrastructure Maintenance Agreement (including in relation to the payment of claims for work performed up to the Completion Date) in accordance with the terms of that agreement; and
(c) notwithstanding termination of the Existing Infrastructure Maintenance Agreement and without limiting the Settlement Deed, the Transferor and M>Tram will continue to perform their respective obligations in relation to work performed up to the Completion Date in accordance with the terms of that agreement.'
Clause 6.1 of the Transfer Agreement required that, from the date of execution of the document until completion of the sale and purchase of assets Thiess Swanston would 'carry on the business in the usual way' (cl 6.1(a)) and would not 'vary or terminate any contract relating to the Business ...' (cl 6.1(i)).
40 On 1 September 2003, Thiess Swanston lodged a proof of debt with the appellants claiming $27,484,408. This amount was said to be owing to the company by NX Swanston as at 23 December 2002. The particulars of the claim included the following:
'Consideration (state how the debt arose) Amount
November and December 2002 Progress Claims $ 6,860.909
UNPAID.
Loss of Profit from balance of term. $19,138,605
Agency works – loss of profit. $ 1,388,352
Early return of lease vehicles. $ 28,294
Termination of subcontractors/novation costs $ 68,248'
41 By a letter dated 8 December 2003 the appellants admitted the unpaid progress claim totalling $6,860,909. They said that the claim of $20,623,499 for loss of profits did not constitute a claim as defined under the Deed of Company Arrangement. A claim under the Deed had to be '"a debt or claim arising on or before the Appointment Date", the appointment date being 23 December 2002.' There had been no contractual breach between the parties as at that date. A claim in relation to a breach of contract had not arisen as at 23 December 2002. The appellants did not immediately reject the claim but suggested that Thiess Swanston seek its own legal advice. Correspondence ensued. On 1 August 2004, the appellants finally advised of the disallowance of the claim for loss of profits. They gave Thiess Swanston a notice of Partial Rejection of Formal Proof of Debt or Claim pursuant to reg 5.6.54(1) of the Corporations Regulations.
42 The grounds for the rejection of Thiess Swanston's claim for loss of profits as set out in the notice were as follows:
'2. The Infrastructure Maintenance Agreement ("Agreement") between yourselves and National Express Group Australia (Swanston Trams) Pty Ltd ("NEGA") did not confer on you a contractual right to terminate the Agreement upon the appointment of the Receivers and Managers to NEGA on 22 December 2002. Accordingly, you have no claim for loss of profits under the Deed.'
43 Thiess Swanston instituted proceedings in this Court against the appellants seeking an order that they admit the loss of profits component of its claim. The application was brought under ss 447A and 447E of the Corporations Act and regulation 5.6.54 of the Corporations Regulations. It was heard by Finkelstein J on 4 August 2004. On 7 September 2004, his Honour made an order that the appellants admit in full, but subject to valuation, Thiess Swanston's proof of debt lodged on 1 September 2003. He also ordered that the appellants pay Thiess Swanston's costs of the application.
44 On 16 September 2004, the appellants filed a notice of appeal against his Honour's decision.
The Reasons for Decision of the Primary Judge
45 His Honour set out in his reasons the history of the events outlined above.
46 In considering the applicable principles his Honour began by observing that Thiess Swanston was only entitled to maintain its claim for loss of profits if, at 23 December 2002, it had a 'contingent' debt or claim against NX Swanston. The Deed, in using that term, (no doubt his Honour was here referring to the definition of 'Claim'), intended to pick up the meaning of 'contingent debt' or 'contingent claim' in the insolvency provisions of the Corporations Act. The relevant provision had its genesis in bankruptcy law. It was to bankruptcy law in relation to contingent claims that his Honour turned.
47 His Honour reviewed case law and textbook writings on the topic of contingent debts in bankruptcy and corporate insolvency. He concluded that a claimable debt would arise when, by reason of a company's insolvency, it became impossible for it to perform a contract. This was so notwithstanding that a formal breach of the contract had not occurred at the time of the winding up order – In re Asphaltic Wood Pavement Co (Lee & Chapman's case) (1885) LR 30 Ch D 216 at 224.
48 His Honour found in any event that, as at 23 December 2003, NX Swanston was in breach of the IMA as it had failed to pay the claim due on 17 December 2002. Ordinarily this would have entitled Thiess Swanston to terminate the agreement. Moreover, NX Swanston had repudiated the IMA in the sense that it informed the Victorian Government and Thiess Swanston that it was no longer able to perform its obligations.
49 The learned trial judge rejected the proposition that because the IMA remained in force until 2004, Thiess Swanston should be taken to have elected not to discharge it. Thiess Swanston was not entitled to terminate it without the consent of the Director, which consent was not forthcoming until the Transfer Agreement. Thiess Swanston had no power to elect to terminate. To that point it 'had no power but to go on with the IMA' (at [20]).
50 His Honour referred to the usual rule that when a contract is terminated for breach the contracting parties are discharged from their obligations to perform the contract in the future but accrued rights including any claims for damages are unaffected. The administrators contended that, because the IMA was terminated by agreement, accrued rights, including any loss of bargain damages, were lost. His Honour accepted that an action in damages could be bargained away. But that would require something in the nature of an accord and satisfaction. His Honour, however, took the view that there was no accord and satisfaction which extinguished Thiess Swanston's cause of action against NX Swanston.
The Grounds of Appeal
51 There are nine grounds of appeal.
'1. The Court erred in finding that the Infrastructure Maintenance Agreement ("Swanston IMA") conferred a right upon Thiess Infraco (Swanston) Pty Ltd ("Thiess Swanston") to terminate or accept a repudiation of the Swanston IMA.
2. The Court erred in not finding that any termination of the Swanston IMA by Thiess Swanston prior to the "relevant date" of 23 December 2002 would not have been a termination for breach of the Swanston IMA, but a termination in breach of the Swanston IMA, and thus did not entitle Thiess Swanston to claim damages for loss of profits.
3. The Court erred in not finding that the effect of the Swanston IMA, and clauses 11(c)(iii), 24.2 and 34 in particular, was to prohibit Thiess Swanston from terminating the Swanston IMA for breach, or accepting a repudiation of the Swanston IMA.
4. The Court erred in finding that Thiess Swanston had not elected to continue with or affirm the Swanston IMA.
5. The Court erred in finding that the Swanston IMA could be terminated with the consent of the Director of Public Transport ("the Director").
6. The Court erred in finding that Thiess Swanston had a right to terminate the Swanston IMA, which right was held in suspense waiting the Director's consent.
7. The Court erred in finding that it was necessary to show something in the nature of an accord and satisfaction before it could be established that an action in damages had been bargained away.
8. The Court erred in not finding that the basis upon which the Swanston IMA was in fact terminated was inconsistent with Thiess Swanston having accepted any repudiation by National Express Group Australia (Swanston Trams) Pty Ltd ("NX Swanston") of the Swanston IMA.
9. The Court erred in finding that on the proper construction of the Swanston IMA, Thiess Swanston had a contingent debt or claim against NX Swanston as at the relevant date.'
Limitations on the Exercise and Consequences of Common Law Rights of Termination
52 A contract is terminated when the parties to it are discharged from the future performance of their contractual obligations. Rights and obligations accrued at the time of termination may continue. Termination may occur by agreement, by frustration of the contract or by the exercise of a right to terminate. The right to terminate a contract arises at common law where a party breaches a term of the contract which is one of its 'conditions' or 'essential' terms.
53 The test of whether a condition is essential is:
'… whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor.'
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641-642 (Jordan CJ) approved in Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 at 337.
When a party to a contract announces, before the time for its performance of an essential term of the contract, that it will not perform it the innocent party is entitled to treat that as an anticipatory breach which constitutes a repudiation of the contract and gives rise to a right to terminate it by rescission – Foran v Wight (1989) 168 CLR 385 at 416 (Brennan J), see also 395 (Mason CJ) and 441 (Dawson J). Serious or multiple breaches of terms which are not construed as conditions or essential may also give rise to the right to terminate. Where one party repudiates its obligations under the contract or delays in performance the other party may terminate.
54 The concept of anticipatory breach overlaps with that of repudiation whereby a party renounces its liabilities under the contract and indicates an intention no longer to be bound by it or only to fulfil it in a manner which is substantially inconsistent with its obligations. In that event the innocent party may accept the repudiation, discharging itself from further performance and sue for damages. The word 'rescission' is used to describe a termination in those circumstances albeit it is not rescission ab initio but preserves accrued rights and obligations – Shevill v The Builders Licensing Board (1982) 149 CLR 620 at 625-626 (Gibbs CJ, Murphy and Brennan JJ agreeing).
55 Subject to limiting cases discussed below, the common law rights of termination may be supplemented or displaced, in whole or in part, by a term of the contract itself or by statute – see generally J Carter, 'Termination in the Law of Contract'in Furmston (ed) The Law of Contract, Butterworths, 2nd Edition (2003) 1317-1318.
56 The effect of a contractual provision relating to termination on the common law rights of termination is a matter of construction. The existence of such provisions in a contract does not necessarily evince an intention to provide exhaustively for the circumstances in which it may be terminated. Rawson v Hobbs (1961) 107 CLR 466 was a case in which a contractual 'annulment' provision coexisted with common law rights of termination – at 480 (Dixon CJ), 491 (Windeyer J). Amann Australia Pty Ltd v The Commonwealth of Australia (1990) 22 FCR 527 was an example of partial displacement of common law rights of termination. In that case the termination provision of a contract for the supply of aerial coastal surveillance services to the Commonwealth, was held to be exhaustive of common law rights other than the right to terminate for anticipatory breach – 532 (Davies J), 544 (Sheppard J) and 555 (Burchett J). In Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, the Court held that ordinary principles of contract law including those relating to termination or repudiation apply to leases. Mason J, with whose reasons Wilson and Deane JJ expressly agreed in their separate judgments, said (at 30):
'If it be accepted that the principles of contract law apply to leases, it is not easy to see why the mere presence of an express power to terminate should be regarded as excluding the exercise of such common law rights as may otherwise be appropriate. It is, of course, open to the parties by their contract to regulate the exercise of the common law right to determine for repudiation or fundamental breach.'
57 Progressive Mailing is also authority for the proposition that the recoverability of damages for loss of bargain in the event of repudiation or breach of an essential term is not conditioned upon common law discharge for breach although it is a necessary condition that the defendant can no longer be required to perform the contract in specie:
'This essential foundation may be established by a common law rescission of the contract by the innocent party or by a termination of the contract in the exercise of a contractual power so to do. In either event, assuming repudiation or fundamental breach by the defendant, he could no longer be required to perform the contract and is liable for damages for loss of bargain. The well-recognised distinction between common law rescission and termination pursuant to a contractual power supplies no reason in principle why such damages are recoverable by the innocent party in one case and not in the other, provided of course that the exercise of the power is consequent upon a breach or default by the defendant which would attract an award of such damages.' (at 31 (Mason J))
His Honour went on to reject the proposition that termination of a contract in the exercise of a contractual power could establish an affirmation of the contract debarring the innocent party from suing for damages for breach on the ground of repudiation or fundamental breach (31).
58 The principle that termination of a contract is a necessary condition for recovery of loss or bargain damages was restated in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260-261 (Mason CJ, Deane, Dawson and Toohey JJ agreeing). The contrary view suggested by Barwick CJ in Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 450 was disapproved.
59 The characterisation, by the House of Lords, of the right to sue for loss of bargain damages as a 'secondary obligation' arising upon termination of the contract is consistent with the approach taken in Progressive Mailing and Sunbird Plaza - Photo Production Ltd v Securicor Ltd [1980] AC 827 at 845 (Lord Wilberforce) and 849 (Lord Diplock) – cited in Sunbird Plaza at 261 (Mason CJ).
60 It may be accepted as a general proposition that the right of parties to a contract to terminate the contract for breach can be defined exhaustively by the terms of the contract itself. In the limiting case of a refusal by one party to perform its part of the contract at all, that is a global repudiation of its contractual obligations, a question may arise whether the other party can be barred by a term of the contract from accepting that repudiation and treating itself as discharged. The concept may be thought of as raising the contractual analogue of the Zen question – what is the sound of one hand clapping? Where there are two parties to a contract and one declares its intention no longer to perform its obligations under the contract it may be difficult to discern any sensible basis upon which a restriction on termination, which depends for its existence on the very contract that has been repudiated, is to be construed if enforceable at all. Questions of validity for want of mutuality can arise as in the case of 'termination for convenience' clauses in government contracts –N.Seddon, Government Contracts Federal State and Local, 3rd Edition, Federation Press (2004) at 5.5. See also KK Puri, Australian Government Contracts: Law and Practice (1978) CCH at par 1505.
61 Clauses restricting or barring termination are to be construed '... according to [their] natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity' – Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510. That formulation is subsumed in the principles generally applicable to the construction of contractual terms and conditions – Codelfa Construction Pty Ltd v Rail Authority of NSW (1982) 149 CLR 337 at 350; Pacific Carriers Ltd v BNP Paribas (2004) 208 ALR 213 at 221 [22]. As appears from the latter case the genesis of the transaction, and the background, context and market in which the parties are operating may all be considered in ascertaining 'the commercial purpose of the contract'.
62 In identifying the intention of clauses dealing with termination for breach of a contract it is necessary to keep in mind that 'clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of contract arising by operation of law' – Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585, cited with approval in Concut v Worrell (2000) 75 ALJR 312 at 317 – [23] (Gleeson CJ, Caudron and Gummow JJ). In the Concut decision their Honours went on to say:
'Thus an express provision for termination for breach in certain circumstances may be regarded as designed to augment rather than to restrict or remove the rights at common law which a party otherwise would have had on breach.'
63 The construction of clauses limiting rights of termination, like that of exemption clauses of which they may be seen as a subset, should avoid absurdity which would defeat the main purpose of the contract – Darlington Futures at 510 citing H & E Van Der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157 at 158 (Walsh J, Barwick CJ and Kitto J agreeing) and Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Aust) Pty Ltd (1978) 139 CLR 231 at 238 (Barwick CJ). In the latter case Barwick CJ cited Suisse Atlantique Societe D'Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 for the proposal that (at 238-239):
'Whilst exemption clauses ... should be construed strictly, they are of course enforceable according to their terms unless their application according to those terms should lead to an absurdity or defeat the main object of the contract or, for some other reason, justify the cutting down of their scope.'
Lord Wilberforce in Suisse Atlantique considered the possibility of limiting cases which would fall outside the scope of any exemption clause (at 432):
'One may safely say that the parties cannot, in a contract, have contemplated that the clause should have so wide an ambit as in effect to deprive one party's stipulations of all contractual force: to do so would be to reduce the contract to a mere declaration of intent. To this extent it may be correct to say that there is a rule of law against the application of an exception clause to a particular kind of breach.'
Subject to that class of case it was 'a question of contractual intention' whether a particular breach was covered. The more radical the breach, the clearer must be the language of an exemption clause to cover it. The so called 'four corners' rule referred to in relation to the bailment of goods may perhaps be seen as a particular application of the general proposition in Lord Wilberforce's judgment – see Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 at 377 (Windeyer J). It is questionable whether the proposition that an exemption clause will not apply to the limiting case posited by Lord Wilberforce is a rule of law. Lord Wilberforce did not make a definitive statement to that effect. Rather the difficulty of identifying any sensible operation for an exemption clause in such a case flows from the attempt to apply ordinary constructional principles to an extreme situation.
64 The proposition that a right to terminate may be barred without being extinguished is not novel. A party to a contract with a right to terminate that contract for breach at common law may be estopped from so doing by its conduct and the estoppel removed by later notice – Bentsen v Taylor [1893] 2 QB 274 at 283 (Bowen LJ); Panoutsos v Raymond Hadley Corporation of New York [1917] 2 KB 473 at 479. In Legione v Hateley (1983) 152 CLR 406 at 439, Mason and Deane JJ said:
'If what is said or done amounts to a clear and unequivocal representation that the particular right will not be asserted for a period of at least x days, a representation to that effect can be relied on to found an estoppel.'
An estoppel against the exercise of a right to terminate for a time does not carry the consequence of extinguishment of the right of termination which is associated with an election to affirm the contract. A party may contract to waive or defer the exercise of its termination rights for a time without extinguishing them. In such a case the effect of the second contract upon the first is a matter of construction – Concut v Worrell at 316 [19] citing Commissioner of Taxation v Sara Lee Household and Bodycare (Australia) Pty Ltd (2000) 74 ALJR 1094 at 1098 – [22]. Similarly, it would seem that a party may contract to defer a right of contractual termination without thereby abandoning any claim for loss of bargain damages that may arise because, for example, of an hiatus between the original contract and that which effects the continuation of obligations under it or replaces them with a set of like obligations to different parties.
65 Despite the constructional difficulties in the way of applying a clause limiting rights of termination as against a party who refuses or is unable to perform a contract at all, a prohibition against ceasing to perform contractual services following termination may be made effective by way of a second contract with a third party. There is no reason in principle why a party to one contract may not bind itself under a second contract to continue to perform services required under the first even though the counterparty to the first has repudiated its obligations and the innocent party has terminated as against the defaulter. While the first contract might be terminated by the innocent party as against the counterparty, the innocent party is obliged under the second contract to continue to do what it would have had to do under the first contract were it still in place. The terms and conditions including consideration for the continuing performance of those obligations would derive from the second contract. In such a case the existence of the second contract would not deprive the innocent party of the right to terminate as against the defaulting counterparty and to sue for loss of bargain damages to the extent that they were not offset by benefits received under the second contract. The second contract would give rise to a fresh obligation owed to the third party to do whatever it is that would have to be done to perform obligations under the first contract.
66 An alternative model which would maintain the first contract in force would use a provision in a second contract barring or limiting the exercise by the innocent party of its rights to termination under the first contract and thus holding the innocent party to the performance of its obligations under that contract. The consideration, including payment for so doing would be provided for in the second contract. The substantive practical difference between the two theoretical mechanisms lies in the availability of the remedy of termination to the innocent party against the repudiating party in the first contract.
67 As has already been noted, cl 5.2 of the Direct Agreement prohibited Thiess Swanston from terminating or suspending 'the performance of its obligations' under the IMA where a step-in notice had been given by the Director. It in effect required Thiess Swanston to continue to do all of the things it was required to do under the IMA on the basis that a specified Enforcing Party, in this case the receivers, was 'performing all of the Franchisee's obligations under the Contract'. The clause was not drawn so as to prevent termination of the contract with NX Swanston. Rather it was directed to require continuity of maintenance services from Thiess Swanston. That was achieved by the assumption, under the Direct Agreement, of obligations to continue providing the services required to be provided under the IMA. The receivers were not parties to the Direct Agreement. The obligation assumed by Thiess Swanston under that agreement was owed to the Director.
68 On the basis of the preceding analysis it seems that it was the first of the two models set out in the preceding general discussion that was adopted in this case. The relevant second contract was the Direct Agreement. The third party was the Director. An alternative construction would read cl 5.2 as extending to prohibit termination of the IMA. On that construction the second model would be applicable. In the event, the choice of construction of cl 5.2 and the model applicable to the Direct Agreement does not affect the outcome of the case for it does not alter the time at which the IMA was formally terminated. That was done under the terms of the Transfer Agreement.
Appeal Ground 1 – Whether Thiess Swanston had a right to terminate the IMA for breach.
69 Clause 24.4(a) of the Swanston IMA provides that Thiess Swanston must not 'except as permitted by par (b) ... avoid, release, surrender, terminate, rescind, discharge (other than by way of performance) or accept the repudiation of ... this Agreement'.
70 The acts to which par (a) applies include acts which can be done consensually or in the exercise of common law rights. Paragraphs (a) and (b) can be read in two ways. One construction would see common law rights of termination extinguished so that all that is left is what amounts to a discretion on the part of the Director to release Thiess Swanston from its agreement. Another construction would see the common law rights not extinguished but exercisable only upon the fulfilment of the conditions defined in cl 24.4(b). That is to say, before Thiess Swanston could terminate for cause, the Director must be reasonably satisfied that '... it is no longer necessary [for] Thiess to have the benefit of the [IMA] ...' and that Thiess Swanston has made 'adequate alternative arrangements...'.
71 Only the word 'termination' is used in cl 24.4(b) to refer to permitted action. As Lord Radcliffe said in Bridge v Campbell Discount Co Ltd [1962] AC 600 at 620:
'"Terminate" is an ambiguous word, since it may refer to a termination by a right under an agreement or by a condition incorporated in it or by deliberate breach by one party amounting to a repudiation of the whole contract.'
The word is generic and wide enough to encompass rescission, discharge and acceptance of repudiation. At common law each of these constitutes the termination of the contract. Termination may also occur by agreement involving release or surrender of contractual rights – see generally J Carter, 'Termination in the Law of Contract' (op cit) at 1317. All of these mechanisms for termination are left intact by cl 24.4(a) but conditional upon the satisfaction of the requirements in cl 24.4(b). This approach to construction accords with the language of the clause and least disturbs existing common law rights. It is also consistent with its contractual purpose of maintaining continuity in the provision of public transport services. That purpose is not undermined by a construction of the contract which would defer or condition, rather than extinguish, common law rights of termination. The fact that 'termination' appears in cl 24.4(a) as one of a number of terms relating to the cessation of a contract, does not mandate its narrow construction in cl 24.4(b) as referring only to consensual termination. The words 'release' and 'surrender' in cl 24.4(a) are capable of reference to consensual termination. The generic construction of 'termination' being open under cl 24.4(b) and having a non-extinguishing operation in respect of common law rights of termination it should be adopted rather than a construction which would have an extinguishing effect.
72 The preceding construction of cl 24 is not affected by cl 34 of the IMA. That clause specifies a process whereby NX Swanston could terminate the IMA for default by Thiess Swanston. It contains no mechanism for termination by Thiess Swanston. That does not support its characterisation as a code for termination. A provision which does not in terms deal with termination by one party can hardly be characterised as a code on the subject. So to do, in this case, would be inconsistent with the existence of cl 24 and its regulation of termination by right or by agreement on the part of Thiess Swanston.
73 The view which I have formed of the construction of cl 24 is consistent with cl 5 of the Direct Agreement which works on the assumption that there is a right in Thiess Swanston to terminate for breach by NX Swanston, albeit the right may be practically confined by the conditions upon its exercise. The provisions of cl 5.2(b) of the Direct Agreement which bar termination or suspension of performance where the Director exercises the step-in option, assume the existence of a right to terminate otherwise exercisable, albeit upon the conditions set out in cl 24.4(b). The obligation on Thiess Swanston to obey the constraints imposed by cl 5.2(b) is imported into the IMA by cl 11(c)(ii) of that agreement. It should be stated here that the fact that the IMA and the Direct Agreement came out of generic moulds which were intended to apply to a variety of contractual arrangements relating to the privatisation of tram and train services in Victoria, does not alter the proper approach to their construction by reference to their particular contents.
74 The learned primary judge was, in my opinion, correct to hold as he did that Thiess Swanston could terminate the IMA and that cl 24.4 'limited the circumstances' on which it could do so [2]. His Honour also rejected the contention that cl 34 was a code and that only NX Swanston could terminate the agreement in case of default. This was, as his Honour held, '... an untenable proposition as reference to cl 24, which expressly contemplates termination by Thiess, shows...' [2].
75 It was submitted for the appellants that 'no provision of the Swanston IMA conferred upon Thiess Swanston a contractual right to terminate on the ground of event of default, breach or other circumstance which might give rise to a claim for the purposes of the Deed of Company Arrangement'. Put that way, the submission begs the question whether, and to what extent, the agreement affected common law rights of termination. It was a matter for the appellants to persuade the Court that the common law rights of termination (encompassing discharge, rescission and acceptance of repudiation) were extinguished by the IMA. This has not been established.
76 In so far as the appellants' submissions suggested that cl 24.4(b) applied to consensual termination only, they are not accepted. The mode of termination regulated by cl 24.4(b) covers all of the modes contemplated by cl 24.4(a).
77 The first ground of appeal fails.
Appeal Ground 2 – Whether the Court erred in not finding a termination of the IMA would have breached the IMA.
78 In the second ground of appeal it is contended that the learned primary judge should have found that any termination of the Swanston IMA by Thiess Swanston prior to 23 December 2002 would have breached the Swanston IMA '... and thus did not entitle Thiess Swanston to claim damages for loss of profits'.
79 Had Thiess Swanston purported to terminate the Swanston IMA prior to 23 December 2002 without the Director first being reasonably satisfied of the matters referred to in cl 24.4(b), that termination would have constituted a breach of cl 24.4(a). It is questionable however what, if any, remedy would have been available at the suit of NX Swanston.
80 As at 23 December 2002, Thiess Swanston had sent to the Director two default notices under cl 5.2 of the Direct Agreement. The first was sent on 19 December and the second on 22 December. A termination of the IMA as at 23 December 2002 would have breached cl 5.2 of the Direct Agreement.
81 The conclusion that the exercise by Thiess Swanston of its common law termination rights prior to 23 December 2002 would have breached the IMA does not lead to the conclusion reflected in appeal ground 2 that it is thereby not entitled to claim damages for loss of profits. That proposition necessarily rests on the premise that cl 24 extinguishes termination rights rather than conditions their exercise. As the conclusion advanced in appeal ground 2 is not supportable, that ground also fails.
Appeal Ground 3 – Whether the Court erred in not holding that Thiess Swanston was prohibited from terminating the IMA for breach.
82 This appeal ground relied upon cls 11(c)(ii), 24.2 and 34 of the IMA for the proposition that Thiess Swanston was prohibited from terminating the IMA for breach or from accepting a repudiation of it.
83 Clause 11(c)(ii) of the IMA required that Thiess Swanston enter into a Direct Agreement with the Director. Although NX Swanston was not a party to the Direct Agreement, Thiess Swanston covenanted with NX Swanston in cl 11(c)(ii) of the IMA to comply with the requirements of the Direct Agreement. That agreement provided for the issue of default notices, for a minimum time to elapse following such issue and for the Director to exercise step-in rights via the IMA receivers in relation to the role of NX Swanston under the IMA. In the latter event, Thiess Swanston had to continue to perform the services required under the IMA. On the preferred construction of cl 5.2, referred to earlier in these reasons, this obligation did not amount to a bar on the termination of the IMA contract. The prohibition created by cl 5.2 derived its force from the Direct Agreement and related to the continued performance of services due by Thiess Swanston under the IMA rather than to the continuation of the IMA itself. Even if this construction be wrong and the prohibition created by cl 5.2 went to the termination of the IMA, it was a prohibition enforceable at the suit of the Director in relation to the exercise of rights arising vis a vis Thiess Swanston and NX Swanston under the IMA. It was not a prohibition which would necessarily remain in force for the balance of the term of the contract. It did not and could not operate to extinguish the right to terminate the IMA. The terms of cl 24 conditioned the right of termination on the Director's reasonable satisfaction but did not prohibit its exercise.
84 The clauses of the IMA relied upon in appeal ground 3 do not, for the reasons previously discussed, effect a global prohibition in respect of the exercise of termination rights. Nor do they extinguish those rights. Appeal ground 3 fails.
Appeal Ground 4 – Whether Thiess Swanston elected to affirm the Swanston IMA.
85 A party to a contract whose counterparty has acted in such a way as to give rise at common law to a right to terminate the contract may have to choose between exercising the right of termination and affirming the contract. This is a choice between inconsistent rights said to constitute an 'election' to proceed one way or the other. Importantly, a party who elects to exercise one right inconsistent with another cannot, in the ordinary course, resile from that election and choose to exercise the other right:
'… if a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge he has done an unequivocal act of showing that he has chosen the one he cannot pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose.'
United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30.
86 The essential elements of an election were stated by Stephen J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 648:
'Election as between inconsistent contractual rights does not call for any conscious choice as between two sets of rights, it being enough that there should be intentional and unequivocal conduct together with knowledge of the facts giving rise to the legal rights.'
It is not necessary for election that there be a consciously 'choosing' mind. McTiernan ACJ agreed with Stephen J. Neither Stephen J nor Mason J was of the view that it was necessary for the electing party to be aware of the existence of the legal right to choose as long as the party was aware of the facts giving the right to rescind the contract. Mason J said (at 658):
'If a party to a contract, aware of a breach going to the root of the contract, or of other circumstances entitling him to terminate the contract, though unaware of the existence of the right to terminate the contract, exercises rights under the contract, he must be held to have made a binding election to affirm. Such conduct is justifiable only on the footing that an election has been made to affirm the contract; the conduct is adverse to the other party and may therefore be considered unequivocal in its effect. The justification for imputing to the affirming party a binding election in these circumstances, though he be unaware of his alternative right, is that, having a knowledge of the facts sufficient to alert him to the possibility of the existence of his alternative right, he has acted adversely to the other party and that, by so doing, he has induced the other party to believe that performance of the contract is insisted upon. It is with these considerations in mind that the law attributes to the party the making of a choice, though he be ignorant of his alternative right. For reasons stated earlier the affirming party cannot be permitted to change his position once he has elected.'
87 The question in the present case is upon what basis could it be said that Thiess Swanston elected to affirm the IMA. Against the learned primary judge's finding that Thiess Swanston's right to terminate for breach or repudiation was 'held in suspense' the appellants argued that Thiess Swanston had continued to perform the Swanston IMA until April 2004. They relied upon its agreement in the Settlement Deed and again in the Transfer Agreement to continue with the Swanston IMA. The appellants argued that Thiess Swanston thereby affirmed the Swanston IMA rather than treated it as discharged by reason of any alleged repudiation by NX Swanston.
88 Counsel for Thiess Swanston pointed out that when the administrators were appointed on 23 December 2002, Thiess Swanston had unequivocally expressed its intention to terminate the IMA for default by NX Swanston. It served notices of default in accordance with cl 5.2 of the Direct Agreement. The defaults were never remedied. Thiess Swanston took the first and at that time, the only step, open to it to set in train the process of termination for default which process is said to have culminated with the Transfer Agreement. It was submitted that the Director's reasonable satisfaction, required by cl 24.4(b) of the Swanston IMA, was to be inferred from his execution of the Transfer Agreement. He could not have executed it unless so satisfied. That was because the Transfer Agreement provided for a new franchisee to take over NX Swanston's role and a new contractor to take over Thiess Swanston's role – circumstances contemplated by cl 24.4(b) of the IMA and cl 5.2(b) of the Direct Agreement. They were the circumstances necessary to keep the public transport system running.
89 Thiess Swanston was obligated to NX Swanston by reason of cl 11(c)(ii) of the IMA, read with cl 5.2(b) of the Direct Agreement, not to terminate the performance of its services while the Director exercised the step-in right. The continued performance of infrastructure maintenance services by Thiess Swanston up until 18 April 2004 did not involve any choice between a right to terminate and right to affirm. On the view which I have taken of the preferable construction of cl 5.2, it did not prevent Thiess Swanston from terminating the IMA provided that the company continued to deliver the maintenance services as required by the Direct Agreement following the exercise by the Director of his step-in right. However Thiess Swanston's right to terminate the IMA continued to be deferred by operation of cl 24.4 of the IMA. There was no affirmation of the IMA by reason of Thiess Swanston's continuing performance of the services for which the IMA provided.
90 The Settlement Deed made on 9 September 2003 provided for a new Swanston IMA to replace the original IMA which would terminate upon the commencement of the new agreement. The Deed of Settlement foreshadowed a termination of the IMA as between NX Swanston and Thiess Swanston. That never occurred. In any event the Deed expressly reserved the characterisation of the termination of the original IMA as a termination for breach. That position was again reserved in the Transfer Agreement.
91 It cannot be said in the circumstances that the conduct of Thiess Swanston up until and including its execution of the Transfer Agreement involved any unequivocal communication of a choice to affirm the IMA. On the contrary, Thiess Swanston reserved its position at all times, its right to terminate being constrained by the conditions upon its exercise imposed by the agreements which it had entered into. Ground 4 therefore also fails.
Appeal Ground 5 – Whether termination with consent was possible.
92 Appeal ground 5 asserts error on the part of the learned primary judge in finding that the Swanston IMA could be terminated with the consent of the Director.
93 The relevant passages in his Honour's judgment appear at [2] and [20]. At [2], in describing the provisions of the IMA his Honour said of Thiess Swanston's right to elect to terminate the contract for breach:
'It had no power to make an election in the sense that it could not terminate the IMA. That right was held in suspense waiting the director's consent, unless, of course, before that consent was given, Thiess chose to go on with the IMA come what may regardless of the prior breach.'
At [20] his Honour said:
'As I have pointed out Thiess was not entitled to terminate the contract for breach or repudiation without the consent of the Director, and it did not obtain that consent until it entered into the transfer agreement; the Director's consent is to be inferred by his execution of the transfer agreement.'
94 The IMA does not in terms speak of the prior 'consent' of the Director as a condition of the right to terminate. Rather it speaks of the Director's 'reasonable satisfaction' about certain things (cl 24.2(b)). It may be seen that by his use of the term 'consent' his Honour referred to the requirements set out in cl 24.2(b) and, perhaps by extension, to the requirements of cl 5.2 in so far as the Director might decide against having receivers step into the shoes of the franchisee under the IMA.
95 There was no error in his Honour's statement which was consistent with the proposition that the exercise of termination rights was conditioned in the IMA by reference to the Director's 'reasonable satisfaction'.
Appeal Ground 6 – A right in suspense.
96 Appeal ground 6 takes issue with his Honour's finding that the right to terminate the IMA 'was held in suspense'. This was a metaphor reflecting the proposition that the rights of termination were not extinguished by the terms of the agreement which deferred the exercise of those rights to the satisfaction of the conditions stipulated by the agreement as necessary to its exercise. It might be at some point that the 'suspended' right, by effluxion of time without satisfaction of the conditions for its exercise and by reason of changing circumstances, might be taken to have no practical significance. It might in such a case for all intents and purposes be regarded as extinguished. This does not mean that his Honour's use of the metaphor reflected legal error. Ground 6 also fails.
Appeal Ground 7 – Whether accord and satisfaction was necessary to bargaining away of the damages claim
97 The learned primary judge considered at [21] the contention by the administrators that the Swanston IMA was terminated by agreement and that any accrued rights, which would ordinarily include loss of bargain damages were lost. His Honour accepted that an action in damages may be bargained away but that it was necessary to show something in the nature of an accord and satisfaction. His Honour referred to McDermott v Black (1940) 63 CLR 161 and the following passage from the judgment of Dixon J (at 183-184):
'An agreement not to sue upon particular allegations might give a defendant a good equitable plea, but at common law it would be necessary for him to show that it amounted to an accord and satisfaction discharging the cause of action or else that it gave rise to an estoppel.
The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given the accord remains executory and cannot bar the claim.'
98 It might otherwise be put that a cause of action, like any other right may to all intents and purposes be 'lost' or 'bargained away by agreement or its enjoyment barred temporarily or permanently by an estoppel. It may be the subject of a contractual release supported by consideration. It may be the subject of a contractual promise not to enforce it, again supported by consideration or perhaps a promise to pursue it only upon the occurrence of certain events. His Honour's observations were directed to the administrator's submission that the IMA and any accrued right to loss of bargain damages had been terminated by agreement. In substance he found there was no agreement to that effect. He said (at [21]):
'Here there was no accord, expressed or implied. There is, therefore, no need to inquire into its satisfaction.'
His Honour's statement of principle, in the circumstances of the case, was unexceptionable. That leaves open however, the critical question whether in truth any cause of action for loss of bargain damages had been extinguished by agreement.
Appeal Ground 8 – Whether the termination of the Swanston IMA under the Transfer Agreement was termination for breach
99 The appellants submitted that the basis upon which the Swanston IMA was in fact terminated was inconsistent with Thiess Swanston having ever purported to accept any repudiation of the contract by NX Swanston. Clause 2 of the Transfer Agreement achieved termination by mutual assent of Thiess Swanston and NX Swanston not by any unilateral acceptance by Thiess Swanston of repudiation.
100 The question that arises is whether, by the Transfer Agreement, Thiess Swanston effected a consensual termination which was unable to be characterised as a termination on account of NX Swanston's breach of contract. As appears earlier in these reasons the right to terminate for breach was not extinguished by the restrictions placed upon its exercise under cl 24 of the IMA. Nor, if cl 5.2 were construed as a restriction upon termination of the agreement, was the right to terminate extinguished by that restriction. A question arises whether the right to terminate could only be exercised upon the reasonable satisfaction of the Director under cl 24.4.
101 The Director's reasonable satisfaction, required under cl 24.4, was a condition upon the right of termination for breach which could not be enforced by the Director under the IMA as the Director was not a party to that agreement. It might be that any failure by NX Swanston to resist a termination for breach, other than upon the Director's reasonable satisfaction of the matters in cl 24.4(b), could be actionable at the instance of the Director as a breach of cl 23.5 of the Franchise Agreement although the remedies which would be available in such an action are not clear.
102 There is no doubt that NX Swanston and the Director could make an agreement with Thiess Swanston which would have the effect of varying or lifting the restrictions imposed by cl 24.4(b) of the IMA and as between the Director and NX Swanston removing any obligation upon NX Swanston under the Franchise Agreement to endeavour to enforce the restriction. It was not necessary to posit an implied 'reasonable satisfaction' on the part of the Director under cl 24.4(b) of the IMA in order to achieve that result.
103 The Director, NX Swanston and Thiess Swanston were all parties to the Transfer Agreement. All agreed to terminate the IMA without reference to the Director's reasonable satisfaction under cl 24(b). Moreover, all agreed that the termination was for '… a breach by [NX Swanston] of the Existing Infrastructure Maintenance Agreement which occurred before 22 December 2002'. The termination that was effected by agreement preserved the rights that Thiess Swanston would have enjoyed upon a termination for breach. It is not fatal to that construction that Thiess Swanston did not express the termination as acceptance of a repudiation. It was at pains from the time of the repudiation of the contract by NX Swanston to preserve, and to the extent contractually possible, to exercise the rights it had in respect of the termination of the IMA.
104 In my opinion the Transfer Agreement did not extinguish any right to claim damages which Thiess Swanston would have had against NX Swanston by reason of its breach of the contract. Importantly there was no general release of such liabilities as NX Swanston may have owed to Thiess Swanston in connection with the termination of the contract. The question about the quantum of such liabilities and the extent that they may have been subject to offsets by payments that Thiess Swanston received from the receivers is a separate issue. In my opinion therefore, ground 8 fails.
Appeal Ground 9 – Whether Thiess Swanston had a contingent debt or claim against NX Swanston at the relevant date
105 In light of the conclusions reached with respect to the preceding grounds of appeal, the question whether the claim for loss of profits reflected a contingent debt or claim within the meaning of the Deed of Arrangement, is to be answered in the affirmative. The learned primary judge in his reasons for judgment discussed contingent claims in the context of claims for breaches of contract which had not occurred at the time of bankruptcy or winding up as the case may be but which were future breaches which would occur by reason of such events. He cited In Re Asphaltic Wood Pavement Co where, prior to its liquidation a company had entered into a construction contract but not completed the work. There was held to be a provable claim for damages for breach of contract in that case. There Cotton LJ said (at 224):
'It is argued that this is not a liability at the time because there was no breach. At the time when the company commenced its liquidation, it was under a contract which implied a liability to maintain these streets if it were required. It is now rendered impossible by the winding-up for the company to do that, and in my opinion … that is properly a liability the damages for which are capable of being proved.'
106 The hypothesis upon which his Honour based his initial discussion about contingent claims was, in the event, academic. For, as his Honour correctly held (at [17]):
'In any event, as it turns out, as at 23 December 2002 NX Swanston was in breach of the IMA. It had failed to pay the fee due on 17 December 2002 and this was a breach of an essential term of the IMA, time being of the essence. Ordinarily this would entitle Thiess to bring the IMA to an end:….'.
And further (at [18]):
'Not only was NX Swanston in breach of an essential term of the IMA, before being placed into administration it had repudiated the IMA in the sense that it informed both the Victorian government and Thiess that it was no longer able to perform its obligations. That this amounted to a repudiation cannot be doubted:….'
107 The question of contingency remained alive however for the right to claim for loss of profits would not crystallise except upon termination of the IMA for breach. The success of the appellants' case in this respect depends upon their making good one or either of the propositions that:
1. The right to terminate for breach was extinguished by the provisions of the IMA.
2. The right to terminate was lost by affirmation of the contract or by agreement pursuant to the provisions of the Settlement Agreement and/or the Transfer Agreement.
108 The entitlement to terminate and to claim damages for loss of bargain had arisen as at 23 December 2002. The exercise of the entitlement to terminate was, for reasons already explained, conditioned upon, but not extinguished by, the requirements of cl 24 of the IMA. Nor was it extinguished by Thiess Swanston's obligations under cl 5.2 (however construed) of the Direct Agreement, which were incorporated by reference into the IMA. There was never any election on the part of Thiess Swanston to affirm the contract notwithstanding the breach. The provision of Infrastructure Maintenance Services in accordance with the terms of the IMA after 23 December 2002 was done pursuant to an obligation imposed upon Thiess Swanston by the Direct Agreement. That was an obligation enlivened by the notice from the Director on 24 December 2002 that the receivers, as Enforcing Party, were performing 'all of the franchisee's obligations' under the IMA. Those obligations of course did not include obligations to meet payments already due and owing. Thiess Swanston maintained and repeatedly asserted its entitlement to termination and, by necessary implication, its entitlement to any claim for loss of bargain damages. For these reasons appeal ground 9 fails.
Conclusion
109 In my opinion, none of the grounds of this appeal is made out. That is to say nothing about the claimed quantum of loss of profits. At the moment it is difficult to see upon what, if any basis, the claimed quantum of loss of profit damages rests. That, however, is a matter for valuation by the administrators in accordance with his Honour's order. The appeal should be dismissed with costs.
I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.
Associate:
Dated: 30 March 2005
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 1145 of 2004
On appeal from a single judge of the Federal Court of Australia
BETWEEN: SIMON ALEXANDER WALLACE-SMITH
FIRST APPELLANT
PETER GEORGE YATES
SECOND APPELLANT
AND: THIESS INFRACO (SWANSTON) PTY LTD
RESPONDENT
JUDGES: FRENCH, WEINBERG & ALLSOP JJ
DATE: 30 MARCH 2005
PLACE: MELBOURNE
REASONS FOR JUDGMENT
weinberg j:
110 This is an appeal from a judgment of Finkelstein J allowing an application by a creditor challenging the rejection of a proof of debt by a company's administrators: Thiess Infraco (Swanston) Pty Ltd v Smith (2004) 209 ALR 694.
111 The facts are in relatively short compass. In 1999, the Victorian Government privatised the public transport system in Victoria. Franchises were awarded to various private organisations to operate the transport system. Three franchises were granted to Australian-based subsidiaries of National Express Group Plc ('NX'), a British publicly listed company. One such franchise was awarded to National Express Group Australia (Swanston Trams) Pty Ltd ('NX Swanston') for a term of ten years.
112 It soon became apparent that the NX subsidiaries could not operate profitably. In December 2002, the British parent withdrew its financial support. Shortly thereafter, all of the NX subsidiaries went into administration. Ultimately, they entered into Deeds of Company Arrangement. The Deeds made provision for the extinguishment of creditors' claims upon payment to them, out of a $30 million fund established by the Victorian Government and the British parent, of a sum less than the full amount of their claims. One group of creditors whose claims would be compromised were those who had a 'debt payable by, or claim against, [a franchisee] (based in contract, tort, statute or otherwise, present or future, certain or contingent, ascertained or sounding only in damages), being a debt or claim arising on or before' 23 December 2002. That was the day on which NX Swanston went into administration.
113 The respondent, Thiess Infraco (Swanston) Pty Ltd ('Thiess') claims to be a creditor of NX Swanston. It lodged a proof of debt with the appellants, who are the administrators of the particular Deed that is central to this appeal. The proof was for unpaid services for work done before 23 December 2002, and for loss of profits. The administrators rejected the proof insofar as it claimed loss of profits, and Thiess challenged that decision pursuant to s 1321 of the Corporations Act 2001 (Cth).
114 The contractual arrangements giving effect to the privatisation process were complex. On 14 May 1999, National Express Group (Australia) Pty Ltd ('NX Australia') entered into an Infrastructure Maintenance Agreement ('the IMA') with Thiess Contractors Pty Ltd. On 23 July 1999, that agreement was novated to, inter alia, NX Swanston and Thiess. It was agreed that Thiess would provide infrastructure maintenance services to NX Swanston for a period of three years, extendable at the option of NX Swanston.
115 On 25 June 1999, the Director of Public Transport ('the DPT') and NX Swanston entered into a Franchise Agreement. On 26 July 1999, the DPT and Thiess entered into a Direct Agreement. The terms of these agreements are set out in some detail in the judgments of French J and Allsop J, and I shall not repeat them here. It is sufficient to note that pursuant to the Direct Agreement between the DPT and Thiess, Thiess gave various undertakings designed to protect the public interest in the operation of the transport system. Clause 5.2 of that agreement prevented Thiess from terminating or suspending the IMA in terms different from cl 24.4 of the IMA. That clause will be discussed below. Clause 5.2(a) provided that Thiess could terminate or suspend the performance of its obligations under the IMA for default on the part of NX Swanston but only if it had given notice of that default to the DPT, and either the default was not remedied within thirty days or, if it could not be remedied, if the obligations of NX Swanston under the IMA did not commence and continue to be performed within that period. Clause 5.2(b) provided that Thiess could not terminate or suspend the IMA if the DPT notified Thiess that he would assume responsibility for NX Swanston's obligations under the IMA.
116 There are several provisions of the IMA that are of critical importance in this case. Clause 34 sets out the circumstances under which the IMA could be terminated in the case of certain defined 'Events of Default'. The primary judge considered it curious that cl 34 appeared to give NX Swanston alone, and not Thiess, the right to terminate the IMA. The wording of that clause had led to a submission that it was a 'code', governing the entire IMA and enabling only NX Swanston to terminate the agreement in case of default. His Honour rejected that submission. He noted that cl 24, which did not deal with any question of default, expressly contemplated termination of the IMA by Thiess.
117 The primary judge regarded cl 24 as important for other reasons. It was concerned with contracts called 'Key Contracts'. By a complicated trail, "Key Contracts" were defined to include the IMA. Clause 24.4 limited the circumstances in which Thiess could terminate a Key Contract. It required, as a condition of Thiess doing so, the DPT to be reasonably satisfied that it was no longer necessary for Thiess to have the benefit of the Key Contract, or to be reasonably satisfied that Thiess had made adequate alternative arrangements for the continued operation of the franchise business. Moreover, the clause went on to say that if Thiess terminated a Key Contract in breach of the IMA, it would be obliged, at the request of the DPT, to enter into an agreement immediately following that request with each counterparty to the Key Contract on the terms set out in the relevant Direct Agreement between the DPT and itself.
118 Thiess provided maintenance services to NX Swanston in accordance with its obligations under the IMA, and received payment for those services throughout the period 1999 to 2002. On 16 December 2002, NX announced that it had given notice to the Victorian Government that it would no longer continue to provide funds to enable its train and tram subsidiaries to meet their liabilities. Later that day, the relevant Minister announced that the NX subsidiaries would hand back their franchises with effect from 23 December 2002.
119 On 17 December 2002, Thiess, which was owed approximately $4 million under the IMA, sought clarification of NX Swanston's position, and its intentions under the IMA. NX Swanston immediately replied that it was negotiating with the Victorian Government for an orderly handover of the franchise businesses once its parent company ceased to provide funding.
120 On 19 December 2002, a director of Thiess sought an assurance from the Chief Operating Officer of NX Australia that NX Swanston would continue to pay the amounts due to Thiess. The Chief Operating Officer said that no such guarantee could be given.
121 On 20 December 2002, Thiess served a default notice on the DPT pursuant to cl 5.2 of the Direct Agreement. The default identified in the notice was the failure by NX Swanston, in breach of the IMA, to pay the sum of $3.989 million currently due and payable to Thiess. Two days later, on 22 December 2002, the DPT, acting pursuant to certain securities granted by NX Swanston to the Victorian Government, appointed Receivers and Managers over the company's assets. Thiess then served a further default notice of the DPT, relying upon the appointment of the Receivers as a further event of default under the IMA. To secure the continued operation of the Swanston tram system, the DPT notified Thiess that it could not terminate or suspend the IMA, and that it was required to honour its obligations under that agreement. Thiess performed those obligations until 18 April 2004 when the IMA was terminated, and was paid for those services by the Receivers.
122 The IMA ultimately came to be terminated in the following circumstances. On 9 September 2003, Thiess, NX Swanston, the DPT, the Receivers and various other parties, executed a Settlement Deed. The Settlement Deed was intended to enable the contracts concerning the franchise to be renegotiated while at the same time keeping the original contracts on foot. As the primary judge noted, as no new contracts were made, most of the Settlement Deed never came into operation. Some of its provisions are, nonetheless, important.
123 Clause 2.2 provided that the IMA would be extended until a new maintenance agreement was struck. In the meantime, Thiess would not seek to terminate the IMA by reason of an 'insolvency event', which included the suspension of the payments of debts, insolvency and the appointment of an administrator. Eventually a new operator was found. The franchise operation was transferred to that new operator under what was described as the 'M>Tram Transfer Agreement (Infrastructure Maintenance)' dated 17 April 2004 ('the Transfer Agreement') to which Thiess, NX Swanston, the DPT and various others were parties. By cl 2 of that agreement, both NX Swanston and Thiess acknowledged and agreed that the IMA 'will terminate on commencement of the Franchise Agreement for breaches by [NX Swanston] of the [IMA] which occurred before 22 December 2002'. The parties further acknowledged and agreed that until the 'Completion Date' (that being the 'Franchise Commencement Date', as defined under the Franchise Agreement), each was bound by and obliged to continue to perform its obligations under the IMA. As the primary judge noted, the existing IMA thereby came to an end.
124 It can readily be seen that the original contractual arrangements between NX Swanston and Thiess were unusual in at least one key respect. They restricted Thiess' rights to terminate the IMA, and effectively prevented it from doing so without the DPT's consent. The reason for this was plain. It was intended to ensure that there would be continuity in the provision of vital public transport services even if one or other of the private parties to that agreement failed to meet its contractual obligations.
125 There cannot be any serious doubt that NX Swanston repudiated the IMA when it told Thiess on 17 December 2002 that, by reason of its parent company's decision to withdraw financial support, it would no longer be able to meet its liabilities as and when they fell due. The critical issue in this appeal is whether Thiess thereby acquired a contingent right to sue NX Swanston for damages for loss of profits, and whether that right existed prior to 23 December 2002, being the date specified in the Deeds of Company Arrangement. If, prior to that date, Thiess had a 'claim' (within the meaning of that expression in cl 1.1 of the relevant Deed), it was entitled to have its proof of debt accepted by the administrators. If Thiess did not have such a 'claim', the administrators acted correctly in rejecting the proof of debt.
126 The administrators refused to admit Thiess' claim for loss of profits as a 'claim' under the relevant Deed because they maintained that Thiess had no right, under the IMA, to terminate notwithstanding NX Swanston's repudiation of that agreement. In accordance with well-established authority, if Thiess could not terminate the contract, it could not recover for loss of profits. They contended that Thiess had bargained away any ordinary common law right that it might otherwise have had to terminate for breach of an essential condition by agreeing to maintain services unless and until the DPT was satisfied that adequate alternative arrangements could be made.
127 It is necessary therefore to consider the legal principles that govern termination of contracts, as they apply to this appeal. It is trite law that a contract may come to an end in various ways. For example, events may occur after a contract has been made which make its performance pointless, more difficult, or even impossible. Such events may result in the termination of the contract by operation of law on the basis that it has been frustrated.
128 Another way in which a contract can come to an end is by termination after breach of an essential condition. It is clear that all contracts involving an exchange of promises are conditional in the sense that each party's obligation to perform is conditional on the performance of all essential promises by the other. Breach of an essential condition by one party confers on the other party the right to terminate the contract. Non-fulfilment of such a condition does not normally result in the automatic termination of the contract, but creates a right to terminate by election. A right to terminate for breach may be lost by conduct indicating that the right will not be exercised. Such conduct may amount to an affirmation of the contract, or waiver of the right to terminate, or may give rise to an estoppel. In any event, the effect of termination is that, in the absence of agreement to the contrary, the contract comes to an end. However, it does so prospectively, leaving accrued obligations unaffected.
129 As a general proposition, the parties are free to agree between themselves whether, and in what circumstances, there shall be a right to terminate for breach. A right to terminate for breach also arises by law, provided that the breach is serious enough.
130 It is common for commercial contracts to provide for rights of termination in response to breach (or 'default'). The parties are free to specify what breaches shall justify termination, how the right to terminate shall be exercised, and what effect the exercise of that right shall have. A contract may validly stipulate that even a minor breach will entitle the other party to terminate. Such terms are frequently included in contracts for the sale of land.
131 Importantly, for present purposes, the law exercises a degree of control over contractual provisions conferring a right to terminate. In general, such provisions are construed strictly, limiting the right to terminate in circumstances where the breach or breaches are relatively innocuous. The present appeal raises a different issue. The question is whether Thiess, an innocent party, should be deprived of its right to sue for loss of profits, because its right to terminate in response to NX Swanston's act of repudiation was to some degree constrained.
132 The appellants in this case accept that, unless otherwise agreed, a right to terminate for breach, pursuant to the terms of a contract, operates concurrently with any right conferred by law to do so. That principle is well established.
133 In Holland v Wiltshire (1954) 90 CLR 409, a contract in writing for the sale of land provided that a deposit of a particular amount should be paid, and the balance of the purchase price paid by a specific date. It further provided that, if the purchaser defaulted, the vendor might, without notice, sell the land and rescind the contract, and any monies paid on account of the purchase should then be forfeited to the vendor as liquidated damages. The purchasers duly paid the deposit, but prior to the due date requested an extension of time for payment of the balance. The vendor agreed to that extension of time. Subsequently, the purchasers' solicitor informed the vendor that they would not proceed with the purchase. The vendor thereupon gave the purchasers a notice which, after reciting the agreement, the date fixed for settlement, and their failure to settle, gave them a new date by which to make settlement, and informed them that if that did not occur, the vendor would sue them for breach of contract. The purchasers failed to complete the purchase and subsequently the vendor sold the land at a lower price. He claimed to recover as damages the difference between the original contract price and the price at which he sold the land. The purchasers claimed the vendor was entitled only to forfeit their deposit.
134 The High Court held that the sale by the vendor was not effected under the recision clause of the contract, but independently thereof. Accordingly, the vendor was entitled to recover the damages claimed. Dixon CJ noted that the purchasers had done more than merely default upon their obligations. They had renounced and refused to perform the entire contract. His Honour said at 415-6:
'True it is that it was not accepted at once either as a breach or as an anticipatory breach. What was done was to place the purchasers on notice that they would be sued for breach if they did not complete before the date named by the notice. This was not an unconditional affirmance of the contract notwithstanding the renunciation. It was a demand for performance coupled with an intimation that refusal or failure to perform would result in proceedings for damages. That is to say it kept the contract open for a limited time and conditionally upon compliance. If time is an essential condition, to extend it does not waive the effect of the stipulation as a condition [cases omitted] … In the same way to give a party refusing to perform a fixed time to resile from his refusal and to notify him that failing his doing so he will be sued for his breach does not amount to an unconditional waiver of the refusal as a renunciation. Here the inference of fact is plain that the purchasers were maintaining their attitude of refusal to go on with the sale.
In these circumstances, the vendor was entitled to treat the contract as discharged by breach. He himself was ready and willing up to the expiration of the notice. His election to treat the contract as discharged by the purchasers' breach was sufficiently manifested by his proceeding to advertise the property for sale, and by his selling it. By that time, the purchasers were in actual breach and that breach was accompanied by an intention clearly evinced of setting the contract at nought. It is hard to see why this should not enable the vendor to treat the whole contract as discharged by the purchasers' breach or in other words to treat the contract as no longer binding upon him. This means that both parties would be discharged from further performance of the contract. The whole contract was involved, including the clause relating to rescission.'
See also generally N C Seddon and M P Ellinghaus, Cheshire and Fifoot's Law of Contract, 8th Australian ed, LexisNexis Butterworths, Sydney, 2002 ('Cheshire and Fifoot') at [21.3] and the cases cited at footnote 9 thereto.
135 However, the appellants submit that it is equally well established that the parties can agree, expressly or by implication, that the right to terminate for breach will be governed exclusively by the contract. They say that in such circumstances, courts will give effect to their agreement. For example, in Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 ('Progressive Mailing House'),Mason J said at 30:
'It is, of course, open to the parties by their contract to regulate the exercise of the common law right to determine for repudiation or fundamental breach. But in this case the parties have not attempted to do so.'
136 In accordance with this principle, the learned authors of Cheshire and Fifoot note that in Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, a clause entitling the Commonwealth to terminate its contract with Amann by giving a notice requiring Amann to show cause was held to constitute an exclusive code governing termination for breach thereby depriving the Commonwealth of any concurrent right to terminate by law.
137 In my view, the present case does not fall within the Progressive Mailing House principle. This is because the facts, as presented, do not take the case outside what the authors of Cheshire and Fifoot describe as a 'presumption of concurrence'. In Concut Pty Ltd v Worrell (2000) 176 ALR 693, the High Court held that a clause in an employment contract giving the employer a right to dismiss for wrongful conduct augmented, rather than removed, the right given by law to terminate for such conduct. In a joint judgment, Gleeson CJ, Gaudron and Gummow JJ at [23] reiterated the long established principle that clear words are needed to rebut the presumption that a contracting party 'does not intend to abandon any remedies for breach of the contract arising by operation of law'. There is a helpful discussion of this principle in Cheshire and Fifoot at [21.3] and in the cases cited at footnote 13 thereto, particularly Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585 per Lord Goff; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717 per Lord Diplock; Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117 at 135 per Powell J; and Dover Fisheries Pty Ltd v Bottrill Research Pty Ltd (1994) 63 SASR 557 at 573 per Prior J.
138 Unless otherwise agreed, the effect of terminating a contract for breach is the same whether the right to terminate is conferred by the contract itself, or by law. However, that principle is subject to an important qualification. If the right to terminate is provided by law, the terminating party can sue for damages representing the full value of the lost performance. This is generally known as 'loss of bargain' damages. However, where the right to terminate is justified only under the contract, and not by law, it appears that such damages cannot be recovered. In substance, discharge of a contract, by termination for repudiation or breach, is necessary before such damages can be recovered.
139 This doctrine is supported by the decision of the High Court in Shevill v Builders Licensing Board (1982) 149 CLR 620. In that case, a lease provided that if rent was unpaid for 14 days or if the lessee was in breach of any covenants or if certain other events occurred such as bankruptcy or liquidation, the lessor could re-enter the land 'without prejudice to any action or other remedy the lessee has or might or otherwise could have for arrears of rent or breach of covenants or for damages as a result of any such event'. The lessee was constantly late in paying rent. The lessor re-entered and claimed as damages for breach of contract an amount equal to the rent payable over the balance of the term. The High Court held that the lessor was not entitled to recover damages for non-payment of rent.
140 It was accepted, in principle, that when one party commits a breach of contract entitling the other to rescind, and that innocent party does rescind, they are entitled to damages for loss of bargain. The damages were the loss of benefits that the performance of the contract would have conferred upon the innocent party. However, it did not follow from the fact that a contract conferred upon the party the right to terminate the contract that it also conferred the right to recover damages as compensation for the loss sustained as a result of the failure of the lessee to pay rent. Accordingly, the lessor was entitled to recover arrears of rent, but not entitled to the actual damages awarded by the trial judge.
141 The distinction that Shevill drew between damages for loss of bargain being available only when there has been a breach entitling the innocent party to rescind, and the unavailability of such damages when there has been a lesser breach, has been much criticised. However, Shevill has never been overruled. Indeed, it was expressly cited with approval by the High Court several years later in Progressive Mailing House. See also Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245. It goes without saying that Shevill has been repeatedly followed by lower courts.
142 In my opinion, the primary judge's finding that Thiess had a right to terminate for breach of an essential condition, or repudiation (albeit one that was 'held in suspense'), was justified. Thiess' right to terminate for breach was conferred by law. Nothing in the IMA took away that right. The IMA merely imposed a restriction upon its exercise in the form of a condition that had first to be met. The right was, in that sense, 'contingent', but nonetheless a right that existed before 23 December 2002. The presumption of concurrence was in no way rebutted. His Honour's metaphor of 'suspense' was, with respect, entirely apt. The primary challenge to his Honour's judgment is therefore rejected.
143 It follows that I agree with both French J and Allsop J that the primary judge correctly rejected the appellants' contention that the IMA denied Thiess the right to terminate for breach or repudiation. I also agree with virtually all that their Honours have said regarding the issue of election or affirmation, subject only to what appears below. I would therefore reject each of the appellants' grounds of appeal, leaving only ground eight for further consideration.
144 This takes me to the point upon which French J and Allsop J part company. French J would reject all of the grounds of appeal, including ground eight. Allsop J would uphold ground eight, and allow the appeal on that limited basis.
145 Ground eight asserts that the primary judge erred in not finding that the basis upon which the IMA was in fact terminated was inconsistent with Thiess having accepted any repudiation by NX Swanston of the IMA. In substance, the ground contends that the termination of the IMA was brought about by mutual assent, and had nothing to do with any acceptance on the part of Thiess of NX Swanston's repudiation of that agreement.
146 French J rejects this contention. He concludes that any termination of the IMA brought about by the Transfer Agreement cannot properly be described as 'consensual'. He notes that all of the parties to the Transfer Agreement accepted that the termination had been brought about by NX Swanston's breach of the IMA. That breach had occurred prior to 23 December 2002.
147 French J further notes that the termination that was effected by the Transfer Agreement specifically preserved any rights that Thiess would have enjoyed upon a termination for breach. The fact that Thiess did not insist upon incorporating into the Transfer Agreement any statement to the effect that the termination of the IMA resulted from its acceptance of NX Swanston's repudiation was not fatal to its claim.
148 Allsop J, on the other hand, notes that the Transfer Agreement, which he describes as 'the M>Tram Agreement', provided for the termination of the IMA, the commencement of a new Franchise Agreement between the DPT and a separate entity (MetroLink) and the commencement of employment by MetroLink of employees of Thiess should they take up the offer. His Honour observes that cl 2(a) of the Transfer Agreement provides that NX Swanston and Thiess mutually agree to end the IMA upon the commencement of the new franchise arrangement. The receivers ceased to have possession of the assets, and ceased to operate the business of NX Swanston at precisely the moment of completion under the Transfer Agreement, namely 3.00 am on 18 April 2004. Until that moment, all of NX Swanston's obligations under the IMA continued to be performed by the receivers, at least for the purposes of the Direct Agreement. In his Honour's view, at no point prior to the termination of the IMA by the operation of the Transfer Agreement did Thiess have an entitlement to terminate the IMA by any general law right of termination.
149 Allsop J concludes that the IMA came to an end, not because Thiess exercised an antecedently existing general law right to terminate, but only because of the operation of the Transfer Agreement. It may also be noted that the Transfer Agreement did not, in terms, attribute the termination of the IMA to an acceptance by Thiess of NX Swanston's repudiation.
150 However, this is by no means the end of the matter. The relevant parties to the Transfer Agreement, NX Swanston and Thiess, not only acknowledged but also agreed that the IMA would terminate at the appointed time 'for breaches of the [IMA] which occurred before 22 December 2002': see cl 2(a) (emphasis added). That statement seems to me to be more than just a recitation of historical fact. It lies at the core of the Transfer Agreement, and explains why the IMA is finally being brought to an end. Allsop J's characterisation of this aspect of the agreement as something other than the exercise by Thiess of a general law right of termination or recission, namely as an agreement to treat the ending of the IMA as an ending for breach of the IMA, has its attractions. It represents a view of the clause that is plainly open. However, with great respect, it is not a view that commends itself to me.
151 In my opinion, cl 2(a) must be read as a whole, and in the context of the entire Transfer Agreement. The clause also operates against the background of the parties' dealings throughout the entire period from the time that NX Swanston repudiated the IMA until the Transfer Agreement came into effect. The link between the termination of the IMA, and the past breaches as described, is drawn for a purpose and is intended to have a practical and operational effect. It is important to note that, at no stage during the period leading up to the Transfer Agreement did Thiess do anything to suggest that it had abandoned any rights that it may have had, under general law principles, to bring the IMA to an end. There is also nothing to suggest that the "presumption of concurrence" (to which I have previously referred) was rebutted. There is nothing in the evidence to suggest that Thiess, by entering into the Transfer Agreement, bargained away its right to terminate for repudiation. In the absence of any indication that Thiess stood to benefit from abandoning that right, it would have been foolish in the extreme for it to do so. Thiess would have given up, for no apparent reason, its right to recover damages for loss of profits.
152 The construction of cl 2(a) that I prefer, namely that it implicitly constituted termination by acceptance of repudiation, seems to me to find textual support in the agreement when read as a whole. It is also supported by the principles formulated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347-8, particular his Honour's observation that the courts had come to a recognition that evidence of surrounding circumstances is admissible in aid of the construction of a contract. To suggest that Thiess had to spell out, in terms, that its right to terminate under general law principles was not being abandoned simply in order to preserve that right would, in my view, be unfair, and hardly consonant with basic principles of justice.
153 The primary judge certainly seems to have viewed the matter in this way. He noted that as at 23 December 2002 NX Swanston was in breach of the IMA. It had failed to pay the fee due on 17 December 2002. This was a breach of an essential term, time being of the essence. In addition, NX Swanston had repudiated the IMA by informing both the Victorian Government and Thiess that it was no longer able to perform its obligations. Ordinarily, both the breach of an essential term, and the repudiation, would entitle Thiess to terminate the IMA, and sue for loss of profits.
154 The primary judge then noted that Thiess had not terminated the IMA at any time shortly after NX Swanston's breach, and repudiation. That led the administrators to contend that the IMA should be treated as if the breach had never occurred, and as if the IMA had never been repudiated. His Honour regarded that submission as having as its foundation the doctrine of election. However, he concluded that the fact that the IMA remained in force until 2004 should not be treated as an affirmation or an election not to discharge that agreement. Thiess was not entitled to terminate the contract for breach or repudiation without the consent of the DPT, and Thiess did not obtain that consent until it entered the Transfer Agreement. To that point Thiess had no choice but to go on with the IMA. It had no power to elect to terminate the IMA. Its right to do so was 'held in suspense' and could only be exercised with the DPT's consent unless, in the meantime, Thiess chose to go on with the IMA 'come what may'. As his Honour noted, this Thiess most definitely did not do.
155 I agree with the primary judge's observation regarding the issue of election. I also agree with his Honour's conclusion that Thiess did not bargain away its right to sue for 'loss of profit damages' by any form of accord and satisfaction. Thiess did nothing to suggest that it was prepared to give up, or had given up, any accrued right that it had to sue for such damages. Clause 2(a) of the Transfer Agreement makes it clear that the termination of the IMA on 18 April 2004, though in form a termination by agreement, was implicitly at least an exercise of the power to terminate in response to the antecedent breach and repudiation. The possibility of exercising that power had stood in limbo for approximately sixteen months, but it had never in any true sense been abandoned.
156 It follows that, in my opinion, the appeal must be dismissed.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.
Associate:
Dated: 30 March 2005
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 1145 of 2004
On appeal from a single judge of the Federal Court of Australia
BETWEEN: SIMON ALEXANDER WALLACE-SMITH
FIRST APPELLANT
PETER GEORGE YATES
SECOND APPELLANT
AND: THIESS INFRACO (SWANSTON) PTY LTD
RESPONDENT
JUDGES: FRENCH, WEINBERG & ALLSOP JJ
DATE: 30 MARCH 2005
PLACE: MELBOURNE
REASONS FOR JUDGMENT
allsop j:
157 This is an appeal from orders made by a Judge of this Court under s 1321 of the Corporations Act 2001 (Cth) in which the appellants, who are the deed administrators in respect of a company called National Express Group Australia (Swanston Trams) Pty Ltd (the "Company"), were directed to admit in full (but subject to valuation) the respondent's proof of debt and were ordered to pay the respondent's costs of the application before the primary judge.
158 The following is a convenient index for these reasons:
Brief factual background [159] – [166]
Contractual framework [167] – [226]
Structure [167] – [168]
The Franchise Agreement [169] – [188]
The Direct Agreement[189] – [201]
The IMA [202] – [226]
Further relevant facts [227] – [285]
The nature of the application [257]
The primary judge's reasons [258] – [264]
The Notice of Appeal [265] – [270]
The Appellants' Submissions [271] – [278]
The Respondent's submission [279] – [285]
The Disposition of the Appeal [286] – [339]
My views in summary [286]
The disposition of the arguments [287] – [339]
The primary contention of the respondent [287] – [288]
The proper construction of the IMA and
the ability of the respondent to terminate [289] – [315]
Understanding the events following
22 December 2002 in the light of the proper
construction of cll 24 and 34 of the IMA
and cll 4 and 5 of the Direct Agreement [316] – [323]
The asserted affirmation or election -
the Settlement Agreement [324] – [330]
The asserted affirmation or election -
the M>Tram Agreement [331] – [339]
The legal position of the parties in the events that have happened [340] – [346]
Orders [347]
Brief factual background
159 On 22 December 2002, receivers and managers were appointed to the Company. On 23 December 2002, the appellants were appointed administrators of the Company. On 14 July 2003, the appellants were appointed deed administrators of the Company under and pursuant to a deed of company arrangement ("DOCA") executed by the Company on the same date. On or about 1 September 2003, the respondent sent to the appellants a proof of debt or claim in the form provided by Form 535 in Schedule 2 to the Corporation Regulations 2001. The proof stated that the Company was on 23 December 2002, and still was, justly and truly indebted for loss of profit "from [the] balance of [the] term" (in the sum of $19,138,805) and from "agency works" (in the sum of $1,388,352), for "early return of lease vehicles" (in the sum of $28,294) and for "termination of subcontracts/novation costs" (in the sum of $68,248). These claims, totalling $20,623,499, were accompanied by a claim for $6,860,909 for past progress claims. (I will describe the contractual arrangements by reference to which these claims were made shortly.) On 1 April 2004, the appellants admitted the claim for past progress claims (for $6,860,909), but rejected the balance of the claims.
160 The grounds for disallowance of the sums totalling $20,623,499 were expressed by the appellants as follows:
The Infrastructure Maintenance Agreement ("Agreement") between yourselves and National Express Group Australia (Swanston Trams) Pty Ltd ("NEGA") [the Company] did not confer on you a contractual right to terminate the Agreement upon the appointment of the Receivers and Managers to NEGA on 22 December 2002. Accordingly, you have no claim for loss of profits under the Deed.
(The contract in question, the Infrastructure Maintenance Agreement, is hereafter referred to as the "IMA".)
161 I will turn presently to the various underlying contracts. For now, four things should be noted. First, no argument took place on appeal differentiating in any way the four elements of the rejected part of the claim. The rejected part of the claim was dealt with as "loss of profits" or loss of the benefit of the contract in question. That was how the rejected claim was described in evidence by an officer of the respondent, Mr Southon: "loss of profits suffered by [the respondent] as a result of the termination of [the IMA]". Secondly, the appellants rejected part of the proof on the basis that the respondent had no entitlement to terminate (and had not terminated) its contract (the IMA) with the Company otherwise than by mutual agreement with the Company. Thirdly, the correctness of that proposition was the burden of the appellants' argument on appeal. Fourthly, whilst the respondent contested the correctness of that proposition by reference to the proper construction of the documents in question and in the events that had occurred, the primary argument of the respondent, put orally on appeal, was that to characterise the issue in that fashion was to misconceive the correct framework of analysis.
162 The dispute arose out of the contractual arrangements governing the privatisation in 1999 of the Victorian public transport system.
163 The Company, as part of a group of companies including a British publicly listed company, National Express Group plc ("NX plc"), was one of the successful tenderers to operate part of the Victorian transport system. The Victorian Government awarded franchises to National Express Group Australia (Bayside Trains) Pty Ltd ("NX Bayside") for 15 years for part of the Melbourne metropolitan train service and to the Company for 10 years for part of the Melbourne metropolitan tram service.
164 The respondent agreed to provide "infrastructure maintenance services" to the Company in connection with the operation of the Company's franchise. A company related to the respondent, called Thiess Infraco (Bayside) Pty Ltd ("Thiess Bayside"), agreed to provide infrastructure maintenance services to NX Bayside in connection with the operation of its train franchise.
165 The Director of Public Transport (the "Director"), notwithstanding the privatisation of the relevant activities, assumed a central place in the contractual arrangements for the purpose, it is clear, of protecting the public interest in the operation of the activities in question.
166 Against that background, one comes to the relevant contracts.
Contractual framework
Structure
167 There was no debate on appeal as to the fact that each of the contracts referred to below can be viewed as part of the known factual matrix of each other contract.
168 The structure of the contractual arrangements can be simplified, relevantly, as follows:
(a) an agreement between the Director and the Company entitled, "Franchise Agreement – Swanston" (the "Franchise Agreement") dated 25 June 1999,
(b) the IMA between the Company and the respondent effectively entered by novation on 26 July 1999, and
(c) a deed between the respondent and the Director entitled "Franchise Entity Direct Agreement – Thiess Infraco (Swanston) Pty Ltd" (the "Direct Agreement") made on 26 July 1999.
The Franchise Agreement
169 The Franchise Agreement, as its name suggests, dealt with the grant of the Swanston tram franchise to the Company.
170 By cll 4.1 and 4.2 of the Franchise Agreement the Company agreed to provide the relevant passenger services and operate the "Franchise Business" for twelve years, subject to termination (cl 18) and extension (cl 4.3). The phrase "Franchise Business" was defined as meaning:
Franchise Business means the business of:
(a) providing Passenger Services (not including charter services, specialist dining services or specialist refreshment services);
(b) the maintenance and operation of (including the grant of access to) Infrastructure; and
(c) any business or activity associated with the activities described in paragraphs (a) and (b),
to be conducted by the Franchisee (whether on its own account, through or by one or more Franchise Entities) on or after the Franchise Commencement Date.
171 The Franchise Agreement dealt with services, capital and capital investment, timetables, passengers, fares, and other aspects of operation. Unsatisfactory aspects of operation gave rise to what were defined as "Call-In Events": persistent timetable deviations (cl 7.4), unsatisfactory results from customer satisfaction surveys (cl 8.5), unsatisfactory surveys of concession usage (cl 9.4(l)) and unsatisfactory rolling stock maintenance and renewal (cl 31.1).
172 Part III of the Franchise Agreement was entitled "Call-In, Breach and Termination". Clause 15 dealt with "Call-In Events". It set out a regime for the identification, discussion concerning and remedying, of such matters. Notification of the same type of Call-In Event three times in 36 months and each subsequent notification of the same type was, at the election of the Director, a "Franchisee Breach".
173 Clause 16 dealt with "Franchisee Breach", which phrase was defined in cl 1.1 as meaning:
Franchisee Breach means:
(a) any failure by the Franchisee to comply with its obligations under this Agreement or any other Transaction Document (including a Financial Franchisee Breach) or the occurrence of a circumstance giving rise to a Franchisee Breach under Clause 6.1 (Load Standards), 7.4 (Breach and Termination Thresholds), 10.1(c) (Customer Service Standards), 15.4 (three Call-in Events), paragraph 3.1, 3.3 or 3.4 of Part 2 of Schedule 6 (Rolling Stock), paragraph 3.4 of Part 3 of Schedule 7 (False Information) or paragraph 3 of Part 10 of Schedule 14 (False Information); or
(b) any failure by any other Franchise Entity to comply with any of its obligations under its Franchise Entity Direct Agreement or any other Transaction Document to which it is a party.
174 Clause 16 provided for notice, "Cure Plans", "Cure Periods" in respect of remediable Franchisee Breaches; and for penalties for Franchisee Breaches not capable of remedy or not remedied.
175 As can be seen from paragraph (b) of the definition of Franchisee Breach at [173] above, the failure of a "Franchise Entity" to comply with its obligations under its "Franchise Entity Direct Agreement" or other "Transaction Document" could be a breach of the Franchise Agreement by the Company. The definition of the phrase "Franchise Entity" in cl 1.1 included the respondent by its reference to, and definition of, the phrase "Infrastructure Maintenance Service Provider":
Franchise Entity means:
(a) for the purposes of Clauses 11.8, 11.9(b), 11.9(c), 11.11, 11.14, 11.16(d), 12.2(f), 13.2, 13.3, 13.6, 13.8, 13.10, 15.1, 18.1(e), 18.1(j), 21.2, 21,4, 21.6, 21.7, 22.2, 25, 30.1 and 36 and Schedule 1, each of the Franchisee, the Infrastructure Maintenance Service Provider, the Rolling Stock Maintenance Service Provider and the Committed Rolling Stock Maintenance Provider, and
(b) for all other purposes, each of the Franchisee, the Infrastructure Maintenance Service Provider and the Rolling Stock Maintenance Service Provider.
…
Infrastructure Maintenance Service Provider means a wholly owned subsidiary of Thiess Contractors Pty Ltd (ACN 010 221 486) being a company incorporated in Victoria of 493 St Kilda Road, Melbourne, Victoria or such other infrastructure maintenance service provider as nominated by the Franchisee and approved by the Director from time to time which, in each case:
(a) has entered into a Direct Agreement with the Director, in a form approved by the Director, under which it undertakes to the Director (amongst other things) to be bound by provisions of this Agreement which are expressed to apply to a Franchise Entity; and
(b) has granted a Security Interest over its assets and undertaking in favour of the Director in a form approved by the Director.
176 The phrase "Franchise Entity Direct Agreements" (sic: Agreement) was relevantly defined in cl 1.1 as meaning:
(a) A Direct Agreement between the Director and the Infrastructure Maintenance Service Provider; …
The Direct Agreement between the respondent and the Director will be dealt with presently. It fell within this definition.
177 The phrase "Transaction Documents" was defined in cl 1.1 to include, amongst other documents, the Franchise Entity Direct Agreement.
178 Clause 16.8 of the Franchise Agreement provided for the Director to seek equitable relief including specific performance and injunctive relief against a Franchise Entity that was in breach.
179 Clause 17 was entitled "Step-In For Franchisee's Breach". In defined circumstances of seriousness (including a "Termination Event"), the Director might himself or herself or through agents enter into and remain in possession of assets, operate and manage assets and operate the Franchise Business. One of the serious circumstances in which the Director could avail himself or herself of taking over the role of the Franchisee in this way was defined by cl 17.1(a)(i)(B)(4) as an uncured Franchisee Breach which in the opinion of the Director gave rise to a right of a party to a "Key Contract" to terminate the "Key Contract". The phrase "Key Contract" was defined as meaning an agreement or arrangement (a) identified in such a way as to include an agreement or arrangement for infrastructure maintenance services (and thus the IMA), or (b) which was designated by cl 23.2 as a "Key Contract".
180 Thus, the Franchisee Agreement contemplated the stepping-in by the Director when the Company had so conducted itself that important contractors to the Company may have (in the opinion of the Director) rights of termination. One can see in this provision an important safeguard against disruption and dislocation which might be caused to the transport system if such a contractor were to rely on its contractual rights against the Company and terminate the underlying "Key Contract" which, through its operation, provided important support to the operation of the transport system.
181 Clause 18 was entitled "Termination". It had five subclauses. No provision of cl 18 gave any right to the Company to terminate the Franchise Agreement. Clause 18.1 identified in paragraphs (a)-(o) a number of events which were called "Termination Events". All the breaches were identified as of the Company (as Franchisee) or of Franchise Entities, not the Director. Clause 18.2 dealt with termination by the Director upon the occurrence of a Termination Event. Clause 18.4 dealt with continuation of accrued and surviving rights after termination. Clause 18.5 treated as waived any restitutionary rights of the Company upon a lawful termination by the Director. Clause 18.3 was in the following terms:
No other right to terminate
Notwithstanding any rule of law or equity to the contrary, this Agreement may not be terminated except as provided in Clause 18.2.
182 Though it should be noted that cl 1.2 of the Franchise Agreement provided that headings are for convenience only and did not affect interpretation, the terms of cl 18.3 in the context in which it appeared clearly addressed any right to terminate, and not merely the Director's right to terminate. I will deal in due course with the content of verb "terminate".
183 Clause 19 of the Franchise Agreement dealt with "Financial Default", a phrase defined in cl 1.1 as meaning:
[A] failure by a party to pay when due any money which the party is obliged to pay to the other under a Transaction Document.
184 Clause 19 provided for interest, but did not independently provide for termination. It would apply to any late payment by the Director to the Company.
185 Clause 20 of the Franchise Agreement dealt with "Force Majeure". Detailed provision was made for the identification of events and circumstances that would amount to such. The clause did not provide for termination upon force majeure.
186 Clause 23 of the Franchise Agreement dealt with "Key Contracts". The IMA was a Key Contract. From the definition of the phrase "Key Contracts", it can be seen that there were other contracts which satisfied the definition, including contracts which Franchise Entities entered into with others. Clause 23.2 imposed certain limits upon the Company in relation to Key Contracts. The Company was not to enter into, and was required to procure that each other Franchise Entity not enter into, Key Contracts that were "Long Term Key Contracts" as defined in cl 23.1(c), unless the Director approved the terms of the contract in question and the Director had entered a Direct Agreement in respect of that Key Contract: cl 23.2(d). In respect of Key Contracts other than Long Term Key Contracts, the Company was not to enter into, and was required to procure that each other Franchise Entity not enter into, Key Contracts unless the Director had entered a Direct Agreement in respect of that Key Contract: cl 23.2(a). Similar provisions limited the amendment and assignment of Key Contracts: cll 23.3 and 23.4. Though the IMA was a Key Contract, it was not a Long Term Key Contract.
187 Clause 23.5 of the Franchise Agreement dealt with termination of Key Contracts as follows:
(a) The Franchisee must not, and must procure that each other Franchise Entity does not, except as permitted by paragraph (b):
(i) avoid, release, surrender, terminate, rescind, discharge (other than by performance) or accept the repudiation of;
(ii) suspend the performance of any of its obligations under; or
(iii) do or permit anything that would enable or give grounds to another party to do anything referred to in subparagraph (i) or (ii) in relation to,
a Key Contract.
(b) A Franchise Entity may terminate a Key Contract if the Director is reasonably satisfied that:
(i) it is no longer necessary for the Franchise Entity to have the benefit of the Key Contract, or
(ii) that Franchise Entity has made adequate alternative arrangements for the continued operation of the Franchise Business.
(c) If a Franchise Entity terminates a Key Contract in breach of this Agreement, the Franchisee must, or must procure that the Franchise Entity does, at the request of the Director, enter into an agreement immediately following that request with each counterparty to the Key Contract on the terms set out in the relevant Direct Agreement.
(It is to be recalled that the phrase "Franchise Entity" was defined as to include the Franchisee, that is the Company.)
188 Thus, cll 18.3 and 23.5 of the Franchise Agreement (a) denied the Company a right to terminate the Franchise Agreement and (b) required the Company not to put an end to, and to procure other Franchise Entities not to put an end to, underlying Key Contracts supporting the Franchise Business other than in circumstances in cl 23.5(b) of the Franchise Agreement within the reasonable satisfaction of the Director, representing the public interest.
The Direct Agreement
189 The Direct Agreement defined the words "Contract" and "Franchise Agreement" to mean the IMA and the Franchise Agreement, respectively.
190 In clause 2(a) of the Direct Agreement the respondent undertook to the Director to do, or to refrain from doing, anything that the Company (as Franchisee) had agreed in the Franchise Agreement to procure a Franchise Entity (the respondent) to do or refrain from doing. Thus cll 23.2, 23.3, 23.4 and 23.5 in the Franchise Agreement became the subject of direct promises by the respondent to the Director. Most importantly for present purposes, by this use of cl 2(a) the respondent undertook contractually to the Director by reference to cl 23.5 of the Franchise Agreement, except as permitted by cl 23.5(b), not to:
(i) avoid, release, surrender, terminate, rescind, discharge (other than by performance) or accept the repudiation of;
(ii) suspend the performance of any of its obligations under; or
(iii) do or permit anything that would enable or give grounds to another party to do anything referred to in subparagraph (i) or (ii) in relation to,
…
the IMA (as the relevant Key Contract between the Company and the respondent).
191 Thereafter, in cl 2 of the Direct Agreement, the respondent made various promises to the Director about aspects of its relationship with the Company.
192 In cl 3 of the Direct Agreement, certain consents and acknowledgments were given. Clause 3(b) was in the following terms:
The Franchise Entity consents to the creation of the Security and acknowledges and agrees that:
…
(b) (enforcement) any Enforcing Party may, at any time after the Director has given notice to the Franchise Entity stating that:
(i) the Security has become enforceable; or
(ii) a Step-in Party is entitled to exercise the Step-in Right under the Franchise Agreement,
exercise all or any of the Powers, and perform all or any of the obligations, of the Franchisee under or in relation to the Contract as if it were the Franchisee to the exclusion of the Franchisee; …
193 The phrase "Enforcing Party" was defined in cl 1.1 in a way to include the Director and any receiver or receiver and manager appointed by the Director.
194 In cl 4 of the Direct Agreement, the respondent gave various undertakings to the Director, including, in cl 4.1(b), the following:
The Franchise Entity undertakes to the Director as follows, except to the extent the Director consents.
…
(b) (Termination, release, etc) It must not, except as permitted by Clause 5:
(i) avoid, release, surrender, terminate, rescind, discharge (other than by performance) or accept the repudiation of; or
(ii) suspend the performance of any of its obligations under,
the Contract [the IMA].
195 As with cl 2(a), cl 4 may be seen as reflecting the Company's obligation under the Franchise Agreement to procure the respondent to act, or refrain from acting, otherwise than in accordance with cl 23.5 of the Franchise Agreement. Clauses 23.5(a)(i) and (ii) of the Franchise Agreement mirror cll 4.1(b) (i) and (ii) of the Direct Agreement. However, cl 4 of the Direct Agreement is subject to what is permitted in cl 5 of the Direct Agreement the terms of which are different to cl 23.5(b) of the Franchise Agreement.
196 Clause 5 of the Direct Agreement, dealt with termination and was in the following terms:
5.1 Termination or suspension without cause
If there is no Default:
(a) subject to paragraph (b), the Franchise Entity may only terminate, or suspend the performance of its obligations under, the Contract in accordance with the terms of the Contract and if it has given the Director not less than six months' prior notice; and
(b) the Franchise Entity must not, without the consent of the Director, terminate, or suspend the performance of its obligations under, the Contract during the last twelve months of the term of the Franchise Agreement not during any extension of the term of the Franchise Agreement.
5.2 Termination or suspension for default
(a) Subject to paragraph (b), the Franchise Entity may only terminate, or suspend the performance of its obligations under, the Contract as a result of a Default in accordance with the terms of the Contract and if:
(i) the Franchise Entity has given notice (a Default Notice) to the Director and the Franchisee setting out the Default; and
(ii) either
(A) if the Default is capable of remedy, the Default has not been remedied within 30 days of the date on which the Default Notice is given to the Director and the Franchisee or such longer period as is allowed for remedy of the Default under the Contract; or
(B) if the Default is not capable of remedy, all of the obligations of the Franchisee under the Contract do not commence and continue to be performed within 30 days of the date on which the Default notice is given to the Director and the Franchisee or such longer period as is allowed under the Contract.
(b) The Franchise Entity may not terminate, or suspend the performance of its obligations under, the Contract as a result of a Default if:
(i) the Director has notified the Franchise Entity that he or she is entitled to exercise his or her step-in right under the Franchise Agreement or the Security has become enforceable; and
(ii) an Enforcing Party is performing all of the Franchisee's obligations under the Contract.
5.3 Cure rights
(a) On becoming aware of any Default, an Enforcing Party may take steps to:
(i) remedy, or procure the remedy of, the Default; or
(ii) if the Default is not capable of remedy, commence and continue to perform the obligations of the Franchisee under the Contract.
(b) To the extent reasonably requested by an Enforcing Party for the purpose of exercising its Powers under this Deed the Franchise Entity must promptly provide the Enforcing Party with any information in its possession (including details of any steps which the Franchise Entity considers appropriate to be taken to, remedy the Default or, if the Default is not capable of remedy, to commence and continue to perform all of the obligations of the Franchisee under the Contract).
5.4 Application of clauses
Clauses 5.1 and 5.2 apply despite anything in the Contract or any other document and whether or not the Director has exercised any Power under the Security or the Franchise Agreement.
197 Plainly, cl 5 is a clause designed for Direct Agreements with Franchise Entities generally. Both cll 5.1 and 5.2 (dealing with termination and suspension where there is no default and where there is default, respectively) assume that the Franchise Entity (here the respondent) has a right to terminate the contract or suspend performance of its operations. The appellants submitted that that is not necessarily an indication that such rights exist in the IMA. However, the "Contract" and the "Franchise Agreement" to which cll 5.1 and 5.2 refer were defined in cl 1.1 of the Direct Agreement in terms specifically identifying the IMA and the Franchise Agreement as follows:
Contract means the agreement titled "Infrastructure Maintenance Agreement" dated 14 May 1999 between National Express Group (Australia) Pty Limited and Thiess Contractors Pty Limited as novated to the Franchise Entity and the Franchisee by a novation agreement dated on or about the date of this Deed between National Express Group (Australia) Pty Limited, NX Australia (Bayside Trains) Pty Limited, the Franchisee, Thiess Contractors Pty Limited, Thiess Infraco (Bayside) Pty Limited and the Franchise Entity, a copy of which is set out in the Annexure.
…
Franchise Agreement means the franchise agreement entitled "Franchise Agreement – Swanston" dated 25 June 1999 between the Franchisee and the Director.
198 The phrase "Default" was defined in cl 1.1 of the Direct Agreement in very wide terms, as follows:
Default means:
(a) any breach by the Franchisee of any of its obligations under the Contract or any event of default, termination event of similar event (whatever called) under the contract; or
(b) any other event or circumstance which would entitle the Franchise Entity to avoid, terminate, discharge or rescind the Contract or treat it as repudiated or suspend the Franchise Entity's performance of obligations under it.
199 Also the word and phrase "Franchisee" and "Franchise Entity" were defined in the Direct Agreement as the Company and the respondent, respectively.
200 The above definition of "Default" was plainly intended to encompass any basis that the respondent had for complaint against the Company under the IMA, whether a breach of a specific contractual provision (see limb (a) of the definition) or a general law entitlement to accept a repudiation or terminate for a sufficiently serious breach (treating those two circumstances as conceptually separate: Honner v Ashton (1979) 1 BPR 9478, 9489-93; Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105, 144-45) or otherwise put an end to the IMA ab initio or in futuro, (see limit of (b) of the definition).
201 The appellants submitted that cll 5.1 and 5.2 of the Direct Agreement proceed upon a wider framework than the IMA (though that is how the word "Contract" is defined) and that they do not assist in importing into the IMA any rights of termination (without, or on the basis of, default) which might be seen to be recognised by cll 5.1 and 5.2 of the Direct Agreement. It should be noted that the evidence disclosed that there were contracts between the Company and other Franchise Entities in which there was clearly a right to terminate in both parties.
The IMA
202 On 14 May 1999, National Express Group (Australia) Pty Ltd ("NX Group Australia") and Thiess Contractors Pty Ltd entered an agreement entitled "Infrastructure Maintenance Agreement". On or about the date of the execution of the deed being the Direct Agreement, 26 July 1999, the parties to the original IMA were replaced by novation, relevantly in relation to the Swanston tram franchise, by the inclusion of the Company and the respondent. Other parties concerning the Bayside train franchise were also parties to the novation agreement. The IMA, for present purposes, can be seen to be an agreement between the Company and the respondent. Where the IMA agreement refers to the "Franchisee" it is a reference to the Company and where it refers to "Thiess" it is a reference to the respondent.
203 The nature of the maintenance work provided for was described as follows:
"Maintenance Works" means works conducted on the Infrastructure in order to preserve the Infrastructure in a functional state and fit for purpose, including the replacement or renewal of any asset which forms part of the Infrastructure with a modern equivalent asset of similar form, fit and function, and includes:
(a) Routine Maintenance Works;
(b) Major Periodic Maintenance;
(c) Interoperator Maintenance Works; and
(d) Infrastructure Enhancements -
for each Franchise Business.
204 One can see from this definition the centrally important position and role of the respondent's activities and obligations in the operation of the transport system for the commuting public.
205 The term of the IMA for the respondent was three years, with an option in the Company (but not the respondent) to extend for a total of nine years (on three occasions, for three years on each occasion).
206 One of the conditions to be satisfied before the IMA had legal force and effect was the satisfaction of each of the conditions in cl 2.2 of the IMA. Clause 2.2 (f) was in the following terms:
(f) the execution by Thiess of the Franchise Entity Deed of Charge and the Franchise Entity Direct Agreement;
Thus, the entry into the Direct Agreement by the respondent with the Director was a condition precedent to legal force and effect of the IMA.
207 Clause 10 of the IMA provided that the Company pay the respondent within 14 days of receipt of progress payment claims.
208 Clause 11 of the IMA dealt with sale and transfer of assets. By cl 11(c)(ii), the respondent agreed with the Company as follows:
(c) Thiess agrees to:
…
(ii) execute and provide to the Franchisee upon request the Franchise Entity Direct Agreement and the Franchisee Deed of Charge, and Thiess undertakes to the Franchisee to comply with the requirements of each of those deeds;
[emphasis added]
Thus, by cl 11(c)(ii) of the IMA the respondent agreed with the Company to honour the terms of the Direct Agreement, which included the respondent's agreement with the Director in cl 2(a) of the Direct Agreement and, through it, cl 23.5 of the Franchise Agreement, and cl 5.2 of the Direct Agreement, which also limited the rights of termination of the IMA.
209 Clause 24 of the IMA dealt with "Key Contracts". Clause 24 may be seen to use terminology and to have a structure more easily conformable with the position of the parties prior to novation. Nevertheless, even after novation, its form revealed the mirroring of provisions in the Franchise Agreement, in the Direct Agreement and in the IMA. For instance, cl 24.4, dealing with termination of Key Contracts, was in the following terms:
24.4 Termination of Key Contracts
(a) Thiess must not, except as permitted by paragraph (b):
(i) avoid, release, surrender, terminate, rescind, discharge (other than by performance) or accept the repudiation of;
(ii) suspend the performance of any of its obligations under; or
(iii) do not permit anything that would enable or give grounds to another party to do anything referred to in sub-paragraph (i) or (ii) in relation to,
this Agreement.
(b) Thiess may terminate a Key Contract if the Director is reasonably satisfied that:
(i) it is no longer necessary Thiess to have the benefit of the Key Contract; or
(ii) Thiess has made adequate alternative arrangements for the continued operation of the Franchise Business.
(c) If Thiess terminates a Key Contract in breach of this Agreement, Thiess must, at the request of the Director, enter into an agreement immediately following that request with each counterparty to the Key Contract on the terms set out in the relevant Direct Agreement.
210 Clause 24.2(c) recognised the IMA as a Key Contract, in the following terms:
(c) Thiess acknowledges that this Agreement is a Key Contract and agrees to cooperate in the implementation of a Direct Agreement with the Director.
211 Clause 24.4 of the IMA can be seen as the Company's compliance with cl 23.5 of the Franchise Agreement and the respondent's further compliance with cl 2(a) of the Direct Agreement.
212 Clause 34 of the IMA dealt with termination and default. It commenced by setting out the "Events of Default" in cl 34.1. It will be recalled that in the Direct Agreement the word "Default" was defined in very wide terms as including "any … event or circumstance which would entitle the [respondent] to avoid, terminate, discharge or rescind [the IMA] or treat it as repudiated or suspend the [respondent's] performance of obligations under it." (See [198] above.)
213 Clause 34.1(a) set out sixteen events or circumstances which were events of default in relation to either party. They included non-payment ((a)(i)), an Insolvency Event ((a)(iv)), a Material Adverse Effect ((a)(vi)) and cross-default ((a)(vii)).
214 Clause 34.1(a)(i) was in the following terms:
Each of these events or circumstances is an Event of Default under this Agreement:
(a) in relation to either party:
(i) (non-payment) if a party fails to pay any amount that is due and payable by it under this Agreement within 14 Business Days of its due date;
…
215 Clause 34.1(a)(iv) was in the following terms:
(iv) (Insolvency Event) if an Insolvency Event occurs in respect of a party or any of its subsidiaries;
…
The definition of "Insolvency Event" in cl 1.1 of the IMA was sufficiently wide to encompass the events which occurred from or about 16 December 2002 and which are described below.
216 Clause 34.1(a)(vi) was in the following terms:
(v) (Material Adverse Effect) if an event or a change occurs which could, or could in the reasonable opinion of the other party, have a Material Adverse Effect on the party or any of its subsidiaries;
…
217 The phrase "Material Adverse Effect" was defined in cl 1.1 of the IMA as follows:
"Material Adverse Effect" means, in respect of a person, a material adverse effect on:
(a) its business, property or financial condition;
(b) its ability to perform its obligations under this Agreement; or
(c) the effectiveness or priority of any Security Interest in this Agreement.
218 Clause 34.1(a)(vii) was in the following terms:
(vii) (cross-default) if:
(A) any Financial Indebtedness of a party or any of its subsidiaries becomes due for payment (other than at the option of the party or the relevant subsidiary) before the stated maturity of that Financial Indebtedness;
(B) an agreement by any person with a party or any of its subsidiaries to provide or underwrite financial accommodation, or to acquire or assume any risk in respect of Financial Indebtedness, is prematurely terminated; or
(C) any money or commodity owing or deliverable by a party or any of its subsidiaries in respect of any Financial Indebtedness is not paid or delivered when due for payment or delivery (having regard to any applicable period);
219 Clause 34.1(b) set out seven events or circumstances which were events of default in relation to the respondent only (without limiting the generality of cl 34.1(a)).
220 Clause 34.2 dealt with the consequences of an event of default. It was limited in terms to the Company giving a notice to the respondent for asserted default by the respondent.
221 Clauses 34.3 to 34.5 dealt with the procedure for the respondent to remedy any breach by it that had been notified to it, in a defined "Cure Period" under a "Cure Plan".
222 Clause 34.6 then provided for termination for default, but only by the Company as follows:
34.6 The Franchisee's Right to Terminate – Event of Default
If Thiess fails to cure a Event of Default within the Cure Period for that Event of Default, and the Event of Default is a serious breach or default under this Agreement, then the Franchisee will be entitled to:
(a) terminate this Agreement immediately by written notice to Thiess, in which event this Agreement will terminate on the date specified in that notice; and
(b) exercise all legal and equitable rights and remedies available to the Franchisee (whether under this Agreement or not).
223 The structure of cl 34 is of some importance. Clause 34.1(a) was bilateral, in that it identified events of default by both parties. Yet the IMA provided no apparent consequence for the coming into existence of an event or circumstance of default by the Company. It will be necessary to deal in some more detail with cl 34 below. It suffices to say here that the IMA contained no clause equivalent to cl 18.3 of the Franchise Agreement which expressly limited termination on any basis to the provisions of the Franchise Agreement, and only in favour of the Director.
224 Clause 36 of the IMA dealt with force majeure. This clause did provide the respondent with a contractual right of termination of the IMA. The phrase "Force Majeure Event" was defined in cl 1.1 of the IMA in terms which it is unnecessary to set out. Clause 36.1 provided for a procedure for notification in connection with such an event. Cluse 36.3 provided as follows:
36.3 Termination
If a Force Majeure Event continues for more than 30 Business Days, the party not affected by the Force Majeure Event may terminate this Agreement by giving at least 14 days' notice to the other party.
225 It is to be recognised that any right of the respondent to terminate under cl 36.3 would be constrained at the suit of the Director by cll 5.1 and 2(a) of the Direct Agreement (the latter adopting mutatis mutandis the provisions of cl 23.5 of the Franchise Agreement and the former being incorporated into the IMA by cl 11(c)(ii) of the IMA).
226 Clause 43.10 of the IMA made time of the essence in the IMA for all obligations. Thus, at common law a failure to pay moneys due under the IMA was by the express terms of the contract an essential or serious breach which would ordinarily give rise to a right of termination at general law, the parties having mutually agreed upon the seriousness of that conduct.
Further relevant facts
227 On 3 December 2002 a progress payment claim for November 2002 in a sum $3,989,000 was lodged by the respondent with the Company. Pursuant to the terms of the IMA, it was payable on 17 December 2002.
228 On 16 December 2002, there was a press release from the "National Express Group" which stated, amongst other things:
… we have given notice today to the Victorian Government that we will stop providing funds to enable the train and tram subsidiaries to meet their liabilities as and when they fall due with effect from December 2002.
229 On 17 December 2002, an officer of Thiess Bayside wrote to the Chief Operating Officer of NX Group Australia about the IMA. It will be recalled that the IMA, as novated, involved infrastructure maintenance for both the Bayside trains and the Swanston trams. The letter stated as follows:
We refer to the press release by National Express Group PLC yesterday concerning its intentions relating to its train and tram operations. That press release states that National Express has 'given notice today to the Victorian Government that we will stop providing funds to enable the train and tram subsidiaries to meet their liabilities as and when they fall due with effect from 23 December 2002.
We have not received any notice to this or any other effect from National Express. To clarify the position, we request that you advise us in writing by 5 p.m. Wednesday 18 December 2002 of National Express's position and intentions under the IMA, and in particular whether National Express remains ready and able to perform its obligations under the IMA prior to and after 23 December 2002.
230 Also on 16 December 2002, the Director issued a press release. It stated, amongst other things:
Transport Minister Peter Batchelor said today the Government aimed to deliver public transport services with as little disruption as possible following the decision of National to cease operating its train and tram businesses and hand back its franchises.
Mr Batchelor said National Express – the operator of M>Train, M>Tram and V/Line passenger – had informed the Government late today that its decision would take effect from December 23.
231 On 17 December 2002, the Chief Operating Officer of NX Group Australia wrote to an officer of Thiess Bayside and of the respondent. The letter stated the following in relation to the IMA:
I refer to your letter of today's date and my previous telephone conversations with you and Don Argent in relation to the recent press release by National Express Group plc ("NEG plc").
As noted in your letter NEG plc has stated that it "will stop providing funds to enable the train and tram subsidiaries to meet their liabilities as when they fall due with effect from 23 December 2002".
As discussed with you, and as stated by the Victorian government in its press release of 16 December 2002, we are currently in negotiations with the State for an orderly handover of the franchise businesses once NEG plc ceases to provide funding.
232 The November progress claim of the respondent was not paid on the date on which payment was contractually due under the IMA, 17 December 2002.
233 On 20 December 2002, the respondent sent a letter (dated 19 December 2002) to the Director which contained the following:
…
National Express Group plc has by press release stated that it will cease providing funds to its subsidiaries to meet their liabilities as and when they fall due with effect from 23 December 2002. National Express has this morning confirmed to Thiess Infraco that it cannot advise as to whether it will pay to Thiess Infraco the amounts which are overdue, and which will become due, to Thiess Infraco under the IMA.
As a consequence of the failure of the National Express Group Australia to pay the amounts due to Thiess Infraco under the IMA, the circumstances could arise that Thiess Infraco itself may not be able to meet debts as and when they fall due.
It is Thiess Infraco's strong desire to continue trading and to continue providing services pursuant to the IMA. In order to ensure that this is possible, payments of the amounts due to Thiess Infraco are required today, or alternatively, we seek and appropriate guarantee from the Director that the amounts due, or which will fall due, to Thiess Infraco under the IMA will be paid.
234 On the same day, 20 December 2002, the respondent sent to the Director and to NX Group Australia a notice said to be a Default Notice under cl 5.2 of the Direct Agreement which was in the following terms:
This is a Default Notice pursuant to clause 5.2 of the Direct Agreement specifying that a Default under the IMA has occurred.
National Express Group plc has by press release stated that it has 'given notice… to the Victorian Government that we will stop providing funds to enable the train and tram subsidiaries to meet their liabilities as and when they fall due with effect from 23 December 2002'. National Express Group Australia (Swanston) Pty Ltd has this morning confirmed to Thiess Infraco that it is not in a position to advise Thiess Infraco whether it will pay to Thiess Infraco amounts due, and which will become due, to Thiess Infraco under the IMA.
Thiess Infraco (Swanston) is currently owed the sum of $3.989M under the IMA in respect of its November progress payment claim which was due and payable on 17 December 2002.
The Default is:
· The failure by National Express Group Australia (Swanston Trams) Pty Ltd, in breach of the IMA, to pay the sum of $3.989m currently due and payable to Thiess Infraco.
235 The communications between officers of Thiess and National Express adverted to in these communications was the subject of evidence of Mr Southon in paragraph 21 of his affidavit as follows:
I am informed by Don Johnson, a Director of Thiess Swanston, and believe that on 19 December 2002 he had a meeting with Peter Strachan of National Express Group in which he asked for assurances that NX Swanston would pay to Thiess Swanston the overdue sums owing to Thiess Swanston for the November progress claims and the sums that would become owing to Thiess Swanston under the December progress claims. Peter Strachan responded that he could provide no such guarantees and any resolution depended upon a decision from the Government.
236 On 22 December 2002, receivers and managers were appointed to the Company by the Director. After this appointment, the respondent sent another notice of default under cl 5.2 of the Direct Agreement to the Director and to NX Group Australia in the following terms:
This is a Default Notice under the Direct Agreement.
The Default is the appointment of a receiver and manager to National Express (Swanston Trams) which we were advised by the receiver occurred on 22 December 2002. The appointment of a receiver and manager constitutes an Event of Default and an Insolvency Event under the Infrastructure Maintenance Agreement.
237 On 24 December 2002, the Director sent a letter to the respondent in the following terms:
Please find enclosed a notice pursuant to Clauses 3.(b) and 5.2(b) of the Direct Agreement.
I confirm that, pursuant to the Direct Agreement, upon receipt of this notice, you are not entitled to terminate or suspend your obligations under the Contract (as that term is defined in the Direct Agreement) as a result of a Default by [the Company].
238 The enclosed notice stated as follows:
I give notice that:
(a) The Security (as that term is defined in the direct Agreement) given by [the Company] ("the Franchisee") in favour of the Director of Public Transport, became enforceable on 22 December 2002; and
(b) An Enforcing Party (as that term is defined in the Direct Agreement) is performing all of the Franchisee's obligations under the Contract (as that term is defined in the Direct Agreement).
239 On 24 December 2002, a letter was sent to "Thiess Infraco" on behalf of companies in the National Express Group, including the Company, which stated, amongst other things, the following:
As you would be no doubt aware, National Express Group (Bayside Trains), and National Express Group (Swanston Trams), have been placed into the hands of Receivers and Managers by the Director of Public Transport as contemplated by the Franchise Documents. From the perspective of the operation of the Thiess Infraco Companies with National Express in the short term will not be greatly affected, and indeed, the Infrastructure Maintenance Agreement dated 14 May 1999 is still the operative contract between the Thiess Infraco companies and National Express.
240 On or about 24 December 2002, the respondent provided to the Company a further progress claim post-dated to 1 January 2004 for the month of December 2002 in the sum of $7,682,838. Under cl 10 of the IMA this sum was due on 14 January 2003.
241 On 30 December 2002, one of the receivers and managers of the Company wrote to the respondent and Thiess Bayside and stated the following:
In my capacity as Receiver and Manager of both of the Franchisees, I confirm that the Franchisees will pay the Thiess Infraco companies for services rendered by them under the IMAs during the course of the receivership (i.e. services provided after 3.00 am on Sunday 22 December 2002). I also confirm that I have the benefit of an indemnity from my appointor, the Director of Public Transport, in respect of those liabilities.
However, I do not propose to adopt the IMAs nor do I propose to pay any outstanding debts of the Franchisees under the IMAs for services rendered prior to my appointment. I suggest you forward your claims for these debts to the Franchisees' administrators, Mr Simon Wallace-Smith and Mr Robert Whitton of Deloittes, so that those debts may be dealt with in the course of the administration of the Franchisees.
I understand that the Office of the Director of Public Transport has sent you a notice under Clause 3(b) and 5.2(b) of the Franchise Entity Direct Agreements dated 16 July 1999 between the Thiess Infraco companies and the Director. As a consequence of service of that notice, the Thiess Infraco companies are prohibited from terminating or suspending their obligations under the IMAs while I, in my capacity as receiver and manager of the Franchisees, am performing the obligations of the Franchisees under the IMAs. I assume that the Thiess Infraco companies will therefore continue to provide the services they are contracted to provide under the IMAs in accordance with the terms of the Franchise Entity Direct Agreements. Could you please confirm that this is your intention.
242 On 23 January 2003, a further Default Notice pursuant to cl 5.2 of the Direct Agreement was sent by the respondent to the Director and the Company in respect of the failure to pay the December progress claim.
243 The provisions of the DOCA, that was entered into on 14 July 2003, provided for claims to be made by reference to the definition of the word "Claim" as follows (the "Appointment Date" being 23 December 2002):
Claim means a debt payable by, or claim against, a Franchisee Company (based in contract, tort, statute or otherwise, present or future, certain or contingent, ascertained or sounding only in damages), being a debt or claim arising on or before the Appointment Date but does not include a claim against a Franchisee Company for Employee Entitlements.
(The phrase "a Franchisee Company" included the Company.)
244 On 9 September 2003, various parties entered a document entitled "Settlement Deed". Those parties did not include the appellants. The parties were: the Director, Thiess Bayside, the respondent, the Company, NX Bayside and the receivers. The recitals to the Settlement Deed state that the parties had agreed to settle their differences on issues arising out of the receivership on the terms set out therein. The nature of those differences was not the subject of debate on appeal.
245 Clause 2.2 of the Settlement Deed was entitled "New Swanston IMA" and was in the following terms:
2.2 New Swanston IMA
(a) The term of the Original Swanston IMA is extended, in accordance with Clause 2.2(d) below, to apply to the maintenance services provided by TIS to NX Swanston on and from the date of this Deed.
(b) TIS and NX Swanston must negotiate in good faith an agreement (the New Swanston IMA) to replace and supersede the Original Swanston IMA.
(c) If TIS and NX Swanston do not enter into the New Swanston IMA on or before 31 December 2003, TIS and NX Swanston will continue to be bound by the Original Swanston IMA.
(d) TIS acknowledges and agrees that:
(i) until the New Swanston IMA is entered into between NX Swanston and TIS, TIS and NX Swanston will continue to be bound by the Original Swanston IMA;
(ii) the receivers will decide in their absolute discretion whether the Original Swanston IMA or the Swanston IMA 2000 will be used as the basis of the negotiation referred to in paragraph (b)
(iii) the Original Swanston IMA will terminate on the commencement of the New Swanston IMA; and
(iv) unless the New Swanston IMA or, if paragraph (c) applies, the Original Swanston IMA) is novated or assigned to the Swanston Successor Operator at the election of NX Swanston the New Swanston IMA will terminate on the date that the Receivers cease to operate the business of NX Swanston.
(e) The termination of the Original Swanston IMA pursuant to Clause 2.2(d) will be for breaches by NX Swanston of the Original Swanston IMA which occurred before 22 December 2002.
(f) Pursuant to Clause 4.1(b) of the Swanston Franchise Entity Direct Agreement and Clause 23.5 of the Swanston Franchise Agreement and subject to Clause 2.4, the Director consents to the termination and placement of the Original Swanston IMA on the commencement of the New Swanston IMA.
(g) Without limiting the operation of the Swanston Franchise Entity Direct Agreement, TIS covenants in favour of the Director and NX Swanston that it will not seek to terminate the Original Swanston IMA or the New Swanston IMA by reason of an Insolvency Event occurring in relation to NX Swanston.
[Emphasis added]
246 The phrases "New Swanston IMA" and "Original Swanston IMA" were defined in cl 1.1 of the Settlement Deed as follows:
New Swanston IMA means the proposed agreement between NX Swanston and TIS to replace and supersede the Original Swanston IMA, referred to in Clause 2.2(b).
…
Original Swanston IMA means the Infrastructure Maintenance Agreement dated 14 May 1999 as novated to NX Swanston by the Novation Deed.
247 The acronym "TIS" was a reference to the respondent. "NX Swanston" was a reference to the Company.
248 The evidence discloses that a New Swanston IMA was not agreed either before or after December 2003.
249 The Settlement Deed also contained provisions for the respondent to enter further agreements with the Director to bring the Direct Agreement in line with the New Swanston IMA between the respondent and the Company. Clause 2.4 was in the following terms:
2.4 Swanston Franchise Entity Direct Agreement
(a) TIS acknowledges and agrees that the Swanston Deed of Charge is valid and enforceable and secures the obligations of the TIS under the Transaction Documents (as defined and including the Swanston Franchise Entity Direct Agreement).
(b) As a condition precedent to the New Swanston IMA, TIS must:
(i) at the discretion of the Director either:
(A) enter into a new agreement with the Director on substantially similar terms to the Swanston Franchise Entity Direct Agreement to apply to the New Swanston IMA; or
(B) amend the Swanston Franchise Entity Direct Agreement to apply to the New Swanston IMA; and
(ii) at the discretion of the Director either:
(A) provide the Director with a deed of charge in exchange for the Swanston Deed of Charge on terms no more or less favourable to the Director than the terms of the Swanston Deed of Charge, to apply to the new agreement or amended Swanston Franchise Entity Direct Agreement referred to in paragraph (i); or
(B) amend the Swanston Deed of Charge to the extent necessary (but on terms no more or less favourable) for the Swanston Deeds of Charges to apply to the new agreement or amended Swanston Franchise Entity Direct Agreement referred to in paragraph (i).
250 Clause 2.5 of the Settlement Deed envisaged the introduction of a "successor operator", in the following terms:
2.5 Transfer or assignment of the New Bayside IMA and the New Swanston IMA
TIB and TIS acknowledge that neither the Director nor the Receivers are obliged to procure the transfer of assignment of:
(a) the New Bayside IMA or the Original Bayside IMA from TIB to the Bayside Successor Operator; and
(b) the New Swanston IMA or the Original Swanston IMA (as extended pursuant to this Deed) from TIS to the Swanston Successor Operator.
251 The phrase "Swanston Successor Operator" was defined in cl 1.1 of the Settlement Deed as follows:
Swanston Successor Operator means the operator succeeding NX Swanston in the conduct of the business of NX Swanston.
252 On 17 April 2004, a further agreement was entered into by various parties. Again, the parties did not include the appellants. The parties were the Director, the Company, the receivers, the respondent, MetroLink Victoria Pty Ltd ("MetroLink"), Transfield MetroLink Pty Ltd ("TML") and Transdev Victoria Pty Ltd ("TV").
253 Under this agreement, called the "M>Tram Transfer Agreement (Infrastructure Maintenance)" (the "M>Tram Agreement"), the respondent and the Company agreed to put an end to the IMA and provided for MetroLink to enter a new arrangement to provide infrastructure maintenance services. The restructure can be summarised as follows by reference to the recitals to the M>Tram Agreement:
(a) The respondent agreed with the Company to terminate the IMA on the commencement of a new franchise agreement between the Director and Metrolink.
(b) The respondent further agreed, in accordance with the Franchise Agreement and the Direct Agreement to enter the M>Tram Agreement for the transfer of the assets and employees used in the business of maintaining the infrastructure under the IMA; and Metrolink agreed to take those assets and employees.
(c) Metrolink entered the M>Tram Agreement for itself and for TML and TV as partners in a partnership styled "Yarra Trams".
254 Clause 2 of the M>Tram Agreement provided for the termination of the IMA (referred to as the "Existing Infrastructure Maintenance Agreement") in the following terms:
M>Tram [the Company] and the Transferor [the respondent] acknowledge and agree that:
(a) the Existing Infrastructure Maintenance Agreement will terminate on commencement of the Franchise Agreement for breaches by M>Tram of the Existing Infrastructure Maintenance Agreement which occurred before 22 December 2002;
(b) until the Completion Date, each is bound by and must continue to perform its obligations under the Existing Infrastructure Maintenance Agreement (including in relation to the payment of claims for work performed up to the Completion Date) in accordance with the terms of that agreement; and
(c) notwithstanding termination of the Existing Infrastructure Maintenance Agreement, and without limiting the Settlement Deed, the Transferor and M>Tram will continue to perform their respective obligations in relation to work performed up to the Completion Date in accordance with the terms of that agreement.
[emphasis added]
255 Clause 4.4 of the M>Tram Agreement linked the end of the old arrangements with the beginning of the new arrangements as follows:
4.4 Interdependency with Franchise Agreement
The parties acknowledge and agree that Completion under this document:
(a) is interdependent with and conditional upon the issue of a Certificate of Commencement under the Franchise Agreement; and
(b) must occur on the same day as the issue of a Certificate of Commencement under the Franchise Agreement.
256 It is to be noted that in both the Settlement Deed and the M>Tram Agreement the termination of the Original Swanston IMA and of the Existing Infrastructure Maintenance Agreement, respectively, were "acknowledged and agreed" to be for "breaches by [the Company] of the [IMA] which occurred before 22 December 2002." As I have said, the appellants were not parties to either of these agreements.
The nature of the application
257 The originating process was filed on 13 April 2004. The substantive order sought was in the following terms:
1. An order that the defendants admit the loss of profits component of the plaintiffs' claim against National Express Group Australia (Swanston Trams) Pty Ltd ACN 087 494 997 (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) submitted to the defendants and dated 1 September 2003.
The primary judge's reasons
258 After describing the factual background, the primary judge said that the respondent was entitled to prove if it had a contingent debt or claim for the purposes of the DOCA. His Honour said that the definition of "Claim" was derived from s 553 of the Corporations Act. (It should be noted, however, that the definition of "Claim" in the DOCA used the phrase "being a debt or claim [including contingent] arising on or before [23 December 2002]", whereas s 553 used the phrase "being debts or claims [including contingent] the circumstances giving rise to which occurred before the relevant date". No argument took place on appeal as to the significance, if any, of such difference in wording.
259 The primary judge then dealt with the law on contingent claims or debts. In [9] and [10] of his reasons the primary judge said:
Since 1869 it has never been doubted that if at the date of bankruptcy the bankrupt was bound by an executory contract the creditor could prove as a contingent creditor for any losses that he might suffer from a past or future breach of that contract. This accords with the evident purpose of bankruptcy which is to permit all creditors to share in the distribution of the assets of the bankrupt and to leave the debtor thereafter free from the liability of previous obligations. …
The view that a future breach of contract could be proved as a contingent claim not only accords with principle, it conforms to the opinions of textbook writers and is supported by the cases. …
260 The primary judge referred to a decision of the Full Court of this Court in Lam Soon Australia Pty Ltd (Administrator Appointed) v Molit (No 55) Pty Ltd (1996) 70 FCR 34 and said at [16] of his reasons:
It is necessary to mention the obiter opinion of the Full Federal Court in Lam Soon Australia Pty Ltd (Administrator Appointed) v Molit (No 55) Pty Ltd (1996) 70 FCR 34 which suggests a different rule. According to that case, a right to sue for damages for a future breach of a contract when looked at before the breach is not a contingent claim; it is a mere expectancy and therefore not provable. I do not propose to apply that dictum. It is contrary to both the purpose of the legislation and authority.
261 The primary judge found both a serious breach and repudiatory conduct prior to 23 December 2002. In [17] and [18] of his reasons for judgment the primary judge said:
In any event, as it turns out, as at 23 December 2002 NX Swanston was in breach of the IMA. It had failed to pay the fee due on 17 December 2002 and this was a breach of an essential term of the IMA, time being of the essence. Ordinarily this would entitle Thiess to bring the IMA to an end: Holland v Wiltshire (1954) 90 CLR 409, 418-419; Tropical Traders Limited v Goonan (1964) 111 CLR 41, 53-55; Mehmet v Benson (1965) 113 CLR 295, 305-306; Neeta (Epping) Pty. Limited v Phillips (1974) 131 CLR 286, 297-298; Bunge Corporation, New York v Tradax Export S.A. Panama [1981] 1 WLR 711, 716.
Not only was NX Swanston in breach of an essential term of the IMA, before being placed into administration it had repudiated the IMA in the sense that it informed both the Victorian government and Thiess that it was no longer able to perform its obligations. That this amounted to a repudiation cannot be doubted: Peter Turnbull and Company Proprietary Limited v Mundus Trading Company (Australasia) Proprietary Limited (1954) 90 CLR 235, 246-248; Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401, 437; Mahoney v Lindsay (1980) 55 ALJR 118, 120; Foran v Wight (1989) 168 CLR 385, 394-395, 421, 434.
262 The primary judge then noted the submission of the appellants based on the fact that at no time prior to 23 December 2002 did the respondent purport to terminate the IMA or accept the Company's repudiation thereof. The primary judge said:
… The foundation for this submission lies in the doctrine of election. According to that doctrine if a person has two inconsistent rights (eg the right to rescind a contract for breach and the right to affirm the contract and sue for damages) when he has chosen one course he cannot afterwards choose the other: United Australia, Limited v Barclays Bank, Limited [1941] AC 1, 30.
263 The primary judge rejected this argument in [20] of his reasons:
In my view, the mere fact that the IMA remained in force until 2004 should not be treated as an affirmation or an election not to discharge that agreement. As I have pointed out Thiess was not entitled to terminate the contract for breach or repudiation without the consent of the Director, and it did not obtain that consent until it entered into the transfer agreement; the Director's consent is to be inferred by his execution of the transfer agreement. To that point Thiess had no choice but to go on with the IMA. To that point it had no power to elect to terminate the IMA. That right was held in suspense and could only be exercised on the Directors' consent, unless, in the meantime, Theiss chose to go on with the IMA come what may. That is a critical point because, as I see it, there can only be an election if the wronged party is in a position to choose between inconsistent rights. In William W. Bierce, Limited, A Corporation v Hutchins 205 US 340 (1907) at 346, Holmes J, delivering the opinion of the US Supreme Court, said: "Election is simply what its name imports; a choice, shown by an overt act, between two inconsistent rights, either of which may be asserted at the will of the chooser alone … He may keep in force or avoid a contract after the breach of a condition in his favor … In all such cases the characteristic fact is that one party has a choice independent of the assent of anyone else." That election does not cover the involuntary acceptance of the benefit of contract finds some support in theory in English cases: see for example Forman & Co. Proprietary, Limited v The Ship "Liddesdale" [1900] AC 190, 204-205.
264 Finally, his Honour rejected the argument of the appellants that the IMA was terminated by agreement and any accrued rights to damages were lost. The primary judge dealt with this argument as follows:
… I accept that an action in damages may be bargained away. What is necessary, however, is to show something in the nature of an accord and satisfaction. "The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given the accord remains executory and cannot bar the claim.": McDermott v Black (1940) 63 CLR 161, 183-184. Here there was no accord, express or implied. There is, therefore, no need to inquire into its satisfaction.
The Notice of Appeal
265 The Notice of Appeal contained nine grounds which can be divided into a number of sections. First, grounds 1, 2 and 3 were to the effect that the primary judge erred by failing to construe the IMA as denying any right in the respondent to terminate the IMA for breach or repudiation. Those grounds were as follows:
1. The Court erred in finding that the Infrastructure Maintenance Agreement ("Swanston IMA") conferred a right upon Thiess Infraco (Swanston) Pty Ltd ("Thiess Swanston") to terminate or accept a repudiation of the Swanston IMA.
2. The Court erred in not finding that any termination of the Swanston IMA by Thiess Swanston prior to the "relevant date" of 23 December 2002 would not have been a termination for breach of the Swanston IMA, but a termination in breach of the Swanston IMA, and thus did not entitle Thiess Swanston to claim damages for loss of profits.
3. The Court erred in not finding that the effect of the Swanston IMA, and clauses 11(c)(iii), 24.4 and 34 in particular, was to prohibit Thiess Swanston from terminating the Swanston IMA for breach, or accepting a repudiation of the Swanston IMA.
266 Secondly, the issue of election or affirmation was contained in ground 4, and arguably ground 8 (though ground 8 may be seen as having a somewhat different significance than affirmation or election):
4. The Court erred in finding that Thiess Swanston had not elected to continue with or affirm the Swanston IMA.
…
8. The Court erred in not finding that the basis upon which the Swanston IMA was in fact terminated was inconsistent with Thiess Swanston having accepted any repudiation by National Express Group Australia (Swanston Trams) Pty Ltd ("NX Swanston") of the Swanston IMA.
267 Thirdly, allied to grounds 1, 2 and 3, grounds 5 and 6 concerned the right to terminate as construed:
5. The Court erred in finding that the Swanston IMA could be terminated with the consent of the Director of Public Transport ("the Director").
6. The Court erred in finding that Thiess Swanston had a right to terminate the Swanston IMA, which right was held in suspense waiting the Director's consent.
268 Fourthly, issue was taken in ground 7 with the relevance of accord and satisfaction:
7. The Court erred in finding that it was necessary to show something in the nature of an accord and satisfaction before it could be established that an action in damages had been bargained away.
269 Fifthly, by way of conclusory ground, ground 9 stated:
9. The Court erred in finding that on the proper construction of the Swanston IMA, Thiess Swanston had a contingent debt or claim against NX Swanston as at the relevant date.
270 There was no notice of contention.
The appellants' submissions
271 The primary submission of the appellants was that the respondent had no entitlement to terminate the IMA. Clause 24.4(a) of the IMA ousted, it was said, the rights described therein, which were sufficiently widely expressed to encompass all species of mechanisms for ending the body of rights being the IMA. Clause 24.4(b) of the IMA recognised, but then constrained, the ability of the respondent to leave the IMA only by consensual termination. Such a "right" of termination did not give rise to a possible claim for damages for breach of contract.
272 It was submitted that the word "terminate" in cl 24.4(b) was to be contrasted with the fuller phrases in cl 24.4(a). There was no contractual right in the respondent to terminate in cl 34 of the IMA. Thus, it was said, "terminate" in cl 24.4(b) (and also where it appeared in cl 24.4(a)) could only mean termination by consent.
273 The appellants' argument, based as it was on the textual contrast between the words used in cll 24.4(a) and (b) and the lack of any contractually denominated right of termination in cl 34 depended, to a degree, on giving to the phrase "accept the repudiation of" in cl 24.4(a) the contractually intended role of dealing with the consequences of serious breach of contract going to the root of the contract. If that were ousted by cl 24.4(a) and not recognised otherwise by cl 24.4(b), and if, as it did, cl 34 provided no contractually denominated right in the respondent to terminate, the only "type" of termination left which could be the subject of the recognition in cl 24.4(b) was "consensual" termination. This construction was, it was said, conformable with the other agreements, and in particular with the inability of the Company to terminate the Franchise Agreement.
274 The terms of the Settlement Deed could not be used, it was said, to establish the Director's reasonable satisfaction for the purposes of cl 24.4(b) of the IMA even if the asserted termination could be seen as a Claim under the DOCA. The consent of the Director for clause 2.2(f) of the Settlement Deed was not, it was said, the reasonable satisfaction of the Director for the purposes of cl 24.4(b) of the IMA.
275 The right to terminate for breach or repudiation, if it existed, was not "held in suspense" as found by the primary judge at [20] of his reasons. There were said to be four essential errors in this conclusion of the primary judge:
(a) The respondent affirmed the IMA by continuing to perform the IMA until April 2004 and by agreeing to the Settlement Deed and M>Tram Agreement.
(b) The way in which the IMA was in fact terminated (by mutual assent of the Company and the respondent) was inconsistent with the acceptance of a repudiation.
(c) Termination in conformity with cl 24.4(b) of the IMA was limited to the circumstances in cl 24.4(b)(i) and (ii). The reasonable satisfaction of the Director to these matters was not obtained. This argument, in part, rested on an anterior assertion that termination in cl 24.4(b) was only consensual termination. It also rested on the argument that, as a matter of fact, the requirements of cl 24.4(b) as to the Director's reasonable satisfaction were not met.
(d) The lack of any right to terminate for breach meant that no right could be "held in suspense".
276 The appellants rejected the existence of a "contingent claim" at 23 December 2002. The only relevant contingency, it was said, could be the respondent's supposed right to terminate the IMA for breach or to accept a repudiation by the Company of the IMA. This contingency did not exist because the respondent did not have at 23 December 2002 any such right and at no time could it have such a right. This was a re-assertion of the primary argument.
277 Alternatively, if a contingent claim existed as at 23 December 2002, based on the future possible termination of the IMA, the Court would apply hindsight to assess whether the contingency should be recognised. The arguments which found the election or the affirmation, it was said, destroyed the contingency.
278 Alternatively, even if the primary judge was correct in his construction of cl 24.4(b), what existed was not a contingent or future claim, but a mere expectancy of the kind referred to in Lam Soon.
The respondent's submissions
279 By way of introduction, the respondent stressed that in the days leading up to 23 December 2002, the Company committed a number of serious defaults under the IMA:
(a) On 17 December 2002, it failed to pay the November 2002 progress claim of $3,989,000, being a breach of an essential term of the IMA, time having been made of the essence by cl 43.10 of the IMA.
(b) Between 16 and 19 December 2002, the Company's parent stated publicly that it would no longer provide funds to enable the Company and NX Bayside to meet their liabilities.
(c) On about 16 December 2002, the Minister for Transport reported that the Company would cease operations and hand back its franchise.
(d) On 22 December 2002, the appointment of receivers and managers by the Director to the Company and NX Bayside.
280 These were breaches, it was said, of cll 34.1(a)(i) (non-payment), 34.1(a)(iv) (Insolvency Event), 34.1(a)(vi) (Material Adverse Effect) and 34.1(a)(vii) (cross-default). No argument to the contrary was put. The findings of the primary judge in [17] and [18] of his reasons ([261] above) were not contested on the appeal.
281 The first submission, put orally by Mr Burnside QC, who, with Mr Woodward, appeared for the respondent, was that the concentration on whether a right of termination existed as at 23 December 2002 focussed attention on the wrong question. The claim, he submitted, for which the respondent was entitled to prove, was for payment under the IMA for the amount for which the IMA provided. This amount included a profit component. The following extract from the oral submissions encapsulated the primary argument.
[T]hat right could be exercised in several possible ways, depending on the course of history. The expected course was that the parties would all perform their respective roles, in which case payment would continue until the end of the contract period. Another possibility was that the contract would be brought to a premature end and, if that was done in a way that did not sacrifice Thiess' right to payment, then its right would simply be exercisable by a different mechanism. That mechanism would be a claim for damages, whether for breach or for breach of an essential term, or by way of accepting a repudiation if permitted to, but by one mechanism or another the right to receive payment as prescribed by the contract would result in payment in accordance with the contract.
It doesn't matter at all in our submission whether that payment is converted into a claim for damages upon breach or upon termination by whatever mechanism.
…
The claim that is sought to be made out in this case is simply a claim to be paid, and that right existed from the day the contracts were signed and continued in existence until the transfer agreement brought an end to that right. Plainly enough after the transfer agreement was executed Thiess could no longer claim the profit component of the agreement that related to a period beyond the signing of the transfer agreement, but up to the signing of the transfer agreement its right to be paid remained. Of course, it's been paid some part of its entitlement, namely that part which reflects its expenses, but it hasn't been paid that part which reflects the profit component of the bargain it struck.
282 The second extract cited above was then corrected:
I'm sorry, I'm being corrected. They continued to be paid the profit component whilst they performed the work, and what they claim is the profit to which they were entitled in the future. Of course, they can't seek for the future period the expenses which by definition they haven't had to incur, but they've been deprived of the value of their bargain from the date the contract came to an end by virtue of the transfer agreement.
283 In the alternative, it was submitted that there was a right to terminate:
The right to terminate is merely the event which crystallises or makes certain the path by which the right to payment is to be enforced. It's clear, however, in our submission, that at the time of the appointment on 23 December 2002 there was a right to bring the contract to an end if Thiess so wished. It wasn't obliged to accept the repudiation. It was entitled to continue performing, it was entitled to continue to be paid, but it could if it wished accept the repudiation, but that right was suspended because of the terms of the agreement which it had entered.
284 Thus it was said:
The right to bring it to an end by orthodox contractual means remains in suspension, but the right to be paid continues because the right to be paid arises under the contract which, by hypothesis, hasn't been brought to an end. That's a right to be paid the full amount which the contract stipulates, including the profit component. Then the question is - and we would say the question really is on one view irrelevant because if there's a right to be paid, there's a right to be paid and that's an end of it, and his Honour's judgment was plainly right in ordering that the profit element of the agreed payments be admitted to proof - but the debate has focussed on the meaning of "terminate" and the effect of the restriction, or rather the scope of the restriction, on termination provided in particular by the IMA.
285 The essence of the further arguments of the respondent were as follows:
(a) The respondent did not give up its right under the general law to terminate and recover damages for breach.
(b) That right arose both on the breach of an essential term and for a repudiation.
(c) the exercise of the right was governed by cll 24.4 and 34 of the IMA and cl 5.2 of the Direct Agreement.
(d) Those provisions operated to suspend, but did not extinguish, the respondent's right to be compensated for the loss of its bargain.
(e) The conduct of the respondent following the service of the notice by the Director was not an affirmation of the IMA.
(f) The M>Tram Agreement effected the termination of the IMA for breach by the Company, and thus operated to crystallise the respondent's claim for the loss of its bargain.
(g) The M>Tram Agreement and the acknowledgements by the Director in that agreement evidence the Director's "reasonable satisfaction" required by cl 24.4(b) of the IMA.
(h) Assessed as at 23 December 2002, the respondent had a claim for the loss of its bargain (representing the balance of the term of the IMA) payable on a contingency; namely, the termination of the IMA for breach, subject to satisfying the pre-requisites for such termination prescribed by the IMA and the Direct Agreement.
The disposition of the appeal
My views in summary
286 The following is an outline summary of my views to be read with what follows:
(a) I reject the respondent's submission that the claim was one merely for payment.
(b) I reject the appellants' submission that the only right of termination recognised by cl 24.4(b) of the IMA was termination by consent.
(c) As at 23 December 2002, and at the time of lodgement of its claim the respondent had a contingent claim falling within the meaning of "Claim" in the DOCA.
(d) The contingent claim as at those dates was based on the conduct of the Company prior to 23 December 2002 in committing a breach of contract agreed to be essential and evincing an intention not to be bound by the IMA according to its terms.
(e) This conduct of the company was sufficient to entitle the respondent pursuant to the general law right to terminate the IMA if, or when, the provisions of the IMA permitted the respondent so to act.
(f) There was no affirmation or election destroying that contingency by the respondent entering into the Settlement Agreement.
(g) However, the IMA was ended by agreement being the M>Tram Agreement not by the exercise of any general law right to end the IMA. The contingency was destroyed by a means other than the acceptance of repudiatory conduct.
The disposition of the arguments
The primary contention of the respondent
287 It is convenient to deal first with the submissions put orally on appeal by Mr Burnside that the claim was for the contractual right to payment and that the concentration in the argument on termination and the right to terminate reflected a distraction from the true issue in the case.
288 I reject this argument. The claim in the proof was for loss of profits or loss of bargain. Such a claim is in the nature of a claim for damages recoverable if the contract is put to an end, not if the contract remains unterminated: Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, 260, (per Mason CJ with whom Deane J, Dawson J and Toohey J agreed at 265) and 273 (per Gaudron J); Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444, 458 (per Gibbs J, Mason J and Jacobs J, contra Barwick CJ at 450); Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, 31 (per Mason J with whom Wilson J and Deane J agreed generally, and Dawson J agreed); and Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 844-5, 849. The correction of the error by Mr Burnside in his address reveals the reason for this principle. If, as contended for by the appellants, the respondent was entirely lacking any right to put an end to the IMA by reason of any conduct of the Company, whether arising out of the terms of the IMA or at general law, then there was no capacity to put the contract to an end (whether the language of rescission or termination is used). Thus there could be no claim for damages for loss of profit or the lost benefit of the bargain. The views of Barwick CJ in Ogle at 450 that loss of bargain damages can be sued for before the contract was rescinded (terminated) in circumstances of actual, as opposed to anticipatory, breach was rejected by the Court in Sunbird Plaza and again, implicitly, in Progressive Mailing House.
The proper construction of the IMA and the ability of the respondent to terminate
289 The importance of this question is revealed by the reasons of the primary judge concerning the nature of a contingent debt or claim. If (as it had) the Company so conducted itself by 23 December 2002 as to provide the foundation for the termination of the IMA at the instance of the respondent for breach (whether as a remedy for serious breach or by way of an acceptance of repudiatory conduct) and if such a termination were possible by the respondent (whether or not dependent upon other events occurring, such as the satisfaction of the Director of certain things) the basis for the existence of a contingent claim as at 23 December 2002 can be appreciated.
290 It was, therefore, central to the appellants' argument that any right in the respondent to end the contract for breach or repudiation by the Company had been ousted by the IMA, in particular by cll 24.4(a) and 34 of the IMA. The only recognition given by cl 24.4(b) of the IMA was, it was said, to termination by mutual agreement between the respondent and the Company, which type of termination could not, of its nature, give rise to a claim for damages. Further, even that type of termination was subject to the Director's reasonable satisfactions set out in cl 24.4(b) of the IMA.
291 It is to be recognised, and it was not in dispute, that the IMA is to be read in the framework of the Direct Agreement and the Franchise Agreement. It is also to be recognised, and it was also not in dispute, that a matter of significant background to understanding the operation of all the relevant agreements was the manifest public interest in maintaining the fluent operation, as far as possible, of the transport system for the public. In that regard, the Director was given a central position in the contractual framework, with a significant degree of power and control.
292 The Franchise Agreement provided a number of important elements for the overall construction of inter-locking rights and obligations. It was express and pellucid that only the Director could terminate the Franchise Agreement. Clause 18.1 of the Franchise Agreement defined the phrase "Termination Events" by reference to conduct of the Company and any relevant "Franchise Entity". There was no conduct of the Director that was a defined "Termination Event". Clause 18.2 gave express power to the Director (and only the Director) to terminate the Franchise Agreement by contractual provision. Clause 18.3 then excluded any other right of termination whatsoever. Expressed as it was, in the passive voice, and given its terms, cl 18.3 of the Franchise Agreement was plainly intended to deal with termination by both parties. The Director was limited to termination under cl 18.2. The Company could not terminate on any basis – under the contract, at law or in equity.
293 This lack of legal capacity in the Company to put an end (other than, of course, by mutual contractual assent) to a relatively long term contract can be explained by a number of factors. The Company was dealing with the Crown in the right of the State of Victoria. There was thus no commercial solvency risk from the contingencies and vicissitudes of business. Access was being granted, on a long term basis, to a business, hitherto a public utility, for the ongoing use and benefit of the public. In those circumstances, one can see as rational and explicable the commercial decision of the Company to bind itself to the franchise for its full term. Any risk could really only be described as sovereign risk.
294 Clause 23.5 of the Franchise Agreement provided the terminological framework to bind both the Company (directly in cl 23.5 of the Franchise Agreement) and the respondent (by clause 2(a) of the Direct Agreement) to a regime concerning termination of Key Contracts, which included the IMA.
295 Thus, cl 18 of the Franchise Agreement made clear that the Franchise Agreement could not be terminated by the Company; and cl 23.5 of the Franchise Agreement limited the Company's and other Franchise Entities' (such as the respondent) capacities to put an end to the underlying Key Contracts.
296 Before turning to the IMA and the Direct Agreement, it is appropriate to address three issues of relevance to all the agreements: (a) the contractual exclusion or limitation of general law remedies for breach of contract, (b) the question of terminology concerning remedies for breach of contract, and (c) how these issues affect the construction of the relevant documents here.
297 There is no doubt that a party's right to accept a repudiation of a contract, or to end a contract because of breach of a serious or essential term, can be excluded by contract. In discerning the intention of the parties in that regard, however, there is a principle of construction that clear words are needed to rebut the presumption that a contracting party does not intend to abandon available remedies for breach of contract arising by operation of law: Concut Pty Ltd v Worrell (2000) 176 ALR 693, 699 at [23] (per Gleeson CJ, Gaudron J and Gummow J); Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689, 717 (per Lord Diplock); Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574, 585 (per Lord Goff of Chieveley, agreed with by Lord Hoffmann, Lord Hope of Craighead and Lord Hutton); and see also Carter Breach of Contract (2nd Edn) [779] and cases there cited.
298 Clause 23.5 of the Franchise Agreement contained a structure repeated in cl 24.4 of the IMA and cl 4.1(b) of the Direct Agreement. It is evident that the drafter of each contract attempted to use such verbs that in common legal parlance state the various remedies of a party to a contract to put an end to the contract in some fashion. The word "avoid" is generally taken to mean set aside ab initio. The word "release" generally encompasses some bilateral consensual arrangement, but may involve the unilateral surrender of rights. The word "surrender" could involve a bilateral consensual arrangement or unilateral act. The words "terminate" and "rescind" have at times bedevilled debate in the field of remedies for breach of contract and associated questions. The word "rescind" can mean setting aside ab initio, such as for misrepresentation. It can also mean the ending of the contract in futuro, leaving accrued rights, including accrued secondary rights to sue for damages, in place: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 476-77; Progressive Mailing House at 30-31; Johnson v Agnew [1980] AC 367; and Photo Productions Ltd at 844. The word "termination" can mean termination by consent, but it can be, and often is in modern legal expression in Australia, used to denote ending a contract for serious breach either pursuant to a contractual entitlement or at common law as a remedy for a serious breach of contract or consequent upon a repudiation by one party or upon a frustration by supervening events: see Carter op cit pp 65-6 [323]-[327]; and Carter and Harland Contract Law in Australia (4th Ed) Chs 19 and 20. This notion of terminate (meaning to end) will generally signify the ending of the contract in futuro. The word "discharge" is sometimes used in a similar fashion to the word "terminate" where there has been a breach and a party becomes entitled to leave, or be discharged from, the contractual arrangement.
299 It would be a mistake, in my view, to treat each of the words used by the drafter in cl 23.5(a)(i) of the Franchise Agreement and in the cognate provisions in these agreement (cl 24.4(a)(i) of the IMA and cl 4.1(b)(i) of the Direct Agreement) as having a clear meaning, mutually exclusive from all the other expressions used. The drafter was attempting, succinctly but comprehensively, it seems to me, to ensure that any capacity at all to end the contract in question would not be exercised, except as permitted by the related and following paragraph (cl 23.5(b) of the Franchise Agreement, cl 24.4(b) of the IMA and cl 5 of the Direct Agreement). An aspect of this overlap of meaning is to be found in the relationship between the word "terminate" and the phrase "accept the repudiation of". The word "terminate" is apt to pick up the notion of the common law right to end a contract for a serious breach of contract (including for a breach of a term agreed to be essential) and to put an end to the contract consequent upon the acceptance of repudiation. In any given circumstance, a serious breach going to the root of the contract and repudiatory conduct may both be present, though it is necessary to keep the notions distinct: Honner v Ashton at 9489-93 per Mahoney JA; Shevill v Builders Licensing Board (1982) 149 CLR 620, 625-6 (per Gibbs CJ); Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, 64 (per Upjohn LJ); Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105, 144-45 (per McHugh JA). Repudiation requires attention to the evincing of any intention not to be bound by the obligations of the contract: see for example Ross T Smyth & Co v T D Bailey and Son & Co [1940] 3 All ER 60 at 71-2 per Lord Wright and Larratt v Bankers & Traders' Insurance Co (1941) 41 SR 215 at 233 per Jordan CJ; a serious breach of contract warranting termination requires attention to the nature and consequences of the breaches: see Treitel Remedies for Breach of Contract: A Comparative Account (Oxford, 1988) pp 350-51; Carter Breach of Contract (2nd Ed) pp 158-59; and Honner v Ashton p 9492; Mersey Steel & Iron Co Ltd v Naylor, Benzon & Co (1884) 9 App Cas 434, 443-44; Ross T Smyth & Co Ltd v T D Baily Son & Co at 72 per Lord Wright; Hongkong Fir at p 72 per Diplock LJ; Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361, 380 per Buckley LJ; Fullers' Theatres Ltd v Musgrove (1923) 31 CLR 524 at 537-38 per Isaacs and Rich JJ; Wallis, Son & Wells v Pratt & Haynes [1910] 2 KB 1003, 1012; and on appeal [1911] AC 394; and Bowes v Chaleyer (1923) 32 CLR 159, 178. Though, of course, the parties may (as they did in cl 43.10 of the IMA) agree upon the essentiality of a term or of a fact. Of course, one body of facts may be both a breach going to the root of the contract and a repudiation. That said, however, as a matter of language and legal mechanics, if repudiatory conduct is accepted by the innocent party, the innocent party will then put an end to or terminate the contract by the manifestation of such acceptance and the expression of the ending of the arrangement.
300 I would not attribute to the drafter of cl 23.5(a) of the Franchise Agreement (and to the drafter(s) of the cognate provisions: cl 24.4(a)(i) of the IMA and cl 4.1(b)(i) of the Direct Agreement) an intention to draw a clear distinction between the word "terminate" and the phrase "accept the repudiation of". They can be distinct and they can be related; it depends on the context and the circumstances.
301 Thus, it is difficult to see why the word "terminate" in cl 23.5(b) of the Franchise Agreement (and in the cognate provisions: cl 24.4(b) of the IMA and cl 5.2(a) of the Direct Agreement) would not have the meaning it has in cl 23.5(a) of the Franchise Agreement (and cl 24.4(a) of the IMA and cl 4.1(b)(i) of the Direct Agreement), that is, end the contract in futuro for whatever reason the law might permit same: terminate pursuant to the terms of the contract, at general law for breach of an essential term or consequent upon repudiatory conduct or consensually.
302 Turning to the IMA, cl 34 conferred no contractual right on the respondent to terminate the IMA. There was, however, no clause such as cl 18.3 of the Franchise Agreement manifesting an intention that the IMA not be capable of termination otherwise than by the contractual regime for the benefit of one party. Clause 34 of the IMA does, however, limit the entitlement to terminate for breach under the IMA to the Company. One question is whether that is to be seen as a code, thereby impliedly negating any entitlement in the respondent to terminate the contract, at general law, for serious breach or consequent upon the acceptance of repudiatory conduct. I would not conclude that cl 34 of the IMA impliedly excludes such common law rights of the respondent. First, I bear in mind the rule of construction referred to earlier. Secondly, cl 34.1 provides for certain events or circumstances to be "Events of Default" of both parties: the Company and the respondent. That expression, "Events of Default", is picked up by the balance of the clause dealing with the regime concerning Events of Default committed by the respondent. It is, in cl 34.1 in particular, an expression that is also apt to describe what the parties have designated as breaches of contract. What they have not done in relation to breaches by the Company (that is, Events of Default committed by the Company) is provide for a regime concerning termination pursuant to the terms of the contract. These Events of Default, nevertheless, stand as breaches of contract. If they are otherwise made essential, such as cl 34.1 (a)(i) concerning payment within 14 days is made essential by cl 43.10 making time of the essence, that will, subject to the balance of the IMA restricting or curtailing the right, enable the respondent to terminate the IMA, at general law, for breach of a term made essential by the terms of the contract in question. If the Events of Default in cl 34.1 are not made contractually essential, it would be necessary to assess the nature and gravity of the breach in question to determine whether the breach deprives the party not in default of substantially the whole benefit from the contract: Hongkong Fir at 69 (per Diplock LJ); Shevill at 625-2; Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549, 556-57, 561-62; and Progressive Mailing House at 31 and 37; or it would be necessary to assess whether the conduct of the Company were such was to evince an intention not to be bound by the contract.
303 Thus, whilst cl 34 of the IMA can be seen clearly as a clause which only provided a contractual regime of termination to the Company, it can also be seen to identify what the parties regarded as breaches of contract by both parties. In particular because of that role of cl 34.1, I see no basis to conclude that cl 34 is a code impliedly excluding the respondent's entitlement to rescind or terminate at common law for a breach agreed to be essential or sufficiently serious as to go to the root of the contract or consequent upon a repudiation by the Company.
304 One then comes to cl 24.4 of the IMA. There is no doubt that cl 24.4(a) of the IMA ousts (except as permitted by (b)) the remedies there identified. The remedies there identified are, as I have said, an evident attempt (in my view, a skilful and succinct, but comprehensive attempt) to identify legal mechanisms to put an end to contracts, ab initio and in futuro. The terms of the provision are that the respondent "must not" do certain things. It denies the entitlement (however arising) of the respondent to do any of those things, except as permitted by paragraph (b). Some criticism was made in argument of the drafting of this structure as "word processing drafting" or as being impossible to account for other than by "loose drafting". That, with respect to counsel who put those submissions, did not give credit to the evident care in the drafting, which was founded, in its juxtaposition of what is in cll 24.4(a) and (b) of the IMA (and in cognate provisions), on an appreciation of the importance of not upsetting past arrangements, but permitting, with appropriate controls, termination in the future.
305 The real issue of construction is whether cl 24.4(b) of the IMA is, as the appellants contended, limited to consensual termination (and thereby, of its nature, incapable of supporting a claim for damages for loss of bargain), or whether it is apt to encompass termination for serious breach or the ending of the contract consequent upon an acceptance of repudiatory conduct.
306 I reject the appellants' arguments that since cl 34 of the IMA did not give a contractual right of termination to the respondent the right of termination recognised (though not conferred) by cl 24.4(b) of the IMA must only be a consensual termination, and that the separate identification of acceptance of repudiation in sub cl 24.4(a) of the IMA meant that "termination" in cl 24.4(a) and (b) could not include either or both the related notions of termination for serious breach or of ending the contract consequent on a repudiation. I would give the various expressions in cl 24.4(a) their full potential meaning. They no doubt overlap to a degree. What was ousted, completely, by cl 24.4(a) of the IMA, and not saved by the permitted exception in cl 24.4(b) of the IMA, was the ability to set aside the contract in the past, whether ab initio or from some other date earlier than the act of termination. What was permitted, subject to the conditions in cl 24.4(b), was to bring the contract to an end, to terminate it, but only from that time forward. That is the notion of terminate – it is to end. I do not see the use of the word "terminate" in cl 34 of the IMA as limiting the use of the word "terminate" in cl 24, to a point of lack of content. As I have said, the word "terminate" has a number of possible meanings. In its context in cl 34 of the IMA it means terminate pursuant to the terms of the contract. In cl 24.4 of the IMA its content is naturally fuller. The respondent has no contractual right to terminate under cl 34. That does not, it seems to me, deprive the respondent of a common law right of ending the contract (terminating it) in the way that I have described earlier. Once one rejects the assertion that the absence of a right in the respondent to terminate under the contract in cl 34 of the IMA removes any right to terminate at common law in the respondent, it follows that the content of the word "terminate" in cl 24.4 of the IMA is wider than consensual termination and that the word "terminate" in cl 24.4, including cl 24.4 (b) is apt to include termination under the general law.
307 This view is supported, it seems to me, by an appreciation of the balance of the rights and obligations of the respondent in the cognate agreements. The Direct Agreement recognised in cl 5.2 a capacity in the respondent to terminate the "Contract" (defined in the Direct Agreement as the IMA) for the default of the Franchisee (defined in the Direct Agreement as the Company). This is put to one side by the appellants as "boiler-plate drafting". To an extent this may, perhaps, be so. Under cl 2(a) of the Direct Agreement the respondent undertook to the Director the obligations in cl 23.5 of the Franchise Agreement. So, as between the Director and the respondent, the respondent agreed not to do anything in cl 23.5(a) of the Franchise Agreement, unless permitted by cl 23.5(b). The respondent agreed (with the Company) that it could only terminate in circumstances set out in cl 24.4(b) and (with the Director via cl 2(a) of the Direct Agreement that it could only terminate in circumstances set out in cl 23.5(b) of the Franchise Agreement. So, insofar as cll 4.1 and 5.2 of the Direct Agreement purport to give a wider capacity to the respondent to act that through cll 24.4 or 23.5, some resolution of cll 2(a) and 23.5 with cll 4.1 and 5.2 would need to be undertaken. That resolution need not be undertaken to resolve this dispute. For present purposes, it is enough to understand that cl 5.2 of the Direct Agreement recognised a right of termination in the respondent for Default by the Company. Clause 23.5(b) of the Franchise Agreement as adopted by cl 2(a) of the Direct Agreement, and as owed to the Director, and the identical cl 24.4(b) owed to the Company under the IMA, restricted the capacity of the respondent to terminate by conditioning it upon the Director's state of satisfaction. Clause 5.2 of the Direct Agreement also laid down a regime for notifying the complaint (by notification to the Director and the Company) and identified further (and different) circumstances in which any right of the respondent to terminate was not to be operative: cl 5.2(b). Clause 11(c)(ii) of the IMA made those further restrictions in cl 5.2(b) binding on the respondent in favour of the Company under the IMA.
308 There is no doubt that as at 23 December 2002 the Company had breached the provisions of the IMA for timely payment of sums due under the IMA. Time had been agreed to be of the essence in the IMA. This breach of a contractually agreed essential term of the IMA gave rise (subject otherwise to the terms of the IMA) to an entitlement at general law to terminate the IMA. Also, there is no doubt that by 23 December 2002 the Company had, through the actions of those that controlled it, repudiated its obligations under the IMA.
309 The respondent was bound, however, to comply with the constraints in the Direct Agreement and in the IMA in dealing with these circumstances. This duty was owed to the Director under the Direct Agreement and to the Company under the IMA, which also by cl 11(c)(ii) picked up the obligations in the Direct Agreement.
310 Clause 5.2(a) of the Direct Agreement (incorporated as it was into the IMA) only permitted termination "as a result of a Default in accordance with the terms of the Contract [the IMA]". The word "Default" had a very wide meaning in the Direct Agreement. It is not to be seen as linked to the notion of termination for an event of default under cl 34 of the IMA, limited as that was to the Company. The two limbs of the definition of "Default" in the Direct Agreement are amply sufficient to encompass the Company's breach and repudiatory conduct here. The words "in accordance with the terms of the Contract [the IMA]" in cl 5.2(a) may, because of the width otherwise of the definition of "Default", be read flexibly to be wider than referring merely to the exercise of rights of termination pursuant to contract (under cl 34 of the IMA).
311 Alternatively, cl 5.2 of the Direct Agreement might be seen as "boiler-plate drafting" and the words "in accordance with the terms of the Contract [the IMA]" in cl 5.2(a) restrict the type or range of Default (otherwise widely defined) upon which the respondent could rely in terminating the IMA to such defaults as the IMA identified as the basis for contractual termination. There are no such defaults: see cl 34 of the IMA. Therefore, on this construction, the compliance by the respondent with cl 5.2 of the Direct Agreement in favour of the Company (by cl 11(c)(ii) of the IMA) would have the respondent unable to terminate because it had no right to terminate for a Default "in accordance with the terms of the Contract [the IMA]", notwithstanding the wide definition of "Default" in the Direct Agreement.
312 I prefer the former construction. I do not see the phraseology in cl 5.2(a) affecting the width intended in cl 24.4(a) and (b) of the IMA (and cognate clauses) of the word "terminate" (and the other words in cl 24.4(a)). Once one gives the word "terminate" in cl 24.4(a) and (b) a meaning to encompass termination at general law for serious breach or upon an acceptance of a repudiation, I do not see the words of cl 5.2(a) of the Direct Agreement by the use of the phrase "in accordance with the terms of the Contract [the IMA]" as cutting down that width and elevating cl 34 of the IMA to a code. This is especially so given that the word "Default" in the Direct Agreement is defined so widely in reach and is defined as specifically related to "the Contract" – the IMA.
313 The requirement of notice under cl 5.2 of the Direct Agreement provides the opportunity for the Director to step in and take over the operation of the Franchise Business. Thus, the continued existence of the general law right of termination in the respondent for serious breaches, or repudiation, of the IMA by the Company, controlled and regulated by the procedure in cl 5.2 can be seen to underpin and reinforce the continuity of the services to the public. The respondent's possession of a right to give a Notice of Default for such serious breaches or repudiatory conduct in connection with the IMA enabled the Director to be apprised of those circumstances and to understand whether it was appropriate to step in under cl 17.1(a)(i)(B)(4) of the Franchise Agreement. It accords with the business-like and smooth running of the transport system for contracting parties such as the respondent to be able, in a way controlled or regulated by the Director in the public interest, contractually to complain about breaches of essential terms or going to the root of the contract or of repudiatory conduct by the Company under the IMA so that the Director is able to take steps of his or her own in the public interest under the terms of the Franchise Agreement or related Transaction Documents including the security documents to deal with the Company.
314 Thus, I reject the primary submission of the appellants that the proper construction of the IMA in the context of the cognate agreements was that the respondent was only entitled to terminate the IMA (as recognised by cl 24.4(b)) by consensual arrangement. The terms of cl 24.4(b) of the IMA recognised, in my view, the general law entitlement of the respondent (if circumstances otherwise gave rise to it) to terminate the IMA for breach of an essential term or consequent upon, or as, the manifestation of the acceptance of the repudiation.
315 Therefore, with a qualifying comment, I would reject grounds 1, 2 and 3 of the Notice of Appeal. The qualifying comment that I would make is in relation to ground 1. To the extent that the primary judge's reasons may be seen to express a view that the IMA conferred a right of termination (contractually) upon the respondent, his Honour would have erred. I do not, however, so read his reasons. I read the primary judge as having viewed cl 24.4(b) of the IMA as recognising the general law right of termination.
Understanding the events following 22 December 2002 in the light of the proper construction of cll 24 and 34 of the IMA and cll 4 and 5 of the Direct Agreement
316 Undoubtedly, the Company, by its failure to pay the November progress claim timeously, was in breach of an essential term of the IMA; and, by the intentions publicly expressed by and on behalf of the Company, it evinced an intention not to be bound by the IMA according to its terms.
317 From 19 December 2002, employing the procedure designated by cl 5.2(a) of the Direct Agreement, the respondent served notices of the breaches that occurred. The first Notice of Default, dated 19 December 2002 ([233] above), described the "event or circumstance which would entitle the [respondent] to … treat [the Contract viz the IMA] as repudiated" (see limb (b) of the definition of "Default" in the Direct Agreement). However, the notice did not specify such as the Default. The Default was identified as the failure to pay the $3.989 million timeously. No submission was put as to any inadequacy in the notice in this, or in any other respect.
318 Of course, the respondent was not entitled to terminate the IMA at this point: cl 5.2 modified its common law right by requiring a procedure to be undertaken. This procedure was undertaken. The cl 5.2 notices were issued and time was thereby provided which enabled the Director to consider his position.
319 On 24 December 2002, the Director exercised his right to give a notice contemplated by cl 5.2(b) of the Direct Agreement. (See the notice at [234] above.) It is necessary to recognise what the effect of cl 5.2(b) and the notice was. Clause 5.2(b) of the Direct Agreement (made applicable to the IMA by cl 11(c)(ii) of the IMA) denied the respondent the power to exercise any entitlement at general law to end the IMA if, first, the Director notified the respondent that he or she was exercising a step in right (cl 5.2(b)(i)), and, secondly, an Enforcing Party (which term included the receivers and managers) was performing all of the Company's obligations under the IMA (cl 5.2(b)(ii)). The second requirement did not depend on the contents of the notice asserting it to be the fact (as occurred here), but on the fact of that occurring.
320 A notice sufficient for cl 5.2(b)(i) was given.
321 The parties were agreed on appeal that the receivers and managers performed all of the Franchisee's (the Company's) obligations under the Contract (the IMA) for the purposes of cl 5.2(b)(ii) of the Direct Agreement after 3 pm on 22 December 2002 until they ceased to have possession of the assets.
322 Thus, so long as cl 5.2(b)(ii) of the Direct Agreement was satisfied, the respondent was, by cl 5.2 of the Direct Agreement (adopted as an obligation to the Company by cl 11(c)(ii) of the IMA) not entitled to exercise any right under general law to terminate the IMA based on the conduct up to 23 December 2002, or after that date to the extent that such a right might otherwise have arisen.
323 Further, to the extent that some change of circumstance would lead to the conclusion that cl 5.2(b)(ii) of the Direct Agreement was not satisfied, it would still be necessary, before the respondent could exercise its common law right of termination, for the Director to be reasonably satisfied of the matters in sub cll 24.4(b)(i) and (ii) of the IMA.
The asserted affirmation or election – the Settlement Agreement
324 The Settlement Agreement (to which the respondent was a party) contained provisions to the effect that the IMA was extended, that until the coming into effect of the "New Swanston IMA" the respondent would continue to be bound by the IMA as extended, that the IMA would terminate on the commencement of the "New Swanston IMA" and that if no New Swanston IMA came into effect the respondent and the Company would continue to be bound by the IMA: see sub cll 2.2 (a), (c) and (d) of the Settlement Agreement. These matters were agreed subject to the assertion or qualification in cl 2.2(e) that the termination of the IMA on the commencement of the New Swanston IMA would "be for breaches by [the respondent] of the [IMA] which occurred before 22 December 2002."
325 The Notice of Appeal and the submissions of the appellants did not seek to distinguish between the notions of affirmation and election. It is sufficient to deal with the arguments on principles of election. The true nature of election is the making of a choice in the face of two mutually exclusive courses of action: Spencer Bower and Turner The Law Relating to Estoppel by Representation (3rd Ed, 1977) p 313 cited by Deane J, Toohey J, Gaudron J and McHugh J in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26, 41. As their Honours said on the following page (p 42) in Immer, when the asserted election is the continuing on of an agreement in circumstances where a right to terminate or rescind has arisen the relevant choice is not whether to go on with the contract or not, but whether to abandon the right to terminate or rescind or not. After referring to passages from the judgments of Kitto J and Mason J in Tropical Traders Ltd v Goonan (1964) 111 CLR 41, 55 and Sargent v ASL Developments Ltd (1974) 131 CLR 634, 656, respectively, their Honours said that a right to rescind will not necessarily be lost by election or affirmation if the relevant party acts on the basis that the contract remains on foot. Likewise Brennan J at 30 said that the act amounting to the election must be unequivocal and an act may be consistent with the continuance of the contract, but also consistent with the reservation of the right to terminate.
326 Given the continuing satisfaction of cl 5.2(b)(ii) of the Direct Agreement, made relevant to the IMA by cl 11(c)(ii) of the IMA, the respondent had no entitlement to take the step of termination. Also, the respondent was only able to terminate the IMA when the Director was reasonably satisfied of the matters in cl 24.4(b)(i) and (ii). Further, the terms of cl 2.2(e) might be seen to be an express reservation of the entitlement to terminate at some point.
327 On the other hand, even accepting that the respondent's power to terminate had not crystallised at the date of the Settlement Agreement (whether because of one or both of cl 5.2(b) of the Direct Agreement (read with cl 11(c)(ii) of the IMA) and cl 24.4(b) of the IMA) the Settlement Agreement may be seen as more than merely continuing to perform obligations under the IMA. It involved an extension of the IMA. It provided for the entry into a new agreement between the parties and upon that event occurring the IMA was to cease to have effect. If a New Swanston IMA had come into effect, the IMA would have ended, not because of any act of general law termination on the basis of the matters referred to in cl 2.2(e), but because of the operation of the Settlement Agreement itself. However, a New Swanston IMA did not come into effect.
328 The Director's consent in cl 2.2(f) of the Settlement Agreement was expressed to be pursuant to cl 4.1(b) of the Direct Agreement and cl 23.5 of the Franchise Agreement. It was not expressed by reference to cl 24.4 of the IMA. Also, it was conditional on the replacement of the Direct Agreement and deed of charge as contemplated by cl 2.4 with new agreements involving the respondent. Such consent by the Director was not the satisfaction envisaged by cl 24.4(b). Clause 24.4(b)(i) involved a satisfaction that it was no longer necessary (implicitly necessary in the public interest being protected by the Director) for the respondent to have the benefit of "the Key Contract". The phrase "Key Contract" picked up the definition in the Franchise Agreement which picked up paragraph 5 in Schedule 16 to the Franchise Agreement:
Any agreement or arrangement for the provision of … Infrastructure maintenance services.
The Settlement Agreement anticipated the respondent continuing to provide such services under an agreement that fell with this definition.
329 Clause 24.4(b)(ii) of the IMA involved a satisfaction about alternative arrangements for the continued operation of the Franchise Business. This involved, implicitly, in my view, arrangements alternative to those which involved the respondent. Under the Settlement Agreement the respondent continued to be involved. There was thus no satisfaction of the Director for the purposes of cl 24.4(b)(ii).
330 Notwithstanding what might be described as the tension between the provisions of the Settlement Agreement and the exercise of, or the existence of, a suspended right of termination, it must be recalled that for the reasons that I have explained the respondent was not in a position to exercise any such right. It in fact had no present entitlement to terminate. Such an entitlement might never arise. There were circumstances that had occurred in the past which would give it an entitlement to terminate the contract to which it was bound if certain other events occurred. For there to be an election the respondent must be seen to make a choice inconsistent with the maintenance of the potential springing into existence of that right. I do not think that the entry into the Settlement Agreement was such a choice. Though the IMA was extended, the terms of the arrangement, including in particular cl 2.2(e), can be seen to reserve the respondent's position concerning the Company's conduct before 22 December 2002. If a New Swanston IMA were to be entered the choice might need to be confronted. It is unnecessary to examine that circumstance as it did not arise.
The asserted affirmation or election - the M>Tram Agreement
331 The M>Tram Agreement provided for the precise contemporaneous occurrence of the following events:
(a) the termination of the IMA,
(b) the commencement of the new franchise agreement between the Director and MetroLink,
(c) the giving of title to the assets and effective possession and operational control of the assets, and
(d) the commencement of employment by Metrolink of employees of the respondent should they take up the offer.
332 It is important to appreciate that in cl 2(a) of the M>Tram Agreement the Company and the respondent mutually agreed to end the IMA on the commencement of the new franchise arrangement. The evidence disclosed that Completion as defined under the M>Tram Agreement was at 3 am on 18 April 2004. The evidence also disclosed that the receivers ceased to have possession of the assets and operate the business of the Company at the same time, 3 am on 18 April 2004.
333 The parties were agreed on the appeal that up to 3 am on 18 April 2004 (that is, up to the time of the termination of the IMA by the terms of the M>Tram Agreement) the receivers were performing all of the Company's obligations under the IMA for the purposes of cl 5.2(b)(ii) of the Direct Agreement. Thus, at no point prior to the ending of the IMA by the operation of the M>Tram Agreement did the respondent have an entitlement to terminate the IMA by exercise of any general law right of termination.
334 The IMA came to an end, not because the respondent exercised an antecedently existing general law right to terminate. Such a right, presently exercisable, did not antecedently exist given the terms of cl 5.2(b)(ii) of the Direct Agreement and the performance by the receivers of the obligations under the IMA. Rather, the IMA came to an end by force of an agreement (the M>Tram Agreement) of the parties to the IMA that the IMA should end at the time identified in the M>Tram Agreement. No cause of the termination of the IMA was identified other than the M>Tram Agreement. It was said on behalf of the respondent that the relevant parties to the M>Tram Agreement (the Company and the respondent) agreed that the IMA would terminate at the appointed time "for breaches of the [IMA] which occurred before 22 December 2002": see cl 2(a) of the M>Tram Agreement. This aspect of the contractual agreement between the Company and the respondent in the M>Tram Agreement was not, however, the exercise of a general law right of termination or rescission. It was an agreement to treat the ending of the IMA as an ending for breach of the IMA. That may have given the Company a right to sue under this contract (that is, the M>Tram Agreement), but it did not change the immutable realities that the respondent, at no time, purported to exercise its general law right to end the IMA and that the respondent did not have the right to do so prior to the ending of the IMA, because of the continued satisfaction of cl 5.2(b)(ii) of the Direct Agreement (adopted, as it was, into the IMA) by the receivers, up to the end of the IMA. The instant the disentitling effect of cl 5.2(b)(ii) might be seen to have been removed, the IMA was at an end perforce the agreement between the Company and the respondent. Indeed, the removal of the disentitling effect of cl 5.2(b)(ii) was only caused by the ending of the IMA. Thus, as the appellants submitted, the terms of this aspect of the M>Tram Agreement do not bind the appellants by forcing on them the consequences of an act (acceptance of repudiatory conduct) which did not happen.
335 The above demonstrates that the entry into, and effectuation of, the M>Tram Agreement was inconsistent with the continued existence of the potential future use of a right at common law to terminate the IMA. The entry into, and effectuation of the M>Tram Agreement can be seen as an act of election (as asserted in ground 4 of the Notice of Appeal) or as the IMA in fact being terminated by a mechanism different from, and inconsistent with, an ending of the IMA by the exercise of a general law right to terminate or rescind the IMA (as asserted in ground 8 of the Notice of Appeal). In this respect, I accept the submissions of the appellants.
336 Once it is recognised that the IMA ceased to exist by mutual agreement and not by the act of acceptance of repudiatory conduct, the contingent right became devoid of content, since the agreement, in respect of which the right existed (suspended hitherto by cl 5.2(b)(ii)), has been ended by agreement. In order to overcome this the respondent must, as the appellants submit, treat cl 2(a) of the M>Tram Agreement as something that it was not – the ending of the IMA by the acceptance of repudiatory conduct.
337 The above analysis does not involve an acceptance of the proposition that the relevant satisfactions of the Director contemplated by cl 24.4(b) were not manifested by the circumstances surrounding the M>Tram Agreement. The Director was a party to the M>Tram Agreement. The consent implicit in that participation must be seen to be to the respondent no longer providing the infrastructure maintenance services under the extended IMA and to MetroLink thereafter providing such services in the operation of the Franchise Business to be taken over by MetroLink.
338 The appellants assert that the Director's consent to the new arrangements did not meet the description of the requirements of cl 24.4(b)(i) and (ii) of the IMA. It is hard to understand why it did not. Clause 24.4(b) of the IMA did not call for any particular manifestation of satisfaction. It calls for a state of satisfaction in respect of two matters. It seems to me that implicit within the Director's participation as a party to the M>Tram Agreement was the satisfaction by him that circumstances described in sub cll 24.4(b)(i) and (ii) of the IMA existed.
339 Viewing the matter in the way I do, notions of accord and satisfaction are irrelevant. The fact is that the Company and the respondent agreed to terminate the IMA. They agreed to terminate it for breach by the Company committed prior to 22 December 2002. That may mean that the Company has agreed to put itself in a contractual position based on that hypothesis. It does not, however, mean that the IMA was ended by the exercise of a general law right of termination. The right to terminate never emerged from the disentitling bonds of cl 5.2(b)(ii) before the IMA was ended. The general law right to terminate was never exercised. The operative mechanism of ending the bilateral contractual arrangement, being the IMA, was the contractual arrangement being the M>Tram Agreement.
The legal position of the parties in the events that have happened
340 Thus, the position of the parties as at 23 December 2002 was that the Company had committed a breach of an essential term of the IMA and had evinced an intention not to be bound by the IMA according to its terms. Subject to the IMA, the respondent would from those circumstances have had a general law entitlement to terminate the IMA. The balance of the terms of the IMA prevented that right being exercised, or disentitled the respondent from exercising it, whilst and unless certain circumstances existed (cl 5.2(b) of the Direct Agreement made relevant by cll 11(c)(ii) and 24.4(b) of the IMA).
341 Plainly those circumstances might arise. Therefore, there is no doubt, it seems to me, that there was a contingent claim, and not merely an expectancy as at 23 December 2002: Lam Soon at 41-44. It is unnecessary to deal with the questions whether the primary judge's distillation of what the Full Court said in Lam Soon was accurate for all purposes and whether Lam Soon was, in any respect, wrong.
342 Whilst there was a contingent claim as at 23 December 2002, for the reasons I have expressed, after 3 am on 18 April 2004, the capacity to terminate the IMA became devoid of both content and value because the IMA otherwise ended by agreement of the parties.
343 Thus, at 1 September 2003, the respondent had a contingent claim, though on 18 April 2004 (at least after 3 am on that day) the claim no longer existed. It might be said only to have had its value affected, but that is too limited a view. The contingent claim was founded on the possibility that circumstances would come to pass allowing the respondent to terminate the IMA on the grounds which came into existence prior to 22 December 2004. After 3 am on 18 April 2004, that possibility no longer existed. The claim thereafter had no foundation. It could be seen no longer to exist, and not merely to have no value.
344 The application was made to the Court before 18 April 2004. The application was disposed of by the primary judge after 18 April 2004. His Honour directed that the proof be admitted in full. Thatwas not an order or declaration that as at 22 December 2002 or as at the date of the lodgement of the proof the respondent had a contingent claim. Rather it was a direction that the appellants admit the respondent's contingent claim as part of their then current obligations under the DOCA.
345 For the reasons I have expressed, as at 7 September 2004, the contingent claim no longer existed. Thus, it should not have been directed, at that time, to have been admitted.
346 The parties were in substantive dispute as to the current position. Whilst it may be that an essential step in the analysis of that was the assessment of whether a contingent claim existed as at 22 December 2002, the parties were not fighting about a matter of historical interest, but about present entitlement. The orders should reflect that reality.
Orders
347 For the above reasons the orders that I would make are:
(a) The appeal be allowed.
(b) The direction and order made by the Court on 7 September 2004 be set aside.
(c) In lieu thereof it be ordered that:
(i) the application be dismissed; and
(ii) the plaintiff pay the defendants' costs.
(d) The respondent pay the appellants' costs of the appeal.
I certify that the preceding one hundred and ninety two (192) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.
Associate:
Dated: 30 March 2005
Counsel for the Appellants: A C Archibald QC with P D Crutchfield
Solicitor for the Appellants: Clayton Utz
Counsel for the Respondent: J W K Burnside QC with E W Woodward
Solicitor for the Respondent: Hunt & Hunt
Date of Hearing: 15 November 2004
Date of Judgment: 30 March 2005
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1995-06-30 00:00:00
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Golden Orchid Pty Ltd v Comax Pty Ltd [1995] FCA 444
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1995/1995fca0444
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2024-09-13T22:50:23.788146+10:00
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CATCHWORDS
CORPORATIONS - service of statutory demand - registered office of company in two-storey building having a number of occupants some connected with the company and some not - address of building specified as registered office - no other specification of it - demand left with employee of shop not bearing company's name - demand in fact reached managing director of company although not for two weeks after service - whether service effective.
Corporations Law, ss.100, 218, 220, 459G, 459S
GOLDEN ORCHID PTY LIMITED v COMAX PTY LIMITED
No. NG 3126 of 1995
CORAM: SHEPPARD J
PLACE: SYDNEY
DATE: 30 JUNE 1995
IN THE FEDERAL COURT OF AUSTRALIA)
)
NEW SOUTH WALES DISTRICT REGISTRY) No. NG 3126 of 1995
)
GENERAL DIVISION )
BETWEEN: GOLDEN ORCHID PTY LIMITED
Applicant
AND: COMAX PTY LIMITED
Respondent
CORAM: SHEPPARD J
PLACE: SYDNEY
DATE: 30 JUNE 1995
REASONS FOR JUDGMENT
HIS HONOUR: This is an application under s.459G of the Corporations Law in which the applicant seeks an order setting aside a statutory demand served on it. The demand is dated 14 February 1995. The applicant contends that the demand was either not served or not served until 14 days or so after the respondent claims that it was. The respondent to the application has commenced proceedings (No. NG 3189 of 1995) for the winding up of the applicant to which I shall sometimes refer as "the company".
Section 459G provides that a company may apply to the Court for an order setting aside a statutory demand served on it. An application may "only" be made within 21 days after the demand is so served. The application must be made in accordance with the section and will only be treated as duly made, if within 21 days, an affidavit supporting the application is filed with the Court and a copy of the application and a copy of the supporting affidavit are served on the person who served the demand on the company. There is no issue between the parties that the demand was served. It is the date of service which is in question. The respondent contends that the application was served on 14 February 1995. The applicant contends that it was not served until 27 or 28 February 1995 when Mr Kee Sun Lee, who is the managing director of the applicant, was handed a copy of the demand. He said that that was the first time he saw the demand and supporting affidavit. He caused it to be forwarded to his solicitor, Mr Hassett. If Mr Lee be right, the application to set aside the statutory demand is within time, it having been filed on 17 March 1995.
The evidence establishes that the registered office of the applicant is 274 Victoria Street, Darlinghurst. It was registered as a shelf company on 14 January 1994 and assumed its present name on 22 April 1994. Its registered office was notified as being 274 Victoria Street, Darlinghurst, on 25 January 1994.
The process server who claims to have effected service of the demand on 14 February 1995 is Mr Szittner. He said that on 14 February 1995 he duly served the applicant with a signed and sealed copy of the creditor's statutory demand for payment of debt and the affidavit in support of the demand. Copies of these documents are annexed to his affidavit. He said that he served the documents by delivering them to one Catherine Pak a female person apparently not less than 16 years of age at the registered office of the company at 274 Victoria Street, Darlinghurst. He said that at the time of service, he asked Ms Pak whether the premises were the registered office of the applicant. She replied, "Yes, this company is at Alexandria, they are all connected".
In her affidavit Ms Pak said that she was a sales manager at the KeiSei Duty Free Shop situated at 274 Victoria Street, Darlinghurst. She said that the shop was owned by Keisei International Pty Ltd. She was an employee of the company during February of 1995. Her usual task was to serve behind the counter in the shop. She remembered that, "in late February 1995", she was given some legal documents concerning the applicant. The person who gave her the documents said, "Is this Golden Orchid?". Ms Pak said, "Golden Orchid is at Alexandria, it is another one of Mr Kee Sun Lee's companies. He owns this shop." The person with the documents then said, "Can you give him these documents?". Ms Pak said "OK". She took the documents and gave them to the accountant for the KeiSei shop and asked him to send them to Alexandria. Ms Pak denied that the person serving the documents, i.e. Mr Szittner, said to her, "Is this the registered office of Golden Orchid Pty Ltd?". She denied assenting to this proposition. She also said that until she spoke to Mr Hassett on 20 April 1995, she did not know where the registered office of the applicant was. She said that the retail operations of the applicant were conducted at Alexandria and so she "organised the documents to be sent there."
Mr Lee swore two affidavits. In the first he said that the applicant's registered office was situated on the ground floor of 274 Victoria Street. The building has in fact marked on it the address, 274-290 Victoria Street. He said that it was comprised of an office which was marked on the door with the words, "Golden Orchid Pty Ltd". He said that also situated on the ground floor of 274 Victoria Street was the KeiSei Duty Free shop operated by another company of which he was a shareholder. He said that during working hours he was usually seated in the applicant's office. He said a secretary was present at all times. He said that at no time on 14 February 1995 or at any other time did any person serve the statutory demand or affidavit in support thereof at the registered office of the defendant. It was not served while he was there and he was informed by his secretary that it was not ever given to her. He said that he was handed the demand and supporting affidavit in late February by "one of the girls" working in the KeiSei Duty Free shop who told him that the documents had come from "next door". He said that this was the first time he had seen the demand. As mentioned, he sent them to Mr Hassett.
In his second affidavit Mr Lee repeated his statements concerning the whereabouts of the applicant's registered office and again described his own office which was marked with the applicant's name. He said that situated on the ground floor of 274 Victoria Street was the KeiSei Duty Free shop and the office of Kook Je Corporation Pty Ltd which was in a different office. The building has two storeys. Other tenants in the building, apart from those mentioned, were the Excalibur Night Club, the Blue Jazz Bar, the Bulaka Indian Restaurant and a residential apartment. He said that he had no connection with any of these other tenants.
He said that during and prior to February 1995 the principal business office of the applicant was at 48 O'Riordan Street, Alexandria. This was where the staff worked and where the opal factory it operated was situated. The customers of the applicant, usually tourists, were taken to Alexandria. He said that, within the trade, the applicant was known to be based at Alexandria.
The matter was in the list for directions on 22 June last. During the directions hearing it emerged that there was this issue about the service of the demand. I asked whether it would be possible for the matter to be dealt with on 21 June. The parties made enquiries and I was informed that they would be ready to proceed at 2.15 p.m. on that day. When the hearing of the matter began, I was informed by counsel that it was proposed to cross-examine Mr Szittner, but that there would be no other cross-examination. Counsel agreed between themselves that the fact that the other witnesses were not called to be cross-examined was not to give rise to a situation in which counsel for the applicant could make adverse comment on the absence of the applicant's witnesses from the witness box.
The only material point of conflict in the evidence is the difference between Mr Szittner and Ms Pak as to whether Mr Szittner made any mention to her of the registered office of the company. Mr Szittner says that he did; Ms Pak denies this. I do not think the matter is of any significance because the demand was left at 274 Victoria Street, Darlinghurst. I thought Mr Szittner an honest and reliable witness. He is an experienced process server. I think it likely that, when serving companies, his usual procedure is to ask whether the premises are the registered office of the company being served. I find that he followed this practice in the present case. I can well understand that Ms Pak does not remember these words being used. Furthermore, it seems doubtful whether she would have understood their significance if she had remembered them. She thought she knew where the documents should be sent. But the address was in fact the
registered office. The demand was eventually brought to Mr Lee's attention.
I should now refer to some of the provisions of the Corporations Law and to some authorities. I have earlier referred to the provisions of s.459G which is the section pursuant to which this application is made. Section 217 provides that a company shall, as from its registration day, have a registered office within Australia to which all communications and notices may be addressed and which shall be open during hours which are specified in the section. Subsection 218(1) provides that, on the lodging of an application for the registration of a company, there shall be lodged a notice in the prescribed form of the address of its proposed registered office. Section 100 provides that, where a provision of the Law requires a notice to be lodged of the address of an office, or of a proposed office, of a body corporate, the notice shall specify the full address of the relevant office including, where applicable, the number of the room and of the floor or level of the building on which the office is situated.
Subsection 220(1) of the Law provides that a document may be served on the company by leaving it at, or by sending it by post to, the registered office of the company. Subsection 220(2) of the Law provides that, for the purposes of subsec. (1) the situation of the registered office of a company in a case to which neither para. (b) nor para. (c) applies shall be deemed to be the place notice of the address of which has been lodged under subsec. 218(1). Paragraphs (a) and (b) of subsec. 220(2) deal with cases where there have been one or more changes in the situation of the registered office of a company. So far as the evidence discloses, neither of those provisions is relevant to the circumstances of the present case.
Finally, s.459S provides that, insofar as an application for a company to be wound up in insolvency relies on a failure by the company to comply with the statutory demand, the company may not, without the leave of the Court, oppose the application on a ground that the company relied on a statutory demand being set aside or that the company could have so relied on, but did not rely on the notice being set aside. The Court is not to grant leave unless it is satisfied that the ground is material to proving that the company is solvent. It follows that, if a company fails to have a notice of statutory demand set aside under s.459G, it will be very difficult for it to avoid facing the question of its solvency in proceedings to wind it up. Its failure to have the demand set aside will mean that it will be unlikely that it can, in the winding up proceedings, contest those proceedings on the ground that it does not owe the amount claimed by the creditor or that there is a real question as to its liability to pay that amount. It is of critical importance, therefore, to ascertain whether the statutory demand was served, as the respondent contends, on 14 February 1995. If it was not, it seems to me that I should take the view either that the demand has not been served at all or that it was served, at the earliest, on 27 or 28 February when Mr Lee says it came to his notice.
The authorities in this area are numerous. In the view I take of the matter it is sufficient to refer principally to the decision of McLelland CJ in Eq in Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559. There a statutory demand was left at the registered office of the debtor company which was the office of a firm of accountants. In fact the accountants had had no contact with the company for several years. Mail for the company passed on by the accountants to an address they had been given for the company had been returned unclaimed. His Honour held (at 565) that the service was good because it was effected in conformity with the provisions of s.220 of the Law.
There were some other matters dealt with in the judgment including the significance, if any, to be attached to the fact that the creditor was advised by the accountants that they had had no contact with the company for several years. The question was whether there was an abuse of process. In the course of his treatment of this question, McLelland CJ in Eq referred to the decision of von Doussa J (when a judge of the Supreme Court of South Australia) in Re Rustic Homes Pty Ltd (1988) 49 SASR 41. His Honour took a different view from that taken by von Doussa J. Here there can be no question of any abuse of process. It was not suggested that there was. The documents did in fact come to the attention of Mr Lee albeit that some two weeks had passed between the time they were served and the time they reached him. I do not need to express a view upon the question upon which the two judges differed and I do not.
Two further authorities were referred to in argument. These were In Re Alpina Pty Ltd (1977) 17 SASR 528, a decision of Hogarth J of the Supreme Court of South Australia, and in Re Third Lojebo Pty Ltd (1982) 1 ACLC 138, a decision of Brooking J of the Supreme Court of Victoria. These cases were decided under earlier legislation not dissimilar from the present but not containing the more specific provisions concerning the need to identify precisely the whereabouts in a building of a registered office contained in s.100 of the Law. It may be noted in passing that Hogarth J in Alpina suggested that the legislation ought to contain provisions along these lines; see at 533. There are some differences between the judgments of Hogarth J and Brooking J. In the light of the decision of McLelland CJ in Eq, with which, on the point in question, I am in respectful agreement, I do not need to refer to these particularly as the legislation considered in the earlier judgments is not on all fours with the present legislation.
The real complaint of the company in this case is that the demand was left in a shop not bearing the name of the company in an office building having a number of businesses. But the demand was nevertheless left at the company's registered office notified by it in the records kept by the Australian Securities Commission. The provisions of s.100 of the Law obliged the company to be specific about its location in the building which it occupied. It was required to designate the number of the room and of the floor or level of the building on which the office was situated. This was not done. It chose to specify only the fact that its office was to be found somewhere within the building.
There is no evidence that there was a directory at the entrance to or in the vestibule of the building, and no precise evidence of how easy or difficult it was to find the office referred to in Mr Lee's affidavit. Mr Szittner took steps to see to it that he did leave the demand with someone in the building who knew of the company. It did in fact come to Mr Lee's knowledge although some two weeks after service. He may have believed that the documents had only just been served - he does not say this expressly - but there is no evidence whether he made any enquiries about that matter. In the result I am satisfied that the demand was served on 14 February 1995.
The matter will be stood over for a short time to enable the parties and their legal advisers to consider what I have said. When the matter is again in the list I shall deal with
the consequence of my finding of the date of service of the demand and make, if it be necessary to do so, directions as to the future conduct of the hearing.
I certify that this and the eleven (11) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.
Associate
Dated: 30 June 1995
APPEARANCES
Counsel for the Applicant: -
Solicitors for the Applicant: J.F. Hassett
Counsel for the Respondent: M. Young
Solicitors for the Respondent: Aubrey F. Crawley & Co.
Date of Hearing: 22 June 1995
Place of Hearing: Sydney
Date of Judgment: 30 June 1995
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federal_court_of_australia:fca/single/1997/1997fca0188
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decision
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1997-02-28 00:00:00
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Re Thurwood, Frank Ex Parte GIO Workers Compensation (Victoria) Ltd & Anor [1997] FCA 188
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1997/1997fca0188
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2024-09-13T22:50:23.863686+10:00
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Catchwords
Orders
IN THE FEDERAL COURT OF AUSTRALIA)
BANKRUPTCY DISTRICT OF THE STATE)No VP 218 of 1996
OF VICTORIA)
RE:FRANK THURWOOD
(Judgment Debtor)
EX PARTE:GIO WORKERS COMPENSATION (VICTORIA) LIMITED (ACN 060 346 509) AUTHORISED AGENTS FOR THE VICTORIAN WORKCOVER AUTHORITY
(Judgment Creditor)
DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
(Supporting Creditor)
Judge Making Order:Ryan J
Date of Order:28 February 1997
Where Made:Melbourne
MINUTES OF ORDER
THE COURT ORDERS:
1.That the period at the expiration of which the petition shall lapse shall be 24 months expiring on 18 March 1998.
2.That the hearing of the petition be adjourned to a date to be fixed not earlier than 5 May 1997.
3.That the costs of the petitioning creditor and the supporting creditor of the hearing on 26, 27 and 28 February 1997 be treated as part of the petitioning creditor's costs in the event that a sequestration order is subsequently made on the petition referred to in paragraph 1 of this order and otherwise be taxed and paid by the debtor.
4.That the costs of W.A. Freightlines Pty Ltd of the hearing on 26 February 1997 be reserved.
5.That liberty be reserved to either party to apply to Ryan J on not less than 72 hours notice in writing to the other party.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
Reasons
IN THE FEDERAL COURT OF AUSTRALIA)
BANKRUPTCY DISTRICT OF THE STATE)No VP 218 of 1996
OF VICTORIA)
RE:FRANK THURWOOD
(Judgment Debtor)
EX PARTE:GIO WORKERS COMPENSATION (VICTORIA) LIMITED (ACN 060 346 509) AUTHORISED AGENTS FOR THE VICTORIAN WORKCOVER AUTHORITY
(Judgment Creditor)
DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
(Supporting Creditor)
Coram:Ryan J
Date:28 February 1997
Place:Melbourne
REASONS FOR JUDGMENT
RYAN J: By a petition filed on 18 March 1996 and served on 8 April 1996, the petitioning creditor, GIO Workers Compensation (Victoria) Limited, has sought a sequestration order against the debtor based on his non-compliance with the bankruptcy notice dated 22 September 1995. The bankruptcy notice in turn was based on a judgment entered in the Magistrates' Court at Melbourne on 3 August 1995 in the sum of $25,230.09. The petitioning creditor in its bankruptcy notice also claimed interest of $383.22. On 7 May 1995 the debtor filed a notice of intention to appear in which he recited as the sole ground of opposition "The debtor is insolvent".
The petition was adjourned on 7 May 1996 to 4 June 1996 and was again adjourned to 18 June 1996 to allow the debtor to obtain documents necessary to complete his affidavit. On 18 June 1996, the Registrar was advised that a receiver of the debtor's property had been appointed at the instance of First For Finance Pty Ltd and that the debtor had applied to this Court in proceedings numbered VG 343 of 1996 for removal of the receiver. The Registrar thereupon adjourned the petition to 15 July 1996. On that date the Registrar was informed of progress which had been made in relation to proceedings VG 343 of 1996 and further adjourned the petition to 25 November 1996. It was then adjourned by consent to 4 February 1997.
The petition was then further adjourned for hearing as an opposed petition to Wednesday, 26 February 1997. In the meantime the debtor had filed an affidavit sworn on 18 June 1996 in which he deposed that he carried on business under the name "Roadair" as trustee for the Thurwood family trust and was also a director of Tarraby Holdings Pty Ltd. Through both entities he was engaged in the provision of transport services and was also an employee and manager of Bartral Pty Ltd which was engaged in a similar business. He went on to depose:
5.With the exception of the petitioning creditor, and the 2 supporting creditors who appeared on 4 June 1996, none of my other unsecured creditors is pressing me for payment in such a way that I would not be able to continue trading. This is so even though a number of the creditors have issued legal proceedings against me and even have judgments against me.
6.My wife and I are jointly indebted to BP Australia Ltd pursuant to a guarantee in support of a company called Tarraby Holdings P/L through which the linehaul freight business was previously conducted. The company has judgment against us in the sum of $100,000.00 approximately. Messrs Corrs Chambers Westgarth act for the company. I believe it has taken no further action against me or my wife to execute on that judgment but that it is currently reserving any rights it has against us in that respect.
Exhibited to that affidavit was a statement of assets and liabilities of the debtor both personally and as trustee for the FT Thurwood Trust. That disclosed an excess of assets over liabilities of $4679 after assigning a value of $260,000 to a linehaul contract with Transport Linehaul Pty Ltd and asserting a debt due from that company of $200,000. As well, the assets included "PPS Credits - 1995/1996 Year $252,792.00".
By a further affidavit sworn on 24 February 1997 the debtor referred to the statement of assets and liabilities exhibited to his earlier affidavit and indicated that he had lost the contract with Linehaul Freight Services because of the appointment of the receiver and manager. That affidavit goes on to assert:
As a result of the contract being terminated, I claim substantial damages from the receiver-manager and First For Finance Pty Ltd. I estimate my damages arising from the loss of this contract and option for renewal to be approximately $520,000.00 applying the formula Mr Smith used in note 7 to the statement. The damage I have sustained as a result of the financier's and/or receiver's wrongful actions has been exacerbated by the receiver's failure to remit group tax during the period of the receivership which has increased the claim of the Deputy Commissioner of Taxation referred to in Clause 11 of my affidavit.
On 26 February 1997, with the consent of Counsel for the respondents to that proceeding, I ordered, amongst other things, in proceeding number VG 343 of 1996:
1.Applicant have leave to amend application and statement of claim dated 17 June 1996 on or before 12 March 1997.
2.Respondents file and serve amended defence on or before 26 March 1997.
...
5.Otherwise matters be fixed for trial on 28 April (estimate 2-3 days).
It is further indicated in the debtor's second affidavit that "The debt due from Transport Linehaul Pty Ltd is presently unknown".
The Mercedes Benz car disclosed in the statement of assets and liabilities as having a net value of $31,000 is now claimed to be owned by the debtor's wife and to be subject to a lease. A Nissan CMF-88L vehicle, registered number VVI 2CU shown as having a net value of $12,000 is now said to have been seized by CBFC Finance Company, as is an Isuzu vehicle registered number VV88 B7 which was shown as having a negative net value of $8,000. Another Isuzu vehicle, VV89 BZ, was shown in the statement of assets and liabilities as having been written off and as having a nil value. As to that vehicle the debtor has sworn:
The receiver manager currently holds the insurance proceeds of $29,500.00 from the destruction of this vehicle in a trust account pending the resolution of the litigation between us.
That reference, I have since been told by Counsel for the debtor, was mistaken and the insurance proceeds are referable to another vehicle which was also written off in the course of the business conducted by the debtor. In his later affidavit the debtor claimed to be still entitled to a credit from the Deputy Commissioner of Taxation under the prescribed payments scheme in the sum of $252,792. However, an affidavit has been sworn by David Ian Johnston, an officer in the Legal Collection Section of the Australian Taxation office, deposing that, as at 31 October 1996, the debtor was indebted to the Deputy Commissioner for unpaid group tax and penalties in the sum of $302,987.85. (In the statement of affairs exhibited to his first affidavit the debtor's liability to the Australian Taxation Office had been estimated at $338,000.)
As to the prescribed payments scheme credits, Mr Johnston exhibited to his affidavit a copy of the debtor's tax return for the year ended 30 June 1996 in which a credit was sought of only $161,434. Mr Johnston contends that there is no basis on which any credit to the debtor under this head could exceed $161,434 and points out that a credit of $10,243 has already been allowed to the debtor in respect of the tax year ended 30 June 1995. Mr Johnston further deposed that the Deputy Commissioner has commenced winding up proceedings returnable in the Supreme Court of Victoria on 26 March 1997 against Bartral Pty Ltd of which the debtor is employed as manager at a salary of $500 per week and from which, according to the debtor, he resigned as a director on 24 February 1997.
In a second affidavit sworn and filed at the end of the hearing yesterday, Mr Johnston has deposed that the debtor remains liable to the Deputy Commissioner for $7,650 being the unpaid balance due under a direct penalty notice for unremitted group tax issued to the debtor in his capacity as a director of Bartral Pty Ltd. It is further asserted that Bartral Pty Ltd has made further defaults in remittal of group tax for October, November and December 1996 totalling $10,650.
The debtor was cross-examined as to his financial affairs by Mr Nolan of Counsel for the petitioning creditor. That cross-examination was necessarily curtailed because of the limited time which the Court was able to afford the application for an adjournment on 26 February 1997 and at 9.30am yesterday morning. By pointing to liabilities which have been conceded by the debtor and others which the debtor was unable to refute unequivocally, Mr Nolan was able to demonstrate to my reasonable satisfaction that, even if the debtor succeeds in his action against the receiver and manager, his assets are unlikely to accede his liabilities.
Accordingly, if my discretion were confined to an assessment of the probability of the debtors establishing solvency at an adjourned hearing after 29 April 1997, I would be constrained to refuse an adjournment. Such a refusal would be impelled by the consideration that if it is almost certain that a sequestration order will be made on a creditor's petition, the petition should be heard without delay so that if a sequestration order is made a trustee in bankruptcy can, amongst other things, make a detached assessment of the utility of continuing to prosecute a pending action.
However, the discretion is not so confined, see e.g. Field v Commercial Banking Co of Sydney Ltd (1978) 22 ALR 403. In exercising it in the unfettered way suggested by the language of s 33(1)(a) of the Act, I have decided on balance, and not without hesitation, to accede to the debtor's application for an adjournment. In coming to that conclusion I have not been unmindful that the petitioning creditor strongly supported by the Deputy Commissioner has pressed for an immediate sequestration order.
I have also had regard to the fact that almost 12 months have now elapsed since the issue of the petition. However, the consequences for the creditors of that fact can be mitigated by an order which I propose to make renewing the petition. In the same context, it is to be borne in mind that in the latter half of 1996 adjournments totalling in the order of 6 months were allowed to the debtor apparently with a view to his prosecuting to a conclusion his action against the receiver and manager. That conclusion in the light of the fixture of the trial for 28 April this year will occur in the foreseeable future.
On the evidence I can discern no significant detriment which is likely to accrue to the petitioning creditor, the supporting creditor, creditors generally or the public if a sequestration order be not made in the meantime. The ability of the debtor to continue to trade unprofitably through Bartral Pty Ltd is likely to be curtailed by the winding up petition pending against the company and it can be presumed that the debtor's present financial circumstances are widely known in the road transport industry.
On the other hand a sequestration order will operate as an immediate stay of the proceedings against the receiver and manager. It is true that a trustee in bankruptcy will be required to assess the costs and benefits of continuing that litigation and to decide whether to persevere in its prosecution. However, some costs to the presumptive bankrupt estate would be incurred in that exercise and I am by no means persuaded that a trustee could, by 28 April, be in a position to pursue the action with the same enthusiasm and understanding of the issues as the debtor.
The debtor, I infer, has already invested a considerable amount of time and costs in that action. Even if it fails entirely there is not likely to be a significant diminution of the debtor's distributable estate. In all the circumstances therefore, I consider, on balance, that the debtor should be allowed an opportunity to see his action at first instance through to the end. I shall accordingly order:
1.That the period at the expiration of which the petition shall lapse shall be 24 months expiring on 18 March 1998.
2.That the hearing of the petition be adjourned to a date to be fixed not earlier than 5 May 1997.
3.That the costs of the petitioning creditor and the supporting creditor of the hearing on 26, 27 and 28 February 1997 be treated as part of the petitioning creditor's costs in the event that a sequestration order is subsequently made on the petition referred to in paragraph 1 of this order and otherwise be taxed and paid by the debtor.
4.That the costs of W.A. Freightlines Pty Ltd of the hearing on 26 February 1997 be reserved.
5.That liberty be reserved to either party to apply to myself on not less than 72 hours notice in writing to the other party.
I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of his Honour Justice Ryan.
Associate:
Date:
Counsel for the Debtor:Mr P.K. Searle
Solicitors for the Debtor:Nevett Ford
Counsel for the Creditor:Mr J. Nolan
Solicitors for the Creditor:Mills Oakley
Date of Hearing:27 February 1997
Date of Judgment:28 February 1997
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federal_court_of_australia:fca/single/1997/1997fca0577
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decision
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1997-05-08 00:00:00
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Balasundram, Suresh Vamadeva v Minister for Immigration & Multicultural Affairs [1997] FCA 577
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1997/1997fca0577
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2024-09-13T22:50:24.538575+10:00
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FOR LIMITED DISTRIBUTION ONLY
CATCHWORDS
MIGRATION LAW - Review of decision of Refugee Review Tribunal not to grant protection visa - Whether the Tribunal had failed to apply the "real chance" test - Whether the Tribunal adopted a fixed set of general criteria rather than considering the individual circumstances of the applicant - Use by the Tribunal of the word "threshold"
Migration Act 1958 ss 36(2), 476(1)(d), 476(1)(e), 476(3)(c)
Chan v Minister for Immigration & Ethnic Affairs (1989) 169 CLR 379
BALASUNDRAM v MINISTER FOR IMMIGRATION & ETHNIC AFFAIRS
VG 222 of 1996
Before: NORTH J
Place: MELBOURNE
Date: 8 MAY 1997
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VG 222 of 1996
B E T W E E N :
SURESH VAMADEVA BALASUNDRAM
Applicant
AND
MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS
Respondent
MINUTES OF ORDERS
BEFORE: North J
PLACE: Melbourne
DATE: 8 May 1997
THE COURT ORDERS THAT:
1. The application is dismissed with costs.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VG 222 of 1996
B E T W E E N :
SURESH VAMADEVA BALASUNDRAM
Applicant
AND
MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS
Respondent
BEFORE: North J
PLACE: Melbourne
DATE: 8 May 1997
EX TEMPORE REASONS FOR JUDGMENT
This is an application under s 476(1) of the Migration Act 1958 in which the applicant seeks a review of a decision of the Refugee Review Tribunal made on 2 April 1996. The Tribunal affirmed the decision of the primary decision-maker, which had the effect of a refusal to grant the applicant a protection visa.
Section 36(2) of the Migration Act provides that a criterion for the grant of a protection visa is that the applicant is a non-citizen to whom Australia has protection obligations under the Refugees Convention 1951 as amended by the Refugees Protocol 1967. The Convention and Protocol provide for protection obligations for persons who are refugees. A refugee is defined as a person who:
"owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country, or who, not having a nationality and being outside the country of his former habitual residence, is unable or, owing to such fear, is unwilling to return to it."
The applicant is a national of Sri Lanka. He is a Tamil and was born on 26 June 1959. He came to Australia on 20 December 1989 on a visitor's visa. His claim to be a refugee was on the basis of his imputed political opinion and his ethnicity. The Tribunal rejected his claims.
APPLICANT'S CASE BEFORE THE TRIBUNAL
The applicant worked in Colombo as a marketing executive from 1980 to 1989. His claim had three aspects. The first related to his fear of persecution as a result of his involuntary involvement with the Janatha Vimukthi Peramuna in the mid 1980s. The applicant does not challenge the Tribunal's rejection of this aspect of his claim. The second aspect was his fear of persecution as a result of his imputed association with the Liberation Tigers of Tamil Eelam (LTTE) and the third aspect was his fear of persecution as a result of his Tamil ethnicity. The Tribunal set out his claims in relation to his association with the LTTE as follows:
"In November 1993 the STF came to his home and interrogated his parents. His relatives who were staying, including his cousin from Jaffna, were also questioned. His cousin was arrested as an LTTE suspect. The family do not know the whereabouts of his cousin; he just disappeared after his arrest. The authorities said they released his cousin the day after his arrest, but the family do not believe this to be the case. The applicant believes that the authorities might impute an LTTE profile to the applicant because he was close to his cousin and often visited him in Jaffna. In response to questions by the Tribunal regarding whether or not his cousin was involved in LTTE activities the applicant stated that he might have been, but he did not know and his parents do not know either.
In February 1996 the applicant attended a public gathering organised by the Melbourne Tamil community. The purpose of the gathering was to disseminate information about the situation of Tamils in Sri Lanka. It was not organised by any particular political group, however there were LTTE banners and people were videoing and taking pictures during the gathering. The authorities in Sri Lanka know of his attendance at this gathering and he is suspected of collecting money to support their cause."
THE TRIBUNAL'S REASONING
At the beginning of its decision, the Tribunal set out the proper approach to the expression "well-founded fear" in the definition of a refugee by reference to the High Court decision in Chan v Minister for Immigration & Ethnic Affairs (1989) 169 CLR 379. The Tribunal recognised that "a well-founded fear" was established if there was "a real chance" that the applicant would suffer persecution if returned to the country of nationality. The applicant does not challenge this statement of the proper test.
In relation to the claims based on an imputed association with the LTTE and the claims concerned with the applicant's Tamil ethnicity, the Tribunal analysed the situation of Tamils in Sri Lanka from about 1993. It referred to reports that thousands of Tamils were subjected to arbitrary detention solely on account of their ethnic origin. The Tribunal then recorded information that not all Tamils were at equal risk. It said:
"However, Amnesty also reported that all Tamils were not at equal risk. In its February 1994 report, Amnesty International stated at p 8:
Tamil people are particularly at risk of being arrested if they are young men, if they have recently arrived in Colombo, if they do not have a job or family in Colombo, if their identity documents were issued in the northeast, or if they are not carrying identity documents. ....
This Amnesty report supports the advice given in a position paper of the United Nations High Commissioner for Refugees dated 16 June 1993 concerning Sri Lankan asylum seekers in Europe and North America:
It is believed that a valid threshold for returnees to establish themselves without serious personal security problems in the South, would be the presence of close relatives and/or duration of previous residence and/or a past employment in these areas. (UNHCR, Geneva)."
I will hereafter refer to the February 1994 Amnesty International Report as the Amnesty Report, and to the paper of the United Nations High Commissioner for Refugees paper dated 16 June 1993 as the UNHCR paper. Then the Tribunal referred to reports of the effect of the ceasefire between the LTTE and the government in January 1995. It referred to reports that the position of Tamils was still unstable and unpredictable, especially in Colombo. The Tribunal referred to advice from the United Nations High Commissioner for Refugees (UNHCR) on 3 February 1995, as follows:
"2. While UNHCR takes note of these recent positive developments in the general security conditions, it maintains the view that the validity of individual asylum claims should be judged on their own merits as in the past, taking into consideration the specific circumstances surrounding the case in question."
The Tribunal then referred to the increased detention of Tamils following the breakdown of the ceasefire. It concluded as follows:
"The Tribunal accepts that Colombo is not a safe refuge for all Tamils (see for example The Time Is Not Yet Ripe, a report of a delegation of the Swiss Organisation for Aid to Refugees of April 1994). However the applicant lived and worked either in Colombo or nearby at Nattandiya on his father's plantation all his life until his departure to Australia. His immediate family continue to live at Nattandiya where they continue to operate what the applicant described as a very profitable business. He speaks English and Singhalese and Tamil. He departed from Sri Lanka legally without any difficulty. Whilst he was once detained by the security forces, this occurred almost five years ago, and was in relation to JVP activity and he was released without charge. He was not detained again. He has never had any contact with the LTTE. He suspects his cousin might have had some involvement in the LTTE but he is not sure. He has a National Identity Card.
The applicant's recent attendance at a public gathering in Melbourne in the absence of any other LTTE activity would only suggest a remote prospect of the Sri Lankan authorities considering the applicant had become an LTTE supporter. He has no current or previous links with the LTTE and was an active member of the SLFP, a Party openly opposed to the LTTE until his departure for Australia.
The Tribunal considers that the threshold requirements referred to by the UNHCR in their position paper of 16 June 1993 (supra) and supported by the Amnesty Report of February 1994 (supra) are still valid criteria to use in the context of the current situation in Sri Lanka. The applicant meets these threshold requirements.
Having regard to the individual circumstances of this applicant the Tribunal finds that the chance of him being subjected to persecution by the security forces on his return by reason of his Tamil ethnicity or past support for the LTTE is not a real or substantial one."
ARGUMENTS AND CONCLUSIONS ON THE REVIEW
The applicant relied on s 476(1)(d) with sub-s (3)(c) and s 476(1)(e) in its challenge to the decision of the Tribunal. These sections provide:
"476. (1) Subject to subsection (2), application may be made for review by the Federal Court of a judicially-reviewable decision on any one or more of the following grounds:
......
(d) that the decision was an improper exercise of the power conferred by this Act or the regulations;
(e) that the decision involved an error of law, being an error involving an incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found by the person who made the decision, whether or not the error appears on the record of the decision;
......
(3) The reference in paragraph (1)(d) to an improper exercise of a power is to be construed as being a reference to:
......
(c) an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case;"
The applicant contended that the Tribunal had failed to apply the real chance test and the decision thereby involved an error of law under s 476(1)(e). Rather than considering the individual circumstances of the applicant as required by the real chance test, the Tribunal had, it was contended, adopted a fixed set of general criteria which it applied as determinative of the case. Thus, it was submitted, the Tribunal excluded the applicant from refugee status because of "the presence of close relatives and/or duration of previous residence and/or a past employment in these areas", as set out in the UNHCR paper and supported by the Amnesty Report. The applicant argued that the Court should read the reasons of the Tribunal as if those reasons said that, if any of the three criteria set out in the paper existed, the applicant was automatically disentitled from refugee status. Such an approach involved the argument that the Tribunal did not consider the individual circumstances of the applicant. It did not make an assessment of his LTTE association and his ethnicity, and did not evaluate the significance of this association and ethnicity as a factor in the real chance of persecution of the applicant. The argument depends upon the use of the word "threshold" in the UNHCR paper, and the two references to "threshold requirements" in the second last paragraph of the Tribunal's reasons. It is not clear in what sense the UNHCR paper used the word "threshold". What is clear is that the UNHCR paper set out a number of relevant factors which it regarded as eliminating personal security problems of returnees. The Tribunal used the expression "threshold requirements" in its reasons solely to identify the factors referred to in the UNHCR paper. It did not use the factors as determinative of the applicant's claims. If it had embarked on such a process it would not have referred to the claims in relation to the applicant's association with the LTTE at all in its concluding four paragraphs. Neither would it have referred to the "individual circumstances" of the applicant in the last paragraph. Earlier in its reasons, the Tribunal set out the applicant's claims relating to his LTTE association and ethnicity. In the last four paragraphs of the decision, the Tribunal evaluated the evidence about the LTTE connection. It also took into account the factors referred to in the UNHCR paper and supported by the Amnesty Report. Counsel for the applicant rightly conceded that the Tribunal committed no error of law in taking these factors into account. The criticism was directed to the alleged treatment of the factors as determinative. In my view, the Tribunal did not apply these factors as determinative preconditions to the finding that the applicant was a refugee. It simply balanced all the material, including the material which UNHCR and Amnesty International had produced. Not only is this clear from the last four paragraphs of the decision read in the context of the reasons as a whole, but it is confirmed by the fact that the Tribunal referred to the UNHCR Information Note dated 3 February 1995, which expressed the UNHCR view that claims "should be judged on their own merits .... taking into consideration the specific circumstances surrounding the case in question". Consequently, the decision did not involve the errors of law alleged. It follows from these reasons that the Tribunal did not exercise its power in accordance with a rule or policy without regard to the merits of the particular case. The challenge under s 476(1)(d) therefore also fails. The application is dismissed with costs.
I certify that this and the preceding
seven (7) pages are a true copy of the reasons
for judgment of his Honour Justice North.
Associate:
Dated: 26 June 1997
APPEARANCES
Counsel appearing for the applicant: Mr R. M. Niall
Solicitors for the applicant: Satchi & Co
Counsel appearing for the respondent: Mr P. Booth
Solicitors for the respondent: Australian Government Solicitor
Date of hearing: 8 May 1997
Date of judgment: 8 May 1997
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Read v Namoa [2021] FCA 1486
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca1486
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2024-09-13T22:50:27.801913+10:00
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FEDERAL COURT OF AUSTRALIA
Read v Namoa [2021] FCA 1486
File number: NSD 1195 of 2021
Judgment of: BURLEY J
Date of judgment: 24 November 2021
Catchwords: CRIMINAL LAW – control orders – application for interim control orders pursuant to s 104.4 of the Criminal Code in the Schedule to the Criminal Code Act 1995 (Cth) – where respondent previously subject to control orders – where respondent presently on remand awaiting sentencing for breach of previous control orders – where respondent's release into the community may be imminent – whether control orders sought are reasonably necessary, and reasonable appropriate and adapted to achieving protection of the public and preventing provision of support for a terrorist act – interim control orders made
Legislation: Criminal Code Act 1995 (Cth) sch 1 (Criminal Code) ss 11.1, 11.5, 100.1, 101.6, 104.1, 104.3, 104.4 and 104.27
Federal Court of Australia Act 1976 (Cth) s 37AF
Cases cited: Booth v Namoa (No 2) [2020] FCA 73
Booth v Namoa [2019] FCA 2213
McCartney v EB [2019] FCA 183; 263 FCR 170
R v Bayda; R v Namoa (No 8) [2019] NSWSC 24
Thomas v Mobray [2007] HCA 33; 233 CLR 307
Division: General Division
Registry: New South Wales
National Practice Area: Federal Crime and Related Proceedings
Number of paragraphs: 25
Date of hearing: 24 November 2021
Counsel for the Applicant: Mr P Melican
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the Respondent: Ms N S Carroll
Solicitor for the Respondent: Gilead Lawyers
ORDERS
NSD 1195 of 2021
BETWEEN: NICHOLAS READ
Applicant
AND: ALO-BRIDGET NAMOA
Respondent
order made by: BURLEY J
DATE OF ORDER: 24 NOVEMBER 2021
THE COURT ORDERS THAT:
Interim control order
1. The Court hereby makes an interim control order pursuant to s 104.4 of the Criminal Code (Cth) in relation to Alo-Bridget Namoa in the terms set out in the Schedule to these orders.
ENDORSEMENT PURSUANT TO RULE 41.06
To: Alo-Bridget Namoa
You will be liable to imprisonment, sequestration of property or punishment for contempt if:
(a) for an order that requires you to do an act or thing – you neglect or refuse to do the act or thing within the time specified in the order; or
(b) for an order that requires you not to do an act or thing – you disobey the order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
SCHEDULE
1. This Interim Control Order relates to the respondent, Alo-Bridget Namoa.
2. The Court is satisfied on the balance of probabilities that, for the purpose of s 104.4(1)(c)(iv) of the Criminal Code (Cth), the respondent has been convicted in Australia of an offence relating to terrorism or a terrorist act, namely conspiring to do acts in preparation for, or planning, a terrorist act between 8 December 2015 and 25 January 2016 at Sydney, contrary to ss 11.5 and 101.6 of the Criminal Code.
3. The Court is satisfied on the balance of probabilities that each of the obligations, prohibitions and restrictions to be imposed on the respondent by the order is reasonably necessary, and reasonably appropriate and adapted, for the purposes of:
3.1. protecting the public from a terrorist act (s 104.4(1)(d)(i) of the Criminal Code); or
3.2. preventing the provision of support for or the facilitation of a terrorist act (s 104.4(1)(d)(ii) of the Criminal Code).
4. The obligations, prohibitions and restrictions to be imposed on the respondent by this Interim Control Order are those set out in Annexure A to this Schedule.
5. A summary of the grounds on which this Interim Control Order is made is set out in Annexure B to this Schedule.
6. This Interim Control Order does not begin to be in force until it is served personally on the Respondent and the Respondent is released from custody.
7. The Respondent may attend the Federal Court of Australia on 2 December 2021 at 9.00am for the Court to:
7.1. confirm (with or without variation) this Interim Control Order;
7.2. declare this Interim Control Order to be void; or
7.3. revoke this Interim Control Order.
8. If this Interim Control Order is confirmed, the confirmed control order is to be in force for 12 months after the day on which this Control Order is made.
9. The respondent's lawyer may attend the Australian Federal Police Sydney office at 110 Goulburn Street, Sydney, NSW 2000 between 9:00 am and 4:00 pm, Monday to Friday in order to obtain a copy of this Interim Control Order.
ANNEXURE A
1. Control 1
1.1. You are prohibited from residing at premises other than:
a. [Address] (the specified premises); or
b. such other premises notified by you to the AFP Superintendent in accordance with Control 1.2.
1.2. If you decide to permanently leave the specified premises, or stay at any premises other than the specified premises for more than 21 consecutive days, you must notify the AFP Superintendent of your new address or the address you will be staying at in writing three business days prior to departing the specified premises. If at the time of leaving the specified premises you did not foresee that you would be staying at any premises other than the specified premises for more than 21 consecutive days and did not notify the AFP Superintendent that you would be doing so, you are required to notify the AFP Superintendent as soon as you become aware that you will be staying at any premises other than the specified premises for more than 21 consecutive days.
1.3. For abundant clarity, you are permitted to stay at any premises other than the specified premises for up to 21 consecutive days, but no more than this, without having to notify the AFP Superintendent.
1.4. The prohibition in Control 1.1 and the requirement in Control 1.2 do not apply during any period in which you are admitted to hospital.
2. Control 2
2.1. You are prohibited from carrying out the following specified activities (including in respect of your work or occupation), namely:
a. accessing, viewing, acquiring, possessing or storing documents (including documents in electronic form) or electronic media which relate to any of the following:
i. explosives, explosive devices, initiation systems or firing devices;
ii. firearms, ammunition or knives;
iii. anti-surveillance or counter surveillance;
unless that material is:
i. published by a 'constituent body' of the Australian Press Council;
ii. broadcast on Australian free to air television;
iii. broadcast on Australian pay television;
iv. shown in a commercial movie cinema;
v. broadcast on a free to air or paid streaming service; or
vi. served on you or your legal representatives by or on behalf of a senior AFP member in the Federal Court proceeding relating to this interim control order, including any appeal from such proceeding, and is accessed, possessed, and stored solely for the purposes of proceedings in the Federal Court relating to this interim control order, including any appeal from such proceeding.
b. accessing, viewing, acquiring, possessing or storing documents (including documents in electronic form) or electronic media which depict or describe any:
i. execution;
ii. beheading;
iii. suicide attack
iv. bombing;
v. terrorist attack;
vi. propaganda or promotional material for a terrorist organisation within the meaning of s 102.1(1) of the Criminal Code (Cth); and
vii. activities of, or associated with, any terrorist organisation within the meaning of s 102.1(1) of the Criminal Code (Cth),
unless that material is:
vii. published by a 'constituent body' of the Australian Press Council;
viii. broadcast on Australian free to air television;
ix. broadcast on Australian pay television;
x. shown in a commercial movie cinema;
xi. broadcast on a free to air or paid streaming service; or
xii. served on you or your legal representatives by or on behalf of a senior AFP member in the Federal Court proceeding relating to this interim control order, including any appeal from such proceeding, and is accessed, possessed, and stored solely for the purposes of proceedings in the Federal Court relating to this interim control order, including any appeal from such proceeding.
3. Control 3
3.1. You are prohibited from carrying out the following specified activities (including in respect of your work or occupation), namely:
a. collating, editing, copying, recording, producing or distributing documents (including documents in electronic form) or electronic media, or directing any person to collate, edit, copy, record, produce or distribute documents (including documents in electronic form) or electronic media, relating to:
i. explosives, explosive devices, initiation systems or firing devices;
ii. firearms, ammunition or knives;
iii. anti-surveillance or counter surveillance;
iv. execution;
v. beheading;
vi. suicide attack;
vii. bombing;
viii. terrorist attack;
ix. propaganda and promotional material for a 'terrorist organisation' within the meaning of s 102.1(1) of the Criminal Code (Cth); and
x. activities of, or associated with, a 'terrorist organisation' within the meaning of s 102.1(1) of the Schedule to the Criminal Code (Cth).
4. Control 4
4.1. You are prohibited from possessing or using, or causing any person to act on your behalf to possess or use, any of these specified articles or substances, namely:
a. firearms, firearm parts or ammunition within the meaning of s 4 of the Firearms Act 1996 (NSW);
b. a 'prohibited weapon' within the meaning of s 4 of the Weapons Prohibition Act 1998 (NSW);
c. any quantity of petrol exceeding 4 litres except petrol contained in the petrol tank of a vehicle;
d. any quantity of any chemical which is not consistent with reasonable domestic use;
e. an article or device, not being a firearm, capable of discharging by any means any irritant matter in liquid, powder, gas, chemical form, dense smoke or substance, which is intended by the person having possession of the article or device to injure or menace a person;
f. a detonator;
g. a fuse capable of use with an explosive or a detonator;
h. a knife, in a public place, without reasonable excuse; and
i. anything intended, by the person having custody of the thing, to be used to injure or menace a person or damage property.
5. Control 5
5.1. You are prohibited from communicating or voluntarily associating with:
a. any person incarcerated in any correctional facility, except:
i. [Name]; and
ii. Eliesa KAFOVALU (19/10/1989), but only so as to permit you to communicate with KAFOVALU in writing;
b. any person known to you to be convicted of, or currently charged with, a 'terrorism offence' within the meaning of s 3(1) of the Crimes Act 1914 (Cth);
c. any of the following specified individuals:
i. Amnah RIMA (nee HAMZE) (date of birth: 08/09/1975)
ii. Bassam HAMZY (date of birth: 03/01/1979);
iii. Rose Honor KARROUM (date of birth: 29/06/1990);
iv. Siaunofilalao KEPU (date of birth: 11/11/1998);
v. Abir BAYDA (approximate date of birth: 14/11/1978).
6. Control 6
6.1. You are prohibited from accessing or using any mobile telephone device and SIM card other than a single mobile telephone device and SIM card provided by the AFP (the permitted mobile phone).
6.2. Your access or use of the permitted mobile phone is subject to the following conditions:
a. prior to using the permitted mobile phone an AFP Superintendent will provide you with the following information in writing:
i. the International Mobile Equipment Identity number for the permitted mobile phone;
ii. the Integrated Circuit Card Identifier for the SIM card you will use with the permitted mobile phone;
iii. the telecommunication service provider which you will use with the permitted mobile phone;
iv. the password for the permitted mobile phone; and
v. the phone number to which the permitted mobile phone will be connected;
b. at any time an AFP Superintendent (or a police officer specified in writing by an AFP Superintendent) requests, you must present the permitted mobile phone for inspection and open any applications the AFP Superintendent or police officer directs you to open;
c. you must not change, remove, modify or disconnect or cause any other person to change, remove, modify or disconnect on your behalf (including any employee or person acting on behalf of a telecommunications service provider) the SIM card provided by the AFP, the telecommunication service provider or the phone number connected to the permitted mobile phone; and
d. if you change the password for the permitted mobile phone, you must provide the new password to an AFP Superintendent, or a police officer acting under an AFP Superintendent's direction, if you are requested to do so by an AFP Superintendent or that police officer.
6.3. For abundant clarity, Control 6.1 does not prohibit you from being present whilst other persons communicate using the 'speaker' function on another phone so long as:
a. you do not participate in the communication; and
b. you do not cause any person to participate in the communication on your behalf.
7. Control 7
7.1. You are required to consider in good faith participating in counselling or education relating to your spiritual, emotional and physical wellbeing, with a suitably qualified professional counsellor or publicly recognised religious leader, for at least 60 minutes per week.
7.2. If you agree to participate in such counselling or education you must advise an AFP Superintendent in writing that you have commenced the counselling or education and provide an AFP Superintendent the name and qualifications of the professional you have engaged.
8. Exemptions requested by you
8.1. You may request that the AFP Superintendent approve an exemption to the obligations, requirements or prohibitions specified in Controls 1-7 above.
8.2. To request an exemption, you must:
a. submit a written request to the AFP Superintendent which:
i. explains the extent to which you seek to be exempted from the Control, and
ii. explains your reason(s) for seeking the exemption; and
b. provide any other information requested by, or on behalf of, the AFP Superintendent for the purposes of determining whether to approve the exemption.
8.3. The AFP Superintendent may grant an exemption subject to conditions specified in writing.
8.4. You must comply with all of the conditions specified in writing by the AFP Superintendent. If you do not comply with a condition to an exemption, the exemption is (and will be taken to have been for all purposes) of no effect.
8.5. A request for an exemption must be made before the material time and date.
8.6. If the AFP Superintendent has not approved an exemption by the material time and date, the request is deemed to have been refused.
9. Exemption granted by the AFP with or without a request from you
9.1. An AFP Superintendent may grant an exemption to the requirements or prohibitions specified in the Controls with your consent.
9.2. The AFP Superintendent may grant an exemption subject to reasonable conditions specified in writing provided on reasonable notice to you and to which you consent in writing.
9.3. You must comply with all the conditions specified in writing by the AFP Superintendent. If you do not comply with a condition to an exemption, the exemption is (and will be taken to have been for all purposes) of no effect.
10. Application of controls while in custody
10.1. Controls 1-7 do not apply during any period in which you are held by or on behalf of any officer in a prison or remand centre of the Commonwealth, a State or a Territory.
10.2. Controls 1-7 resume their application at the conclusion of any period referred to in Control 10.1.
11. Interpretation
11.1. In this Interim Control Order:
a. AFP Superintendent means a member of the Australian Federal Police performing the duties of a Superintendent within the Counter-Terrorism portfolio.
b. material time and date means:
i. in relation to a request for an exemption to a Control that requires you to do an act – the time and date that you are required to do that act and propose not to do it;
ii. in relation to a request for an exemption to a Control that prohibits you from doing an act – the time and date that you propose to do that act;
iii. in relation to a request for an exemption to a Control that requires you to be present at an area or place – the time and date that you are required to be present at that area or place and propose not to be;
iv. in relation to a request for an exemption to a Control that prohibits you from being present at an area or place – the time and date that you propose to be present at that area or place.
c. password includes but is not limited to any passcode, swipe pattern or any information or function necessary to facilitate access to the applicable device.
d. police officer means a 'member' or 'special member' of the Australian Federal Police, as defined by the Australian Federal Police Act 1979 (Cth), or a 'police officer' within the meaning of the Police Act 1990 (NSW).
ANNEXURE B
Offence relating to terrorism and a terrorist act
1. On 5 October 2018, Alo-Bridget Namoa was found guilty, and subsequently convicted, of an offence contrary to ss 11.5(1) and 101.6(1) of the Criminal Code 1995 (Cth) for conspiring to do acts in preparation for a terrorist act (the conspiracy offence). The offence involved Namoa providing strong and express encouragement to Sameh Bayda, with whom she had participated in an Islamic ceremony of marriage, concerning a plan by Bayda to carry out an act of violence against non-Muslims.
2. The offence for which Namoa was convicted related to terrorism and a terrorist act.
Ongoing risk factors
3. By reason of the following matters, Namoa presents an ongoing risk of committing, supporting or facilitating a terrorist act.
3.1. Namoa provided support and encouragement for the carrying out of a domestic terrorist act. In providing that support, Namoa identified the prospective victims as 'kuffar' (ie as legitimate targets for a violent attack) and encouraged Bayda to continue with the attack despite her understanding that he was having second thoughts. Namoa provided that support and encouragement notwithstanding she believed Bayda could, himself, be killed while carrying out the attack, such was her level of commitment to the cause.
3.2. Namoa herself expressed a desire to commit a terrorist act, and possessed a knife wrapped in a Shahada flag in furtherance of her agreement with Bayda to do so.
3.3. Namoa has a demonstrated susceptibility to the influence of others. She has shown very little resilience and a limited capacity to exercise independent and reliable judgement, even where those exerting influence are seeking to involve her in very obvious and serious wrong-doing. This is most clearly exemplified by her involvement in Bayda's plan to commit a terrorist act.
3.4. Namoa's indoctrination into Islamic extremism had a profound effect on her. Most significantly, it led her to commit the offence referred to at [1] above. Even after being arrested and charged with that offence, during the First Period of Imprisonment, Namoa continued to characterise her circumstances through the lens of that ideology, for example by identifying the authorities as 'oppressors' and demonstrating a firmly held belief that the 'kuffar' should be put to death. She also continued to express support for the Islamic State and its ideology.
3.5. Namoa did not simply have a passing or fleeting interest in Islamic extremism. Rather, it was an enduring one. Nor was she passive in her consumption of that ideology. Rather, she espoused it and encouraged others to adopt it, including her brother, well into the First Period of Imprisonment.
3.6. Namoa's radicalisation was also a product of her access to and consumption of extreme and violent material which she accessed online. At the time of her arrest for the terrorism-related charges in February 2016, Namoa's phone contained an extensive amount of extremist material, including depictions of suicide bombings and executions (including by beheading) and literature advocating jihad martyrdom. Namoa has conceded that she was 'fanatical' and that she had been 'immersed with all the propaganda'.
4. Although there is no evidence Namoa accessed extremist material, contacted prohibited associates under her first control order, or expressed a desire to commit, support or facilitate a terrorist act, during the 8 months she spent in the community between December 2019 and July 2020, this must be viewed in light of the following matters:
4.1. Namoa was, throughout this period, subject to the first control order, and should be taken to be aware that her conduct was being monitored. The first control order expressly prohibited her from accessing extremist material (control 6) and communicating or associating with identified persons or classes of persons.
4.2. In the weeks and months after Namoa was released from prison on 22 December 2019, her phone was used:
4.2.1. to acquire 3 photographs of persons (who the AFP believe include Namoa and her brother Esau) raising their right index finger, a gesture understood by Namoa to be an ISIS salute;
4.2.2. to download and access an image of a flag depicting a sword logo with the Shahada, the Shahada symbol being:
4.2.2.1. incorporated in the Islamic State flag; and
4.2.2.2. printed on the flag found wrapped around a Tactical brand knife in Namoa's handbag in January 2016, both of which items she had possessed pursuant to an agreement between her and Bayda to carry out a terrorist act;
4.2.3. on a number of occasions in January, February and April 2020, to send text messages to her mother, sister and then husband describing and threatening violent acts, including to 'shoot', 'stab' and 'kill' people, 'pour[] acid down [her sister's] throat to teach her a lesson', 'burn [her sister's] house down', 'fukn hurt someone', 'cave [her sister's] fukn head in', 'pour acid down [another person's] throat', and 'punch [her husband Arslan] in [th]e throat'.
4.3. In May 2020, Namoa communicated with a woman whose husband has been convicted of foreign incursion-related offences. And over a 2 week period in June and July 2020, Namoa attempted to contact that woman a further 7 times.
4.4. Namoa was for much of the time she spent in the community married to Arslan, who appears to have been a positive and supportive influence, but in November 2020 Namoa sought an Islamic divorce from him, and the two appear to have broken off all contact.
4.5. Since July 2020, while on remand, Namoa has written to:
4.5.1. persons who have been convicted of terrorism offences;
4.5.2. the woman referred to at [4.3] above;
4.5.3. two people who Namoa had been prohibited from communicating or associating with under the first control order.
4.6. In a further letter while on remand, Namoa wrote that 'there is no terrorism in this country'. In another, she wrote that although she 'can't speak [her] mind at the moment', she 'will one day … I say something and its taken out of context and make out like I've said something controversial that's oh so damaging to the security of the country'. These statements demonstrate a lack of insight into the seriousness of her past offending and related conduct, which included her expressing support for terrorism and terrorist acts.
5. Namoa admitted, in around September 2020, that she did not abandon her Islamic faith as she had claimed to various people around the time of her sentencing hearing and in her evidence before the sentencing judge. There is also evidence that her claims to have renounced Islam were at the behest of Bayda, which reinforces the concerns about her susceptibility to the influence of others.
6. While the sentencing judge found that Namoa was genuine in her renunciation of fanatical beliefs and made other findings favourable to Namoa, those findings concerned Namoa's beliefs and ideology at that point in time. To the extent the sentencing judge considered Namoa's likely future behaviour and conduct, his Honour expressed a qualified opinion. Furthermore, the evidence referred to at [5], and Namoa's more recent admission that she never abandoned her faith, were not before the sentencing judge.
7. In view of the above matters, there is a real risk that upon her release from custody, and in the absence of appropriate obligations, prohibitions and restrictions, Namoa will either herself commit, or otherwise support or facilitate, a terrorist act.
8. The obligations, prohibitions and restrictions set out in the proposed interim control orders are reasonably necessary, and reasonably appropriate and adapted, for the purpose of preventing a terrorist act or the provision of support for or the facilitation of such an act. They represent a substantially reduced intrusion upon Namoa's liberty than was occasioned by the first control order. They will ensure that Namoa:
8.1. is again provided with the opportunity to engage positively with the community (through employment, religious observation, counselling and education);
8.2. is capable of being monitored by police during her reengagement with the community; and
8.3. is prohibited from engaging in those behaviours, and being exposed to those influences, which may lead her to commit, provide support for or facilitate a terrorist act,
and thereby reduce the risks outlined above.
REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)
BURLEY J:
1 This is an application by Superintendent Nicholas Read of the Australian Federal Police (AFP) for an interim control order in respect of Alo-Bridget Namoa pursuant to s 104.4 of the Criminal Code (Cth) (contained in the Schedule to the Criminal Code Act 1995 (Cth)).
2 On 5 October 2018, Ms Namoa and her co-offender Sameh Bayda, were found guilty by a jury of the offence of conspiring between 8 December 2015 and 25 January 2016 at Sydney and elsewhere to do acts in preparation for, or planning, a terrorist act, contrary to ss 11.5(1) and 101.6(1) of the Code (2015 offence). On 31 January 2019 a judge of the Supreme Court of New South Wales sentenced both to imprisonment. The term imposed upon Ms Namoa was three years and nine months commencing on 23 March 2016 and expiring on 22 December 2019: R v Bayda; R v Namoa (No 8) [2019] NSWSC 24 (Fagan J).
3 Prior to Ms Namoa's release from imprisonment, Sandra Booth, a commander in the AFP, made an application to this court for a first interim control order, which was subsequently made on 19 December 2019: Booth v Namoa [2019] FCA 2213 (Rares J) (Booth No 1). That order was confirmed to apply without variation on 3 February 2020: Booth v Namoa (No 2) [2020] FCA 73 (Rares J) (Booth No 2).
4 On 22 December 2019, Ms Namoa was released from custody and on the same day she was served with the first interim control order.
5 On 25 July 2020, Ms Namoa was arrested and charged with six counts of contravening a control order and six counts of attempting to contravene a control order, contrary to ss 104.27 and 11.1 of the Code. She was refused bail and has been remanded in custody since her arrest (second period of imprisonment). Ms Namoa has pleaded guilty to some of these counts and the remainder have been withdrawn. She is due to be sentenced next Monday, 29 November 2021.
6 On 19 December 2020, the interim control order imposed made on 19 December 2019 expired.
7 There is a prospect that Ms Namoa's sentence for the contraventions of the first interim control order will not exceed, or will not exceed by much, the time she has been remanded in custody to date, with the consequence that Ms Namoa's release into the community may be imminent. It is for that reason that the present application has been made on an urgent basis.
8 There is a two stage process for an officer of the AFP to seek and obtain an interim control order within ss 104.3 and 104.4 of the Code. First, a "senior AFP member" must obtain the written consent of the AFP Minister who, at present, is the Honourable Karen Andrews MP. Secondly, the senior AFP member must provide to the Court the documents and information required by s 104.3. The Court may make an order but only if the particular requirements of s 104.4 of the Code, to which I shall return below, have been satisfied.
9 Superintendent Read has filed an extensive affidavit in support of the present application, which I am satisfied supplies the documents and information addressing all of the requirements of s 104.3 of the Code. He has filed submissions in support of the application and provided a draft interim control order, the terms of which have been considered by the legal representatives for Ms Namoa. Ms Namoa's legal representatives, who appeared at the application today, have provided brief written submissions indicating that Ms Namoa does not oppose the grant of an interim control order. They have discussed the draft orders with the representatives of Superintendent Read and, after some limited refinements were made, accept that the terms proposed are substantially more limited than those made in the first control order.
10 For the reasons set out below, I am satisfied that it is appropriate for the interim control order to be made.
11 The four preconditions for the making of an interim control order are set out in s 104.4(1)(a)-(d). The first is that a "senior AFP member", defined in s 100.1 as being an AFP member of the rank of Superintendent or above, has requested the order in accordance with s 104.3. Superintendent Read holds the requisite rank. His request is supported by an affidavit that conforms with the requirements of s 104.3. Most particularly, it includes the information that has been supplied to the Minister, an explanation as to why (and why not) each of the obligations, prohibitions or restrictions sought should be imposed upon Ms Namoa, the history of previous requests for interim control orders and a copy of the Minister's consent.
12 The statement of facts relating to why the order should be made includes certain information about two individuals that Superintendent Read claims is confidential. He seeks a suppression order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) in order to protect the identity of those individuals. This involves the suppression of limited parts of annexures NR-03 and NR-07 of Superintendent Read's affidavit and of the confidential submissions supplied in support of the suppression order. Having regard to the matters raised, I am satisfied that a suppression order in the form sought is appropriate.
13 The second precondition under s 104.4(1)(b) is that the Court has received and considered such further information (if any) as it requires. No such information has been required, and so this precondition is not operative.
14 The third precondition is that one of the seven alternatives set out in s 104.1(1)(c) be met. Superintendent Reid relies on subsection (iv), which requires that the Court be satisfied on the balance of probabilities, that Ms Namoa has been convicted in Australia of an offence relating to terrorism, a terrorist organisation (within the meaning of subsection 102.1(1)) or a terrorist act (within the meaning of s 100.1). In Booth No 1 at [12] and Booth No 2 at [18] the Court found that Ms Namoa had been convicted of an offence relating to terrorism and a terrorist act. In my view that is plainly correct: see also McCartney v EB [2019] FCA 183; 263 FCR 170 at [29]-[30] (Wigney J). As Superintendent Read submits, the 2015 offence involved conspiring to do acts in preparation for a terrorist act; Ms Namoa had agreed with and expressly supported her co-offender's intention to carry out a terrorist act. The terrorist act was initially intended to be an attack on people in Sydney during the New Year's Eve festivities on 31 December 2015, which Ms Namoa encouraged. The offence also involved Ms Namoa holding a knife and Islamic State flag on behalf of her co-offender. Ms Namoa herself expressed a desire to carry out a terrorist act. There is a clear connection between the offence for which Ms Namoa was convicted and terrorism and a terrorist act. I am comfortably satisfied that this requirement has been met.
15 The fourth precondition in s 104.4(1)(d) is that:
the court is satisfied on the balance of probabilities that each of the obligations, prohibitions and restrictions to be imposed on the person by the order is reasonably necessary, and reasonably appropriate and adapted, for the purpose of:
(i) protecting the public from a terrorist act; or
(ii) preventing the provision of support for or the facilitation of a terrorist act; or
(iii) preventing the provision of support for or the facilitation of the engagement in a hostile activity in a foreign country.
16 Section 104.4(2) relevantly provides that for the purposes of s 104.4(1)(d), the Court must take into account, as a paramount consideration, the objects of Div 104. Section 104.1 provides:
104.1 Objects of this Division
The objects of this Division are to allow obligations, prohibitions and restrictions to be imposed on a person by a control order for one or more of the following purposes:
(a) protecting the public from a terrorist act;
(b) preventing the provision of support for or the facilitation of a terrorist act;
(c) preventing the provision of support for or the facilitation of the engagement in a hostile activity in a foreign country.
17 Section 104.4(2) also relevantly provides, as an additional consideration, the impact of the control order obligations, prohibitions or restrictions on Ms Namoa's circumstances, including financial and personal.
18 In Thomas v Mobray [2007] HCA 33; 233 CLR 307, Gleeson CJ explained the exercise involved in s 104.4(1)(d) as one involving proportionality (at [19]):
The requirement that a court consider whether each of the obligations imposed by a control order is both reasonably necessary, and reasonably appropriate and adapted, for the purpose of protecting the public was the subject of debate. A requirement of that kind would sometimes be described as a requirement of proportionality. Judgments about proportionality often require courts to evaluate considerations that are at least as imprecise as those involved in formulating a control order.
19 Justices Gummow and Crennan in the same case considered, at [99], in relation to each proposed obligation, prohibition and restriction:
….Section 104.4(1) requires in para (d) that each of these be measured against what is "reasonably necessary" and also against what is "reasonably appropriate and adapted" for attainment of the purpose of public protection from a terrorist act. This is weighed with the impact upon the circumstances of the person in question as a "balancing exercise" (s 104.4(2)).
20 The affidavit of Superintendent Read includes a summary of the grounds upon which the Superintendent considers that Ms Namoa presents an ongoing risk of committing, supporting or facilitating a terrorist act. The general context of the application arises from an ongoing and, in my view, justified concern explained by Superintendent Read that terrorist groups such as Islamic State remain active and have the potential to inspire terrorism around the globe.
21 More particularly, those grounds stem from the fact that Ms Namoa was found to have supported and encouraged an act of domestic terrorism in support of her extremist views of Islam, herself expressed a desire to commit a terrorist act and had possessed a knife wrapped in a Shahada flag in furtherance of her agreement with Mr Bayda to do so. In the weeks and months after her release from prison on 22 December 2019, Ms Namoa's phone was used to obtain images of persons raising their right index finger, which is a gesture known to Ms Namoa as being an "ISIS salute", and downloading an image of a flag depicting a sword logo with the Shahada symbol, which are known symbols used by the Islamic State. She has also sent numerous messages which include threats of extreme violence. Since July 2020, during her second period of imprisonment, Ms Namoa communicated with two persons who have been convicted of terrorism offences and two people with whom she had been prohibited from communicating or associating under the first interim control order. Furthermore, she admitted in about September 2020 that she had not abandoned her Islamic faith, as she had claimed in her evidence before the sentencing judge, and there is evidence to suggest that she did so at the behest of her co-accused. A more complete summary of the grounds on which the order is made are set out in Annexure B to the orders.
22 In Booth No 1, Rares J considered (at [28]) that there was at that time, December 2019, "still a real and reasonable risk that Ms Namoa remains a person about whom it is not possible conclusively to say that she is not at risk of relapsing to, or actually maintaining, the offending behaviours that led to her conviction, although…there are many positive indications that she has abandoned those behaviours". One of those positive indications was Ms Namoa's apparent reversion to Christianity: see [21]-[24]. His Honour also found that Ms Namoa "is a person who is vulnerable and, in the past, has succumbed to those vulnerabilities by adopting jihadist or fundamentalist beliefs and behaviours that resulted in her conviction" for the 2015 offence: see [31].
23 For the purposes of her bail application on 15 December 2020, Ms Namoa's representatives obtained a report by Dr Richard Furst, forensic psychiatrist, dated 11 September 2020. He agreed with the assessment made by Rares J, emphasising "the unique circumstances of Ms Namoa's offending, her emotional/intellectual vulnerabilities, her status as only one of only a handful of female terrorism-related offenders in the state of New South Wales and the relatively extreme nature of her previous interest in Jihadist/violent extremists images, propaganda and ideologies".
24 Superintendent Read submits that at the time of making the first interim control order, there were indications that Ms Namoa may have been disengaging from the extremist ideology that was the catalyst for her offending and subsequent conduct while in custody. He submits that while that may continue to be the case, those indications must be treated with caution, having regard to Ms Namoa's subsequent conduct, aspects of which I have summarised above. Superintendent Read submits that by engaging in that conduct, Ms Namoa has exposed herself to persons and material that have the capacity to have a radicalising influence on her, and that the risk of that occurring is neither remote nor fanciful having regard to the circumstances surrounding her conviction for the 2015 offence which involved her being highly influenced by a combination of Islamic State propaganda and persons with extremist views. I accept that submission.
25 I have considered each of the control orders proposed to be made. I consider that the obligations, prohibitions and restrictions set out are reasonably necessary, and reasonably appropriate and adapted, for the purpose of protecting the public from a terrorist act or preventing the provision of support for or the facilitation of a such an act. They represent a reduced intrusion upon Ms Namoa's liberty than was occasioned by the first interim control order and they will ensure that she is provided with the opportunity to engage positively with the community, while at the same time being capable of being monitored by the police on a more limited basis and being prohibited from engaging in behaviour and being exposed to influences which may lead her to commit or provide support for a terrorist act.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Burley.
Associate:
Dated: 26 November 2021
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SZKKC v Minister for Immigration and Citizenship [2009] FCA 362
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FEDERAL COURT OF AUSTRALIA
SZKKC v Minister for Immigration and Citizenship [2009] FCA 362
MIGRATION – whether fresh evidence may be led on appeal – whether the Federal Magistrate erred in the exercise of his discretion to withhold relief – whether the Federal Magistrate was entitled to take into account the nature of the jurisdictional error and its impact on the decision‑making process
Migration Act 1958 (Cth) s 426, s 417
Federal Court Rules O 52 r 36
Minister for Immigration and Citizenship v SZKKC (2007) 241 ALR 523
Minister for Immigration and Citizenship v SZIQB [2008] FCAFC 20
SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152
SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294
Palmer v The Queen (1998) 193 CLR 1
SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609
SZKKC v MINISTER FOR IMMIGRATION AND CITIZENSHIP and REFUGEE REVIEW TRIBUNAL
NSD 1363 OF 2008
SIOPIS J
20 APRIL 2009
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY NSD 1363 OF 2008
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZKKC
Appellant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: SIOPIS J
DATE OF ORDER: 20 APRIL 2009
WHERE MADE: PERTH
THE COURT ORDERS THAT:
1. The appeal is dismissed.
2. The appellant pay the first respondent's costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY NSD 1363 OF 2008
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZKKC
Appellant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: SIOPIS J
DATE: 20 APRIL 2009
PLACE: PERTH
REASONS FOR JUDGMENT
1 The appellant is a citizen of the People's Republic of China (China) who arrived in Australia on 8 June 1996. The appellant arrived on a false passport and a tourist visa.
2 On 29 August 1996, the appellant lodged an application for a protection visa with the Department of Immigration and Citizenship (the department). This application was lodged by a migration agent on behalf of the appellant. It contained a four page statement setting out the appellant's claim. The appellant signed the protection visa application and each page of the statement. The appellant's visa application form claimed that the appellant had a well‑founded fear of persecution due to China's one child policy. The completed visa application form stated that the appellant's religion was Guanyin Buddhist and gave the appellant's address as an address in Campsie.
3 In support of her application, the appellant claimed that after the birth of her first child in China she was forced to use an IUD contraceptive device and that this harmed her health. She claimed she was forced to have one abortion and the Chinese authorities attempted to force her to have another abortion before she gave birth to her second child. The birth was discovered by the authorities and she was detained for three months until she paid a heavy fine. The appellant claimed that she became pregnant again in 1996. She said that she and her husband moved to live with relatives in another city, to avoid detection by the authorities. She claimed that in March 1996, local family planning officials searched houses in the night and that she and other pregnant women were taken by truck to a hospital. She said that during the journey she gave birth and that a doctor from the hospital reportedly killed the baby by an injection. The appellant said she was so sad that she tried to commit suicide, but her husband saved her. She then, with her husband's help, escaped from China and came to Australia.
4 On 2 July 1997, a delegate of the first respondent refused the application for a protection visa.
THE TRIBUNAL
5 On 30 July 1997, the appellant, by her migration agent, applied to the Tribunal for a review of that decision. The appellant signed the application form which also recorded her address as the Campsie address.
6 On 11 February 1998, the appellant's migration agent wrote to the Tribunal advising of the appellant's change of address. The new address given was an address in Lidcombe.
7 By a letter dated 3 December 1998, addressed to the appellant at her Lidcombe address, the Tribunal invited the appellant to attend a hearing. A copy of this letter was also sent to the appellant's migration agent. The letter was headed "Notice under Section 426 of the Migration Act 1958".
8 The migration agent completed the "Response to Hearing Offer" form accepting the invitation to attend the hearing and returned it to the Tribunal. This document was received by the Tribunal on 19 December 1998. The Tribunal wrote to the appellant setting the date of the hearing as 21 January 1999. The appellant, however, did not attend the hearing.
9 By a decision handed down on 7 July 1999, the Tribunal found that the non‑discriminatory implementation of China's one child policy does not by itself constitute persecution for a Convention reason. Further, the Tribunal said that it could not be satisfied, on the limited evidence available to it, that the policy had been applied to the appellant in a discriminatory way or that it would be in the future. The Tribunal concluded that the appellant did not have a well‑founded fear of persecution.
THE FEDERAL MAGISTRATES COURT
10 By an application filed on 22 March 2007, almost eight years after the Tribunal's decision was handed down, the appellant sought judicial review of the Tribunal's decision in the Federal Magistrates Court. The appellant relied upon the following grounds of review:
1. I have been mistreated and prosecuted by Chinese authority not only because of my offence of "One Child Policy", but also my involvement in underground Catholic church activities. However, my PV application prepared by my migration agent did not include religious matters and any details of my prosecution.
2. Due to the lack of knowledge of legal procedures of the PV application, I missed the RRT hearing at which I might have given evidence and clarify my claims.
3. The lack of communication and misunderstanding between me and my migration agent also directly caused my absence from the RRT hearing and hence resulted in the adverse decision.
The objection to competency hearing
11 The first respondent contended that the appellant's application for judicial review was incompetent, in that it was filed out of time, namely, after 28 days of the notification of the Tribunal's decision.
12 There was a hearing of the first respondent's objection to competency on 12 April 2007. At that time the appellant was a detainee in the Villawood immigration detention centre. The appellant was unrepresented at the hearing. The appellant gave evidence at that hearing and was cross‑examined by counsel for the first respondent. The appellant deposed that she did not attend the handing down of the Tribunal's decision. The appellant deposed that she had been informed by her migration agent in 1999 that the Tribunal had refused her application for review. The appellant had then at the migration agent's suggestion instructed him to join her as a party to the Muin and Lie class action. The appellant said she had not received the reasons of the Tribunal until 12 March 2007. She had obtained the reasons after a friend assisted her in writing to the Tribunal. The appellant also said that she had not tried to contact her migration agent after 2003 because she had gone to his office in 2003 and found it had been closed.
13 The Federal Magistrate held that the application was competent. This decision was upheld by the Full Court of the Federal Court (Minister for Immigration and Citizenship v SZKKC (2007) 241 ALR 523). The first respondent was granted special leave by the High Court to appeal the Full Court decision, but the first respondent subsequently withdrew the appeal. The matter was returned to the Federal Magistrates Court for determination of the application.
Amended application for review
14 On 29 May 2007, the appellant filed an amended application, which included the following new ground of review:
1. The Tribunal failed to exercise its jurisdiction because it failed to give her a proper notice in relation to the hearing it had scheduled for her to attend.
Particulars
The Tribunal wrote to the applicant on 3 December 1998…[The letter] is headed "NOTICE UNDER SECTION 426 OF THE MIGRATION ACT 1958". At that time, the Act required such a notice to include a notice as to the effect of subsection (2) of section 426, which provided that
The applicant may, within 7 days after being notified under subsection (1), give the Tribunal written notice that the applicant wants the Tribunal to obtain oral evidence from a person or persons named in the notice.
The letter sent to the applicant does not refer to the 7 day requirement.
2. … (Original emphasis.)
15 At a hearing before the Federal Magistrate on 20 June 2008, counsel for the first respondent advised the Federal Magistrate that the first respondent conceded jurisdictional error as alleged by the appellant in ground 1 of the amended application. However, the first respondent contended that relief should be withheld on the basis of unwarranted delay. The hearing was adjourned to permit evidence to be led and submissions to be made on whether relief should be withheld in the exercise of the Federal Magistrate's discretion.
The hearing in relation to discretionary matters
16 The adjourned hearing occurred on 8 August 2008. The issue to be decided by the Federal Magistrate at the hearing was whether the court should in the exercise of its discretion withhold relief, notwithstanding that jurisdictional error was conceded by the first respondent.
17 At the hearing, the first respondent relied upon the affidavit of Nicola Johnson sworn on 11 April 2007 which deposed that the Tribunal's decision had been handed down on 7 July 1999 and that the appellant was a member of the Muin and Lie class action from at least 17 August 2000. The first respondent submitted that the appellant took no steps to seek review of the Tribunal's decision from the determination of the class action in 2003 until she filed her application in 2007. This delay, contended the first respondent, was unexplained and unwarranted and the court should exercise its discretion to withhold relief on that ground. The Federal Magistrate proceeded on the basis that the Muin and Lie case concluded on 20 June 2003.
18 The appellant relied upon an affidavit sworn on 27 June 2008 in opposition to the first respondent's contention that relief should be withheld in the exercise of the Federal Magistrate's discretion.
19 The appellant deposed that in August 1996, she saw an advertisement by a migration agent in a Chinese language newspaper in Sydney. She contacted the migration agent, who listened to the appellant's story in a two hour interview conducted in Mandarin, and then agreed to take her case for a fee. The appellant said that she told the migration agent that she was a Catholic and told him about her arrest for printing pamphlets about the Catholic church, and also that the government had killed her baby and forced her to be sterilised. The appellant said that she returned to the office of the migration agent a week later and signed the application forms. She deposed that nobody read the content of the forms to her in Mandarin before she signed them. The appellant said that she signed the forms because she trusted her migration agent to include all of her story in the application and to know the procedures for becoming a refugee. The appellant also deposed that she did not give the migration agent her address, but gave him a landline telephone number on which he could contact her.
20 The appellant went on to depose that she had subsequently found out that the address which was included in her protection visa application prepared by the migration agent was false. The appellant deposed that there were a number of other statements in the forms she signed which were wrong. The appellant said that her religion was recorded as Guanyin Buddhist, not Catholic, and that her claim based on her persecution because she was Catholic was omitted from the statement. She said there were also other factual errors regarding her pregnancies, and some dates were incorrect.
21 The appellant then deposed that in or around July 1997, she received a telephone call from her migration agent in which he told her that her case would be going to the Tribunal and that she would have to pay more money if she wanted to continue with her application. The appellant agreed and was told that the migration agent would call her when there was news. The appellant signed more forms which were in English.
22 The appellant also said that the new address in Lidcombe given by the migration agent to the Tribunal in February 1998 was false. She deposed that she had moved a number of times since first meeting the migration agent, but she never told him her addresses.
23 The appellant said that she had another telephone conversation with the migration agent in or around early June 2000. The migration agent told her that she was unsuccessful before the Tribunal and advised her to become part of the Muin and Lie class action. The appellant agreed to this and paid the migration agent's fee.
24 The appellant said that she was taken into immigration detention on 27 September 2000 and released on the third day. She said that she went to her migration agent's office about two days after she was released. The migration agent said that everything was "okay" and that her case was continuing. The appellant deposed to two further telephone conversations that she had with the migration agent in late 2000 or early 2001. On both occasions, the migration agent told the appellant that he would telephone her when he had further information. The appellant said that she trusted the migration agent and believed that he would telephone her when he had more information.
25 The appellant deposed that in January 2003, when the appellant still had not been contacted by the migration agent, she went to his office, but the office had been closed and she had no way of contacting him.
26 The appellant said that she, nevertheless, expected that her migration agent would contact her if he had further news about the class action. She said that she trusted the migration agent. The appellant went on to say that in early 2007, she started to get worried about what was happening to her application. She consulted a friend who suggested that she contact another migration agent. The appellant deposed that until she was taken into detention in March 2007 she had no idea that she was in Australia illegally because she thought her case was still ongoing. The appellant said that she did not know that she could contact the department or the Tribunal directly.
27 The appellant was cross‑examined at some length on her affidavit evidence during the hearing before the Federal Magistrate.
the federal magistrate's reasons
28 The Federal Magistrate dismissed the appellant's application on the grounds that relief should be withheld because of the unexplained and unwarranted delay.
29 In his reasons, the Federal Magistrate first referred to and summarised the appellant's evidence. The Federal Magistrate found the evidence to be "in some respects unsatisfactory". The Federal Magistrate referred to a number of claims made by the appellant in her evidence that the migration agent had failed to act on her instructions and had inserted false information in her visa application. These included the fact that the appellant had told the migration agent that she was a Catholic, but he had stated in the form that she was a Guanyin Buddhist and had not included a claim for a protection visa based on her persecution as a Catholic. There was also the assertion that the migration agent had included a false address in Campsie in the initial visa application and then submitted a further false address ‑ this time in Lidcombe ‑ to the Tribunal in February 1998. The Federal Magistrate observed that the appellant could not explain why the migration agent would include a false religion, "unprompted" give two false addresses, and leave out a claim based on her Catholicism.
30 The Federal Magistrate also referred to the appellant's evidence that the migration agent had telephoned her at a different address to that for which she had given the migration agent a telephone number and that she had been unable to explain how the migration agent could have had that telephone number.
31 The Federal Magistrate also noted that the appellant had acknowledged "factual inconsistencies between her affidavit and oral evidence she gave on 12 April 2007". The Federal Magistrate said that he preferred the earlier oral evidence, which had "the ring of truth about it".
32 The Federal Magistrate then dealt with the submissions of the parties. The Federal Magistrate referred to the case of Minister for Immigration and Citizenship v SZIQB [2008] FCAFC 20 (SZIQB) as an example of a case where the Full Court had withheld relief on the basis that there was an unwarranted delay in seeking relief, notwithstanding that there was a jurisdictional error.
33 The Federal Magistrate also referred to the following observations by the Full Court in SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 168‑169, at [97] (SZIZO):
It should be only in exceptional circumstances that a Court should refuse to issue the constitutional writs once the Court has determined that the Tribunal had failed to comply with its imperative statutory obligations to an applicant seeking the review of a decision of the delegate refusing the applicant a protection visa. If it were otherwise, and the Court were required to inquire into the extent to which the failure by the Tribunal to comply with its statutory obligations to accord an applicant a fair hearing prejudiced the applicant, the imperative obligation imposed on the Tribunal might well be blunted.
34 The Federal Magistrate said, however, that SZIZO was not a case of delay. The Federal Magistrate observed that the Full Court had emphasised the consequences of the breach of "the code of procedure in the Migration Act" and had referred to the case of SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294. Accordingly, said the Federal Magistrate, the "exceptional circumstances" referred to by the Full Court needed to be put into context.
35 The Federal Magistrate went on to say that this case involved a "breach of a superseded form of s 426 of the Migration Act, enacted well before s 422B of that Act". The Federal Magistrate also observed that s 426, in the form then applicable, was no longer part of the code of procedure in the Act and that the same public policy considerations did not apply in this case as applied in SZIZO. Further, the Federal Magistrate found that the breach of procedure in this case did not deprive the appellant of a hearing. The Federal Magistrate said that it appeared that the appellant had failed to keep her migration agent appraised of how to contact her. The Federal Magistrate said that on her evidence the migration agent did not know the appellant's address because she did not inform him of it. It appeared, therefore, that the appellant's failure to attend the hearing before the Tribunal was a result of a lack of communication between her and her migration agent.
36 The Federal Magistrate found that the appellant's explanation for the delay in filing the application well over three years after the conclusion of the Muin and Lie class action on 20 June 2003, was unsatisfactory. The Federal Magistrate found that the appellant did nothing to check the status of the class action after losing contact with her migration agent. The Federal Magistrate found that it was implausible that the appellant assumed her migration agent was still attending to her affairs and would contact her with advice when she knew his office had closed. The Federal Magistrate observed that the appellant had acknowledged in her oral evidence at the interlocutory hearing that when she was taken into detention in 2000 she was advised by officers of the department that she would have to leave Australia as soon as the class action was finished. The Federal Magistrate said that the appellant had acknowledged that she was afraid of being taken into detention again and this had happened in 2007. His Honour said that whilst the fear was understandable it was not an adequate explanation for the delay by the appellant in bringing the present proceedings.
37 The Federal Magistrate also considered the appellant's contention that a further relevant consideration in the exercise of the discretion, was that the appellant had been denied a hearing before the Tribunal "on the basis of at least irregular conduct by her migration agent". The irregular conduct was said to be the provision of two false addresses to the department and the Tribunal, the nomination of her religion as Guanyin Buddhist rather than Catholic, and the failure to include the appellant's claim based on her fear of persecution because of her Catholicism. The Federal Magistrate rejected the appellant's contention that the migration agent had engaged in irregular conduct. This is because the Federal Magistrate found the appellant's evidence in support of this contention to be implausible. The Federal Magistrate found that the appellant's failure to attend the Tribunal was on the balance of probabilities attributable to her own fault in failing to keep the migration agent informed of her contact details, rather than the fault of the migration agent.
38 As to the strength of the appellant's claim before the Tribunal, the Federal Magistrate acknowledged that the appellant's claim was founded upon the one child policy in China. However, the Federal Magistrate said that it was difficult to see what future harm the appellant would suffer on that basis. The Federal Magistrate also referred to the appellant's claim that she feared harm as a Catholic. He said at [16] of his reasons:
That claim, if accepted, might support the granting of a protection visa, but I am unable to express any view on the strength of it. Further, I do not accept the [appellant's] evidence that she told her migration agent of that claim at her first interview with him but that he left it out of her statement, and falsely claimed her religion to be Buddhist…It is a claim that could be considered by the Minister if he was minded to do so. In my view, the existence of a claim for protection that has not been previously considered does not outweigh the considerations of the length of the [appellant's] delay in bringing these proceedings, and my rejection of the [appellant's] explanation for that delay.
39 Finally, the Federal Magistrate observed:
I find that the delay by the [appellant] in commencing the present proceedings following the conclusion of the Muin and Lie class action was unwarranted. I reject her explanation for the delay. The surrounding circumstances support the withholding of relief in the exercise of discretion. I will, therefore, order that the application be dismissed.
THE APPEAL
Amended notice of appeal
40 On 29 August 2008, the appellant filed a notice of appeal. By an amended notice of appeal filed on 31 October 2008, the appellant raised six grounds of appeal.
41 I granted the appellant leave to rely on her amended notice of appeal.
Application for leave to adduce additional evidence
42 At the commencement of the hearing of the appeal, the appellant sought leave to rely upon additional evidence which was not before the court below. The evidence on which the appellant seeks to rely is that contained in an affidavit sworn by the appellant on 31 October 2008. The appellant deposed to the claims she would make to the Tribunal about her Catholicism, in the event that her case is remitted to the Tribunal. I accepted the affidavit provisionally and said that I would rule on its admissibility in these reasons.
43 Counsel for the appellant argued that the evidence should be admitted because the Federal Magistrate's reasons establish "a new principle or burden on applicants in cases where the Court is considering withholding relief on the basis of delay". This new principle was said to be that the applicant must bring evidence of the merits of a claim to be a refugee to the court, so the court can assess the strength of a claim that was not considered by the Tribunal. Counsel for the appellant based her argument on a comment by the Federal Magistrate that the appellant's claim, if accepted, might support the granting of a protection visa, but that he was unable to express a view on the strength of it.
44 In my view, the Federal Magistrate did not establish a new principle. The Federal Magistrate recognised that it may be open to the appellant to seek to rely upon a different or additional ground if the matter was remitted to the Tribunal. However, this prospect was also recognised by the appellant at the hearing before the Federal Magistrate on 12 August 2007. This accounts for the reference to the claim relating to Catholicism in the appellant's affidavit. All that the Federal Magistrate was saying in his reasons was that on the basis of the evidence before him, he was not able to make any assessment of the strength of the claim. There is nothing novel in this approach. It was always open to the appellant to have led the evidence which the appellant now seeks to lead before the Federal Magistrate. The evidence is, accordingly, not fresh evidence and is not admissible.
45 In addition, the appellant did not comply with O 52 r 36 of the Federal Court Rules.
Ground one
46 The first ground of appeal is that the Federal Magistrate erred by imposing the burden of proof on the appellant. It was said that the court took an approach of effectively requiring the appellant to show why relief should be granted, rather than requiring the respondents to show why relief should not be granted.
47 The appellant contended that the error of the Federal Magistrate was demonstrated by two factual matters. First, the Federal Magistrate appeared to assume that the migration agent was competent, diligent and/or honest and this imposed a greater evidentiary and persuasive burden on the appellant. Secondly, the Federal Magistrate appeared to hold against the appellant her inability to explain the alleged conduct and motives of the migration agent, and this reinforced the evidentiary and persuasive burden on the appellant, rather than on the first respondent.
48 In my view, there was no error by the Federal Magistrate. Insofar as there was a persuasive onus on the first respondent, the first respondent discharged the onus. The first respondent had demonstrated that there was a long period of delay and relied principally upon the appellant's evidence that she took no steps to advance her case since 2003, when she lost contact with her migration agent. Further, the Federal Magistrate accepted the first respondent's contention that the appellant's explanation for the delay, namely, that she thought the migration agent was still dealing with her case and would contact her, was implausible.
49 As to the appellant's contention that the Federal Magistrate erred in making assumptions about the propriety of the migration agent, this misapprehends the position. It was the appellant that was asserting that the migration agent acted improperly by inserting false addresses and a false religious denomination into the visa application, and in leaving out a claim based on her Catholicism. This allegation was made in the face of the fact that the appellant had signed the visa application confirming the correctness of the information contained therein. It was incumbent on the appellant to lead plausible evidence in support of her contention that the migration agent had acted improperly. This she failed to do. The Federal Magistrate found that it was inherently implausible a migration agent would insert a false address in a visa application form and then some time later send the Tribunal a second false address or would leave out an obvious claim made by the appellant during the course of a two hour interview at a time when the visa application and statement were prepared by the migration agent. The Federal Magistrate also referred to the fact that the appellant was unable to explain the inconsistency in her evidence that the migration agent had contacted her by telephone at an address she had not given to the agent. It was, in my view, open to the Federal Magistrate to come to the view that the appellant's evidence in support of this contention was implausible.
50 The appellant impugned the comments of the Federal Magistrate in his reasons to the effect that the appellant could give no explanation for why the migration agent would include false information in the visa application or leave out the claim based on Catholicism. The appellant relied upon observations of the High Court in the case of Palmer v The Queen (1998) 193 CLR 1 (Palmer) in support of this submission. Palmer was a case involving a sexual offence. In Palmer, the majority observed that there was a danger that the jury would be misled by questions to the accused as to whether he had any explanation as to why the complainant would lie. In my view, the observations of the High Court have no application in these circumstances. They refer to the risk of a jury being misled by questions of that kind. In making observations as to the appellant's lack of explanation, the Federal Magistrate was doing no more than saying that when given an opportunity to point to any circumstances which may support her contention as to the migration agent's impropriety, she was unable to do so. The Federal Magistrate was not, thereby, imposing any additional burden on the appellant but reporting the evidence as it unfolded before him.
51 I, accordingly, dismiss ground one of the grounds of appeal.
Ground two
52 The second ground of appeal is that the Federal Magistrate erred in taking into account the prospect that the appellant may take her claim based on her Catholicism to the first respondent for separate consideration.
53 The Federal Magistrate noted at [16] of his reasons that the appellant's claim based on her Catholicism "is a claim that could be considered by the Minister if he was minded to do so". Both parties have taken this to mean that the first respondent could exercise his or her discretion under s 417 of the Act, which allows the Minister to substitute his or her own decision for that of the Tribunal, if he or she thinks that it is in the public interest and if the Minister's decision is more favourable than the Tribunal's decision.
54 The appellant contended that the Federal Magistrate, by considering this factor, has erroneously and inappropriately equated the process under s 417 of the Act to the process that applies when a person applies for a protection visa. These procedures, said the appellant, should not be equated.
55 In my view, the Federal Magistrate did not equate the process under s 417 of the Act to that of the review process before the Tribunal. The Federal Magistrate dealt with the potential claim that the appellant may raise before the Tribunal if the matter was remitted to the Tribunal. He gave little weight to the existence of that claim because there was little evidence before him elucidating the claim. Further, the Federal Magistrate had rejected the evidence of the appellant that she had told her migration agent of the claim based upon her Catholicism. It was open to the Federal Magistrate to adopt that approach.
56 The Federal Magistrate made his observations in relation to the existence of a further process under s 417 as a subsidiary comment. It was a subsidiary comment because he had already come to the view that he was unable to place significant weight on the existence of the appellant's potential additional claim based upon her Catholicism. The reference by the Federal Magistrate to the process under s 417 did not affect the exercise of his discretion based on the existence of the additional potential claim. This is apparent from the Federal Magistrate's reference to weighing up the existence of the potential claim against the length of the delay, in the concluding sentence to [16] of his reasons.
Ground three
57 The third ground of appeal is that the Federal Magistrate erred in taking into account that the former s 426 of the Act was not an imperative obligation, in circumstances where the first respondent conceded that the Tribunal's decision was affected by jurisdictional error.
58 The appellant submitted that the Federal Magistrate erred by not giving due weight to the concession by the first respondent that the Tribunal's decision was affected by jurisdictional error. The appellant said that the Federal Magistrate's comment that s 426 was no longer in the same terms as prevailed at the time that the notice was sent to the appellant, was not relevant to the question of whether to withhold relief in the exercise of the discretion. The appellant also submitted that insofar as the Federal Magistrate had regard to public policy considerations, these considerations should inform the question of whether there was jurisdictional error in the first place. Once such error is conceded, as it has been here, said the appellant, the inquiry into public policy considerations was no longer relevant.
59 The Federal Magistrate distinguished between those cases where the discretion to withhold relief was exercised on the basis of delay by the party seeking the relief, and those cases where it is withheld on other grounds. The Federal Magistrate characterised the decision of the Full Court in SZIQB as falling into the former category, and the decision of the Full Court in SZIZO as falling into the latter category.
60 In the case of SZIQB, the Full Court observed at [30]:
We consider it appropriate to start from the position that an applicant for judicial review of an administrative decision made more than seven years earlier is required to offer a satisfactory explanation of why the application was not made earlier. The evidence and submissions of the first respondent bearing on this issue do not constitute a satisfactory explanation. Rather they have satisfied us that he deliberately undertook a course of conduct that would render it difficult, if not impossible, for the Tribunal, his migration agent and the Department of Immigration to find him. We are also satisfied that he made no real effort to ascertain the fate of his application to the Tribunal. These considerations render it unnecessary for us to consider the apparent strength of the first respondent's claim to be entitled to a protection visa. (Emphasis added.)
61 The Federal Magistrate considered the circumstances of this case for the purposes of demonstrating that the "exceptional circumstances" preclusion referred to in SZIZO did not apply, and that it was, therefore, open to the court to withhold relief. However, in light of the observations of the Full Court in SZIQB referred to at [60] above and the Federal Magistrate's findings that the appellant's delay in commencing the proceedings was unwarranted, it was unnecessary for the Federal Magistrate to have regard to whether there was a further ground on which to withhold relief in the exercise of the discretion. On the authority of SZIQB, the appellant's unwarranted delay was a sufficient basis to support the Federal Magistrate's decision.
62 In any event, it was open to the Federal Magistrate to have regard to the nature of the jurisdictional error and its impact upon the impugned decision and decision‑making process in considering whether to withhold relief in the exercise of his discretion (SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at 618 and 623‑631 (SZBYR)). In SZBYR, the High Court emphasised the discretionary nature of the relief granted under the constitutional writs, and, whilst recognising a number of established categories when relief may be withheld, did not state that the categories were closed nor that the circumstances which could be taken into account were circumscribed. Accordingly, I do not accept the submission of the appellant that the Federal Magistrate erred in having regard to those circumstances.
63 I, accordingly, dismiss this ground of appeal.
Ground four
64 The fourth ground of appeal is that the Federal Magistrate erred in attributing certain knowledge, motivation and levels of competence to the appellant's migration agent without any evidentiary basis.
65 The appellant submitted that the Federal Magistrate erred by attributing a level of diligence, competence and honesty to the migration agent, without any evidentiary basis for doing so. There was, said the appellant, no material before the court from which the Federal Magistrate could infer that the migration agent was competent, diligent or honest.
66 This ground of appeal raises the same considerations as are raised in relation to the first ground of appeal. As I have previously held, it was incumbent upon the appellant to adduce plausible evidence in support of her claim that the agent had acted improperly. This was particularly so in light of her previously having certified the correctness of the information in the visa application. This she failed to do. Accordingly, I dismiss this ground of appeal.
Ground five
67 The fifth ground of appeal is that the Federal Magistrate erred in taking into account the appellant's inability to explain the motivation of her migration agent in the alleged conduct of the migration agent, where it was unfair to require the appellant to do this.
68 This ground of appeal raises the same considerations as were dealt with in the first ground of appeal. For the reasons given in relation to this contention when considering the first ground of appeal, I dismiss this ground of appeal.
Ground six
69 The sixth and final ground of appeal is that the Federal Magistrate erred in finding that the appellant's oral evidence to the Court, given on 12 April 2007, was inconsistent with her affidavit evidence.
70 In her written submissions, the appellant construed the Federal Magistrate's observations on inconsistencies to mean that he found the appellant's oral evidence that she trusted her migration agent, to be inconsistent with her subsequent affidavit evidence that she no longer trusted him. The appellant submitted that there was no such inconsistency because the appellant had said that she trusted her migration agent in both her oral and her affidavit evidence.
71 The first respondent submitted that the appellant had mistaken the inconsistencies to which the Federal Magistrate referred. The first respondent contended that the inconsistencies could be identified by comparing the transcript of the interlocutory hearing with the affidavit. Examples of inconsistencies included that the appellant said at the hearing that she became aware of the Tribunal's decision in 1999, whereas in her affidavit, she said she became aware of it in 2000; the appellant said at the hearing that she was detained by immigration officials for one day in 2000, whereas in her affidavit she said she was detained for three days; and approximations of dates on which the appellant met her migration agent differed in her oral and affidavit evidence.
72 At the hearing, counsel for the appellant suggested that these inconsistencies were trivial. She claimed that these minor inconsistencies informed the Federal Magistrate's decision that key parts of the appellant's evidence were unsatisfactory and should be rejected.
73 In my view, the first respondent's contention as to the inconsistencies to which the Federal Magistrate was referring in his reasons, is to be accepted. The Federal Magistrate said at [8] of his reasons that the appellant "acknowledged factual inconsistencies" between her oral and affidavit evidence. This was a reference to a concession which the appellant made during her cross‑examination. It is to be inferred that the concession related to the matters identified by the first respondent.
74 It was open to the Federal Magistrate to refer to the appellant's acknowledgement of the inconsistencies in her evidence. He did not err in making reference to the inconsistencies and placing some weight on the inconsistencies. They were not, as the appellant suggested, trivial.
75 It was also open to the Federal Magistrate to prefer the oral evidence that the appellant gave on 12 April 2007 to that contained in her subsequent affidavit. He was in the position to make that judgment. I have understood the Federal Magistrate's reference to preferring the appellant's oral evidence on 12 April 2007 to be directed primarily to the evidence that the appellant gave during cross‑examination that she did nothing to find out what had happened in relation to the class action during the period 2003 to 2007 "because I knew [the migration agent's] office had been closed and I didn't try to contact him again". During her oral evidence, the appellant did not say anything about continuing to hold a belief, after she found that the migration agent's office had closed, that the migration agent was still working on the case and that he would contact her if there was a further development – which is what she deposed to in her affidavit.
76 Further, the Federal Magistrate's rejection of the appellant's evidence was not based only on the findings as to the inconsistencies and the preference for the oral evidence of 12 April 2007, but also on the inherent implausibility of the appellant's evidence in relation to the migration agent giving the Tribunal false addresses, misstating her religion and leaving out her claim founded on her Catholicism, as well as the appellant's inability to explain how the migration agent could have telephoned her, as she said that he did, when she had not given him the telephone number for the address at which she was then staying. It was also based on the implausibility of the appellant's evidence that she continued to believe that the migration agent was still working on her case and would contact her. It was open to the Federal Magistrate to reject the appellant's evidence on these grounds.
77 This ground of appeal is dismissed.
78 The appeal is dismissed with costs.
I certify that the preceding seventy‑eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.
Associate:
Dated: 20 April 2009
Counsel for the Appellant: Ms L Clegg
Solicitor for the Appellant: Gilbert + Tobin
Counsel for the First Respondent: Mr S Lloyd
Solicitor for the First Respondent: Sparke Helmore
Date of Hearing: 17 November 2008
Date of Judgment: 20 April 2009
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SZMAD v Minister for Immigration & Citizenship [2008] FCA 1275
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2008/2008fca1275
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2024-09-13T22:50:28.850575+10:00
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FEDERAL COURT OF AUSTRALIA
SZMAD v Minister for Immigration & Citizenship [2008] FCA 1275
SZMAD v MINISTER FOR IMMIGRATION & CITIZENSHIP AND REFUGEE REVIEW TRIBUNAL
NSD 842 OF 2008
JACOBSON J
12 AUGUST 2008
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 842 OF 2008
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZMAD
Appellant
AND: MINISTER FOR IMMIGRATION & CITIZENSHIP
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: JACOBSON J
DATE OF ORDER: 12 AUGUST 2008
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the first respondent's costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 842 OF 2008
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZMAD
Appellant
AND: MINISTER FOR IMMIGRATION & CITIZENSHIP
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: JACOBSON J
DATE: 12 AUGUST 2008
PLACE: SYDNEY
REASONS FOR JUDGMENT
Introduction and Background
1 This is an appeal from orders made by Driver FM dismissing an application for review of a decision of the Refugee Review Tribunal dated 23 January 2008. The Tribunal affirmed a decision of a delegate of the Minister not to grant the appellant a protection visa.
2 The appellant is a citizen of the People's Republic of China. He arrived in Australia on 19 June 2007 on a passport issued in a name different from his actual name. He applied for a protection visa on 19 July 2007. The delegate refused the protection visa in a decision notified to the appellant on 12 October 2007.
3 The appellant claimed to have a well-founded fear of persecution on political grounds. His claims were set out in a statutory declaration sworn on 19 July 2007. He claimed to have worked as an engineer in a state-owned construction company and said that in early 2000 he established a construction team to enter into, and carry out, contracts forvarious building projects.
4 A person, who I will refer to as Mr Q, began to work for the appellant's construction team in around 2003. During 2005 the appellant's construction team was engaged in the construction of a primary school in Mr Q's home province. However, an amount of approximately RMB800,000 was owed to the appellant's company by the local government authority for which the school was constructed.
5 The appellant went on to swear in his statutory declaration that he and Mr Q organised a sit-in during December 2006 in order to put pressure on the government authority to pay the unpaid construction fees. However, the appellant said the protest was suppressed by the police and that he and Mr Q were arrested because they were said to have been involved in an anti-government movement. The appellant also claimed that he and Mr Q were detained for more than a month by the public security bureau (PSB) in the period from December 2006 to January 2007. He said they were interrogated by the police but that they were finally released about the end of January 2007.
6 The appellant also claimed in his statutory declaration that he and Mr Q were involved in a large rally in Mr Q's home province as a consequence of the death of Mr Q's brother who apparently died from AIDS. He said that police surrounded the village and a number of local villagers were arrested. He also said that he had been wanted by the PSB ever since then as a result or organising anti-government activities. He claimed that he was in hiding in "a secret place" for some period before he eventually left China.
The Decision of the Refugee Review Tribunal
7 The Tribunal was satisfied that the appellant left China under a false passport. The Tribunal said that it would deal later in its reasons with the question of whether the reason the appellant left under a false passport was due to a fear of persecution or some other reason. However, it did not directly do so. It is important to note though, that the Tribunal did make a finding that the appellant did not hold a well-founded fear of persecution.
8 The Tribunal was satisfied that although the appellant referred in his statutory declaration to his wish to help AIDS sufferers, his claims when considered as a whole were based upon the difficulties he had with the authorities arising from the failure to pay the outstanding construction fees. The Tribunal was of the view that the substance of the claim was that corrupt officials wanted to stop the appellant demanding money owed by the local government to the appellant's company.
9 The Tribunal accepted that the appellant and Mr Q had participated in the sit-in in December 2006. (The Tribunal referred to December 2005 but this seems to be a typographical error). The Tribunal accepted that this claim was motivated by the appellant's desire to be paid the balance of the money owed to his firm.
10 The Tribunal also accepted that the appellant and Mr Q were detained by the police for several weeks in December 2006. Moreover, the Tribunal was of the view that the appellant was ill-treated at that time, observing that such treatment unfortunately seems to be commonplace in police stations in China.
11 However, the Tribunal did not accept the appellant's evidence as to the events said to have occurred in April 2007. The Tribunal said that it had carefully considered the appellant's evidence about the Memorial Day gathering in support of AIDS victims and the protests which were said to have been undertaken at that time against corrupt officials but it rejected that evidence.
12 The Tribunal gave a number of reasons for this finding. The substance of the reasons was that the appellant did not give clear explanation and in some respects that the claim was "far-fetched" and inconsistent with other evidence, in particular that the police had unconditionally released him in January of that year. The Tribunal was satisfied that if the authorities had been aware of the appellant's presence at the April 2007 protest and had wished to arrest him they could readily have done so. The Tribunal went on to say that the failure of the authorities to arrest the appellant at that time "reliably indicates" that the authorities had no interest in detaining him. Accordingly the Tribunal was satisfied that the appellant did not have a well-founded fear of persecution in China on Convention grounds.
Decision of the Federal Magistrate
13 In his application for review before Driver FM, the appellant claimed that the Tribunal was biased because it accepted some major elements of his claim but rejected others. The appellant also asserted a breach of s 424A of the Migration Act 1968 (Cth). Federal Magistrate Driver, at [4], rejected the appellant's contentions. His Honour pointed out that the mere fact that a Tribunal accepts some claims and rejects others does not indicate bias or any unfairness in a legal sense. The learned Federal Magistrate was of the view that the Tribunal had adopted the correct approach to the question of whether the appellant had a well-founded fear of persecution within the principles stated by the High Court in Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559. The Federal Magistrate observed at [6] that the appellant was unable to persuade the Tribunal that he had a profile which would cause the authorities in China to have a continuing adverse interest in him.
14 The Federal Magistrate rejected the ground of review based on s 424A of the Act upon the basis that the particulars which the appellant identified as being particulars that were required under that section were merely difficulties which the Tribunal had in evaluating the appellant's evidence.
15 The learned Federal Magistrate also dealt with the question of the appellant's evidence that he had used a false passport to enter Australia. His Honour considered that the Tribunal should have answered that specific question but he considered that no jurisdictional error resulted because the Tribunal had answered the question it was required to answer pursuant to the Act, namely whether the appellant had a well-founded fear of persecution in China on Convention grounds.
The Appeal
16 The appellant appears this morning in person. He has had the assistance of Mandarin interpreter. He claimed that he had been unfairly treated by the Federal Magistrates Court and the Refugee Review Tribunal.
17 He made particular reference to the failure of the Tribunal to answer the question that it had posed for itself as to why he left China under a false passport. He also dealt with that question in his written submissions. His written submissions also dealt with the issue raised before the Federal Magistrate, namely that some of his evidence had been accepted and he therefore submitted that the Tribunal failed to properly apply the real chance test.
18 I have come to the view that there was no error in the learned Federal Magistrate's finding that the Tribunal applied the real chance test stated by the High Court in Guo, in particular at 572 and 574-577. As his Honour observed, the findings which the Tribunal made were open to it. Nor, in my view, is there any error in the Federal Magistrate's finding that the complaint made about the failure to deal expressly with the passport question disclosed no jurisdictional error. The answer to this contention is that for whatever reason the appellant left China under a false passport, it was not necessary for the Tribunal to consider that question expressly because it found that the appellant did not have a well-founded fear of persecution. That is to say, even if he had a subjective fear, he did not have an objective fear within the requirements of the Refugees Convention.
19 I have considered the other matters referred to in the Notice of Appeal and the appellant's written submissions. In my view there is no error in the reasons of the Federal Magistrate nor can I see any jurisdictional error in the decision of the Refugee Review Tribunal.
Conclusion and Orders
20 It follows that I order that the appeal be dismissed. I will order that the appellant pay the costs of the first respondent of the appeal.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.
Associate:
Dated: 19 August 2008
Counsel for the Appellant: The Appellant was self-represented.
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 12 August 2008
Date of Judgment: 12 August 2008
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Lamb v Sherman [2023] FCAFC 85
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2023/2023fcafc0085
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2024-09-13T22:50:28.905411+10:00
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FEDERAL COURT OF AUSTRALIA
Lamb v Sherman [2023] FCAFC 85
Appeal from: Sherman v Lamb [2023] FCA 168
File number: QUD 60 of 2023
NSD 450 of 2022
Judgment of: RARES, ROFE AND DOWNES JJ
Date of judgment: 25 May 2023
Date of final orders: 5 June 2023
Catchwords: BANKRUPTCY AND INSOLVENCY – appeal from making of sequestration order – where, at 4:37pm on last day for compliance, bankrupt lodged by electronic communication application to set aside bankruptcy notice under s 41(6A) of Bankruptcy Act 1966 (Cth) – whether application to set aside bankruptcy notice is "made" to the Court within meaning of s 41(6A)(b) by electronic lodgment of application or by its acceptance for filing – where r 2.01(1)(a) of Federal Court (Bankruptcy) Rules 2016 (Cth) provides application must be "made" by filing – where r 2.25(3) of Federal Court Rules 2011 deems electronic lodgment after 4:30pm to be filed, if accepted, on next business day – whether act of bankruptcy committed within six months before presentation of petition as required by ss 44(1)(c) and 52(1) of the Act – where Registrar purported to extend time for compliance with bankruptcy notice after application lodged – whether Registrar's orders extending time for compliance capable of affecting earlier act of bankruptcy – when application to set aside bankruptcy notice "made" within the meaning of s 41(6A) of the Act – held: appeal dismissed.
PRACTICE AND PROCEDURE – operation of rr 2.21-2.25 of Federal Court Rules 2011 regarding document lodgment and filing – when document lodged by electronic communication is filed pursuant to r 2.25.
Legislation: Bankruptcy Act 1966 (Cth) ss 33(1)(c), 40(1)(g), 41(6A), 41(7), 44(1)(c) and 52(1)
Federal Court of Australia Act 1976 (Cth) ss 25(6) and 35A
Federal Court (Bankruptcy) Rules 2016 (Cth) rr 1.04 and 2.01
Federal Court Rules 2011 rr 2.21(1), 2.23, 2.24, 2.25(1), 2.25(3), 2.26 and 2.27
Cases cited: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Guss v Johnstone (2000) 171 ALR 598
Johnston v Vintage Developments Pty Ltd [2006] FCAFC 171
Owners of the Ship "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404
Purden Pty Ltd v Registrar in Bankruptcy (1982) 43 ALR 512; 64 FLR 306
Re Daunt; Ex parte McIntyre and Yates (1905) 5 SR NSW 533
Streimer v Tamas (1981) 37 ALR 211; 54 FLR 253
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 65
Date of hearing: 25 May 2023
Date of last submissions: 31 May 2023
Counsel for the appellant: Mr G Handran KC and Mr R Kipps
Solicitor for the appellant: NicholasBlack Lawyers
Counsel for the respondent: Mr N Ferrett KC and Mr J Moxon
Solicitor for the respondent: Romans & Romans Lawyers
Table of Corrections
8 June 2023 Paragraph 3, line 5: The word "former" be added before the word "solicitors"
The words "(to whom we will refer as Ms Lamb's solicitors)" be added after the word "solicitors"
ORDERS
QUD 60 of 2023
NSD 450 of 2022
BETWEEN: SIOBHAN LAMB
Appellant
AND: SHELDON SHERMAN
Respondent
order made by: RARES, ROFE AND DOWNES JJ
DATE OF ORDER: 25 MAY 2023
THE COURT ORDERS THAT:
1. On or before 31 May 2023, the parties confer and provide draft orders to give effect to the Court's reasons delivered orally today and to deal with costs or, in the absence of agreement, file and serve draft orders and written submissions, with the written submissions to be limited to 1 page.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
QUD 60 of 2023
BETWEEN: SIOBHAN LAMB
Appellant
AND: SHELDON SHERMAN
Respondent
order made by: RARES, ROFE AND DOWNES JJ
DATE OF ORDER: 5 June 2023
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay 75% of the respondent's costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 450 of 2022
BETWEEN: SIOBHAN LAMB
Appellant
AND: SHELDON SHERMAN
Respondent
order made by: RARES, ROFE AND DOWNES JJ
DATE OF ORDER: 5 June 2023
THE COURT ORDERS THAT:
1. Order 2 made on 24 April 2023 be varied so that it reads:
"The question of what orders should be made in respect of the interim application filed on 27 March 2023 be referred for the consideration of the Full Court and heard together with the appeal in proceeding QUD60/2023"
2. The question referred to the Full Court in order 1 above be answered as follows:
"The orders which should be made in respect of the interim application filed on 27 March 2023 are:
1. Pursuant to r 1.39 of the Federal Court Rules 2011, time be extended so as to permit the respondent to bring the interim application filed on 27 March 2023.
2. Pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth), order 2 made on 14 July 2022 and order 2 made on 6 October 2022 be set aside.
3. The applicant pay 75% of the respondent's costs of the respondent's interim application."
[Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from the transcript)
THE COURT:
INTRODUCTION
1 The Court is deciding this appeal today because it involves the status of a person who has been made bankrupt and such matters ought, in the ordinary course, if practicable, be addressed with reasonable promptitude.
2 The appellant debtor, Siobhan Lamb, challenges the decision of a judge of the Court who made a sequestration order against her estate at the suit of the judgment creditor, Sheldon Sherman. The primary judge found that Ms Lamb had committed an act of bankruptcy by failing to comply within the 21 days permitted (that is, by 15 June 2022) with a bankruptcy notice issued on 22 April 2022 that Mr Sherman served on her on 25 May 2022.
3 The complication the subject of this appeal, which his Honour did not deal with in any detail in his reasons, was whether Ms Lamb did not need to comply with the bankruptcy notice. That was because, at 4:37pm on 15 June 2022, seven minutes after the time for a document to be lodged so that it would be deemed to have been filed on that day as prescribed in r 2.25(3)(a) of the Federal Court Rules 2011, Ms Lamb's former solicitors (to whom we will refer as Ms Lamb's solicitors) lodged electronically with the Court an application that purported to apply to set aside the bankruptcy notice, under s 41(6A) of the Bankruptcy Act 1966 (Cth).
4 The Registry accepted Ms Lamb's application for filing at 2:44pm on 16 June 2022. Shortly afterwards, on the same day, Mr Sherman lodged his creditor's petition for filing.
5 Subsequently, on 14 July 2022 and 6 October 2022, a Registrar made orders purporting to extend the time for compliance by Ms Lamb with the requirements of the bankruptcy notice until 6:00pm on first, 6 October 2022 and secondly, 24 November 2022 (the extension orders). After hearing the application on the latter day, the Registrar did not order any further extension and, on 8 December 2022, gave oral reasons for dismissing Ms Lamb's application.
THE ISSUES
6 Ms Lamb contends that the primary judge erred in:
failing to deal, in terms, with the effect of the extension orders and her argument that their consequence was to extend the time for compliance with the bankruptcy notice so that any act of bankruptcy could only have occurred after the presentation of the petition and, therefore, was outside the jurisdictional requirement in s 44(1)(c) of the Bankruptcy Act that, at the time of presentation, a petition must identify an existing act of bankruptcy; and
finding that, despite her application under s 41(6A) and the extension orders, she had committed an act of bankruptcy on 15 June 2022 by not complying with the bankruptcy notice.
7 In turn, Mr Sherman seeks orders nunc pro tunc (which he did not seek below) that he be granted leave, first, to challenge, on a review under s 35A of the Federal Court of Australia Act 1976 (Cth), the Registrar's extension orders which he now seeks be set aside on the basis that they had been made without jurisdiction (because Ms Lamb's application to set aside the bankruptcy notice had not been filed within the time it fixed for compliance, as required by s 41(6A) of the Bankruptcy Act) and, secondly, to amend the petition to assert that Ms Lamb had committed an act of bankruptcy on 25 November 2022, after the Registrar had refused to grant Ms Lamb any further time for compliance with the bankruptcy notice. On 24 April 2023, Rares J ordered that the first of these issues, that arose in the proceeding that Ms Lamb instituted by the application under s 41(6A), be referred to this Full Court pursuant to s 25(6) of the Federal Court Act.
BACKGROUND
8 The parties agreed the following facts about the progress of the application, namely:
Ms Lamb was served with the bankruptcy notice on 25 May 2022 and had until 15 June 2022 to comply with it. The bankruptcy notice required her to either pay the amount claimed by Mr Sherman as the judgment creditor, settle with him to his satisfaction or apply to set it aside before the time for compliance;
at 4:37pm on 15 June 2022, Ms Lamb's solicitors electronically lodged using the Court's electronic filing system her application to set aside the bankruptcy notice;
Ms Lamb's solicitors emailed an unsealed copy of the application and its supporting affidavit to Mr Sherman's solicitors at 5:34pm that afternoon;
at 2:27pm and 2:28pm on 16 June 2022, Mr Sherman's solicitors conducted searches on the Commonwealth Courts Portal which did not disclose that any application to set aside the bankruptcy notice had been filed;
at 2:44pm on 16 June 2022, the Registry accepted Ms Lamb's application for filing;
at 3:16pm on 16 June 2022, Mr Sherman's solicitors lodged the petition electronically and served Ms Lamb with it at 3:40pm on that day;
on 14 July 2022, at the first hearing of the application before the Registrar, both parties were legally represented, the Registrar made the first of the extension orders and adjourned the hearing of the application to 6 October 2022;
on 6 October 2022, the Registrar made the second of the extension orders and adjourned the hearing of the application to 24 November 2022;
on 24 November 2022, the Registrar heard the application and reserved his decision, but made no orders extending the time for compliance with the bankruptcy notice; and
on 8 December 2022, the Registrar gave oral reasons and dismissed the application.
9 On 27 March 2023, Mr Sherman filed an application under s 35A of the Federal Court Act to review the Registrar's decisions to make the extension orders.
10 The parties also agreed the following facts about the progress of the petition as it progressed concurrently with, but separately to, the application, namely:
on 6 July 2022, another Registrar ordered Ms Lamb to file and serve any notice stating her grounds of opposition to the petition and affidavits by 4:00pm on 20 July 2022. Ms Lamb did not file any notice of grounds of opposition or affidavits until 7 February 2023 and, thus, did not comply with the order of 6 July 2022;
on 27 July 2022, another Registrar adjourned the hearing of the petition to 19 October 2022;
on 19 October 2022, the latter Registrar adjourned the hearing of the petition to 30 November 2022;
on 30 November 2022, another Registrar adjourned the hearing of the petition to 8 February 2023;
on 7 February 2023, Ms Lamb filed a notice of opposition in which, relevantly, she asserted that, first, pursuant to s 52(2)(a) of the Bankruptcy Act, she was solvent and able to pay her debts, and, secondly, "[t]he petition is defective as it incorrectly identifies the act of bankruptcy alleged to have been taken by [Ms Lamb]". The notice of opposition raised four other grounds with which it is not necessary for us to deal; and
on 8 February 2023, Mr Sherman's counsel asserted in their outline of submissions that orders of the Court to extend time on an application to set aside a bankruptcy notice necessarily fell away if that application were dismissed, as his Honour did in the event.
11 On 2 May 2023, Mr Sherman filed an application in the appeal seeking to amend the petition to assert that Ms Lamb committed an act of bankruptcy on 25 November 2022.
THE PROCEEDING BEFORE THE PRIMARY JUDGE
Background
12 The matter came before the primary judge on 8 February 2023, but, in part because of connectivity issues with the hearing taking place on Microsoft Teams, his Honour was unable to deal with it on that day and adjourned the hearing of the petition to 10 February 2023.
13 When the matter was returned before his Honour, on 10 February 2023, Ms Lamb sought, and was refused, an adjournment of the hearing of the petition. With his Honour's leave, she filed an amended notice of grounds of opposition and an outline of submissions that, among other matters, contended that the petition was defective and that the extension orders validly had extended the time for compliance with the bankruptcy notice to 24 November 2022, relying on the decision of Deane and Ellicott JJ in in Streimer v Tamas (1981) 37 ALR 211; 54 FLR 253.
14 Mr Sherman's counsel relied on their outline of submissions and orally submitted that Ms Lamb's factual assertions that there was a defect in the petition were "made in error."
15 After hearing evidence and argument, his Honour gave an ex tempore judgment and made the sequestration order.
The primary judge's reasons
16 His Honour found that, from at least 8 December 2022, if not earlier, Ms Lamb was on notice that the petition was likely to be heard on 8 February 2023, when it had been listed. His Honour noted some personal matters which Ms Lamb asserted in support of her unsuccessful adjournment application, but nothing turned on those on the appeal. He was satisfied that Ms Lamb had had sufficient time to put on whatever evidence and arguments were necessary for her to oppose the petition.
17 His Honour found that Mr Sherman had proved the matters that s 52(1) of the Bankruptcy Act required, namely, the commission of an act of bankruptcy on 15 June 2022, service of the petition on Ms Lamb, and that the judgment debt was still owing. The primary judge concluded that the remaining question was whether, as a matter of discretion, he ought make a sequestration order against Ms Lamb's estate. His Honour set out the grounds of opposition and then said (at [18]):
Not all of these were pressed after amendments. Some of those grounds may be dealt with in short order in any event. The petition is not inaccurate in relation to its identification of the act of bankruptcy. Further, I am quite satisfied from the court record that the petition was filed before an application to set aside the bankruptcy notice was made. Further, and in any event, that application has been dismissed.
(emphasis added)
18 His Honour was not satisfied by Ms Lamb's evidence that she was solvent within the meaning of ss 5(2) and (3) of the Bankruptcy Act, namely, that she was able to pay all her debts as and when they became due and payable, and rejected Ms Lamb's other grounds of opposition. He was satisfied that Mr Sherman had proven the act of bankruptcy and the necessary matters required under s 52(1) of the Bankruptcy Act and then made the sequestration order.
THE LEGISLATIVE SCHEME
19 Relevantly, the Bankruptcy Act provides:
33 Adjournment, amendment of process and extension and abridgment of times
(1) The Court may:
…
(c) extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with a bankruptcy notice), for doing an act or thing or abridge any such time.
40 Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia … a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia—within the time fixed for compliance with the notice; or
…
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
41 Bankruptcy notices
(6A) Where, before the expiration of the time fixed for compliance with a bankruptcy notice:
(a) proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or
(b) an application has been made to the Court to set aside the bankruptcy notice;
the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.
(7) Where, before the expiration of the time fixed for compliance with a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
44 Conditions on which creditor may petition
(1) A creditor's petition shall not be presented against a debtor unless:
…
(c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.
52 Proceedings and order on creditor's petition
(1) At the hearing of a creditor's petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
(emphasis added)
20 The Federal Court (Bankruptcy) Rules 2016 (Cth) relevantly provide:
1.04 Application of these Rules and other Rules of the Court
(1) Unless the Court otherwise orders:
(a) these Rules apply to a proceeding in the Court to which the Bankruptcy Act applies;
…
(2) The other Rules of the Court apply, to the extent that they are relevant and not inconsistent with these Rules:
(a) to a proceeding in the Court to which the Bankruptcy Act applies;
2.01 Originating application and interim application
(1) Unless these Rules otherwise provide, a person must make an application required or permitted by the Bankruptcy Act to be made to the Court:
(a) if the application is not made in a proceeding already commenced in the Court—by filing an application in accordance with Form B2;
(emphasis added)
21 The note under r 2.01 lists numerous examples of applications under the Bankruptcy Act that must be made by filing a Form B2, but does not include, expressly, an application under s 41(6A) of the Bankruptcy Act. However, Pt 3 of the Federal Court (Bankruptcy) Rules is headed 'Bankruptcy notices' and provides, in r 3.02, what an application to set aside a bankruptcy notice under s 41(6A) of the Act must include, but that rule says nothing about the form in which such an application is to be made. Thus, because the Federal Court (Bankruptcy) Rules do not otherwise provide, r 2.01(1)(a) required that Ms Lamb make the application, as she did, in accordance with Form B2.
22 Next, the Federal Court Rules in Div 2.3, headed 'Lodging and filing documents', contain a detailed scheme for identifying how documents may be lodged with the Court and when they are actually, or are deemed to have been, filed. In 2014, the Court introduced its electronic court file and made amendments to the Federal Court Rules to deal with this innovation. There are now four modes of lodging documents prescribed in r 2.21(1). Relevantly, r 2.23(1) sets out the technical requirements for sending a document for filing to a Registry by electronic communication and rr 2.21 and 2.24 to 2.25 in Div 2.3 provide:
2.21 How documents may be lodged with the Court
(1) A document may be lodged with the Court by:
(a) being presented to a Registry when the Registry is open for business; or
(b) being posted to a Registry with a written request for the action required in relation to the document; or
(c) being faxed to a Registry in accordance with rule 2.22; or
(d) being sent by electronic communication to a registry, in accordance with rule 2.23.
…
2.24 Documents sent by electronic communication
(1) If a document sent to a Registry by electronic communication in accordance with rule 2.23 is accepted at the Registry, and is a document that must be signed or stamped, a Registrar will:
(a) for a document that these Rules require to be endorsed with a date for hearing—insert a notice of filing and hearing as the first page of the document; or
(b) for any other document—insert a notice of filing as the first page of the document.
(2) If a notice has been inserted as the first page of the document in accordance with subrule (1), the notice is taken to be part of the document for the purposes of the Act and these Rules.
2.25 When is a document filed
(1) A document is filed if:
(a) it is lodged with the Court in accordance with rule 2.21(1); and
(b) either:
(i) for a document in an existing proceeding—it is accepted in the proper Registry by having the seal of the Court affixed to it; or
(ii) in any other case—it is accepted in a Registry by having the seal of the Court affixed to it.
Note: A document that is accepted for filing is added to the Court file. See the definition of Court file in the Dictionary.
…
(3) If a document is faxed or sent by electronic communication to a Registry, the document is, if accepted by a Registry under subrule (1), taken to have been filed:
(a) if the whole document is received by 4.30 pm on a business day for the Registry—on that day; or
(b) in any other case—on the next business day for the Registry.
Note 1: Business day is defined in the Dictionary.
Note 2: File is defined in the Dictionary as meaning file and serve.
Note 3: Because of the Court's computer security firewall, there may be a delay between the time a document is sent by electronic communication and the time the document is received by the Court.
23 In addition, r 2.26 gives a registrar a discretion to refuse to accept a document, including one that, if accepted, would become an originating application if the registrar is satisfied that the document would be an abuse of the process of the Court or is frivolous or vexatious on its face or by reference to any documents already filed or submitted for filing with it. And r 2.27 sets out when a document will not be accepted for filing, including where it does not substantially comply with the Federal Court Rules.
24 The dictionary to the Federal Court Rules provides that an originating application "means an application starting a proceeding".
THE PARTIES' SUBMISSIONS
25 The sole issue on Ms Lamb's appeal is whether she had "made" her application under s 41(6A) before the time for compliance with the bankruptcy notice had expired so that the extension orders had the effect of extending the time for compliance to after 15 June 2022. That would result in the petition not being able to have satisfied the requirement in s 44(1)(c) (as s 52(1)(a) mandated), that the act of bankruptcy on which it was founded had been committed within six months before its presentation.
26 Ms Lamb submitted that she had lodged the application electronically within the meaning of the Federal Court Rules when the Court received it at 4:37pm on 15 June 2022 and that, first, that receipt constituted her "making" the application within the meaning of s 41(6A) of the Bankruptcy Act, and secondly, the effect of the extension orders was to extend the time for compliance with the bankruptcy notice to 24 November 2022. She contended that this necessarily meant that any act of bankruptcy on which the petition could have relied could not have been committed until 25 November 2022, being the day after the last extension.
27 Mr Sherman contended that Streimer 37 ALR 211 was plainly wrong because, unless and until the Court made an extension order and an extension order remained in place throughout the proceeding, an incurable act of bankruptcy would occur, regardless of a mistake of the kind that occurred in that decision, namely that the judge had overlooked continuing an extension order when adjourning overnight. He submitted that he should be allowed to seek to set aside the Registrar's extension orders, first, on this basis and, secondly, because the application was made only when it was accepted for filing on 16 June 2022, being after the time for compliance with the bankruptcy notice had expired.
CONSIDERATION
Did Ms Lamb commit an act of bankruptcy on 15 June 2022?
When an application is "made"
28 Although Ms Lamb's solicitors lodged her application under r 2.21(1)(d) of the Federal Court Rules on the last day for compliance with the bankruptcy notice, that lodgment occurred after 4:30pm. The critical question here is, when was that application under s 41(6A) "made"?
How the legislative provisions operate
29 A debtor commits an act of bankruptcy by force of s 40(1)(g) of the Bankruptcy Act if he or she has been served in Australia with "a bankruptcy notice under this Act" and does not "within the time fixed for compliance with the notice" comply with its requirements or satisfy the Court that he or she has a counterclaim, set-off or cross-demand of the kind specified in s 40(1)(g). However, if, before the expiration of the time fixed for compliance with the bankruptcy notice, the debtor has applied to the Court for an order to set the bankruptcy notice aside on the ground that he or she has a counterclaim, set-off or cross-demand referred to in s 40(1)(g) and the Court has not determined that question before the expiration of the time for compliance, then s 41(7) deems that the time for compliance is extended until and including the day on which the Court determines that issue.
30 In that context, s 41(6A) can be seen to operate consistently with the scheme of the Bankruptcy Act in providing certainty as to whether a debtor has committed an act of bankruptcy. That is because the section requires that, as a jurisdictional precondition of the Court having power to make any order extending the time for compliance with a bankruptcy notice or setting it aside, the debtor "make" that application to the Court before the expiration of the time for compliance with the bankruptcy notice.
31 As explained above, because an application to set aside a bankruptcy notice is not one in a proceeding already commenced, r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules provides that "a person must make" it "by filing an application in accordance with Form B2" (emphasis added). The Federal Court (Bankruptcy) Rules apply the Federal Court Rules as to how documents are filed in the Court (r 1.04(2)(a)). Thus, in order to determine when an application under s 41(6A) is made to the Court for the purposes of r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules, it is necessary to consider the operation of rr 2.21-2.25 of the Federal Court Rules.
32 Rules of Court cannot be, or prescribe matters, inconsistent with the Act under which they are made, but they can prescribe how applications to the Court are to be made. The Federal Court Rules prescribe a scheme by which documents, including in particular ones commencing a proceeding, such as an application to set aside a bankruptcy notice under s 41(6A), can be filed in the Court, and make provision for their lodgment anterior to the act of filing. There was no argument that these rules are inconsistent with s 41(6A) of the Bankruptcy Act. The relevant Federal Court Rules set out in [22] above provide how a document will come to be filed if it has been lodged with the Court by being sent by electronic communication to a Registry in accordance with the technical requirements for electronic communication prescribed in r 2.23 (see r 2.21(1)(d)).
33 Rule 2.24(1) prescribes that where the Federal Court Rules require that a document that has been sent to a Registry by electronic communication be signed or stamped by a registrar, then the registrar must "insert a notice of filing and hearing as the first page of the document" (emphasis added). Necessarily, an application under s 41(6A) needs a hearing date and a Court file since it commences a proceeding in the Court. Ordinarily, in order to serve such an application on the petitioning creditor, the debtor needs to have the formal court process, being a sealed application that has a hearing date endorsed on it. Rule 2.24(2) operates so that when the registrar signs or stamps a document, that must be endorsed with a notice of filing and date for hearing. Such a notice is a document created by the Registry as a record of the filing and becomes the first page of the application that the person seeking to make it had earlier lodged by sending it to the Registry by electronic communication.
34 Rule 2.25 prescribes how and when a document is filed in the Court Registry. That process requires, first, the act of the litigant lodging the document with the Court in accordance with rule 2.21 (r 2.25(1)(a)) and secondly, it being accepted in a Registry by having the seal of the Court affixed to it (r 2.25(1)(b)(ii)).
35 Here, because Ms Lamb lodged her application at 4:37pm on 15 June 2022, by force of r 2.25(3)(b) it was deemed to have been filed on the next business day, being 16 June 2022, when, in fact, the Registry accepted it for filing at 2:44pm and inserted, as its first page, the notice of filing and a hearing date of 7 July 2022.
36 An application can only be made to the Court to set aside a bankruptcy notice under s 41(6A) of the Bankruptcy Act by taking a step in the Court to enliven its jurisdiction. That occurs either by making the application orally before a judge or registrar with power to deal with it or by causing the document to be filed in accordance with r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules. As a result of such a step, the Court becomes seized with jurisdiction to deal with the subject matter of the application.
37 The word "filed" is the word traditionally used to describe the act or process of placing a document in the records of a court or registry and is, of course, the act of the court: see Johnston v Vintage Developments Pty Ltd [2006] FCAFC 171 at [16] per Tamberlin, Jacobson and Rares JJ.
38 The purpose of r 2.25 of the Federal Court Rules is to identify when a document lodged with the Court has the legal effect of being filed in the Court and is treated as invoking the Court's jurisdiction, namely, once it is has been accepted for filing on the day deemed by the rule and given a hearing date. And r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules prescribes that an application commencing a proceeding under s 41(6A) is "made" by filing it.
39 The effect of r 2.25 is to put a person who lodges a document electronically in the same position as one who does so physically. That is, lodgment will only be effective during business hours when there is an officer of the Court with authority to accept the document, and, if the officer accepts it, filing occurs in accordance with the deeming provisions in the rule, unless the Rules otherwise provide or the Court orders. For example, ordinarily if a person attends the Registry to present an originating application or a bankruptcy petition for filing, he or she physically hands the document to an officer of the Registry who must accept it and put it on the court file, unless rr 2.26 or 2.27 apply. Those acts are usually synchronous. However, if the person arrives after the Registry has closed for business, the person must either apply to reopen it or must apply to a person, such as a registrar or a judge, with the authority to waive compliance with the Rules for lodging or filing documents, if the person wants to initiate a proceeding in the Court or lodge a document for filing on that day.
40 It would be no use to anyone who sought to rely on a document as being lodged or filed on a particular day with the Court for the solicitor or party to stand outside locked Registry doors and take a selfie photograph of themselves that had a time stamp showing them there after business hours and come back the next day to say, "I was at the Registry and it was closed, but treat the document as lodged or filed yesterday.", where a limitation period, if there were one, would have expired at midnight the previous night.
41 Thus, a person must do something more to make sure, if a lodgment occurs after hours (that is, after 4:30pm under r 2.25(3)), that this act will be effective to invoke the Court's jurisdiction on the day of lodgment by taking steps to have a judge or registrar open the Court to enable the document to be filed out of hours on the same day.
42 One reason for this, particularly in bankruptcy matters or where a limitation period is about to expire, is that people need certainty as to whether or not a proceeding has been commenced or, in the language of s 41(6A) of the Bankruptcy Act, "an application has been made to the Court". Applications to the Court are not made in the air. They are made to the Court to invoke regularly its jurisdiction in accordance with the requirements of a statute and relevant rules of Court. It would be absurd to suggest, in the example we have given earlier, that standing outside a closed Registry after business hours is enough to "make" an application to the Court. That is because nobody was at the Registry to receive and accept it or to file it. Hence, the Rules are structured in the way they are, to allow an officer in the Registry to consider whether or not a document lodged electronically or physically should be put on the Court's file or be used to create a Court file to commence a proceeding and thus invoke the jurisdiction of the Court.
The case law
43 Ms Lamb's reliance on the decision in Purden Pty Ltd v Registrar in Bankruptcy (1982) 43 ALR 512; 64 FLR 306 does not avail her. Bowen CJ, Fisher and Lockhart JJ explained that the words "presented" and "presentation" used in the Bankruptcy Act were not used in the sense of the unilateral act of the creditor showing the petition to the appropriate court officer, but in the sense of handing or delivering it to, and the officer accepting, it. They said (at 515):
The showing of the document to the court's officer and its receipt by him are both necessary elements in the notion of presentation of a petition. However, what the officer does with the document thereafter is nothing to the point as by then it has been presented.
(emphasis added)
44 Their Honours went on to cite that the distinction between presentation and filing was of long standing by referring to the reasons of Walker J in Re Daunt; Ex parte McIntyre and Yates (1905) 5 SR NSW 533 at 536–537. There, Walker J explained that this distinction was of little practical effect, saying (at 537):
This, I take it, is the invariable course, and is so universally recognised that in practice a presentation of a petition involves and implies a request that it be immediately filed. The old distinction has become purely verbal. It is not unreasonable to suppose that the Legislature, when speaking of "presentation," spoke of it as every practitioner would regard it, as carrying with it the usual incident of filing.
(emphasis added)
45 Bowen CJ, Fisher and Lockhart JJ went on to say that, because of peculiarities and differences in the way, at the time in 1982, in which various State registries of this Court dealt with the lodging and filing of documents, such as a creditor's petition, that a person wished both to present and have filed, it was necessary that the Full Court determine a consistent practice throughout the Registries of the Court as to how the act of presenting a petition could be ascertained. They said (at 517):
It is vital, however, that the date of presentation of the petition be ascertained with certainty. Hence that date ought to be stamped or otherwise marked on the petition.
46 In Streimer 47 ALR 211, the Full Court considered a slightly differently worded s 41(6A) (before its amendment to substantially its current form by Sch 1 of the Bankruptcy Legislation Amendment Act 1996 (Cth)), that then provided:
Where, before the expiration of the time fixed by the Court or the Registrar for compliance with the requirements of a bankruptcy notice—
(a) proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or
(b) an application to set aside the bankruptcy notice has been filed with the Registrar;
the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.
(emphasis added)
47 Contrary to Ms Lamb's, and indeed Mr Sherman's, arguments, in Streimer 37 ALR at 214–215 Deane and Ellicott JJ held that the consequence of "filing" the application was:
The Parliament plainly turned its attention to the question of what steps needed to be taken before the expiry of the time which the bankruptcy notice fixed for compliance with its terms. It specified two alternative steps, namely, the institution of proceedings to set aside the relevant judgment or order or the filing of an application to set aside the bankruptcy notice. Subject to either of those steps being taken within the time limited for compliance, the power to extend time is conferred in general words. It would, in our view, be contrary to the plain import of the words used by the Parliament to construe s. 41 (6A) as requiring not only that one or other of the alternative express conditions precedent to jurisdiction be fulfilled within the time originally fixed for compliance but as also requiring that both the application for an order and any initial order be made within that time.
(emphasis added)
48 In that case, the debtor applied to the Court within the time fixed for compliance by the bankruptcy notice for an order extending the time but, some time later after several extensions, the judge hearing the application accidentally omitted to make a further order extending the time for compliance overnight when he adjourned the proceeding to the next day. Deane and Ellicott JJ held that once the jurisdiction of the Court had been enlivened under s 41(6A), the Court could make an order nunc pro tunc to remedy such a defect because nothing in s 41(6A) required expressly that an order be made prior to time at which the notice would expire.
49 The present wording of s 41(6A) also confers power on the Court to make an order extending the time for compliance once the debtor has taken one of the two steps in pars (a) and (b), namely, instituting proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued or making an application to the Court to set that notice aside. Given that s 41(6A)(a) requires that the debtor institute proceedings, being an act to enliven the jurisdiction of a court that can set aside the judgment or order in respect of which the bankruptcy notice was issued, s 41(6A)(b) must also require the debtor to do an act sufficient to enliven the jurisdiction of this Court (or another court having jurisdiction under s 41(6A)) so as to satisfy its criterion that "an application has been made to the Court to set aside the bankruptcy notice".
50 Mr Sherman's argument that Streimer 37 ALR 211 was wrongly decided relied on a construction of s 41(6A) that is in the teeth of both s 33(1)(c) of the Bankruptcy Act, as it applies to an application for an extension filed prior to the time fixed for compliance by the bankruptcy notice, and the ordinary rule of statutory construction, as stated by Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ in Owners of the Ship "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421:
It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.
(footnote omitted)
51 Here, the jurisdiction of the Court to make an order extending time exists if, and only if, an application has been made before the time fixed for compliance of the bankruptcy notice, as had occurred in Streimer 37 ALR 211. Moreover, a reading of s 41(6A) of the kind Mr Sherman argued would ignore the facultative alternative in s 41(6A)(a) that all a debtor need do is institute proceedings to set aside the judgment or order in respect of which the bankruptcy notice had been issued in another court, as the debtor's alternative to making an application under s 41(6A)(b) to set the bankruptcy notice aside.
52 Mr Sherman's application to overrule Streimer 37 ALR 211 cannot be accepted. First, the decision has stood for over 41 years. If the Parliament had thought the decision had created an inconvenience or did not reflect its intention, it is impossible to think that the legislation would not have been amended to reflect such a construction. Secondly, the decision of Deane and Ellicott JJ is plainly correct and should be followed. Moreover, in Guss v Johnstone (2000) 171 ALR 598 at 610–611 [63], Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ referred to Streimer 37 ALR 211 with approval. Their Honours noted (at 609 [55]):
When, on 1 July 1997, on the hearing of an application made by notice of motion filed on 23 June 1997, Sundberg J refused to stay the order of 30 May 1997 by which he declared that the court was not satisfied of the matters referred to in s 40(1)(g), Sundberg J rightly pointed out that a grant of stay on 1 July would not cancel the act of bankruptcy which had already been committed. In James v Abrahams ((1981) 34 ALR 657 at 662), Deane and Lockhart JJ held that the language of s 41(6A), including its express stipulations as to time, makes it impossible to imply any general power in the Federal Court to extend the time for compliance with a bankruptcy notice in a case which does not fall within s 41(6A). In any event, no application was made to Sundberg J to do anything other than stay his previous orders. The only order he had relevantly made was a declaration, and, by force of the statute, that had already resulted in certain consequences. The Full Court was right to dismiss the appeal against the decision of Sundberg J of 1 July 1997.
(emphasis added)
53 They also said (at 610 [62]):
It is true that there is no statutory grant of power to annul an act of bankruptcy (King v Henderson [1898] AC 720 at 728), or to extend the time for compliance with a bankruptcy notice other than in a case where the conditions of section 41(6A) have been satisfied (James v Abrahams (1981) 34 ALR 657).
(emphasis added)
Disposition
54 In order to make an application to the Court, its jurisdiction has to be invoked, which, ordinarily, occurs by the Registry or the Court accepting the filing of a document comprising an application to set aside a bankruptcy notice, as r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules provides. It cannot be that it is sufficient for an application to be lodged to "make" it, because thereafter it may or may not be rejected for filing. The Federal Court Rules seek to create certainty and prevent injustice occurring by clearly prescribing when a document sent electronically will be taken to have been filed. It does so by stipulating that where the Court receives the document prior to 4:30pm on a business day, and, if accepted, it is deemed to have been filed on that day so that the Court's jurisdiction then will be enlivened, but, in all other cases, the document is deemed to be filed on the next business day. That gives certainty to when the jurisdiction of the Court has been enlivened.
55 Of course, it is always possible, because this Court is a superior court of record, for a person to make an oral application for relief to a judge, including under s 41(6A), in cases where there is urgency and the judge is satisfied that it is appropriate and there is a sufficient basis to accept such an application. Where that occurs, the judge exercises the power of the Court to allow the proceeding to be commenced.
56 When Ms Lamb lodged her application under s 41(6A) of the Bankruptcy Act by electronic communication on 15 June 2022 at 4:37pm, she did not at that time "make" an application to the Court to set aside the bankruptcy notice within the meaning of s 41(6A). That was because the Court had nothing before it by which it could have done anything to extend the time for compliance with the bankruptcy notice, since its jurisdiction had not yet been invoked either by the filing of that application under r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules and in accordance with the Federal Court Rules, or by her making an oral application to a judge or registrar (if a registrar had power to do so) to permit her to "make" the application to the Court at that time. In the circumstances, she had only lodged her application electronically under r 2.21(1)(d), and, by itself, the lodgment could not have invoked the jurisdiction of the Court under s 41(6A). That is because, until the application was accepted by the Registry under r 2.25(1)(b)(ii), when the seal of the Court was affixed to it and a registrar inserted the notice of filing and hearing as its first page under r 2.24(1)(a), it was not filed or made under r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules (or deemed by force of r 2.25(3) of the Federal Court Rules to have been filed), so that it could not be "made" to the Court within the meaning of s 41(6A).
57 The act of the Registrar on 16 June 2022 that accepted Ms Lamb's application for filing at 2:44pm could not have affected her earlier commission of the act of bankruptcy by failing to comply with the bankruptcy notice before the time that it had fixed for compliance. There is nothing in the Act that permits the Court to cure an act of bankruptcy that has occurred after the time for compliance with a bankruptcy notice has expired, and before any application has been made to the Court under s 41(6A).
58 The imposition of strict time limitations in cases such as this is consistent with the approach the High Court has taken in other similar areas, such as its decision in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276–277. There Gummow J, with whom Brennan CJ, Dawson, Gaudron and McHugh JJ agreed, identified that the provisions of the then s 459G of the then Corporations Law (Vic), required an application to set aside a statutory demand to be made strictly in accordance with the conditions set out in the statute. His Honour identified those conditions as attaching a limitation or condition upon the authority of the Court to set aside the demand.
59 Similarly here, s 41(6A) imposes a limitation that an application to set aside a bankruptcy notice be made to the Court, that is, to invoke its jurisdiction, before the time fixed for compliance with the bankruptcy notice expires. It is obviously for debtors and in their interests, to make sure that, if they seek to lodge an application under s 41(6A) after the ordinary business hours of the Registry on the last day for compliance with a bankruptcy notice, they do something to make sure that that lodgment will be filed in accordance with the Rules on that day prior to the expiry of the time for compliance.
Conclusion
60 For these reasons, Ms Lamb committed an act of bankruptcy on 15 June 2022. Although his Honour did not deal in terms with her argument based on the late filing of her application, had his Honour done so, that could not have altered the consequence that the act of bankruptcy could not have been set aside: see Guss 171 ALR at 610 [62]. His Honour was correct to find that Mr Sherman had proved that Ms Lamb had committed an act of bankruptcy on 15 June 2022, as required by ss 44(1)(c) and 52(1)(a) of the Bankruptcy Act.
Application to review extension orders
61 Ms Lamb argued that granting Mr Sherman's application to review the Registrar's extension orders would cause her prejudice because she had been put to proof of her solvency before the primary judge, which, had Mr Sherman made the application earlier, she may not have had to do.
62 That argument has no substance. In the circumstances, Ms Lamb was opposing the making of the sequestration order and needed to satisfy his Honour that, in any event, she was solvent. Moreover, as explained above, the extension orders had no operative effect. In our opinion, Mr Sherman should be granted an extension of the time to set these orders aside and should be granted that relief, because those orders were, first, made after, and could not have affected the commission of, the act of bankruptcy, secondly, made in a proceeding commenced without jurisdiction under s 41(6A) and, thirdly, plainly wrong. There is no injustice to Ms Lamb in setting the extension orders aside.
Application to amend petition
63 Last, Mr Sherman's application to amend the petition is hopeless. Section 44(1)(c) requires that the act of bankruptcy upon which the petition is founded must occur prior to its institution. Here, he sought to rely on an act of bankruptcy that occurred on 25 November 2022, well after the presentation of the petition, which falls outside the express words of s 44(1)(c), "[t]he act of bankruptcy on which [a] petition is founded" must be one committed "within six months before" its presentation under s 44(1)(c). That application should be dismissed.
CONCLUSION
64 It follows that the appeal fails, Mr Sherman's application to have the extension orders set aside should be allowed and those orders should be set aside, and his application to amend the petition must be dismissed.
65 We will allow the parties to confer and bring in draft orders to give effect to these reasons. If they cannot agree, they should make written submissions limited to one page within seven days of these reasons being published.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Rares, Rofe and Downes.
Associate:
Dated: 5 June 2023
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federal_court_of_australia:fca/single/2012/2012fca0735
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2012-06-04 00:00:00
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Salyer v Sharp [2012] FCA 735
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2012/2012fca0735
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2024-09-13T22:50:28.930015+10:00
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FEDERAL COURT OF AUSTRALIA
Salyer v Sharp [2012] FCA 735
Citation: Salyer v Sharp [2012] FCA 735
Parties: SCOTT SALYER AS TRUSTEE FOR THE SCOTT SALYER REVOCABLE TRUST, SKPM CORPORATION, MONTEREY PENINSULA FARMING LLC, FAST FALCON LLC and SS FARMS LLC v BRADLEY D. SHARP (CHAPTER 11 TRUSTEE) and ROBERT C. GREELEY, RECEIVER
File number: NSD 500 of 2012
Judge: EMMETT J
Date of judgment: 4 June 2012
Legislation: Corporations Act 2001 (Cth) s 581
Date of hearing: 4 June 2012
Place: Sydney
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 4
Counsel for the plaintiffs: The plaintiffs did not appear
Counsel for the defendants: G Lucarelli
Solicitor for the defendants: Duncan Cotterill
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 500 of 2012
BETWEEN: SCOTT SALYER AS TRUSTEE FOR THE SCOTT SALYER REVOCABLE TRUST
First Plaintiff
SKPM CORPORATION
Second Plaintiff
MONTEREY PENINSULA FARMING LLC
Third Plaintiff
FAST FALCON LLC
Fourth Plaintiff
SS FARMS LLC
Fifth Plaintiff
AND: BRADLEY D. SHARP (CHAPTER 11 TRUSTEE)
First Defendant
ROBERT C. GREELEY, RECEIVER
Second Defendant
JUDGE: EMMETT J
DATE OF ORDER: 4 JUNE 2012
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The proceeding be dismissed.
2. The plaintiffs pay the defendants' costs of the proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 500 of 2012
BETWEEN: SCOTT SALYER AS TRUSTEE FOR THE SCOTT SALYER REVOCABLE TRUST
First Plaintiff
SKPM CORPORATION
Second Plaintiff
MONTEREY PENINSULA FARMING LLC
Third Plaintiff
FAST FALCON LLC
Fourth Plaintiff
SS FARMS LLC
Fifth Plaintiff
AND: BRADLEY D. SHARP (CHAPTER 11 TRUSTEE)
First Defendant
ROBERT C. GREELEY, RECEIVER
Second Defendant
JUDGE: EMMETT J
DATE: 4 JUNE 2012
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This proceeding was commenced by an originating application filed on 3 April 2012 by Scott Salyer, as trustee for the Scott Salyer Revocable Trust, SKPM Corporation, Monterey Peninsula Farming LLC, Fast Falcon LLC, and SS Farms LLC. The defendants are Bradley Sharp, a United States trustee in bankruptcy, and Robert Greeley, a receiver appointed by the United States Bankruptcy Court in respect of certain assets. The final relief claimed is an order that the defendants be restrained from taking any steps to file any letter of request in the Federal Court pursuant to s 581 of the Corporations Act 2001 (Cth), or seeking any orders ex parte where the plaintiffs are named as defendants or respondents, without three clear days notice to the plaintiffs.
2 The proceeding was listed for directions on 4 April 2012, and orders were made for abridgement of the time for service. It has been managed in conjunction with other proceedings involving the same parties, or other parties with whom the parties have some connection, in relation to a dispute relating to the administration of SK Foods Australia Pty Ltd. The related proceedings were all listed before me for directions on 30 April 2012. On that day, all parties were represented. The directions given on that occasion included directions in relation to proceeding NSD 542 of 2012, which is an application under the cross-border insolvency legislation, seeking recognition of the status of parties involved in the present proceeding, including Mr Greeley. It was apparent to all parties that, to the extent necessary, this proceeding would be dealt with on 30 May 2012 and 4 June 2012, when all the proceedings were fixed, either for directions or for the hearing of interlocutory applications.
3 On 7 May 2012, notices of ceasing to act were filed by the solicitors who were then on the record as acting on behalf of all of the plaintiffs. On 23 May 2012, the plaintiffs were informed that the plaintiffs in the cross-border insolvency proceeding, whose solicitors represent the defendants in the present proceeding, intended to press for the hearing of the cross-border insolvency proceeding on 30 May 2012, if the timetable allowed.
4 In the events that have occurred, the listing on 30 May 2012 was vacated by the Court on the basis that the proceedings would be dealt with today, 4 June 2012. When the matter was called on today, there was no appearance for the plaintiffs. The defendants now move ore tenus for dismissal of the proceeding. In the circumstances, it is appropriate to accede to that application, and I propose to make orders accordingly.
I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate:
Dated: 9 July 2012
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federal_court_of_australia:fca/single/2001/2001fca1557
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2001-11-05 00:00:00
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Kelly v Australian Electoral Office [2001] FCA 1557
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2001/2001fca1557
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2024-09-13T22:50:29.455690+10:00
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FEDERAL COURT OF AUSTRALIA
Kelly v Australian Electoral Office [2001] FCA 1557
EDWARD KELLY v AUSTRALIAN ELECTORAL OFFICE
N 1480 OF 2001
EMMETT J
5 NOVEMBER 2001
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 1480 OF 2001
BETWEEN: EDWARD KELLY
APPLICANT
AND: AUSTRALIAN ELECTORAL OFFICE
RESPONDENT
JUDGE: EMMETT J
DATE OF ORDER: 5 NOVEMBER 2001
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
The application for an expedited hearing be refused.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 1480 OF 2001
BETWEEN: EDWARD KELLY
APPLICANT
AND: AUSTRALIAN ELECTORAL OFFICE
RESPONDENT
JUDGE: EMMETT J
DATE: 5 NOVEMBER 2001
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 On 31 October 2001 the Chief Justice of the High Court remitted proceeding number S250 of 2001 to this Court. In that proceedings the plaintiff sought an order of mandamus against the Australian Electoral Commission ("the Commission") requiring acceptance and declaration of his nomination, and prohibition of the holding of "the New South Wales Senate election" until implementation of the order of mandamus. He also sought an injunction restraining the Commission from holding the election of senators "to the New South Wales Senate" until the final determination of the matters raised in the proceeding. In addition he sought a declaration that s 169A(3) of the Commonwealth Electoral Act 1918 ("the Act") is invalid. That section deals with the form of the ballot paper for a Senate election. It provides that a candidate may not make a request to be described as independent, as well as making a joint request with another candidate that their names be grouped in the ballot paper.
2 At a directions hearing today, the plaintiff has indicated that he no longer presses for mandamus. He seeks to file an amended statement of claim in which the relief sought is:
· an injunction restraining the Commission from the conduct of the ballot for the Senate election for New South Wales until final determination of the matter;
· a declaration that his nomination substantially complied with the Commonwealth Electoral Act;
· a declaration that the writ for the Senate of New South Wales was issued unconstitutionally and is a nullity;
· orders striking out ss 169(4) and 169A(3) of the Act as unconstitutional; and
· exemplary damages and costs.
3 When the matter came before me earlier this afternoon, the plaintiff initially indicated that he wished to seek interlocutory relief. That application was then abandoned and the plaintiff sought that the matter be expedited to the extent of a final hearing prior to Saturday 10 November, when the election is to be held. That application is opposed by the Commission on the basis that there is no need for an expedited hearing of the issues that are raised by the proceeding. The Commission contends that there is no jurisdiction in this Court to restrain the holding of the election on the ground that there is some invalidity involved in the election, such as the wrongful rejection by the Commission or its officers of the applicant's nomination.
4 Section 353(1) of the Act provides that "[t]he validity of any election or return may be disputed by petition addressed to the Court of Disputed Returns and not otherwise". Under s 354(1) the High Court of Australia is to be the Court of Disputed Returns and is to have jurisdiction either to try a petition or refer it for trial to the Federal Court of Australia.
5 In my view, the effect of those provisions is to provide that the only method whereby the validity of the Senate election to be held on 10 November 2001 can be disputed or called in question is by means of a petition to the High Court after the election. Even if this proceeding were expedited to the extent of a final hearing before Saturday, no order could be made restraining the holding of the election on the ground that the election would be invalid. I cannot perceive any other basis upon which the Court would intervene in the holding of the election.
6 The proposed amended statement of claim raises other questions as to the constitutionality and validity of the election. The same arguments seem to me to be applicable to the contention that the writ issued for the Senate election for New South Wales is defective. The plaintiff's claim is that the Governor of New South Wales is not constitutionally appointed. The plaintiff claims that no Governor of New South Wales has been validly appointed since the Parliament of Westminster passed the British Nationality Act 1948. If that argument be correct, the validity of the election would be called into question by means otherwise than that prescribed by Part XXII of the Commonwealth Electoral Act.
7 No argument has been advanced as to why any claim for damages should be expedited. In my view there is no reason why any claim for damages should be expedited. In the circumstances, I am not prepared to accede to the request for an expedited hearing of this proceeding.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate:
Dated: 7 November 2001
Counsel for the Plaintiff: The plaintiff appeared in person
Counsel for the Respondent: Mr S Gageler with Ms R M Henderson
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 5 November 2001
Date of Judgment: 5 November 2001
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2020-05-27 00:00:00
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Jahani (liquidator) v Alfabs Mining Equipment Pty Ltd, in the matter of Delta Coal Mining Pty Limited (in liq) [2020] FCA 752
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca0752
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2024-09-13T22:50:30.000813+10:00
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FEDERAL COURT OF AUSTRALIA
Jahani (liquidator) v Alfabs Mining Equipment Pty Ltd, in the matter of Delta Coal Mining Pty Limited (in liq) [2020] FCA 752
File number: NSD 577 of 2020
Judge: STEWART J
Date of judgment: 27 May 2020
Catchwords: PRACTICE AND PROCEDURE – application for joinder under r 9.05 of the Federal Court Rules 2011 (Cth) to bring unfair preference proceedings against multiple unrelated defendants – whether joinder necessary in order to enable determination of a related dispute and avoid multiplicity of proceedings – where common issues exist in relation to all the proposed defendants – possibility of inconsistent findings being made if proceedings were not joined – efficient use of judicial resources
Legislation: Corporations Act 2001 (Cth) ss 553C, 588FF
Federal Court Rules 2011 (Cth) rr 1.32, 1.34, 9.02, 9.05, 9.06
Cases cited: Dean-Wilcocks v Air Transit International Pty Ltd [2002] NSWSC 525; 55 NSWLR 64
Dudley (Liquidator) v RHG Construction Fitout & Maintenance Pty Ltd [2019] FCA 1355
Lord v Agreserves Australia Ltd [2006] FCA 598
Date of hearing: 27 May 2020
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 21
Counsel for the Plaintiffs: M Rose
Solicitor for the Plaintiffs: McCullough Robertson
ORDERS
NSD 577 of 2020
IN THE MATTER OF DELTA COAL MINING PTY LIMITED (IN LIQUIDATION) ACN 114 283 706, DELTA MINING PTY LTD (IN LIQUIDATION) ACN 056 692 883, SBD SERVICES PTY LTD (IN LIQUIDATION) ACN 124 019 816 AND DELTA SBD LTD (IN LIQUIDATION) ACN 127 894 893
BETWEEN: SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF DELTA COAL MINING PTY LTD (IN LIQ)
First Plaintiff
SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF DELTA MINING PTY LTD (IN LIQ) ACN 056 692 883
Second Plaintiff
SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF SBD SERVICES PTY LTD (IN LIQ) ACN 124 019 816 (and another named in the Schedule)
Third Plaintiff
AND: ALFABS MINING EQUIPMENT PTY LTD ACN 099 383 650
First Defendant
AMPCONTROL (QLD) PTY LTD ACN 001 335 842
Second Defendant
BRANDWORX PTY LTD ACN 168 637 250 (and others named in the Schedule)
Third Defendant
JUDGE: STEWART J
DATE OF ORDER: 27 MAY 2020
THE COURT ORDERS THAT:
1. Pursuant to r 9.05 of the Federal Court Rules 2011 (Cth), the plaintiffs have leave nunc pro tunc to join each of the parties listed in the Schedule as defendants in this proceeding.
2. Costs be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from the transcript)
STEWART J:
1 By originating process that comes before me on an urgent basis, as duty judge, the plaintiffs seek interlocutory orders for leave to join 28 parties to these proceedings, as defendants, pursuant to rr 1.32 and 9.05 of the Federal Court Rules 2011 (Cth). Alternatively, the plaintiffs seek that the requirements of r 9.02 of the Rules be waived pursuant to r 1.34 of those Rules.
2 Since the originating application already cites the defendants in respect of whom leave is sought, they are, in effect, already defendants to the proceeding. Recognising that, Mr Rose, who appears before me for the plaintiffs, seeks that leave to join the defendants be granted nunc pro tunc.
3 Messrs Jahani and McInerney bring these proceedings in their capacities as liquidators of each of the following companies: Delta Coal Mining Pty Ltd, Delta Mining Pty Ltd, Delta SBD Ltd and SBD Services Pty Ltd, which I will refer to as the companies. The substantive proceeding to which the proposed defendants are sought to be joined is a proceeding brought pursuant to s 588FF of the Corporations Act 2001 (Cth) for the recovery of unfair preferences.
4 The relevant statutory limitation period to bring those claims expires on 30 May 2020, being three years from the date on which Messrs Jahani and McInerney were appointed as administrators of the company: see s 588FF(3)(a)(i) of the Act. Since 30 May is only days away, the application must be dealt with urgently. Mr Jahani, in his affidavit, has explained why this application was not brought at an earlier time, particularly with reference to what has been done in the intervening period of time. I am satisfied with the adequacy of that explanation and that the matter is properly dealt with today.
5 The plaintiffs rely on two affidavits of Mr Jahani, each affirmed on 25 May 2020. Messrs Jahani and McInerney were appointed as administrators of the companies on 31 May 2017 (the relation-back day). On 18 August 2017, each of the companies was wound up in a creditors' voluntary winding up with Messrs Jahani and McInerney appointed as the liquidators. Mr Jahani explains the following relationships, as at the date of his and Mr McInerney's appointment:
(1) Delta SBD wholly owned Delta Mining and SBD Services;
(2) Delta Mining wholly owned Delta Coal Mining;
(3) Delta Coal Mining was part of the Delta SBD Group;
(4) Delta Mining was part of the Delta SBD Group;
(5) The Delta SBD Group was in the business of providing labour and equipment hire services;
(6) The Delta SBD Group was consolidated for financial reporting purposes; and
(7) Movements of cash across the Delta SBD Group from time to time were recorded as intercompany loans.
6 The companies' principal activity was the provision of labour and equipment hire to mine owners in Queensland and New South Wales for the extraction of black coal. Other mining services provided by the companies included whole mining management and operations and other specialist underground mining services.
7 The companies were party to a deed of cross guarantee entered into on 3 May 2011 in order to take the benefit of ASIC class order 98/1418, as amended. The effect of that deed is that each of the companies jointly and severally agreed with each of its creditors that each entity subject to the deed would guarantee to each creditor payment of any debt due to the creditor from any group entity, upon, inter alia, a creditors' voluntary winding up of the relevant company, as those terms are defined in the deed.
8 Mr Jahani goes on to explain that the books and records of the company indicate that during the six months ending on 31 May 2017 (the relation-back period), the companies made payments to each of the proposed defendants in respect of:
(1) unsecured amounts owing to them for goods or services supplied by those creditors;
(2) various unsecured taxation liabilities; or
(3) rental payments under a lease agreement in respect of certain property in Queensland,
each of which the liquidators believe constitute unfair preference payments made during the relation-back period.
9 Those payments are detailed in the exhibits to Mr Jahani's affidavit.
10 Mr Jahani also deposes that as a result of his and Mr McInerney's statutory investigations, they believe that each of the companies was insolvent from at least 1 December 2016. Mr Jahani also considers that by receiving the benefit of the relevant payments, each of the proposed defendants has received more than they would receive by way of a dividend in the liquidation of the companies if the relevant payments were set aside and the relevant proposed defendant was to prove its debt as an unsecured creditor in the winding up of the companies.
11 The need for this application arises because, absent an order permitting joinder, it is possible that a single proceeding commenced against each of the proposed defendants would later be held to be improperly constituted. In Dudley (Liquidator) v RHG Construction Fitout & Maintenance Pty Ltd [2019] FCA 1355, the plaintiff liquidators commenced a proceeding for the recovery of alleged preferential payments against 17 defendants by way of a single originating process under r 2.2 of the Federal Court (Corporations) Rules 2000 (Cth). That proceeding was, as Jackson J said at [2]:
… proceedings of the kind that is sometimes called a 'mother proceeding' (Dean-Wilcocks v Air Transit International Pty Ltd [2002] NSWSC 525, (2002) 55 NSWLR 64 at [14], Martin Bruce Jones as Liquidator of Forge Group Ltd (Receivers and Managers Appointed) (In Liquidation) v Sun Engineering Qld Pty Ltd [2017] WASC 195 at [62]) or a 'mothership proceeding' (Re Bias Boating Pty Ltd [2017] NSWSC 1524 at [18]). That is, they are unfair preference claims in respect of the same insolvent company (or group of companies) that have been commenced against multiple defendants in relation to separate payments made by the company to each defendant.
12 The issue in that case was whether the commencement of that proceeding against all defendants in one cause was authorised without more, by the rules, and in particular, r 9.02. Jackson J concluded, at [26], that:
… r 9.02 did not authorise the liquidators to commence a single set of proceedings in this court against multiple defendants where the alleged preferential payments, and the agreements or arrangements with the company under which they were made, were unique to each separate defendant.
13 It is in this context that the plaintiffs' application arises. The plaintiffs require the Court's leave to commence a single proceeding against the multiple defendants. The Court's power to grant that leave arises under r 9.05 of the Rules. That rule is relevantly in the following terms:
9.05 Joinder of parties by Court order
(1) A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person:
…
(b) is a person:
…
(iii) who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.
14 In the absence of that leave being granted, the plaintiffs would be required to commence 28 separate proceedings with one defendant to each of them. For the reasons which follow, I am satisfied that the proposed defendants ought to be joined in one proceeding as they are each persons who should be joined to enable determination of a related dispute and to avoid a multiplicity of proceedings.
15 In that regard, Austin J in Dean-Wilcocks at [33] observed that:
Where there is a single plaintiff but many defendants, the concern is rather different [from when there are many plaintiffs] … although the general objectives of fairness and practicability remain [I would add that the objective of judicial efficiency is equally salient]. Each defendant will be required to answer a case individually pleaded against it by the plaintiff, but the pleaded case against each defendant will contain assertions made against all defendants. It is not unfair to a defendant that the plaintiff makes identical or similar allegations against others. The fact that the plaintiff does so by joining more than one defendant to a single proceeding does not itself create unfairness. Disadvantage to a defendant, and the possibility of unfairness, may arise if, for example:
• the making out of the case against one defendant in some way hampers another defendant from adequately making out its defence; or
• the joinder of multiple defendants leads to cost or delay to a defendant materially greater than would have occurred if the cases had been brought separately; or
• a defendant is forced to defend its case in an inconveniently located court; or
• a defendant is forced to defend its case in the Supreme Court [in this case the Federal Court] whereas if the case had been brought separately against a defendant it would or might have been brought in a lower court at less cost to the defendant.
16 At [35], his Honour identified some special features of unfair preference proceedings, which may, in particular, justify the granting of leave, even though leave might not be granted in similarly constituted proceedings with a different subject matter (with some interpolations by me):
First, since unfair preference proceedings arise under the Corporations Act (Cth), it is appropriate that any applications concerning them, and their case management, be allocated to the Corporations List [that was in the Supreme Court, whereas in this Court similar considerations apply with regard to case management of cases such as this] ... Secondly, the issue at stake in unfair preference proceedings is whether the liquidator of a failed company should recover assets for the benefit of unsecured creditors as a whole. The adoption of a procedure that is speedy, inexpensive and efficient from the point of view of liquidators should facilitate the commencement and maintenance of proceedings in cases where there appear to be reasonable prospects of success. That would be an important outcome in terms of public policy and the interests of the commercial community as a whole. Thirdly, a central ingredient of unfair preference proceedings is the establishment of the insolvency of the company at the relevant time: s 588FC. In the case of a company of any significant size, that question should where practicable be determined by [a superior Court]. By granting leave to the liquidator to maintain a single proceeding in this Court [case managed within the docket system], the Court can bring the matter to a point where the question of insolvency has been determined [as well as any other common issues] or it emerges from the defences that insolvency is not in issue ...
17 Thereafter, if appropriate, any particular defendant who is able to contend that the further conduct of the case on a joint basis is prejudicial to them, can apply under r 9.06 of the Rules for a separation out from the case and for subsequent issues to be determined separately.
18 In particular, there is a reasonable prospect that common issues to all the claims in this case will be the insolvency of the companies as well as possibly the availability of set-off under s 553C of the Act because of some conflicting authority on that question. The defendants are then likely to seek to raise defences unique to them, but those can be dealt with, as I have said, on a case management basis or by separating out the cases at a later stage. Mr Jahani deposes that based on his experience as a liquidator, the commencement of separate proceedings against any or all of the proposed defendants would add significant costs to the pursuit of unfair preference claims against them. That stands to reason.
19 Further, and whilst Mr Jahani does not expect that each of the proposed defendants would contest the issue of insolvency, if there were proceedings were against each of them separately the consideration of insolvency alone, leaving aside other issues, would require the allocation of significant judicial resources. This may, as Mr Jahani points out, also lead to the risk of inconsistent findings in relation to the same ultimate subject matter. That is a particularly significant matter in my consideration. It would be a poor day for the administration of justice if 28 separate cases each had to deal with the same factual question or questions, and potentially arrive at conflicting conclusions. Not only would that be an enormous waste of judicial resources, but it would also bring the system into disrepute.
20 I am satisfied that leave under r 9.05 can be granted nunc pro tunc: Lord v Agreserves Australia Ltd [2006] FCA 598 at [7] per Jacobson J.
21 For those reasons I am satisfied that the plaintiffs should have the orders that they seek.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stewart.
Associate:
Dated: 2 June 2020
SCHEDULE OF PARTIES
NSD 577 of 2020
Plaintiffs
Fourth Plaintiff: SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF DELTA SBD LTD (IN LIQ) ACN 127 894 893
Defendants
Fourth Defendant: COAL MINES INSURANCE PTY LTD ACN 000 011 727
Fifth Defendant: COASTWIDE ENGINEERING PTY LTD ACN 002 244 680
Sixth Defendant: COUGAR MINING GROUP PTY LTD ACN 142 713 951
Seventh Defendant: HS COMPANY PTY LIMITED ACN 099 707 856 TRADING AS CRAM FLUID POWER
Eighth Defendant: ERNST & YOUNG ABN 75 288 172 749
Ninth Defendant: FUCHS LUBRICANTS (AUSTRALASIA) PTY LTD ACN 005 681 916
Tenth Defendant: JENNMAR AUSTRALIA PTY LTD ACN 078 584 531
Eleventh Defendant: MARATHON TYRES PTY LTD ACN 082 184 923
Twelfth Defendant: MINES RESCUE PTY LIMITED ACN 099 078 261
Thirteenth Defendant: CHIEF COMMISSIONER OF STATE REVENUE
Fourteenth Defendant: PARK PTY LTD ACN 093 014 129 TRADING AS PARK FUELS
Fifteenth Defendant: SGS HYDRAULICS PTY LTD ACN 104 018 564
Sixteenth Defendant: QUARRY MINING & CONSTRUCTION EQUIPMENT PTY LTD ABN 13 002 572 303
Seventeenth Defendant: WARATAH ENGINEERING PTY LTD ACN 614 565 829
Eighteenth Defendant: TOILLA PTY LTD ACN 010 755 030
Nineteenth Defendant: VLI CONVEYORS PTY LIMITED ACN 001 989 895
Twentieth Defendant: VLI DIESEL PTY LIMITED ACN 060 444 162
Twenty First Defendant: WESTRAC PTY LTD ACN 009 342 572
Twenty Second Defendant: BJ'S WORKWEAR PTY LIMITED ACN 124 755 157
Twenty Third Defendant: FENNER DUNLOP AUSTRALIA PTY LTD 080 570 574
Twenty Fourth Defendant: FLS PUMPS PTY LIMITED ACN 163 759 082
Twenty Fifth Defendant: HOGANS HEAVY HAULAGE PTY LTD ACN 095 141 487
Twenty Sixth Defendant: PPK GROUP LIMITED ACN 003 964 181
Twenty Seventh Defendant: T & G KELLY'S COURIERS PTY LIMITED ACN 100 359 313
Twenty Eighth Defendant: VEOLIA ENVIRONMENTAL SERVICES (AUSTRALIA) PTY LTD ACN 051 316 584
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federal_court_of_australia:fca/single/1998/1998fca0385
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1998-04-21 00:00:00
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Macabenta, Maria v Minister for Immigration & Multicultural Affairs [1998] FCA 385
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2024-09-13T22:50:31.937722+10:00
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FEDERAL COURT OF AUSTRALIA
DISCRIMINATION LAW - representative action - whether new 1997 Migration Regulations attract operation of s 10 of Racial Discrimination Act ("the RDA") - meaning of "national origin" - whether the same as "nationality" - meaning of "right" - whether regulations operate unequally with respect to the enjoyment of any right - whether there is indirect discrimination - whether the regulations are "special measures" - whether regulations can be described as "benign" discrimination and therefore outside s 10 - differences between the operation of s 9 and s 10 of the RDA - effect of past governmental action in permitting extensions of residence.
MIGRATION LAW - new visa class providing for applications for permanent residence - Statutory Rule ("SR") 279 applicable to specified countries only - whether SR 279 operates unequally with respect to enjoyment of rights by persons from other countries - history of visa extensions.
Racial Discrimination Act 1975 (Cth) s 10
Statutory Rule No 279 of 1997
Migration Act 1958 (Cth) s 504(1)
English Race Relations Act 1968
International Convention on the Elimination of all Forms of Racial Discrimination, 1965
Gerhardy v Brown (1985) 159 CLR 70, cited
Ealing London Borough Council v Race Relations Board [1972] AC 342, applied
Australian Medical Council v Wilson (1996) 68 FCR 46, applied
De Silva v Ruddock (unreported, Merkel J, 19 February 1998), applied
Mabo v Queensland No 1 (1988) 166 CLR 186, cited
Adam v The Czech Republic (Comm No 586/1994, UN Doc CCPR/C/57/D (1996)), cited
Western Australia v The Commonwealth (1995) 183 CLR 373, cited
MARIA MACABENTA v
MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
NG 887 OF 1997
TAMBERLIN J
SYDNEY
21 APRIL 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG 887 of 1997
BETWEEN: MARIA MACABENTA
Applicant
AND: MINISTER FOR IMMIGRATION AND
MULTICULTURAL AFFAIRS
Respondent
JUDGE: TAMBERLIN J
DATE OF ORDER: 21 APRIL 1998
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The parties are directed to bring in Short Minutes to deal with the appropriate future conduct of the proceedings and costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG 887 of 1997
BETWEEN: MARIA MACABENTA
Applicant
AND: MINISTER FOR IMMIGRATION AND
MULTICULTURAL AFFAIRS
Respondent
JUDGE: TAMBERLIN J
DATE: 21 APRIL 1998
PLACE: SYDNEY
REASONS FOR JUDGMENT
This application is brought by Ms Maria Macabenta ("the applicant") as a representative party in respect of a group of 690 applicants ("the group"), comprising nationals of a number of countries, some of which include the Philippines, Indonesia, Fiji, India and Pakistan.
The applicant seeks a declaration under s 10 of the Racial Discrimination Act 1975 (Cth) ("the RDA") that, by reason of provisions of Statutory Rule No 279 of 1997 ("SR"), the group members do not enjoy a right enjoyed by persons of other national origins (Iraq, Kuwait, Lebanon, China, Sri Lanka and States comprising the former Yugoslavia) and that s 10 operates to entitle herself and the group to enjoy the rights conferred by that Rule to the same extent as persons of those other national origins.
On the hearing the applicant elected not to proceed with claims made in the first amended application, which were founded on s 9 of the Act.
The application raises important questions as to the interpretation and application of s 10 of the RDA. That section relevantly provides:
"Rights to equality before the law
10. (1) If, by reason of, or of a provision of, a law of the Commonwealth or of a State or Territory, persons of a particular race, colour or national or ethnic origin do not enjoy a right that is enjoyed by persons of another race, colour or national or ethnic origin, or enjoy a right to a more limited extent than persons of another race, colour or national or ethnic origin, then, notwithstanding anything in that law, persons of the first-mentioned race, colour or national or ethnic origin shall, by force of this section, enjoy that right to the same extent as persons of that other race, colour or national or ethnic origin.
(2) A reference in subsection (1) to a right includes a reference to a right of a kind referred to in Article 5 of the Convention." (Emphasis added)
The "Convention" referred to is the International Convention on the Elimination of all Forms of Racial Discrimination, which came into force on 21 December 1965.
Several points should be noted with respect to this provision:
· it is concerned with the operation of a law and not with activities or conduct of individuals;
· it must relate to the enjoyment of a right;
· the inequality must arise by reason of race, colour, national or ethnic origin;
· a provision of a law which enlivens the section is not made unlawful or invalid;
· it operates to confer an entitlement to equal enjoyment of that right on persons who would otherwise be affected unequally by the law.
The operation and effect of s 10 has been discussed and contrasted with the operation of s 9, which is concerned with discriminatory conduct: see Gerhardy v Brown (1985) 159 CLR 70 per Mason J at 92-100 and Brennan J at 119-124. I will refer to these differences more specifically later in these reasons.
By s 504(1) of the Migration Act 1958 (Cth) ("the Migration Act"), the Governor-General is empowered to make regulations required or permitted to be made or which are necessary or convenient to give effect to that Act.
Section 31 of the Migration Act provides for regulations which prescribe criteria for visas of specified classes.
The object of the Migration Act is set out in s 4 which provides:
"4.(1) The object of this Act is to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens.
(2) To advance its object, this Act provides for visas permitting non-citizens to enter or remain in Australia and the Parliament intends that this Act be the only source of the right of non-citizens to so enter or remain.
(3) To advance its object, this Act requires persons, whether citizens or non-citizens, entering Australia to identify themselves so that the Commonwealth government can know who are the non-citizens so entering.
(4) To advance its object, this Act provides for the removal or deportation from Australia of non-citizens whose presence in Australia is not permitted by this Act."
The object of the Act is expressed in wide and general terms, as are the means of advancing that object. This indicates the plenary nature of the powers and discretions intended to be conferred by the Act.
Background
On 13 June 1997, the Minister for Immigration and Multicultural Affairs ("the Minister") announced the Government's decision to resolve the uncertainty surrounding the future status of certain groups of people who, for humanitarian reasons, had been allowed to remain in Australia as long term temporary residents. This was to be effected by creating new visa classes (850 and 851) to cover persons from Sri Lanka, countries in the former Yugoslavia region, Iraq; Kuwait; Lebanon, and the People's Republic of China ("the PRC"). I will refer to these as the "specified countries." The practical effect of these visas, if all qualifying conditions are met, is to offer permanent resident status.
It has been the practice of successive governments over many years to provide, for humanitarian reasons, extension of stay concessions for people temporarily in Australia, who had suddenly been faced with serious disruptions in their home countries and who would have faced acute difficulties if required to return home from Australia at that time. These concessions enabled such persons to obtain an extension of their residence entitlement, usually by way of visa, to lawfully remain in Australia pending the resolution of the situation in their home countries. The measures were reviewed from time to time over the years and the temporary visas were concessions extended by way of extensions where the Government considered it appropriate. The concessional treatment ceased when the current developments in those countries indicated that such a concession was no longer necessary. The status of persons treated in this way had been left unresolved and uncertain for some years and so the decision was made in order to remedy the unsatisfactory and uncertain state of affairs surrounding their status. These categories of visas, which were proposed to give effect to this purpose, came to be known as Resolution of Status Visas (850 and 851) and were given statutory effect through Statutory Rule (SR) 279 of 1997, dated 1 October 1997.
The concession introduced pursuant to the 1997 decision applied to citizens of the specified countries, who met prescribed criteria, and who had arrived lawfully in Australia in the periods and from the countries set out below:
(a) Iraq and Kuwait - on or before 31 October 1991,
(b) Lebanon - on or before 30 November 1991,
(c) PRC - on or before 1 November 1993,
(d) Sri Lanka - on or before 1 November 1993, and
(e) former Yugoslavia - on or before 1 November 1993.
I will refer to the above dates as the "cut off dates". The evidence indicates that the cut off dates were fixed having regard to the periods of disruptions and disturbances in those countries and other matters such as economic considerations.
On 1 November 1993 the Minister for Immigration at the time, Mr Bolkus, announced a measure enabling nationals of the PRC, who had arrived in Australia before 20 June 1989 (the Tiananmen Square incident), access to permanent residence. At the same time he also announced the creation of additional permanent residence categories. This government decision was given statutory effect through SR 11 of 1994.
The uncontradicted evidence of Mr Johnston, who is the Director of the Special Residence Section of the Migration Branch in Canberra, was that when determining the cut off dates for entitlement to new visas, consideration was given to a wide range of factors including Australia's economic and budgetary constraints on providing general assistance beyond the countries and dates fixed. The decision provided a cut-off between those who had been in Australia for a lengthy period, without their status having been resolved, and those who had arrived more recently in the light of improving circumstances in their home countries in the knowledge that they would be required to return home. In particular, the cut-off dates for citizens of Iraq, Kuwait and Lebanon reflect the dates when earlier temporary concessions for those nationals ceased. They were fixed to normalise the position of those individuals who remained in Australia beyond those dates with their status unresolved.
The cut-off date for the citizens of the PRC, Sri Lanka and the former Yugoslavia were said to be consistent with the former Minister's decision of 1 November 1993, which made permanent residence available to certain groups primarily from the PRC. However, it also included persons from Sri Lanka and the former Yugoslavia, who had applied for refugee status or had been granted humanitarian temporary entry permits and who had met age and other qualification criteria. The 1997 decision recognised that the earlier governmental decisions had generated hopes and expectations in other citizens of these countries in Australia at the time, from broadly similar situations, that they would also be allowed to stay.
At the time of the 1997 decision, it was contemplated that the proposed measures would enable about 8,000 people to apply for the new visas. The offer extended the temporary stay of these people, with the availability of permanent residence after they had been in Australia for a total of ten years.
The applicant
The applicant was born in the Republic of the Philippines on 25 May 1958. She entered Australia on 25 October 1991 as the holder of a passport issued by the Republic of the Philippines and she was granted a valid entry permit on arrival.
On 24 October 1997, the applicant lodged an application both for a sub-class 850 Resolution of Status (Temporary) visa and an application for a sub-class 851 Resolution of Status visa (which I will refer to as "the visas"). The latter visa provided for permanent residence if the conditions were satisfied. Her application was refused because she was not the holder of a passport of one of the specified countries in respect of which sub-classes 850 and 851 apply. See sub-clause 3(c) and clause 1216A of Part 2 of Schedule 1 of the Regulations.
Submissions
The applicant's primary submission is that the limitation of the right to apply for the new visas by reference to the specified countries attracts the operation of s 10 of the RDA. The specific provisions referred to in argument were sub-clause 1216A(3)(b) of Part 2 of Schedule 1; sub-clause(3) of Clause 850.212 of Part 2 Schedule 2 and Clause 850.213 of Part 2 of Schedule 2 of Statutory Rules No 279. These will be referred to as the "visa provisions".
The submissions can be conveniently considered under separate headings. These are:
· national origin
· enjoyment of a right
· indirect discrimination
· special measures
· benign interpretation
· the PRC.
National origin
Section 10 of the RDA relates only to a law which, by reason of national or ethnic origin, does not afford equal enjoyment of a right. Accordingly, the first question which arises is whether the visa provisions can be said to nullify or impair the enjoyment of a right by the applicant by reason of "national origin".
The applicant says that a liberal interpretation is to be given to the expression "national origin" and that it should not be confined to a person's current nationality or connection with a sovereign state but that it covers a person's race or descent. Two cases are cited in support of this proposition: see Ealing London Borough Council v Race Relations Board [1972] AC 342 at 365, and Australian Medical Council v Wilson (1996) 68 FCR 46 at 75.
The next submission of the applicant is that the choice of the specified countries is by reference to "nationality" and that "nationality" is effectively equivalent to "national origin". The latter expression, it is said, may refer to the birth nationality of a person but it reaches beyond this and may also include such other nationality or nationalities as a person may acquire in a life time. The applicant does not dispute, for example, that a person born in a country such as Indonesia might be properly considered to have Indonesia as the country of "national origin". The visa provisions under challenge, it is said, are not concerned with distinctions between Australian and non-Australian citizens but rather draw a distinction between different non-Australian nationals. It is further said that the concept of "nationality" is used in the regulation as a convenient reference point by which to protect persons whose "national origin" is the state of nationality they hold. In other words, "nationality", as used in the regulation, is a useful and concise way of referring to "national origin."
The Minister, on the other hand, submits that even if, (which is disputed), there is any relevant "right" for the purposes of s 10, that right is not afforded to the persons from specified countries on the basis of "national origin" but rather by reference to their nationality; the date on which they entered Australia; their particular circumstances; whether their entry was lawful, and the cut off dates referred to above. It is said that there is a significant distinction between "national origin" and "nationality." The Minister relies on a recent decision in De Silva v Ruddock (unreported, Merkel J, 19 February 1998) where his Honour considered the operation of s 9 of the RDA.
Discussion
The relevant qualification for the new visas is that the applicant has entered Australia as the holder of a valid passport of one of the specified countries. The requirement does not, in terms, select "national origin" as the factor which enlivens its operation. Nor does it refer to race, colour, or ethnic origin. In Ealing (supra), the House of Lords had to consider the expression "national origin" as used in the English Race Relations Act, 1968. That section provided:
"1(1) It shall be unlawful for any person, being the proprietor or manager of or employed for the purpose of any place of public resort to which this section applies, to practice discrimination on the ground of colour, race, or ethnic or national origins against persons seeking access to or facilities or services at that place...." (Emphasis added)
In discussing the expression "national origins" in his speech Lord Cross said, at 365-6:
"There is no definition of 'national origins' in the Act and one must interpret the phrase as best one can. To me it suggests a connection subsisting at the time of birth between an individual and one or more groups of people who can be described as 'a nation' - whether or not they also constitute a sovereign state....
Suppose, for example, that a man of purely French descent marries a woman of purely German descent and that the couple had made their home in England for many years before the birth of the child in question. It could ... be said that the child had three 'national origins'; French through his father, German through his mother and English not because he happened to have been born here but because his parents had made their home here. Of course, in most cases a man has only a single 'national origin' which coincides with his nationality at birth in the legal sense and again in most cases his nationality remains unchanged throughout his life. But 'national origins' and 'nationality' in the legal sense are two quite different conceptions and they may well not coincide or continue to coincide. That is shown by this case. Mr Zesco was born in 1913 when Poland - though a 'nation' was not a sovereign state but part of the Russian empire. So at birth his 'national origins' were Polish but his nationality was Russian. When Poland became an independent state after the first war he became a Polish citizen, but now though his 'national origins' have remained throughout Polish he has become a citizen of the United Kingdom by naturalisation. It is not difficult to see why the legislature in enacting the Race Relations Act 1965 used this new phrase 'natural origins' and not the word 'nationality' which had a well established meaning in law." (Emphasis added)
His Lordship said that the expressions "ethnic" or "national origins" were used to limit the scope for argument over the meaning of the word "race" which, of course, is a concept capable of many different shades of meaning. In ordinary discourse there is frequently reference to expressions such as the "Negro" race; the "Jewish" race; the "Chinese" race, and the "Indian" race for example.
Lord Donovan (at 354) pointed out that "national origins" meant something different from mere "nationality", and observed that otherwise there would no reason for not using the latter term. Viscount Dilhorne (at 359-360) drew a similar distinction, and Lord Simon (at 363) took a similar view. Although he was in dissent, Lord Kilbrandon, made an important observation at 368 where he said:
"The forbidden grounds are 'colour, race, or ethnic or national origins'. These characteristics seem to have something in common: they have not been acquired, and they are not held, by people of their own choice. They are in the nature of inherited features which cannot be changed, as religion, politics and nationality can be changed, more or less at will, although subject, in the case of the last to fairly strict rules laid down by the receiving state. These considerations seem to indicate a deliberate exclusion of nationality from the unlawful grounds, apart from the strong argument that so familiar a popular as also juridical concept could hardly have been omitted from the area of protection by accident." (Emphasis added)
These words are apposite in the present case. The concept of "nationality" can properly be described as a feature which can be changed and which is not inherent in the above sense. "National origin" on the other hand is not a characteristic which, generally speaking, is capable of change.
The decision in Ealing was considered by the Full Federal Court in the Australian Medical Council case where (at 75), Sackville J said:
"... there is powerful independent support for the conclusion that 'national origin' as used in s 9 of the RD Act, does not simply mean citizenship... In my opinion, Ealing provides guidance for Australian courts concerning the meaning of the phrase 'national origin', as used in s 9 of the RD Act."
Referring to Dr Siddiqui, the applicant in that case, his Honour said:
"However, it seems that he was born and educated in India and that his racial background is Indian. Accordingly, although he became an Australian citizen in 1982, it is very likely that his national origin for the purposes of the RD Act, is Indian."
In De Silva, Merkel J in discussing the expression "national origin" as used in s 9(1) of the Discrimination Act said at 22:
"The discrimination alleged in the present case is not based on national origin; rather, at best for the applicants, one of its bases relates to nationality at or since a specified date, being 1 November 1993. Although there are obvious difficulties in any precise definition of 'national origin' as that term is used in the RD Act, in my view it does not mean current nationality or nationality at a particular date which has no connection with the national origin of the persons concerned. Accordingly, any case of direct discrimination under s 9(1) must fail on that ground alone."
Although there are important differences between ss 9 and 10 of theRDA, which I advert to later, I can see no reason to conclude that a different meaning should be given to the expression "national origin" in the two sections.
On a natural and ordinary reading of the words "national origin", the term denotes place or nation of "origin" or perhaps "birth nationality" but not nationalities acquired at subsequent stages of life.
Some support for the existence of a distinction in s 10 between "nationality" and "national origin" can be gleaned from the text of the Convention itself, which in Article 1(3) refers to "nationality." If the legislation implementing the Convention had intended that the wider term "nationality" should control the application of the law, it would have been a simple matter to use that term rather than to refer to "national origin".
Over a lifetime, a person may acquire a number of different "nationalities" which, depending on the legal regimes in force in any particular country, may be held successively from time to time or even simultaneously where States recognise dual nationality. In these circumstances it may often be a matter of substantial difficulty to determine the relevant nationality of a person for the purpose of a particular regulatory regime. On the other hand, the expression "national origin" is a narrower concept and more readily determined because it is limited to "origin", which is fixed at birth and incapable of change. In framing an International Convention and legislation to implement its provisions against the background of many different legal systems, there is much to be said for preferring a more specific criterion which can be more readily determined with greater certainty.
In the present case the criterion adopted is whether the person, at the time of entry into Australia, held a valid passport of a specified country. This is not a reference to the national origin of the person. Nor is it a reference to race, colour or ethnic origin. For these reasons I do not accept the submission of the applicant on this point.
Right - Is the applicant adversely affected in her equal enjoyment?
The applicant accepts that she must establish that she does not enjoy a "right" or that she enjoys a "right" to a lesser extent, in comparison with persons of another race or colour or national or ethnic origin.
The applicant points out that the reference in s 10(1) of the RD Act is to a "right" and that is different from s 9(1), which refers to a human right or fundamental freedom in the political, economic, social, cultural fields or any other field of public life. Therefore, it is submitted by the applicant that cases concerned with the application of s 9 are not relevant. Reference is made to Mabo v Queensland No 1 (1988) 166 CLR 186 at 229-230.
In my view, the differences in wording do not carry much weight because the Convention itself is focused broadly on the observance of human rights and fundamental freedoms. See, for example, the first two clauses of the Recitals to the Convention. The statements in the second clause refers to the Universal Declaration of Human Rights. These matters indicate that the Convention and the RDA are primarily concerned with the enjoyment of basic human or fundamental rights.
The applicant also points out that, whereas s 9 is concerned with the acts of an individual, s 10 is concerned with the effect of a provision of the law of the Commonwealth or State. The essential difference is that under s 9, it is unlawful for a person to contravene the section, whereas under s 10, a law to which the section applies is not invalid but rather its operation is extended to confer entitlements to those adversely affected to enable them to enjoy the right in question to the same extent.
Both sections provide that the expression "rights" includes a right "of a kind" referred to in Article 5 of the Convention because the definition is inclusive in nature. Even if "right" is not "of a kind" referred to in the Convention, it may still be a "right" for the purposes of s 10. Article 5 enumerates a collection of wide-ranging general rights, such as the right to equality under the law, the right to freedom of movement and residence within the border of the State, the right to nationality, the right to inherit, the right to work, and so on. It is evident that the expression "right" should be given a broad interpretation.
The rights set out in Article 5 are, of course, only particular instances of the rights and freedoms protected by s 10 and not an exhaustive description of those rights and freedoms: see Gerhardy (supra) at101.
The applicant further submits that the opportunity conferred by the new visas to apply for permanent residence is a right of a kind referred to in Article 5, namely a right to obtain residence.
The respondent, on the other hand, submits that the applicant must establish that the right alleged is of a "kind" intended to be protected by the Act. The courts, it is said, have shown reluctance to attempt a definition of the meaning of the word "right" as used in ss 9 or 10 of the Act. Nevertheless, it is the function of the Court to ascertain in each case whether a "right", said to support the application of s 10, is one which attracts the protection of the Act. Such a process involves an exercise in statutory interpretation, which as Deane J points out in Mabo (supra) at 229-230, must not be narrow or legalistic. His Honour there said:
"The word 'right' is used in s 10 in the same broad sense in which it is used in the International Convention, that is to say, as a moral entitlement to be treated in accordance with standards dictated by the fundamental notions of human dignity and essential equality which underlie the international recognition of human rights." (Emphasis added)
The respondent also submits that the Court should adopt the analysis by Merkel J in De Silva (at 23) in relation to s 9 as follows that:
"To fall within section 9(1) the failure to extend the subclass 435 visa must nullify or impair the recognition, enjoyment or exercise of any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life. Putting aside the special position of refugees, which does not arise as none of the applicants put their claims in this proceeding on the basis of eligibility for refugees status, Article 5 of the Convention does not recognise any right of non-citizens to remain where they are temporarily resident in such circumstances. Further, the applicants have not demonstrated the recognition of any such right as a human right or fundamental freedom in any other context."
Whilst accepting that s 9 speaks in terms of a "human rights or fundamental freedom," the respondent submits that the Court must undertake an exercise of characterisation similar to that carried out by his Honour in De Silva and that such an exercise demonstrates that the entitlement of certain non-citizens here to seek an 850 or 851 visa is not a right of the kind protected by s 10 of the Act.
The respondent further submits that the opportunity for a non-citizen to apply for permanent residence in Australia after a period of temporary residence, because of disruption in the person's home land, is not a right of the kind protected by s 10 of the Act. Such an opportunity is in the nature of a benefit to meet a specific need arising from past governmental treatment of certain groups. In order to qualify for characterisation as a right under the section, the right conferred must be of a kind that is capable of being enjoyed by the applicants. Otherwise it cannot be said that it is a right in respect of which the applicant is being denied any, or complete enjoyment on an equal basis. The opportunity which the visa rules provide, according to the respondent, is to be characterised as being conferred on persons in a special class, not because of ethnic origins, but rather because of past treatment. There is no evidence that the applicant was granted a temporary entry visa on humanitarian grounds because of disruption in her homeland. The right in question, it is said, was a right which the applicant could not have taken advantage of or enjoyed and so it cannot be concluded that she is denied or limited as to the enjoyment of that opportunity. She is not within a group having an equivalent claim to residence because she has not established the same background of governmental treatment as groups from specified countries.
The provision of an opportunity to become a permanent resident does not deprive nationals of other countries, who do not have a similar history and who are non-citizens, of the opportunity to enjoy a "right" to reside in Australia. The provision of an opportunity to make an application for temporary and/or permanent status arising from specific historical and special humanitarian circumstances, does not therefore enliven s10.
Although Article 5 of the Convention is cast in wide terms in respect of the right to residence, it does not follow that every non-citizen who lawfully enters Australia has any claim by way of a right to permanently reside here. The equality envisaged in the enjoyment of the enumerated rights does not encompass circumstances where a government, on compassionate grounds, has declined to return a group of persons from certain states to their national states. Therefore, the law does not unequally affect persons from other countries who do not have a similar history and who are differently affected because of that history. There is no unequal treatment in the enjoyment of rights as between two groups of non-citizens with different histories of treatment by the government in different circumstances where the measures are not claimed to be unreasonable or inappropriate to implement the object and purposes of the Migration Act. The provisions for the new visas provide a means of meeting a specific human problem of specific groups, namely an expectation of being able to remain in Australia arising from their treatment by previous governments. It does not have the effect of unequally treating the group of which the applicant is a representative.
In the course of argument reference was made to a report of the deliberations of the UN Human Rights Committee in Adam v The Czech Republic, (Comm. No 586/1994, UN Doc CCPR/C/57/D (1996)). That proceeding concerned an application by an Australian citizen for restitution of property confiscated by the Czechoslovakian government in 1949. The claim was rejected on the grounds that the applicants did not fulfil the requirements that they have Czech citizenship and be permanent residents of the Czech Republic. The Committee concluded that the refusal of restitution to non-citizens of the Czech Republic violated their rights.
In the course of the Committee's Examination of the Merits, it is said at par 12.5:
"... The State party itself has acknowledged that the confiscations under the Communist governments were injurious and this is the reason why specific legislation was enacted to provide for a form of restitution. The Committee observes that such legislation must not discriminate among the victims of the prior confiscations, since all victims are entitled to redress without arbitrary distinctions. Bearing in mind that the author's original entitlement to his property by virtue of inheritance was not predicated on citizenship the Committee finds that the condition of citizenship is ... unreasonable." (Emphasis added)
It is noteworthy in the above passage that the Committee considered that the entitlement must be conferred without arbitrary distinctions. In the present case, of course, it cannot be said that the criteria for selection of the listed countries is arbitrary, having regard to the circumstances in which the selection of these countries and cut off dates was made.
For the above reasons I am not persuaded that the applicant is unequally affected in the enjoyment of any "right" as a result of the visa conditions.
Indirect discrimination
The applicant seeks to rely on the principles relating to indirect discrimination. This type of discrimination can be described as the selection of criteria for differential treatment, which on their face apply equally but which in their practical operation are unfair and discriminatory. The applicant submits that the expression "to a more limited extent" imports the concept of indirect discrimination into s 10(1). It is submitted that this arises because it is said to be obvious that in practice, in the majority of cases, the criteria of "nationality" and "national origin" will coincide. Therefore, if a law imposes a comparative advantage by reference to nationality, a substantial number of persons of the corresponding national origin will enjoy the right to a greater extent than persons not of that origin.
In substance the submission is that by selecting the listed countries, on the basis of nationality, there is a discriminatory effect by reason of "national origin". This stems from what is claimed to be the indirect discriminatory impact of the grant of the right to apply for the new visas.
In my view there is no reason to introduce into s 10 concepts of indirect discrimination. Section 10 is concerned with the effect of a law and not with the concept of discrimination upon the individual. The effect of a law can be direct or indirect. It is not necessary to input into s 10 the concept of indirect discrimination embedded in s 9. Reliance on indirect discrimination raises a false issue. The real question for the Court is the proper construction of the language used in the section. If it can be said that by reason of a provision of a law, there is an effect of the type set out in the section, then the equalising adjustment provided for in the section is enlivened. It is not to the point to speak in terms of direct or indirect discrimination. The section operates by reference to the nationality of a person at a particular point of time when that person entered Australia as the holder of a valid passport of a listed country. For the reasons given earlier, on a proper interpretation of the section, the language does not warrant the conclusion that national origin and nationality are the same.
Special measures
As a further, alternative submission, the respondent says that s 10 can have no operation because the visas are a "special measure", to which par 4 of Article 1 of the Convention applies, with the consequence that s10 does not apply.
Article 1(4) of the Convention provides:
"Special measures taken for the sole purpose of securing adequate advancement of certain racial or ethnic groups or individuals requiring such protection as may be necessary in order to ensure such groups or individuals equal enjoyment or exercise of human rights and fundamental freedoms shall not be deemed racial discrimination, provided, however that such measures do not as a consequence lead to the maintenance of separate rights for different racial groups and that they shall not be continued after the objectives for which they were taken have been achieved."
In support of this argument, the respondent refers to the decision of Brennan J in Gerhardy (supra) at 133, where his Honour, with reference to Article 1(4) of the Convention said:
"A special measure (1) confers a benefit on some or all members of a class, (2) membership of which is based on race, colour, descent or national or ethnic origin, (3) for the sole purpose of securing adequate advancement of the beneficiaries in order that they may enjoy and exercise equally with others human rights and fundamental freedoms, (4) in circumstances where the protection given to the beneficiaries by the special measure is necessary in order that they may enjoy and exercise equally with others human rights and fundamental freedoms."
In determining the purposes for which a measure is taken, a court will have regard to background facts. As Brennan J went on to say at 137-138:
"To determine whether the measure in question is intended to remove and is necessary to remove inequality in fact (as distinct from formal inequality), the circumstances affecting the political, economic, social, cultural and other aspects of the lives of the disadvantaged group must be known and an opinion must be formed as to whether the measure is necessary and likely to be effective to improve those circumstances. The objective circumstances affecting the disadvantaged group are matters of fact, capable of ascertainment albeit with difficulty. But once those circumstances are ascertained, an assessment must be made about a number of matters: what is 'adequate advancement' of the beneficiaries in the circumstances? Do they require the protection given by the measure in order to enjoy and exercise their human rights and fundamental freedoms equally with others? Whether a measure is needed and is likely to alter the circumstances affecting a disadvantaged racial group in such a way that they will be able to live in full dignity, to engage freely in any public activity and to enjoy the public benefits of society equally with others if they wish to do so is, at least in some respects, a political question. A court is ill- equipped to answer a political question."
The judgment of Deane J (at 149) is also relied on. His Honour there said:
"What is necessary for characterization of legislative provisions as having been 'taken' for a 'sole purpose' is that they can be seen, in the factual context, to be really and not colourably or fancifully referable to and explicable by the sole purpose which is said to provide their character. They will not properly be so characterized unless their provisions are capable of being reasonably considered to be appropriate and adapted to achieving that purpose."
The respondent submits that all four indicia necessary to establish a "special measure" are established in the present case having regard in particular to the affidavit of Mr Johnston and the published statements of governmental policy annexed to it.
On the assumption, (which I do not accept), that there has been discrimination, I do not consider that the present circumstances attract the exception. This is not a case where the visas can be said to be necessary to enable the selected groups to enjoy and exercise equally human rights and fundamental freedoms. The language is simply not apposite to the present circumstances. The visas are designed to meet a specific problem. However, the visa provisions cannot be properly characterised as being for the purpose of securing the advancement of the beneficiaries in order that they may enjoy and exercise human rights and fundamental freedoms. For these reasons the measures are not within Article 1(4) of the Convention or within the criteria referred to by Brennan J.
Benign discrimination
The respondent contends that there is a principle distinct from the "special measures" principle which can support the visa provisions. This is described by the respondent as the "benign" discrimination point. It is based on a remark in the majority judgment in Western Australia v The Commonwealth (1995) 183 CLR 373 at 483-4 in these terms:
"... if there were any discrepancy in the operation of the two Acts, the Native Title Act can be regarded either as a special measure under s 8 of the Racial Discrimination Act (372) or as a law which, although it makes racial distinctions, is not racially discriminatory so as to offend the Racial Discrimination Act or the International Convention on the Elimination of All Forms of Discrimination." (Emphasis added)
In the present case, in view of the conclusions which I have reached, it is not necessary for me to decide whether there is any principle of "benign discrimination" which would justify beneficial discrimination on the ground of race and I express no opinion on this submission.
PRC
The applicant points out that the broad justification advanced for limiting the visas to the specified countries was that those benefited had been eligible for specific visa concessions provided by previous Governments for humanitarian reasons. This justification is referred to in the evidence given by Mr Johnston. The applicant seeks to weaken the force of this justification in the specific case of the PRC. The applicant points out that there is an apparent anomaly in the case advanced for the Minister in the case of persons who came from the PRC after Tiananmen Square in 1989 and 1 November 1993, because some persons in this category were not given any entitlement to a visa or residence until the 1997 regulations for the new visas.
The evidence of Mr Johnston was that many of these persons from the PRC were eligible, in fact, for refugee status so that the point only has relevance in the case of persons who did not make such an application. In addition, other PRC nationals, namely unsuccessful applicants for refugee status, were able to claim residence under other special visas requiring special qualifications. However, it is true that there remained a residual group who remained here without interim visas having been made available. There was no evidence as to the number of persons who came within the description of not having any visa until the present provisions came into operation in 1997. Mr Johnston's evidence was that in most cases the PRC Nationals had either applied for refugee status or other visas.
The evidence as to this inconsistency, in relation to an indeterminate number of persons from the PRC in the period after Tiananmen Square, does not, in my view, affect the central consideration that the visas were, in substance, established for humanitarian and compassionate reasons based on the expectations of persons from these countries. They are based on continued, prior government conduct in permitting and enabling the continued residence in Australia of persons from the specified countries.
Procedure
The respondent has submitted that the Orders sought should not be made because this is a representative proceeding and the Orders are not appropriate as to form and for other reasons.
In view of my conclusion that the application should be dismissed it is not necessary to deal with these submissions.
General Conclusions
Considered from a broader perspective, the position is that the entitlement claimed by the applicant is that a right to residence has been given to some groups of persons who arrived in Australia holding passports of certain countries. These persons have been resident in Australia for over four years because of concessions extended from time to time, by the Australian government, for humanitarian considerations. The present government has taken into account these past concessions and recognised that they have given rise to reasonable expectations of continued residence and engendered uncertainty on the part of such persons as to their future status. In order to reduce the extent of the problem of uncertain status, the government has provided for the new visas.
The confinement of the new visas to individuals from specific countries is because the humanitarian concessions, which have been extended, were made by reference to persons arriving from those countries. No doubt this reference to the countries is a convenient way of describing the groups of persons who had received the concessions over the years and who had experienced the uncertainty as to status. The cut-off dates, which also comprise one of the selected criteria, are imposed because of budgetary and other practical constraints. Consequently, the position is that even within the groups themselves, from the specified countries, the government made its decision after taking into account the practicalities of the situation.
Due to the opportunity conferred being referable to a particular history of governmental treatment, it cannot be said that members of other groups, which have not experienced that history and which were not so treated, have been deprived of their enjoyment of substantially the same entitlement or right. Formulated in the negative, the opportunity furnished by the visas is not one in respect of which the applicants can be said to be eligible. When regard is had to the background circumstances, it cannot be said that the provisions give rise to unequal treatment in the enjoyment of any right by reason of national origin.
For the above reasons the application should be dismissed. However, as this proceeding is a representative proceeding I will not make any orders as this stage. I direct the parties to bring in appropriate Short Minutes. These should also deal with the future conduct of the proceeding. At that time I will hear the parties on costs.
I certify that this and the preceding twenty (20) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin
Associate:
Dated: 21 April 1998
Counsel for the Applicant: Mr D M J Bennett QC
Ms C Ronalds
Mr S Beckett
Solicitor for the Applicant: Parish Patience
Counsel for the Respondent: Mr J Basten QC
Dr A S Bell
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 19 March 1998
Date of Judgment: 21 April 1998
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1997-12-16 00:00:00
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Re Bendel, David; Ex Parte Bendel, David & Ors v Pattison, Paul Anthony (as Trustee of the Bankrupt Estate of David Bendel) [1997] FCA 1572
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1997/1997fca1572
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2024-09-13T22:50:32.704458+10:00
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IN THE FEDERAL COURT OF AUSTRALIA NOT FOR GENERAL
distribution
VICTORIA DISTRICT REGISTRY VB 1083 of 1996
RE: DAVID BENDEL
EX PARTE: DAVID BENDEL
APPLICANT
AND: PAUL ANTHONY PATTISON (AS TRUSTEE OF THE
BANKRUPT ESTATE OF DAVID BENDEL)
RESPONDENT
RE: DAVID BENDEL
EX PARTE: SASH INVESTMENTS PTY LTD
ACN: 004 667 565
APPLICANT
AND: PAUL ANTHONY PATTISON (AS TRUSTEE OF THE
BANKRUPT ESTATE OF DAVID BENDEL)
RESPONDENT
RE: DAVID BENDEL
EX PARTE: SKILLMARK INVESTMENTS PTY LTD
ACN: 004 008 457
APPLICANT
AND: PAUL ANTHONY PATTISON (AS TRUSTEE OF THE
BANKRUPT ESTATE OF DAVID BENDEL)
RESPONDENT
RE: DAVID BENDEL
EX PARTE: ORBACH HOLDINGS PTY LTD
ACN: 004 363 213
APPLICANT
AND: PAUL ANTHONY PATTISON (AS TRUSTEE OF THE
BANKRUPT ESTATE OF DAVID BENDEL)
RESPONDENT
JUDGE: HEEREY J
DATE OF ORDER: 16 december 1997
WHERE MADE: MELBOURNE
REASONS FOR JUDGMENT
I think it is appropriate in the case of Sash Investments Pty Ltd that there be an order for costs on an indemnity basis. There was substantial fraud, as I find, not merely in the subject matter of the litigation but in the way the case was presented to the Court. It is true that I have directed the matter be referred to the prosecuting authorities, but that seems to me quite separate from the justified claim of the trustee not to be out of pocket when litigation has been pursued against him on a fraudulent basis. It is a matter for discretion, as counsel rightly concedes, but the case of Australian Guarantee Corporation Limited v De Jager [1984] VR 483 at 502 provides a good example of an award of costs other than party and party costs on a similar basis.
I think it is appropriate that I order in the Orbach case that the costs of the applicant, Orbach Holdings Ltd, be paid out of the estate and rank as costs of administration.
I certify that this and the preceding page are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey
Associate:
Dated: 16 December 1997
Counsel for the Applicant: T Irlicht
Solicitor for the Ap plicant: Irlicht & Broberg
Counsel for the Respondent: J Delany
Solicitor for the Respondent: Cornwall Stodart
Date of Hearing: 16 December 1997
Date of Judgment: 16 December 1997
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Doyle v Australian Postal Corp [1999] FCA 1364
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1999/1999fca1364
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2024-09-13T22:50:33.172722+10:00
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FEDERAL COURT OF AUSTRALIA
Doyle v Australian Postal Corporation [1999] FCA 1364
INDUSTRIAL LAW – Interlocutory relief – applicant sought to restrain respondent giving effect to decision to transfer – serious issue to be tried – whether decision to transfer divorced from applicant's status as a person who proposed to become a union delegate – balance of convenience.
Workplace Relations Act 1996 (Cth) s298K, s298T, 298U(e)
Bullock v The Federated Furnishing Trades Society of A/asia (1985) 5 FCR 464, applied
JOAN DOYLE v AUSTRALIAN POSTAL CORPORATION
V 452 OF 1999
MARSHALL J
MELBOURNE
31 AUGUST 1999
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 452 OF 1999
BETWEEN: JOAN DOYLE
Applicant
AND: AUSTRALIAN POSTAL CORPORATION
Respondent
JUDGE: MARSHALL J
DATE OF ORDER: 31 AUGUST 1999
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The application for interlocutory relief be dismissed.
2. The directions hearing be adjourned to 10.15 am on 6 September 1999.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 452 OF 1999
BETWEEN: JOAN DOYLE
Applicant
AND: AUSTRALIAN POSTAL CORPORATION
Respondent
JUDGE: MARSHALL J
DATE: 31 AUGUST 1999
PLACE: MELBOURNE
REASONS FOR INTERLOCUTORY JUDGMENT
1 On 6 August 1999 the applicant, Joan Doyle, made application pursuant to s298T of the Workplace Relations Act 1996 (Cth) ("the Act") in which she sought the imposition of a penalty upon the respondent, Australian Postal Corporation ("Australia Post") for breach of s298K of the Act. The application also sought orders under s298U(e) of the Act restraining Australian Postal Corporation ("Australia Post") from giving effect to certain matters regarding Ms Doyle's employment.
2 The application sought interlocutory relief against Australia Post from giving effect to its decision to transfer Ms Doyle to the Brighton Delivery Centre. The application for interlocutory relief was made returnable on 12 August 1999. On that day that application and the directions hearing was adjourned to 26 August 1999. On 26 and 27 August 1999 evidence was given regarding the claim for interlocutory relief and submissions made on the issue of balance of convenience. Written submissions were received on 31 August 1999 on the question of serious issue to be tried.
3 By the time the application for interlocutory relief was heard Australia Post had determined to transfer Ms Doyle to its South Melbourne Delivery Centre. The application for interlocutory relief was amended to seek to restrain Australia Post from giving effect to that later decision.
Factual background
4 Ms Doyle is employed by Australia Post as a postal delivery officer. She has been employed by Australia Post since November 1985. From February 1996 until October 1998 Ms Doyle was located at the Fairfield Post Office. In October 1998 she was relocated to the Northcote Delivery Centre.
5 Ms Doyle is a member of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union ("the CEPU"). She has been a member of the CEPU and predecessor organisations since late 1985. She has been active in the affairs of the CEPU over the length of her employment. She is currently the CEPU shop steward at the Northcote Delivery Centre. From August 1997 to August 1999 Ms Doyle held office as a member of the Branch Committee of Management of the Victorian Postal and Telecommunications branch of the Communications Division of the CEPU. She is the holder of a permit pursuant to reg 109B of the Workplace Relations Regulations allowing her right of entry to Australia Post's premises in accordance with Div 11A of Part IX of the Act.
6 Ms Doyle nominated for the position of Branch President in the recent elections held within the Victorian Postal and Telecommunications branch of the CEPU ("the Branch"). She was unsuccessful. However she was elected to the position of Alternate National Councillor.
7 There is a self-styled reform group within the Branch known as "Keep Australia Post Public" ("KAPP"). Ms Doyle is the convenor of KAPP. It is, in effect, the internal opposition to the incumbent leadership of the Branch.
8 On 9 April 1999 Ms Doyle was working at the Northcote Delivery Centre when an issue arose between Ms Doyle and the Delivery Manager of the Centre, Mr Michael Sinni, concerning the allocation of work to a particular employee. Consequently work stopped for 10 minutes until Ms Doyle was satisfied that progress had been made on the matters which she and Mr Sinni had been discussing.
9 As a result of Ms Doyle's actions in effecting a stoppage of work on 9 April 1999 Mr Sinni informed Ms Doyle that her actions warranted an inquiry in accordance with Australia Post's disciplinary procedures. Mr Sinni gave evidence that he was motivated to initiate the inquiry procedure because Ms Doyle:
· refused to comply with his direction;
· called an unauthorised stoppage of work; and
· undermined a decision made by him.
10 Mr Sinni claimed that he did not commence the inquiry procedure because of Ms Doyle's role in union affairs. His evidence was that he was solely motivated by what he perceived to be a breach of discipline.
11 In support of her view that Mr Sinni had contrived to place her on an inquiry due to her union activities, Ms Doyle gave evidence that on 1 April 1999 she found a "with compliments" slip on Australia Post stationery which contained writing by Mr Sinni which included the words "Micke… [short for Michelle] – Joan Enquiry??" The reference to Michelle was said to be a reference to Ms Michelle Moulden, Mr Sinni's superior and the Area Manager Delivery North East for Australia Post.
12 Mr Sinni gave evidence that the notation was made on 12 April 1999. This evidence is consistent with other writing on the piece of paper which relates to events at the Centre on 12 April 1999.
13 In his affidavit of 23 August 1999 Mr Sinni said as follows:
"I want to make it clear that at no time have I sought to victimise Ms Doyle. At the time of these incidents I had only been at Northcote for two to three weeks. At that time I had no knowledge of Ms Doyle's union membership or prior union activity."
14 When cross-examined by counsel for Ms Doyle, Mr Rozen, Mr Sinni admitted that the last sentence quoted above was incorrect. He said he was aware that Ms Doyle was in the Union and was purporting to act as shop steward. The Court also infers that Mr Sinni was aware that Ms Doyle was proposing to formally nominate for that position shortly after 9 April 1999.
15 An inquiry into Ms Doyle's conduct on 9 April 1999 was undertaken by Mr Stephen Grech, Manager Operations Process Improvement, Network Process and Technology Unit of Australia Post. That inquiry also dealt with an allegation that Ms Doyle had obstructed a fellow employee on 13 April 1999 from delivering mail via the use of a motorcycle. Ms Doyle was exonerated regarding the 13 April 1999 matter.
16 Mr Grech gave evidence in an affidavit sworn by him on 23 August 1999 that he found the allegation that Ms Doyle had engaged in unauthorised industrial action on 9 April 1999 to be made out. He said that:
"In reaching this conclusion I acted independently. I did not seek the views of any other person nor did I receive unsolicited advice from any other person. The manner in which I conducted the inquiry, my findings as to the allegations made against Ms Doyle, and my recommendation that she be dismissed were not influenced in any way by Ms Doyle's union membership, position as a delegate or officer of the union."
17 Mr Grech was not cross-examined on that evidence. He gave further evidence that he recommended to Mr Steve Ousley, the State Delivery Manager, that Ms Doyle's employment be terminated. That recommendation was contained in a letter to Mr Ousley dated 1 June 1999.
18 Mr Ousley considered Mr Grech's report. He interviewed Ms Doyle and ultimately determined that the appropriate penalty was a transfer to the Brighton Delivery Centre in lieu of termination of her employment. Mr Ousley's decision to transfer Ms Doyle to Brighton was the subject of reconsideration by a Board of Reference. The Board hearing occurred on 18 August 1999. On 24 August 1999 the Board found that the decision to transfer Ms Doyle was "fair and reasonable". It concluded as follows:
"On the assumption that Ms Doyle is transferred to a location closer to her home than Brighton DC, the appeal is dismissed."
Serious issue to be tried
19 On the current state of the evidence before the Court, especially having regard to the reverse onus of proof provided by s298V of the Act, the Court is satisfied that a serious issue to be tried has been raised. At this stage the Court is unable to confidently conclude that Ms Doyle's status as a person who proposed to become a delegate of CEPU and who after 20 April 1999 had become such a delegate was totally divorced from the decision of Australia Post to transfer her in her employment.
20 It is the Court's view however, that the evidence in its current form reveals what was described by Woodward J in Bullock v The Federated Furnishing Trades Society of A/asia (1985) 5 FCR 464 at 472 as a "more doubtful claim (which nevertheless raises a serious issue to be tried) [and which], may still attract interlocutory relief if there is a marked balance of convenience in favour of it." This is especially so having regard to the unchallenged evidence of Mr Grech referred to above and to the independent finding of the Board of Reference on the appropriateness of a transfer of Ms Doyle in her employment with regard to the conduct alleged against her.
21 The Court is inclined to the view that whilst a serious issue to be tried has been established on the current state of the evidence its strength is mediocre at best. The Court puts aside from consideration for current purposes any question of resolving credibility issues as between Mr Sinni and Ms Doyle concerning the "with compliments" slip discussed earlier in these reasons.
Balance of convenience
22 The Court therefore does not consider there to be a marked balance of convenience in favour of the grant of interlocutory relief. The only real disadvantage which Ms Doyle will suffer as a result of her transfer to South Melbourne may be the requirement to arise approximately one hour earlier than she has been accustomed to arising to commence duties in Northcote. Australia Post has undertaken to ensure that Ms Doyle does not suffer a diminution in overtime earnings as a result of her transfer. The Court accepts that undertaking and in the absence of it may have reconsidered its attitude to the grant of interlocutory relief restraining the transfer.
23 Mr Rozen submitted that the Court should also take into account the detriment to Ms Doyle's fellow employees at Northcote should she be transferred. I accept that such detriment is a relevant factor going to balance of convenience. However such evidence was limited to two fellow employees and must be weighed in the balance against the importance of Australia Post maintaining the integrity of its disciplinary process which includes access to an independent Board of Reference.
24 It was also submitted that should Ms Doyle succeed at trial and as a result be transferred back to Northcote, she may find that all deliveries have been motorised and be unable to work there as she does not hold a motorcycle licence. There was no evidence before me that such a change was imminent. However, it is also possible that such a change may occur in due course if Ms Doyle was returned to Northcote necessitating her transfer for reasons divorced from any consideration in Part XA of the Act.
Order
25 In the circumstances it is appropriate to order that the application for interlocutory relief be dismissed and that the directions hearing be adjourned to the next directions list before me at 10.15 am on 6 September 1999.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.
Associate:
Dated: 31 August 1999
Counsel for the Applicant: Mr P Rozen
Solicitor for the Applicant: Maurice Blackman Cashman
Counsel for the Respondent: Mr M McDonald
Solicitor for the Respondent: Minter Ellison
Date of Hearing: 27 August 1999
Completion of Written Submissions: 31 August 1999
Date of Judgment: 31 August 1999 (ex tempore as revised from the transcript)
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2017-09-11 00:00:00
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Axent Holdings Pty Ltd v Compusign Australia Pty Ltd [2017] FCA 1077
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2017/2017fca1077
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2024-09-13T22:50:33.569472+10:00
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FEDERAL COURT OF AUSTRALIA
Axent Holdings Pty Ltd v Compusign Australia Pty Ltd [2017] FCA 1077
File number: VID 1408 of 2016
Judge: KENNY J
Date of judgment: 11 September 2017
Catchwords: PRACTICE AND PROCEDURE – Application for discovery – Orders for discovery made.
Legislation: Patents Act 1990 (Cth)
Cases cited: Belegging-en Exploitatiemaatschappij Lavender BV v Witten Industrial Diamonds Ltd [1979] FSR 59
Mulley v Manifold (1959) 103 CLR 341
Date of hearing: 4 September 2017
Registry: Victoria
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Patents and associated Statutes
Category: Catchwords
Number of paragraphs: 53
Counsel for the Applicant: S K Gatford
Solicitor for the Applicant: Comlaw Barristers and Solicitors
Counsel for the Respondents: C H Smith
Solicitor for the Respondents: Rankin & Co
ORDERS
VID 1408 of 2016
BETWEEN: AXENT HOLDINGS PTY LTD (ACN 096 387 370) T/A AXENT GLOBAL
Applicant
AND: COMPUSIGN AUSTRALIA PTY LTD
First Respondent
HI-LUX TECHNICAL SERVICES PTY LTD
Second Respondent
COMPUSIGN SYSTEMS PTY LTD
Third Respondent
AND BETWEEN: COMPUSIGN AUSTRALIA PTY LTD (ACN 070 157 925) (and another named in the Schedule)
First Cross-Claimant
AND: AXENT HOLDINGS PTY LTD
Cross-Respondent
JUDGE: KENNY J
DATE OF ORDER: 11 SEPTEMBER 2017
THE COURT ORDERS THAT:
1. By 4:00pm on 25 September 2017 each of the respondents give standard discovery in accordance with Rules 20.14, 20.16 and 20.17 of the Federal Court Rules of documents that evidence from 2 December 2010:-
(a) the promotion, sale or supply by any one of them of any variable speed limit sign or lane use sign;
(b) the maintenance or repair by any one of them of any variable speed limit sign or lane use sign;
(c) any authorisations or instructions given by any one of them as to the use by others of any variable speed limit sign or lane use sign; and
(d) all documents that any respondent asserts to be an authorisation in writing given to them by an authority of a State for the services of that State under section 163(2) of the Patents Act 1990 (Cth).
2. The Court excuses compliance with order 1(a) and (b) if it is the case that numerous contracts have been entered into in the same or substantially the same terms, in which case the relevant respondent must provide, in place of copies of each contract, a verified list setting out for each such contract the following information:-
(a) one complete contract whose terms are representative of all contracts of that kind;
(b) the date of all such similar contracts;
(c) the identity of all parties to all such contracts; and
(d) the number of items supplied, repaired or maintained under each such contract and the date or dates of each supply, repair or maintenance undertaken pursuant to that contract.
3. The Court excuses compliance with order 1(c) if it is the case that numerous authorisations or instructions have been given in the same or substantially the same terms, in which case the relevant respondent must provide, in place of copies of those authorisations or instructions, a verified list setting out for those authorisations or instructions the following information:-
(a) one complete authorisation or instruction whose terms are representative of all authorisations or instructions of that kind;
(b) the date of all such similar authorisations or instructions;
(c) the identity of all persons to whom all such authorisations or instructions were given; and
(d) the product to which each such authorisation or instruction related.
4. The Court excuses compliance with order 1(d) in the case of any respondent that has by now provided Axent with a copy of all documents that that respondent asserts to be an authorisation in writing given to it by an authority of a State for the services of that State under section 163(2) of the Patents Act 1990 (Cth) and, in that event, directs that that respondent confirm on oath that it has in fact provided Axent with copies of all such authorisations given to it by an authority of a State.
5. Unless a party notifies the Court in writing by 4:00 pm on 14 September 2017 that it opposes this order as to costs, the respondents pay the applicant's costs of and incidental to the obtaining of these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
KENNY J:
APPLICATION for discovery
1 On 2 December 2016 the applicant, Axent Holdings Pty Ltd (Axent) filed an originating application seeking relief on the basis that Compusign Australia Pty Ltd (Compusign Australia) and Hi-Lux Technical Services Pty Ltd (Hi-Lux) infringed claims 1-28 (the claims) of Australian patent number AU2003252764 (the patent in suit) for an invention titled "Changing Sign System".
2 On 24 May 2017 Compusign Systems Pty Ltd (Compusign Systems) was joined as the third respondent to the application.
3 In mid-February 2017, Hi-Lux and Compusign Australia filed a cross-claim for the revocation of the patent in suit on various grounds of invalidity. The grounds relied on by one or other of them were: lack of novelty; lack of inventive step; obviousness; lack of fair basis; lack of clarity; lack of entitlement; and secret use.
4 The hearing of the originating application and the cross-claim (on liability only) has been fixed to begin on 27 November 2017.
5 Axent has previously raised the issue of discovery; and attempts to deal with that issue informally have failed. Axent has now applied, by way of a letter dated 24 August 2017, for standard discovery in accordance with rr 20.14, 20.16 and 20.17 of the Federal Court Rules 2011 (Cth) (the Rules). No objection has been taken to the form of the application, which I indicated at an earlier case management conference would be acceptable.
6 Paragraph 1 of the orders proposed by Axent seek documents that evidence from 2 December 2010:
a. the promotion, sale or supply by any one of [the respondents] of any variable speed limit sign or lane use sign;
b. the maintenance or repair by any one of [the respondents] of any variable speed limit sign or lane use sign; and
c. any authorisation or instructions given by any one of [the respondents] as to the use by others of any variable speed limit sign or lane use sign.
d. all documents that any respondent asserts to be an authorisation in writing given to them by an authority of a State for the services of that State under section 163(2) of the Patents Act 1990.
7 Paragraph 2 of Axent's proposed orders further provide:
The Court, however, excuses compliance with order 1(a) and (b) if it is the case that numerous contracts have been entered into in the same or substantially the same terms, in which case the relevant respondent may provide, in place of copies of each contract, a verified list setting out for each such contract the following information:-
a. one complete contract whose terms are representative of all contracts of that kind;
b. the date of all such similar contracts;
c. the identity of all parties to all such contracts; and
d. the number of items supplied, repaired or maintained under each such contract and the date or dates of each supply, repair or maintenance undertaken pursuant to that contract.
THE parties' position statements
8 In order to assess Axent's application for discovery, it is necessary to refer to the position statements on infringement filed by each of the parties.
9 Axent filed its position statement on infringement on 23 June 2017, and amended it on 28 July 2017. In its statement, Axent alleges that the Compusign respondents' sale or manufacture of variable speed limit signs and advanced lane use signs infringe the claims of the patent in suit. As will be seen, however, by their pleadings and position statements, the respondents, while denying infringement, have sought relevantly to confine the dispute. Axent's current application for discovery raises the effect of this confinement.
10 As Axent's position statement acknowledges, the Compusign respondents have admitted that they have imported and sold into Australia components for, and manufactured, promoted, sold and supplied, repaired and replaced in whole or in part in Australia, variable speed limit signs for traffic control on roadways. Indeed, Compusign Systems says that it intends to continue to engage in this conduct.
11 Axent also alleges that Hi-Lux's sale and manufacture of a speed limit series of products and lane use series of products infringe the claims of the patent in suit, and acknowledges that Hi-Lux has made some relevant admissions. Like the Compusign respondents, Hi-Lux has admitted that, in Australia, it has manufactured, sold and supplied, offered to sell and supply, and kept for these purposes variable speed limits signs and that these variable speed limits signs include versions that have pre-programmed displays and versions that its customers program. Hi-Lux has also admitted listed features of its variable speed limits signs.
12 In its position statement, at paragraph 20, Axent affirms that "[e]ach of the respondents has admitted that they are manufacturers of variable speed limit signs. They have also admitted various other acts of infringement". As its position statement shows, however, Axent alleges different types of infringing conduct.
13 In paragraphs 21–22 of its position statement, Axent alleges that the respondents have:
a. instructed, further or alternatively, directed, procured or induced, others to use their systems so as to infringe each of the claims of the patent;
b. authorized others to infringe each of the claims of the patent;
c. joined in a common design with others to infringe each of the claims of the patent; and
d. contravened section 117 of the Patents Act.
Axent alleges that "[t]his is through [the respondents] providing detailed specifications for their sign systems, operating and maintenance manuals and other documentation to United Group Infrastructure (UGL) ".
14 Further, Axent alleges, in paragraph 23 of its position statement, that:
a. each individual supply, as well as being an act of primary infringement – and also to the extent that it is not: if, for example, a controller is not supplied (which Axent denies, as each sign contains a CPU) – is an infringement of the kind listed in paragraph 20; and
b. subsequent acts of repair and replacement in whole or in part of a signage system are both a primary infringement and a separate act of infringement of the kind listed in paragraph 20, as they amount to authorization to the relevant third party for them or another to engage and/or continue to engage in use of the signage system, which is a separate act of primary infringement; and
c. servicing and maintenance of a signage system or the giving instructions or assistance to a third party to do this is also a separate act of infringement of the kind listed in paragraph 20, as it amounts to authorization to the relevant third party for them or another to engage and/or continue to engage in use of the signage system, which is a separate act of primary infringement.
15 For completeness, I note that Axent further states that there are three other issues relevant to the respondents' liability for patent infringement: (1) whether any of the infringing acts are statute-barred; (2) the precise period for which the patent was in a state of lapse due to Axent's failure to pay a renewal fee; and (3) whether the amendment of the patent ought to affect Axent's ability to recover damages.
16 In their position statement, the Compusign respondents set out that:
4. From about 22 April 2004 and until about July 2013, Compusign Australia Pty Ltd (Compusign Australia) imported into Australia components for and manufactured, promoted, sold, supplied, repaired and replaced in whole or in part in Australia variable speed limit signs for traffic control on roadways (the Compusign Products).
5. From about July 2013, Compusign Systems Pty Ltd (Compusign Systems) has imported into Australia components for and manufactured, promoted, sold, supplied, repaired and replaced in whole or in part in Australia the Compusign Products.
6. The Compusign Products were so designed, made and/or supplied from time to time by the Compusign Parties for specific traffic works and projects in accordance with technical specifications of road authorities and other third parties. The products are made specifically for each such project in accordance with the technical requirements of that project.
17 The Compusign respondents also set out why they claim not to have infringed the patent in suit. In addition they rely on the following five defences:
a) any alleged infringing conduct before 2 December 2010 is statute-barred, by operation of s 120(4) of the Patents Act 1990 (Cth) (the Act): at [8d];
b) that due to the Applicant's non-payment of renewal fees for the Patent and the ceasing of the Patent, the Applicant cannot bring infringement proceedings for any infringements during the ceased period of 7 October 2015 until 15 September 2016, by operation of ss 223(10) and 143(a) of the Act and regulation 13.6(1) of the Patents Regulations 1991: at [6a];
c) that by reason of the amendment of the complete specification of the Patent, by operation of s 115(1) of the Act, no pecuniary relief is available for any alleged infringements of the Patent before the amendments: at [8e];
d) Compusign Australia was making or had taken definite steps to make a product as claimed, by reason of its use of the Compusign Prototype before the priority date, so that by s 119 of the Act there would be no infringement of the Patent: at [8h]; and
e) if any claims of the Patent are infringed and valid (which is denied), any exploitation of the Patent by the Compusign parties was authorized by an authority of the State for the services of that State, and by operation of s 163 of the Act such exploitation was not an infringement: at [22].
18 In its position statement, Hi-Lux referred to its admissions regarding the features of its variable speed limit signs, as set out in an annexure to its defence. Hi-Lux noted that Axent did not refer to a lane use sign until Axent made its position statement, noting that to date "Hi-Lux has only offered to supply such a sign, and made a prototype product". Hi-Lux went on to say that, if (as Axent said) the claims are product claims and the variable speed limits signs that Hi-Lux supplies have all of the features of the claims (as Axent alleges), then Hi-Lux's admitted conduct of manufacturing, selling, supplying, offering to sell and supply, and keeping for those purposes, is a sufficient admission as to its relevant conduct. Hi-Lux further alleged that, if contrary to Axent's earlier asserted position, the "allegations of infringement ... are premised on the claims being method claims," then Hi-Lux disputed that it has instructed or authorised any person to use any of its variable speed limits signs, or its lane use signs, in any particular way.
19 Further, at paragraph 13 of its position statement, Hi-Lux stated that it conducted "only limited repair services" and that "[f]or most of the signs that it has supplied, a company called Tyco Integrated Systems Pty Ltd [was] engaged by the customer to maintain and repair the signs". Hi-Lux also set out its various defences, including under s 163(1)(b) of the Patents Act 1990 (Cth) (the Patents Act), "because it supplies its [variable speed limit signs] to the State of Victoria (VicRoads), and to the State of South Australia (Department of Transport)".
the PARTIES' SUBMISSIONS
Axent's submissions in support of its application for discovery
20 In written submissions accompanying Axent's letter seeking discovery, Axent submitted that there were four aspects to the disclosure that it required:
a. to enable Axent to address evidence to the issue of the controller, its location and its function;
b. so that the Court is in a position to determine the full range of the different types of infringement that have occurred;
c. to ascertain and allow the Court to determine the conduct surrounding the allegations of authorisation and indirect infringement, including the instructions given by the respondents to end users and others; and
d. to assess the applicability or otherwise of the "authority of state" defence in the different factual and contractual scenarios that exist.
21 In relation to the last-mentioned issue, Axent submitted that "it is important to identify to whom each of the respondents has promoted or sold the infringing products, including who they have contracted with". Axent continued:
The "authority of state" defence is asserted to apply to contracts with VicRoads and its interstate equivalents. However, there are a number of different factual scenarios which the Court will need to consider in determining the applicability or otherwise of this defence, including
a. a "direct" order as between an authority of state and a respondent;
b. where a respondent has sold an infringing product to an intermediary, who in turn supplies to an authority of state; and
c. contracts (with or without intermediaries) where the end user is a non-government organisation, such as Transurban Limited.
22 In written submissions, Axent submitted that:
Similar considerations apply in relation to maintenance and repair contracts, which both respondents acknowledge exist, and to other instructions given by the respondents such as might enliven a finding of indirect infringement. In that regard, Axent disagrees with Hi-Lux's assertion that authorisation and indirect infringement issues are otiose if the patent is for a product. For reasons set out in the respondents' position statements time periods are important, and both the nature and timing of the different acts of infringement fall[] for determination. It is possible, given the issues around time periods, if one or more of the pleaded defences succeeds, that a direct infringement will not sound in damages or an account of profits but that a later (or earlier) indirect infringement (e.g. the repair of an earlier supplied sign, or the giving of instructions to enable use of an infringing product) will so sound.
23 The Compusign respondents' position statement was accompanied by a "Summary of Compusign Products", which lists the supply of Compusign products by reference to road project, date of first supply, location, "others known to be involved", "end user(s)/Road authorities" and other data. At the hearing of Axent's discovery application, counsel for Axent, Ms Susan Gatford, referred the Court to this last-mentioned document to explain how the industry was said to work in respect of the supply of signs. By reference to this document, Ms Gatford explained that:
So ... we've got initial manufacturer, which is Compusign or Hilux. We've then got a third party or parties with whom that manufacturer contracts, and that is the people under the heading Others Known to be Involved, in that table, and then we have end users, who are the roads authorities, and they may be private companies such as Transurban or statutory authorities such as VicRoads. Those documents also show that the manufacturers make and supply a signage system, provide the detailed specifications and provide written instructions, manuals as to how to operate them. That comes from the documentation that is "the following specifications" in that table, your Honour, and then:
Maintain the system post-supply, including repairing and replacing.
24 Ms Gatford submitted that the Compusign respondents had made a "generalised admission of repair and maintenance on behalf of Compusign, and then in subsequent correspondence that is annexed to the submissions in respect of discovery, Hi-Lux has said various things about what it does for repair and other things". In this context, Ms Gatford added:
[T]he real guts of this discovery argument ... is this. The respondents are saying you can determine infringement on the basis of the admissions that have been made. ... That a supply is enough. And a generalised admission of that nature might, in many cases, make that correct, but it doesn't in this case because of the nature of the contractual arrangements and because of the nature of the defences that have been raised.
...
[W]e need to know, as a result of the generalised nature of the admissions, to whom the supply was made because statutory authorities are dealt with differently to private companies because of section 163 of the Patents Act.
...
So in terms of defences, particularly the Crown use defence, there's going to be a question ... about whether or not [ ] two-stage supply attracts the operation of section 163 ... .
25 Amongst other things, Ms Gatford also stated that:
[W]e don't want the circumstance, and your Honour will be familiar with the cases where there's a hearing on liability and then you go off to quantum and you say, well, what acts is it that I'm assessing quantum in relation to? And you need, in effect, a further hearing on liability ahead of the assessment.
…
I don't want to make it harder than it is. I'm trying to make it easy and the way to make it easier, I think, for the court is to give us the discovery and we can make it easy for you in respect of picking representative samples. And if we do that wrong, that's our lookout. And we can deal with it in that way. We need to deal with – your Honour is going to need to decide in the liability case whether all of these suppliers are covered by the authority of state defence; that's step 1. That's not a timing issue, that's a who the parties are type issue. And then there's going to be an issue as to what the – because that requires a written authority under the section.
And we've sought in the orders that I've handed to your Honour a copy of the written authority for each supplier in respect of which they rely on that defence because in their position statements, they just say section 163 applies full stop. But it obviously can't apply to circumstances where the end user is [] Transurban or some non-authority of state, and it can't, we say, apply in circumstances where their supply is to someone else who on supplies. Now, that might be a matter of legal argument that your Honour needs to determine, but there are a number of different factual scenarios that are required. Your Honour needs sufficient basic facts and it might only be a representative example, but in respect of the authority of state issue in particular, we need the authorities.
26 Ms Gatford submitted that discovery was also required in order to identify documents in the respondent's possession that assist in disproving their pleaded defences. Ms Gatford also observed that there was a dispute between the parties about the period of time in which the patent in suit had lapsed and that this issue would fall for determination. In consequence, so she submitted, "some infringements will be in and some infringements will be out".
27 In addition, regarding the issue of repair and maintenance, Ms Gatford submitted that:
So [the respondents] then say that all of these allegations around repair and maintenance are tenuous and therefore they shouldn't be the subject of any discovery. We say that puts the cart before the horse and pre-empts the court's judgment: it's for the court to have the evidence before it in order to make that determination.
It's not a reason to [r]efuse discovery, because the respondent thinks that the claim isn't as strong as the claim around supply or sale, and the way that case is put is that use of an infringing sign is obviously an infringement by the end user, and if it's broken or in need of maintenance or repair then anyone who undertakes that task is authorising that user to continue to infringe.
28 As to "the controller" issue, Ms Gatford contended:
... in respect of the controller issue Hi-Lux has made certain admissions which it now seeks to withdraw from in part, particularly in relation to how its signs are controlled. It hasn't provided any technical documentation at all. Compusign has relatively recently, in the bundle of documents attached to the discovery submissions, provided informal discovery of three specifications, which is says are representative examples of all signs that it has supplied...
Those specifications themselves are incomplete. For example, they refer to a communications protocol called the UGL Compusign sign protocol. It's that – that's going to shed some light on the controller issue, and presumably similar documents also exist in the case of Hi-Lux, so that that should all be incorporated in the one set of contract documents that we get for each type of contract. And, as I have said, there's no evidence that it's burdensome or that it can't be done quickly.
The respondents' submissions in opposition to discovery
29 In relation to the respondents' reliance on s 163 of the Patents Act, counsel for the respondents, Mr Craig Smith, submitted that the "respondent's position is only going to be as good as the documents it puts forward in its evidence in defence". Mr Smith submitted that there would be "one of the two scenarios", namely, "the supply direct to the Crown or … an indirect supply to the Crown". Mr Smith submitted that if the respondents were to rely on a s 163 defence, then:
[t]hey'll need to put a purchase order, if that's the document, in writing, or a purchase order from the Crown to its customer, so a company like a Visionstream Australia. It either can or can't put that material on, but there's not a great complexity to it. But going through a discovery exercise now, while it's trying to complete its evidence on invalidity issues, is only going – in my respectful submission – to increase expense for no particular benefit.
30 Mr Smith frankly explained that the respondents were still considering the circumstances that they would claim gave rise to the s 163 defence. Mr Smith submitted:
[T]here may well be documents that are likely to undercut the operation of a particular defence or an allegation, but this isn't one of them. We either make good on establishing that there are facts that attract the operation of the Crown defence or we don't.
31 As to when the patent in suit lapsed, Mr Smith submitted:
The court will be able to determine if there's a time frame during which the patent is not operative, and then we move to the quantum phase of the proceeding, the applicant will know that there's no point seeking to establish damages on account of profits in relation to sales, repairs, authorisations, whatever it may be within those periods.
Mr Smith added:
... if we get to a quantum case, we would have to those time frames fitting into them, depending on your Honour's orders and findings. But they're not matters which, with respect, would be efficient to go into at this stage, because all it will establish is that there are some components of conduct that fall within that period and some that fall outside that period.
Mr Smith noted that the dispute about the period of lapse involved only months.
32 As to maintenance and repair, Mr Smith submitted that Axent's putative argument that the maintenance and repair at issue involved relevantly "a sanctioning, approving, or countenancing of, say, VicRoads' use of the signs" was tenuous. Mr Smith submitted that the respondents' basis objection was "it's simply the fact of repair simpliciter that is said to amount to an authorisation, and we admit repair simpliciter, therefore we say there's no utility in providing discovery."
33 As to discovery of authorisations and instructions, Mr Smith stated that Hi-Lux did not provide manuals or instructions at all; and Compusign had provided some instructions, although these instructions related to technical matters, such as wiring.
34 As to the promotion, sale or supply by any of the respondents of any variable speed limit sign or lane use sign, Mr Smith stated that supply and manufacture had been admitted. Further, the category was very broad and would include invoices, supply documentations, and all kinds of other documents over a seven year period, which was inappropriate to discover when, so far as all signs were concerned, their sale and supply was admitted. Mr Smith contended that dates and the like would be relevant only at the quantum phase. Mr Smith said that:
Relevantly, the court could proceed in the liability phase of the proceeding on an assumption that all of the permutations – and there's only, I think, six or seven – seven now with the lane used sign – seven permutations have been sold during the relevant – or promoted, because one of them hasn't been sold, during the relevant time period, including outside the lapsed period. I mean, they're all currently being offered for sale, for example, as I understand it. So that alone is conduct outside the lapsed period. So even just with that admission, the court could move forward on a liability assessment, but on the scope of the conduct for quantum that would be then affected by relevant periods of operation of the patent.
35 In relation to the issue of controllers, Mr Smith submitted that:
[S]amples of all of these signs have also been made available for inspection and that ... has included the internals of the signs. Also, ... the applicant attached to its discovery submissions three letters in which ... there has been a detailed explanation of the controllers which goes beyond any obligations of discovery. And this correspondence also – and other correspondence like it has been relied on by the applicant relevantly as admissions and – in their position statements and that's what they're intended to be, admitted position.
36 Mr Smith explained that the letters to which he referred were a letter dated 3 August 2017, referring to another letter dated 2 June 2017, and a letter dated 15 August 2017. Mr Smith submitted that "mindful of obligations [under ss] 37M and 37N [of the Federal Court of Australia Act 1976 (Cth)], it was intended to be something that could be relied upon by the applicant as being a statement of features of the respondent's signs". Mr Smith added that:
The explanation in relation to the controllers has been provided in those letters but if the applicant doesn't want to rely upon that stated position then the main category that might give rise potentially would be the instructions in paragraph 1C.
37 Mr Smith submitted he "had understood that [paragraph] related to how the signs were to be used because it was an authorisation point that was asserted as being the reason for giving that category of discovery"; and that "the only issue, then, would be in relation to the scope of (c) as to whether those instructions are as to how a customer will use the sign".
Axent's submissions in reply
38 In reply, Ms Gatford, for Axent, submitted, that:
[T]he admissions made don't give you sufficient facts to make the relevant determinations. And I say that in this sense: the admission – it's a supply from this person to that person that is the relevant infringement and the authorities say that every supply is a separate infringement. So that the supply and then the maintenance and then the repair, some of those events, in respect of various signs – well, maybe the same sign, the same sign in the same physical location, it might happen within the lapse period ...
So your Honour is not going to be able to say, just on the basis of an admitted supply or an admitted repair or an admitted maintenance – and, again, we don't know what the facts are underneath all of those admissions – the admissions are really at too general and broad a level for your Honour to be able to make the relevant finding of infringement.
39 In answer to the Court's questions, Ms Gatford went on to say:
... I have been told – and rightly – that I need to particularise and prove one type of each type of infringement. Now, the maintenance and repair obligation might vary. ... I don't know enough of the factual basis behind that allegation ... to say things to your Honour about whether or not that amounts to an authorisation. I need – for those sorts of authorisation cases, you need the surrounding circumstances. You can't do it off the back of an admission. It might, as your Honour says, be possible to determine one – to determine this case in the sense of we can stop, one way or another, sale or supply. Sale or to supply to some people and not to others, maybe, sale or supply, in terms of damages, at some times and not others. Your Honour is now going through the process that I've been going through for the past three or four months: is this application really necessary? ...
And I've formed the conclusion that we do, because for a number of reasons: I want your Honour to have the best available factual basis for a finding of infringement. If this information is not provided, in terms of discovery of a sample contract or some such, I'm going to have to think about how I put on my evidence of infringement to talk about, for example, what's inside the Axent signs, how they work ... what goes on in respect of those things, and then ask your Honour to draw inferences, in the absence of evidence from my learned friends, as to how the infringing product works, and that is not satisfactory...
40 Ms Gatford added:
I should be basing my infringement case to you on what the product specifications are, not on the legal interpretation and ... of fact and law as to what those things do. So although your Honour is correct in some senses in the supply and sale category in the dates issue, that's not the case for the Authority of State defences and ... there's another thing that that category also deals with, which is the technical aspects.
In substance, Ms Gatford sought the product specifications for each sale and supply.
FURTHER DEVELOPMENTS
41 Since the hearing on Monday, the Court has been advised by the respondents' solicitors that the respondents agree to provide the following documents.
A representative example of any version of any technical specification for each VSLS or Lane Use Sign that has been supplied to any customer by any respondent on or after 7 December 2010;
A representative example of any contract entered into by any respondent in relation to the repair of any VSLS sign or Lane Use Sign the subject of this proceeding for any repair which occurred on or after 7 December 2010; and
A representative example of any instruction manual documents for any VSLS sign or Lane Use Sign that was supplied to any customer by any respondent on or after 7 December 2010
42 The respondents' solicitors offered to make these documents available to the solicitors for Axent by close of business on 8 September 2017. I understand this notification was an attempt to assist in the resolution of the dispute, notwithstanding the emails from Axent that were sent to my associate may contain a contrary suggestion. Although the respondents' agreement to provide those documents goes some way to resolving the dispute, it does not resolve it completely.
CONSIDERATION
43 Rule 20.13 of the Rules provides that a party may make application for an order for discovery, including standard discovery. Rule 20.14 specifically provides for standard discovery. This is a request for documents that are "directly relevant to the issues raised by the pleadings or in the affidavits"; and of which, after a reasonable search, the party is aware; and that are, or have been, in the party's control: see r 20.14(1). Rule 20.14(2) further provides that to constitute a document directly relevant to the issues in the case, the document must meet one of four criteria. That is, a document must be one on which the party intends to rely; or one adversely affecting the party's own case; or one supporting another party's case; or one adversely affecting another party's case.
44 As Menzies J said in Mulley v Manifold (1959) 103 CLR 341 at 345, "discovery is a procedure directed towards obtaining a proper examination and determination of [the] issues" in the case. The issues in the case are the issues relating to the substance of the dispute. In this proceeding, these issues are primarily identifiable by reference to the parties' pleadings and their position statements. The identification of these issues will involve consideration of the effect of any admissions that the parties have made, since the admissions may relevantly limit the issues in the case.
45 The documents that Axent seeks to be discovered are described at the beginning of these reasons. It is convenient to deal with each class in turn.
(a) Documents evidencing from 2 December 2010 the promotion, sale or supply by any one of the respondents of any variable speed limit sign or lane use sign
46 The respondents have admitted the promotion, sale and supply by them of the variable speed limit sign and lane use sign. Ordinarily this would mean that no discovery would be given in respect of the above documents. Further, a respondent's obligation to give disclosure is confined to the issues raised in the particulars of infringement and the respondent need not normally give disclosure of all its sales: see Belegging-en Exploitatiemaatschappij Lavender BV v Witten Industrial Diamonds Ltd [1979] FSR 59 at 64.
47 Given some of the substantive issues raised by the respondents' defences, however, the application of those defences will depend in part on when and to whom the sale and supply was made. Therefore the latter particular issues also arise on the parties' pleadings and position statements. It follows that at least some of the requested documents are likely to be directly relevant, because they satisfy one of the criteria in r 20.14(2).
48 It may be that, as the respondents submitted, this class describes a wide variety of documents. The class is, however, limited to documents "directly relevant" to the issues raised by the pleadings and the position statements, and the respondents have not said that discovery would be unduly onerous. In any event, the applicant's proposed second order may assist in limiting the extent of discovery.
(b) Documents evidencing from 2 December 2010 the maintenance or repair by any one of the respondents of any variable speed limit sign or lane use sign
49 It is clear from the parties' pleadings and position statements that there is a dispute between the parties about the maintenance and repair of the signs. I accept, as Ms Gatford submitted, that although the respondents have made generalised admissions about maintenance and repair, there remain substantial differences between the respondents and Axent about what is (and is not) infringing (and non-infringing) maintenance and repair, extending to some disagreement about what is in fact meant by maintenance and repair in the circumstances of the case. Further information is required in order to assess this aspect of Axent's claim. Axent is entitled to discovery of the documents it seeks in this category. The second order that Axent proposes may assist in appropriately limiting the time and cost that such discovery might otherwise necessitate.
(c) Documents evidencing from 2 December 2010 any authorisations or instructions given by any one of the respondents as to the use by others of any variable speed limit sign or lane use sign
50 Similarly to categories (a) and (b), documents evidencing authorisations or instructions given by the respondents as to the use by others of any variable speed limit sign or lane use sign are relevant to the issues in dispute, as appears from the parties' pleadings and the position statements. Such documents relate to the substance of part of the dispute between the parties.
51 It is possible that a respondent may have provided a number of instructions or authorisations in the same or substantially the same terms and that the litigation will not be assisted by the provision of all such documents. Hence I would also provide that the respondents be excused from compliance with an order of the kind that Axent seeks with respect to authorisations and instructions where there are numerous authorisations or instructions in the same or substantially the same terms and the respondent provides a verified list of them, as well as certain other information.
(d) Documents that any respondent asserts to be an authorisation in writing given to them by an authority of a State for the services of that State under section 163(2) of the Patents Act
52 Documents said by the respondents to be an authorisation in writing given to them by an authority of a State for the services of that State under s 163(2) of the Patents Act are likely to be directly relevant to the issues raised by the parties' pleadings and the position statements, within the meaning of r 20.14(2). It may be that, as Mr Smith has said, Axent will receive them (or has received them) through the provision of the respondents' affidavits. If these documents have now in fact been provided to Axent, then the occasion for discovery of these documents has passed. It seems to me, however, that the respondents should be required to state on oath that each of them has in fact provided a copy of any document said to be an authorisation in writing given to it by an authority of a State for the services of that State under s 163(2) of the Patents Act. If the documents have not been provided to date, then the respondents should be required to make the discovery sought, in order that Axent may comprehend the case against it, particularly bearing in mind that mediation is fixed for 3 November 2017.
Conclusion
53 It seems to me that the documents sought by Axent are likely to be directly relevant to the issues in the case and concern the substance of the issues in dispute between the parties, and that making the proposed orders for the discovery of those documents will assist in the efficient resolution of the matter. For the reasons stated, subject to my earlier observation about authorisations and instructions, I would make the orders sought by Axent.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate:
Dated: 11 September 2017
SCHEDULE OF PARTIES
VID 1408 of 2016
Cross-Claimants
Second Cross-Claimant: HI-LUX TECHNICAL SERVICES PTY LTD (ACN 006 654 691)
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McCartney v Abdirahman-Khalif [2019] FCA 2218
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2019/2019fca2218
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2024-09-13T22:50:36.813823+10:00
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FEDERAL COURT OF AUSTRALIA
McCartney v Abdirahman-Khalif [2019] FCA 2218
File number: SAD 245 of 2019
Judge: CHARLESWORTH J
Date of judgment: 22 November 2019
Date of publication of reasons: 16 March 2020
Legislation: Criminal Code Act 1995 (Cth) Div 104; ss 100.1, 102.2, 104, 104.2, 104.3, 104.4, 104.12A, 104.14, 104.28A
Evidence Act 1995 (Cth) ss 75, 140, 191
Cases cited: Abdirahman-Khalif v The Queen [2019] SASCFC 133
Date of hearing: 20 November and 22 November 2019
Registry: South Australia
Division: General Division
National Practice Area: Federal Crime and Related Proceedings
Category: No Catchwords
Number of paragraphs: 84
Counsel for the Applicant: Mr A Berger and Mr P Melican
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the Respondent: Ms M Shaw QC with Mr J Caldicott
Solicitor for the Respondent: Caldicott Lawyers
REASONS FOR JUDGMENT
SAD 245 of 2019
BETWEEN: IAN MCCARTNEY
Applicant
AND: ZAINAB ABDIRAHMAN-KHALIF
Respondent
CHARLESWORTH J:
1 On 22 November 2019 I made an interim control order pursuant to s 104 of the Criminal Code Act 1995 (Cth) against the respondent. The order was interlocutory in nature. An interim control order may ordinarily be made on an ex parte application. In the circumstance of this case, however, the respondent was served with the application and afforded an opportunity to be heard. I gave oral reasons for making the interim control order on the date that the order was made. The parties have since been provided with an informal written record of the reasons derived from the transcript of the oral reasons.
2 The applicant has elected to confirm the interim control order in accordance with the provisions of Div 104 of the Code.
3 At the time that the order was made it was envisaged that the confirmation hearing required to be conducted by the Code might follow in a short time frame, having regard to the need to afford the respondent procedural fairness in respect of that hearing. However, the commencement of the confirmation hearing has been adjourned more than once on the application of the respondent. As a consequence, the interim control order remains in force.
4 The applicant has requested that the Court publish written reasons for the interim control order made on 22 November 2019 and I now do so. The reasons commencing at [10] below are in substantially the same terms as the informal written record provided to the parties earlier. In the circumstances I have described, I do not consider it appropriate to make any substantive addition or alteration to them. Any amendments that have been made should be understood as intended to improve expression, without affecting the meaning of what was pronounced orally.
5 As a consequence, the reasons assume some knowledge on the part of the reader as to the content of the evidence before the Court. I do not propose to remedy that, given that it remains open to me to adopt a different view of similar evidence at the confirmation stage.
6 In giving oral reasons I referred to amended short minutes of order setting out the relief sought by the applicant. The controls sought by the applicant formed Annexure A to the minutes. The controls sought by the applicant were expressed as follows (without alterations):
1. Control 1
1.1. You are required to remain at premises:
a. nominated by you within 24 hours from the time that this Interim Control Order comes into force; and
b. approved in writing by the JCTT Coordinator
(the specified premises),
between the hours of 10:00 pm and 6:00 am (the curfew period) each day from the day on which this Interim Control Order comes into force until the day that it ceases to be in force.
1.2. You must present and identify yourself at the specified premises during the curfew period upon request by a police officer.
2. Control 2
2.1. You are required to report to a police officer every Wednesday, between 7:00 am and 7:00 pm (the reporting period), at Port Adelaide Police Station, 244 St Vincent Street Port Adelaide SA.
3. Control 3
3.1. You are prohibited from being at any of the following areas:
a. within the exclusion zone shaded in yellow set out in Annexures 1 and 2 at Adelaide Airport; and
b. within the exclusion zone shaded in yellow set out in Annexures 3 and 4 at Port Adelaide; and
c. within 1 km of any Australian airport (beside Adelaide Airport) which has an international point of departure, or from which a person can board or charter a flight for an international destination;
d. within 1 km of any Australian port (beside Port Adelaide) which has an international point of departure, or from which a person can board or charter a marine vessel for an international destination;
e. inside, or in the grounds of, any prison or correctional facility unless you are incarcerated there;
f. at the residence of any person with whom, by reason of Control 11, you are prohibited from communicating or associating;
g. any place in Australia outside the state of South Australia.
4. Control 4
4.1. You are prohibited from leaving Australia for any period of time while this Interim Control Order is in force.
5. Control 5
5.1. You are prohibited from carrying out the following specified activities (including in respect of your work or occupation), namely: accessing, acquiring, possessing or storing documents (including documents in electronic form) or electronic media, or attempting to access, acquire, possess or store documents (including documents in electronic form) or electronic media, which relate to any of the following:
a. explosives, explosive devices, initiation systems or firing devices;
b. firearms, ammunition or knives;
c. anti-surveillance or counter surveillance.
unless that material is:
d. published by a 'constituent body' of the Australian Press Council;
e. broadcast on Australian free to air television;
f. broadcast on Australian pay television;
g. shown in a commercial movie cinema; or
h. broadcast on one of the following streaming services: Netflix; STAN; ABC iView; or SBS on demand.
6. Control 6
6.1. You are prohibited from carrying out the following specified activities (including in respect of your work or occupation), namely: accessing, acquiring, possessing or storing documents (including documents in electronic form) or electronic media, or attempting to access, acquire, possess or store documents (including documents in electronic form) or electronic media, depicting or describing any:
a. execution;
b. beheading;
c. suicide attack;
d. bombing;
e. terrorist attack;
f. propaganda and promotional material for a terrorist organisation including the al-Hayat Media Centre; or
g. activities of, or associated with, any 'terrorist organisation' within the meaning of s 102.1(1) of the Schedule to the Criminal Code Act 1995 (Cth),
unless that material is:
h. published by a 'constituent body' of the Australian Press Council;
i. broadcast on Australian free to air television;
j. broadcast on Australian pay television;
k. shown in a commercial movie cinema; or
l. broadcast on one of the following streaming services: Netflix; STAN; ABC iView; or SBS on demand.
7. Control 7
7.1. You are prohibited from the following specified activities (including in respect of your work occupation), namely: producing or distributing documents (including documents in electronic form) or electronic media relating to:
a. explosives, explosive devices, initiation systems or firing devices;
b. firearms, ammunition or knives;
c. anti-surveillance or counter surveillance;
d. executions;
e. beheading;
f. suicide attacks;
g. bombings;
h. terrorist attacks;
i. propaganda and promotional material for a terrorist organisation including the al-Hayat Media Centre;
j. activities of, or associated with, any organisation that is specified as a 'terrorist organisation' for the purposes of s 102.1 of the Schedule to the Criminal Code Act 1995 (Cth).
8. Control 8
8.1. You are prohibited from carrying out the following specified activities (including in respect of your work or occupation), namely: purchasing, renting or driving any vehicle which exceeds a gross vehicle mass of 4.5 tonne.
9. Control 9
9.1. You are prohibited from carrying out the following specified activities (including in respect of your work or occupation), namely: undertaking paid or unpaid employment of which you have not first notified the JCTT Coordinator in accordance with Control 9.2.
9.2. In your notification to the JCTT Coordinator, you must:
a. submit a written notification to the JCTT Coordinator which notifies the proposed employment, including details of the employer (including their name and place of business) and the nature of the work that will be undertaken; and
b. provide any information requested by or on behalf of the JCTT Coordinator in relation to the proposed employment (including, but not limited to, information regarding persons employed by or associated with the proposed employer and information about the nature of the business and the work you would be undertaking).
10. Control 10
10.1. You are prohibited from possessing or using, or causing any person to act on your behalf to possess or use, any of these specified articles or substances, namely:
a. firearms or ammunition;
b. a 'prohibited weapon' within the meaning of s 6 of the Summary Offences Regulation 2016 (SA);
c. any quantity of petrol exceeding 4 litres;
d. any quantity of any chemical which is not consistent with reasonable domestic use.
11. Control 11
11.1. You are prohibited from communicating or associating with:
a. any person incarcerated in any correctional facility;
b. any person located in Turkey, Iraq or Syria;
c. any of the following specified individuals:
i. Daniel John CLAVELL (Date of birth: 07/07/1987);
ii. Nathan John CLAVELL (Date of birth: 27/04/1998);
iii. Samia HUSSAIN (Date of birth: 12/02/1998);
iv. Joel Edward James CLAVELL (Date of birth: 20/02/2000);
v. Joshua John CLAVELL (Date of Birth: 25/01/1989); and
12. Control 12
12.1. You are prohibited from accessing or using, any mobile telephone device other than one mobile telephone device (the permitted mobile phone), and your use of the permitted mobile phone is subject to the following conditions:
a. before using the permitted mobile phone, you must present it to the JCTT Coordinator (or a police officer specified in writing by the JCTT Coordinator) for inspection;
b. before using the permitted mobile phone, you must advise the JCTT Coordinator, in writing, of the following information: the International Mobile Equipment Identity number for the permitted mobile phone, the Integrated Circuit Card Identifier for the SIM card you will use with the permitted mobile phone, the telecommunication service provider which you will use with the permitted mobile phone, and the phone number to which the permitted mobile phone will be connected;
c. once you have advised the JCTT Coordinator of the information required by paragraph 12.1.b above, you must not change, remove, modify or disconnect or cause any other person to change, remove, modify or disconnect on your behalf (including any employee or person acting on behalf of a telecommunications service provider) the SIM card, telecommunication service provider or phone number connected to the permitted mobile phone.
12.2. You are prohibited from causing or permitting another person to use or access the permitted mobile phone.
12.3. You are prohibited from causing or permitting another person to use or access any mobile telephone device on your behalf.
13. Control 13
13.1. You are prohibited from accessing or using any fixed or landline telephone service other than one service that has been approved in writing by the JCTT Coordinator for you to access or use.
13.2. To seek approval, you must:
a. submit a written request to the JCTT Coordinator which nominates the fixed or landline telephone service; and
b. provide any other information requested by or on behalf of the JCTT Coordinator for the purpose of identifying the nominated fixed or landline telephone service.
13.3. You are prohibited from causing another person to use or access any fixed or landline telephone service on your behalf.
14. Control 14
14.1. You are prohibited from accessing or using, or causing any person to access or use on your behalf, any public telephone except in the case of an emergency, provided that you contact the JCTT Coordinator as soon as possible after accessing or using such a public telephone and:
a. provide sufficient detail to the JCTT Coordinator to identify the public telephone that you accessed or used, the date, time and phone number called; and
b. you explain the nature of the emergency which required you to access or use that public telephone.
15. Control 15
15.1. You are prohibited from accessing or using, or causing any person to access or use on your behalf, any satellite telephone service.
16. Control 16
16.1. You are prohibited from accessing or using, or causing any person to access or use on your behalf, any of the following websites, applications or computer programs (collectively, platforms), as the case may be:
a. FaceTime
b. WhatsApp
c. Viber
d. Telegram
e. Skype
f. Facebook Messenger
g. Instagram
h. Snapchat
i. KIK
j. iCall
k. WeTalk
l. Lync2013
m. Nimbuzz Messenger
n. Whistle Phone
o. Talkatone
p. Discord
q. Google Duo
r. MagicApp
s. Signal Private Messenger
t. Zoiper IAX SIP VOIP Softphone
u. Beejive
v. Fring
w. JaJah
x. Line2
y. Talkatone
z. Truphone
aa. Twitter
bb. Yahoo
cc. ICQ
dd. Google Talk
ee. MSN Messenger
ff. AIM
gg. Yahoo Messenger
hh. Packet8
ii. Google Hangouts.
16.2. In addition to the platforms listed in Control 16.1, you are prohibited from accessing or using, or causing any person to access or use on your behalf, any Voice Over Internet Protocol (VOIP) service.
16.3. In addition to the platforms listed in Control 16.1, you are prohibited from accessing or using, or causing any person to access or use on your behalf, any internet based messaging service.
16.4. However, Controls 16.3 and 16.4 do not prohibit access to or the use of:
a. Facebook; or
b. a website which includes an 'instant chat' function that allows a visitor to the website to send messages to, and receive messages from, the website host solely for the purpose of obtaining or providing customer service.
17. Control 17
17.1. You are prohibited from accessing or using any internet service other than the one service that has been approved in writing by the JCTT Coordinator for you to access or use (the permitted internet service).
17.2. To seek approval:
a. you must submit a written request to the JCTT Coordinator which:
(i) nominates the internet service provider account; and
(ii) nominates the devices you will connect to the internet service (including but not limited to computers and televisions);
b. provide any other information requested by, or on behalf of, the JCTT Coordinator, in relation to, or for the purpose of identifying, the nominated account and devices.
17.3. You are prohibited from causing or permitting another person to access or use the permitted internet service.
17.4. You are prohibited from causing any other person to access or use on your behalf any internet service.
18. Control 18
18.1. You are prohibited from accessing or using any electronic mail (email) account other than one account that has been approved in writing by the JCTT Coordinator for you to access or use (the permitted email account).
18.2. To seek approval:
a. you must submit a written request to the JCTT Coordinator which nominates the email account; and
b. provide any other information requested by, or on behalf of, the JCTT Coordinator in relation to, or for the purpose of identifying, the nominated account which you will be accessing or using.
18.3. You are prohibited from causing or permitting another person to use or access the permitted email account.
18.4. You are prohibited from causing any other person to access or use on your behalf any email account.
19. Control 19
19.1. You are prohibited from accessing or using any computer other than one computer that has been approved in writing by the JCTT Coordinator for you to access or use (the permitted computer).
19.2. To request approval you must:
a. submit a written request to the JCTT Coordinator which nominates the computer; and
b. provide any information requested by or on behalf of the JCTT Coordinator in relation to, or for the purpose of identifying and accessing, the nominated computer.
19.3 If the approval is granted, you must provide the JCTT Coordinator, or a police officer acting under the JCTT Coordinator's direction, the password for the permitted computer if you are requested to do so by the JCTT Coordinator or the police officer.
20. Control 20
20.1. You are prohibited from accessing or using, or causing any person to access or use on your behalf, any tablet device, including but not limited to an iPad or a Samsung Galaxy Tab.
21. Control 21
21.1. You are required to consider in good faith participating in counselling or education relating to your psychological and physical wellbeing, with a suitably qualified professional, for at least 60 minutes per week.
21.2. If you agree to participate in such counselling or education you must advise the JCTT Coordinator in writing that you have commenced the counselling or education and provide the JCTT Coordinator the name and qualifications of the professional you have engaged.
22. Exemptions
22.1. You may request the JCTT approve an exemption to the requirements or prohibitions (as the case may be) specified in Controls 1.1, 2.1, 3.1.g and 11.1.b.
22.2. To request an exemption, you must:
a. submit a written request to the JCTT Coordinator which: (i) identifies the Control in respect of which you seek an exemption; (ii) explains the extent to which you seek to be exempted from the Control; and (iii) explains your reason(s) for seeking the exemption; and
b. provide any other information requested by, or on behalf of, the JCTT Coordinator for the purposes of determining whether to approve the exemption.
22.3. The JCTT Coordinator may grant an exemption subject to conditions specified in writing.
22.4. You must comply with all of the conditions specified in writing by the JCTT Coordinator. If you do not comply with a condition to an exemption, the exemption is (and will be taken to have been for all purposes) of no effect.
22.5. A request for an exemption must be made before the material time and date.
22.6. If the JCTT Coordinator has not approved an exemption by the material time and date, the request is deemed to have been refused.
23. Interpretation
23.1. In this Interim Control Order:
a. Material time and date means:
i. in relation to a request for an exemption to the requirement in Control 1.1. the commencement of the curfew period that is the subject of the request (and, if more than one curfew period is the subject of the request, the first of those curfew periods);
ii. in relation to a request for an exemption to the requirement in Control 2.1. before the conclusion of the reporting period that is the subject of the request (and, if more than one reporting period is the subject of the request, the first of those reporting periods);
iii. in relation to a request for an exemption to the requirement in Control 3.1.g. the time and date at which you wish to depart South Australia; and
iv. in relation to a request for an exemption to the requirement in Control 11.1.b. the time and date at which you wish to communicate with a person located in Turkey, Iraq or Syria.
b. JCTT Coordinator means a member of the Australian Federal Police performing the duties of JCTT Coordinator.
c. Password includes but is not limited to any passcode, swipe pattern or any information or function necessary to facilitate access to the applicable device, account, application, service, software or hardware.
d. Police officer means a 'member' or 'special member' of the Australian Federal Police, as defined by the Australian Federal Police Act 1979 (Cth), or a 'police officer' within the meaning of the Police Act 1998 (SA).
7 It is not necessary to reproduce the maps referred to in Control 3.1.a and 3.1.b.
8 The order made on 22 November 2019 had the effect of imposing all of these controls, with the exception of Control 9.
9 I also referred to written submissions filed on behalf of the applicant. As will be seen, I adopted that part of the submissions concerning the construction of the provision conditioning the exercise of the power to make an interim control order. For completeness, the submissions I adopted at the interim stage are now extracted below (with citations added):
A protective purpose
32. While a control order may result in some deprivation of liberty, its purpose is not punitive. Proceedings under Division 104 are civil, not criminal, in nature. It is not sought to punish the Respondent but to protect the community.
33. Donald FM described the purpose of control orders in Jabbour v Hicks [2008] FMCA 178 as follows:
[8] ... it is important to note that the function of this Court is not to determine whether or not the Respondent should be punished or further punished for any of his activities. Rather, the function of this Court is to consider whether a control order should be made placing restrictions upon the activities of [the subject] and, if so, what those restrictions should be. In making those decisions, the applicable legislation provides clear guidance as to the matters to be taken into account by the Court. Punishment or further punishment is not a factor to which this Court has any regard. The matters are to be considered on what could be described as a prospective basis – what is to occur in the future so that the public is protected from a terrorist act.
34. In McCartney v EB (2019) 263 FCR 170 Wigney J noted (at [18]) that the protective purpose of the provisions in Division 104 supports a more beneficial (to the Applicant) and less restrictive construction of its provisions than would be the case if it contained penal provisions.
Assessing risk
35. In Thomas v Mowbray (2007) 233 CLR 307, Gleeson CJ observed (at [9]) that '[t]he level of risk of the occurrence of a terrorist act, and the level of danger to the public from an apprehended terrorist act, will vary according to international or local circumstances.' Similarly, Gummow and Grennan JJ observed (at [92]) that:
The federal judges exercising the jurisdiction conferred by the interim control order provisions will bring to their consideration of whether 'making the order would substantially assist in preventing a terrorist act' (s 104.4(1)(c)(i)) and of the particular form of an order, both matters of common knowledge, some of which we have referred to above [September 11 and other terrorist activities], and the facts and circumstances disclosed in the evidence on the particular application for an order.
'Substantially assist'
36. This application is brought, in part, on the basis that the Respondent is a potential perpetrator of a terrorist act. But even if the Court is not persuaded of this, the ICO sought may still 'substantially assist' in preventing a terrorist act. As Gummow and Crennan JJ noted in Thomas v Mowbray (at [97]) the making of a control order against someone other than the prospective perpetrator of a terrorist act may nevertheless be of substantial assistance in preventing a terrorist act. It may also 'substantially assist' in preventing provision of support for, or the facilitation of, such an act.
37. The case law that has considered the meaning of 'substantial' or 'substantially' suggests that the phrase has no fixed meaning and does not suggest a quantitative or proportional assessment (see for example Terry's Motors Ltd v Rinder [1948] SASR 167; In re Net Books Agreement 157 [1962] 1 WLR 1347). It has, however, in different contexts, been held to mean 'not trivial or minimal' (R v Lloyd [1967] 1 QB 175) or 'more than merely insubstantial or insignificant' (Secretary, Dept of Social Security v Wetter (1993) 40 FCR 22 at 29-30). In light of the protective purpose of Division 104 and the matters referred to in paragraphs [38]-[39] below, the Applicant submits that such a meaning is appropriate in construing s 104(1)(c)(i).
38. The Applicant submits that the Court does not need to find on the balance of probabilities that a terrorist act would otherwise occur before it can grant an ICO for the following reasons:
38.1. Had this been the intention it could readily have been stated.
38.2. Such a construction would rob the provisions of much of their intended protective effect.
38.3. The sorts of obligations, prohibitions and restrictions that can be contained in a control order are, by their very nature, not necessarily going to be decisive in preventing a terrorist act.
38.4. Such an interpretation of s 104.4(1)(c)(i) is consistent with how the notion of protecting the public should be interpreted in s 104.4(1)(d).
38.5. The provisions dealing with control orders can be contrasted with those dealing with preventative detention which are aimed to prevent an imminent terrorist act occurring (see s 105.1). Section 105.5(4) of the Criminal Code requires there to be reasonable grounds to suspect that the subject will engage in a terrorist act; or possesses a thing that is connected with the preparation for, or the engagement of a person in, a terrorist act; or has done an act in preparation for, or planning, a terrorist act before preventative detention can occur. If Parliament intended s 104.4(1)(c)(i) to be interpreted in a way that required a court to find that a terrorist act would otherwise occur before it could make a control order then this would not sit comfortably with the preventative detention regime which seems to be designed to deal with such a situation.
39. Certain steps can substantially assist in preventing something even though one cannot quantify the risks of it occurring with or without protective action. To pick but one illustration, ensuring aircraft maintenance workers were not intoxicated whilst on duty could properly be said to substantially assist in preventing the loss or passengers lives even though the chance of this occurring, with or without such action, would be difficult to quantify.
'Reasonably necessary' and 'reasonably appropriate and adapted'
40. In Thomas v Mowbray, Gleeson CJ explained (at [19]) the judicial function as follows:
The requirement that a court consider whether each of the obligations imposed by a control order is both reasonably necessary, and reasonably appropriate and adapted, for the purpose of protecting the public was the subject of debate. A requirement of that kind would sometimes be described as a requirement of proportionality. Judgments about proportionality often require courts to evaluate considerations that are at least as imprecise as those involved in formulating a control order.
41. Gummow and Grennan JJ described (at [99]) the judicial task in deciding which controls to impose as follows:
Section 104.4(1) requires in para (d) that each of these be measured against what is 'reasonably necessary' and also against what is 'reasonably appropriate and adapted' for attainment of the purpose of public protection from a terrorist act. This is weighed with the impact upon the circumstances of the person in question as a 'balancing exercise' (s 104.4(2)).
42. Gummow and Grennan JJ went on to explain (at [103]) that what is required by the criteria of reasonable necessity and 'reasonably appropriate and adapted' is a 'sufficient connection between the desired end and the means proposed for its attainment'. In Jabbour v Hicks, for example, Donald FM (at [39]) confirmed controls which made it 'more difficult' for the person to travel for terrorist activities and 'more eas[y]' to locate him if he did so.
Standard of proof and interlocutory proceedings
43. Subsection 104.4(1), which sets out the substantive matters of which the Court must be satisfied before it can make an ICO, adopts the 'balance of probabilities' as the applicable standard of proof.
44. Where circumstantial evidence is relied upon, it is sufficient that the circumstances raise a more probable inference in favour of what is alleged. It is not necessary to exclude all reasonable hypotheses to the contrary, even in respect of grave allegations of criminal conduct. The Applicant accepts that the principles set out in Briginshaw v Briginshaw (1938) 60 CLR 336 are engaged in relation to the more serious allegations he makes against the Respondent.
45. Proceedings in relation to a request for an ICO are interlocutory for all purposes, including for the purposes of s 75 of the Evidence Act 1995: s 104.28A(1).
RECORD OF ORAL REASONS
10 Before the Court is a request for an interim control order to be made under s 104.3 of the Code. The person requesting the order is a member of the Australian Federal Police (AFP) holding the rank of Assistant Commissioner. He is a senior AFP member for the purposes of the Code. He makes the request having first obtained the consent of the Hon Peter Dutton MP. Mr Dutton is the Minister as defined in the Code.
11 The power to make an interim control order is conferred by s 104.4 of the Code. The power is discretionary. It is conditioned by the four requirements set out in s 104.4(1)(a) to (d). Subsections (a) and (b) are procedural. I am satisfied that those requirements are fulfilled. The requirements in s 104.4(1)(c)(i) and (vi) and s 104.4(1)(d) are relevantly as follows:
(c) the court is satisfied on the balance of probabilities:
(i) that making the order would substantially assist in preventing a terrorist attack; or
…
(vi) that making the order would substantially assist in preventing the provision of support for or the facilitation of a terrorist act.
…
(d) the Court is satisfied on the balance of probabilities that each of the obligations, prohibitions and restrictions to be imposed on the person by the order is reasonably necessary, and reasonably appropriate and adapted for the purposes of:
(i) protecting the public from a terrorist act; or
(ii) preventing the provision of support for or the facilitation of a terrorist act; or
(iii) preventing the provision of support for or the facilitation of the engagement in a hostile activity in a foreign country.
12 For the purposes of these paragraphs, reference to a terrorist attack includes a reference to a terrorist act that has not occurred, a specific terrorist act and more than one terrorist act: Code, s 104.2(6).
13 Section 104.4(2) sets out the considerations to be taken into account in determining whether the criterion in s 104.4(1)(d) is satisfied.
14 The Court need not include in the order an obligation, prohibition or restriction that was sought by the senior AFP member if the Court is not satisfied, as mentioned in s 104.4(1)(d), in respect of that obligation, prohibition or restriction.
15 The phrase "terrorist act" is defined in s 100.1(1) of the Code to mean an action, or a threat of an action, where the action falls within subs (2) and does not fall within subs (3). I have had regard to the elements of the definition.
16 I have had particular regard to s 100.1(3). It provides:
terrorist act means an action or threat of action where:
(a) the action falls within subsection (2) and does not fall within subsection (3); and
(b) the action is done or the threat is made with the intention of advancing a political, religious or ideological cause; and
(c) the action is done or the threat is made with the intention of:
(i) coercing, or influencing by intimidation, the government of the Commonwealth or a State, Territory or foreign country, or of part of a State, Territory or foreign country; or
(ii) intimidating the public or a section of the public
17 As can be seen, whether an act of advocacy, protest, dissent or industrial action constitutes terrorism turns upon the state of mind accompanying those activities.
18 For the purposes of this application, and subject to what is said below, I accept the applicant's submissions as to the proper construction of the provisions contained in Div 104 of the Code and particularly what is meant by the phrases "reasonably necessary", "reasonably appropriate and adapted" and "substantially assist", as those phrases appear in s 104.4(1)(c) and (d).
19 There is some dispute as to how the Court is to undertake its evaluative task, particularly in relation to the specificity with which, and the judicial method by which, the Court should assess and articulate the risk to which the proposed orders are directed. I will return to that aspect of the dispute in due course.
20 The background to this application is that three weeks ago the respondent was released into the community having been imprisoned for a period of two and a half years following her arrest on a terrorism-related charge. The significance of the respondent's involvement with the criminal justice system was the focus of submissions before me.
21 It is necessary to summarise the criminal proceedings by way of background.
22 The respondent was arrested in late May 2017 after an unsuccessful attempt to travel to Turkey and from there to Syria to lend support to the cause of Islamic State (IS), a terrorist organisation within the meaning of the Code.
23 On 17 September 2018, the respondent was convicted on information charging that, between 14 July 2016 and 23 May 2017, she was intentionally a member of a terrorist organisation, namely IS, in contravention of s 102.2(1) of the Code. In addressing the jury, the prosecutor had said:
Remember, also, I think I said at the outset of the trial and opening the case for the prosecution that it is not suggested by the Crown that the defendant has been involved in any way at all in any one of the violent things that you have seen during the course of the trial in the evidence. Further, it is not the allegation of the Crown that the defendant was planning or intending to commit any act of violence.
24 On 31 October 2019, the Court of Criminal Appeal ordered that the guilty verdict be set aside and that a verdict of acquittal be entered. The respondent was released from prison on that day. At trial, and on appeal, the objective actions of the respondent were, in large part, not in issue and the evidence adduced on the prosecution case concerning the respondent's subjective words and conduct was largely uncontradicted. Whether the respondent was guilty of the offence turned on the question of whether the evidence was sufficient to prove beyond reasonable doubt that the respondent's actions fulfilled the essential elements of the offence, particularly whether they constituted an attempt to obtain "membership" of IS within the meaning of the Code.
25 The word "membership", as defined, formed a part of an essential element of the offence. The jury can be taken to have found that essential element to have been proved beyond reasonable doubt. The Court of Criminal Appeal set aside that verdict: Abdirahman-Khalif v The Queen [2019] SASCFC 133 (Kourakis CJ, Kelly and Parker JJ).
26 The relevant ground of appeal was that the verdict was not supported by the evidence because there was no evidence of the organisational structure of IS explaining the nature of its membership or how a person might become a formal, or informal, member of it and, therefore, no evidence that the appellant had taken a step to become a member. It was that appeal ground that that was upheld by the majority (Kourakis CJ and Parker J, Kelly J dissenting).
27 Kourakis CJ said at [8]:
The totality of the evidence which I set out in greater detail below, and which was not contradicted at trial, was capable of supporting an inference that the appellant was a supporter of Islamic State, its extremist ideology and its terrorist activities. It also supported the inference that she intended to travel to Turkey to make contact with members or supporters of Islamic State in Turkey, with the intention of travelling into the areas of Syria, Iraq and Turkey controlled by it for the purposes of either providing medical assistance to fighters and others or to marry an Islamic State fighter.
28 However, there was, his Honour said (at [10]):
…no evidence against which to evaluate any connection between the proved conduct of the appellant, her communications, pledge of allegiance, singing and attempt to travel to Turkey, with formal, or informal membership of Islamic State.
29 Parker J, to similar effect, said (at [271]):
… While I have no doubt whatsoever that the evidence was more than sufficient to permit the jury to conclude that the appellant firmly supported IS and was strongly committed to its cause, that was not the subject of the charge she faced. …
30 I now turn to consider the nature of these proceedings. An application for an interim control order is, for all purposes, to be taken to be an interlocutory proceeding. That is provided for by s 104.28A(1) of the Code. Accordingly, although the Evidence Act 1995 (Cth) applies, the hearsay rule does not: Evidence Act, s 75. Construed as a whole, s 104 of the Code contemplates that an application for an interim control order may be made ex parte and in private. Accordingly, the Court is authorised to hear and determine the application in closed court and without affording procedural fairness to the person against whom such an order is sought.
31 There was no obligation on the applicant to serve the application on the respondent to this proceeding. The applicant nonetheless did so and joined the respondent as a party. A solicitor for the respondent attended at the first case management hearing and confirmed that the respondent sought to be heard on it. Neither party suggested that the application should be heard and determined other than in open court.
32 At the commencement of the substantive hearing, the respondent was represented by counsel, Ms Shaw SC. Ms Shaw properly acknowledged that whether or not the respondent should be heard on the application was a matter within the Court's discretion. I granted counsel audience on the interim application. Adopting that course necessarily gives rise to a possibility that I may, in the course of expressing these reasons, reject submissions advanced on behalf of the respondent concerning the same or similar factual or legal issues that may, depending on the outcome of this application, arise for consideration or reconsideration in the context of a confirmation hearing, should there be one. However, there was no suggestion by counsel for the respondent that hearing and determining the merits of her submissions at this stage would give rise to an apprehension of bias affecting any subsequent confirmation hearing. I have proceeded to hear the submissions and am proceeding to judgment on that basis.
33 I now turn to the evidence. The application is supported by the affidavit of senior AFP member, Mr Ian McCartney. In accordance with the Code, it annexes two statements of facts, the first as to why the orders should be made and the second as to why the orders should not be made. The facts are sworn on the basis of information and belief. In large part, the affidavit evidence constitutes hearsay for the purposes of the Evidence Act, although the statements of fact also annex evidentiary materials that would not otherwise offend the hearsay rule in their own right.
34 Whilst for the purposes of this interlocutory proceeding the hearsay evidence is not inadmissible, characterisation of some of the evidence as hearsay may affect its reliability and, hence, its weight. I have assessed the evidence on that basis.
35 Determination of this application requires facts to be found to the civil standard of proof. In determining whether the Court is satisfied that the applicant's case has been proved on the balance of probabilities, the Court must take into account, among other things, the nature of the subject matter of the proceeding and the gravity of the matters alleged: Evidence Act, s 140. In applying that standard, I have had particular regard to the nature of the controls sought to be imposed on the respondent and the extent to which they represent an incursion on her civil liberties. Some of the controls would prohibit the respondent from doing acts that she would, in any event, be prohibited from doing under the general law, but others are not. I have also had regard to the fact that the orders sought at this stage of the process are in the nature of interim orders. Something should be said about the consequence of that.
36 The orders will not remain in place unless the senior AFP member makes an election to confirm them in accordance with s 104.12A. In that event, there is to be a confirmation hearing in accordance with s 104.14. At such a hearing, the Court may revoke the order or confirm the order with or without variation. Importantly, when determining whether an interim order is to be confirmed, the Court is to proceed only on the evidence adduced for the purposes of the confirmation hearing. To the extent that the evidence presently before me is assessed for the purposes of making orders having a significant impact on the respondent, I am proceeding on the basis that that impact will persist, on the basis of that evidence, only until the confirmation hearing, should there be one.
37 At that hearing, the respondent would be entitled to be heard, to cross-examine witnesses and to adduce evidence of her own. Whether the order should be confirmed and so continue in force for a total period of 12 months must be determined in a different evidentiary context.
38 The evidentiary materials before me include judgments, transcripts and other materials from proceedings in the Supreme Court of South Australia, including sentencing remarks made by the trial judge in April 2019. The sentencing remarks contain findings of fact and the reasons for judgment of the Court of Criminal Appeal contain conclusions about the capacity of the evidence adduced at the trial to establish critical factual propositions to the criminal standard of proof.
39 The applicant correctly acknowledges that findings of fact by justices of the Supreme Court do not have evidentiary status in these proceedings, but rather form a part of the background against which this application is made. It was nonetheless submitted that I should make equivalent factual findings on the evidence before me, and, in particular, that I should characterise the evidence and draw primary inferences to the same effect as the majority in the Court of Criminal Appeal.
40 Also before the Court is a statement of agreed facts signed by the parties for the purposes of s 191 of the Evidence Act. Those objective facts form a part of my findings and it will be necessary in due course to determine what inferences can, or cannot, be drawn by reference to them.
41 To be clear, I will not make any factual finding concerning the respondent's past conduct by adopting any facts the jury may or may not have found at trial, nor by adopting any fact made by the sentencing judge, nor by adopting any facts that the Court of Criminal Appeal might have found capable of being established beyond reasonable doubt in the criminal proceedings. Forensically speaking, I consider the judgments to be otherwise of limited assistance in the current statutory context and I will rely on the evidence that is contained in the statement of agreed facts, the statement of facts sworn by Mr McCartney both as to why the orders should and should not be made, and, in particular, the exhibits thereto.
42 The affidavit of Mr McCartney alleges primary facts as well as findings that might be made by inference. In addition, the affidavit urges the Court to make certain evaluative judgments on the basis of those facts. For the most part, the primary facts concern the objective conduct of the respondent, that is, her words, her acts and omissions. Counsel for the respondent did not seek to contradict the primary facts at large, but did take issue with the inferences that might be drawn from them, both as to the subjective intentions, knowledge and motivations of the respondent, and as to the risk that she presents to the community, and as to the proper application of the statutory criteria to her and her circumstances.
43 I find established to the requisite standard those primary facts set out in the statement of facts sworn by Mr McCartney as to what the respondent has said and done in the past, with two qualifications. The first qualification is that I do not consider it necessary to make any finding to the effect that the respondent obtained, or attempted to obtain, "membership" of IS. The second qualification is that it is unnecessary to draw any inferences about what the jury did or did not find to have been proven at the respondent's trial.
44 The state of mind accompanying the respondent's past conduct, including her beliefs, intentions and motivations is, too, a question of fact to be inferred from all of the circumstances.
45 In the result, I have determined that an interim control order should be made and that the controls should be in the terms set out in the amended short minutes of order, save that I do not consider it appropriate in my discretion to make an order in terms of proposed control 9.
46 The proposed control 9 would prohibit the respondent from carrying out specified activities, including in respect of her work or occupation, namely paid or unpaid employment, without having first notified the "JCTT coordinator". The proposed control goes on to suggest how that notification should be given. I will explain why I am not inclined to impose a control in those terms in due course.
47 I am required by the Code to include with the order a summary of the grounds on which the order is made. It is presently unclear to me the level of detail that is required in fulfilling that obligation. It might be sufficient simply to identify the statutory provisions that I have found are invoked and the criteria that I have found to be fulfilled. However, I have regard to the fact that, in usual circumstances, an interim control order is made ex parte. In the ordinary course the person subject to the order would not be aware of the application until the order is sought and so it is appropriate to proceed on the basis that some detail of facts, albeit in summary form, should be set out in the order itself.
48 I propose to include a summary of the grounds in the order to the following effect:
(1) Islamic State (IS) has:
(a) since its inception, directly, and indirectly, engaged in preparing, planning, assisting in or fostering the doing of various terrorist acts globally; and
(b) as one of its main goals to engage in terrorist acts (violent jihad) throughout the world, including killing westerners; and
(c) by its leaders and propaganda materials, exhorts its followers to take action to achieve those goals.
(2) Ms Abdirahman-Khalif:
(a) attempted to travel on 14 July 2016 in order to marry an IS fighter in Turkey or Syria or thereabouts and to use her nursing training to provide medical assistance to IS fighters there;
(b) between at least November 2014 and May 2017, possessed and accessed an extensive amount of material promoting IS and violent jihad including extremist, violent videos depicting content such as beheadings, stonings and shootings, including such acts being committed by children;
(c) between at least May and July 2016, communicated with supporters of IS;
(d) pledged an oath of allegiance, Bay-ah, to the then leader of IS, Abū Bakr al-Baghdadi, on 2 October 2016;
(e) between at least May 2016 and March 2017, expressed support for IS and violent jihad, including by repeated recitation of IS and extremist Nasheeds;
(f) recorded a video of herself whilst a Nasheed referring to jihad was playing;
(g) self-identified as a mujahideen, a term used by those, at the very least, who support IS ideology;
(h) used a pose adopted by IS of pointing skyward with her index finger and recorded a video of herself doing so;
(i) was a member of a chat group named Bahki'ah Sisters, suggesting that she was a pro-IS woman and the group Naughty Sisters, both of which included herself and members of a group known as the Mombasa Group, that group being responsible for a terrorist attack in Kenya; and
(j) had advanced notice of the terrorist attack in Kenya by the Mombasa Group and, having counselled a member of the group to be patient and to wait until October or December to conduct their attack. Her conduct after this event indicated her support for the attack. Further, she continued accessing IS material after the event and made her pledge of allegiance after the event. The communications with one of the members of the Mombasa Group evidence a relationship in the nature of a friendship.
(3) Ms Abdirahman-Khalif's attempt to travel to IS territory demonstrates her commitment to and support for IS's ideology, intentions and activities. She did not tell her family about her intended travel. She replaced her iPhone with an android device and she brought very limited hand luggage, all of which was consistent with advice contained on her electronic devices regarding how to avoid detection and successfully travel to IS territory. That conduct was detected in July 2016 upon her attempted travel to IS territory.
(4) Upon being detected, her contact with the Australian Border Force and the AFP made plain the seriousness with which Australian law regards any attempt to join an organisation such as IS.
(5) Ms Abdirahman-Khalif's passport was cancelled on 19 July 2016. Notwithstanding these interactions with the authorities, she did not move away from the IS-inspired ideology that had influenced her behaviour. Rather, she continued to engage with members of the Mombasa Group in advance of their terrorist attack and made efforts to conceal her subsequent conduct, including by uninstalling and reinstalling "Telegram", deleting communications and by advising the Mombasa Group, "Don't talk".
(6) Ms Abdirahman-Khalif made the Bay-ah in October 2016 and identified as a mujahideen in February 2017 and was untruthful in a police interview in February 2017.
(7) Ms Abdirahman-Khalif is susceptible to the influence of extremist propaganda and violent material. Extensive extremist material and IS propaganda, including images, videos and IS publications were located on her mobile telephones. Some of that material was of the most extreme nature, including beheadings, stonings and shootings. It also included material calling for a caliphate and for Sharia law in the United Kingdom.
(8) During a recent term of imprisonment, Ms Abdirahman-Khalif has communicated with a number of persons, both in Australia and overseas, who are a security concern. The persons of security concern have made unsolicited contact with her, including for the purposes of providing her with the opportunity to marry. The extent to which Ms Abdirahman-Khalif was aware of the nature of the security concerns at the time of the correspondence is presently unclear, although there is some evidence before me that she was not.
(9) Ms Abdirahman-Khalif has not completed any significant rehabilitation programs specifically directed to her deradicalization, including because she was not provided with any meaningful opportunity to do so when in prison.
(10) Ms Abdirahman-Khalif's past conduct has occurred in circumstances in which she has very poor psychological resistance and she continues to have poor psychological resistance. In all of the circumstances, it is more probable than not that Ms Abdirahman-Khalif will continue to:
(a) support the ideology, intentions and activities of IS, including terrorist attacks being carried out by its members; and
(b) seek out and engage with IS extremists, whether members or otherwise, including for the purposes of pursuing her intention to marry an IS fighter or terrorist.
(11) There is, I find, a high likelihood that Ms Abdirahman-Khalif will act on her intention to marry an IS extremist in the very short term or that she will otherwise form relationships in the very short term in which she is highly susceptible to the influence of others. In the context of such relationships, there is a real risk that Ms Abdirahman-Khalif will do any act in support of the IS cause as may be requested or demanded of her by others, including acts of terrorism or conduct supporting or facilitating acts of terrorism, including in Australia. It is more probable than not that the making of the interim control order would substantially assist in preventing a terrorist attack or in preventing the provision of support for or the facilitation of a terrorist act.
49 By using the word "join" at [48(4)] above, I do not express any finding as to whether or not that was the respondent's intention.
50 I express my dismay that Ms Abdirahman-Khalif did not have any meaningful opportunity to engage in significant rehabilitation programs specifically directed to her deradicalization whilst in prison as identified at [48a(9)] above.
51 The summary of grounds will go on to include a statement as to the proportionality of the orders.
52 I now turn to deal with some of the matters raised on behalf of the respondent in the course of submissions advanced on her behalf by her legal representatives.
53 It was suggested that the Court should draw the inference that the respondent discouraged the Mombasa attack. I have rejected that submission. All that the respondent did was to suggest that the attack should be delayed. The evidence, particularly the evidence of the telephone call in question, does not suggest that the respondent expressed any concern or even any disquiet about the fact of the attack. Indeed, it seems that she was closely enough connected with those who committed the attack to perceive herself, at least, to have some influence in dictating or at least influencing its timing.
54 I wish to elaborate on that portion of the evidence that deals with what I will refer to as "the Clavell correspondence". The evidence is to the effect that two members of the Clavell family were shot by police on 12 June 2019 in a confrontation in which each of them were armed, one with a large knife and the other with a hatchet. A trial in relation to that confrontation is pending. It is sufficient to say that the persons involved in that confrontation are of significant security concern, as perceived by the AFP, including for reasons relating to extreme IS related ideology.
55 Whilst in prison, the respondent received correspondence from one Sumia Hussein. Ms Hussein is the wife of Nathan Clavell. She is the sister-in-law of a person who is presently imprisoned in the United Kingdom after pleading guilty to encouraging terrorism on social media. The correspondence suggests that the respondent was made aware in July of the shooting incident involving two of the Clavell brothers and that she received correspondence, in late July proposing that she marry one of the members of the Clavell family.
56 It is an agreed fact that in late August 2019 the respondent spoke to two officers at the South Australia Department of Correctional Services and at that time the officers informed the respondent of the Clavell family's history and associations.
57 It is unclear to me whether that is the first time that the respondent first learned of the Clavell family's history and associations. She had received correspondence concerning the shooting in the previous July and it is in that context that I view with some caution the letter that the respondent sent to the Clavells in which she stated that their letters and money orders would be returned. The letter is significant, more for what it does not say. Whilst I accept that, by that letter, the respondent to a degree was ceasing communication, the reason for doing so and the time period over which she intended to cease communications is left entirely unclear. The respondent stated:
I am writing to let you know that any letters or money that you or your brothers send will be sent back to you. I am currently having hard time and I had to block mails. I hope you can forgive me and understand my situation.
58 The letter then contains expressions of goodwill and good luck and a prayer that there be a release and a "prayer for the brothers". I infer that the respondent is there referring to the two brothers involved in the confrontation with the police. There is no expression of dismay or disgust in the letter. There is no expression of unwillingness to marry, as had been previously proposed to her. There is nothing to indicate or suggest that the Clavell family should stop contacting her, including upon her release. In short, I do not accept that letter supports an inference that the respondent has deradicalized.
59 It was submitted that the reasons for the respondent travelling to Turkey and Syria were to join an IS society and to participate in that society as the wife of a fighter and as a nurse. I do not accept that submission, at least not wholeheartedly. I find that the society to which counsel was referring is a society that is an ideal, and that the ideal has not yet been achieved. It is that ideal society for which IS is fighting. I find that IS ideology is such that its fighters will attempt to achieve that society by any means, however abhorrent. Women in the society, I infer, are subservient, but that makes them no less dangerous. I find that the material in the respondent's possession included video material depicting children being put to use in the most abhorrent ways. Family life in an IS society is not to be equated with family life as we understand it to be.
60 Whilst it might be the case that the respondent intended to provide medical assistance, I find that her intention was to provide medical assistance only to IS fighters, that is to persons who were advancing the IS cause, and not to any person who might be injured by them. Again, I do not consider that to be nursing in the sense that we, in an Australian society, would understand the profession of nursing to be.
61 There are two reports before the Court. They contain material in the nature of expert opinion. They contain assessments of the risk presented by the respondent. I have given careful consideration to them and careful consideration to the context in which they have been prepared.
62 I have read the report of a psychologist who assessed the respondent in advance of a sentencing hearing. Dr Lim was engaged in 2018. She assessed the respondent in July, August and October 2018. By that timing, I infer that Dr Lim was unaware of the Clavell correspondence. I have taken into account that the author concluded with the view that the respondent was assessed as having a low risk of recidivism and a low risk of causing serious physical harm to herself or others at the present time. That assessment, however, related to the respondent's then current incarceration and was made at a time when the period of the incarceration was indefinite or at least undetermined.
63 The assessment was based on an assumption that the respondent had disengaged from previously held extreme religious ideologies due to restrictions on her current environment. The report stated:
I do not believe that [the respondent] is a dangerous person who is inherently predisposed to committing acts of physical violence. She does not possess, nor had she displayed the typical gamut of static and dynamic criminogenic risk factors that are typically associated with an elevated risk of criminally aggressive/violent behaviours, such as juvenile offending history, substance abuse, a severe personality disorder, or severe psychological dysfunction/maladjustment prior to the period of 2 years leading up to these terrorism-related charges. She is also capable of empathy and feelings of guilt and remorse, which are generally considered to be positive behavioural and prognostic indicators towards treatment, responsivity and success.
64 Dr Lim went on to say that:
It should be noted however, that [the respondent's] risk of violence recidivism is likely to be elevated to 'Moderate' if she is released without having had the opportunity to engage in targeted and individualised professional interventions, and if there is no comprehensive rehabilitation plan in place prior to her release from prison to support her to continue addressing her identified risk factors …
65 I have found in this proceeding that no such support or services or interventions were indeed provided.
66 The report refers to the respondent being in a state of "persistent psychological vulnerability" at the time of the events that led to the criminal charge. For the purposes of the present application, it is appropriate to proceed on the basis that the respondent continues to be in a state of "persistent psychological vulnerability".
67 I deduce from the report some of the reasons why a person in the respondent's position, particularly a young woman otherwise having some promise, would adopt extreme religious ideologies. The reasons are highly complex, as is the process of assessing the risk that such a person might present to the community, particularly after a period of incarceration having the effect of restricting her access to materials of the kind that had previously inspired her.
68 I have taken into account what was said in the prosecution address at the criminal trial, but that must be understood in the context of a case in which the prosecutor was urging on the jury an understanding of what the case was (and what the case was not) about. It was the Crown's obligation to prove only certain elements. I understand the prosecutor's submission to be urging the jury not to be distracted by issues that were not relevant to the elements of the charge to which the trial related.
69 Returning to the Clavell correspondence, I find that the fact that the respondent received and responded to the correspondence does demonstrate and reinforce the psychologist's opinion that she has poor psychological resistance and is naive in the extreme. To engage with strangers whilst she was in prison, including strangers who she knew were also in prison, demonstrates that the respondent has no insight into her own susceptibility.
70 The second report is a Joint Terrorism Threat Assessment. It expresses certain views about the risk profile of the respondent. In particular, it expresses the view that the respondent's knowledge and skills to carry out an act of politically-motivated violence was assessed as "highly unlikely" and her risk of having access to resources was assessed as "unlikely".
71 I have adopted a different approach to that adopted in the report. In essence, I have disagreed with it.
72 The assessment of the respondent's risk is for the Court to make. I do not agree that it is unlikely that the respondent will have access to resources to commit a terrorist act. I may take on judicial notice that terrorist acts have been committed with the most banal domestic items. There is some tempering of the opinion in the report to that effect in any event.
73 As to knowledge and skills, I place little weight on the personal knowledge and skills of the respondent as I have perceived and described the risk that she presents. The risk is a risk that she will undertake and carry out instructions of others who have the necessary knowledge and skills and that she will lack the confidence or the psychological resilience to resist.
74 It was submitted that because the respondent had not committed a violent act in the past and because she had not expressed any desire to do so it followed that she had no propensity to do so in the future. I do not mean to oversimplify the argument, but those were the fundamental steps in reasoning that were urged upon me.
75 I take into account that the activities and behaviour of the respondent were interrupted when she was arrested.
76 The respondent's propensity for participating in a violent act must be assessed in all of the circumstances, not only by reference to her motivations for travelling to Syria or Turkey or other places in the Middle East. The absence of an expressed desire to personally commit a specific act of violence is, of course, relevant, but it must be given less weight in circumstances where there has been an express allegiance to a leader who has urged upon his followers the necessity to commit an act of violence in order to achieve the cause of IS. It is to be given less weight in circumstances where material depicting gross acts of violence were consumed and stored over a significant period and in significant quantities by the respondent.
77 The respondent has, I conclude, an obsession with violence.
78 It was also submitted that the Court should be in a position to identify with some specificity what the respondent will do if the control order is not made. In my view, it is not necessary to undertake that task. I have found that there is a high likelihood that the respondent will seek out, engage and marry likeminded persons and that she is a person with poor psychological resilience. The risk is that she will do whatever it is that she is told to do.
79 I will now explain why I am not prepared to make a control order in terms of control 9, as originally proposed. I decline to impose that control in the exercise of my discretion principally because non-compliance with the control order attracts a criminal sanction such that the obligation that is to be imposed must be one that is factually and legally clear.
80 Describing an obligation as one prohibiting a person from engaging in paid, or unpaid, "employment" without first giving notification raises an issue that is bedevilled with legal uncertainty. A person might engage in meaningful work, but whether or not that work arrangement constitutes an employment relationship is sometimes very difficult even for a Court to ascertain. It should not be left to somebody in the respondent's position to work that out for herself so as to conclude whether or not she is or is not under an obligation to notify.
81 Moreover, Div 104 of the Code is expressed mostly in terms of orders that prohibit specific activities, including activities undertaken in the course of employment. I do not consider mere employment to be a sufficiently specific activity to form the basis of a control expressed in terms of the proposed control 9. The control orders already contain prohibitions on activities that must not be undertaken whether in employment or not. If the applicant is concerned that there are gaps in those controls, then it ought to have applied for orders prohibiting the engagement in other specific activities whether in the course of employment or otherwise. In my view, the controls, without control 9, are sufficient to address the risk that I have identified.
82 As for the requirement of proportionality, the controls restrict, and in some cases significantly so, the respondent's freedom of movement, her freedom of association and communication, her access to certain materials, that is, information of a specific kind, and her access to and use of specific articles. They restrict the respondent's means of communication, including by the hardware devices and the software applications that can be used, and they facilitate the ability of the police to monitor her activities. Some of the orders are intended to achieve more than one of those objectives and they overlap considerably. I have had regard to the impact that the orders would have on the respondent as a young woman and especially having regard to the vulnerable position that she is in, but the evidence before me at this stage of the proceeding in that regard is slight, other than inferring the obvious from the orders themselves.
83 I have not had the benefit of any evidence at this stage from the respondent as to her personal circumstances. It might be that some of these controls have a greater impact upon her than might otherwise appear on their face.
CONFIRMATION HEARING
84 As has been mentioned, since the interim order was made the respondent has sought and obtained orders for the adjournment of the confirmation hearing. At the time of publication of these written reasons, the confirmation hearing is to commence on 9 June 2020.
I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.
Associate:
Dated: 22 November 2019
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Tran v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 77
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FEDERAL COURT OF AUSTRALIA
Tran v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 77
MIGRATION – application for extension of time within which to file and serve notice of appeal – whether delegate of Minister required to give particulars of "information" to applicant pursuant to s 57 of Migration Act 1958 (Cth) – whether fact that migration agent had informed Department that it no longer acted for applicant was "relevant information" – whether fact that Department had been unable to contact applicant was "relevant information" – application devoid of merit – extension of time refused
THI DONG THAO TRAN v MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS and MIGRATION REVIEW TRIBUNAL
VID 1229 OF 2005
WEINBERG J
10 FEBRUARY 2006
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY VID 1229 OF 2005
BETWEEN: THI DONG THAO TRAN
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
FIRST RESPONDENT
MIGRATION REVIEW TRIBUNAL
SECOND RESPONDENT
JUDGE: WEINBERG J
DATE OF ORDER: 10 FEBRUARY 2006
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The applicant pay the respondents' costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY VID 1229 OF 2005
BETWEEN: THI DONG THAO TRAN
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
FIRST RESPONDENT
MIGRATION REVIEW TRIBUNAL
SECOND RESPONDENT
JUDGE: WEINBERG J
DATE: 10 FEBRUARY 2006
PLACE: MELBOURNE
REASONS FOR JUDGMENT
1 This is an application for an extension of time to enable the applicant to appeal against a judgment of the Federal Magistrates Court given on 24 January 2005: Tran v Minister for Immigration (No 2) [2005] FMCA 412 ("Tran (No 2)"). On that date, McInnis FM dismissed an application for judicial review of a decision of a delegate of the respondent Minister dated 6 November 2003.
2 The applicant did not file and serve a notice of appeal within the 21 day period provided for in O 52 r 15(1)(a)(i) of the Federal Court Rules. The Federal Magistrate was not asked to, and did not, fix any later date for that purpose, pursuant to O 52 r 15(1)(a)(iii). Nor did the applicant apply to this Court within the 21 day period for further time within which to file and serve a notice of appeal under O 52 r 15(1)(b). The applicant must therefore rely upon O 52 r 15(2), which provides that this Court may, at any time, "for special reasons" grant leave to file and serve a notice of appeal.
Factual Background
3 The applicant is a citizen of Vietnam who arrived in Australia on 30 June 1999 as the holder of a subclass 300 (Prospective Spouse) visa.
4 On 4 February 2000, the applicant applied for permanent residence on the basis of her marriage to Mr Tran Van Cong (the "nominator"). The applicant was granted a subclass 820 visa ("temporary spouse visa") on 9 February 2000.
5 By a statutory declaration made on 1 May 2000, the nominator stated that the applicant had left him and that he no longer supported her application for permanent residence. On 24 June 2000, the nominator made a further statutory declaration in which he stated that the applicant had resumed living with him, and that he wished to "withdraw" his earlier statutory declaration.
6 Between April 2002 and June 2003, the Department of Immigration and Multicultural and Indigenous Affairs (the "Department") attempted to contact the applicant to request that she provide further information in order to determine whether she met the criteria for the grant of a permanent spouse visa. Some of this correspondence was sent to Global Interchange Australia Pty Ltd ("Global Interchange"), the agent appointed to act on behalf of the applicant. On 13 March 2003, Global Interchange advised that it no longer acted for the applicant. Other letters were sent to the applicant at her last-known residential address of 3 Willow Avenue, St Albans, Victoria, and at several other addresses. On 30 May 2003, an attempt was made to contact the applicant by telephone. A person purportedly answering the phone advised that he did not know anyone by her name.
7 On 6 November 2003, a delegate of the Minister refused to grant the applicant a permanent spouse visa. The delegate noted that she had been given a reasonable opportunity to provide information and documentation confirming that the relationship was genuine and continuing. However, in the absence of any such evidence, the delegate was "unable to make a positive conclusion in this respect", and found that the applicant therefore did not satisfy clause 801.221, a criterion for the grant of a permanent spouse visa.
8 On 24 May 2004, the applicant filed an application in the Federal Magistrates Court seeking judicial review of the delegate's decision. It was that proceeding, MLG 587 of 2004, that was dismissed by McInnis FM on 24 January 2005.
9 On 16 February 2005, the applicant lodged an application in the Migration Review Tribunal (the "Tribunal") for review of the delegate's decision. It appears that this was done in response to the Federal Magistrate's conclusion, in an earlier proceeding on the same day as the proceeding that is the subject of this application (Tran v Minister for Immigration (No 1) [2005] FMCA 411), that an adjournment should not be granted to enable the applicant to adduce evidence that she had applied, or attempted to apply, to the Tribunal for review of the delegate's decision. On 24 February 2005, the Tribunal declined to accept or consider the application for review, on the basis that it was not lodged within the prescribed time limit.
10 On 18 March 2005, the applicant filed in this Court a Form 56A application under the Judiciary Act 1903 (Cth), seeking orders "to quash the decision of the Federal Magistrates Court" (presumably the decision of McInnis FM on 24 January 2005 in Tran (No 2)) and to remit the matter to the Tribunal for reconsideration according to law. That proceeding, VID 206 of 2005, was transferred to the Federal Magistrates Court by Sundberg J on 19 April 2005.
11 On 15 September 2005, an amended application (in the proceeding transferred by Sundberg J to the Federal Magistrates Court) was filed on behalf of the applicant, by which review was sought of the Tribunal's decision to refuse to consider her application of 16 February 2005 for review, and the delegate's decision to refuse to grant a spouse visa. The amended application no longer sought to quash the decision of McInnis FM, as the original application had done. In that amended application, the grounds of review were particularised, in substance, as follows:
· the delegate's decision was erroneous, the applicant met the criteria for the grant of a spouse visa, and the second statutory declaration "confirmed the spousal status conclusively";
· the applicant should not have been contacted directly by the delegate, as she had a migration agent as her authorised representative; and
· the Tribunal breached its duties by summarily not allowing the applicant her right to access the review mechanism.
12 In addition, the amended application foreshadowed a challenge to "the constitutional validity of contradictory sections within the Act which the legislature on the one hand allows for review and on the other limits that ability for Applicants". It indicated that "[t]his ground of appeal will be canvassed further in the Contentions of Fact and Law".
13 On 15 September 2005, Riethmuller FM ordered that the proceeding, which had been filed on 18 March 2005, and transferred to the Federal Magistrates Court, be transferred to the Federal Court: Tran v Minister for Immigration (No 3) [2005] FMCA 1438. He said that he did so with some reluctance. His Honour was plainly influenced by the fact that, in certain respects, the proceeding had the characteristics of a purported appeal from the decision of McInnis FM, and also by the fact that the applicant had foreshadowed a constitutional challenge.
14 In giving reasons for his orders, Riethmuller FM noted that the issues raised by the applicant in the amended application were as follows:
· whether or not an appropriate notice of the delegate's decision had been sent to the applicant;
· whether the delegate's decision could be judicially reviewed, despite a failure to apply to the Tribunal for review; and
· whether or not the time limits provided for by the Migration Act 1958 (Cth) were valid.
15 Riethmuller FM observed that the first two issues had been effectively determined by McInnis FM, and that the applicant would be estopped from re-litigating those issues. As previously indicated, his Honour said that it appeared from the submissions that had been addressed that what was actually being sought was in the nature of an appeal from the decision of McInnis FM.
16 On 26 October 2005, the matter came before me for directions. It soon became clear that, notwithstanding the somewhat convoluted history of the matter, what the applicant was seeking to do, in reality, was to appeal against the decision of McInnis FM in Tran (No 2), and not to pursue the application seeking review of the Tribunal's decision. It was specifically indicated that the constitutional challenge earlier outlined to Riethmuller FM would be pursued, and it was on that basis that I made orders regarding the future conduct of this matter. I ordered that the applicant file and serve an amended notice of appeal setting out the grounds relied upon for the appeal together with full particulars relevant to the appeal. I further ordered that the applicant file an application for an extension of time within which to appeal, and any affidavits in support of that application.
17 It is important to understand that I questioned the applicant's solicitor closely regarding the proposed constitutional challenge. I warned him that the Court would not look favourably upon a spurious submission, devoid of merit, involving little more than a waste of valuable Court time. I was assured that any constitutional challenge would only be pursued after careful consideration had been given to the issue by someone competent to advise upon it. It was in the light of that assurance that I made the orders that I did, and, in particular, made provision for the issue of s 78B notices.
18 On 30 November 2005, the applicant filed a draft notice of appeal in purported compliance with my orders. The grounds of appeal are set out as follows:
"1. Jurisdictional Error
2. Denial of Natural Justice
3. Denial of Procedural Fairness"
19 The orders sought include a writ of prohibition, a writ of certiorari and a writ of mandamus. The writ of certiorari is aimed at "quashing the decision of McInnis FM". The applicant also seeks, in the alternative, an order setting aside his Honour's decision.
20 On the same date, the applicant gave notice under s 78B of the Judiciary Act that this proceeding involved a matter arising under the Constitution, or involving its interpretation. The matters identified in the s 78B notice were as follows:
"2. The present case involves a decision as to whether the MRT is an administrative body or a quasi-judicial or judicial body.
3. Whether s. 338 of the Migration Act 1958 (Cth) setting down the jurisdiction of the MRT was validly enacted.
4. The case involves a consideration of the legislative powers of the Federal Parliament under s. 51 (xix) of the Constitution."
21 The applicant also filed an outline of contentions. Those contentions are in the following form:
"1. On the 27 June 2000 an appointment of Person to act as Agent was lodged with DIMIA. The agent given was Global Interchange Australia Pty Ltd of 163 Barkly Street, Footscray.
2. By letter dated 13 March 2003 Global Interchange sought to inform DIMIA that it was no longer acting for the applicant.
3. DIMIA subsequently sought to correspond with the applicant directly.
4. The learned Federal Magistrate saw nothing untoward when this version of events was presented to him at the heating.
5. The applicant submits that the learned Federal Magistrate committed a jurisdictional error in not requiring that the adverse information that Global Interchange were no longer acting was brought to the attention of the applicant, the applicant was not given time to obtain alternative assistance and that instead DIMIA sought to communicate directly with the applicant who spoke little or no English.
6. DIMIA received 2 contradictory statutory declarations from the nominator of the applicant for a permanent spouse visa.
7. On the 6 June 2000 the nominator sought to withdraw his support on the ground that the relationship had ceased.
8. A further statutory declaration was lodged on the 21 June 2000, claiming the parties had reconciled.
9. (It should be noted in passing that the parties still live as husband and wife).
10. The delegate of DIMIA subsequently sought to obtain confirming information without success.
11. On the 6 November 2003 the delegate concluded that 'I am unable to make a positive conclusion in this respect' (i.e. whether the relationship was genuine and ongoing).
12. Nevertheless, the delegate was able to make a decision denying the applicant the spousal visa.
13. The applicant submits that the FMC made a jurisdictional error in being satisfied that the delegate had acted in accordance with natural justice and procedural fairness by making a decision about which he is uncertain."
Oral Submissions
22 In the course of the hearing, Mr Cheung, who appeared on behalf of the applicant, essentially argued two points. He submitted that the applicant had been denied procedural fairness by the delegate because "adverse information" had not been communicated to the applicant so that she might comment upon it. He further submitted that the delegate had erred in failing to be satisfied that the applicant met the requirements for the visa sought given the existence of the second statutory declaration sworn by the nominator.
23 Mr Cheung did not refer specifically to s 57 of the Migration Act, but it emerged in argument that this was the provision that underpinned his submission. Section 57 relevantly provides as follows:
"(1) In this section, relevant information means information (other than non‑disclosable information) that the Minister considers:
(a) would be the reason, or a part of the reason, for refusing to grant a visa; and
(b) is specifically about the applicant or another person and is not just about a class of persons of which the applicant or other person is a member; and
(c) was not given by the applicant for the purpose of the application.
(2) Subject to subsection (3), the Minister must:
(a) give particulars of the relevant information to the applicant in the way that the Minister considers appropriate in the circumstances; and
(b) ensure, as far as is reasonably practicable, that the applicant understands why it is relevant to consideration of the application; and
(c) invite the applicant to comment on it."
24 Mr Cheung submitted that the delegate had been obliged, pursuant to s 57, to inform the applicant of the fact that her former migration agent had ceased to act for her and had informed the delegate of that fact. He further submitted that the delegate had been obliged, under the same section, to inform the applicant of the fact that he had been unable to contact her, at the various private addresses to which correspondence had been sent, and of the telephone conversation that he had had with an unknown male on 30 May 2003.
25 The balance of Mr Cheung's submissions related to questions of delay, and the exercise of discretion. After initially endeavouring, unsuccessfully, to articulate a constitutional argument, he expressly abandoned the constitutional challenge that had been foreshadowed.
26 Mr Horan, who appeared on behalf of the first respondent, submitted that on no view could it be said that the matters identified by Mr Cheung as "adverse information" constituted "relevant information" within the meaning of that expression in s 57. He further submitted that neither the fact that the migration agent had ceased to act, nor the fact that the delegate had been unable to contact the applicant, formed "a part" of the reason for the delegate's decision refusing the applicant the visa sought. The reason for that refusal had been simple. The applicant had not been able to satisfy the delegate of the criteria as at November 2003. That meant, in accordance with the decision of the Full Court in Minister for Immigration & Multicultural & Indigenous Affairs v VSAF of 2003 [2005] FCAFC 73 at [17], that the application had to fail.
27 Mr Horan submitted that no error of any kind could be discerned in McInnis FM's decision. The delegate had been entitled to accord little weight to the nominator's second statutory declaration which, in any event, was relevant only to the position in 2000. The critical issue so far as the visa was concerned was the position in November 2003.
Conclusions
28 It is plain that the notice of appeal does not comply with my orders dated 26 October 2005. Not only does it not contain "full particulars" of the grounds of appeal, it barely provides particulars of any recognisable ground of appeal.
29 The applicant has not shown any error in the judgment of McInnis FM, still less any jurisdictional error that might have affected the delegate's decision. As Mr Horan correctly pointed out in his written submissions:
"18. The delegate was required to form a positive state of satisfaction that the appellant satisfied the prescribed criteria, including the criteria set out in clause 801.221 of Schedule 2 of the Migration Regulations. Relevantly, those criteria required that the appellant continue to be nominated for the grant of a permanent spouse visa by the nominating spouse, and that the appellant was the "spouse" of the nominator at the time of decision.
19. There was no evidence before the delegate on the question whether the appellant continued to be the "spouse" of the nominator at the time of the delegate's decision. Accordingly, the delegate could not be satisfied that the appellant met the criteria for the grant of a permanent spouse visa.
20. The Department had made repeated requests that the appellant provide further information in support of the application for a permanent spouse visa.
20.1. On 2 April 2002, the Department wrote to the agent appointed to act on behalf of the appellant. No response was received to this letter.
20.2. On 11 September 2002, the Department wrote to the appellant at her last-known residential address.
20.3. On 7 March 2003, the Department again wrote to the appellant's agent. On 13 March 2003, the agent advised the Department that it was no longer acting for the appellant.
20.4. On 27 March 2003, the Department again wrote to the appellant at her last-known residential address, and care of the nominator's niece at her last known residential address. The letter sent to the nominator's niece was returned unclaimed.
20.5. On 30 May 2003, the Department attempted to phone the nominator.
20.6. On 11 June 2003, the Department wrote to the appellant at an address that had been provided in the nominator's statutory declaration dated 1 May 2000, namely 2 Appolo Place, Ardeer, Victoria.
21. Contrary to the appellant's submissions, it was not contrary to the Migration Act or the Migration Regulations for the Department to write to the appellant directly, particularly after her agent had informed the Department that it no longer acted on her behalf. See generally ss.494B and 494C of the Migration Act, and in particular s.494B(4) and s.494C(4).
22. Further, the Department was not obliged to bring to the appellant's attention the "adverse information" that Global Interchange had ceased to act for the appellant. It may be presumed that the appellant was aware of this fact. In any event, the Department did make repeated attempts to contact the appellant directly after being informed that Global Interchange was no longer acting on behalf of the appellant." (footnotes and court book references omitted)
30 The chronology set out above demonstrates that the applicant had ample time and opportunity to provide information to the Department, and to obtain alternative assistance. There is no substance in the applicant's contention that she was denied procedural fairness by reason of any breach of s 57. There was no obligation on the part of the delegate to write to the applicant informing her of the fact that her migration agent had contacted the Department and indicated that they no longer acted for her. There was no obligation on the part of the delegate to convey to the applicant the fact that the delegate had been unable to communicate with the applicant, assuming that the Gordian Knot implicit in this contention could be severed.
31 It is of particular concern that Mr Cheung did not file any written submissions in support of the constitutional issues purportedly raised in the s 78B notice dated 30 November 2005. The matters raised in that notice were utterly devoid of any merit, a matter that became even clearer during the course of oral submissions.
32 The course of issuing of a s 78B notice is an important step in any proceeding. It is not to be taken lightly. The matter is particularly serious given that I asked Mr Cheung repeatedly during the directions hearing on 26 October 2005 whether he genuinely proposed to raise the constitutional issues foreshadowed, and was told repeatedly that he did. I even went so far as to remind him that there could be serious consequences, from his point of view, at least as far as costs were concerned, if, as I suspected, there were no genuinely arguable constitutional issues to be considered.
33 The applicant has failed to identify any factors that would warrant extending the time within which to appeal from the decision of McInnis FM. The appeal would have no realistic prospects of success. Accordingly, leave to appeal out of time should be refused. The applicant must pay the respondents' costs.
34 There is one further matter that requires consideration. Order 62 r 9(1)(c) of the Federal Court Rules provides as follows:
"Without limiting the Court's discretion to award costs in a proceeding, if costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Court that a legal practitioner is responsible (whether personally or through a servant or agent), the Court may, after giving the legal practitioner a reasonable opportunity to be heard, do any of the following:
…
(c) direct the legal practitioner to repay to the client, costs which the client has been ordered to pay to another party;".
35 Having regard to what I have said about the constitutional issues that were flagged, and then hastily abandoned in argument, there is a question as to whether the applicant's solicitor should be ordered to contribute some portion of the costs that the applicant has been required to pay. This would only be in relation to any costs thrown away by reason of the unnecessary and unwarranted introduction into this proceeding of the constitutional challenge, a matter that Mr Cheung was specifically warned about on 26 October 2005.
36 In accordance with O 62 r 9(1), I propose to afford him an opportunity to be heard on this issue.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.
Associate:
Dated: 10 February 2006
Counsel for the Applicant: Mr D Cheung
Solicitor for the Applicant: Mr D Cheung
Counsel for the Respondents: Mr C Horan
Solicitor for the Respondents: Australian Government Solicitor
Dates of Hearing: 10 February 2006
Date of Judgment: 10 February 2006
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Hermens v Acacia Group Limited [2011] FCA 1286
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2011/2011fca1286
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2024-09-13T22:50:38.163153+10:00
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FEDERAL COURT OF AUSTRALIA
Hermens v Acacia Group Limited [2011] FCA 1286
Citation: Hermens v Acacia Group Limited [2011] FCA 1286
Parties: ROLAND LEOPOLD LUCIEN HERMENS and PENELOPE HERMENS v ACACIA GROUP LIMITED and GREGORY MCCAULEY
File number(s): NSD 1524 of 2010
Judge: JACOBSON J
Date of judgment: 11 November 2011
Catchwords: CONTRACT – alleged oral agreement to employ the Applicant as CEO of company at a particular net wage –whether the conduct of the parties establishes the terms of the alleged bargain – whether there was an implied agreement to pay a reasonable wage – conduct of the parties did not did not show the alleged bargain
TRADE PRACTICES – misleading or deceptive conduct – statements made did not amount to a representation for the purposes of s 52 of the Trade Practices Act 1974 (Cth)
Legislation: Trade Practices Act 1974 (Cth), ss 52 and 82
Cases cited: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110
Legione v Hateley (1983) 152 CLR 406
Meates v Attorney General [1983] NZLR 308
Ormwave Pty Ltd v Smith (2007) 5 DDCR 180
Date of hearing: 13, 14, 15 September 2011
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 135
Counsel for the First and Second Applicants: Mr D Lloyd
Solicitor for the First and Second Applicants: A R Walmsley & Co Solicitors
Counsel for the First and Second Respondents: Mr B Hull
Solicitor for the First and Second Respondents: HWL Ebsworth
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1524 of 2010
BETWEEN: ROLAND LEOPOLD LUCIEN HERMENS
First Applicant
PENELOPE HERMENS
Second Applicant
AND: ACACIA GROUP LIMITED
First Respondent
GREGORY MCCAULEY
Second Respondent
JUDGE: JACOBSON J
DATE OF ORDER: 11 NOVEMBER 2011
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The First Applicant pay the costs of the proceedings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1524 of 2010
BETWEEN: ROLAND LEOPOLD LUCIEN HERMENS
First Applicant
PENELOPE HERMENS
Second Applicant
AND: ACACIA GROUP LIMITED
First Respondent
GREGORY MCCAULEY
Second Respondent
JUDGE: JACOBSON J
DATE: 11 NOVEMBER 2011
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 Mr Hermens and Mr McCauley and their wives were the incorporators of Acacia Group Limited ("Acacia") which carries on business as a not-for-profit private education and training college.
2 Mr Hermens claims to have been an employee of Acacia for the period from its incorporation in August 2008 until he was removed as a director in July 2010.
3 The principal claim made by Mr Hermens in this proceeding is for recovery of back-pay for wages said to be due to him by Acacia pursuant to an oral agreement made between Mr Hermens and Mr McCauley.
4 The agreement is said to have been made in June 2008 when Mr Hermens and Mr McCauley were planning the establishment of Acacia. It is also said to be evidenced by a document created by Mr Hermens some time after the incorporation of Acacia in which the duties of the CEO of Acacia are described.
5 It is clear that Mr Hermens held the position of Chief Executive Officer ("CEO") but whether that title was more than a nominal one, applicable for only very limited purposes, is in dispute.
6 The effect of the conversation on which Mr Hermens relies is that Acacia would pay him $1,000 per week net, that is after deduction of tax. He claims that due to cash flow difficulties in the period after Acacia commenced business, he and Mr McCauley agreed that the payment of wages would be deferred. The amount of back-pay claimed by Mr Hermens is $163,080.00 which comprises of $170,000 in wages and $17590 in unpaid superannuation with interest less $24,510.00 of payments and drawings which had been received.
7 The conversations on which Mr Hermens bases his claim are denied by Mr McCauley. Many other parts of the relevant factual background are also in dispute.
8 An important issue which therefore arises is whether I accept Mr Hermens' evidence of the critical conversations. This turns upon my assessment of the witnesses bearing in mind my observations of them in the witness box and the objective probabilities arising from my consideration of the factual matrix.
9 But even if I accept Mr Hermens' evidence, a real issue arises as to whether what was said and done was sufficient to prove all the essential elements of a contract: see Integrated Computer Services Pty Limited v Digital Equipment Corporation (Aust) Pty Limited (1988) 5 BPR 11,110 ("Integrated Computer Services").
10 Mr Hermens also makes a claim against Mr McCauley to recover the back-pay by reason of the alleged misleading and deceptive conduct of Mr McCauley. The claim is made under ss 52 and 82 of the Trade Practices Act 1974 (Cth) (as then in force). It is based on the same factual material as gives rise to the claim in contract against Acacia.
11 The other claim in the proceeding made by Mr and Mrs Hermens is for recovery of their initial contributions of $15,000 each to the capital of Acacia.
12 That claim depends upon the terms on which the money was provided to Acacia and the constitution of the company.
13 Mr Hermens was the only witness in his case. Mr McCauley gave evidence for the respondents. Evidence was also given by his wife, Mrs Francis McCauley, and by Ms Megan Atkins who was a non-executive director of Acacia from about 4 February 2009.
The background facts: 2008 to 30 June 2009
14 During 2007 and 2008, Mr Hermens and Mr McCauley were teachers at the Blacktown TAFE. They met when they were teaching in the School of Business Services at the TAFE.
15 In early 2008 Mr Hermens and Mr McCauley had some discussions about teaching courses to indigenous students. Both men were engaged in the teaching and co-ordination of a program known as iSTEPS (the Indigenous Special Training and Education Programs) which was provided to indigenous students at the TAFE. However, they were dissatisfied with the way in which the program was conducted and believed they could establish a Registered Training Organisation ("RTO") to run the programs themselves.
16 There is a dispute between the parties as to why they were dissatisfied with the situation at TAFE. Each suggests that the other had a reason for wanting to leave TAFE but I do not think that anything turns on this. What is plain is that they did ultimately give up their teaching jobs at TAFE and establish Acacia as the company which conducted an RTO at premises in High Street, Penrith.
17 Mr Hermens' evidence of the first critical conversation was that Mr McCauley came into Mr Hermens' office at TAFE in about June 2008 and said:
"Get me out of here." I responded, "Well, I should get going with the college idea, but I'm on, you know, good money. I'm earning over $1000 a week and I wasn't willing to let that go, unless the college could support that income." He said, "I agree. I want the same thing out of this." I said, "Okay. I will get on with it."
18 Mr McCauley denied that a conversation to this effect took place. His evidence of the initial discussions made no mention of how much income or payment each of the men wanted or expected to make out of the venture.
19 Both agreed that there were discussions in June or July 2008 about the amount of money each would need to contribute to establish the venture. They agreed it would cost about $60,000 to get the company up and running including obtaining accreditation as an RTO with the Vocational Education Training Assessment Board ("VETAB"). They therefore agreed to contribute $30,000 each to establish the venture.
20 The relevant conversation about the set-up costs took place in about July 2008. It was common ground between the parties that Mr Hermens arranged the VETAB registration. It was also common ground that Acacia was to be established as a not-for-profit company.
21 Acacia was incorporated on 11 August 2008 as a not-for-profit company limited by guarantee.
22 The business name, Acacia Education & Training was registered at about the same time. This became the name under which the RTO traded.
23 Mr Hermens' evidence was that in September 2008, he told Mr McCauley that he was ready to lodge the registration documents with VETAB but they needed to nominate a CEO as a requirement of VETAB. It was common ground between Mr Hermens and Mr McCauley that Mr McCauley said that Mr Hermens was the most qualified for that purpose and that he should therefore put his name down as the CEO.
24 It was an essential part of Mr Hermens' case that he was the CEO of Acacia for all purposes but Mr McCauley said the appointment was only for the purpose of satisfying the requirements of VETAB.
25 On 24 October 2008 Mr Hermens provided his initial contribution of $30,000. The funds were drawn from Mrs Hermens' account and credited to the loan accounts of Mr and Mrs Hermens with Acacia in the sum of $15,000 each.
26 In the period up to November 2008, Mr Hermens carried out the necessary work of setting up Acacia and pursuing the VETAB registration. He did so while continuing to work at the Blacktown TAFE. The work involved in setting up Acacia was therefore carried out part time, during early mornings and in the evening. It was not until November 2008 that Mr Hermens ceased his employment at the Blacktown TAFE.
27 In November 2008 Mr Hermens located premises at High Street, Penrith which he considered to be suitable for Acacia's business. Mr McCauley was happy with the site which was near the Penrith TAFE. Mr Hermens negotiated a lease which provided for a partial rent holiday and bond of $15,000. Mr McCauley agreed to pay the bond as a part payment of his start up contribution of $30,000.
28 Acacia moved into the High Street premises in around mid-December 2008 or early January 2009. At about that time, Acacia conducted some renovations and purchased furniture. Mr McCauley seems to have arranged the renovations and purchase of the furniture as part of his contribution to the start up costs.
29 On 19 January 2009 there was a Board meeting of Acacia at the company's premises at Penrith. Mr Hermens and Mr McCauley were present. The meeting was also attended by Ms Megan Atkins. Ms Atkins was not formally appointed as a director of Acacia until February 2009 but she was involved in the company's activities for some months before her appointment.
30 A document was created which is best described as an informal minute of the meeting. Ms Atkins said that she prepared it from handwritten notes. The document has that appearance.
31 The minute includes the following item:
CEO payments: 2K director drawing.
32 Mr Hermens said that there was a conversation at the meeting on 19 January 2009 about this topic. He said it was in the following terms:
"Well, I – I have to take out a wage cheque, and we had agreed on that." She said, "Well, what is the rate?" I said, "We agreed $1000 a week." Greg McCauley said, "Yes, that's right, we did." She said, "Okay, then."
33 Neither Mr McCauley nor Ms Atkins gave direct evidence of what was said at the meeting. Ms Atkins was asked in cross-examination how the entry "CEO Payments" came to be made on the document. She said that the minute was prepared for the purpose of providing evidence of board meetings to VETAB, as part of a VETAB audit, and that:
"I volunteered to take what handwritten notes we had, and type those up into a better format to present for the purposes of the VETAB audit".
34 Ms Atkins agreed that the reference to "CEO" was a reference to Mr Hermens. She was not asked about Mr Hermens' evidence that the $2,000 was a wage cheque, but the effect of her evidence was that the handwritten note from which she prepared the minute was a contemporaneous one and it described the sum as a drawing.
35 The sum of $2,000 was entered in Acacia's books as a drawing against Mr Hermens' loan account. The cheque was drawn on 22 December 2008. The only reference on the loan account drawing is "CEO".
36 It was put to Mr Hermens' in cross-examination that the $2,000 drawing was in fact just a drawing on his loan account but he denied that this was so.
37 Acacia obtained its VETAB authorisation as an RTO in January 2009. It "opened its doors" as an RTO on 26 January 2009 offering eight different business service courses.
38 In around February 2009 Mr Hermens prepared two documents entitled "Job Description" in which he set out a description of the positions of "CEO" and "General Manager" respectively. These documents were central to Mr Hermens' case because he claimed that Acacia employed him to carry out the duties set out in the Job Description for the CEO. He also contended that the Job Description of the General Manager was a statement of the position to be taken up by Mr McCauley.
39 Each of the Job Description documents gives a general description of the responsibilities of the office but neither of them states that the holder of the office was an employee of Acacia. Nor does it contain any statement of a wage or other payment to be made to the person holding the office.
40 Mr Hermens did not claim to have had any discussion with Mr McCauley about the CEO document. The effect of Mr Hermen's evidence was that he handed the CEO Job Description and the General Manager documents to Mr McCauley and that he, Mr Hermens, did the work referred to in the CEO document.
41 Mr McCauley was cross-examined about the Job Description documents. His evidence was that he read the documents and he did some research into the office of a CEO but, although he did not agree with it as a statement of Mr Hermens' position, he did not say anything to Mr Hermens about the document.
42 The effect of Mr McCauley's evidence on this topic was that he expected the matters contained in the Job Description documents to be discussed by the board of Acacia. However, he conceded that there was only one formal board meeting of Acacia in 2009 and he accepted that a number of important decisions were made informally between Mr Hermens and himself.
43 Mr McCauley denied that he knew, when the Job Description documents were shown to him by Mr Hermens, that Mr Hermens and Mr McCauley were going to be employed by Acacia as CEO and General Manager respectively.
44 At about the same time (or perhaps earlier, having regard to the date of the document) another document which described the "Internal Governance for Continuous Improvement" of Acacia ("the Internal Governance document") and Acacia Education and Training was shown to Mr McCauley.
45 The Internal Governance document describes the role of the CEO as follows:
to provide regular high level advice to Acacia Education & Training directors on the day-to-day operational business … and on operational or contentious issues.
46 The Internal Governance document also contains a chart showing the internal governance arrangements and relationships between stakeholders. The positions of "CEO" and "Managers" are shown at the top of the chart as being responsible for the development of the business, with the endorsement of the board of directors.
47 The document bears the date August 2008 which is consistent with Mr McCauley's evidence that the document was shown to him in late 2008 in the course of the application for VETAB accreditation, rather than in February 2009 as was suggested to him in cross-examination.
48 The effect of Mr McCauley's evidence on this topic was that the Internal Governance document was prepared purely for VETAB purposes and that the description of the role of the CEO in the document was limited to Acacia's dealings with VETAB.
49 There were other company documents in which Mr Hermens was described as the CEO. One was a business card that was prepared in about March or April 2009. Others were emails and correspondence. Mr McCauley's evidence was that he was aware of the documents but he considered that this was done because the title of CEO was a VETAB requirement. Ultimately, however, Mr McCauley conceded that Mr Hermens was the CEO of Acacia Education and Training.
50 In the financial year ending 30 June 2009 Acacia did not do well financially. It was still in "start-up" phase and was having problems meeting its expenses. In around May 2009 Mr McCauley offered to assist by providing his personal credit card for payments of the company's bills.
Acacia's accounting records as at 30 June 2009
51 The accounting records of Acacia show that as at 30 June 2009 Mr and Mrs Hermens and Mr and Ms McCauley had contributed their "start-up" contributions of $30,000 per family which were credited to their loan accounts.
52 There were other transactions on the loan accounts of Mr Hermens and Mr McCauley during that financial year. Mr McCauley had contributed more than his $15,000 share. He did so by making a number of cash deposits and by paying a number of company expenses. His loan account therefore stood in credit in an amount of just over $32,000.
53 Mr Hermens' loan account was also in credit. His contributions consisted of his initial $15,000 and certain other payments of company expenses of over $6,000. However, other items totalling $9,306.29 were recorded as drawings against Mr Hermens' loan account, leaving him with a credit balance of slightly less than $12,000.
54 Mr Hermens' drawings were recorded in a company ledger under the heading "RH private drawings". Those items consisted of the $2,000 to which I referred earlier at [37]–[38] and other items such as payments to service stations and supermarkets. Mr Hermens conceded in cross-examination that many of the items recorded under the "RH private drawings" column were payments for his personal or private purposes.
55 Significantly, the ledger contains a column with a headings "wages" but it contains no entry for any wages to Mr Hermens. By contrast, the wages of an employee of Acacia, Mr M Lyon, are recorded in the wages column in the ledger.
56 It is also significant that the ledger was an accounting record prepared by Mr Hermens. He seemed reluctant to concede this but ultimately did so.
57 Moreover, there were no records of Acacia for the financial year ending 30 June 2009 of a type which would normally be kept for Mr Hermens, if he were an employee. That is to say, there were no PAYG tax records, no payment of superannuation guarantee contributions and no suggestion that there was any record of Mr Hermens as an employee for purposes of workers' compensation insurance.
58 Nor was there a Group Certificate and Mr Hermens did not disclose any wages from Acacia as income in his 2009 tax return. His only explanation for this was his assertion that relevant accounting records were missing.
Background facts continued: July 2009 to 30 June 2010
59 In July 2009 Mr McCauley left his full time employment with the Blacktown TAFE and began work at Acacia.
60 Mr Hermens gave evidence-in-chief of a conversation with Mr McCauley just after Mr McCauley started working at Acacia full time. Mr Hermens said that Mr McCauley told him that he,Mr McCauley, needed to get some money out of the business but Mr Hermens said they were having cash flow problems.
61 Mr Hermens said that during the course of the conversation he told Mr McCauley that "I haven't paid myself properly" and that "there was still back-pay". He said that the conversation continued as follows:
I said "I'm falling way behind on my mortgage. I have a million dollars worth of mortgage I have to service". I said "I need to pay around 7,000 in mortgages" … Mr McCauley said "We've got more cheques coming in very soon. When they do, take out what you need".
62 In cross-examination Mr Hermens said that the conversation took place in December 2009 in the Acacia car park.
63 Mr McCauley agreed that a conversation took place at about that time in the car park. He said Mr Hermens told him he was having "issues" with his mortgage and requested a payment of $7,000 to put toward his mortgage. Mr McCauley agreed and wrote a cheque for that amount.
64 The payment of $7,000 was made by Acacia to Mr Hermens on 7 December 2009. The payment was debited to Mr Hermens' loan account but it was recorded as "Wages; R.Hermens".
65 There were other drawings against Mr Hermens' loan account earlier in that financial year but they were recorded merely as "CEO" and later as "Roland Hermens". Some of them were for $1,000. Others were for $800. Those payments were as follows:
3 July 2009 $1,000
9 July 2009 $1,000
17 July 2009 $1,000
24 July 2009 $1,000
29 July 2009 $800
5 August 2009 $800
13 August 2009 $800
20 August 2009 $1,000
26 August 2009 $1,000
3 September 2009 $1,000
14 October 2009 $1,000
16 October 2009 $1,000
2 November 2009 $2,000
66 The only other evidence which Mr Hermens gave in his oral evidence about the topic of wages in that period did not directly mention the payment of wages to him. He said there was a conversation with Mr McCauley in August 2009 about the difficulties in paying wages to employees and the payments of "wages et cetera". He also said he had a conversation with Mr McCauley in September 2009 in which Mr Hermens said:
We will use … the corporate credit cards to pay any bills, to take some pressure off our salaries.
67 Mr Hermens said that Mr McCauley agreed to this, but the effect of Mr McCauley's evidence was that he denied there was any reference to payments of salaries.
68 In about December 2009 or January 2010 Mrs McCauley seems to have expressed concern about what she perceived to be Mr Hermens' use of the corporate credit card for personal use. Whether or not there was any prior agreement between Mr Hermens and Mr McCauley for this, it is plain that there were concerns by Mr and Mrs McCauley and by Ms Atkins as to the state of the Company's financial affairs and the need to regularise payments.
69 Ms Atkins gave evidence which I accept, that it was these concerns which gave rise to a board meeting of Acacia that was held on 28 January 2010. The minutes of the meeting were in evidence.
70 The minutes of 28 January 2010 record a motion moved by Ms Atkins and seconded by Mrs McCauley that:
a payment of $800 net be paid to the CEO, Roland Hermens from 29 January 2010 weekly.
71 The motion was carried, as was a motion in similar terms for the payment of $800 net to be paid weekly to the General Manager, Mr Greg McCauley.
72 Mr McCauley was cross-examined about the minutes, and in particular about the use of the words "net" and "weekly" but he was not able to give a satisfactory explanation. He said the payments were treated as drawings but he could not say why the minutes described them in the manner set out above.
73 Schedules showing the payment of the moneys to Mr Hermens and Mr McCauley were in evidence. In each instance the payments were debited to their loan accounts. The payments on 29 January 2010 and 4 February 2010 were recorded as "Wages R.Hermenes" (sic) and "Wages G.McCauley". Thereafter, the payments were recorded merely as "Roland" or "Greg".
74 Subject to one exception, payments were made in the amount of $800 (or a multiple thereof) to Mr Hermens and Mr McCauley on a regular basis during the period from 29 January 2010 to 26 May 2010.
75 The exception was a payment to Mr Hermens on 22 March 2010 of $2,800. It was suggested to Mr Hermens in cross-examination that this consisted of two payments of $800 plus an amount of $1,200 which was unauthorised. Mrs McCauley gave evidence that she had taken up the unauthorised payment with Mr Hermens at a board meeting in March but there is no company record to that effect.
76 On 29 April 2010 Mr Hermens sent an email to Mr and Mrs McCauley and Ms Atkins stating that he was taking stress leave and temporarily standing down as CEO.
77 Mr Hermens returned to work on 24 May 2010 but by then there was considerable acrimony between the parties and Mr McCauley told Mr Hermens not to return to work. The source of the acrimony was the payment by Mr Hermens of personal expenses out of Acacia's funds.
78 Shortly after the end of the financial year, on 5 July 2010, a letter was sent to Mr Hermens, signed by Mr and Mrs McCauley and Ms Atkins, informing him that a resolution was passed at a board meeting on 3 July 2010 terminating Mr Hermens' authority to act as agent, officer or representative of Acacia.
Acacia's accounts as at 30 June 2010
79 The financial statements for Acacia for the year ended 30 June 2010 show that Mr McCauley's loan account was in credit in the amount of just over $38,000 whereas Mr Hermens' loan account was in debit in the amount of $40,642.
80 The reason for the imbalance between the loan accounts was that Mr McCauley made further financial contributions to Acacia whereas Mr Hermens did not. The amounts which each was paid pursuant to the resolution of 28 January 2010 was treated as a drawing against the loan account, rather than as wages.
81 As in the previous years, there were no Group Certificates or other records recording the payments to Mr Hermens, or Mr McCauley as wages.
The relevant principles
82 It is now well established that the classical rules of offer and acceptance do not fit easily into every contractual arrangement. Thus, in determining whether a contract has been formed, it is not always necessary to identify a precise offer or a precise acceptance, or indeed a precise time at which offer and acceptance have taken place: see the review of the authorities by Heydon JA in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [71]–[80]; see also Ormwave Pty Ltd v Smith (2007) 5 DDCR 180 at [68]–[75] per Tobias JA.
83 The question which arises in the class of cases where the classical rules cannot be applied is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement: Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117–11,118 per McHugh JA ("Integrated Computer Services").
84 Two caveats to which McHugh JA drew attention in Integrated Computer Services should be noted. First, it is an error to suppose that merely because something has been done, then, there is therefore, a contract in existence. Second, the conduct of the parties must be capable of proving all the essential elements of an express contract.
85 A succinct statement of the relevant principle is to be found in the remarks of Cooke J in Meates v Attorney General [1983] NZLR 308 at 377 ("Meates") that:
The acid test in the case like the present is whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain.
Was there a contract in the terms alleged?
86 The contract for which Mr Hermens contended was that Acacia employed him as the CEO at a wage of $1,000 per week, net after tax. The contract was said to have been made in August 2008 and to have continued until May 2010 when Mr Hermens ceased to work for the company.
87 The authorities to which I have referred show that the answer to this question turns not only on what was said between Mr Hermens and Mr McCauley but whether the conduct of the parties, viewed as a whole, establishes all of the elements of the alleged bargain.
88 There are aspects of the oral evidence of each of Mr Hermens and Mr McCauley which I cannot accept. I will refer to those aspects of the evidence shortly.
89 First, I do not accept Mr Hermens' version of the conversation on June 2008 in its entirety. However, I do not accept Mr McCauley's evidence that he and Mr Hermens had no discussions prior to establishing Acacia about how much income each of them wished to obtain from the venture.
90 It seems to me to be likely that two men who were in full time employment at $1,000 net per week would have had some discussions before agreeing on an exit path from the Blacktown TAFE as to the prospects of earning at least an equivalent figure from the new venture.
91 Second, I do not accept the evidence of Mr McCauley (or Ms Atkins' evidence on the same topic) that Mr Hermens was the CEO of Acacia purely for the purposes of the VETAB accreditation.
92 Acacia was a RTO. Without the VETAB accreditation it had no business. VETAB required a CEO and Mr Hermens filled that role. He did so with the approval of the other directors of the company. He was described as the CEO in numerous internal documents and on the Acacia business card.
93 I accept that Mr McCauley and Ms Atkins may have regarded the title of "CEO" as a somewhat inflated statement of the status which Mr Hermens occupied but all the objective evidence points to the conclusion that he was the CEO of Acacia.
94 Third, I do not accept Mr Hermens' evidence of the conversation which he says took place at the 19 January 2009 board meeting. It is contrary to the written minute of the meeting which was prepared from Ms Atkins' handwritten notes. Her notes are likely to be the most reliable source of what was said.
95 Fourth, I do not accept Mr McCauley's evidence that he expected the CEO and General Manager Job Description documents to be considered by the board of Acacia. That was not the way in which the company's affairs were conducted, at least in February 2009 when the Job Description documents were prepared and shown to Mr McCauley.
96 The evidence shows that, at least until January 2010, Acacia's affairs were conducted on an informal basis. Decisions were made informally, without board meetings, and the conduct of the business was left largely to Mr Hermens and Mr McCauley. It seems to me that in those circumstances I can infer from Mr McCauley's failure to complain about the CEO Job Description documents that he was content for Mr Hermens to carry out the duties of the CEO as stated in the document.
97 Moreover, the evidence shows, and Mr McCauley accepted, that Mr Hermens was the CEO of Acacia Education & Training which was the business name under which Acacia ran the RTO.
98 The evidence also shows that Mr Hermens carried out many of the functions of the CEO as stated in the document, albeit in a more informal way than was stated in the Job Description.
99 Whether or not Mr Hermens performed his functions satisfactorily or whether or not he was guilty of the allegations of misconduct made against him by Mr and Mrs McCauley and Ms Atkins is not relevant to the question of whether there was a contract between Acacia and Mr Hermens.
100 Fifth, I accept that there was a conversation between Mr Hermens and Mr McCauley in the car park in about December 2009 during which Mr Hermens told Mr McCauley about his financial problems and requested payment of the sum of $7,000.
101 Mr McCauley agreed that a conversation to that effect took place. It is supported by two powerful objective factors. First, Mr Hermens had financial difficulties and needed the money for his mortgage payments. Second, the cheque for $7,000 was drawn and paid to Mr Hermens.
102 I am also of the view, on the balance of probabilities, that there was some mention in the conversation about Mr Hermens' difficulties being caused by the failure to pay himself properly. That was the objective fact. Moreover, the payment was described as "wages" in Mr Hermens' loan account.
103 I am inclined against the view that Mr Hermens said in the conversation in the car park that he was owed back-pay. There was nothing in the conversation between the two at this stage to suggest any agreement to pay a wage, whether in a specific sum, or at all. It was therefore unlikely, in my opinion, that Mr Hermens referred to back-pay.
104 Sixth, I do not accept that in a conversation in August 2009 Mr Hermens referred to the use of credit cards to take pressure off "our salaries". Mr McCauley's evidence that there was no discussion of salaries in that conversation is more consistent with the objective facts because neither he nor Mr Hermens were taking salaries.
105 In light of these findings I have come to the view that there was no conversation between Mr Hermens and Mr McCauley to the effect that Acacia would pay Mr Hermens a salary of $1,000 a week, net, as contended by Mr Hermens.
106 Even if I were to take Mr Hermens' evidence at its highest, it seems to me that it falls short of establishing a concluded bargain in the terms alleged.
107 I accept that Acacia's affairs were conducted informally and it may therefore have been possible for a contract to have come into existence upon the basis of conversations between Mr Hermens and Mr McCauley provided it was clear enough from the conduct of all parties that Acacia agreed to employ Mr Hermens as CEO for $1,000 a week.
108 But even at its highest, Mr Hermen's evidence falls far short of that. It fails the acid test stated by Cooke J in Meates of demonstrating objectively from the point of view of reasonable persons on both sides, all the elements of the concluded bargain for which Mr Hermens contends. There are three reasons for this:
109 First, if I were to accept Mr Hermens' evidence of all the conversations, they are too fleeting and inconclusive to point to the necessary terms of the contract alleged.
110 Second, in the company's first financial year of trading there were no wages paid to Mr Hermens or Mr McCauley. Nor were there any indicia of wages to Mr Hermens in the records of Acacia for that period.
111 Indeed, what seems to me to be the most important piece of evidence against Mr Hermens' case is the Acacia ledger which showed payments to him as personal drawings whilst leaving blank the column specifically allocated to wages.
112 Third, although I accept that Mr Hermens was the CEO of Acacia and that he performed duties in accordance with the CEO Job Description, that does not necessarily establish a contract of employment between the company and Mr Hermens. It may be possible for a director of a company to be the chief executive officer without being employed by the company to carry out those duties. In any event, it is not possible to infer from the fact that Mr Hermens was the CEO that there was an agreement that he would be paid a salary of $1,000 net, or indeed any other amount.
113 There are only two items of evidence which point to the possibility of an agreement to pay a wage to Mr Hermens but neither item supports a finding that there was an agreement between Mr Hermens and Acacia to pay a salary in any fixed amount.
114 The first is the recording of the $7,000 payments to Mr Hermens in December 2009 as wages. Whatever the significance of that entry, it shows no more than an agreement by Acacia to pay Mr Hermens the amount he requested to meet his mortgage payments. There is nothing in the car park conversation or the accounting entry which points to an agreement to pay Mr Hermens $1,000 per week.
115 It is no more than speculation to suggest that the $7,000 represented $1,000 per week for 7 weeks. Nor does the conversation or the accounting entry point to an acknowledgment by Acacia of an agreement to pay Mr Hermens $1,000 per week as salary or wages.
116 The second item is the minute of the board meeting of 28 January 2010 and the recording of the first two payments to Mr Hermens as wages. The terms of the resolution which refer to a payment of $800 "net" to be paid "weekly" do suggest that Acacia agreed to pay that sum to Mr Hermens as a wage. This is reinforced by the fact that the first two payments of $800 were described as "wages" in Mr Hermens' loan account.
117 However, even if the resolution of 28 January 2010 evidences an agreement to pay wages, it does not establish the agreement for which Mr Hermens contends. At most, it was a new agreement, for a different amount, and it operated only for a period of about three months prior to Mr Hermens' departure from the company.
Was there an implied agreement to pay a reasonable wage
118 Even if there was an agreement between Acacia and Mr Hermens that he would be the CEO, I do not consider it was a term of the agreement that he would be paid a reasonable wage.
119 All of the objective circumstances are contrary to that suggestion and the case does not satisfy the test for implication of a term into the contract: see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347.
120 What needs to be taken into account is that Mr Hermens and Mr McCauley were (with their wives) the incorporators of the company. This was not a case of an employer employing an independent person to occupy a job such as a receptionist or a teacher in the college, where such an implication may be appropriate.
121 Here, the objective circumstances suggest that the agreement between the parties was that Mr Hermens and Mr McCauley would seek to establish and build up the business, achieving as much income as they could, and then determine at the end of the financial year how much they would take from any surplus by way of salary.
122 If the surplus was $200,000 they may take $100,000 each. But if the surplus was only $20,000 they could, at most, take $10,000 each.
123 Moreover, the circumstances suggest that Mr Hermens and Mr McCauley wished to take any income in the most tax effective way. It may be that this would be done by splitting the income with their wives.
124 It is therefore not so obvious that it goes without saying that Mr Hermens would be paid a reasonable wage.
125 Nothing turns on the fact that Megan Thorpe was employed at a wage of $60,000 or that, after Mr Hermens' departure from the company, a decision was taken to pay wages to Mr McCauley.
Misleading conduct
126 Even if I were to accept all of Mr Hermens' evidence, the statements made to him by Mr McCauley did not have the necessary quality of certainty to amount to a representation for the purposes of s 52 of the Trade Practices Act 1974: see Legione v Hateley (1983) 152 CLR 406 at 435–436.
The $30,000
127 The $30,000 contributed by Mr and Mrs Hermens to the establishment of the company was in the nature of a capital contribution. It is true that it was credited to the loan accounts but the loans were not repayable on demand.
128 Nor were they repayable merely because Mr Hermens ceased to be involved with the company. Rather, the question of whether the loans are repayable turns on Acacia's constitution.
129 Counsel for Mr Hermens relied on Article 61 of the company's constitution. But no matter how broadly the article is to be construed, it does not extend to repayment of loans made to the Company. Indeed, that article points against the whole of the case brought by Mr Hermens because it requires board approval for payment of expenses, payment for services and payments as an employee.
130 The relevant article is Article 97 which deals with distribution of the Company's assets on a winding up. The article is in different terms from the usual article which would provide for recovery of a surplus on a winding up. Here, any surplus is not to be paid to the members but is to be transferred to another company with similar objects.
131 It seems to me that this article extends only to any surplus left after payment of creditors. If Mr or Mrs Hermens were a creditor on a winding up of Acacia, the article would not deprive them of their right to repayment of a credit balance in the loan account.
132 However, it seems to me that the effect of the constitution is that where members such as Mr and Mrs Hermens contributed loan capital to Acacia, there is no entitlement to have it repaid except on a winding up of the company.
Conclusion and Orders
133 The claim brought by Mr and Mrs Hermens must be dismissed.
134 Costs should follow the event except insofar as the proceeding includes a claim by Mrs Hermens to recover her loan contribution. Her claim was added late and it did not add any additional costs to the proceeding. It follows that there should be no order for costs against Mrs Hermens.
135 Accordingly, I will order that the application be dismissed and that Mr Hermens is to pay the costs of the proceedings.
I certify that the preceding one hundred and thirty-five (135) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.
Associate:
Dated: 11 November 2011
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ALP20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCA 816
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Federal Court of Australia
ALP20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCA 816
Appeal from: ALP20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCCA 3070
File number: NSD 1338 of 2020
Judgment of: LEE J
Date of judgment: 30 June 2021
Catchwords: MIGRATION – application for leave to appeal – where primary judge refused leave to rely on amended application and summarily dismissed proceeding – whether proposed amended application below raised an arguable ground of appeal – leave to appeal allowed – matter remitted to Federal Circuit Court to be determined according to law
Legislation: Acts Interpretation Act 1901 (Cth) s 33
Federal Circuit Court Rules 2001 (Cth) r 44.12
Federal Court of Australia Act 1976 (Cth) s 24
Migration Act 1958 (Cth) ss 5J, 5H, 36
Cases cited: ALP20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCCA 3070Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
CSZ16 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 156
DVO16 v Minister for Immigration and Border Protection [2019] FCAFC 17; (2019) 271 FCR 342
SZTVU v Minister for Home Affairs [2019] FCAFC 30; (2019) 268 FCR 497
Division: General Division
Registry: New South Wales
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 44
Date of hearing: 30 June 2021
Counsel for the Appellant: Mr J R Murphy
Solicitor for the Appellant: Armstrong Legal
Counsel for the First Respondent: Mr H P T Bevan
Solicitor for the First Respondent: Sparke Helmore Lawyers
Counsel for the Second Respondent: The Second Respondent filed a submitting notice save as to costs
ORDERS
NSD 1338 of 2020
BETWEEN: ALP20
Appellant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP, MIGRANT SERVICES AND MULTICULTURAL AFFAIRS
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
order made by: LEE J
DATE OF ORDER: 30 JUNE 2021
THE COURT ORDERS THAT:
1. The appeal be dismissed as incompetent.
2. Leave be granted to appeal and the appeal be allowed.
3. The orders made by the Federal Circuit Court on 12 November 2020 be set aside and the matter be remitted to the Federal Circuit Court to thereafter be determined according to law.
4. The costs of the proceeding to date in the Federal Circuit Court be costs in the proceeding below.
5. The respondent pay the applicant's costs of 30 June 2021.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from the Transcript)
LEE J:
A Introduction
1 On 12 November 2020, a judge of the Federal Circuit Court made a number of orders, including that the appellant's claim for relief by way of a constitutional writ in respect of a decision of the Administrative Appeals Tribunal (Tribunal) dated 20 January 2020, to affirm the decision of a delegate of the first respondent (Minister) not to grant the appellant a protection visa, be dismissed: ALP20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCCA 3070 (primary judgment or J).
2 On 10 December 2020, a notice of appeal was filed in this Court.
3 The order of the primary judge to dismiss the proceeding was made pursuant to r 44.12(1)(a) of the Federal Circuit Court Rules 2001 (Cth), which is in the following terms:
44.12 Show cause hearing
(1) At a hearing of an application for an order to show cause, the Court may:
(a) if it is not satisfied that the application has raised an arguable case for the relief claimed—dismiss the application;
…
(2) To avoid doubt, a dismissal under paragraph (1)(a) is interlocutory.
4 Two things should be observed about r 44.12(1)(a). First, the rule provides that in dealing with an application for an order to show cause, the Court may dismiss an application if it is not satisfied that the application has raised an arguable case for the relief claimed. The use of the word "may" necessarily implies a discretion: s 33(2A) of the Acts Interpretation Act 1901 (Cth). Secondly, as made explicit by r 44.12(2), an order made pursuant to r 44.12(1)(a) is an interlocutory order, not a final order. Relevantly, s 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides that an appeal does not lie from a judgment of the Federal Circuit Court exercising its original jurisdiction under a law of the Commonwealth that is interlocutory, unless the Court or a judge gives leave to appeal.
5 The Minister filed a notice of objection to competency in respect of the appeal on 19 January 2021 and, sensibly, at the commencement of the hearing today, Mr Murphy, who appeared on behalf of the appellant, conceded that the appeal ought to be dismissed as incompetent: T2.22.
6 It is against this procedural background that I come to the matter that was argued before me; that is, an application for an extension of time and leave to appeal. Given the application is one for leave to appeal, for the remainder of these reasons I will refer to the moving party as the applicant.
B THE UNUSUAL PROCEDURAL BACKGROUND
7 It is first necessary to say something about the somewhat unusual procedural background to this matter. The applicant commenced the proceeding below in February 2020 when he was self-represented. Perhaps understandably in those circumstances, it is fair to describe the grounds of the application then articulated as deficient. The three grounds advanced were as follows:
1. The AAT failed to consider and assess all relevant information provided in support of my application
2. The AAT failed to judge the merit of the case in light of country information report
3. Hence, there is highly possibility of legal mistake exists in the AAT refusal decision
(Reproduced without alteration).
8 In late February 2020, orders were made by a Registrar of the Federal Circuit Court fixing the application for a show cause hearing under r 44.12 on 12 November 2020, and directing that the applicant file an amended application "giving complete particulars of each ground of review" by 17 April 2020, affidavit evidence by 8 May 2020 and submissions by 12 June 2020. The applicant did not comply with any of these orders and filed no documents.
9 It appears from the primary judge's reasons (at J [35]–[37]) that oral submissions were made at the hearing below by the applicant's solicitor, Mr Mwilambwe, in relation to the difficulties the applicant had faced by reason of having lost his employment and not being able to obtain legal representation due to the COVID-19 pandemic. Although there was no evidence that explained why the applicant did not comply with the orders of the Registrar, it is fair to assume from what is set out in the primary judgment that prior to the retention of solicitors, the applicant faced some difficulty in obtaining sufficient funds in order to be represented.
10 In any event, the evidence read on this application establishes that Mr Mwilambwe was engaged as the applicant's legal representative on 27 October 2021 to assist with the show cause hearing and amending the originating application.
11 The material before the primary judge indicates that on 27 October 2020, Mr Mwilambwe telephoned an employed solicitor of the Minister indicating his involvement in the matter, and that an amended application would be prepared shortly. There was some further communications between the two solicitors, including a further telephone call the next day. Nothing appears to have happened then until 10 November 2020, when the solicitor for the Minister contacted Mr Mwilambwe and asked whether, presumably in the light of the former communications, Mr Mwilambwe intended to become the solicitor on the record, whether he intended to file an amended application and, if so, when it might be expected. As noted above, it appears that Mr Mwilambwe had been instructed to not only assist with the show cause hearing but also amend the application a fortnight earlier.
12 In any event, when the show cause hearing was listed at 11.30am on 12 November 2020, the solicitor had instructions on behalf of the applicant to make two oral applications: (1) an application for leave to amend; and (2) an application for an adjournment: see J [35]. Both of these applications were refused, leading to the dismissal of the proceeding below.
C THE PROCEEDING IN THIS COURT
13 The applications for an extension of time and leave to appeal seek to agitate an argument that the primary judge erred in failing to grant the applicant leave to amend his application in circumstances where there was an arguable case for relief.
14 There is no need to rehearse well-known authorities in this judgment. Despite the delay in filing the applications, I am satisfied that, in circumstances where there is no particular prejudice pointed to by the Minister, I should extend time in order to allow the application for leave to appeal to be brought. When it comes to the determination of whether leave should be granted, I am further satisfied that in the event I consider the primary judge fell into error in reaching a conclusion that the amended application did not raise an arguable ground of appeal, then I ought to grant leave.
15 It is convenient therefore to proceed directly to the principled approach to determining whether the primary judge fell into error and consider whether the material before the primary judge disclosed an arguable ground of appeal.
C.1 The Principled Approach
16 On 9 June 2021, an affidavit affirmed by Mr Mwilambwe deposed to the fact that at this hearing the applicant would seek leave to rely upon an amended notice of appeal. The Minister opposes the grant of leave. In circumstances where the original draft notice of appeal sufficiently raises the issue as to whether the primary judge fell into error, I do not consider that I should grant leave for the amended notice of appeal to be relied upon. This is because the amended notice of appeal could serve to distract the Court from the true nature of the inquiry; namely, whether the material before the primary judge was such as to give rise to an arguable ground of review.
17 The materials before the primary judge included the proposed amended application which was apparently before his Honour (although for reasons which are not explained in the evidence, was still prepared as if it was being made on behalf of the applicant as being self-represented). Any submissions that were advanced were in support of that amended application and its arguability. In this regard I am at somewhat of a disadvantage because there is no transcript available to shed light on what occurred before the primary judge, and no party sought an adjournment to obtain such a transcript.
18 The proposed amended application before the primary judge was in the following form:
1. The decision was affected by narrow ultra vires (subject matter) by reason of the Second Respondent ('the Tribunal')'s failure to correctly make a finding of jurisdictional fact in relation to the criterion of whether there is a real chance of persecution relates to all areas of a receiving country. Pursuant to s 5J(1)(c) of the Migration Act 1958 (Cth) ('the Act'), the Tribunal failed to take into account all relevant information available in making a finding of jurisdictional fact that there is not a real chance of persecution relating to all areas of Pakistan.
2. The decision was affected by narrow ultra vires (subject matter) by reason of the Tribunal's failure to correctly make a finding of jurisdictional fact in relation to the criterion of whether the persecution will amount to 'serious harm'. Pursuant to ss 5J(1)(a), 4(b) and 5 of the Act, the Tribunal failed to take into account all relevant information available in making a finding of jurisdictional fact that the persecution will not amount to 'serious harm'.
3. The decision was affected by broad ultra vires (irrelevant considerations) by reason of the Tribunal taking into account considerations of the proximity of risk of serious harm. Pursuant to ss 5J(1)(a), 4(b) and 5 of the Act, the Tribunal took into account irrelevant consideration of the proximity of risk of serious harm. The text of s 5J of the Act does not in itself prescribe the proximity of the serious harm as a mandatory consideration.
4. The decision was affected by narrow ultra vires (subject matter) by reason of the Tribunal's failure to correctly make a finding of jurisdictional fact in relation to the criterion of whether there will be 'significant harm'. Pursuant to s 36(2A) of the Act, in the same veil as ground 1 and 2 above, the Tribunal failed to take into account all relevant material available in making a finding of jurisdictional fact that there is no 'significant harm'.
5. The decision was affected by narrow ultra vires (subject matter) by reason of the Tribunal's failure to correctly make a finding of jurisdictional fact in relation to the criterion of whether it would be reasonable for the Applicant to relocate to an area of Pakistan where there will not be a real risk where the Applicant will suffer 'significant harm'. Pursuant to s 36(2B)(a) of the Act, in the same veil as ground 1, 2 and 4 above, the Tribunal failed to take into account all relevant material available in making a finding of jurisdictional fact that it would be reasonable or practical for the Applicant to relocate to another area of Pakistan.
6. The decision of the Tribunal is otherwise legally unreasonable.
(Reproduced without alteration).
19 Although Mr Murphy did not abandon the other grounds, it is fair to say that the argument before me proceeded on the basis that proposed grounds 1 and 5 were considered to be the high water marks of arguability in the amended application.
20 In respect of proposed ground 1, the primary judge observed the following (at J [40]):
Proposed ground 1 reflects a disagreement with the adverse finding as to there not being a real chance of persecution relating to all areas of Pakistan. The unparticularised assertion of a failure to take into account "all relevant information" does not identify a reasonably arguable error. The Tribunal does not have to refer to every piece of evidence before the Tribunal. The formulation of alleged error by reference to all relevant information appears to invite impermissible merits review and proposed ground round 1 [sic] does not disclose an arguable case of jurisdictional error.
21 In respect of proposed ground 5, the primary judge said (at J [41]):
Proposed round [sic] 5 also refers to "all relevant material" and reflects a disagreement with the adverse findings. Proposed ground 5 fails to identify an arguable case of jurisdictional error.
22 Properly analysed, there are really two issues of arguability that the primary judge had to deal with:
(1) first, whether or not the proposed amended application was sufficiently arguable so as to allow leave to amend; and
(2) secondly, whether the Court ought to make an order dismissing the application if it failed to reach the level of satisfaction that the applicant raised an arguable case for the relief claimed (being the issue thrown up by the substantive application).
23 Again, it is unnecessary for me to set out in any detail the principles concerning arguability when it comes to an application for leave to amend. Although Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 establishes that when one seeks to amend a court document, arguability is not a sufficient condition for the granting of leave to amend, it is certainly a necessary one. Accordingly, it was necessary for the solicitor appearing on the application below to establish to the satisfaction of the Court that the amended application raised an arguable ground.
24 In relation to the second way arguability was relevant before his Honour, I was referred to SZTVU v Minister for Home Affairs [2019] FCAFC 30; (2019) 268 FCR 497 (at 518 [92]), where Derrington and Wheelahan JJ said the following in respect of r 44.12:
The condition which engages the power to dismiss an application is satisfaction by the Court that the application raises no "arguable case" for the relief claimed. Adopting the same approach to r 44.12 of the FCC Rules as that taken by Hayne, Crennan, Kiefel and Bell JJ in Spencer v Commonwealth at [58]-[60], we consider that one should begin with the text of r 44.12, which refers to no more than absence of satisfaction that there is an "arguable case". Consistently with the reasoning of Hayne, Crennan, Kiefel and Bell JJ in Spencer v Commonwealth at [58], we should avoid the creation of a lexicon of words to capture the condition that is stated clearly enough in the text of r 44.12, namely absence of satisfaction that there is an "arguable case". In evaluating whether there is an arguable case the Court may consider whether the case advanced in the application is reasonably arguable (cf, Dempster v National Companies and Securities Commission (1993) 9 WAR 215 at 262), but the power to dismiss an application summarily under r 44.12 of the FCC Rules should not be exercised lightly.
25 As I have explained, the focus of this appeal at present is on the failure of the primary judge to give leave to rely upon the amended application. This is because, as the primary judge records, it was common ground below (unsurprisingly in the circumstances) that the then extant application did not raise an arguable ground of review.
26 It is convenient for me to deal with proposed grounds 1 and 5 of the amened application separately.
C.2 Proposed Ground 1
27 Read together, ss 5J(1)(c) and 5H(1) of the Migration Act 1958 (Cth) have the effect that a person who would otherwise have a well-founded fear of persecution will not satisfy the refugee criterion for a protection visa in s 36(2)(a) if they can lawfully go to any other part of the receiving country that is inhabited or habitable, and safe: see FCS17 v Minister for Home Affairs [2020] FCAFC 68; (2020) 276 FCR 644 (at 651 [20] per Allsop CJ and at 666 [81] per White and Colvin JJ).
28 Relevantly, in its reasons (at [65]) the Tribunal identified what was said to be the applicant's "key points", which included:
• He claimed to be at risk of discrimination as a Pashtun and as a Shia. For instance, it would be very difficult to obtain a rental property 'if they don't recognise your face'. A prospective landlord would not normally rent to a person from Parachinar. The (Sunni) locals regard Shia as infidels, and can kill you.
• Similarly, the discrimination against Shia tribes is such that it is difficult to obtain employment. If he were to eventually get a well-paid government or professional employment, non-Shia will be resentful (and, by implication, put him at risk of harm).
- In terms of discrimination, the applicant claimed that his work experience with NADRA [Ministry of Interior's National Database and Registration Authority] did not serve to illustrate his employability in the country as a whole. He worked for only about a year, and had been posted to Parachinar, which is mostly Shia. His employment prospects in another part of Pakistan are much poorer.
29 The Tribunal then went on to say (at [67]–[71]):
While the applicant's evidence and country information refer to discrimination against Pashtun and Shia in Pakistan's large cities, the Tribunal finds there is no real chance of discrimination amounting to serious harm, such as 'significant economic hardship that threatens [his] capacity to subsist', or the 'denial of capacity to earn a livelihood of any kind, where the denial threatens [his] capacity to subsist', to mention two of the non-exhaustive instances of 'serious harm' listed in s.5J(5). It places weight on the applicant's and his own family's experiences, for instance, when he studied in Quetta, and his family lived in Islamabad from 2011 to 2013, without incident. The applicant's work with NADRA, his successful studies in Quetta and his family's rental arrangements in Islamabad all raise questions as to the frequency and severity of such discrimination; and at least suggest that the applicant and his family were able to manage such risks. Furthermore, the applicant's work experience in Sydney, as a computer engineer, and his fluent English, may reduce the impact of any discrimination. Having regard to the evidence as a whole, the Tribunal finds there is no real chance of the applicant facing discrimination as a Pashtun, Shia or any combination of related factors (including a Pashtun Shia from Parachinar, and a member of the Bangash tribe), in accommodation, employment or other fields, which individually or cumulatively involves serious harm amounting to persecution.
The applicant also claims to be at risk of sectarian violence as a Pashtun and Shia, and in particular as a Shia professional from Parachinar. He would be at risk both as a Shia with professional skills, returning from the West; and all the more so, if he were to be successful and gain some profile.
Country information indicates that Shia Muslims face security threats from extremist groups, although most Shia face only a low risk of sectarian violence. The Tribunal notes that, as a person who is not currently a devout observer, the applicant would face an even lower risk of being caught up in sectarian attacks against mosques and religious gatherings.
DFAT's comment that high-profile Shia face an elevated risk of violence (characterised as 'moderate') is consistent with reports that Sunni extremists have also targeted Shia professionals and in some instances, government employees. In the applicant's case, the Tribunal notes that he has IT qualifications, and some work experience as a computer engineer in Pakistan and Australia. However, he is in his late twenties and the Tribunal is not satisfied that his academic or career to date, or his past residency in Australia, would establish for him a profile in Islamabad, Lahore or one of the other large cities outside Kurram Agency.
The applicant provided some examples of individuals from Parachinar who had been attacked, although there is little information about what factors might lie behind particular incident (such as an individual's profile or the precise circumstances that led to an attack). As noted above and discussed at [the] hearing, the incidence of violent attacks against Pashtuns, Shia and/or Shia professionals is low and, at least in recent years, declining. The Tribunal finds on the material as a whole, and particularly taking into account the applicant's past experiences and profile, that he does not face a real chance of being targeted as a Pashtun, Shia, a Shia professional or any combination of these factors, outside Kurram Agency (for instance, in a major city such as Islamabad or Lahore).
(Emphasis added, citation omitted).
30 The Tribunal (at [63] and [69]) accepted that there was evidence (including from DFAT) that "most Shia in Pakistan face a low risk of sectarian violence". However, the applicant submits that in looking at his past experience outside the Kurram Agency, the Tribunal does not appear to have made any reference to an aspect of the applicant's claims (which was accepted by the delegate (see delegate reasons (at [65]))) that the applicant had prior experience of being a victim of one terrorist bomb attack against Shias in Quetta and a witness to another similar attack. These events, it is said, were independently verified by: (a) documentation confirming the applicant's address in the area at the relevant times; and (b) news reports of the two bombings.
31 The applicant contends that the Tribunal was statutorily required to consider whether the risk of sectarian violence to Shias outside the Kurram Agency, while "low", nevertheless amounted to a real risk that the applicant would suffer serious harm in all areas of Pakistan, and that the Tribunal failed to undertake this aspect of the statutory task. It is said that instead, the Tribunal (at [66]–[67]) considered other risks of harm (such as employment discrimination) and then focused (at [71]) on the discrete question of whether the applicant will be at "an elevated risk of violence" as a "high profile Shia". Given that the Tribunal was not satisfied the applicant was a "high profile Shia", the applicant submits that the Tribunal was required to consider whether there was a real chance the applicant would suffer serious harm because of the more general "low risk of sectarian violence" confronting Shias throughout Pakistan. Having failed to do so, it is said that the Tribunal's reasons were infected by jurisdictional error.
C.3 Proposed ground 5
32 Section 36(2B)(a) of the Act has the effect that a person who is otherwise at a real risk of suffering significant harm in a receiving country will not satisfy the criterion for a protection visa in s 36(2)(aa) if "it would be reasonable for the non-citizen to relocate to an area of the country where there would not be a real risk that the non-citizen will suffer significant harm".
33 The applicant submits the determination of this question involved two stages of inquiry.
(1) first, the Tribunal had to determine whether, objectively, there was no appreciable risk of the occurrence of the feared harm in another part of Pakistan; and
(2) secondly, if, as here, the Tribunal was satisfied there was not an appreciable risk of the applicant suffering significant harm in another part of the country, namely Islamabad or Lahore, the decision‑maker was then required to determine whether the relocation of the applicant to Islamabad or Lahore was reasonable, in the sense of practicable, having regard to the applicant's particular circumstances.
34 It is said that the Tribunal in the present case undertook these two tasks in reverse order and only reached a conclusion as to the first stage of the inquiry. This had the tendency, it is said, to elide the two stages of the inquiry.
35 The relevant parts of the Tribunal's reasons (at [83]–[84]) are in the following terms:
The Tribunal finds that in areas outside Kurram Agency (such as Islamabad and Lahore), there is no real risk that the applicant will be subjected to any form of harm which would be the result of an act or omission by which severe pain or suffering, whether physical or mental, is intentionally inflicted on him, such as: - (a) to meet the definition of torture; or (b) to meet the definition of cruel or inhuman treatment or punishment; or (c) to meet the definition of degrading treatment or punishment. It is also not satisfied that there is a real risk that he will suffer arbitrary deprivation of his life or the death penalty.
The Tribunal concludes that there are areas outside Kurram Agency (such as Islamabad and Lahore) where there would not be a real risk that the applicant will suffer significant harm; and that, having regard to his circumstances as a whole, it would also be reasonable for him to relocate to such an area. Therefore, there is taken not to be a real risk that he will suffer significant harm in Pakistan: s.36(2B)(a).
36 Further, it is said that beyond stating its findings in the conclusory terms set out above, the Tribunal failed to consider whether the "low risk of sectarian violence" to Shias outside of the Kurram Agency amounted to a "real risk" of "significant harm" for the purposes of s 36(2B)(a) of the Act. It is said that it is not to the point that the Tribunal did consider (at [81]) that other types of risked harm – such as employment and housing discrimination – did not amount to "significant harm", but that this consideration underscores that no intellectual exercise was undertaken with respect to the "low risk of sectarian violence", and this failure amounted to jurisdictional error.
C.4 Consideration
37 The Minister contends that it is clear that the Tribunal properly considered the risk of harm, whether serious or significant, to the applicant based upon discrimination and the potential for sectarian violence in areas outside the Kurram Agency by reference to the framework advanced by the applicant and in accordance with the applicable authority: citing, most recently CSZ16 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 156 (at [9]–[10] per Jagot, Charlesworth and Snaden JJ).
38 Mr Murphy concedes, correctly, that the amended application, including as to proposed ground 1, was not a model of drafting. Indeed, it is lacking in particularity and expressed at a high level of generality. I have no doubt that the primary judge was not assisted in the way I have been by detailed written submissions and the able articulation of the argument orally. Part of this was likely due to the fact that what his Honour was dealing with was a summary proceeding, which does not allow for extended consideration of potential arguments and requires, as the Registrar made orders to facilitate, proper particularisation of the grounds relied upon.
39 All of these considerations may explain why the primary judge came to the view that he did, but they also point to the need for caution in approaching issues of arguability, particularly when the circumstances are such that the refusal of an application for leave to amend will effectively amount to a final disposition of the case and the extinguishment of someone's rights. It is unnecessary for me to express a view as to proposed ground 5, but it seems to me that proposed ground 1 does reach the level of raising an argument which could properly be described as arguable. Upon close examination, it may not be regarded as strong, but I think it is sufficient for the Court to be alive to the fact that it was appropriate that leave be granted, at least to advance this ground, and for the matter to then be determined on the merits.
40 I stress, however, that the issue of arguability is an evaluative process which, at the stage the primary judge was called upon to determine it, was an impressionistic one. It is regrettable that the primary judge was called to make this assessment with a less than lucid proposed amended application and in the circumstance of a show cause hearing, which would not have required extended reflection. Further, the whole necessity for there to be a show cause hearing was caused by failures of the applicant to file a coherent amended application.
D CONCLUSION AND ORDERS
41 It follows in all the circumstances that I consider the primary judge fell into error in refusing leave to amend the application. His Honour should have formed the view that proposed ground 1 of the amended application raised an arguable case for the relief claimed and, in those circumstances, should not have reached the level of satisfaction that there was no arguable case and proceeded to dismiss the application under r 44.12. It seems to me that the appropriate course is therefore to allow the application for leave to appeal and set aside the orders made by the Federal Circuit Court on 12 November 2020.
42 Like the position in DVO16 v Minister for Immigration and Border Protection [2019] FCAFC 17; (2019) 271 FCR 342 (at 362 [96] per Stewart J), counsel for the Minister accepted that the refusal of leave to amend below had been on the basis that the prospects of a ground succeeding were too low and accepted that if this Court found that a ground was arguable, leave to rely on the amended application below should have been granted. Like in that case, it appears to me the appropriate exercise of discretion is to remit the matter to the Federal Circuit Court for reconsideration rather than dealing with it for the first time in the appellate jurisdiction of this Court.
43 I then come to the question of costs. Needless to say, this matter raises no point of general principle and turns on its own particular facts. Part of those facts is the less than satisfactory way this litigation has been conducted prior to the involvement of Mr Murphy. The regrettable procedural history of this matter has caused delay and a show cause hearing would have been unnecessary if proper attention had been given to the filing of a document in terms of the amended application at the commencement of the proceeding. Indeed, even now, as counsel for the applicant recognises, there will be a need to amend the application in the Federal Circuit Court to articulate properly the nature of the case the applicant wishes to advance.
44 In all the circumstances, I think the appropriate exercise of discretion is to order that the costs of the proceeding to date be costs in the proceeding below, to be determined by the primary judge at the time of the final disposition of the proceeding. In respect of the proceeding in this Court, I think that the applicant should have his costs of today.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.
Associate:
Dated: 19 July 2021
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FEDERAL COURT OF AUSTRALIA
Lin v State Rail Authority of NSW [2004] FCAFC 219
FEDERAL JURISDICTION – claim under Federal Act struck out – federal jurisdiction in respect of a claim under a State Act.
PROPERTY LAW – nature of a monthly periodic tenancy – Retail Leases Act 1994 (NSW).
Judiciary Act 1903 (Cth) s 79
Retail Leases Act 1994 (NSW) s 3, s 6, s 34, s 44(5), s 63, s 72, s 75, s 76
Trade Practices Act 1974 (Cth) s 2B, s 51AC
Transport Administration Act 1988 (NSW) s 4(2)(b)
Amad v Grant (1947) 74 CLR 327 cited
Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 cited
Burgundy Royale v Westpac (1987) 18 FCR 212 cited
Cattley v Arnold (1859) 1 J&H 651; 70 ER 905 cited
Decor Corp v Dart Industries Inc (1991) 33 FCR 397 cited
Dockrill v Cavanagh (1944) 45 SR (NSW) 78 cited
Hammersmith and Fulham London Borough Council v Monk [1992] 1 AC 478 cited
Murphy v Overton Investments Pty Ltd (2001) 182 ALR 138 cited
Niemann Electronic Industries Ltd [1978] VR 431 cited
Oxley v James (1844) 13 M&W 209; 153 ER 87 cited
Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 cited
Bradbrook, MacCallum & Moore, Australian Real Property Law (3rd ed, 2002)
Butt, Land Law (4th ed, 2001)
Gray & Gray, Elements of Land Law (3rd ed, 2001)
Hogg & Monahan, Liability of the Crown (3rd ed, 2000)
SARAH LIN v STATE RAIL AUTHORITY OF NSW
No N 1996 of 2003
FINN, MANSFIELD & GYLES JJ
SYDNEY
6 AUGUST 2004
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N1996 OF 2003
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: SARAH LIN
APPELLANT
AND: STATE RAIL AUTHORITY OF NSW
RESPONDENT
JUDGES: FINN, MANSFIELD AND GYLES JJ
DATE OF ORDER: 6 AUGUST 2004
WHERE MADE: ADELAIDE
THE COURT ORDERS THAT:
(1) leave to appeal be granted;
(2) the appeal be allowed;
(3) the order of the primary judge be set aside;
(4) the matter be remitted to the primary judge;
(5) the respondent pay the appellant's costs of the application and the appeal.
As the matter is being remitted it will be for the judge at first instance to determine whether it is appropriate to have the proceeding transferred to a State Court.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N1996 OF 2003
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: SARAH LIN
APPELLANT
AND: STATE RAIL AUTHORITY OF NSW
RESPONDENT
JUDGES: FINN, MANSFIELD AND GYLES JJ
DATE: 6 AUGUST 2004
PLACE: ADELAIDE
REASONS FOR JUDGMENT
1 The considerations ordinarily applied in determining whether to grant leave to appeal against an order striking out an application disclosing no cause of action are well understood and have been reiterated on many occasions. They are:
(i) whether in all the circumstances the decision is attended by sufficient doubt to warrant the decision being reconsidered by the Full Court; and
(ii) whether substantial injustice would result if leave were refused supposing the decision to be wrong.
See generally Niemann Electronic Industries Ltd [1978] VR 431; Decor Corp v Dart Industries Inc (1991) 33 FCR 397 at 398. The present matter calls for the application of both of these considerations.
2 The appellant, Sarah Lin, commenced proceedings in this Court claiming that the respondent, the State Rail Authority of New South Wales ("the SRA"), has as her landlord (i) engaged in conduct in contravention of s 51AC of the Trade Practices Act 1974 (Cth); and (ii) breached the provisions of s 34 of the Retail Leases Act 1994 (NSW). Pecuniary relief was sought in respect of each claim.
3 The primary judge upheld the SRA's motion to strike out the claim on the basis that it disclosed no cause of action. His Honour held, unexceptionably as we will indicate, that the Trade Practices Act claim must fail for the reason that s 51AC does not bind the SRA. His Honour also noted in relation to the Retail Leases Act claim that (at [14]):
"a claim under that Act has already been made to the Administrative Decisions Tribunal of New South Wales and dismissed for lack of jurisdiction: see Lin v State Rail Authority of New South Wales [2003] NSWADT 131. This Court has no jurisdiction to deal with that claim, at least in the absence of an arguably proper claim in federal jurisdiction."
4 For the reasons we give below, it is this last conclusion which is the cause of difficulty on this application.
1. THE TRADE PRACTICES ACT CLAIM
5 The SRA is a statutory corporation created under the Transport Administration Act 1988 (NSW). It is expressly declared by that Act to be, "for the purposes of any Act, a statutory body representing the Crown": see s 4(2)(b). As such it has had conferred upon it the privileges and immunities of the Crown in right of New South Wales: see generally Hogg & Monahan, Liability of the Crown, par 12.3 (3rd ed, 2000). One such immunity, qualified in form, is from the operation of the provisions of the Trade Practices Act (the "TP Act").
6 Section 2B(1) of the TP Act provides:
"(1) The following provisions of this Act bind the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory:
(a) Part IV;
(aa) Part VB;
(b) Part XIB;
(c) the other provisions of this Act so far as the relate to the above provisions."
Section 51AC is in Part IVA of the TP Act. Irrespective then of whether the SRA is carrying on a business, it is not bound by the provisions of the TP Act. His Honour was correct in concluding that Ms Lin had no cause of action against the SRA under that Act.
7 Ms Lin, who is an unrepresented litigant, has sought to repel this conclusion by relying (as she did before the primary judge) upon a number of cases which the primary judge properly characterised as irrelevant. They deal with subject matter quite unrelated to the federal issue dealt with in s 2B of the TP Act.
2. THE RETAIL LEASES ACT CLAIM
8 The SRA does not seek to uphold his Honour's decision on the basis relied upon by his Honour. It is conceded in light of case law which we ought follow, that the matter before the primary judge was "'wholly' federal" in character even though one of the two claims made arose under a State statute: Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [7]. Being endowed with that character from the outset, it was retained thereafter notwithstanding that the claim which gave the matter its federal character initially was later struck out: Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 at 481-482; Burgundy Royale v Westpac (1987) 18 FCR 212 at 219. The concession is properly made: see generally Allsop, "Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia" (2002) 23(1) Aust Bar Rev 29; though it does not imply that Ms Lin, in consequence, in fact has a cause of action under the Retail Leases Act.
9 It is the SRA's contention that she has no such cause of action and that, for this reason, leave should be refused as no injustice would result notwithstanding the primary judge's error. A Notice of Contention to this effect has been filed.
10 To appreciate the burden of this contention it is necessary to refer both to the provisions of the Retail Leases Act and to the factual setting in which Ms Lin's claim is made.
11 First, the Act. A "retail shop lease" is defined to mean any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop: s 3. It may be assumed for present purposes that Ms Lin has such a lease from the SRA.
12 Section 6 of the Act limits the retail shop leases to which the Act applies. This provision is central to the SRA's contention. It provides insofar as presently relevant:
"6. (1) This Act does not apply to any of the following leases of retail shops:
(a) leases for a term of less than 6 months without any right for the lessee to extend the lease (whether by means of an option to extend or renew the lease or otherwise), and for this purpose a provision for holding over by the lessee at the end of the term of the lease is not considered to confer a right on the lessee to extend the lease if it operates effectively at the discretion of the lessor."
13 This primary judge had before him a copy of Ms Lin's tenancy agreement. It was executed on 10 October 1998 for a term of one month as a periodic monthly tenancy. Rent was payable monthly in advance. A guarantee equivalent to three month's rent was to be provided before the commencement of the lease. The lease was terminated on 9 April 2003 because of non-payment of rent. The events the subject of Ms Lin's application occurred prior to that date.
14 It is well settled that a monthly periodic tenancy continues from month to month indefinitely, until determined by notice to quit given by either party to the other: Butt, Land Law, 264-265 (4th ed, 2001). As was said by Latham CJ in Amad v Grant (1947) 74 CLR 327 at 336:
"There is not a new tenancy with the beginning of each month … but a letting for a period determinable by a notice to quit."
The notice to quit must itself be for a month terminating at the end of a complete month: Dockrill v Cavanagh (1944) 45 SR (NSW) 78 at 82. Because a tenancy continues indefinitely until determined by notice, it can hardly be said to have a certain prefixed maximum duration: see Gray & Gray, Elements of Land Law, 345 (3rd ed, 2001). There is authority, though, for the view that the term of a periodic tenancy can be treated in retrospect as the period for which the tenancy actually continued: see e.g. Cattley v Arnold (1859) 1 J&H 651; 70 ER 905; Oxley v James (1844) 13 M&W 209; 153 ER 87; Bradbrook, MacCallum & Moore, Australian Real Property Law, 418 (3rd ed, 2002).
15 While the SRA's contention is that the Retail Leases Act does not apply to Ms Lin's lease because of the provisions of s 6(1)(a), the question for this Court is whether it would be futile to grant leave as her claim under that Act disclosed no reasonable cause of action and ought to have been dismissed for that reason under O 20 r 2 of the Federal Court Rules.
16 That question raises two distinct issues. These are: (i) is there a real question to be tried as to whether or not Ms Lin's lease falls within the exclusion in s 6(1)(a) of the Act; and (ii) if the exclusion does not apply, is the claim one that the Court can entertain under the Retail Leases Act.
17 As to the first of these, and consistent with what has been said above about periodic tenancies, it cannot be said that there is not a real question to be tried as to whether s 6(1)(a) applies to a lease for an indefinite period which, in retrospect, had a term of about four and a half years and which was "founded on the continuing will of both landlord and tenant that the tenancy shall persist": Hammersmith and Fulham London Borough Council v Monk [1992] 1 AC 478 at 492. The lease, arguably, was not one for a fixed term whether for less than six months or otherwise, though it was capable, in fact, of being determined within that period. Its duration did not depend on the exercise of rights to extend. Rather, it depended on the exercise of a power to determine what otherwise was of indefinite duration. It is arguable, furthermore, that the Act's provision dealing with termination of a retail shop lease does not apply to a periodic tenancy: see s 44(5) of the Act.
18 The second issue depends on whether the Retail Leases Act was in terms which made it capable of being picked up and applied by this Court under s 79 of the Judiciary Act 1903 (Cth): Murphy v Overton Investments Pty Ltd (2001) 182 ALR 138. The Act is a source both of rights and remedies. While it clearly envisages that "retail tenancy disputes": see s 63(ii); should ordinarily be resolved by the Administrative Decisions Tribunal: see Division 3, esp ss 72, 75 and 76; it acknowledges (inter alia) that if a claim has previously been lodged with the Tribunal and has been "dismissed for want of jurisdiction", it may later be raised in civil proceedings before a court: s 76(1)(a). In the present matter a claim by Ms Lin was dismissed by the Tribunal for want of jurisdiction. This Court, in consequence, has jurisdiction to entertain the claim: Murphy, above.
19 The Court will order that:
(1) leave to appeal be granted;
(2) the appeal be allowed;
(3) the order of the primary judge be set aside;
(4) the matter be remitted to the primary judge;
(5) the respondent pay the appellant's costs of the application and the appeal.
20 As the matter is being remitted it will be for the judge at first instance to determine whether it is appropriate to have the proceeding transferred to a State Court.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn, Mansfield and Gyles.
Associate:
Dated: 17 August 2004
Appellant appeared in person.
Counsel for the Respondent: Mr G Sirtes with Ms F Sinclair
Solicitor for the Respondent: Henry Davis York
Date of Hearing: 6 August 2004
Date of Judgment: 6 August 2004
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Aurongjeb v Minister for Immigration & Multicultural Affairs [2000] FCA 527
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2000/2000fca0527
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2024-09-13T22:50:38.983834+10:00
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FEDERAL COURT OF AUSTRALIA
Aurongjeb v Minister for Immigration & Multicultural Affairs [2000] FCA 527
MOHAMMED AURONGJEB v
MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS
N 961 of 1999
TAMBERLIN J
17 APRIL 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 961 OF 1999
BETWEEN: MOHAMMED AURONGJEB
APPLICANT
AND: MINISTER FOR IMMIGRATION &
MULTICULTURAL AFFAIRS
RESPONDENT
JUDGE: TAMBERLIN J
DATE OF ORDER: 17 APRIL 2000
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application be dismissed with costs.
2. The respondent is to serve a copy of these reasons and orders on the applicant by sending them to his last known place of abode.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 961 OF 1999
BETWEEN: MOHAMMED AURONGJEB
APPLICANT
AND: MINISTER FOR IMMIGRATION &
MULTICULTURAL AFFAIRS
RESPONDENT
JUDGE: TAMBERLIN J
DATE: 17 APRIL 2000
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 When this matter was called on for hearing the applicant did not appear. Having regard to what has been said from the bar table, and having examined the relevant documents, I am satisfied that this is a case where the applicant has not proceeded with the application and every indication is that he does not intend to pursue the application. However, I consider that the appropriate order should be made under O 32 r 2 on the basis that the proceeding has been called on for trial and the applicant is absent and therefore I will dismiss the proceeding. I can see no reason why I ought not order that the applicant pay the respondent's costs, although this may be an academic order in the circumstances.
2 I note also that under O 35 r 7, where the Court is exercising original jurisdiction it may set aside a judgment or order after it has been entered where the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default, and whether or not the absent party had notice of the motion for the order.
3 Accordingly, I make the orders which I have indicated, namely, that the appeal be dismissed with costs. I also direct the respondent to send a copy of these brief reasons and the orders to the last known address of the applicant. If he receives notice of that correspondence he will be aware of his right to apply for an order pursuant to O 35, r 7, if this is an appropriate case, to set aside this judgment which has been made in his absence. I emphasise that it will be necessary for him to establish a proper case and sound reasons for basing such an application.
I certify that the preceding three (3) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.
Associate:
Dated: 20 April 2000
Counsel for the Applicant: No appearance
Counsel for the Respondent: T Reilly
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 17 April 2000
Date of Judgment: 17 April 2000
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All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union [2017] FCAFC 189
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2017/2017fcafc0189
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2024-09-13T22:50:39.096830+10:00
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FEDERAL COURT OF AUSTRALIA
All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union [2017] FCAFC 189
Review of: All Trades Queensland Pty Limited [2016] FWC 2832
All Trades Queensland Pty Limited v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers' Union [2017] FWCFB 132
File number: QUD 92 of 2017
Judges: FLICK, BARKER AND RANGIAH JJ
Date of judgment: 27 November 2017
Catchwords: INDUSTRIAL LAW – application for review of decision of Full Bench of Fair Work Commission – where Full Bench dismissed appeal from decision of Commissioner – where applicants sought approval of enterprise agreement – whether agreement passed "better off overall test" under s 193 of the Fair Work Act 2009 (Cth) – relevant comparator instruments to be used – operation of Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) – whether employees simultaneously covered by modern award and award-based transitional instrument – distinction between "application" and "coverage" of modern award to an employee – whether transitional instruments terminated by operation of sunsetting provisions
Legislation: Evidence Act 1995 (Cth) s 191
Fair Work Act 2009 (Cth) ss 47, 48, 48(1), 57, 193, 193(1), 193(4), 193(5), 206
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 2, item 4(1)(b), Sch 3, items 20, 20(1), 20(1)(b), 29, 29(1), Sch 5, items 16, 16(3), 16(5), Sch 7, Pt 4, Sch 8, items 18, 18(2)(a), 18(2)(b)
Workplace Relations Act 1996 (Cth) (repealed)
Fair Work Legislation Amendment Regulations 2009 (No. 3) (Cth)
Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) reg 3B.02
Explanatory Memorandum, Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009
Cases cited: All Trades Queensland Pty Limited [2016] FWC 2832
All Trades Queensland Pty Ltd v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers' Union [2017] FWCFB 132
Saraswati v R (1991) 172 CLR 1 at 17; [1991] HCA 21
Date of hearing: 21 August 2017
Registry: Queensland
Division: Fair Work Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 60
Counsel for the Applicants: Mr J E Murdoch QC
Solicitor for the Applicants: Herbert Smith Freehills
Counsel for the First, Second and Third Respondents: Mr W Friend QC with Ms C Hartigan
Solicitor for the First, Second and Third Respondents: Hall Payne Lawyers
Counsel for the Fourth Respondent: The Fourth Respondent filed a submitting notice, save as to costs
ORDERS
QUD 92 of 2017
BETWEEN: ALL TRADES QUEENSLAND PTY LIMITED (ACN 115 379 461)
First Applicant
QUEENSLAND MASTER BUILDERS ASSOCIATION (ABN 966 419 893 86)
Second Applicant
HOUSING INDUSTRY ASSOCIATION (ACN 400 631 752)
Third Applicant
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
First Respondent
COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Second Respondent
AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION KNOWN AS THE AUSTRALIAN MANUFACTURING WORKERS' UNION
Third Respondent
FAIR WORK COMMISSION
Fourth Respondent
JUDGES: FLICK, BARKER AND RANGIAH JJ
DATE OF ORDER: 27 NOVEMBER 2017
THE COURT ORDERS THAT:
1. The applicants' further amended originating application dated 6 June 2017 be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
1 In 2016, All Trades Queensland Pty Limited (ATQ) applied to the Fair Work Commission, pursuant to the Fair Work Act 2009 (Cth) (FW Act), for approval of the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (2015 agreement), a single-enterprise non-greenfields agreement. The 2015 agreement was drafted to apply to apprentices and trainees employed by ATQ in a wide range of industries, including the building and construction, and engineering and automotive industries. ATQ hires the services of trainees and apprentices to other businesses in Queensland.
2 The 2015 agreement was the latest in a series of enterprise-specific agreements applying to ATQ and its employees, following a 2006 agreement that came into effect under the then applicable provisions of the Workplace Relations Act 1996 (Cth) (WR Act); a 2009 agreement which was made and approved under the provisions of the FW Act; and a 2012 agreement approved under the FW Act. The 2015 agreement was intended to replace the 2012 agreement, the nominal expiry date of which was 31 October 2015.
3 The application for approval of the 2015 agreement was opposed in the Commission by the Construction, Forestry, Mining and Energy Union (CFMEU), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the Automotive, Food, Metals, Engineering, Printing And Kindred Industries Union, known as the Australian Manufacturing Workers' Union (AMWU) (together, the unions). A dispute arose as to what were the applicable comparator instruments for the purposes of the application of the "better off overall test" (BOOT) set out in s 193 of the FW Act. ATQ's position was that the applicable comparator instruments were a number of Queensland State awards and orders preserved, as "notional agreements preserving State awards" (NAPSAs) by the FW Act. The unions' common position was that the relevant instruments for the BOOT were the modern awards made under the FW Act and in operation since 1 January 2010, which covered the work to be performed by the employees under the 2015 agreement; and that the 2015 agreement was incapable of passing the BOOT by reference to those instruments.
4 At first instance, Commissioner Spencer accepted the unions' argument and determined that the relevant modern awards were the comparator instruments. See All Trades Queensland Pty Limited [2016] FWC 2832. ATQ then sought leave to appeal to the Full Bench of the Commission. The Full Bench granted leave to appeal but dismissed the appeal, agreeing in essence with the Commissioner's decision and reasons for it. See All Trades Queensland Pty Ltd v Construction, Forestry, Mining and Energy Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union and Australian Manufacturing Workers' Union [2017] FWCFB 132. At the hearing before the Full Bench, ATQ's position was supported by the Housing Industry Association (HIA), Queensland Master Builders' Association (QMBA) and the Apprentice Employment Network.
5 By their further amended originating application, the applicants now apply in this Court for relief in the following terms:
A. The Applicants apply for each of the following declarations pursuant to section 39B of the Judiciary Act 1903 (Cth) (Judiciary Act), sections 21 and 22 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and sections 562 and 563 of the Fair Work Act 2009 (Cth) (FW Act), that:
1. an order declaring that, on the proper construction of Schedule 3.20 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) and Regulation 3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) (Transitional Regulations), the following instruments (together the ABTIs):
a. AN140326 – Order – Apprentices' and Trainees' Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (One Big Order);
b. AN140350 – Order – Supply of Tools to Apprentices (Tools Order);
c. AN140045 – Building Products, Manufacture and Minor Maintenance Award – State 2003;
d. AN140043 – Building Construction Industry Award – State 2003;
e. AN140061 – Civil Construction, Operations and Maintenance General Award – State 2003;
f. AN140107 – Engineering Award – State 2002;
g. AN140128 – Furniture and Allied Trades Award – State 2003;
h. AP789529 – Metal, Engineering and Associated Industries Award 1998 – Part 1;
i. AP790899 – National Training Wage Award 2000;
j. AP792354 – Plumbing Industry (QLD and WA) Award 1999; and
k. AP824308 – The Vehicle Industry – Repair, Service and Retail Award 2002;
cover apprentices and trainees on competency based training arrangements employed by:
I. All Trades Queensland Pty Limited (Employees); and
II. the HIA in its group training scheme (HIAGT Employees);
2. an order declaring that, on the proper construction of s 193 of the FW Act, and Schedule 7.18 of the Transitional Act, the ABTIs cover the Employees and the HIAGT Employees to the exclusion of modern awards;
3. an order declaring that, on the proper construction of Schedule 7.18 of the Transitional Act, the proper instruments for the BOOT assessment for the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 are the ABTIs;
4. an order declaring that the Employees and HIAGT Employees are unmodernised award covered employees within the meaning of Schedule 7.20 of the Transitional Act;
5. an order declaring that, on the proper construction of s 193 of the FW Act, unmodernised award covered employees are not award covered employees for the purposes of s 206 of the FW Act; and
6. such further or other declarations and orders as the Court thinks fit.
B. The First Applicant and the Second Applicant apply for the following relief:
1. pursuant to section 39B of the Judiciary Act, section 23 of the Federal Court Act and sections 562 and 563 of the FW Act, a writ of certiorari be issued to the Fourth Respondent removing into this Court the decision made by the Fourth Respondent on 7 February 2017 in the matter of All Trades Queensland Pty Limited v CFMEU, CEPU and AMWU [2017] FWCFB 132 and quashing that decision and the orders made at paragraph [69];
2. pursuant to section 39B of the Judiciary Act, section 23 of the Federal Court Act and sections 562 and 563 of the FW Act, a writ of certiorari be issued to the Fourth Respondent removing into this Court the decision made by the Fourth Respondent on 12 August 2016 in the matter of All Trades Queensland Pty Limited [2016] FWC 2832 and quashing that decision and the orders made at paragraph [226];
3. pursuant to section 39B of the Judiciary Act, section 23 of the Federal Court Act and sections 562 and 563 of the FW Act, a writ of mandamus be issued to the Fourth Respondent to hear and determine the First Applicant's application for approval of the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (AG2016/525) according to law; and
4. such further or other declarations and orders as the Court thinks fit.
6 The question raised in this proceeding is whether the applicants are entitled to such relief.
Agreed facts
7 For the purpose of the hearing of the proceeding, the parties have agreed the following facts for the sole purpose of tendering a statement of agreed facts in evidence under s 191 of the Evidence Act 1995 (Cth):
The First Applicant
1. The First Applicant:
a. is a constitutional corporation;
b. is a national system employer within the definition of the Fair Work Act 2009 (Cth) (FW Act);
c. as at 27 March 2006 employed apprentices and trainees on competency based wage progression arrangements as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations (Employees);
d. as at 27 March 2006, together with its Employees, was covered by:
i. AN140326 – Order – Apprentices' and Trainees' Wages and Conditions (Excluding Certain Queensland Government Entities) 2003 (One Big Order); and
ii. AN140350 – Order – Supply of Tools to Apprentices (Tools Order),
(together the CBT ABTIs); and
e. hires the services of the Employees to other businesses in Queensland, including members of both the Second Applicant and the Third Applicant.
The Second Applicant
2. The Second Applicant:
a. is registered as an Industrial Organisation of Employers had corporate status under the Industrial Relations Act 1999 (Qld) which was continued by operation of s1033 of the Industrial Relations Act 2016 (Qld);
b. is a Recognised State Registered Association under the Fair Work (Registered Organisations) Act 2009 (Cth) (FW (RO) Act); and
c. has members that are employers who:
i. employ apprentices and trainees in Queensland under competency based wage progression arrangements as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations (QMBA Employees); and
ii. as at 27 March 2006, together with their relevant QMBA Employees, were covered by the CBT ABTIs (QMBA Members).
Third Applicant
3. The Third Applicant:
a. is a constitutional corporation;
b. operates a group training scheme (HIAGT) that directly employs apprentices and trainees in Queensland on competency based wage progression arrangements as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations (HIAGT Employees); and
c. as at 27 March 2006, together with the HIAGT Employees was covered by the CBT ABTIs.
Respondents
4. Each of the First Respondent, Second Respondent and Third Respondent is a Registered Organisation under the FW (RO) Act entitled to represent one or more of the Employees, QMBA Employees, HIAGT Employees.
Relevant Instruments
5. The CST ABTIs provide for competency based wage progression of apprentices and trainees in Queensland as referred to in item 16 of Regulation 3B.02 of the Transitional Regulations.
6. As at 27 March 2006 the First Applicant, the QMBA Members, HIAGT, and the HIA Members were employers within the scope of:
a. AN140045 – Building Products Manufacture and Minor Maintenance Award – State 2003;
b. AN140043 – Building Construction Industry Award – State 2003;
c. AN140061 – Civil Construction, Operations and Maintenance General Award – State 2003;
d. AN140107 – Engineering Award – State 2002; and
e. AN140128 – Furniture and Allied Trades Award – State 2003, (together the Relevant ABTIs).
7. On 1 January 2010, the following modern awards commenced operation:
a. the Manufacturing and Associated Industries and Occupations Award 2010;
b. the Vehicle Manufacturing, Repair, Services and Retail Award 2010;
c. the Electrical, Electronic and Communications Contracting Award 2010;
d. the Plumbing and Fire Sprinklers Award 2010;
e. the Building and Construction General Onsite Award 2010; and
f. the Joinery and Building Trades Award 2010,
(together the Modern Awards).
8. Pursuant to item 16 of Regulation 3B.02 of the Transitional Regulations, as from 1 January 2010, the CST ABTIs continued to cover the First Applicant.
(NB: The parties disagree as to whether:
a. the CBT ABTIs have ceased by operation of the sunsetting provisions in item 20 of schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendment) Act and no longer cover the employers and employees referred to in paragraph 10; and/or
b. the Modern Awards and CBT ABTIs provide concurrent coverage; and/or
c. if there is concurrent coverage, coverage of the CBT ABTI's displaces or is displaced by concurrent coverage by the modern awards).
Previous ATQ Agreements
9. On 18 September 2006, the All Trades Queensland Pty Limited Apprentice/Trainee Union Collective Agreement 2006 (2006 Agreement) commenced. The 2006 Agreement
a. covered its apprentices and trainees within the construction, engineering, electrical contracting, automotive, civil and other trades;
b. had a nominal expiry date three years from the date on which it was lodged with the OEA; and
c. was a workplace agreement for the purposes of subsection 38A(2) of schedule 8 of the WR Act.
10. On 1 October 2009, the All Trades Queensland Pty Limited Apprentice/Trainee Union Collective Agreement 2009 (2009 Agreement):
a. an agreement made under the FW Act;
b. came into operation, being 7 days after it was approved by the FWC under the FW Act; and
c. applied to the First Applicant and the Employees.
11. In relation to the 2009 Agreement, the First Applicant submitted an employer's declaration under section 185 of the FW Act. That declaration listed the following instruments as the relevant instruments covering the Employer and the Employees for the purposes of the relevant no-disadvantage test:
a. Building Construction Industry Award State NAPSA Qld;
b. Building Products, Manufacture and Minor Maintenance Award State NAPSA Qld;
c. Civil Construction, Operations and Maintenance General Award State NAPSA Qld;
d. Clerical Employees Award State NAPSA Qld;
e. Electrical Contracting Industry Award State NAPSA Qld;
f. Engineering Award State NAPSA Qld;
g. Furniture and Allied Trades Award NAPSA Qld;
h. General Stores, Warehousing and Distribution Award State NAPSA Qld;
i. Nursery Award State NAPSA Qld; and
j. Order Apprentices and Trainees Wages and Conditions.
12. In relation to the 2009 Agreement, each of the First Respondent, Second Respondent and Third Respondent filed an employee organisation declaration under section 185 of the FW Act in support of the application and the employer's declaration.
13. On 17 April 2013, the All Trades Queensland Union Collective Agreement 2012-2015 (2012 Agreement) approved by the Fair Work Commission (FWC) came into operation. A correction to this decision was made on 24 April 2013. The 2012 Agreement applied to ATQ and the Employees.
14. In relation to the 2012 Agreement, the First Applicant submitted an employer's declaration under section 185 of the FW Act. That declaration listed the following instruments as the relevant instruments for the purposes of the BOOT:
a. Building Products, Manufacture and Minor Maintenance Award – State 2003;
b. Building Construction Industry Award – State 2003;
c. Civil Construction, Operations and Maintenance General Award – State 2003;
d. Electrical Contracting Industry Award – State;
e. Engineering Award – State 2002;
f. Furniture and Allied Trades Award – State 2003;
g. Metal, Engineering and Associated Industries Award 1998 – Part 1;
h. National Training Wage Award 2000;
i. Plumbing Industry (Qld and WA) Award 1999; and
j. Wages and Conditions (excluding certain Queensland Government Entities) 2003 and the QIRC Order – Supply of Tools to Apprentices.
15. In relation to the 2012 Agreement, each of the First Respondent, Second Respondent and the Third Respondent filed an employee organisation declaration under section 185 of the FW Act in support of the application and the employer's declaration.
The 2015 Agreement
16. On 25 February 2016, a majority of the Employees approved the All Trades Queensland Pty Ltd Apprentice/Trainee Enterprise Agreement 2015 (2015 Agreement). On 9 March 2016, the First Applicant applied to the FWC for approval of the 2015 Agreement under section 185 of the FW Act (Approval Application).
17. In relation to the 2015 Agreement, the First Applicant submitted an employer's declaration under section 185 of the FW Act. That declaration listed the following instruments as the relevant instruments for the purposes of the BOOT:
a. Building Products, Manufacture and Minor Maintenance Award – State 2003;
b. Building Construction Industry Award – State 2003;
c. Civil Construction, Operations and Maintenance General Award – State 2003;
d. Electrical Contracting Industry Award – State;
e. Engineering Award – State 2002;
f. Furniture and Allied Trades Award – State 2003;
g. Metal, Engineering and Associated Industries Award 1998 – Part 1;
h. National Training Wage Award 2000;
i. Plumbing Industry (Qld and WA) Award 1999;
j. The Vehicle Industry – Repair, Service and Retail Award 2002;
k. the One Big Order; and
l. the Tools Order.
18. Each of the First Respondent, Second Respondent and Third Respondent filed an employee organisation declaration under section 185 of the FW Act in objection to the Approval Application and claimed that the BOOT should be conducted against the modern awards.
Decisions of the FWC
19. On 12 August 2016, in All Trades Queensland Pty Limited [2016] FWC 2832 (First Decision), Commissioner Spencer issued a decision which found that:
a. the ABTIs had ceased to operate on 1 January 2014;
b. the modern awards covered ATQ and its employees that previously were covered by the CBT ABTIs; and
c. the BOOT for the 2015 Agreement should be applied against the modern awards.
20. On 1 September 2016, the First Applicant filed a notice of appeal of the First Decision to the Full Bench of the FWC. The Second Applicant and the Third Applicant appeared before the appeal to the Full Bench of the FWC and made submissions that the CBT ABTIs still covered QMBA Members, HIA and HIA Members.
21. On 7 February 2017, in All Trades Queensland Pty Limited v CFMEU, CEPU and AMWU [2017] FWCFB 132 (Full Bench Decision), the Full Bench dismissed the First Applicant's appeal and referred the matter back to Commissioner Spencer for final determination in accordance with the Full Bench Decision.
22. The application of the BOOT is yet to be heard by Commissioner Spencer.
Current Position
23. The First Applicant:
a. has paid the Employees the rates of pay contained in the respective 2006, 2009, and 2012 Agreements; and
b. continues to pay the Employees on that basis.
24. The Third Applicant has been paying the HIAGT Employees the modern award rates from 30 January 2017.
25. The First Respondent and the Second Respondent have publically stated that:
a. significant amounts of back-pay are owed to apprentices and trainees in Queensland who were previously accepted as covered by the CBT ABTIs;
b. claims in relation to this back-pay obligation would be pursued before the courts; and
c. claims for back-pay could be in the millions of dollars.
26. Neither of the First Respondent, Second Respondent and/or Third Respondent have commenced proceedings themselves or on behalf of their members seeking back pay for the relevant apprentices and trainees.
Statutory setting in which issues are raised
8 As the Full Bench observed in its reasons refusing the appeal from the Commissioner's decision, the statutory framework applicable to the determination of the question is complex. We consider, with respect, that the Full Bench appropriately outlined and described the framework at [5] to [36] of its reasons for decision, in the following terms:
[5] … Sections 186 and 187 of the FW Act set out the requirements which must be satisfied in order for an enterprise agreement to be approved by the Commission. Section 186(2)(d) requires that the Commission be satisfied that the agreement passes the BOOT. The content of the BOOT is set out in s.193, which relevantly provides:
193 Passing the better off overall test
When a non-greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
…
Award covered employee
(4) An award covered employee for an enterprise agreement is an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
Prospective award covered employee
(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a) would be covered by the agreement; and
(b) would be covered by a modern award (the relevant modern award ) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she would perform under the agreement; and
(iii) covers the employer.
Test time
(6) The test time is the time the application for approval of the agreement by the FWC was made under subsection 182(4) or section 185.
…
[6] Section 193 essentially requires a comparison to be undertaken between the entitlements of the enterprise agreement and those of any modern award(s) which cover the employees to which it is sought that the agreement apply. Relevant modern awards are therefore the comparator instruments for the purpose of the required comparison.
[7] By way of background, modern awards were made as a result of the conduct of the award modernisation process mandated by Part 10A of the WR Act, which was the immediate statutory predecessor of the FW Act. All current modern awards commenced effect on 1 January 2010. Each modern award (consistent with s.143 of the FW Act) contains coverage terms which set out (relevantly) the employees and employers which are covered by it. The employers and employees covered are usually expressed as classes by reference to a particular industry or a particular type of work.
[8] The FW Act draws a critical distinction between when a modern award or an enterprise agreement covers an employee and when it applies to an employee. Section 48 deals with when a modern award covers an employer, employee and others relevantly as follows:
48 When a modern award covers an employer, employee, organisation or outworker entity
When a modern award covers an employee, employer, organisation or outworker entity
(1) A modern award covers an employee, employer, organisation or outworker entity if the award is expressed to cover the employee, employer, organisation or outworker entity.
…
Effect of other provisions of this Act, FWC orders or court orders on coverage
(2) A modern award also covers an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award covers the employee, employer, organisation or outworker entity:
(a) a provision of this Act or of the Registered Organisations Act;
(b) an FWC order made under a provision of this Act;
(c) an order of a court.
(3) Despite subsections (1) and (2), a modern award does not cover an employee, employer, organisation or outworker entity if any of the following provides, or has the effect, that the award does not cover the employee, employer or organisation or outworker entity:
(a) a provision of this Act;
(b) an FWC order made under a provision of this Act;
(c) an order of a court.
Modern awards that have ceased to operate
(4) Despite subsections (1) and (2), a modern award that has ceased to operate does not cover an employee, employer, organisation or outworker entity.
Modern awards cover employees in relation to particular employment
(5) A reference to a modern award covering an employee is a reference to the award covering the employee in relation to particular employment.
[9] Section 47, which deals with when a modern award applies to an employer, employee and others, relevantly provides:
47 When a modern award applies to an employer, employee, organisation or outworker entity
When a modern award applies to an employee, employer, organisation or outworker entity
(1) A modern award applies to an employee, employer, organisation or outworker entity if:
(a) the modern award covers the employee, employer, organisation or outworker entity; and
(b) the modern award is in operation; and
(c) no other provision of this Act provides, or has the effect, that the modern award does not apply to the employee, employer, organisation or outworker entity.
Note 1: Section 57 provides that a modern award does not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment.
...
Modern awards apply to employees in relation to particular employment
(3) A reference in this Act to a modern award applying to an employee is a reference to the award applying to the employee in relation to particular employment.
[10] Sections 53 and 52, which respectively set out when an enterprise agreement covers an employee (and others) and when it applies, substantially reflect for relevant purposes the definitional structure of ss.48 and 47. Section 53 relevantly provides:
53 When an enterprise agreement covers an employer, employee or employee organisation
Employees and employers
(1) An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.
...
Effect of provisions of this Act, FWC orders and court orders on coverage
(3) An enterprise agreement also covers an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement covers the employee, employer or organisation:
(a) a provision of this Act or of the Registered Organisations Act;
(b) an FWC order made under a provision of this Act;
(c) an order of a court.
(4) Despite subsections (1), (2) and (3), an enterprise agreement does not cover an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement does not cover the employee, employer or organisation:
(a) another provision of this Act;
(b) an FWC order made under a provision of this Act;
(c) an order of a court.
Enterprise agreements that have ceased to operate
(5) Despite subsections (1), (2) and (3), an enterprise agreement that has ceased to operate does not cover an employee, employer or employee organisation.
Enterprise agreements cover employees in relation to particular employment
(6) A reference in this Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment.
[11] Section 52 provides:
52 When an enterprise agreement applies to an employer, employee or employee organisation
When an enterprise agreement applies to an employee, employer or organisation
(1) An enterprise agreement applies to an employee, employer or employee organisation if:
(a) the agreement is in operation; and
(b) the agreement covers the employee, employer or organisation; and
(c) no other provision of this Act provides, or has the effect, that the agreement does not apply to the employee, employer or organisation.
Enterprise agreements apply to employees in relation to particular employment
(2) A reference in this Act to an enterprise agreement applying to an employee is a reference to the agreement applying to the employee in relation to particular employment.
[12] Section 57 deals with the interaction between modern awards and enterprise agreements, and operates to ensure that a modern award and an enterprise agreement cannot simultaneously apply to an employee as follows:
57 Interaction between modern awards and enterprise agreements
(1) A modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment.
(2) If a modern award does not apply to an employee in relation to particular employment because of subsection (1), the award does not apply to an employer, or an employee organisation, in relation to the employee.
[13] Section 57 is one of a number of 'interaction rules' which are set out in Pt.2-1 Div.3 of the FW Act and deal with the interaction between the National Employment Standards established in Pt.2-2, modern awards and enterprise agreements.
[14] Although under ss.48 and 53 respectively a modern award and an enterprise agreement may both cover an employee at a given time, because the terms of both instruments are expressed to cover the employee in relation to particular employment, only the enterprise agreement (while it is in effect) will apply to the employee. For the purpose of the BOOT in s.193, a modern award will be required to be used as the comparator instrument if it covers any employees to which the agreement, if approved, will apply. The comparator modern award need not apply to the employees. Often it will not, for example when there is an earlier enterprise agreement which covers and applies to the relevant employees.
[15] The operation of s.193 is modified by certain provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) so that in some circumstances a NAPSA together with a 'transitional APCS' are to be used as the comparator instruments. NAPSAs were established by Schedule 8 of the WR Act, as amended by the Workplace Relations Amendment (Work Choices) Act 2005 (Work Choices Act), as transitional instruments applicable to employees brought into the federal industrial relations system who previously had their terms and conditions determined by a State award. Thus clause 31 of Schedule 8 provided:
31 Notional agreements preserving State awards
If, immediately before the reform commencement, the terms and conditions of employment of one or more employees in a single business or a part of a single business:
(a) were not determined under a State employment agreement; and
(b) were determined, in whole or in part, under a State award (the original State award) or a State or Territory industrial law (the original State law);
a notional agreement preserving State awards is taken to come into operation on the reform commencement in respect of the business or that part of the business.
[16] At the time the Work Choices Act amendments came into effect, cl.38A of Sch.8 of the WR Act provided that a NAPSA ceased to have operation three years after the 'reform commencement date' (27 March 2006) or earlier in relation to an employee if a workplace agreement made under the WR Act came into operation in relation to the employee, and that once a NAPSA ceased operating in relation to an employee it could never operate again in relation to that employee. However cl.38A was subsequently amended by the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 so that it provided as follows:
38A Operation of a notional agreement preserving State awards
(1) A notional agreement preserving State awards ceases to be in operation at the end of:
(a) unless paragraph (b) applies, 31 December 2009; or
(b) if a later date is prescribed by the regulations--that later date.
(2) A notional agreement preserving State awards ceases to be in operation in relation to an employee if a workplace agreement or a pre-transition workplace agreement comes into operation in relation to the employee.
Note: The reference in subclause (2) to a workplace agreement includes a reference to a workplace determination (see section 506).
(3) A notional agreement preserving State awards ceases to be in operation in relation to an employee if the employee becomes bound by an award.
(4) If the notional agreement has ceased operating in relation to an employee because of subclause (2) or (3), the agreement can never operate again in relation to that employee.
(5) Despite subclause (4), a notional agreement that has ceased operating because of subclause (2) can operate again if:
(a) the notional agreement ceased to operate because it was replaced by a pre-transition workplace agreement (the replacement workplace agreement); and
(b) the replacement workplace agreement later ceased to operate because it did not pass the fairness test.
Note: See sections 346Y, 346YA and 346Z of the pre-transition Act.
(6) Despite subclause (4), a notional agreement that has ceased operating because of subclause (2) can operate again if:
(a) the notional agreement ceased to operate because it was replaced by a workplace agreement or a pre-transition workplace agreement; and
(b) the workplace agreement or pre-transition workplace agreement ceased to operate after the commencement of this subclause.
[17] Part 7, Division 2, Subdivision H of the WR Act, as amended by the Work Choices Act, also established a new class of instruments known as 'APCSs' (Australian Pay and Classifications Scales). Section 208 brought into existence, in relation to any 'pre-reform wage instrument', a 'preserved APCS' which contained the wage rate and classifications, casual loading provisions, certain training provisions, frequency of payment provisions and the coverage provisions of the relevant 'pre-reform wage instrument'. The expression 'pre-reform wage instrument' included State awards (including orders, determinations and decisions of State industrial authorities) and certain other State laws and instruments dealing with employment conditions. Thus derived from any award or order of a State industrial authority was both a NAPSA and a preserved APCS, so that every NAPSA had a related preserved APCS. It may be noted that preserved APCSs only ever existed notionally for legal purposes, and were never given any authoritative documentary existence.
[18] The WR Act was replaced by the FW Act (except for Schedule 1 of the WR Act, which became the Fair Work (Registered Organisations Act) 2009). The Transitional Act was enacted as cognate legislation in order to deal with various matters in the transition from the WR Act industrial relations regime to the FW Act regime and other matters consequential to the FW Act. The Transitional Act was assented to on 25 June 2009. Schedule 1 to the Transitional Act effected the repeal of most of the WR Act. Schedule 3 to the Transitional Act is entitled 'Continued existence of awards, workplace agreements and certain other WR Act instruments'. Item 2(1) of Sch.3 provides:
(1) Each WR Act instrument (see sub-item (2)) that becomes a transitional instrument (see subitems (3) to (4A)) continues in existence in accordance with this Schedule from when it becomes a transitional instrument, despite the WR Act repeal.
[19] Item 2(2)(b) of Sch.3 provides that a NAPSA is a WR Act instrument, and item 2(3)(a) provides that each WR Act instrument that was in effect immediately before the 'WR Act repeal day' (1 July 2009), except a Division 2B State reference transitional award, becomes a transitional instrument. Item 2(5) classifies a NAPSA as an 'award-based transitional instrument' (ABTI).
[20] Item 3 of Sch.3 defines when a transitional instrument covers, and when it applies, to an employee or employer. Item 3 relevantly provides:
3 The employees, employers etc. who are covered by a transitional instrument and to whom it applies
(1) A transitional instrument covers the same employees, employers and any other persons that it would have covered (however described in the instrument or WR Act) if the WR Act had continued in operation.
Note 1: The expression covers is used to indicate the range of employees, employers etc. to whom the instrument potentially applies (see subitem (2)). The employees, employers etc. who are within this range will depend on terms of the instrument, and on any relevant provisions of the WR Act.
Note 2: Depending on the terms of a transitional instrument and any relevant provisions of the WR Act, the instrument's coverage may extend to people who become employees after the instrument becomes a transitional instrument.
(2) A transitional instrument applies to the same employees, employers and any other persons the instrument covers as would, if the WR Act had continued in operation, have been:
(a) required by the WR Act to comply with terms of the instrument; or
(b) entitled under the WR Act to enforce terms of the instrument.
Note: The expression applies is used to indicate the range of employees, employers etc. who are required to comply with, or can enforce, the terms of a transitional instrument.
...
[21] Item 3(4)(c) provides that the item has effect subject to Div.2 of Pt.5 of Sch.3, which 'deals with interaction between transitional instruments and FW Act modern awards, workplace determinations and enterprise agreements'. We will later refer to items 29 and 31 of Sch.3, which are contained in this Division.
[22] Item 20(1) of Sch.3 provides:
20 Sunsetting rules for various transitional instruments
Notional agreements preserving State awards
(1) A notional agreement preserving State awards (other than a notional agreement that is an enterprise instrument) terminates:
(a) on the 4th anniversary of the FW (safety net provisions) commencement day; or
(b) if the regulations prescribe a later day—on that later day.
[23] The 'FW (safety net provisions) commencement day' referred to is 1 January 2010, so the 4th anniversary referred to is 1 January 2014.
[24] Item 21 of Sch.3 provides:
21 Effect of termination
If a transitional instrument terminates, it ceases to cover (and can never again cover) any employees, employers or other persons.
[25] Two other provisions of Sch.3 have the effect that a NAPSA, as an ABTI, may cease to cover or to apply to particular employees prior to the termination date provided for in item 20. Firstly, item 29 relevantly provides:
29 Modern awards and award-based transitional instruments
Modern awards other than the miscellaneous modern award
(1) If a modern award (other than the miscellaneous modern award) that covers an employee, or an employer or other person in relation to the employee, comes into operation, then an award-based transitional instrument ceases to cover (and can never again cover) the employee, or the employer or other person in relation to the employee.
The miscellaneous modern award
(2) While an award-based transitional instrument that covers an employee, or an employer or other person in relation to the employee, is in operation, the miscellaneous modern award does not cover the employee, or the employer or other person in relation to the employee.
...
[26] Secondly, item 31 provides:
31 FW Act enterprise agreements and workplace determinations, and award based transitional instruments
If an enterprise agreement or workplace determination (under the FW Act) applies to an employee, or an employer or other person in relation to the employee, then:
(a) an award based transitional instrument ceases to apply to the employee, and the employer or other person in relation to the employee; but
(b) the award based transitional instrument can (subject to the other provisions of this Part) continue to cover the employee, and the employer or other person in relation to the employee.
Note: Subject to the other provisions of this Part, the award based transitional instrument can again start to apply to the employee, and the employer or other person in relation to the employee, if the enterprise agreement or workplace determination (under the FW Act) ceases to apply to the employee.
[27] The relevant effect of the provisions of Sch.3 to the Transitional Act referred to is therefore, in summary, that it extended the operation of each NAPSA which remained in operation immediately before 1 July 2009 until 1 January 2014 or any later date prescribed by regulations made pursuant to the Transitional Act, provided that before that date the NAPSA will cease to cover any employee who becomes covered by any modern award (other than the miscellaneous modern award) which comes into operation. Once any such NAPSA terminates, it ceases to cover and can never cover again any employees, employers or other persons. A NAPSA will, prior to its termination date, also cease to apply to an employee if an enterprise agreement or workplace determination applies to the employee, but will resume applying to the employee if the enterprise agreement or workplace determination ceases to apply.
[28] A preserved APCS is not specified as a transitional instrument under Sch.3. APCSs are dealt with separately in Sch.9, Minimum Wages. Item 5(3) of Sch.9 continues the existence of APCSs under the FW Act as 'transitional APCSs', which are a subcategory of 'transitional minimum wage instruments'. Under item 11 of Sch.9, a transitional APCS ceases to cover an employee when a modern award that covers the employee comes into operation. Under item 7(1) and (4) of Sch.9, a transitional APCS may only be terminated by order of the Commission under item 3 of Sch.5 or item 9 of Sch.6 in specified circumstances which it is not presently necessary to describe.
[29] This position concerning the coverage of ABTIs and preserved APCSs was modified by reg.3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Transitional Regulations). Regulation 3B.02 was added to the Transitional Regulations by the Fair Work Legislation Amendment Regulations 2009 (No. 3), which was made by the Governor-General on 14 December 2009 and took effect on 1 January 2010. The regulation modified Schedule 5 of the Transitional Act by adding additional items and Parts. Relevantly, reg. 3B.02 added Part 15, item 16, which provides:
Part 5 Continued coverage under award-based transitional instruments
16 Continued coverage
(1) Despite item 29 of Schedule 3, an award-based transitional instrument that:
(a) sets minimum terms and conditions for an employee to whom a training arrangement applies; and
(b) either:
(i) provides for competency-based wage progression; or
(ii) provides solely for the provision of tools for use by apprentices; and
(c) covered an employee or employer immediately before 1 January 2010;
continues to cover the employee or employer
(2) Despite the rule in item 11 of Schedule 9, an employee who is covered by the award-based transitional instrument is also covered by a transitional APCS that would have covered the employee immediately before 1 January 2010.
(3) The award-based transitional instrument and transitional APCS also cover an employee to whom a training arrangement applies:
(a) who is employed, on or after 1 January 2010, by an employer who is covered by the award-based transitional instrument; and
(b) who would have been covered by the award-based transitional instrument and transitional APCS under subitems (1) and (2) if the employee had been employed immediately before 1 January 2010.
(4) For subitems (1) to (3), the award-based transitional instrument and transitional APCS only cover an employer in respect of an employee to whom a training arrangement applies.
(5) Despite section 47 of the FW Act, a modern award that would, but for this subitem, apply to the employee does not apply for the period during which the award-based transitional instrument covers the employee.
[30] Reg.3B.02 was expressed as having been made pursuant to item 8(1) of Sch.2 to the Transitional Act, which provides:
8 Regulations relating to matters dealt with in the transitional Schedules
(1) The regulations may modify provisions of the transitional Schedules.
...
[31] Item 18 of Sch.7 of the Transitional Act deals with the application of the BOOT to enterprise agreements made after the end of the 'bridging period' if one or more of the employees covered by the agreement is an 'unmodernised award covered employee'. Item 18 is within Part 4 of Sch.7, which is entitled 'Transitional provisions to apply the better off overall test after end of bridging period if award modernisation not yet completed'. The 'bridging period' was the period starting on 1 July 2009 and ending immediately before 1 January 2010.
[32] Item 18 relevantly provides:
18 Application of better off overall test to making of enterprise agreements that cover unmodernised award covered employees
(1) This item applies in relation to an enterprise agreement made after the end of the bridging period if one or more of the employees covered by the agreement is an unmodernised award covered employee.
Non-greenfields agreements
(2) Despite section 193 of the FW Act, if the enterprise agreement is not a greenfields agreement, the agreement passes the better off overall test under that section only if:
(a) the FWC is satisfied as referred to in subsection (1) of that section in relation to the agreement; and
(b) the FWC is satisfied, as at the test time, that each unmodernised award covered employee, and each prospective unmodernised award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant award-based transitional instrument and transitional APCS applied to the employee.
...
FWC may assume employee better off overall in certain circumstances
(4) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award or relevant award-based transitional instrument and transitional APCS applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.
...
[33] The expression 'unmodernised award covered employee' is defined in item 20 of Sch.7 as follows:
unmodernised award covered employee, for an enterprise agreement, means an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by an award-based transitional instrument (the relevant award-based transitional instrument) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
[34] Item 20 also defines the expression 'prospective unmodernised award covered employee' as follows:
prospective unmodernised award covered employee, for an enterprise agreement, means a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a) would be covered by the agreement; and
(b) would be covered by an award-based transitional instrument (the relevant award-based transitional instrument ) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she would perform under the agreement; and
(iii) covers the employer.
[35] 'Test time' is defined in item 20 to mean, for the purpose of item 19, the time the application for approval of the agreement by the Commission was made under s.185 of the FW Act.
[36] It is clear that the application of item 18 depends on the relevant enterprise agreement covering employees who are also covered by an ABTI. If no employee is covered by an ABTI, then whether any employee is covered by a preserved APCS is irrelevant. If item 18 applies, then paragraph (a) of item 18(2) still requires (in accordance with s.193(1) of the FW Act) that, for modern award-covered employees, the BOOT must be passed using the relevant modern award as the comparator instrument, and paragraph (b) requires, for employees covered by an ABTI, that the BOOT must be passed using the relevant ABTI and its associated transitional APCS as the comparator instrument.
The Commissioner's decision
9 The Commissioner found that the relevant NAPSAs covered ATQ's employees immediately before 1 January 2010. She considered that when the 2006 agreement ceased to operate on 1 October 2009, ATQ's employees reverted to coverage by the NAPSAs pursuant to cl 38A(6) of Sch 8 of the WR Act. She considered the 2009 agreement, while it applied to ATQ's employees, did not displace the coverage of the NAPSAs. As a result, the requirements for the application of item 16 of Sch 5 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) were satisfied.
10 The Commissioner then concluded that the sunset provision of item 20 of Sch 3 was not displaced in its operation by item 16 of Sch 5, finding, at [185] to [196] of her reasons, so far as is relevant, as follows:
[185] Item 16 in Regulation 3B.02 of the Transitional Regulations expressly excludes the operation of Item 29 of Schedule 3 if the criteria are met. This has the effect that the ABTI continues to cover the Applicant even if a Modern Award comes into operation.
[186] Item 16 of Regulation 3B.02 of the Transitional Regulations does not expressly exclude the operation of Item 20 of Schedule 3 (the sunsetting clause) of the Transitional Act, like it does Item 29.
[187] Item 20 of Schedule 3 operates such that a NAPSA terminates on the 4th anniversary of the safety net commencement (the 4th anniversary being 1 January 2014) or if regulations prescribe a later day – on that later day.
[188] If it was the intention to continue the operation of the ABTIs that met the criteria in Item 16 of Regulation 3B.02, it is surprising that Item 16 does not express an exclusion for Item 20 as well as Item 29.
[189] However, in considering the full clause of Item 20, it must be considered whether the Regulations prescribe a "later day" for the termination of the NAPSA. Item 16 of Regulation 3B.02 does not prescribe a "later day", it only indicates that an ABTI "continues to cover" under certain circumstances.
[190] In considering the material in evidence before the Commission, it appears that it is the Fair Work Ombudsman's advice to the Applicant that the Regulations do not have an end date and will continue to apply until the Regulations are changed, however, the Fair Work Ombudsman does not specifically make any reference or consideration of Item 20, Schedule 3 (the sunsetting clause). The advice is not specifically given in relation to the Applicant's circumstances or the matter before the Commission. That is, the advice does not take into account the 2006 or the 2009 Agreements in the chronology of considerations and the specific date of the sunsetting clause as applicable to the termination of NAPSAs.
[191] Referring to the Explanatory Statement in relation to the introduction of Item 16 of Regulation 3B.02, the Applicant argued that it reflected a shift in policy whereby the ABTIs are expressly identified to be continued. However, it is also noted that the Explanatory Statement contains the following extract that may lead a reader to believe the ABTIs were to continue for a limited duration only, to accommodate the apprenticeships being undertaken and the transition of the system to the Federal jurisdiction:
"This regulation ensures employees who currently have access to competency-based wage progression continue to have access to those arrangements for the duration of their traineeship or apprenticeship. Similarly, entitlements for apprentices to be provided with tools by their employer will continue to apply for the duration of their apprenticeship…"
[192] From the above, it would seem that the purpose of the Regulation was to ensure the continuation of the protection of the unique system for those already participating in it.
...
[194] The Applicant's submitted that Item 16 of Regulation 3B.02 "carved out" ABTIs that provided for competency-based wage progression to protect them from the operation of Item 29 of Schedule 3. The Applicant submitted that Item 20 of Schedule 3 (the "sunsetting clause") was enacted as a general provision in the original Transitional Act, commencing on 1 July 2009. Because Item 16 was taken to be inserted into the Transitional Act after it had commenced (Regulation 3B.02 taking effect on 1 January 2010), it should be understood as creating an exception to the sun-setting provision.
[195] It was submitted that the "saving" of a NAPSA under Item 16 puts that NAPSA in a different category, and further, the exception had been kept separate (the insertion of the content of Regulation 3B.02 was taken to occur in Schedule 5 of the Transitional Act) from the sun-setting provision in Schedule 3 of the Transitional Act.
[196] In the current circumstances, Items 20 and 21 of Schedule 3 of the Transitional Act "sunsetted" the NAPSAs that continued to cover the Applicant under Item 16 of Regulation 3B.02. Item 16 of Regulation 3B.02 clearly excluded the operation of Item 29 of the Transitional Act, but did not exclude Items 20 or 21 of the Transitional Act. Considering the current circumstances against the provisions, Item 16 of Regulation 3B.02 provides for continued coverage of the OBO and the Tools Order, until all NAPSAs terminated 4 years after the FW (safety net provisions) commencement day, that is, 4 years after 1 January 2010, being 1 January 2014.
11 The Commissioner then added, at [221] and [222], that she considered the relevant modern awards covered the employees of ATQ regardless of the application or coverage of the relevant NAPSAs:
[221] There is nothing in the Fair Work Act 2009 that makes reference to NAPSAs or prior legislative provisions to exclude coverage of Modern Awards. It is noted that Item 16 of Regulation 3B.02 only referred to the ceasing of the application of Modern Awards during the period that ABTIs continued to cover, and did not cease the coverage of Modern Awards.
[222] Accordingly, the employees are considered to be award covered employees for an enterprise agreement under s.193(4), being employees who are covered by the proposed Agreement and are covered by a Modern Award.
The Full Bench's decision
12 In the appeal to the Full Bench, ATQ contended that the Commissioner had erred, on the following grounds, in concluding that the relevant NAPSAs terminated on 1 January 2014:
• Item 16 of Sch.5 as enacted by reg.3B.02 manifested an intention to continue coverage of ABTIs of the nature of the relevant NAPSAs without there being any termination date for this continued coverage.
• Item 16 was directly contradictory of item 20 of Sch.3.
• This conflict was to be resolved on the basis that item 16 of Sch.5, which was a later provision directed at a specifically identified situation, prevailed over item 20 of Sch.3, which was an earlier provision expressed in general terms. There was an implied repeal of item 20 of Sch.3 to the extent that it was in conflict with item 16 of Sch.5.
• Item 16 of Sch.5 was also inconsistent with the continued application of any modern award to any employee to which an ABTI continued to apply because of the item. No modern award applied to any such employee.
13 Before the Full Bench, the HIA, QMBA, and Apprentice Employment Network supported ATQ's appeal and submissions. Together, they identified what were referred to as the wider ramifications of the Commissioner's decision, namely, that many employers of trainees and apprentices in Queensland had operated under the belief that item 16 of Sch 5 continued the operation and application of the relevant NAPSAs (and associated Australian Pay and Classification Scales (APCS)) beyond 1 January 2014; and pointed to the fact that advice from the Fair Work Ombudsman and submissions made by the Queensland Government to the Annual Wage Review in 2015 were consistent with that belief.
14 The unions contended before the Full Bench that the Commissioner's decision was correct and made submissions consistent with the Commissioner's reasoning.
15 In giving leave to appeal but dismissing the appeal, the Full Bench considered that the critical question was whether the relevant modern awards relied upon by the unions covered the employees to whom the 2015 agreement would apply if approved (regardless of whether the NAPSAs covered or applied to such employees). At [50] of its reasons, the Full Bench said that s 193(1) of the FW Act requires the relevant modern award to be the comparator instrument for the BOOT in respect of award covered employees and prospective award covered employees. It said that under s 193(4) award covered employees and their employer must at the test time be covered by an operative modern award (which is the "relevant modern award" for the purpose of s 193(1)), and under s 193(5) prospective award covered employees must, if they were employed at the test time, be covered by a modern award together with the employer.
16 The Full Bench, at [51], drew attention to s 48(1) of the FW Act, which provides that a modern award "covers" an employee and an employer if it is expressed to cover them. The Full Bench considered it was clear that the modern awards relied upon by the unions were, at the test of time, expressed to cover various categories of employees to whom the 2015 agreement would apply if approved. The Full Bench considered it was not necessary to examine the coverage provision of each of the modern awards relied upon since ATQ did not submit that any of them were not expressed to cover employees to whom the 2015 agreement would apply. The Full Bench gave one example to support its observation, by reference to the Building and Construction General Onsite Award 2010.
17 At [53], the Full Bench said the question was then whether anything in the Transitional Act alters the clear position established by s 193 of the FW Act and an examination of the coverage provisions of the relevant modern awards. It considered that, because the Transitional Act is legislation which is cognate to the FW Act, and because both Acts operate as component parts of an overall scheme of industrial relations legislation, they should generally be interpreted in a co-ordinated way as far as their respective texts permit. Further, the Full Bench said, item 4(1)(b) of Sch 2 of the Transitional Act provides that expressions used in a Schedule that are defined in the FW Act are to bear the same meaning in the Schedule as they do in the FW Act unless a contrary intention appears. The Full Bench therefore considered the definitional distinction between when a modern award applies to an employee and employer, and when it covers them, as established by s 47 and s 48 respectively, should be applied to the Transitional Act, and it could not find any contrary intention in that regard in the FW Act.
18 The Full Bench then considered, at [54], that item 16 of Sch 5, while it operates to continue the coverage of award-based transitional instruments (ABTIs) to which it applies, does not displace the coverage of any modern award to an employee. It considered that, critically, item 16(5), while it provides that a modern award shall not apply to an employee while an ABTI still covers the employee, does not provide that a modern award shall not continue to cover the employee. The Full Bench rejected a submission by ATQ that it was necessarily implicit in item 16 that a modern award could not continue to cover where there was coverage by an ABTI. It considered there was no inherent conflict in there being coverage of an employee by two different instruments, since coverage is only concerned with the potential, and not actual, application of the instrument. It said, by way of example, that a modern award will continue to cover an employee even though an enterprise agreement is the legally effective regulatory instrument because it both covers and applies to the employee. It considered difficulty could only arise if two instruments both applied to the employee, and the legislative scheme resolves the potential conflict by interaction rules which generally ensure that one of the instruments does not apply – such as, for example, s 57 of the FW Act. It considered item 16(5) to be an interaction rule of that type.
19 At [55], the Full Bench said that the use of an ABTI (including a NAPSA) and a transitional APCS as the comparative instrument for the purposes of the BOOT is authorised only by item 18 of Sch 7 to the Transitional Act. It stated that item 18 is a provision within Pt 4 of Sch 7, the heading to which – "Transitional provisions to apply the better off overall test after end of bridging period if award modernisation not yet completed" – indicates that the purpose of the provisions in that Part was to deal with the approval process for enterprise agreements made after 1 January 2010, in the event that the award modernisation process had not been completed by that date. It considered that that conclusion tends to be confirmed by [348] of the Explanatory Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009.
20 The Full Bench then said, at [56], that since the award modernisation process did in fact complete by that date, it was not clear that an interpretation of item 18 which would, notwithstanding this, give it work to do after 1 January 2010 was consistent with that intention. It added, that, in any event, item 18(2)(a) maintains the requirement that s 193(1) must be satisfied in order for an agreement that covers any "unmodernised award covered employee" to be approved. It said that that means that for any employee covered by a modern award, the BOOT must be undertaken using the relevant modern award as the comparator instrument. That means, even assuming that the 2015 agreement does cover any "unmodernised award covered employee", the BOOT must nonetheless be applied using the relevant modern award as the comparator instrument in respect of any employees covered by the 2015 agreement who are also covered by a modern award (whether or not such employees might also be covered by an ABTI).
21 The Full Bench considered that item 18(2)(b) adds an additional requirement that for any "unmodernised award covered employee", the BOOT must also be passed using the relevant ABTI and the associated transitional APCS as comparators. It said that at the time the Transitional Act was enacted, containing as it did item 18 of Sch 7, it may not have been contemplated that an employee might simultaneously be covered by a modern award and an ABTI, so that both (a) and (b) of item 18(2) would need to be satisfied. The Full Bench observed that the potential situation was only brought about by the later enactment of Sch 5 item 16 by virtue of reg 3B.02 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) (Transitional Regulations). The Full Bench considered, that, notwithstanding this, there was no inherent impracticability or absurdity about the proposition that the BOOT might have to be applied twice to any employees covered by both a modern award and an ABTI, such that it would cause the Full Bench to search for an alternative interpretation of the relevant provisions that is contrary to the clear language actually used.
22 At [57], the Full Bench, following consideration of the operation of the Transitional Act, accepted the unions' second contention – that item 16 of Sch 5, even if it applied to the NAPSAs, did not have the effect of displacing the coverage, as distinct from the application, of the relevant modern awards – and considered that the Commissioner's additional conclusion, referred to above at [11], was correct. While the Full Bench considered that conclusion was sufficient to dispose of the appeal by dismissing it, it further considered that because, in ultimately dealing with the application for approval of the 2015 agreement, it would be necessary to determine whether item 18 of Sch 7 has any application to the 2016 agreement, it should express its view as to whether the relevant NAPSAs continued to cover any employees of ATQ. That involved the Full Bench considering whether the effect of item 16 of Sch 5, as enacted by reg 3B.02, was to modify the effect of item 20 of Sch 3 such that the NAPSAs did not terminate on 1 January 2014.
23 In dealing with that further question, which is the primary issue raised in this proceeding before this Court, the Full Bench rejected the case put on behalf of ATQ.
24 The Full Bench noted, at [59], the subject matter of Sch 3 to the Transitional Act was concerned with continuing the legal existence of various types of instruments that were made under the WR Act upon the FW Act coming into effect, subject to various conditions and limitations. It noted that item 2 gave continued existence to NAPSAs but that item 20(1) brought that existence to an absolute end at the later date of 1 January 2014 or a later date prescribed by the Transition Regulations. It added that item 21 confirms what might otherwise be regarded as obvious, namely, that once the existence of a transitional instrument terminates, it ceases to cover and can never cover again any employees, employers or other persons.
25 The Full Bench, at [60], then noted item 29 of Sch 3, which fell within Div 3 of the Schedule and said that it may be gleaned from the title to that Division and the provisions contained within it, that it was concerned with establishing interaction rules between transitional instruments which are given legal existence and instruments made under the FW Act's provisions. It noted that those interaction rules were concerned with the coverage and application of various categories of instruments to employers, employees and others at particular times and in particular circumstances, but were not concerned with their existence as legal instruments.
26 The Full Bench said, at [61], that item 29(1) was to be interpreted in that context and was concerned with the coverage of ABTIs in relation to particular employers, employees and others who have become covered by a modern award, and "mandates that in that circumstance the coverage of the ABTI ceases in respect of any such person and cannot thereafter recommence". The Full Bench there added that item 29(1) does not itself bring an end to the legal existence of a relevant ABTI as a whole, only its coverage of particular persons. It said that in circumstances where scope of coverage may not be co-extensive with that of a modern award, the provision allows for the possibility that some persons previously covered by an ABTI may cease to be covered by it because they have become covered by a modern award, but other persons continue to be covered by the ABTI while it retains legal existence because they have not become covered by a modern award.
27 As to the terms and proper construction of item 16 of Sch 5, the Full Bench, at [62], considered it important to note that reg 3B.02, which introduced it, was not made in exercise of the power in item 20(1)(b) of Sch 3 (supported by the general power in s 4(a) of the Transitional Act to make regulations "prescribing matters ... required or permitted by this Act to be prescribed") to prescribe a day later than 1 January 2014 for the termination of NAPSAs. It said the regulation expressly stated that it was made in exercise of the power contained in item 8(1) of Sch 2 to make regulations modifying provisions in the Schedules to the Transitional Act.
28 It then noted, at [63], the terms of item 16(1) commences with the words "Despite item 29 of Schedule 3 …". The Full Bench observed that the terms of item 16(1) demonstrated that it was concerned with the continuation of the coverage by certain ABTIs of a specified category of person in a manner which is inconsistent with, and therefore modifies, the effect of item 29 of Sch 3. At [63], it additionally noted that there was no statement in item 16 of any purpose to modify the effect of item 20 of Sch 3, and that the provisions of item 16 did not deal with the subject matter of item 20(1), namely the termination of NAPSAs, the legal existence of which were continued as transitional instruments by item 2(1) of Sch 3. The Full Bench also considered that no part of item 16 expressly or by effect sought to modify item 21 of Sch 3. It therefore concluded:
Item 16(1) is therefore to be understood as no more than a modification of the interaction rule in item 29(1) of Sch.3 concerning an ABTI which remains in existence in accordance with the other provisions of Sch.3 and a modern award which comes into effect.
29 It followed, in the view of the Full Bench, that there was no inconsistency between item 20 of Sch 3 and item 16 of Sch 5, which required an implication to be drawn that the latter modified the effect of the former.
30 The Full Bench, at [65]-[66], also had regard to the explanatory statement for the Fair Work Legislation Amendment Regulations 2009 (No. 3), which it considered tended to confirm the ordinary meaning of the reg 3B.02 provisions. It said it confirmed the purpose of item 16 was to allow ABTIs of the specified type to continue to cover relevant employees and employers upon the commencement of modern awards. It also observed that the explanatory statement suggested that it was not intended that the provision have a long term effect insofar as it was directed at allowing the existing traineeships and apprenticeships to be completed in accordance with pre-existing arrangements, although the Full Bench said it must be acknowledged that item 16(3) of Sch 5 continues the coverage of relevant ABTIs for persons employed after 1 January 2010 who meet the specified conditions.
31 Finally, the Full Bench, at [67], noted the way in which the BOOT was applied to the 2012 agreement, the Fair Work Ombudsman's advice and submissions made by the Queensland Government to the Annual Wage Review 2015, but said such matters were incapable of affecting the conclusions reached concerning the proper interpretation and application of the Transitional Act provisions.
Did the Commission commit any jurisdictional error?
32 ATQ and QMBA contend that the Commissioner, by holding that the operation of the NAPSAs/ABTIs ceased on 1 January 2014 as they were "sunsetted" by the sunset provision, erred.
33 They also contend that the Full Bench erred in finding that item 16 of Sch 5 does not operate to extend the legal existence of any NAPSA beyond the 1 January 2014 date specified in item 20 of Sch 3.
34 Their case is that the conclusion of the Full Bench, at [64], that item 16 of Sch 5 did not modify item 20 of Sch 3, is unsustainable, and that it was not really a matter of modification or appeal by implication, but modification by express words.
35 Thus, these applicants submit that the Commission erred in determining that the modern awards are the correct reference instruments for the purposes of the BOOT in respect of the 2015 agreement; and that the Commissioner and the Full Bench ought to have concluded that the CBT ABTIs and the relevant ABTIs were the only relevant instruments for the purposes of the BOOT.
36 In both instances, they contend, the Commission committed jurisdictional error in that it misunderstood and misapplied the relevant statutory provisions by committing themselves to a course beyond jurisdiction, that is, to require that the BOOT be conducted by comparing the 2015 agreement with industrial instruments that were not lawfully the appropriate comparators, and by failing to require that the BOOT be conducted by comparison to the ABTIs, which were the comparators required by the FW Act.
37 We do not agree that the Commission, either at first instance or by the Full Bench, committed the jurisdictional errors contended for by the applicants. We consider the primary analysis provided by the Commissioner and the Full Bench in arriving at their decisions was correct.
38 We have set out s 193 of the FW Act at [8] above. By subs (1) it is clear that an enterprise agreement that is not a greenfields agreement, as in this case, passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall "if the agreement applied to the employee" than if the relevant modern award applied to the employee. As the unions have submitted, the critical question for consideration is whether the relevant modern award covered the employees to whom the enterprise agreement will apply if approved. The Full Bench, at [50] to [53], to which we have referred to at [15] to [17] above, correctly stated this approach.
39 Only when that question of coverage is determined is it necessary to turn to the question, whether the Transitional Act or the Transitional Regulations alter that approach.
40 We agree with the contention made on behalf of the unions that there is nothing in the Transitional Act or Transitional Regulations that alters that approach. The relevant NAPSAs are not to be used as comparator instruments for the purpose of the BOOT, because:
(1) by operation of item 20(1) of the Transitional Act, the relevant NAPSAs "sunsetted", to use the language of the parties, and terminated on 1 January 2014; and
(2) in any event, even if item 16(5) of the Transitional Act applied, it did not have the effect of displacing coverage of the relevant modern awards because of the terms of s 48 of the FW Act, which is set out above in [8], as the Full Bench explained.
41 Item 20 of Sch 3 has the effect that the NAPSAs ceased operating on 1 January 2014. By operation of item 21, they can never again cover employees.
42 While the applicants rely on item 16 to contend that it states a rule that prevails over item 20, that argument is not compelling. It is put on the basis that item 16 prevails over item 20 because it "impliedly" modifies or repeals item 20 in order to overcome an inconsistency between the two. The inconsistency is said to be that item 20 terminated the NAPSA on 1 January 2014, whereas item 16 imposed no cut off or "sunsetting" date on the continuing of the ABTIs preserved by that provision.
43 We agree with the argument put on behalf of the unions that the construction contended for by the applicants does not have regard to the language used in the relevant provisions and each have work to do. Item 16, by its terms, expressly modifies the effect of item 29 of Sch 3. Item 16(1) commences by stating that "Despite item 29 of Schedule 3 …" and then proceeds to deal with matters relevant to and affecting item 29. Item 16(5) expressly excludes the operation of s 47 of the FW Act, which section is also set out above at [8].
44 Item 16 does not refer to or deal with the matters set out in item 20. Item 20 remains unaffected by the operation of item 16.
45 As the Full Bench pointed out, reg 3B.02, which introduced item 16, was made pursuant to item 8(1). We accept the submission that if the regulation was intended to modify the Transitional Act in the exercise of the power conferred by item 8(1), such a modification should be clear and identifiable and not found to have been achieved by implication because of apparently inconsistent language. A repeal by implication is rarely readily accepted. See Saraswati v R (1991) 172 CLR 1 at 17; [1991] HCA 21 (Gaudron J). It should not be considered to have been affected by item 16.
46 To the extent that the applicants argue that, by operation of item 16(5), modern awards do not apply to or cover ATQ and its employees, we note that the express language of item 16(5) modifies the effect of s 47 of the FW Act, which deals with when a modern award applies to an employee. A modern award may not apply pursuant to item 16(5) if the ABTI applies to the employees. However coverage of the modern award, rather than application, is the relevant consideration for the purpose of the BOOT. Item 16(5) does not, in that regard, refer to, and consequently does not modify, the effect of s 48, which deals with when a modern awards covers an employee. The Full Bench explained this correctly in its reasons.
47 Accordingly, despite the operation of item 16(5), a modern award can continue to cover an employee for the period during which an ABTI covers the employee. We agree with the Full Bench that there is no inherent conflict in there being coverage of an employee by two different instruments, given that coverage is concerned with the potential, rather than the actual, application of the instrument. As the unions submit, a difficulty would only arise if two instruments both purported to apply to the employee. Even if item 16 prevailed over item 20 of the Transitional Act, item 16(5) would not operate to cease coverage of the modern awards.
48 Thus, we also accept the submission that item 20 of the Transitional Act and item 16 of reg 3B.02 are not necessarily inconsistent and can operate independently of each other.
49 We do not accept the submission made on behalf of the applicants that item 16 impliedly modifies or repeals item 20.
50 ATQ and QMBA additionally challenge the view of the Full Bench, expressed at [56] of its reasons, that item 18(2)(b) of Sch 7 of the Transitional Act adds an additional requirement in that both paras (a) and (b) would have to be satisfied for an agreement to pass the BOOT. They contend this means a "double BOOT test" – both the modern award and the ABTI would be used as comparators. They submit the Full Bench was in error in reaching that conclusion, because s 193(1) of the FW Act only applies to "each award covered employee" and "each prospective award covered employee". They say that if the proposition that the apprentices and trainees are not covered by a modern award is correct, then step (a), requiring application of the BOOT on the modern awards, does not apply.
51 These applicants, therefore, submit that the relevant employees are not covered by the modern awards because they are covered by the ABTIs. Thus, they fall within the definition of "unmodernised award covered employees" under item 20 of Sch 7 of the Transitional Act. They contend the expressions "award covered employee" in s 193(1) and "unmodernised award covered employee" are mutually exclusive.
52 These applicants draw attention to the term "award covered employee" as defined in s l93(4) of the FW Act to be:
An award covered employee for an enterprise agreement is an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern award ) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
53 They contend that, conversely, an "unmodernised award covered employee" is defined in item 20 of the Transitional Act as follows:
unmodernised award covered employee, for an enterprise agreement, means an employee who:
(a) is covered by the agreement; and
(b) at the test time , is covered by an award-based transitional instrument (the relevant award-based transitional instrument) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
54 They submit that the juxtaposition of the definitions provides support for the proposition that an employee is either in one category or another – never both. Hence, they say, the Full Bench finding that the BOOT has to be applied to two instruments, that is, to the modernised awards and then to ABTIs, is unsound.
55 The unions submit that consideration of item 18 of Sch 7 in the context of the application made by the applicants is irrelevant because of the sunsetting provision in item 20 of Sch 3.
56 The unions further submit that item 18 is a transitional provision. As the Full Bench relevantly noted, at [55], item 18 is a provision within Pt 4 of Sch 7 which is entitled "Transitional provisions to apply the better off overall test after end of bridging period if award modernisation not yet completed". The Full Bench noted that the heading indicated the purpose of the provisions under the heading was to deal with the approval process of enterprise agreements made after 1 January 2010 in the event that the award modernisation had not been completed by that date. The Full Bench further noted, at [56], that given the award modernisation process had completed by that date, it was not clear that an interpretation of item 18 which would give it work to do after 1 January 2010 was consistent with that intention.
57 We accept the unions' submission that the applicants' contention, that the Full Bench's reasoning with respect to the operation of item 18 was incorrect, cannot be sustained because it is based on an incorrect presumption that the employees were not award covered employees. The employees were covered by the modern awards within the meaning of s 48 of the FW Act. The Full Bench's reasoning, at [56] of its decision, is correct. We agree that the Full Bench correctly concluded that item 18 of Sch 7 has no application in the approval of the 2015 agreement.
58 It follows that, the employees are award covered employees for the purpose of s 206 of the FW Act.
Conclusion and orders
59 For these reasons the applicants' application should be dismissed.
60 We will hear from the parties as to the question of costs.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick, Barker and Rangiah.
Associate:
Dated: 27 November 2017
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Australian Building and Construction Commissioner v Abbott (No 2) [2011] FCA 308
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2024-09-13T22:50:41.231463+10:00
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FEDERAL COURT OF AUSTRALIA
Australian Building and Construction Commissioner v Abbott (No 2)
[2011] FCA 308
Citation: Australian Building and Construction Commissioner v Abbott (No 2) [2011] FCA 308
Parties: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER v BENJAMIN ABBOTT AND THE PARTIES IN ATTACHED SCHEDULE 1
File number: WAD 230 of 2008
Judge: GILMOUR J
Date of judgment: 31 March 2011
Legislation: Evidence Act 1995 (Cth) s 45
Date of hearing: 31 March 2011
Place: Perth
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 16
Counsel for the Applicant: Mr K Pettit
Solicitor for the Applicant: Clayton Utz
Counsel for the 218th & 219th Respondents: Ms K Vernon
Solicitor for the 218th & 219th Respondents: Construction Forestry Mining & Energy Union
Counsel for Respondents in attached Schedule 1: Mr R L Hooker
Solicitor for the Respondents in attached Schedule 1: Gibson & Gibson
Counsel for the 221st Respondent: Mr R E Lindsay
Solicitor for the 221st Respondent: Corser & Corser
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION WAD 230 of 2008
BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER
Applicant
AND: BENJAMIN ABBOTT
First Respondent
THE PARTIES IN ATTACHED SCHEDULE 1
Third Respondent to Two Hundred & Twenty Second Respondent
JUDGE: GILMOUR J
DATE: 31 MARCH 2011
PLACE: PERTH
RULING AS TO ADMISSIBILITY OF AIRC TRANSCRIPT
1 These reasons relate to the admissibility of part of the transcript of the evidence given by Mr Peter Stuurstraat, a witness for the applicant in this proceeding, during an Australian Industrial Relations Commission (AIRC) hearing on 14 October 2010.
2 The issue arose in this way. Mr Stuurstraat gave evidence to this Court that he had been told by a security officer at the site of the Phase V Expansion Project in Karratha that a Mr Brad Upton (a CFMEU employee) was trying to get a meeting together. His relevant evidence-in-chief is as follows:
Can you tell us how you became aware that there was a meeting that morning?We'd relocated the parking area for the crew to park in and we were having difficulties with logistics with teething problems so I went out there to ensure that people would be able to get in and park in the right areas and so forth with these new logistics that had been arranged, and that's when the security chap came over and saw us and informed me that something was happening over in the car park.
What did he inform you?He said that Upton's trying to get a meeting together.
And did you check that yourself?Yes.
By going to the what you have called the overflow car park?Yes, I went over there. Yes.
And you spoke to Mr Upton?Yes.
3 During cross-examination, counsel for the CFMEU and Mr Upton sought to have the witness agree that during the relevant conversation the security officer had not in fact mentioned Mr Upton. The evidence is as follows:
Well, I'm putting it to you, Mr Stuurstraat, that the security guard never said to you, "Upton is trying to get a meeting going"?Okay.
What he said to you was, "A meeting is being assembled in the car park." Isn't that what he said to you?Again, I'll reply: along those lines is what he said.
HIS HONOUR: Mr Stuurstraat, you've been given two alternatives, it can't be both?I've made a iteration of what happened along that line, it was along the lines of, "There is a meeting getting together, Upton is getting a meeting together." That has been said to me, whether they're the exact words that he used or not, I'm sorry, I don't know, but they were along those lines.
MS VERNON: Well, was it along the lines of, "A meeting is being assembled in the car park" or was it along the lines of, "Upton is trying to get a meeting going"?I'm sorry, it's along those lines of both of what you just said, it's along those – it's a long time ago and it was a long those lines of what was said to me.
4 Counsel for the CFMEU and Mr Upton then cross-examined Mr Stuurstraat as to evidence he had given in the AIRC hearing on 14 October 2008. This was an attempt to demonstrate that this evidence constituted a prior inconsistent statement. That evidence was recorded in the AIRC transcript Paragraph Number (PN) 115, which was read out to the witness. I required the transcript to be produced to the Court and directed that it be shown to the witness. The transcript relevantly contained PN 109-PN 123 of the examination-in-chief of Mr Stuurstraat. I will refer to this transcript in these reasons as "the document".
5 PN 115 in the following terms:
Yes, let's start with that. You turned up for work in the morning?---Yes, I turned up to work in the morning and was asked to – I was approached by the guards – by the security that a meeting was being assembled at the car park and that they – as far as they were concerned, it was not a meeting that was – had authority to proceed.
6 The relevant cross-examination in this Court of Mr Stuurstraat by counsel for the CFMEU and Mr Upton in respect to the content of the PN 115 was as follows:
You would agree with me that's what you said? Yes, and I – it wasn't a word for word, it was along those lines, so
Well, no, I'm putting to you what you actually said ? Okay.
to the Industrial Relations Commission on that day, you said:
. . .
Could you, please, look for PN115? Yes.
And then proceed to read it to yourself quietly, so not out loud? Yes.
Right, you have read that now? Yes.
And that is, you would agree with me, what you said to the Australian Industrial Relations Commission on the morning of 14 October 2008? Yes, sounds good.
All right. Thank you. You can return that now, please? Yes.
So, Mr Stuurstraat, I will ask you again to confirm that what you said on 14 October was, "Yes, I turned up to work in the morning and was asked to - approached by the guards, by the security, that a meeting was being assembled at the car park and that they - as far as they were concerned, it was not a matter that had authority to proceed'? Correct.
That's what you said to the Australian Industrial Relations? That's what I said and that wasn't a quote.
Thank you. Sorry? And it wasn't a quote. That's not a quote in there; that's what the guard had approached me with.
You would agree with me, wouldn't you, Mr Stuurstraat, that you didn't make any mention in your evidence before the Australian Industrial Relations Commission that Mr Upton was going to get a meeting going, did you? No, most probably wasn't asked.
7 Section 45 of the Evidence Act 1995 (Cth) is thereby invoked. Senior counsel for the applicant invited Ms Vernon to tender the document but she declined.
8 The applicant has invited the Court to exercise its discretion to admit part of the document into evidence under s 45(3)(c) of the Evidence Act.
9 The applicant says that PN 112 to PN 122 should be admitted into evidence. The CFMEU and Mr Upton say that only PN 115 should be admitted.
10 There are a number of matters which I consider to be relevant in these circumstances to the Court's discretion under s 45(3)(c).
11 First, it is relevant to consider whether the document or part of it should be admitted by the Court to enable it to fairly consider the cross-examination in this Court of Mr Stuurstraat upon the content of PN 115 and to weigh its effect. The applicant submits that the Court would be assisted in this respect by admitting into evidence not only PN 115 but also:
• PN 112, which introduces Mr Stuurstraat and the issue.
• PN 114 which explains the exact setting for the cross-examination.
• PN 116-119, and 121 which identify the person who is the subject of the cross-examination, and
• PN 113, 120 and 122, which set the context of the questioning in the AIRC.
12 Second, it is relevant to consider whether the document is required in order to decide whether the prior statement was inconsistent in the way asserted by cross-examining counsel. The applicant submits that the Court will be assisted as to this by PN 115-122, as they show that it was likely that it was Mr Upton who was said to be arranging the meeting, and hence tend to negate the basis of the cross-examination.
13 The CFMEU and Mr Upton submit that there is no basis for the admission into evidence of the entirety of paragraphs PN 112 to PN 122 in the document because:
(a) those paragraphs other than PN 115 were not put to Stuurstraat;
(b) those paragraphs go well beyond what was put to Stuurstraat;
(c) PN 115 is a discrete paragraph containing a question that is answered within the paragraph, and it was put to Stuurstraat as being a prior inconsistent statement with that contained in paragraph 15 of Stuurstraat's redacted statement and his oral evidence on the same point;
(d) PN 112-114 and PN 116-122 are not required to make sense of PN 115 because they extend to conduct and conversations with persons other than Stuurstraat and the security officer,;
(e) the Court does not need any assistance to:
(i) introduce Stuurstraat because he gave evidence that PN 115 was his evidence, and the AIRC transcript containing PN 115 can be adequately reproduced to indicate PN 115 is his evidence;
(ii) understand the exact setting for the cross-examination in the AIRC because only the cross-examination in this Court is relevant and that is contained in the Court Transcript;
(iii) understand the identity and role of Stuurstraat as that is found in his witness statement supplemented by his oral evidence;
(iv) understand the context of the questioning in the AIRC because the question and answer in PN 115 is clear;
(f) Stuurstraat gave oral evidence about his recollection of what happened after the conversation with the security officer. He was not cross-examined on that evidence. Paragraphs PN 112-114 and PN 116-122 cannot be used to supplement the evidence that Stuurstraat otherwise gave, or fill in gaps in evidence he did not give;
(g) Stuurstraat's evidence in cross-examination was that what he was told by the security officer was "along the lines of "There is a meeting getting together. Upton is getting a meeting together" but he could not recall the exact words used but it was along the lines of both options. The evidence contained in PN 112-114 and 116-122 is not required to assist in assessing Stuurstraat's credibility, because he himself admitted he could no longer recall exactly what was said, but both what he said in PN 115 and what he said in evidence was equally correct.
14 I accept the submission of the applicant to the effect that paragraphs other than PN 115 in the document ought be admitted with the purposes of enabling the Court to understand the context in which the question and answer found in PN 115 sits as well as to consider whether in fact the answer given is inconsistent with the evidence given to this Court as to the conversation between Mr Stuurstraat and the security officer. The submission as to inconsistency is a serious matter affecting as it does the credit of the witness. Fairness therefore becomes an important consideration.
15 These purposes will, in my opinion, be served by admitting into evidence not only PN 115 but also PN 114, 116, 117, 119 and 121. These paragraphs record the evidence of Mr Stuurstraat concerning the presence and conduct of Mr Upton in the vicinity of the security guard at the time of the disputed conversation and shortly thereafter. That additional evidence given to the AIRC is pertinent to assessing the question whether or not the evidence in PN 115 properly understood and in context is inconsistent with the evidence given by Mr Stuurstraat before this Court. I do not regard the content of PN 112, 113, 118 and 120 to be relevant in this respect and I would not admit them.
16 I will invite counsel for the applicant to arrange for a suitably redacted version of the document to be produced for tender to the Court.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.
Associate:
Dated: 31 March 2011
SCHEDULE 1 – THE RESPONDENTS
MURRAY ARCARO
Third Respondent
MOSES ASIATA
Fourth Respondent
SERGIO BAEZ
Sixth Respondent
FRANCISCO BARRAZA
Ninth Respondent
ROLAND BAZAEZ
Twelfth Respondent
LEON BECKER
Thirteenth Respondent
PATRICK BIRD
Sixteenth Respondent
TERRANCE BISHOP
Seventeenth Respondent
ROMEO BONCATO
Nineteenth Respondent
DARREN BOXALL
Twentieth Respondent
ROBERT BROWN
Twenty-Fifth Respondent
SLAVO CEKLIC
Twenty-Eighth Respondent
KIM CHENNELL
Twenty-Ninth Respondent
JASON CHROMIAK
Thirty-First Respondent
ROBERT CLARK
Thirty-Second Respondent
DAVID COLLINS
Thirty-Fourth Respondent
DONALD COLYER
Thirty-Fifth Respondent
CHRIS CORRIGAN
Thirty-Seventh Respondent
ALLAN COUTTS
Thirty-Eighth Respondent
LANCE CRONIN
Thirty-Ninth Respondent
ANDREW CROSIER
Fortieth Respondent
RENEE CUMBERS
Forty-First Respondent
KENNETH CUMMING
Forty-Second Respondent
ALASTAIR CUNLIFFE
Forty-Third Respondent
AIDEN DAVEY
Forty-Fifth Respondent
SCOTT DEVINE
Forty-Ninth Respondent
CLAUDE DEVOS
Fiftieth Respondent
JOHN DICKSON
Fifty-First Respondent
NORMAN DODGIN
Fifty-Third Respondent
DANIEL DOYLE
Fifty-Fifth Respondent
MATT DRUMMOND
Fifty-Sixth Respondent
JOHANNES DUPLESSIS
Fifty-Ninth Respondent
WARWICK FAULKNER
Sixty-Fourth Respondent
VICTOR FAUSTINO
Sixty-Fifth Respondent
JOSE FERREIRA
Sixty-Seventh Respondent
GEORGE FITZROY
Seventy-First Respondent
DAVID FRASER
Seventy-Second Respondent
SALVATORE FRONTE
Seventy-Third Respondent
PETER GARDINER
Seventy-Fifth Respondent
LOUIE GEROVICH
Seventy-Eighth Respondent
SIMON GILBERT
Eighty-Second Respondent
TAY GOODALL
Eighty-Third Respondent
DUANE GUYATT
Eighty-Eighth Respondent
JOHN HARVEY
Ninetieth Respondent
QUINTON HEBBARD
Ninety-First Respondent
ROBERT HOLT
Ninety-Fourth Respondent
STEPHEN HONICKE
Ninety-Fifth Respondent
ANDREW HORNBY
Ninety-Sixth Respondent
CHRISTOPHER HOWARD
Ninety-Seventh Respondent
VINCENT HOWES
Ninety-Eighth Respondent
NIKOLA IVKOVIC
One Hundred and Third Respondent
DENIS JACKSON
One Hundred and Fourth Respondent
MARK JOHNSON
One Hundred and Sixth Respondent
RICHARD JONES
One Hundred and Seventh Respondent
RAYMOND JONES
One Hundred and Eighth Respondent
TURIPI KARUTJINDO
One Hundred and Tenth Respondent
EMIN KECAP
One Hundred and Eleventh Respondent
SHAUN KEILY
One Hundred and Twelfth Respondent
LENKO KORLJAN
One Hundred and Thirteenth Respondent
DARRIN LANE
One Hundred and Fifteenth Respondent
SHANE LAVELLE
One Hundred and Sixteenth Respondent
CHRISTINE LEAHY
One Hundred and Seventeenth Respondent
CHARLIE LINESS
One Hundred and Eighteenth Respondent
CLIFFORD LOGAN
One Hundred and Nineteenth Respondent
KENNETH LOGAN
One Hundred and Twentieth Respondent
DONALD MACKAY
One Hundred and Twenty-Third Respondent
JAMES MANN
One Hundred and Twenty-Fourth Respondent
DENIS MARRINER
One Hundred and Twenty-Sixth Respondent
GHEORGHE MATEIU
One Hundred and Twenty-Seventh Respondent
GREGORY MCCARTHY
One Hundred and Thirtieth Respondent
PAUL MCGEADY
One Hundred and Thirty-First Respondent
RUSSELL MCGHIE
One Hundred and Thirty-Second Respondent
JOSEPH MCGRANE
One Hundred and Thirty-Third Respondent
ALASTAIR MCGUIRE
One Hundred and Thirty-Fourth Respondent
ALAN MCKENZIE
One Hundred and Thirty-Fifth Respondent
DEAN MEDLAND
One Hundred and Thirty-Seventh Respondent
BRAD MILLER
One Hundred and Thirty-Eighth Respondent
ROBERT MITCHELL
One Hundred and Fourtieth Respondent
PASKO MITRESKI
One Hundred and Forty-First Respondent
CHRISTOPHER MOORE
One Hundred and Forty-Third Respondent
LEONARD MUDRI
One Hundred and Forty-Fourth Respondent
DARREN NEWBY
One Hundred and Forty-Sixth Respondent
JAMIE NICOLAOU
One Hundred and Forty-Seventh Respondent
JAMES ODIAM
One Hundred and Forty-Eighth Respondent
BRIAN OTTAWAY
One Hundred and Fifty-First Respondent
MANDY-LEE PALMER
One Hundred and Fifty-Second Respondent
KEN PAYNE
One Hundred and Fifty-Fifth Respondent
LOUISE PFITZNER
One Hundred and Fifty-Eighth Respondent
RICHARD PHILLIPS
One Hundred and Fifty-Ninth Respondent
SHEREE PIKE
One Hundred and Sixtieth Respondent
JOE PIZZO
One Hundred and Sixth-Second Respondent
JOHN PRATT
One Hundred and Sixty-Third Respondent
DAVID ROSSITER-MCLAREN
One Hundred and Seventieth Respondent
PHILLIP ROWELL
One Hundred and Seventy-First Respondent
TOM SABINE
One Hundred and Seventy-Third Respondent
MICHAEL SANDERS
One Hundred and Seventy-Fifth Respondent
ANTON SAXER
One Hundred and Seventy-Seventh Respondent
KEITH SHIELD
One Hundred and Eighty-First Respondent
DALE SHIRTLIFF
One Hundred and Eighty-Second Respondent
DUSKO SOBOT
One Hundred and Eighty-Fifth Respondent
GRAEME SOWDEN
One Hundred and Eighty-Seventh Respondent
BRAD SPARK
One Hundred and Eighty-Eighth Respondent
JUSTIN STUURSTRAAT
One Hundred and Ninety-Second Respondent
WAYNE SUTHERLAND
One Hundred and Ninety-Third Respondent
ALLAN TAMAPUA
One Hundred and Ninety-Fourth Respondent
KEN THACH
One Hundred and Ninety-Fifth Respondent
MICHAEL TICEHURST
One Hundred and Ninety-Sixth Respondent
NEIL TOLLISON
One Hundred and Ninety-Seventh Respondent
BRYAN TONKIN
One Hundred and Ninety-Eighth Respondent
JOHN TUIVASA
Two Hundredth Respondent
GREG UCHWAL
Two Hundred and First Respondent
PETER VARIAKOJIS
Two Hundred and Second Respondent
MAREE WAINMAN
Two Hundred and Third Respondent
MITCHELL WEIR
Two Hundred and Fourth Respondent
MICHAEL WRIGHT
Two Hundred and Sixth Respondent
LESLEY YOUNG
Two Hundred and Eighth Respondent
PERO ZUVELA
Two Hundred and Ninth Respondent
CONSTRUCTION FORESTRY MINING AND ENERGY UNION
Two Hundred and Eighteenth Respondent
BRADLEY UPTON
Two Hundred and Nineteenth Respondent
AUTOMOTIVE FOOD METALS ENGINEERING PRINTING AND KINDRED INDUSTRIES UNION
Two Hundred and Twentieth Respondent
JOHN WINDUS
Two Hundred and Twenty-First Respondent
ANDREW HOLDSWORTH
Two Hundred and Twenty-Second Respondent
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2019-02-25 00:00:00
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McKay Super Solutions Pty Ltd (Trustee) v Bellamy's Australia Ltd (No 2) [2019] FCA 215
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2019/2019fca0215
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2024-09-13T22:50:42.043073+10:00
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FEDERAL COURT OF AUSTRALIA
McKay Super Solutions Pty Ltd (Trustee) v Bellamy's Australia Ltd (No 2) [2019] FCA 215
File number(s): VID 163 of 2017
VID 213 of 2017
Judge(s): BEACH J
Date of judgment: 25 February 2019
Catchwords: REPRESENTATIVE PROCEEDINGS – practice and procedure – competing class actions – open class action – closed class action – costs capping across both actions – single set of applicants' costs across both actions – maximum monetary cap of applicants' costs – maximum monetary cap of respondent's costs – s 33ZF(1) of Federal Court of Australia Act 1976 (Cth) – r 40.51 of Federal Court Rules 2011 (Cth)
Legislation: Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZF, 37M and 37N
Federal Court Rules 2011 (Cth) r 40.51
Cases cited: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570
Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [2001] RPC 1
Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469
Ex parte McCay; Re Consolidated Press Ltd (1936) 36 SR (NSW) 592
Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320
Hanisch v Strive Pty Ltd (1997) 74 FCR 384
HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79
Knight v Beyond Properties Pty Ltd [2006] EWHC 1242 (Ch); [2007] 1 All ER 91
McKay Super Solutions Pty Ltd v Bellamy's Australia Ltd [2017] FCA 947
Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191
Ong v Ping [2015] EWHC 3258 (Ch)
Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509
Statham v Shephard (No 2) (1974) 23 FLR 244
Taylor v Owners - Strata Plan No 11564 (No 2) [2013] NSWCA 153
Woodlands v Permanent Trustee Company Ltd (1995) 58 FCR 139
Date of hearing: 17 December 2018
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 151
Counsel for the Applicants: Ms RM Doyle SC and Mr DP Lorbeer
Solicitor for the Applicant in VID 163 of 2017: Slater & Gordon
Solicitor for the Applicant in VID 213 of 2017: Maurice Blackburn
Counsel for the Respondent: Mr MC Garner and Mr G Kozminsky
Solicitor for the Respondent: Minter Ellison
ORDERS
VID 163 of 2017
BETWEEN: MCKAY SUPER SOLUTIONS PTY LIMITED (ACN 110 853 024)
AS TRUSTEE FOR THE MCKAY SUPER SOLUTIONS FUND
Applicant
AND: BELLAMY'S AUSTRALIA LIMITED (ACN 124 272 108)
Respondent
JUDGE: BEACH J
DATE OF ORDER: 25 February 2019
THE COURT ORDERS THAT:
1. The respondent's interlocutory application relating to cost capping be dismissed.
2. Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
VID 213 of 2017
BETWEEN: PETER ANTHONY BASIL
Applicant
AND: BELLAMY'S AUSTRALIA LIMITED (ACN 124 272 108)
Respondent
JUDGE: BEACH J
DATE OF ORDER: 25 february 2019
THE COURT ORDERS THAT:
1. The respondent's interlocutory application relating to cost capping be dismissed.
2. Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BEACH J:
1 The respondent (Bellamy's) by its interlocutory applications filed in proceeding VID 163 of 2017 (McKay proceeding) and proceeding VID 213 of 2017 (Basil proceeding) has essentially sought cost capping orders such that:
(a) the costs that may be recovered by the McKay applicant and the Basil applicant (the applicants) pursuant to any costs orders made in their favour are to be agreed or assessed on the basis that the applicants are treated as having been represented by the same counsel and the same solicitors in the one proceeding, with the intent that they be allowed a single set of costs between them across both proceedings;
(b) further to order (a), the maximum costs as between party and party that can be recovered in both proceedings is in total $4,456,550 such that the maximum costs as between party and party that can be recovered by the applicants is $4,456,550 across both proceedings and the maximum costs as between party and party that can be recovered by Bellamy's is $4,456,550 across both proceedings; and
(c) further to order (a) but alternatively to order (b), the maximum costs as between party and party that may be recovered in each proceeding is $2,228,275.
2 Bellamy's seeks order 1(a) and order 1(b), alternatively order 1(a) and order 1(c), on the basis that order 1(a) and the costs capping orders in order 1(b) or 1(c) are complementary, and that both of them should be made in each proceeding.
3 Let me explain some of the context to the present applications.
4 On 20 March 2017, Bellamy's applied to stay either the McKay proceeding or the Basil proceeding. But rather than staying either proceeding, on 18 August 2017 I decided to close the class in the Basil proceeding (McKay Super Solutions Pty Ltd v Bellamy's Australia Ltd [2017] FCA 947), to leave the class open in the McKay proceeding, and to allow both class actions to go forward as so constituted. I did however observe that "but for the fact that in both proceedings more than 1000 group members in each case had committed themselves to litigation funding agreements and retainer agreements with their respective litigation funders and solicitors, I would have permanently stayed one of the proceedings" (at [8] and [96]).
5 I also noted (at [112] to [118]) that I would make case management orders to achieve efficiencies and reduce overall costs and said:
The above steps are designed to reduce the overall costs that may ultimately be borne by group members across both proceedings in respect of the applicants' own costs in each action. But such steps may also reduce the potential overall adverse costs order burden of the respondent (and indeed its own costs) across both actions. Indeed, I expressed my view to counsel at the hearing of the stay applications that in relation to any potential exposure to an adverse costs order, I may consider making orders to achieve the result that the respondent be only exposed to one set of legal costs vis-à-vis the applicants as if there had been only one set of proceedings.
6 On 13 September 2017 I made case management orders in each proceeding to the following effect:
The Applicant and the [other applicant] negotiate as one with the Respondent on an electronic discovery protocol and categories for discovery.
The Applicant confer with the [other applicant] to agree a protocol for the efficient conduct of the proceedings [(the cooperation protocol)], including with respect to:
(a) using reasonable endeavours to agree on the areas of expertise required for expert evidence, the identity of particular experts to be briefed and the contents of any briefs and letters of instructions to experts;
(b) consulting with each other before preparing, filing, and serving any evidence;
(c) using reasonable endeavours to progress this proceeding and [the other proceeding] in a similar manner;
(d) cooperating in the conduct of or response to any interlocutory application in either this proceeding or [the other proceeding];
(e) notifying the [other applicant] in the event that an interlocutory application is deemed prudent or necessary within a reasonable time before such application is filed;
(f) conferring about key dates.
7 Pursuant to those orders a cooperation protocol was entered into and the applicants pursuant to that protocol have achieved significant efficiencies in reducing unnecessary duplication in the conduct of the proceedings. But notwithstanding those orders and the fact that they have been complied with, Bellamy's still contends that it remains exposed to adverse costs orders that exceed its exposure had there been only one proceeding brought against it conducted by one law firm. Accordingly, it has sought costs capping orders.
8 Now I accept that it is a consequence of my rejection of Bellamy's applications for a stay of one of the proceedings that the total costs incurred by the Basil group members, the McKay group members and Bellamy's are likely to exceed the costs that would have been incurred if only one proceeding had been commenced or continued. This reality was not overlooked by me. Let me elaborate.
9 On the stay applications, various options were identified by me in response to the matters raised by the parties as potential ways to address the competing proceedings, being:
(a) consolidation of the two proceedings
(b) a permanent stay of one of the proceedings;
(c) a 'declassing order' under s 33N(1) of the Federal Court of Australia Act 1976 (Cth) (the Act);
(d) an order closing the class in one of the proceedings, but leaving the other proceeding as an open class proceeding, with a joint trial of both; or
(e) a joint trial of both proceedings with each left as they were then constituted, as open class proceedings (the 'do nothing' approach or more kindly described as the 'wait and see' approach).
10 In the context of the competing proceedings before me, I identified options (a), (c) and (e) as options that could be readily eliminated. I then addressed Bellamy's submissions in support of a permanent stay of one of the proceedings. Bellamy's submissions were principally directed towards the topics of multiplicity and duplication, in terms of giving rise to additional costs exposure from its perspective, and if I might say so a well understandable concern.
11 In contending for a permanent stay of one of the proceedings, Bellamy's relied on a submission concerning multiplicity to the effect that it ought not to be the subject of two or more representative proceedings with overlapping group members in respect of the same subject matter. I rejected this submission. And in doing so, I adverted to the reality that even if I determined to stay one of the proceedings, this would not immunise Bellamy's against the possibility that there may nevertheless be multiple proceedings. I observed the following (at [34] to [37]):
First, Part IVA contemplates that there may be more than one proceeding against the same respondent in respect of the same subject matter and the same cause(s) of action. A claimant has a choice whether to bring representative proceedings on behalf of "some or all" persons. If that choice is not made, one or more claimants may bring separate proceedings against the one respondent in respect of the same claims. Hence a multiplicity of proceedings. Moreover, even if group proceedings are brought, one or more group members may opt out and bring their own proceedings, resulting in multiple proceedings against the same respondent. Indeed, such group members who have opted out may bring their own separate representative proceedings. Nothing in Part IVA precludes such an option. And to do so would neither be invalid (the US' apparently contrary position notwithstanding) nor an abuse of process. In other words, the structure of Part IVA permits of multiple proceedings including multiple representative proceedings.
Second, although it is no doubt vexatious, oppressive and an abuse of process for the same applicant to bring multiple proceedings in respect of the same or similar claims against the same respondent, in form that is not the situation with which I am faced. The McKay applicant has brought its proceedings on behalf of its class using Slater & Gordon and IMF. The Basil applicant has brought his proceedings on behalf of his class using Maurice Blackburn, ICP Capital and ICP. The group members in either of the proceedings are not formally parties.
Third, as discussed in Johnson Tiles by Merkel J at [11] to [17], the commencement of a second bona fide set of representative proceedings prior to the Court giving substantive directions in existing but overlapping representative proceedings (ie with overlapping group members), does not of itself establish any vexation, oppression or an abuse of process. …
Fourth, no authority cited to me persuasively supports the proposition that in circumstances where the duplication of class membership is eliminated in respect of two group proceedings involving the same subject matter against the same respondent, that nevertheless there is still vexation, oppression or an abuse of process in both such proceedings as so modified to eliminate the duplication going forward. For example, take the situation where one has two closed classes that do not overlap or one open class and a closed class, but where the closed class is excluded from the open class. Alternatively, assume that such results can be achieved by case management directions. It is difficult to see how it could be said that to then allow the two group proceedings to go forward would be vexatious, oppressive or an abuse of process. …
12 I also referred to the presumptive entitlement of both proceedings to go forward in the following terms (at [54]):
[B]oth the Basil proceedings and the McKay proceedings are presumptively entitled to go forward, absent vexation, oppression or an abuse of power of which, as I have said, there is none. So, if one of the proceedings is to be stayed (ie something is to be taken away from, say, the Basil applicant and the Basil group members such that their otherwise entitlement to proceed is denied) some powerful and significant reason must be demonstrated. …
13 The other related contention that was advanced by Bellamy's in support of its stay applications was a submission that it was in the interests of justice to stay one of the proceedings in order to eliminate the duplication of costs and expenses. Bellamy's submitted that a permanent stay would ensure that it was not subjected to a 'manifest injustice', namely, meeting multiple representative proceedings with overlapping group members in respect of the same factual matters, causes of action and losses. It was said that the grant of a stay would ensure that it would not be exposed to two sets of adverse costs orders. But I did not accept that the duplication of work and costs justified the grant of a stay, saying (at [43] and [46]):
Now the respondent, even in the absence of establishing vexation, oppression or an abuse of process, contends that it would be in the interests of justice to stay one of the proceedings to eliminate the duplication of costs and expenses. I accept that this is an important consideration and indeed I have considered this under all limbs said to justify a stay. But the duplication can be minimised by less draconian measures as I later discuss.
…
Now I accept that there is likely to be some duplication and consequent additional expense. But I would make a number of other points. First, even if I permanently stay one of the proceedings, there may be multiple proceedings (with corresponding duplication) in any event for the reasons that I have explained. Second, I propose to put in place case management procedures to reduce such duplication of the type that I discuss later, without needing the blunt instrument of a permanent stay to address this concern. Third, even if there is some duplication with consequent expense, this is only a matter to weigh in the balance. And in the circumstances, it does not outweigh the corresponding detriment to over 1000 signed up group members who may be denied their choice of funder and lawyers if I were to stay, for example, the Basil proceedings; likewise there would be an analogous detriment by staying the McKay proceedings given the over 1500 signed up group members in those proceedings.
14 I did not regard Bellamy's as being entitled to avoid exposure to more than one proceeding. Nor did I accept the proposition that the risk of multiplicity of proceedings would be entirely eliminated, whatever course I adopted. Further, I recognised that a consequence of the decision not to stay one or other of the proceedings was that some work would be duplicated, with attendant costs, but that this was something that could be significantly reduced through case management and cooperation between the applicants and their advisers, as in my view it has been. So much for the background. Let me return to the present applications.
15 In summary, I would reject Bellamy's applications for the following reasons, even though I do not doubt that I have power to grant the orders sought notwithstanding the applicants' submissions to the contrary.
16 First, in my view the case management directions I have put in place are working reasonably well to substantially reduce any duplication in costs. Indeed, at no stage has Bellamy's approached me to tighten or strengthen these directions. And nor has it established any substantial non-compliance therewith to date.
17 Second, if there is any unjustified duplication in costs I can retrospectively and adequately deal with such questions including retrospectively limiting Bellamy's adverse costs exposure at a later stage. All of these steps can be taken in the then "known world". No compelling reason has been advanced by Bellamy's to deal with these matters prospectively and now. Its principal argument concerning the advantages of dealing with the matter prospectively in relation to a potential settlement was somewhat overstated.
18 Third, I am in no position at this stage to forensically make any adequate assessment of the suitability of the quantum caps sought in orders 1(b) and (c). I have insufficient information particularly given the complexity of the proceedings to make any adequate assessment. Moreover, I do not consider that any "subject to further order" rider is an answer to this point.
19 Fourth, and flowing from the third point, only order 1(a) has any apparent allure, and even this allure is superficial. Moreover, if I was to entertain an order of the type of order 1(a) it would only be of a type where:
(a) there was an element of mutuality such that Bellamy's would be subject to a correlative constraint; and
(b) it operated only in relation to costs incurred by the parties subsequent to my judgment on the stay applications.
20 Fifth, I accept that to make an order of the type of order 1(a) modified as I have just suggested might seem an attractive solution to accommodate the interests of all concerned, but it may disadvantage group members. If I were to make such an order and the applicants were to win at trial, to the extent that I have capped the costs that could be recovered against Bellamy's, the differential between the applicants' solicitor/client costs and the cap on costs that could be recovered from Bellamy's is likely to come out of any damages award. But who would ultimately wear that? The applicants personally? Group members? The applicants' lawyers? The external litigation funders? I could not say at this stage. But more importantly, if one or more of these interests are to bear that deficit, why should I trouble myself with such questions at this stage given that I could make the equivalent of order 1(a) at a later stage with the modifications referred to in the preceding paragraph? Again this all suggests that it is better to deal with these costs questions retrospectively rather than prospectively, but in the meantime to leave in place a protocol to minimise or eliminate costs duplication to the extent feasible. In other words, the practical solution to the present problem is not to now impose on insufficient material and with insufficient justification a crude costs cap, but rather to take steps designed to reduce or minimise any duplication or inefficiency based upon the foundation (as I have already ruled) that there are two actions going forward, which I might say have now been set down for trial before me.
21 As I say, I am not satisfied that I should make the orders sought by Bellamy's. Therefore its applications will be dismissed for the reasons that I will now elaborate on.
LEGAL PRINCIPLES
22 At this point it is convenient to discuss some aspects of the applicable legal principles debated before me.
(a) Section 33ZF
23 I have power under s 33ZF(1) of the Act to make order 1(a) as sought in the interlocutory applications. Alternatively, I have power to make such an order pursuant to the Court's implied power or pursuant to the Federal Court Rules 2011 (Cth) (the Rules).
24 Section 33ZF(1) of the Act provides:
In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
25 In Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469 at [33] I said the following:
…[A]lthough in a general sense s 33ZF(1) has been described as a plenary power, nevertheless it is not unlimited. It is in one sense both trite and question begging to assert that the power must be exercised judicially. But let me pass to the language of s 33ZF(1) itself. It uses the language "make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding". Grammatically, "thinks" is to be applied distributively, so that it reads "thinks appropriate" or "thinks necessary"; there is no "is" before "necessary". But as applied distributively, "thinks appropriate" has a lower threshold than "thinks necessary". But in the composite phrase, the concept is "thinks appropriate … to ensure that justice is done in the proceeding" (emphasis added). In other words, although the words "thinks appropriate" have a lower threshold than "thinks necessary", nevertheless the relevant element of necessity in another guise is enshrined in the coupling of the words "to ensure that". In summary, the question becomes whether I think it is appropriate, to ensure that justice is done in the proceeding, to make the orders sought by Newcrest. It is not whether I think it to be merely convenient or useful per se. Section 33ZF(1) is not a licence for me to impose my own expansive case management philosophy. Rather, I must be satisfied that any order that is made satisfies the statutory test. Now I accept that s 33ZF(1) is a very wide power and ought not to be construed narrowly (McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4 and Owners of Shin Kobe Maru v Empire Shipping Company Inc (1994) 181 CLR 404 at 421). Nevertheless, any exercise of power has to fit within the statutory formulation.
26 The operation and scope of that section has been further illuminated in the following terms in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at [165] per Murphy, Gleeson and Beach JJ:
In our view, in context, there is less of a difference between "appropriate to ensure justice" and "necessary to ensure justice" than might initially appear. In s 33ZF "necessary" identifies a connection between the proposed order and an identified purpose as to which the Court must be satisfied before making an order. The expression "necessary to ensure that justice is done" has shades of meaning and admits of degrees of comparisons and in context the expression should not be given a narrow construction. The requirement that a proposed order be "necessary to ensure that justice is done in the proceeding" does not require that the Court be satisfied that unless the order is made the administration of justice will collapse or that justice in the proceeding will not be "ensured" in the sense of being certain. Section 33ZF provides a wide power directed at enabling the Court to make orders to deal with the novel problems that might arise through a new statutory procedure for representative proceedings, and the expression "necessary to ensure that justice is done" requires that the proposed order be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding.
27 Now the applicants accept that the power under s 33ZF(1) is a broad one. But they say that here the occasion for its use is not enlivened. They contend that the orders proposed by Bellamy's seek to achieve a result which will have effect across two proceedings. But they say that it cannot be said that an order in the form sought by Bellamy's is "appropriate or necessary to ensure that justice is done in the proceeding". Their contention is said to derive some support by analogy from the observation in my earlier ruling (at [41]) that s 33ZF(1) was:
not directly applicable. It uses the language "…to ensure that justice is done in the proceeding…". But a permanent stay of a group proceeding could hardly be said to ensure that justice is done "in the proceeding".
28 Similarly, it is contended that denying an applicant its costs or reducing the costs to which an applicant would otherwise be entitled in a proceeding because of the existence of another proceeding, cannot sensibly be described as appropriate to ensure that justice is done in the proceeding.
29 Indeed, it is contended that making orders in the form sought risks unfairly prejudicing the applicants. It is said that the orders sought by Bellamy's function in a manner which would operate prospectively so as to restrict the applicants' recovery of costs (whether after trial or on the occasion of a court approved settlement) which might otherwise have been considered to have been reasonably incurred. Proposed order 1(a) imposes a restriction on the costs that the applicants can recover under any cost order. It is also said that initially Bellamy's did not suggest that any similar restriction be imposed with respect to the costs that Bellamy's could recover, but I would note at this point that that situation has now changed.
30 Further, although proposed orders 1(b) and (c) impose a reciprocal cap, the applicants contend that it cannot be assumed that Bellamy's and the applicants are or will be in the same position. First, it cannot be assumed that the same legal costs are required to be incurred for the applicants to prove their case as might be necessary for Bellamy's to conduct its defence. Second, Bellamy's costs are not subject to Court approval in the event that the proceedings are settled. Third, a cap may impact differently and disproportionately upon funders, when compared with a respondent or its insurer. Let me say now that I reject this last point. Litigation funders who are well resourced would not be prevented by the proposed cap from incurring additional costs over and above the cap should they consider it desirable to do so in the same way as a respondent or its insurer would not be so prevented. There is no relevant distinction in this regard between an applicant's litigation funder and a respondent's insurer.
31 Further, the applicants say that Bellamy's offer to cap its party/party costs recovery is illusory. Securities class actions are likely to settle before judgment. As a result, Bellamy's offer to cap its costs will therefore only bite in circumstances where the applicants' claims are heard at trial and are unsuccessful. But it is said that this is unlikely. The applicants contend that a facially neutral bilateral cap of the type proposed in orders 1(b) and 1(c) will affect the applicants disproportionately.
32 Now I should say at this point that I do not accept the applicants' contention that I do not have the power to make the orders sought under s 33ZF(1). The real question is whether I should exercise the power to make the orders sought in the proceedings.
33 In my view, the orders sought by Bellamy's in each proceeding are prima facie reasonably adapted to the purpose of seeking or obtaining justice in that proceeding. This is so notwithstanding that proposed order 1(a) (and also order 1(b)) in each proceeding is made by reference to that proceeding and another proceeding. In determining whether an order is reasonably adapted to the purpose of seeking or obtaining justice in a proceeding, I am not necessarily confined to a consideration of the circumstances within the boundaries of that proceeding only, but may look to other circumstances outside such boundaries to the extent that they bear upon or are relevant to a consideration of whether the order sought is reasonably adapted to the purpose of seeking or obtaining justice in the proceeding. In my view order 1(a) in each proceeding is prima facie reasonably adapted to the purpose of seeking or obtaining justice in that proceeding, both for group members if it is imposed on a bilateral basis and also Bellamy's.
34 Moreover, if it is accepted that I have power presumably under s 33ZF(1) to make relevant orders retrospectively, as the applicants contend that I do and indeed advance this as a reason why I should not make the relevant orders prospectively, then there is a tension in their position with saying that I cannot prospectively invoke s 33ZF(1) due to an absence of power.
35 Bellamy's also invokes the implied power of the Court in support of its applications for order 1(a). The implied power is that which is necessary to the effective exercise of the jurisdiction granted to the Court. Now the applicants contend that the same considerations which demonstrate that the orders sought by Bellamy's cannot properly be made under s 33ZF(1) also necessitate the conclusion that order 1(a) cannot properly be made in the exercise of the Court's implied or incidental power. They contend that such an order is not necessary for the effective exercise of the Court's jurisdiction to determine the substantive proceedings. I reject that submission for analogous reasons to those discussed above. Let me turn to another aspect of principle.
(b) Double representation
36 Bellamy's contends that courts do not usually award costs in a way which accepts double representation. It is said that this is because courts are concerned about costs being incurred unnecessarily by the over-representation of parties with common interests. In its generality, Bellamy's contentions are unremarkable. But let me elaborate further.
37 The general rule is that separate representation of applicants is not permitted without leave. And where multiple applicants with the same interest are separately represented, it will generally be proper for the unsuccessful respondent to be burdened with only one set of adverse costs.
38 And if successful parties with the same interests elect to be separately represented, they bear the onus of demonstrating that a sufficient reason exists for the unsuccessful party to be burdened with more than one set of costs. The burden may be discharged, and multiple applicants will be permitted separate representation, where they have a conflict of interest. But once there is no conflict and if there is separate representation, only one set of costs may be recoverable.
39 In Ex parte McCay; Re Consolidated Press Ltd (1936) 36 SR (NSW) 592 when considering costs in contempt proceedings, Jordan CJ said (at 595):
There are two applications before us, both arising out of the same paragraph, by two of the persons whose actions may be prejudicially affected. Each of these persons was, of course, entitled to bring the matter to the notice of the Court. But it does not follow that, if an order for costs should be made against the respondent, it should necessarily include the costs of both applications. … In the present case, it must have been manifest by the time that the rules nisi were granted that there was no possible cleavage between the two applicants, and no reason why they should not thenceforth join forces in presenting their applications to the Court, apart, of course, from a natural desire to be represented each by counsel of his own choice. But this is a desire that they are not entitled to indulge at another person's expense, in the absence of some good reason.
40 Ex parte McCay involved the question of costs where two applications for contempt of court had been brought by two separate applicants in two libel actions arising out of the same publication. Jordan CJ accepted that both applicants were entitled to bring their own application but noted that "it is most important that contempt applications not be used … as instruments of oppression" (at 595). He further noted that it was manifest by the time the rules nisi were granted in the proceedings that there was "was no possible cleavage between the two applicants". Accordingly, there was no reason why they should not from that time onwards have joined forces. As a result, the order made was that the respondent pay the costs of both applicants in full up to and including the time of the grant of the rules nisi, but that from that time onwards the respondent pay one half of the subsequent costs of each applicant. What is also of note is that a retrospective analysis was made, once the court was appraised of all the relevant facts, of the costs question to deal with an instance of over representation or unnecessary duplication.
41 Now both parties accept that the rule against double representation does not apply where separate representation is necessary because of an actual or potential conflict of interest.
42 Moreover, the applicants seek to characterise the circumstances of the present proceedings as ones where there is such a conflict of interest or potential conflict of interest justifying the separate representation of the McKay applicant and the Basil applicant.
43 But in my view this characterisation is wrong. It is apparent from the latest form of statement of claim filed in each proceeding that the Basil applicant and the McKay applicant are advancing identical claims and seeking identical relief against Bellamy's. There does not appear to be a potential conflict of interest between them. Now the applicants identify certain so-called divergences of interest which to the extent that they can be properly characterised as divergences of interest have resulted from their separate representation. But it is arguable that none of such concerns would exist if the common claims made against Bellamy's were advanced in the one proceeding brought by the one law firm.
44 Perhaps there are divergences such that the two applicants will give different discovery, will have different lay evidence and will have different particulars of loss and damage. Further, there may be other divergences, for example, issues in relation to the opt-out process and class closure, the resolution of the residual overlap of group members in the two proceedings, the content of notices to group members and the common fund application made by the McKay applicant. In addition, there will be separate issues which arise on any settlement, given the dynamics of compromising the McKay open class proceeding, as opposed to the closed Basil class. But these are not divergences of interest, let alone questions of actual conflict of interest. In a sense these divergences are an artefact of having two proceedings. If there had been only one group proceeding, such divergences may have been minimised, eliminated or indeed may have been easily handled in the one proceeding.
45 But to reject the applicants' conflict of interest argument does not entail that I should make the orders sought by Bellamy's. I will return to this later, but for the moment let me delve further into the cases.
46 Ex parte McCay dealt with co-applicants but the principles have been more developed in a line of cases involving multiple defendants in relation to disentitling over representation, although there exists no inflexible rule. In Statham v Shephard and Anor (No 2) (1974) 23 FLR 244 Woodward J said (at 246 to 247):
[T]he court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. I would add to this basic proposition three provisos. In the first place, if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants.
Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation.
Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time.
47 Woodward J concluded that it was reasonable for the two defendants to maintain separate representation (at 248). Again, an important aspect of Statham was whether there was any possible conflict of interest.
48 In Taylor v Owners - Strata Plan No 11564 (No 2) [2013] NSWCA 153, an appellant was ordered to pay only one set of costs with respect to some of the respondents. The application by the appellant was made in reliance upon UCPR rule 51.4(5), which expressly provided that an applicant who considered that respondents need not be separately represented could notify them that objection would be taken to more than one set of costs being allowed between them. The circumstances in that case included that the requisite notice under rule 51.4(5) had been given and there was no conflict between the respondents. It was said by McColl, Basten and Hoeben JJA at [6]:
In Statham v Shephard (No 2) (1974) 23 FLR 244 at 246, Woodward J stated the general principle that, subject to three provisos, "the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases". The first proviso reduced the severity of the "no possible conflict" test, saying that the defendants should make enquiries from the plaintiff if a conflict appeared possible but unlikely. The second proviso was that the defendants might be acting reasonably in remaining at arm's length despite their united opposition to the plaintiff, even, apparently, in the case of "no possible conflict of interest". Whether that proviso was added from an abundance of caution and would generally have no operation need not be determined. It was limited by the third proviso which stated that even if the defendants were acting reasonably in maintaining separate representation "for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time". It might be added that, even if they did not duplicate costs, they would not necessarily obtain separate costs orders if the expense incurred was not one which should reasonably have been borne by the plaintiff.
49 In HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79 an application was also made in reliance upon UCPR rule 51.4(5). In that case multiple respondents were not permitted to recover all the costs associated with two sets of legal representatives. It was noted that by reason of the fact that the only question before the court was a narrow one of construction, there arose no possible risk of conflict between the respondents (at [13] and [16(2)]). In those circumstances, it was found to be unreasonable that the appellant bear the costs of both sets of representation (at [14] to [16] per Bathurst CJ, Leeming and Payne JJA).
50 Both Taylor and HP Mercantile concerned respondents with common interests on the relevant appeal and with respect to which no possible conflict arose. But I would note that in those cases orders were made retrospectively and on the basis of evidence which demonstrated over representation and unnecessary duplication in the past conduct of the proceedings. Accordingly, those cases do not address the making of a forward looking cost capping order against two lead applicants in class actions in which I have already permitted separate representation.
51 At this point it is convenient to refer to Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [2001] RPC 1. The English Court of Appeal overturned the primary judge's order that from a specified date "the first and second defendants shall recover only 1 set of costs between them, to be taxed as if only one firm of solicitors were acting for both parties and the parties were represented by one leading and one junior counsel". Aldous LJ observed that the governing principle was that the losing party should only be required to pay the costs reasonably incurred by the other party. Aldous LJ said (at [72]):
… A losing claimant should ordinarily pay the costs reasonably incurred by the parties that he takes proceedings against. What costs are reasonably incurred by one or more defendants should be ascertained by the costs judge who carries out the assessment. Upon such an assessment duplication and failure to co-operate can be seen and adjustments made accordingly. To decide what costs were reasonably incurred by defendants by considering what costs a losing client should pay, amounts to pre-judging the results of a detailed assessment without considering the facts.
52 Holman J added (at [116]):
… The proper target of the judge should not have been separate representation as such, but any unreasonable duplication of expense by the two sets of representatives. The proper point at which to consider that is on detailed assessment by the costs officer, and not by the arbitrary order which the judge made.
53 Now the observations in Bristol-Myers Squibb support the notion that the relevant inquiry on costs is whether there are unreasonably duplicated costs. But I agree with Bellamy's that one must be careful in how one approaches Bristol-Myers Squibb.
54 That case concerned the position of co-defendants and not co-plaintiffs. So in that context Aldous LJ said (at [71]):
The complaint upheld by the judge was that sometime in February, before the trial in July 1998, that position changed and it became unreasonable for the defendants to be represented by their own solicitors and counsel. That being so, it was not reasonable for the appellants to pay both sets of costs. What was it that meant that it was unreasonable for one of the parties to continue to be separately represented? The judge did not answer that question, except to say that he was not saying that the solicitors acted improperly. His conclusion depended upon what he thought was reasonable for the losing party to pay, not upon an assessment as to whether one of the respondents had acted unreasonably.
55 Aldous LJ went on to say (at [72]) that a "losing claimant should ordinarily pay the costs reasonably incurred by the parties that he takes proceedings against" (my emphasis).
56 Holman J said (at [116]):
Further, I applaud the judge's aim which was to discourage multiple representation by parties fighting, as he put it, a common enemy on a common cause… Further, I was persuaded by Mr Whittle, on behalf of Baker Norton, that in heavy pharmaceutical patent actions of this kind the fact that two large drug companies are facing a common enemy does not, as he put it, "make them friends." Many important commercial decisions, and the consequential effect upon other potential litigation, may lurk just below the surface of a case like this, thereby justifying that each party has its own legal advisers in the fray. The proper target of the judge should not have been separate representation as such, but any unreasonable duplication of expense by the two sets of representatives.
57 Further, in that case the co-defendants with double representation were commercial competitors and "[m]any important commercial decisions, and the consequential effect upon other potential litigation, may lurk just below the surface of a case like this, thereby justifying that each party has its own legal advisers in the fray". So the existence of trade rivalry between co-defendants or co-plaintiffs may justify separate representation. But that is not the present case.
58 In Ong v Ping [2015] EWHC 3258 (Ch), Morgan J said that "if the court considers that the costs of separate representation exceeded what was reasonably necessary to present the Claimants' case and protect their interests, then the court will conclude that the additional costs (in excess of the costs that would have been incurred if the Claimants had instructed a single set of solicitors) were not reasonably incurred and those costs will be disallowed" (at [60(5)]). He held that after a certain point in the litigation before him, it was not reasonably necessary for the two Claimants to have separate representation, and ordered that as and from that point in time the unsuccessful defendant was only liable for the costs which would have been incurred if the Claimants had used one firm of solicitors rather than two. So he focused on whether the costs of multiple parties bringing (or defending) claims against a single defendant (or plaintiff) were reasonably incurred.
59 Bellamy's contends that to the extent that Bristol-Myers Squibb and Ong stand for the proposition that where there is double representation the relevant inquiry on costs is whether there is unreasonable duplication of costs or whether successful litigants have acted unreasonably, such an approach is inconsistent with Australian authority. It prays in aid what Bathurst CJ, Leeming and Payne JJA explained in analogous circumstances that "the ultimate question is not … whether [successful litigants with double representation] … have acted reasonably, nor whether there has shown to be duplication" but rather "whether it is reasonable for the unsuccessful litigant to bear more than one set of costs" (HP Mercantile Pty Ltd at [14]).
60 So, according to Bellamy's, the prism to be looked through from the perspective of the unsuccessful litigant (on this hypothesis, Bellamy's) is whether it is reasonable for it to bear more than one set of costs, rather than whether the co-plaintiffs (on this hypothesis, the applicants before me) had unnecessarily or unreasonably duplicated costs.
61 Alternatively, Bellamy's says that even if the relevant inquiry is whether there is an unreasonable duplication of costs and whether successful litigants have acted reasonably, where there are two or more applicants making the same claims and seeking the same relief against a respondent and there is no conflict or possible conflict of interest between them, separate representation giving rise to duplication of costs is not justified, and the respondent (if unsuccessful) should only be liable for one set of costs. It is said that this is because in those circumstances the duplicated costs are necessarily unreasonable irrespective of the standpoint.
62 Given that I have allowed both proceedings to go forward, in my view the English approach is more suitable in the present context. Further, the practical differences between the formulations may be more perceived than real. It may be reasonable for Bellamy's to pay more than one set of costs in circumstances where I have allowed two class actions to go forward, as a result Bellamy's is not at great risk of yet further fragmentation and multiplicity, and where there has been no unnecessary or unreasonable duplication of costs from the applicants' perspective.
63 Now Bellamy's says that the applicants, not Bellamy's and the unfunded group members in the McKay proceeding, should in any event bear the financial burden of the duplicated costs inevitably arising as a result of the exercise of their "presumptive entitlement", whether those costs are necessary or unnecessary. It says that to the extent they are labelled "necessary", the so-called necessity only arises as a result of the decision by the applicants (or perhaps their respective litigation funders) to have separate representation. It says that once this is appreciated, the necessary/unnecessary duplicated costs distinction relied upon by the applicants is a diversion.
64 I disagree. Even accepting the general proposition consistent with the s 37M over-arching purpose that co-applicants or applicants in separate proceedings raising the same issues where there is no actual or potential conflict of interest ought not be entitled to two sets of costs (for example, the approach that has long applied to co-trustees), nevertheless on the foundation where I have allowed two class actions to go forward, in my view the necessary/unnecessary discriminant is appropriate. Moreover, this can only be properly assessed retrospectively rather than prospectively. But I would say that the co-operation protocol that I have ordered be put in place is designed to minimise any so called duplicated work and expenditure.
65 At all events, on any view Bellamy's will have an opportunity if needed one day to deal with the matter retrospectively. But perhaps such an occasion may never arise. Bellamy's may win at trial or the proceedings may settle such that Bellamy's exposure to an adverse costs order may never arise.
(c) Rule 40.51
66 I have power to make the cost capping orders sought in orders 1(b) and 1(c) of the interlocutory applications particularly under r 40.51 of the Rules. Rule 40.51 provides:
(1) A party may apply to the Court for an order specifying the maximum costs as between party and party that may be recovered for the proceeding.
(2) An order made under subrule (1) will not include an amount that a party is ordered to pay because the party:
(a) has failed to comply with an order or with these Rules; or
(b) has sought leave to amend pleadings or particulars; or
(c) has sought an extension of time for complying with an order or with any of these Rules; or
(d) has not conducted the proceeding in a manner to facilitate a just resolution as quickly, inexpensively and efficiently as possible, and another party has been caused to incur costs as a result.
67 The following principles are relevant to costs capping orders under r 40.51.
68 In considering whether to make a costs capping order, various factors have been identified as being of potential relevance, but whilst those factors may provide useful guidance they are not fixed criteria. The discretion is a broad one and must be exercised judicially having regard to all the relevant circumstances.
69 More generally, a costs capping order provides incentives to the parties to litigate in accordance with ss 37M and 37N and to focus on the substantive issues in dispute.
70 Consistently therewith, a number of first instance decisions of this Court have held that r 40.51 does not permit a unilateral costs capping order. Accordingly, bi-directional costs capping orders have been sought by Bellamy's in orders 1(b) and 1(c). In essence, Bellamy's seeks an order that the maximum costs as between party and party that either the applicants (combined) or Bellamy's can recover is in total $4,456,550.
71 Now before proceeding further I would note that the genesis and purpose of the Court's powers under r 40.51(1) are not irrelevant, although of course my analysis must begin and end with the text itself. The principal purpose of r 40.51 and its predecessor order 62A would seem to be not so much a desire to limit the exposure of a respondent to an adverse costs order in complex and lengthy commercial litigation, but rather with concerns relating to access to justice, public interest, and a desire to limit the costs of all parties in less complex and shorter cases. The rule was adopted following the expression of concerns by a former Chief Justice of this Court. In his Honour's letter dated 6 November 1991 to the President of the Law Council of Australia, he relevantly wrote (see Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509 at 511 per Beazley J):
… There is concern within the Court, reflecting that within the wider community and the legal profession, that the cost of litigation, particularly for persons of ordinary means, places access to the civil courts beyond their reach and thus effectively denies them justice.
A deterrent to the assertion or defence of rights in civil litigation is a fear of the ultimate exposure in terms of the legal costs to which an unsuccessful party may be subjected.
… [T]he object of such a rule would be to define a budget so that the management of the case might be tailored according to its economic limits. It is anticipated that such a rule, if introduced, would be applied principally to commercial litigation at the lower end of the scale in terms of complexity and the amount in dispute, although it could be applied in other cases as appropriate.
72 In Hanisch v Strive Pty Ltd (1997) 74 FCR 384, Drummond J said (at 387) that:
The principal object of O62A is to arm the Court with power to limit the exposure to costs of parties engaged in litigation in the Federal Court which involves less complex issues and is concerned with the recovery of moderate amounts of money, although it may be appropriate for an order to be made under O62A in other cases…
73 But in some cases a costs capping order may work injustice or inconvenience. As Mann J said in Knight v Beyond Properties Pty Ltd [2006] EWHC 1242 (Ch); [2007] 1 All ER 91 at [23]:
Capping costs in advance does indeed involve a degree of speculation which, though it can be carried out when necessary (just as the courts have to assess proper sums for the purposes of security for costs applications) is not easy and has its dangers. The consequences of getting it wrong are in fact more serious that getting the sum wrong in a security application because costs outside the cap are irrecoverable. Costs outside the amount of the security remain recoverable. It is only a partial answer to say that insufficiencies can be dealt with under a liberty to apply. It is possible to remedy insufficiencies at that stage, but it is likely to increase costs if it has to happen (the costs of the defendants in relation to this present application should be noted in this respect - £14,000), and to require a party to explain and justify its future conduct in the litigation to the counter-party, which it would not normally wish or be required to do. If such matters can properly, fairly and reliably be left to detailed assessment post-trial then, on the whole, they should be. Retrospective judgments about such things are likely to be more reliable than prospective judgments.
74 In the exercise of the discretion to make such an order, relevant factors include the damages sought to be recovered, the complexity of the case, whether the applicant's claims are reasonably arguable, whether a party would otherwise be forced to abandon a proceeding if such an order was not made, whether there is a public interest element to the case (see for example Woodlands v Permanent Trustee Company Ltd (1995) 58 FCR 139 at 146 to 148 per Wilcox J involving a preliminary question) and the costs likely to be incurred in the proceedings. Relevantly to the present context it should be noted that if the proceeding is complex forensically and also lengthy then this may militate against the making of such an order. I would note at this point, although I will return to these matters later, that the two class actions before me are not the usual type of case that might warrant a costs capping order.
75 Now I accept that the applicants' submissions focus almost exclusively on the origins of r 40.51 with little regard paid to its text. So much is clear in the applicants' conclusion that r 40.51 could not be used as a means of regulating or managing costs generally. But such an approach to construction displaces the plain meaning of the text and is contrary to the applicable principles of construction. Moreover, the applicants do not point to any ambiguity in the text of r 40.51. And they do not identify any aspect of the statutory text whose meaning might be resolved by reference to the origins of the rule. Rather, they gloss over the words and rely upon purpose and context as ends in themselves. Such an approach is impermissible.
76 In my view, there are no fixed criteria or constraints for the making of a cost capping order under r 40.51 save that it should be bilateral. The discretion to exercise the power is a broad one that must be exercised judicially having regard to all the circumstances of the case.
77 But having said all of that, for reasons that I will explain later I do not propose to make order 1(b) or order 1(c).
A QUINTET OF FALLACIES?
78 The applicants contend that Bellamy's applications proceed on the basis of five "fallacies". I won't dwell on the applicants' idiosyncratic idea of a "fallacy" that would be unrecognisable to a logician.
79 First, in what has been described as the "no multiplicity" fallacy, it is said that Bellamy's submissions assume that it ought not to be exposed to more than one proceeding in respect of the same event or claim. And as I have said, there is no legislative presumption enshrined in Pt IVA in favour of such an outcome. Indeed there is nothing in Part IVA which says that this is the preferred let alone the ideal outcome. Moreover, the opt out regime has the effect that no respondent could ever assume that it would only be exposed to one proceeding with respect to a particular matter. I referred to this reality in my earlier judgment (at [34] to [37]).
80 But as to the "no multiplicity" fallacy, Bellamy's is not now submitting that it ought not be exposed to more than one proceeding in respect of the same event or claim. Rather, what it now submits is that in circumstances where it is exposed to more than one proceeding in respect of the same event or claim, and where those proceedings make identical claims and seek identical relief in circumstances where there is and can be no conflict of interest or cleavage between the two applicants, it should be exposed to only one set of costs as if only one proceeding was brought against it by one set of lawyers. I reject the applicants' argument that Bellamy's has committed the "no multiplicity" fallacy.
81 Second, in what has been described as "the indulgence" fallacy, the applicants contend that Bellamy's treats and describes it as an indulgence to permit the applicants separate representation in the two proceedings. But it is said that I have already ruled that there was nothing vexatious or abusive in the two proceedings being pursued by two applicants on behalf of two cohorts of group members.
82 But as to "the indulgence" fallacy, the applicants' chain of reasoning said to expose this so-called fallacy is flawed.
83 The applicants refer to my judgment where I said that both the Basil proceeding and the McKay proceeding were presumptively entitled to go forward, absent vexation, oppression or abuse of process. Next, the applicants say that I ruled in my judgment that there was nothing vexatious or abusive in the two proceedings being pursued by two applicants on behalf of two cohorts of group members. From these two propositions, which are not disputed by Bellamy's, the applicants conclude that it is a fallacy to characterise as an indulgence the applicants having separate representation to pursue identical claims against Bellamy's. But I agree with Bellamy's that such a process of reasoning does not follow. The question whether duplication of costs justified a stay is different from the question now before me as to who should bear the burden of the additional costs that flow from the applicants having separate representation to prosecute two identical proceedings against Bellamy's. Equating the two questions is erroneous, as the latter question was not answered in my earlier judgment.
84 Bellamy's is not now contending that permitting the applicants to have separate representation to pursue identical claims against Bellamy's in separate proceedings is impermissible. Rather, it says that the additional costs that flow from an indulgence being granted to the applicants should be borne by the applicants in any event. So when Jordan CJ in Ex parte McCay described the desire of two applicants, making the same application against the defendant, to be separately represented by counsel of their own choice as an indulgence, his Honour was not holding that their separate representation was an abuse of process. Rather, it was, to adopt my language in my earlier reasons, their presumptive entitlement. Moreover, the presumptive entitlement to bring separate proceedings and have separate representation is not an absolute and unfettered right. Indeed, but for the fact that in both the Basil proceeding and the McKay proceeding more than 1,000 group members had committed themselves in each proceeding to litigation funding agreements and retainer agreements with their preferred funders and solicitors, I would have permanently stayed one of the proceedings. Accordingly, any presumptive entitlement is not an absolute right and may be overridden. I reject the applicants' submission concerning Bellamy's having committed "the indulgence" fallacy.
85 Third, the applicants have contended that Bellamy's has committed the "no duplication" fallacy by asserting that the interests of justice require that Bellamy's not be exposed to any costs which would not be incurred if there was only one proceeding with one set of lawyers. But the applicants contend that this cannot be so. They say that the outcome of my judgment dictates that Bellamy's is exposed to two proceedings, with the caveat that I have advertised my intention to monitor and if necessary supervise the question of unnecessary duplication and excessive charges in the event that the applicants fail to implement the relevant cooperation protocol. But although my judgment dictates that Bellamy's is exposed to two proceedings, it does not dictate that it must be exposed to all the costs of those two separate proceedings. Indeed, the costs limitation order Bellamy's seeks in order 1(a) was expressly contemplated by me as a possible incident of my decision allowing both proceedings to go ahead. I reject the applicants' "no duplication" fallacy.
86 Fourth, the applicants say that Bellamy's has committed the "impediment to settlement" fallacy by suggesting that the fact that it is exposed to the risk of 'duplicated costs' will have a chilling effect on settlement prospects. But the applicants say that even assuming that the additional costs involved in the two proceedings is $1.5 million as Bellamy's asserts, the suggestion by Bellamy's that additional costs of this type will represent an impediment to the settlement of claims one or two orders of magnitude greater is fallacious.
87 But Bellamy's says that this so-called fallacy is merely asserted without any reasoning to support it. Further, it says that even if I concluded that duplicated costs might, as distinct from will, present an impediment to settlement, that would be sufficient to justify making the orders sought by Bellamy's now. It is said that such an approach is consistent with the overarching purpose set out in s 37M.
88 Now I do not think that Bellamy's has committed any fallacy in this respect but I do consider that its point is over-stated. Moreover, it does not persuade me to make the orders sought. I will return to this question later.
89 Fifth, the applicants submit that Bellamy's has committed "the interests of the unfunded group members" fallacy. The applicants contend that Bellamy's propounds another fallacy concerning what it asserts are the interests of the unfunded McKay group members. Bellamy's asserts that it is unfair that unfunded McKay group members should suffer because of the indulgence afforded to the applicant and the funded group members. The assertion is that unfunded McKay group members will suffer a greater reduction from any settlement by reason of the additional costs referable to the fact that two proceedings with separate representation have been pursued. But the applicants say that this is not so. The McKay group members are only affected by any recovery of costs referable to the McKay proceeding. They are not subsidising the running of the Basil proceeding. Further, certain of the costs common to both proceedings are now being shared across the two proceedings.
90 But Bellamy's says that this argument ignores the commercial reality that any settlement agreed to by Bellamy's will most likely be in respect of both proceedings. And if there is a settlement, then absent the orders now sought by Bellamy's, any amount Bellamy's agrees to pay by way of settlement will inevitably be reduced by the duplicated costs of the two applicants, to the detriment of all group members, including the unfunded group members in the McKay proceeding.
91 Further, it is said that even if there was a separate settlement of the McKay proceeding, the applicants' argument assumes that if the order sought by Bellamy's in order 1(a) is made, the result would be that the McKay applicant's recoverable costs would not be affected, but the Basil applicant's recoverable costs would (exclusively) be reduced, so that as regards the unfunded group members in the McKay proceeding, there would be no greater reduction of any settlement sum without Bellamy's proposed order than with it. But that assumption is invalid. If the order sought in order 1(a) is made, the result would be that both the McKay applicant's recoverable costs and the Basil applicant's recoverable costs would be reduced such that in total they represented the costs of one law firm pursuing the claims in one proceeding, rather than two firms in two separate proceedings. Accordingly, if that order is made, and there is a settlement of the McKay proceeding, the unfunded group members in the McKay proceeding will receive a greater share of the settlement sum than they would receive if that order is not made. It follows that the unfunded group members in the McKay proceeding are adversely affected by the duplicated costs arising by the separate representation of the McKay applicant and the Basil applicant.
92 I reject this last so-called fallacy asserted by the applicants. Bellamy's submissions on this aspect have some force and I will return to this later.
ORDER 1(A)
(a) Bellamy's arguments
93 It is said that order 1(a) should be made because it is clear that Bellamy's costs exposure is greater than it would have been if Bellamy's was defending only one proceeding conducted by one law firm. It is said that the following matters are relevant.
94 First, order 1(a) will only cause detriment to the applicants if the conduct of the two proceedings has resulted in and will in the future result in duplication of costs. In those circumstances, the order should be made. Further, it is said that past duplication of costs is relevant to the question whether order 1(a) should be made because if the applicants' actions are ultimately successful, Bellamy's is exposed to an adverse costs order which will include those past duplicated costs. It is said that the evidence before me showing past duplicated costs provides a proper basis for me to infer that there will likely be future duplicated costs in addition to other evidence before me which demonstrates that there will be such costs.
95 Second, it is said, correctly, that but for the fact that in each of the Basil proceeding and the McKay proceeding more than 1,000 group members had committed themselves to litigation funding agreements and retainer agreements with their respective litigation funders and solicitors, I would have permanently stayed one of the proceedings. Had there been a lesser number of funded group members in one or other of the proceedings such that it would have been uneconomic for that proceeding to continue as a closed class action, that proceeding would likely have been permanently stayed and would not have been re-commenced as a closed class action. In such circumstances, it is said that Bellamy's would now be facing only one class action and be exposed only to one set of legal costs if an adverse costs order were made against it. Now whilst in the circumstances of the present case the applicants and funded group members were held by me to be entitled to their choice of solicitor and funder, it is said that such election should not come at the expense of Bellamy's. The applicants and each funded group member have a common interest. Accordingly, insofar as Bellamy's exposure to costs is concerned, it is said that no justification exists for the applicants and funded group members to engage separate solicitors. Accordingly, it is said that unless the orders sought are made in each proceeding, Bellamy's will be unfairly exposed to the additional costs occasioned by this indulgence, and those additional costs will also be incurred to the detriment of all unfunded group members in the McKay proceeding.
96 Third, Bellamy's has made reference to the evidence concerning duplicated costs.
97 It says that the McKay applicant has adduced in evidence two litigation budgets. The first was filed on 12 May 2017 (2017 budget) and estimated the costs of the McKay proceeding on the basis that one law firm prosecuted one class action against Bellamy's. The second was filed on 12 February 2018 (2018 budget). The 2018 budget was prepared on the basis that the Basil proceeding and the McKay proceeding would be heard together and conducted by two law firms in accordance with the case management orders made by me on 13 September 2017. The disbursements estimated in each budget are substantially the same. But Slater & Gordon's total solicitor costs in the 2018 budget ($2,285,676.95) are only approximately 24% lower than Slater & Gordon's total solicitor costs in the 2017 budget ($3,017,980), notwithstanding that that work is now being shared by Slater & Gordon and Maurice Blackburn. Bellamy's says that it appears that the total solicitor costs to which Bellamy's is now exposed, being the total costs of Slater & Gordon and Maurice Blackburn, is $4,571,354 which is about $1.5 million more than if Bellamy's had been exposed to only one proceeding. Put differently, Bellamy's says that on the McKay applicant's own evidence, Bellamy's is exposed to a significantly larger adverse costs order by reason of there being two proceedings with two law firms acting as compared to one proceeding with one law firm acting.
98 Further, it is said that duplication of costs is established not only by a comparison of the 2017 and 2018 budgets and the unchallenged evidence of Mr Phi, but also by the cooperation protocol between the applicants, their lawyers and their funders. Under that protocol:
(a) the goal is to reduce any duplication, which of course implicitly concedes that there will be duplication;
(b) representatives of both Maurice Blackburn and Slater & Gordon must attend all interviews with potential expert witnesses, in addition to some other conferences, which involves costs that would not be incurred if Bellamy's was facing only one proceeding being conducted by one law firm;
(c) Maurice Blackburn and Slater & Gordon must, in respect of various matters, confer with each other, cooperate with each other, consult with each other, exercise best endeavours to agree with each other, give notifications to each other, coordinate tasks with each other, and negotiate as one with Bellamy's, which involves work that would not be required if Bellamy's was facing only one proceeding being conducted by one law firm;
(d) Maurice Blackburn must have a significant degree of oversight of work performed by Slater & Gordon and Slater & Gordon must have a significant degree of oversight of work performed by Maurice Blackburn, which involves work that would not be required if Bellamy's was facing only one proceeding being conducted by one law firm;
(e) Maurice Blackburn and Slater & Gordon must review each other's professional fees, which involves work that would not be required if Bellamy's was facing only one proceeding being conducted by one law firm; and
(f) the applicants have jointly retained multiple counsel, such that, according to Bellamy's, each of those counsel and other counsel retained by the applicants must maintain ongoing familiarity with the proceedings thereby increasing the cost of the proceedings.
99 Bellamy's says that this is unfair to it. Further, it says that it is also not in the interests of group members and particularly not in the interest of unfunded group members in the McKay proceeding. If the McKay proceeding and the Basil proceeding settle, and orders are not made as sought in the interlocutory applications, this will likely mean that additional costs will need to be recovered from the settlement thus likely reducing the amount available to all group members. Further, Bellamy's says that although it might be said that insofar as funded group members in both proceedings are concerned it is not 'unfair' that they suffer this reduction as it is a consequence of their own choice to retain separate lawyers, such a contention cannot be maintained in respect of the unfunded group members in the McKay proceeding. They have made no such choice. It is said that they should not suffer because of an indulgence afforded to the applicants and the funded group members in both proceedings.
100 Fourth, Bellamy's contends that the order sought is consistent with and is framed using the language of my observations in my earlier judgment at [118]. On this point the applicants submit that Bellamy's is seeking to re-agitate matters considered in my principal judgment, but I disagree. The question in the earlier judgment was whether inter-alia duplication of costs justified a stay of one or other of the two competing open class actions. But the question now before me is who should bear the burden of the additional costs that flow from the applicants, who are separately represented, prosecuting two identical proceedings against Bellamy's. In my earlier judgment, I held that each applicant was entitled to maintain a separate proceeding against Bellamy's with the class in the Basil proceeding ordered to be closed. But in so doing, I did not answer the separate question of costs. So much was made clear by what I said (at [118]):
Indeed, I expressed my view to counsel at the hearing of the stay applications that in relation to any potential exposure to an adverse costs order, I may consider making orders to achieve the result that the respondent be only exposed to one set of legal costs vis-à-vis the applicants as if there had been only one set of proceedings.
101 Fifth, Bellamy's says that more generally if parties with a common interest seek the indulgence of their own separate representation, it is both necessary and appropriate that they bear the costs of that indulgence. That is especially so where those costs will inevitably represent an impediment to settlement, particularly where settlement is the mechanism by which class actions are generally resolved. It is said that the evidence of the McKay applicant referred to earlier shows that in the present case the cost of the indulgence is around $1.5 million.
(b) Analysis
102 Before I analyse the main arguments let me deal with some introductory matters.
103 Let me say at the outset that when I refused Bellamy's stay application(s), I did not impose as a precondition of the two proceedings being permitted to continue that the applicants conduct the proceedings in a manner guaranteed to produce the outcome that Bellamy's would be exposed to only one set of costs as if there had been only one proceeding. Rather, I contemplated that if the respective applicants and their legal teams did not co-operate in a manner designed to reduce duplicated work, it might be necessary to adopt additional measures designed to control costs. I indicated an intention to consider Bellamy's exposure to adverse costs if it were demonstrated that the applicants had failed to implement cooperation measures designed to reduce that exposure. So what I had in mind was that additional costs control mechanisms might be necessary if there was shown to be unnecessary duplicated costs by reason of the absence of cooperation between both applicants and between their advisers to achieve the objectives of minimising duplicated work and costs.
104 Now there is no evidence before me that causes me concern in this regard. There has for some time been a cooperation protocol that encapsulates my proposed directions in order to reduce the overall costs. And the applicants' lawyers have successfully cooperated in accordance with this protocol and my directions. Moreover, there is no reason to conclude that this will not continue.
105 Indeed the evidence before me concerning the past conduct of both proceedings demonstrates that the cooperation protocol is operating as I intended and is meeting my objectives. There has not been unnecessary duplication of work between the applicants' legal teams. It is evident from the affidavits of Mr Chuk and Mr Slade that the respective applicants and their legal teams have co-operated in the conduct of the two proceedings since my judgment on the stay question. This has not only included the adoption of a largely unified approach to the two proceedings as between the applicants and Bellamy's that has minimised the expense occasioned to Bellamy's by the existence of the two proceedings, but it has also involved the adoption of measures calculated to minimise the internal duplication of work thereby minimising the expense occasioned to group members by the existence of the two proceedings. Under the cooperation protocol, tasks arising from issues common to the proceedings are divided between the firms, so that group members in each proceeding taken together are not exposed to the costs of each firm undertaking the same work.
106 In light of the cooperation that has occurred to date, the existence of the cooperation protocol and the contemplated next steps in the proceedings, I am not able to conclude that there is likely to be any unnecessary duplicative work and expense in the future. The experience of the practitioners involved and their approach to cooperation to date gives me confidence that there will not be unnecessary duplicative work in the future.
107 Further, the number of matters which have needed to be attended to which have been unique to either of the two proceedings has declined since the completion of the class closure process. As a consequence, the requirement to brief separate counsel has been reducing over time, and will reduce still further.
108 Now Bellamy's interlocutory applications appear to have been initially premised on a perception that more counsel than was reasonable had been engaged on behalf of the applicants to undertake various tasks. But it now appears that all but two of its initial complaints of this type have fallen away. Of the circumstances that were initially identified, the two upon which Bellamy's appears to maintain its reliance are the apparent involvement of five counsel on two occasions in the preparation of various amended versions of the statements of claim. But as Mr Chuk has explained, Bellamy's criticisms have proceeded on a misapprehension.
109 Further, order 1(a) may be inappropriate because it may deprive the applicants of costs to which there can be no proper objection. By way of example, if order 1(a) was made the applicants would not be able to recover some of their otherwise party/party costs in respect of the appearance at the case management hearing on 8 December 2017 of their respective counsel and the attendance of their respective solicitors, notwithstanding the fact that there remained applicant-specific issues including the content of the opt-out notice in the Basil proceeding, and the fact that the orders made on that date required various tasks to be undertaken that were unique to each applicant and class. Further, there were a number of applicant specific tasks which arose out of the orders made on 8 December 2017 including discovery, provision of full particulars of the applicants' cases on causation, loss and damage and the distribution of opt-out notices, which required each firm and funder to manage the respective group members' responses to the relevant notice(s) including the collection of trade data. Order 1(a), if made, would have the effect that the applicants would not be entitled to recover the costs of those exercises undertaken on behalf of both applicants and the group members each of them represents. And this is despite the fact that such work was not in one sense duplicative, and was required to be undertaken in order to properly advance and represent the interests of the McKay group members and the Basil group members.
110 Further and more generally, it may be accepted that the relevant duplicated costs are principally the additional costs incurred by reason of having two sets of lawyers, rather than one set of lawyers, dealing with the issues common to both proceedings and the additional costs incurred by reason of the need for each of the McKay applicant's lawyers and the Basil applicant's lawyers to deal with matters unique to each proceeding. Both of these categories of additional costs are duplicated costs in the sense that they are costs that would not be incurred if there was only one proceeding with one set of lawyers acting for one applicant. And moreover, even if there were unique costs, there would be only one set of costs and not two sets of costs if there was only one proceeding.
111 In this regard much of the evidence led by the applicants is directed to establishing that the additional costs in these two categories have been and will continue to be reasonably incurred, in the context of and in light of there being two proceedings. But although these additional costs may have been and may be reasonably incurred from the standpoint of the two applicants and the funded group members in both proceedings who have retained Slater & Gordon or Maurice Blackburn to act on their behalf, Bellamy's says that the question for the purposes of the present applications is not whether these additional costs have been and will continue to be reasonably incurred from the standpoint of the applicants, the funded group members, Slater & Gordon and Maurice Blackburn. Rather, it says that the question is whether it is reasonable for Bellamy's and the unfunded group members in the McKay proceeding to be exposed to the burden of these additional costs, rather than these additional costs being borne by the applicants and the funded group members or their respective litigation funders.
112 Now I accept the force of what Bellamy's puts to some extent, particularly when considered solely from its perspective. But as I have said, in the present context and where I have determined to permit both actions to go forward, I prefer the English approach. In that circumstance, I am not satisfied that it has been demonstrated that there has been or will be any unnecessary or unreasonably duplicated work or costs performed by the applicants when taken together. Moreover given that I have allowed both cases to go forward with separate representation where justified on specific separate questions, it is not necessary to now demonstrate any actual or potential conflict of interest for the relevant costs recovery. And in that context, rules developed more generally against double representation are not of great assistance.
113 But there is another problem with Bellamy's position, and it concerns the matter of timing.
114 Bellamy's says that costs capping orders should be made now. It says that costs capping orders are generally made at an early stage of proceedings. It says that the benefit of such orders being made at this stage of the proceedings is that it will facilitate the disciplined and cost-effective conduct of the proceedings and focus the parties on the real issues in dispute and facilitate settlement. It says that large claims for legal costs by class action applicants are significant impediments to settlement and therefore not in the interests of group members, because applicants' solicitors usually require payment of their legal costs in full out of any proposed settlement sum before any portion of that proposed settlement sum is allocated to group members' claims.
115 But I do not see the pressing need to now make the orders sought by Bellamy's.
116 First, and as I have already set out, I have made directions designed to reduce any duplication of work, inefficiencies from two proceedings and any costs flowing therefrom. Of course what I have put in place is not a perfect solution, but it is proportionate and has some advantages in achieving the said reductions. Further, I can make orders later designed to further reduce such problems if the need arises.
117 Second, let me deal with Bellamy's settlement point. Bellamy's says that it is not in the interests of justice to defer making costs capping orders and to deal with the matter retrospectively as this would result in uncertainty for all parties going forward and be inimical to and may frustrate any possible future negotiated settlement. It is said that the parties need to know now whether and which of the orders sought by Bellamy's will be made. It is said that if the matter is left undetermined, any further negotiations between the parties with a view to settlement will be undertaken without the benefit of them having clarity on the important question of the level of costs the applicants will be entitled to if they are ultimately successful at trial. It is asserted that this would be a significant impediment to any further settlement negotiations.
118 Now if order 1(a) was to be made it would only bite in relation to adverse costs orders. In other words it could not attach on the occasion of any settlement. In that scenario there would by definition be no adverse costs order, or at most only one made by consent anyway which would not be material to the present debate. But Bellamy's responded that order 1(a) would have utility even in the context of a settlement. It submitted that if order 1(a) was made, then on an approval application under s 33V the Court in assessing the reasonableness of the amount of the costs to be paid out of the settlement would have regard to that order. Frankly, I found Bellamy's settlement arguments to be a stretch in terms of the utility of making order 1(a) as being advantageous to a settlement negotiation. Moreover, the sums likely to be discussed at a mediation for an overall settlement are likely to be one or two orders of magnitude above the delta costs amount calculated from the difference in the applicants' total costs with and without order 1(a).
119 Third, Bellamy's says that making order 1(a) now rather than deferring the question is consistent with the authorities on costs capping orders of the type sought in order 1(b) or order 1(c). It is said that the same considerations militate in favour of order 1(a) being made promptly, so that the parties know sooner rather than later where they stand on these costs issues, and can ensure that their ongoing conduct and management of the proceedings is informed by the effect of that order. But in my view the directions that I have already made are adequate and designed to reduce the duplication and inefficiency difficulties. Moreover, I can further modify those directions and tighten them if necessary.
120 Fourth, the applicants in each proceeding, the funded and unfunded group members in both proceedings, and of course Bellamy's all enjoy the benefit and protection of the Court's supervisory role in respect of costs. Now this supervisory role is made more explicit in relation to group members under Part IVA of the Act. But Bellamy's is also a beneficiary of the necessary role that the Court can play in the overall supervision and regulation of the question of costs. Bellamy's has benefited from, and will continue to benefit from, the directions made by me regarding the applicants' cooperation in the conduct of the proceedings. To make the orders in the prospective and blunt form now sought by Bellamy's would be to unnecessarily fetter the informed exercise of discretion which is properly to be undertaken by me in relation to costs, either on the occasion of an application for approval of a settlement pursuant to s 33V, or on a taxation of costs after trial. It is in that context that any unnecessary duplicated work or any excessive costs charged by any party including Bellamy's can most appropriately be assessed.
121 In summary I consider that any further costs liability question is best dealt with retrospectively rather than prospectively.
122 Let me make three other points.
123 First, it should be noted that two sets of legal representatives with different approaches may in some cases facilitate an increased settlement sum over and above what one set of legal representatives might achieve, and well over the additional costs involved. Such an outcome would be advantageous to the applicants and group members. No doubt this is speculation to some extent, but such a scenario ('two heads better than one') is not unrealistic. Bellamy's professed altruism on behalf of group members particularly unfunded McKay group members did not take this into consideration, unsurprisingly, when considering what was in the best interests of group members. Now I raise this only to demonstrate that Bellamy's professed concern for group members was imperfect to say the least. It put more attractive arguments when focused on its own position and its own self-interest.
124 Second, the applicants contend that order 1(a) risks unfairly prejudicing the applicants because no similar restriction is imposed with respect to the costs that Bellamy's can recover. But Bellamy's says that it has only retained one law firm to represent it in this dispute, and so if Bellamy's is successful at trial, the applicants will only be exposed to an adverse costs order in respect of the costs of one legal team, not two. Of course, what Bellamy's says is true in one sense. But the one legal team could duplicate some work defending both proceedings. To deal with this possibility (if necessary) I consider that if I had otherwise been persuaded to make order 1(a), I would have made it bilateral. I note that orders 1(b) and (c) are bilateral.
125 Third and for completeness, in terms of the timing of order 1(a) if I had been otherwise persuaded to make it, it seems to me that it would not have been appropriate to make it operate from any earlier than the time I resolved the competition between the two proceedings at the time I delivered my judgment on the stay applications. At that time I can be certain that there was no potential for conflict between the applicants, between their lawyers, and between the litigation funders. Now Bellamy's says that the only relevant conflict to consider is that between the applicants, and moreover that there was no such conflict at the time of filing the second proceeding. But I am not so convinced that only the conflict, if any, between the applicants needs to be considered. Indeed, each applicant represents its own group members and would be concerned about the legal resources and funding resources for their own proceeding. The applicant in each case had an interest in maintaining its proceeding as the open class action. A broader lens needs to be considered. In any event, even if the narrower lens is looked at, I am not certain that I could say that there was no possible potential for conflict before I ruled on the stay application(s). Given that I am not making order 1(a) I do not need to discuss this further.
126 For all the above reasons I refuse to make order 1(a).
ORDERS 1(B) AND 1(C)
(a) Bellamy's arguments
127 In addition to order 1(a), Bellamy's contends that the costs capping orders sought in order 1(b) or order 1(c) should be made. It says there is probative evidence before me of what Bellamy's costs exposure would have been in the hypothetical situation that it had been defending one proceeding conducted by one law firm. It says that this evidence provides a proper basis to make a bidirectional costs capping order. Let me elaborate on its arguments.
128 First, it says that its arguments advanced concerning order 1(a) strongly militate in favour of making cost capping orders in both proceedings.
129 Second, it says that the cost capping orders sought in order 1(b), alternatively order 1(c), fix a bi-directional costs cap by reference to specific sums that are based on evidence filed by the McKay applicant. The McKay applicant has previously filed evidence and made submissions as to its budgeted costs, assuming that only one proceeding was conducted by one law firm against Bellamy's (i.e. the 2017 budget). According to Bellamy's, the McKay applicant did so to obtain a benefit on the stay applications made by Bellamy's. But having done so, Bellamy's contends that it is not now open to the McKay applicant on the present costs capping applications to adopt a different position and to say that its budgeted costs on the now hypothetical scenario of Bellamy's defending one proceeding conducted by one law firm would have been materially higher than the 2017 budget. Moreover, so Bellamy's contends, the affidavit of Mr Chuk dated 5 October 2018 filed on behalf of the McKay applicant does not seek to say that there are changed circumstances unforeseen at the time the 2017 budget was prepared which now warrant any uplift in that budget.
130 Bellamy's says that the uncontested evidence establishes that because Bellamy's is facing two identical proceedings conducted by two law firms, it will be exposed to a much larger adverse costs order than if Bellamy's was facing one proceeding being conducted by one law firm making those same claims. It says that the uncontested evidence of the McKay applicant quantifies the costs to which Bellamy's would have been exposed in the hypothetical situation that it had been defending one proceeding conducted by one law firm. It says that the McKay applicant's evidence on that issue is probative and also represents the best evidence of the likely costs to which Bellamy's would have been exposed in the hypothetical situation that it had been defending one proceeding conducted by one law firm. And it says that as a matter of principle, the McKay applicant cannot now adopt a different position as to its budgeted costs in that hypothetical situation. It cannot approbate and reprobate in the context of this litigation. Therefore it says that I should rely on the McKay applicant's evidence to fix the quantum of the costs cap.
131 Now I accept that a party cannot both approbate and reprobate. Such a "principle" originally arose in the context of wills and estates. Equity fastened "upon the conscience of a party taking under a deed or will" and required that the party "choose between taking the benefit and accepting the burden of any stipulated conditions or rejecting the benefit" (Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at [57] per Gummow, Hayne and Kiefel JJ). Indeed, the formulation of the "principle" that you cannot both approbate and reprobate is synonymous with the doctrine of equitable election. I would note that equitable election differs from the common law principle of election, the latter of which puts a person to an election between inconsistent rights. Contrastingly, equitable election raises the question of intention based on knowledge. Now the "principle" that one cannot both approbate and reprobate has extended beyond wills and has been applied in other contexts, including the conduct of litigation (see In Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320 at 1329 per Browne-Wilkinson VC). But in any event I do not consider that the "principle" has application in the present context as I will explain in a moment.
132 Third, it is said that there would be no utility in my now ascertaining the applicants' likely budget for the conduct of the proceedings, as such a budget would necessarily be based on two law firms conducting two proceedings against Bellamy's. Now Bellamy's accepts that such a budget would be relevant on the question of duplication, but it says that such a budget would have little relevance on the question of what Bellamy's costs exposure would have been in the hypothetical situation that it was defending one proceeding conducted by one law firm. This is the relevant question that Bellamy's says that I must consider when fixing a costs cap.
133 Fourth, Bellamy's brazenly contends that there is something at least analogous to a public interest element in its application insofar as the position of unfunded group members is concerned. It is said that the Court has a supervisory and protective role towards group members and should be concerned to ensure that the interests of those who are absent, but represented, are not prejudiced by the conduct of the litigation on their behalf. In this regard it says that unfunded group members in the McKay proceeding have not sought the indulgence of a preferred law firm and funder. It says that there is no reason why any settlement sum they receive should be reduced by reason of the additional costs associated with two proceedings, conducted by two law firms, being prosecuted against Bellamy's in circumstances where all group members and both applicants have a common interest.
134 Fifth, Bellamy's says that because the costs cap sought by Bellamy's is bi-directional, there is no risk of any party conducting litigation in a manner that enables it to take any tactical advantage of the costs cap.
135 Sixth, Bellamy's says that the orders sought by it can be made without reference to Bellamy's costs budget. If Bellamy's budget is more than the costs cap that is ordered, then Bellamy's will suffer detriment. But if Bellamy's budget is less than the costs cap that is ordered, then Bellamy's does not seek a lower costs cap as that would prejudice the applicants. Importantly, so it says, costs capping orders must apply equally to the parties such that under r 40.51 a different dollar cap is not applied to each party.
136 Seventh, notwithstanding that costs capping applications are generally forward looking, Bellamy's contends that past duplication is also relevant and that this is especially so in this case. When these applications were first raised with me, I noted that there ought to be no prejudice to Bellamy's by reason of it making its costs capping applications at a later time. Accordingly, it says that the orders now sought should address both past and future duplication of costs so as to avoid any prejudice otherwise flowing from the delay in making the applications.
(b) Analysis
137 Generally speaking I reject Bellamy's submissions.
138 First, it may be doubted that order 1(b) or order 1(c) adds substantially to order 1(a). On Bellamy's arguments sufficient protection would be achieved by merely making order 1(a) rather than additionally orders 1(b) or 1(c) based upon preliminary and unreliable budgets. But as I have said, not even order 1(a) is necessary at this stage.
139 Second, Bellamy's has relied on a comparison of the budget prepared in the McKay proceeding on or around 12 May 2017 with one prepared some nine months later on 12 February 2018, which it says shows that it is exposed to $1.5 million more in solicitor costs than if it had been exposed to only one proceeding. That figure is the result of an analysis undertaken by Ms Beverley Newbold, solicitor for Bellamy's. She has fixed upon what she says represents "the likely approximate total recoverable taxed costs (as between party and party) if there was one proceeding brought against Bellamy's". But I reject Bellamy's submissions which would require me to impose costs caps on unsatisfactory and out of date estimates.
140 As I have indicated to the parties, it is only in the circumstance where I have determined to contemplate the imposition of any species of costs cap that the parties will then be invited or directed to undertake the time consuming and expensive task of preparing up to date litigation budgets with respect to the proceedings. Moreover, it would be expected that in such a phase, the parties would provide detailed budgets and expert cost consultant reports to assist my assessment.
141 Third, the applicants have not "approbated and reprobated" with respect to the 2017 and 2018 budgets previously submitted by them. Rather, they have sought only to explain the context including the foundation upon which those budgets were prepared. In my view those budgets were opinions and forecasts then diligently and honestly prepared and given in the light of the circumstances then pertaining.
142 The 2017 and 2018 budgets were prepared nine months apart. And obviously more was known about the proceedings by the time the 2018 budget was prepared. For example by that time there had been developments in relation to the pleadings. The applicants had on 13 October 2017 filed amended statements of claim. On 1 December 2017, the respondent filed an application to strike out the amended statements of claim in whole or in part. The applicants filed a further amended statement of claim on 18 December 2017. Further, there had also been developments in relation to matters including the opt out regime and registration for class closure. In addition, by the time the 2018 budget was prepared, pursuant to the cooperation protocol and from the date of the common fund order the allocation of work as between the applicants' legal representatives commenced to be split on the basis that the percentage allocation would reflect the percentage of aggregate assessed losses of group members in each proceeding. In those circumstances, Bellamy's assumption that the McKay parties' budget ought to have fallen by something in the order of 50% after my primary judgment is unsound. Moreover, consistently with the cooperation protocol, Maurice Blackburn has had significantly reduced involvement in the conduct of legal work in relation to common issues. Of course the 2017 and 2018 budgets are not irrelevant. But as I have said, if I were otherwise minded to give consideration to litigation budgets at all in the context of costs supervision, the parties including Bellamy's would in that event and at that time be required to prepare current litigation budgets.
143 Fourth, there is another problem with Bellamy's approach. Let it be assumed that I should now take some additional measure to supervise or manage costs. It seems to me that for any sensible method of costs supervision to be adopted, it ought proceed on the basis that it is relevant to have regard both to what the applicants' lawyers predict will happen in the litigation and to what Bellamy's lawyers predict will happen in the litigation, as well as what is in fact occurring in the progress of the litigation. Indeed I reject any approach which did not require Bellamy's to put forward its own budget estimates for my consideration on the quantum of any costs gap.
144 Now Bellamy's has strenuously resisted any suggestion that I or the applicants should be privy to its litigation budget. But the refusal by Bellamy's to permit perusal of its litigation budget potentially suggests that Bellamy's invites a situation in which if proposed order 1(b) or order 1(c) are made it may enjoy a tactical advantage. It will have the advantage of the applicants revealing their hand but not its own. Further, it may be in a better position to wear any burden of the additional costs incurred over and above the cap, as compared with the applicants' appetite and their funders' appetite to wear such a burden. I need not speculate further as I do not propose to make the orders sought.
145 Fifth, a budget costs regime is inapt to these proceedings. The litigants are not persons of ordinary means and these proceedings could not be described as commercial litigation at the lower end of the scale in terms of either the complexity of the dispute, its size or the amount in issue.
146 Sixth, the nature of these proceedings and the relief sought by the applicants takes the proceedings outside the usual types of cases in which orders under r 40.51 have been made.
147 Seventh and relatedly, no public interest point arises of the type with which applications under r 40.51 are sometimes concerned. Now Bellamy's submissions appear to suggest that something analogous with a public interest element arises with respect to the interests of unfunded group members in the McKay proceeding. But the position of unfunded group members falls to be governed by my supervision, including in the context of a common fund order and in the future with respect to any application for approval of a settlement under s 33V.
148 Eighth, unlike some other cases there is no question here of any of the applicants or Bellamy's being forced to abandon the proceedings or its defence if a cost capping order were not to be made.
149 In summary I am not presently satisfied that any costs capping order should be made, and certainly not on the limited material before me. Moreover, given the cooperation protocol in place, I would prefer to deal with these further questions retrospectively.
CONCLUSION
150 For the foregoing reasons I will dismiss each of Bellamy's interlocutory applications.
151 I will reserve the question of costs for the moment, although my preliminary view is that it is appropriate to treat the applicants' costs of these applications as their costs in the cause, but to otherwise make no order for costs. I will hear further from the parties on this question.
I certify that the preceding one hundred and fifty-one (151) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.
Associate:
Dated: 25 February 2019
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Howitt-Steven v Unisuper Ltd [2002] FCAFC 272
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FEDERAL COURT OF AUSTRALIA
Howitt-Steven v Unisuper Ltd [2002] FCAFC 272
SUPERANNUATION – appeal from decision of single judge dismissing appeal on questions of law from decision of Superannuation Complaints Tribunal – appellant sought to claim disablement benefits from his Superannuation Fund – claim made in 1997 for "severe depression and anxiety, insomnia" – claim refused by Trustee on the basis of an undisclosed medical condition – appellant had suffered an "adjustment disorder and secondary alcoholism" in 1994 which he had not disclosed at the time he joined the superannuation scheme – Tribunal, on a different ground, dismissed the complaint as appellant had not provided an "accurate statement" – amendments to the Superannuation Trust Deed in July 1997 – decision of Tribunal in October 1997 - whether amended Deed applied to appellant – construction of Deed – point not taken before primary judge
APPEALS – role of appellate court – appeal from decision of a single judge on appeal from an administrative tribunal on questions of law – whether new points allowed to be taken on appeal – consideration of the role of the appellate court – whether exceptional circumstances
Superannuation (Resolution of Complaints) Act 1993 (Cth), ss 19, 46
Superannuation Industry (Supervision) Act 1993 (Cth), ss 100, 101
Insurance Contracts Act 1984 (Cth)
Federal Court of Australia Act 1976 (Cth), ss 19, 22, 24, 27, 28
Federal Court Rules, O 13
National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562, referred to
Local Government Superannuation Board v Thorne [2002] FCA 848, considered
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, referred to
Cubillo v Commonwealth [2001] FCA 1213 at [255], referred to
CDJ v VAJ (No 1) (1998) 197 CLR 172, cited
Allesch v Maunz (2000) 173 ALR 648, referred to
White v Minister for Immigration and Multicultural Affairs (2000) 96 FCR 511, discussed
Coulton v Halcombe (1986) 162 CLR 1, referred to
Branir Pty Ltd v Owston Nominees (No. 2) Pty Ltd [2001] FCA 1833, considered
Crampton v The Queen (2000) 176 ALR 369, considered
Reischauer v Knoblanche (1987) 10 NSWLR 40, referred to
Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290, referred to
Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (`1990) 20 NSWLR 310, referred to
White Property Developments Ltd v Richmond Growth Pty Ltd & Ors [1998] FCA 26,
referred to
White Property Developments Ltd v Richmond Growth Pty Ltd & Ors [1998] FCA 1422,
cited
Fry v Commission for Superannuation (1984) 2 FCR 472, applied
Liversidge v Anderson [1942] AC 206, referred to
Simmons Ltd v Hay (1964) 81 WN (Part 1) (NSW) 358
Notcutt v Universal Equipment Co (London) Ltd [1986] 1 WLR 641
Finch v Sayers [1976] 2 NSWLR 540
Butterworths "Practice and Procedure High Court and Federal Court of Australia" at [33,025.5]
WARREN ARTHUR HOWITT-STEVEN v UNISUPER LTD
N1592 of 2001
MADGWICK, DOWSETT & STONE JJ
28 AUGUST 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N1592 of 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: WARREN ARTHUR HOWITT-STEVEN
APPLICANT
AND: UNISUPER LTD
RESPONDENT
JUDGES: MADGWICK, DOWSETT & STONE JJ
DATE OF ORDER: 28 AUGUST 2002
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N1592 of 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: WARREN ARTHUR HOWITT-STEVEN
APPLICANT
AND: UNISUPER LTD
RESPONDENT
JUDGES: MADGWICK, DOWSETT & STONE JJ
DATE: 28 AUGUST 2002
PLACE: SYDNEY
REASONS FOR JUDGMENT
MADGWICK J:
INTRODUCTION
1 This is an appeal from a judgment of a judge of this Court by which her Honour dismissed an appeal to the Court on questions of law from a decision of the Superannuation Complaints Tribunal ("the Tribunal") brought pursuant to s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Complaints Act").
2 The appellant, Mr Howitt-Steven, is a permanently disabled former clerical employee of the University of Sydney. The respondent ("the Trustee") is the Trustee of the Superannuation Scheme for Australian Universities ("the Fund" or "the Scheme") established by a trust deed ("the Deed") that covers, among others, administrative clerical staff at that and other universities.
3 The Trustee refused the applicant's claim on the basis that he had a pre-existing, undisclosed medical condition. When the appellant complained to the Tribunal, it dismissed his complaint upon a different basis, namely that he had provided a statement as to his previous health which was not "accurate".
BACKGROUND
4 The following material (adopted from a written summary outlined by the Tribunal) indicates the immediate background to the matter:
· The appellant was born on 16 February 1946 and, at the time of the hearing before the Tribunal was 54 years of age.
· On 18 October 1994, whilst employed elsewhere, the appellant was admitted to hospital for one week suffering from a condition diagnosed as adjustment disorder and secondary alcoholism. The appellant explained (in a letter to the Trustee in July 1997) that his increase in alcohol consumption in 1994 was due to work related stresses, was short lived and did not include anxiety or depression.
· The appellant was employed in an administrative capacity by the University of Sydney from January 1995.
· When the appellant joined the Fund on 10 April 1996 he wrote "no" on the Health Declaration Form in response to a question which asked if he had ever had a mental or nervous disorder.
· On 11 February 1997 the appellant ceased attending at work (and permanently ceased employment on 5 June 1998).
· On 10 April 1997 he applied for payment of a disablement benefit describing his illness or injury as "severe depression and anxiety, insomnia". In his disablement claim nomination form, he said symptoms of his condition had first appeared in November 1994 and that he had been hospitalised because of them in November 1994. This form was supported by a form completed by Dr S who first attended the appellant on 19 February 1997 and said that the appellant's symptoms first appeared in November 1994.
· The disablement claim was denied by the Trustee on or before 5 June 1997. The Trustee's original decision was that the appellant was "not eligible to claim (a disability benefit) in accordance with Clause B.13 of the Trust Deed". The reason given was that the appellant had failed to disclose his symptoms of depression and anxiety when he applied for Membership of the Fund in April 1996.
· A complaint was lodged with the Trustee in respect of its decision and was received by the Trustee on 30 June 1997.
· The Deed was amended on 1 July to make Cl B.13 more liberal.
· The Trustee reviewed the complaint on 13 October 1997 and decided to apply cl B.13 in its amended form, but nevertheless affirmed its original decision. The appellant was notified of this decision on 17 October 1997.
· A complaint was received by the Tribunal on 5 November 1997. The appellant asserted that he had filled out his claim form to the best of his ability at the time and had not attempted to conceal any medical information. He said he had attempted to correct incorrect information on his original claim form and he claimed that the Trustee should have given him a more favourable review. The appellant asserted that the decision of the Trustee that he was not eligible for a disablement benefit was unfair and unreasonable.
· On 5 June 1998, the appellant permanently ceased employment.
· The appellant claims that the condition he suffered from in 1994 and the condition which was the basis of his claim in April 1997 are not the same. He denies he was suffering from the condition complained of at the time he joined the Fund in April 1996.
· The disablement benefit amount is an annual pension of $19,855.00 or, if the appellant is determined to have had an undisclosed pre-existing condition, a single lump sum of $15,200.00 paid as a restricted benefit in accordance with cl B.13 of the Trust Deed and calculated in accordance with the formula set out at cl B.6. [Thus, if the applicant has say thirty years of life in front of him, the pension would be worth some hundreds of thousands of dollars in present day values, rather than the mere $15,200.00 lump sum which the Trustee determined he should be paid.]
· No benefit has been paid to the appellant by the Trustee.
· The appellant applied for Department of Social Security (DSS) sickness benefits on 22 May 1998 and as at 2 August 1999 was in receipt of a Disability Support Pension.
JURISDICTION OF THE TRIBUNAL
5 This complaint was investigated by the Tribunal only after confirmation that the Trustee had dealt with the complaint under s 101 of the Superannuation Industry (Supervision) Act 1993 (Cth) ("SIS Act") – see [16] below. The Tribunal therefore determined that it had jurisdiction pursuant to s 19 of the Complaints Act. Section 19 provides:
"(1) The Tribunal cannot deal with a complaint under section 14 or 14A unless the complainant satisfies the Tribunal that:
(a) a complaint about the same subject matter was previously made to an appropriate person under arrangements for dealing with such complaints made under section 101 of the Supervision Act; and
(b) the complaint so made was not settled to the satisfaction of the complainant within 90 days or such longer period as the Tribunal allows."
6 The statutory framework within which the Tribunal is to function was unexceptionably described by the primary judge, drawing on National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562 at 565. It need not be again rehearsed here.
THE TRUST DEED
7 It appears that the relevant Deed was established in 1982 and was subsequently amended on a number of occasions. The provisions of the Deed were replaced in their entirety by a Deed of Amendment dated 16 January 1990, which was subsequently amended numerous times.
8 From its recitals and cl 5, it appears that the Deed's purpose was to establish a superannuation scheme for Australian universities in respect of the relevant "superannuable classifications" of employees. It appears that the Scheme extends at least to the University of Sydney, a large employer, and its large clerical-administrative staff. The present significance of these matters is that there is no reason to believe that the framers of the Deed and its various amendments were immune from general community and relevant employees' expectations that the latter would be treated fairly and in a measured way, appropriate by community standards. These circumstances are part of the factual matrix against which the Deed is to be interpreted: in Local Government Superannuation Board v Thorne [2002] FCA 848, Mansfield J said (at [33]-[35]):
"There are in effect two possible alternative constructions of Rule 21. …
In selecting which of those two alternatives is the appropriate one, I am mindful of the nature of the Scheme and of The CCA Plan. In Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 at 1610, Warner J said:
'… the court's approach to the construction of documents relating to a pension scheme should be practical and purposive, rather than detached and literal … [A]lthough there are no special rules governing the construction of pension scheme documents, the background facts or surrounding circumstances in the light of which those documents have to be construed – their 'matrix of fact' to use the modern phrase coined by Lord Wilberforce – include four special factors. The first factor is that … the beneficiaries under a pension scheme such as this are not volunteers. Their rights have contractual and commercial origins. They are derived from the contracts of employment of the members. The benefits provided under the scheme have been earned by the service of the members under those contracts and, where the scheme is contributory, pro tanto by their contributions. Secondly, … pension scheme documents have to be construed in the light of the requirements of [the relevant statutory authorities]…'
The remaining two factors are not relevant for present purposes. Those remarks were cited with approval by Waddell CJ in Eq in Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602. See also per Ryan, Tamberlin and Finkelstein JJ in Scully v Commissioner of Taxation (1990) 84 FCR 41 at 49-50.
In endeavouring to discover the intention of the parties to the Scheme, having regard to its words, it is necessary to have regard to the whole of the wording of the Scheme. The meaning of Rule 21 may be informed by other parts of it. It is also appropriate to prefer a construction of Rule 21 which will avoid consequences which appear to be "capricious, unreasonable, inconvenient or unjust": per Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109."
9 The Tribunal "determined that Deeds amended to 30 November 1994 and 6 April 1998 were relevant to its consideration as they were respectively the Deed that was applicable at the time the appellant applied to join the Fund (10 April 1996) and the Deed that was applicable on the date when the appellant ceased employment (5 June 1998)".
10 The relevant clauses of the Deed were as follows:
Clause 1, dealing with interpretation, provides:
"…
Category II member means a member who was admitted to membership of the Scheme after 31 December 1989.
Disablement and incapacity
'disablement' in relation to a member means being absent from employment through injury or illness for three months within a period of twelve consecutive months and in such state of health (not due to or induced by any wilful action on the part of the member designed or intended to bring about a state of health to obtain a benefit under the Scheme) as in the opinion of the Trustee, after consideration of all the facts and evidence before it, renders the member permanently incapable of performing duties or engaging in employment for which the member is or was by reason of training and experience, reasonably qualified;
'temporary incapacity' in relation to a member means being absent from employment through injury or illness for three months within a period of twelve consecutive months and in such state of health (not due to or induced by wilful action on the part of the member designed or intended to bring about a state of health to obtain a benefit under the Scheme) as in the opinion of the Trustee renders the member for the time being unable to perform his or her own duties or any other duties for which he or she is by training and experience reasonably qualified and which is available at the member's employer;
…"
Clause 5 provides:
"Unless otherwise agreed between the employer and the Trustee, employees eligible for membership are:
(a) employees who on or after the commencing date are within superannuable classifications as declared by the employer and approved by the Trustee;
(b) any person nominated by an employer and accepted by the Trustee as being eligible for membership."
Clause 6 provides:
"(1) Every eligible employee shall as a condition of membership complete an application for membership in such form as the Trustee shall from time to time determine and in so doing shall be deemed to agree to comply with and to be bound by the provisions of the Deed.
(2) The Trustee may in relation to the employees of an employer or generally require applicants for membership of the Scheme to undertake such medical examinations including blood tests and provide such statements of medical history in such form as the Trustees may specify or require. Any employees who fails to undertake or fails to pass such medical examinations including any blood tests or fails to provide a satisfactory statement as aforesaid may at the discretion of the Trustee be refused membership of the Scheme or may be admitted to membership on such special conditions relating to benefits contributions or otherwise as the Trustee may determine and notify to the employee and the employer concerned.
(3) Where the Trustee is of the opinion that a member has made a false, misleading or inappropriate statement as to the member's age, state of health or otherwise or has failed to disclose any relevant fact or information in relation to his or her application for membership or in any medical examination or test for the purposes of the Scheme the Trustee may reduce or adjust any benefit payable to or in respect of the member in such manner as the Trustee may determine."
11 A limited temporary incapacity benefit is payable under cl 19 in the event of the member's disablement as follows:
"(1) Subject to sub-clause (4) hereof, the temporary incapacity benefit shall be paid for such period up to six months as the Trustee shall determine provided that the Trustee may extend the period of payment on such basis as the Trustee thinks fit for a further period or periods provided that the total period during which the temporary incapacity benefit shall be paid shall not exceed twelve months.
(2) The temporary incapacity benefit shall be paid by monthly instalments commencing on such dates as the Trustee shall determine in any particular case.
(3) There shall be no increase in the amount of the temporary incapacity benefit.
(4) The temporary incapacity benefit shall cease to be payable on the first to occur of the following:
(a) the member returning to active employment with the employer;
(b) the member's death;
(c) the member's disablement; or
(d) the member ceasing to be in the service of the employer ... "
Clause 16 provides that Division B of the Deed applies in respect of all Category II members.
12 Division B of the Deedcontained the following:
"B.1 This Division applies in respect of Category I members who so elect or who are deemed to so elect and in respect of all Category II members.
…
B.3 Subject to the Deed other than the provisions of Division A and to any agreement or undertaking entered into or given pursuant to clause 12(2) the Trustee shall pay or cause to be paid out of the Fund in the event of a member ceasing to be in the service:
(a) (i) by retirement on or after the member's 55th birthday – at the option of the member a retirement pension calculated in the manner set out in clause B.4 or the lump sum benefit referred to in clause B.7;
(ii) on disablement – the disablement pension calculated in the manner set out in clause B.5;
(iii) on death in service – the benefits referred to in clause B.6; or
(iv) for any reason not coming within any of the previous paragraphs – the lump sum benefit referred to in clause B.7; and
(b) the supplementary benefit referred to in clause B.14.
…
B.4 The retirement benefit at the option of the member shall be:
(a) an immediate pension payable for the life of the member at an annual rate calculated in accordance with the following formula:
benefit salary x benefit service x pension factor x ASF; ["ASF" appears designed to provide for part-time employees –the applicant's ASF would be 1]
(b) a single lump sum payment of an amount calculated in accordance with the following formula:
benefit salary x benefit service x lump sum factor x ASF;
(c) (i) an immediate pension for the life of the member at such annual rate not exceeding the rate referred to in paragraph (a) as the member selects, together with
(ii) a lump sum of an amount calculated in accordance with the following formula:
(100 – R)% x the single lump sum referred to in paragraph (b)
where "R" is the ratio of the pension selected by the member to the pension referred to in paragraph (a), expressed as a percentage.
…
B.5 (1) The disablement benefit prior to age 65 shall be an immediate pension payable until the member's 65th birthday or earlier death at an annual rate calculated in accordance with the following formula:
benefit salary x 60% x ASF
(2) On attaining age 65 the disablement benefit at the option of the member shall be:
(a) an immediate pension payable for the life of the member at an annual rate calculated in accordance with the following formula:
benefit salary x benefit service x pension factor x ASF;
(b) a single lump sum payment of an amount calculated in accordance with the following formula:
benefit salary x benefit service x lump sum factor x ASF;
(c) (i)an immediate pension for the life of the member at such annual rate not exceeding the rate referred to in paragraph (a) as the member selects, together with
(ii)a lump sum of an amount calculated in accordance with the following formula:
(100 – R)% x the single lump sum referred to in paragraph (b)
where "R" is the ratio of the pension selected by the member to the pension referred to in paragraph (a), expressed as a percentage.
…
Clause B.8 - Temporary Incapacity Benefit
B.8 (1) Subject to any agreement or undertaking entered into pursuant to the provisions of the Deed, the Trustee shall pay a temporary incapacity benefit in respect of any member who is either:
(a) absent from active employment with the employer; or
(b) employed in work that is less remunerative than the member's previous employment with the employer;
by reason of temporary incapacity. "
(2) The temporary incapacity benefit shall be at an annual rate calculated in accordance with the following formula:
Benefit salary x 60% x ASF
and shall be payable subject to the terms and conditions set out in this clause and clauses 19 and 20."
The history of cl B13
13 Up to 30 June 1997, cl B.13 read:
"Notwithstanding anything expressed or implied to the contrary in this Division, where the Trustee is of the opinion based on such evidence as the Trustee considers satisfactory that the member died or became disabled or suffered temporary incapacity within three years of joining the Scheme by reason of a condition which existed at the time of joining the Scheme which was not disclosed to the Trustee at the time or the member did not provide an accurate statement in a form approved by the Trustee as to the member's health and such other matters as the Trustee may require at the time the member joined the Scheme, the benefit in respect of the Member's death or disablement shall be a lump sum calculated in accordance with the following formula:
benefit salary x contribution service x 20% x ASF
The temporary incapacity benefit under Clause B.8 shall not be payable unless by reason of special or exceptional circumstances the Trustee other determines in any particular case."
14 By a further Deed of Amendment dated 1 July 1997 cl B.13 was:
"amended by deleting the following from the first sentence:
'which was not disclosed to the Trustee at that time or the member did not provide an accurate statement in a form approved by the Trustee as to the member's health and such other matters as the Trustee may require at the time the member joined the Scheme.' "
15 The effect was that, on and from 1 July 1997, cl B.13 read:
"Notwithstanding anything expressed or implied to the contrary in this Division, where the Trustee is of the opinion based on such evidence as the Trustee considers satisfactory that the member died or became disabled or suffered temporary incapacity within three years of joining the Scheme by reason of a condition which existed at the time of joining the Scheme, the benefit in respect of the Member's death or disablement shall be a lump sum calculated in accordance with the following formula:
…"
The "internal review" of the Trustee's decision
16 Sections 100 and 101 of the SIS Act provide:
"100. The object of this Part is to impose special duties on the trustees and investment managers of superannuation entities.
101. (1) The trustee of a regulated superannuation fund other than an excluded superannuation fund … must take all reasonable steps to ensure that there are at all times in force arrangements under which:
(a) beneficiaries have the right to make inquiries into, or complaints about, the operation or management of the fund in relation to the beneficiary making the inquiry or complaint; and
(b) inquiries or complaints so made will be properly considered and dealt with within 90 days after they were made.
…
(2) A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units."
17 Section 19(1) of the Complaints Act provides:
"The Tribunal cannot deal with a complaint under section 14 or 14A unless the complainant satisfies the Tribunal that:
(a) a complaint about the same subject matter was previously made to an appropriate person under arrangements for dealing with such complaints made under section 101 of the [SIS] Act"
It would appear that, pursuant to this obligation, the Trustee committed to a "Membership Committee" (which included members of the Trustee's Board of Directors) the function of reviewing claims. The Membership Committee, on 13 October 1997, decided to apply the provisions of Cl B.13 as it then stood, that is in its post 1 July 1997 terms (as set out at [15] above), however the Committee considered that the applicant had a "pre-existing condition". The minutes of a meeting of the Trustee's Board of Directors indicate that, in the absence of any member of the Committee, it "confirmed the decision of the Membership Committee that Mr Steven's claim was due to a condition which existed at the time of joining the Scheme and so should be restricted" (emphasis added). It is tolerably clear that the Board thereby accepted the advice that the clause, cl B.13, in its post 1 July 1997 form applied.
18 After this, on 3 November 1997, the appellant registered his complaint with the Tribunal.
The course of proceedings preliminary to the Tribunal's decision
19 The Tribunal's officers unsuccessfully attempted to conciliate the matter and gathered information from the parties. In the course of this, the Trustee's "Membership Manager", Ms Cox, responded on 1 December 1997 to a letter of 5 November 1997 from the Tribunal's staff which had sought, among other things, the Trust Deed and each "supplemental deed or amendment" and an indication of the "latest amendment to the Trust Deed/Rules which the Trustee considered in reaching its decision and in reviewing its decision". The Trustee's response, via Ms Cox, included the following:
"Trust Deed amendment number 15 [that is the amendment dated 1 July 1997] is the latest amendment to the [Scheme's] Trust Deed relevant to this claim …
The Trustee determined [the appellant] had failed to disclose a pre-existing condition and that his benefit should be restricted in accordance with Clause B.13. [The appellant] was advised of the decision on 5 June 1997."
20 Ms Cox also provided minutes to the effect summarised above at [17] as to the Trustee's later consideration of the matter and said "The Trustee upheld the decision of the Membership Committee to decline the claim".
21 The Tribunal's staff then, on 17 December 1997, wrote to the appellant seeking further medical information. That letter indicated what the matter at issue was:
"I refer to the complaint you have made regarding the decision of the Trustee that you are ineligible to claim a disability benefit under Clause B.13 of the Trust Deed on the basis that you became disabled by reason of a condition which existed at the time of joining the Scheme which was not disclosed to the Trustee. Your claim is on the basis of severe depression, anxiety and insomnia.
It is therefore important to try and establish whether your present condition existed when you applied to join the fund in April 1996. Please obtain reports from Dr Gilkes and Dr Smith addressing this particular question."
22 On 10 May 2000 the appellant's solicitor made short written submissions clearly directed only to the question of whether the applicant's condition had been a pre-existing one.
23 Ultimately, by letters of 16 May 2000, the "Chairperson" (see s 7 of the Complaints Act) of the Tribunal wrote to the parties, advising of the intended "Review Meeting" (provided for by s 59 of the Complaints Act) and inviting written submissions.
24 In response, on 29 May 2000, Ms Cox wrote on behalf of the Trustee:
"The Trustee contends that [the appellant] made a false statement regarding his state of health (Clause 6(3)) and his benefit is therefore restricted in accordance with Clause B.13 of the Trust Deed."
25 Clause 6(3), set out at [10], it will be recalled, provides:
"Where the Trustee is of the opinion that a member has made a false, misleading or inappropriate statement as to the member's age, state of health or otherwise or has failed to disclose any relevant fact or information in relation to his or her application for membership or in any medical examination or test for the purposes of the Scheme the Trustee may reduce or adjust any benefit payable to or in respect of the member in such manner as the Trustee may determine."
26 Also, in response to the Tribunal's invitation, the appellant's solicitors made further submissions on 16 June 2000 (before they were given a copy of Ms Cox's submissions of 29 May 2000). The solicitors argued that there had been two different "conditions" suffered by the appellant. Later, when they had Ms Cox's submission, the appellant's solicitors again referred to factual matters and set out an extract from cl B.13 that made it clear that they did not understand that there was any question that the clause in its post 1 July 1997 form did not apply.
The Tribunal's Reasons for Decision
27 Introducing the case, the Tribunal said:
"The Trustee's original decision was made on 20 May 1997 and was that [the appellant] was 'not eligible to claim (a disability benefit) in accordance with Clause B.13 of the Trust Deed'. In other words, the Trustee maintained that the operation of Clause B.13 of the Deed was such as to prevent a payment being made. Clause B.13 places a restriction on disability benefit in circumstances where pre-existing medical conditions are not disclosed at the time of joining the Fund."
28 After referring to its "[j]urisdiction", the Tribunal said:
"The Tribunal determined that Deeds amended to 30 November 1994 and 6 April 1998 were relevant to its consideration as they were respectively the Deed that was applicable at the time [the appellant] applied to join the Fund (10 April 1996) and the Deed that was applicable on the date when [the appellant] ceased employment (5 June 1998)."
29 A number of the Deed's provisions thought relevant were then set out. They did not include cl 6 (of the main part of the Deed – hereafter "main cl 6").
30 The Tribunal then said:
"Under the Deed amended to 16 January 1990, clause B.13 originally restricted benefits payable in circumstances where the Member died or became disabled as a result of [AIDS].
However, by the Deed of Amendment dated 20 June 1994, B.13 was replaced with new wording which deleted the reference to [AIDS] and instead restricted benefits payable in circumstances where there were 'pre-existing conditions';
[the text of cl B13 as at [13] above was then set out]
By a Deed of Amendment dated 30 November 1994, Clause B.13 was amended by replacing 20% with 21%."
31 Summarising the submissions, the Tribunal wrote:
"The Complaint submitted that the Trustee has improperly determined that he was suffering from a 'condition which existed at the time of joining the scheme' as referred to in Clause B.13 of the Deed. The conditions are entirely separate and this is supported by medical evidence.
The Trustee's Submission
The Trustee submitted that the Complainant made a false statement about his state of health (Clause 6(3)) and that his benefit is restricted in accordance with Clause B.13 of the Deed."
32 Without explanation as to why it did not have regard to the later form of Cl.B.13, the Tribunal purported to apply it in its 1994-1997 form. The Tribunal said:
"Whilst it is not altogether clear from Clause B.13 whether the condition to be disclosed is a 'pre-existing condition' or 'a condition existing at the time of joining the Scheme' the wording of the Health Form attached to the application suggests that the Trustee seeks disclosure of pre-existing conditions. As to whether the Complainant may have been suffering a mental or nervous disorder at the time he joined the Fund, the Tribunal notes … a pre-existing illness from 1994 onwards 'in a fluctuating way', but does not conclude that the Complainant had the condition at the time he joined the Fund.
…
The Tribunal was persuaded by the findings and reasonings of Dr K. The Tribunal concluded that even if subtle differences could be determined between the 1994 and the 1997 conditions, the Complainant should have dislosed the existence of the 1994 condition when applying for Membership of the Fund in 1996. It was the Tribunal's view that the 1994 condition of adjustment disorder was in the nature of a mental or nervous disorder which ought to have been disclosed.
The second limb of clause B.13
For the reasons set out above, the Tribunal is of the view that the Complainant was also in breach of the second limb of Clause B.13 in that the Complainant did not provide an accurate statement as to his health when he joined the Fund.
Accordingly, the Complainant's Complaint is dismissed. Furthermore, the Tribunal does not find that there are special or exceptional circumstances to justify payment of the benefit under clause B8." (emphasis added)
33 The Tribunal added some adverse remarks about the appellant's credibility. They were at least in part, as the primary judge described them, "harsh" and may even have been legally erroneous. However, in the view I take of the matter, it is not necessary to explore that issue further.
34 On the question of what the Trustee might have done had it known what the Tribunal regarded as the "facts", the Tribunal said:
"If these facts had been known to the Trustee at the time of the Application for Membership, it was likely that the Trustee would not have afforded full cover to the Complainant.
…
FURTHER OBSERVATIONS
The Trustee should reimburse the Complainant for the cost of premiums associated with the provision of full disability cover. This is because the Trustee was unlikely to have agreed to provide the cover, had full and proper disclosure of his medical condition been given by the Complainant." (emphasis added)
35 The Tribunal expressed its formal determination as follows:
"The Tribunal affirms the decision of the Trustee in this case and directs that the benefit under Clause B.13 of the Deed be paid accordingly."
The proceedings in this Court
36 The Notice of Appeal to the Court from the Tribunal's decision as amended referred to a great many supposed errors of law. Given the Tribunal's finding that the appellant had not had his disabling condition when he joined the Scheme, and that after the 1 July 1997 amendment to cl B.13 the appellant could not have been caught by that clause, it is remarkable that the amended Notice of Appeal included the following assertions:
"The applicable version of the Trust Deed of the Superannuation Scheme for Australian Universities (the Scheme) was the version current as at the date of the Applicant's claim. The Tribunal erred in determining that the applicable version of the Trust Deed governing the Scheme was the one in force at the University of Sydney. Accordingly, the Tribunal considered the wrong version of date when the Applicant ceased employment with the Trust Deed and erred in so doing."
37 It is equally surprising that the amended Notice of Appeal did not question the Tribunal's mode of interpretation of cl 13 in its pre-July 1997 form, insofar as it required the appellant to "provide an accurate statement … as to [his] health …".
38 The only other question of law raised that may have any present significance was:
"The Tribunal erred in law in its determination that the Respondent's conduct was fair and reasonable as follows:
…
2.10.4 The Tribunal failed to apply the principal [sic] that the onus of proving non-disclosure lies with the Trustee: see Commercial Union v Beard & Ors [1999] NSWCA 422 (25 November 1999)."
The decision of the primary judge
39 Her Honour was moved at the outset to say, with some restraint:
"The amended notice of appeal is less helpful than is desirable in identifying the questions of law upon which the Applicant appealed to this Court. The written submissions of the Applicant contain the following paragraph …"
That paragraph was a series of summary propositions.
40 Ultimately her Honour had to attempt to "conclude" which questions of law the appellant was relying on. It should be noted that none of this lack of proper assistance to the Court appears to have been attributable to any personal fault of the appellant.
41 So far as is otherwise presently relevant, her Honour noted that:
· the Tribunal "found, and it is accepted by the parties" that Division B (including of course cl B.13) in its pre 1 July 1997 form applied.
· Only limited submissions were addressed to the Court on the proper construction of cl B.13 of the Deed. It was submitted on behalf of the appellant that, as he was not aware at the time that he applied to join the Scheme that he had earlier been diagnosed as having a nervous or mental disorder, it was unfair and unreasonable of the Trustee to invoke cl B.13 of the Deed. However, it was not argued that an "accurate statement" within the meaning of cl B.13 of the Deed was a statement which accurately reflected the member's knowledge concerning his or her health at the relevant time. At a later point her Honour said:
"The Applicant did not contend that 'an accurate statement' within the meaning of cl B.13 of the Deed is a statement which accurately reflects the Applicant's state of knowledge at the time that the statement is provided. That the Applicant did not so contend is confirmed by a consideration of his Amended Notice of Appeal and his written and oral submissions. The Amended Notice of Appeal identifies an aspect of the proper construction of cl B.13 as a question of law raised on the appeal but not this aspect. No submissions were advanced by the Applicant as to the true meaning of the expression "an accurate statement" appearing in cl B.13 and, presumably for this reason, no answering submissions were made by the Trustee. Further, the attempts of the Applicant's counsel to place reliance on s 21 and s 26 of the Insurance Contracts Act 1984 (Cth) ("the Contracts Act") suggest that the Applicant's concerns with respect to the Tribunal's failure to advert to the submission identified in [46] above arose independently of the proper construction of cl B.13.
An application made on behalf of the Applicant to further amend his Amended Notice of Appeal during the course of the hearing to place reliance on s 21 of the Contracts Act was refused as the Court accepted that the Trustee would be prejudiced by the amendment."
· On the issue of the proper construction of cl B.13, the submission advanced on behalf of the appellant was that the Trustee had misinterpreted the Deed by equating a "pre-existing condition" with a condition that existed at the time of his application to join the Scheme. The appellant contended that, whatever the nature of his 1994 illness, that condition no longer existed at the time of his application to join the Scheme. Her Honour said:
"Counsel for the Trustee, as I understood his submissions, accepted that there was no relevant condition 'which existed at the time of joining the Scheme which was not disclosed to the Trustee at that time' within the meaning of cl B.13 of the Deed. It is therefore unnecessary for me to consider this issue further."
· Counsel for the Trustee contended that the decision of the Tribunal was supported by its finding that the appellant "did not provide an accurate statement in a form approved by the Trustee as to [his] health … at the time [he] joined the Scheme" within the meaning of cl B.13 of the Deed. Counsel for the appellant, on the other hand, contended that cl B.13 did not, on a proper reading, provide two separate bases upon which the benefit payable under the Deed would be the lump sum calculated in accordance with the formula set out in cl B.13. Counsel argued that cl B.13 was throughout concerned with conditions which existed at the time that the member joined the Scheme.
Her Honour held:
"The 'statement in a form approved by the Trustee as to the member's health' within the meaning of cl B.13 is, in my view, the "Personal Health Statement" which the Applicant was required to complete when he applied to join [the Scheme]. Question 3 of the Personal Health Statement asked '[h]ave you ever had any of the following?' A number of conditions isthen listed, including 'mental or nervous disorder'. It is plain that this question is not designed solely to elicit information as to the Applicant's present state of health but is rather intended to establish whether the Applicant for membership of [the Scheme] has ever suffered from any of the nominated conditions.
In my view the Tribunal rightly concluded that cl B.13 has two limbs. That is, that the lump sum benefit provided for by cl B.13 is payable where the Trustee is, relevantly, of the opinion:
(a) that the member became disabled within three years of joining the Scheme by reason of a condition which existed at the time of joining the Scheme which was not disclosed to the Trustee at that time; or
(b) that the member did not provide an accurate statement in a form approved by the Trustee as to the member's health.
The submission that the Tribunal misconstrued cl B.13 by finding that the clause was concerned with disclosures concerning pre-existing conditions, as opposed to conditions existing at the time of joining [the Scheme], is rejected.
…
Although the Tribunal may be thought to have been somewhat harsh on the Applicant in assessing his credibility, it appears to have made its assessment of his credibility after concluding that his complaint should be dismissed. As the written submissions of the Applicant appear to recognise, the findings of the Tribunal as to the Applicant's credit were not relevant to the decision that it was required to make. In the circumstance, no legal relevance attaches to the Tribunal's assessment of the Applicant's credibility."
42 Her Honour found no substance in any of the other matters raised and discussed in the appellant's amended Notice of Appeal.
The course of proceedings before the Full Court
43 The Notice of Appeal from the primary judge's judgment began with the following assertions:
"The Court erred in construing clause B.13 of the Trust Deed as providing for the payment of a lump sum benefit. The Court should have held that clause B.13 merely restricted the amount of the disablement benefit otherwise payable under clause B.3 of the Trust Deed.
The Court erred in applying the form of clause B.13 as at the date the appellant joined the Scheme (10 April 1996) and as at the date he made a claim for a benefit under the Scheme (10 April 1997). The Court should have applied the form of clause B.13 as at the date the appellant ceased to be in service within the meaning of clause B.3 of the Trust Deed, being 5 June 1998. On that date, the form of clause B.13 restricted payment of a disablement benefit only where the member became disabled by reason of a condition which existed at the time of joining the Scheme. The respondent conceded that the appellant had no relevant illness or disorder at the time of joining the scheme which was not disclosed [to] the respondent at that time."
44 As to the construction of the pre-July 1997 form of clause B.13, the Notice of Appeal proffered:
"The Court erred in construing the form of clause B.13 as at 10 April 1997 as having two limbs, the second of which governed the disablement benefit payable to a member where the respondent was of [the] opinion that the member did not provide an accurate statement in a form approved by the respondent as to the member's health. The Court should have [construed] the form of clause B.13 as at 10 April 1997 as being applicable only where a member suffered disablement or temporary incapacity within three years of joining the Scheme without providing an accurate statement as to his health at the time he joined the Scheme.
…
The Court erred in concluding that the appellant's statement as to his health was not 'accurate' within the meaning of the form of clause B.13 as at 10 April 1997. The Court should have found or held that the appellant's statement as to his health was 'accurate' within the meaning of the form of clause B.13 as at 10 April 1997, in that, as the respondent conceded, the appellant had no relevant illness or disorder at the time of joining the scheme which was not disclosed [to] the respondent at that time."
45 It was only in the course of oral argument that a supposed necessity to read down the "accurate statement" part of the clause was ultimately sought to be raised.
The nature of the appeal to the Federal Court from the Tribunal
46 Section 46 of the Complaints Act provides:
"(1) A party may appeal to the Federal Court, on a question of law, from the determination of the Tribunal.
(2) An appeal by a person under subsection (1) is to be instituted:
(a) …
(b) in accordance with rules of court made under the Federal Court of Australia Act 1976.
(3) The Federal Court is to hear and determine the appeal and may make such order as it thinks appropriate."
47 Order 53B of the Federal Court Rules applies the provisions of Order 53, designed for the Administrative Appeals Tribunal, to appeals from the Tribunal. Order 53(2) and Form 55A require that each question of law raised on the appeal should be specified in the notice of appeal. However, Order 13 provides a very broad power to the Court to permit amendments of pleadings and, as here, what might be thought of as quasi-pleadings. Order 13 rule 2 provides:
"(1) Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.
(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings.
…
(7) An amendment may be made even if the effect of the amendment is to add a new claim for relief or foundation in law for a claim for relief (whether by way of substitution for an existing claim for relief or foundation in law or not) if the new claim for relief or foundation in law:
(a) arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the party applying for leave to make the amendment; or
(b) subject to subrule (9), arises, in whole or in part, out of facts or matters that have occurred or arisen since the commencement of the proceeding.
(8) Subject to subrule (9), an amendment of a pleading may be made even if the amendment pleads a fact or matter that has occurred or arisen since the commencement of the proceeding.
(9) Paragraph (7) (b) and subrule (8) do not permit an amendment that would have an effect inconsistent with any statute that limits the time within which an action or a proceeding of a particular kind may be brought or instituted." (emphasis added)
Conclusions
(1) The nature of the appeal to the Full Court
48 To understand the proper scope of our role it is necessary first to understand the proper scope of the role of the primary judge in an "appeal" from an administrative tribunal on questions of law.
49 Such an "appeal" involves the exercise of the court's original jurisdiction. Section 19 of the Federal Court of Australia Act 1976 ("the FC Act") provides:
"(1) The Court has such original jurisdiction as is vested in it by laws made by the Parliament.
(2) The original jurisdiction of the Court includes any jurisdiction vested in it to hear and determine appeals from decisions of persons, authorities or tribunals other than courts."
50 As to that jurisdiction, s 22 of the FC Act provides:
"The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided."
51 Thus Order 13, referred to above, merely reflects the legislative policy expressed in s 22 that the Court should justly grant all remedies to which any party is entitled, provided that the claim is properly brought forward, so as to determine completely and finally all matters in controversy between the parties. Where the "appeal" to the Court is limited to questions of law, I take the effect of s 22 to be that the Court should determine all legal questions in controversy between the parties. It is an everyday occurrence that such legal questions become better understood and more accurately stated in the course of litigation.
52 Section 22 not only grants the Court wide powers, it mandates values to be observed in their exercise. In general, however inconvenient to the Court it may be, mere considerations of case management cannot stand in the way of the Court's primary function of doing justice between the parties: Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146.
53 Section 24 of the FC Act gives the Court jurisdiction to hear and determine appeals from judgments of the Court constituted by a single judge.
54 Section 27, enabling the Court on an appeal to draw its own inferences of fact and, in its discretion, to receive further evidence, is of relevance here, even though the initiating "appeal" to the Court itself from the Tribunal was only "on … questions of law". Often enough, some evidence will be necessary before the primary judge can determine the merits of such a question. A common example is a question of whether a tribunal breached an obligation to give a party a right to a fair hearing. As the Full Court put it in Cubillo v Commonwealth [2001] FCA 1213 at [255], referring to the effect of CDJ v VAJ (No 1) (1998) 197 CLR 172 and Allesch v Maunz (2000) 173 ALR 648, "it has been authoritatively determined that an appeal to this court is by way of rehearing". That observation necessarily applies also to appeals from single-judge decisions. (It may be noted that White v Minister for Immigration and Multicultural Affairs (2000) 96 FCR 511, in which a contrary view was expressed, was decided before Allesch v Maunz and did not refer to the observations in CDJ at 2000-1; it must be regarded as superceded by Allesch).
55 The philosophy of doing substantial justice between the parties that, pursuant to s 22 of the FC Act, is to guide the Court in its original jurisdiction is also appropriate in the exercise of the appellate jurisdiction. This is apparent from s 28 (and perhaps especially from s 28(4)) which, again, both broadly empowers the Court and commands the Court to observe certain values in exercising those powers. Section 28 provides:
"(1) Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction:
(a) affirm, reverse or vary the judgment appealed from;
(b) give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order;
…
(3) The powers specified in subsection (1) may be exercised by the Court notwithstanding that the notice of appeal asks that part only of the decision may be reversed or varied, and may be exercised in favour of all or any of the respondents or parties, including respondents or parties who have not appealed from or complained of the decision.
(4) An interlocutory judgment or order from which there has been no appeal does not operate to prevent the Court, upon hearing an appeal, from giving such decision upon the appeal as is just."
56 As the learned authors of Butterworths' "Practice and Procedure High Court and Federal Court of Australia" put it in their commentary on s 28 at [33,025.5]:
"This section of the Act is a 'modal' section, that is, it sets out the methods in which the court may treat an appeal and the courses open to the court on appeal. Contrast this with s 24 which is a substantive section conferring jurisdiction upon the court to hear appeals: Kovac v R (1977) 15 ALR 637 at 642. As to when the court will intervene to vary a judgment or verdict, see Anderson v R (1977) 19 ALR 212; Whim Creek Consolidated (NL) v FCT (1977) 17 ALR 421 at 426; 31 FLR 146 at 151; 8 ATR 154 at 158 and notes to s 24, above. Section 28 confirms that the court has sufficient power in exercising its appellate jurisdiction to ensure that a decision given on appeal is just and not constrained by the technical form of the appeal. However, permission to argue a point on appeal, including a point of law, not taken at trial remains in the discretion of the court and the exercise of that discretion will depend upon it being clear that facts relevant to the application of any question of law have been determined and that it is expedient and in the interests of justice that the point is decided. Indeed, it may be necessary to show a risk of injustice if leave to argue the point is denied. Certainly, though, leave will not be granted where it involves the presentation of a different case to the one presented at trial where the opposing party might have had an opportunity to augment its case to deal with the point: WT Partnership (Aust) Pty Ltd v Sheldrick (1999) 96 IR 202; BC9903471; [1999] FCA 843."
57 Thus, unless there is irremediable procedural injustice to a party, the Full Court should strive to determine all questions of law properly arising in an appeal to it from the judgment of a single judge in a proceeding confined in its nature to legal questions.
58 What is considered an irremediable procedural injustice will vary. The most obvious case is where there is an irremediable loss of the opportunity to investigate or to bring evidentiary material to counter a question not raised at first instance. Increased or unnecessary costs can usually be remedied. However, in some cases, even the lavish application of indemnity costs will be no adequate balm: people involved in litigation often have great non-monetary investments in it of their time, anxieties, hopes and expectations. Corporations do not have feelings but may have invested much paid time of their servants and agents in the litigation which is difficult to quantify and to bring within a costs order
59 Further, where parties are clearly well-advised and merely tactical choices have been made as to which legal questions are to be agitated or as to how they are to be presented, the legitimate interests of all parties and the overriding public interest in the regular, efficient and orderly conduct of litigation, and in its finality, will often raise an issue of injustice militating against new points being taken on appeal.
60 The reluctance of the courts, for good reasons, to permit
"the main area for the settlement of disputes [to] move from the court at first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish" (per Gibbs CJ, Wilson, Brennan and Dawson JJ in Coulton v Halcombe (1986) 162 CLR 1 at 7)
has often been stated and recently by a Full Court of this Court in Branir Pty Ltd v Owston Nominees (No. 2) Pty Ltd [2001] FCA 1833 at [34] – [39]. Even in a criminal case, exceptional circumstances must be shown: Crampton v R (2000) 176 ALR 369 at [7] – [8]. Relevant matters to the maintenance of a firm line were referred to by Gleeson CJ in Crampton at [14] – [19]. They may be summarised as:
· the "overarching societal interest in the finality of litigation in criminal [and I would add, civil] litigation";
· the common position that fresh counsel are retained for an appeal increases a tendency to look for a new approach and thereby to seek to treat the primary hearing as a preliminary skirmish;
· the risks inherent in an appellate court in hindsight assessing the facts as to the wisdom of a course taken by counsel;
· the necessity, for an adversarial system, of generally regarding the parties as bound by the conduct of their counsel; and
· preservation of judicial neutrality by leaving it to the parties to define the issues and to select the evidence and arguments which they will rely.
A degree of care may be necessary in applying such well-settled principles to an appeal to the Full Court of this Court. In Allesch v Maunz, dealing with the indistinguishable statutory regime governing appeals to the Full Court of the Family Court of Australia, Gaudron, McHugh, Gummow and Hayne JJ said at 653-4:
"For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error. At least that is so unless, in the case of an appeal by way of rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance. And the critical distinction, for present purposes, between an appeal by way of rehearing and an appeal in the strict sense is that, unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance whereas, on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand." (emphasis added)
And in CDJ McHugh, Gummow and Callinan JJ said (at 199-202):
"The question of the circumstances in which the Full Court of the Family Court should exercise its discretion to receive further evidence, in exercise of the power conferred by s 93A(2), is therefore to be determined as a matter of statutory construction. That matter should not be approached as if the common law procedures which gave rise to the principles laid down in such authorities as Wollongong Corporation conclusively indicate the proper construction of the statutory provision.
The common law procedures were interlocutory in nature in the sense that they were directed to the issue whether there should be an order for a new trial. They involved the exercise of original jurisdiction. In contrast, the statutory appeal is directed to whether the orders made below should be set aside and, if so, what orders should be made in their place to determine the outcome of the litigation. An order for a retrial is one, but not the only, order that the appellate court may make. Moreover, such an order is an order of last resort. In that context, the admission of further evidence has to be seen from a different perspective from that which would be appropriate if the statute did no more than repeat the common law procedures. For example, in a statutory appeal it may be the respondent who seeks to introduce further evidence to buttress the favourable findings already made and to resist the substitution by the appellate court of its orders for those of the trial court.
The scope of s 93A(2)
In the exercise of the discretion conferred by a power such as s 93A(2), the critical factor is the subject matter of the proceedings with which the appeal is concerned. This is because the purpose of the power to admit further evidence is to ensure that the proceedings do not miscarry. Tests such as those stated in Wollongong Corporation based on the need for finality in litigation are therefore not necessarily applicable to cases in which the interests of third parties, such as children, are at stake, although factors such as finality, discoverability of the evidence and its likely effect on the orders made are usually relevant to the exercise of the discretion. In an application at common law to admit further evidence, the court applies principles, bordering on fixed rules. In an application under s 93A(2) and similar provisions, the Full Court or Court of Appeal weighs factors, although it may of course develop guidelines for weighing those factors and exercising the discretion.
Moreover, even at common law, the grounds for admitting further evidence of matters occurring before judgment were not inflexible. The common law courts have always reserved to themselves an exceptional power to set aside a verdict on the ground of further evidence where the interests of justice require it. In McCann, Dixon CJ, Fullagar, Kitto and Taylor JJ said:
'The grounds upon which the court proceeds in granting the remedy ... have never become completely stereotyped; they have always possessed some flexibility and have been governed by the overriding purpose of reconciling the demands of justice with the policy in the public interest of bringing suits to a final end.'
…
Still another consideration is that the discretion is given to an appellate court hearing an appeal against an order made in the exercise of original jurisdiction. No doubt it is true that, because the appeal is by way of rehearing, the Full Court's jurisdiction is neither purely appellate nor purely original. In Attorney-General v Sillem, Lord Westbury LC pointed out that '[a]n appeal is the right of entering a superior Court, and invoking its aid and interposition to redress the error of the Court below.' Appellate jurisdiction in the strict sense is jurisdiction to determine whether the order of the court below was correct on the evidence and in accordance with the law then applicable. In contrast, the Full Court of the Family Court must decide the rights of the parties upon the facts and in accordance with the law as it exists at the time of hearing the appeal. Speaking of the similar jurisdiction of the English Court of Appeal, the Master of the Rolls, Sir George Jessel, said that the appeal is a 'trial over again, on the evidence used in the Court below; but there is a special power to receive further evidence.' Nevertheless, it is highly unlikely that Parliament in conferring jurisdiction on the Full Court to hear appeals intended that s 93A(2) should be construed in a way that would have the practical effect of obliterating the distinction between original and appellate jurisdiction. Nor can the availability of further evidence relevant to the issues in the appeal be treated as equivalent to a ground of appeal, proof of which prima facie entitles the appellant to a new trial. The power to admit the further evidence exists to serve the demands of justice. Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial." (emphasis added)
61 The fact that, in that case, their Honours were concerned with the question of admitting further evidence does not diminish the force of their observations on the breadth of the power of the Family Court and this Court on appeals from primary judges. It is, in my view, neither possible nor desirable to entirely immunise an appeal to the Full Court raising non-discretionary questions of law against the somewhat broader approach appropriate in an appeal by way of rehearing where error in the order appealed from is the relevant question. Other considerations as well as the necessity not to obliterate the distinction between original and appellate jurisdiction are relevant to a determination of what will "serve the interests of justice". That legal questions should be correctly decided is an important value in its own
right. As the Privy Council observed (per Lord Watson) in Connecticut Fire Insurance Company v Kavanagh (1892) AC 473 at 480:
"When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient, in the interests of justice, to entertain the plea."
62 In Branir (supra) the necessity to confine this principle to cases where there is no chance of prejudice to the other party was, with respect, powerfully restated.
63 The nature of the case will be relevant to such considerations. The actual practice of the courts has often been tender, for example, where issues of status are involved – criminal, bankruptcy and Australian residency rights are cases that come to mind: see BC v Minister for Immigration & Multicultural Affairs [2002] FCAFC 221 at [30]-[38].
64 In the present case, the following matters are relevant:
· the issues are likely to have an importance beyond the present parties: it seems probable that there will be other, though few (see [69]), cases more or less similar to that of the appellant: in Crampton Kirby J referred (at [60]) to the desirability of preventing the repetition of legal error.
· the case touches the appellant's livelihood;
· the respondent was under a statutory obligation (criminally enforceable if intentionally or recklessly disregarded) to produce all documents or parts of documents considered by it to be relevant to the appellant's complaint to the Tribunal: see s 24 of the Complaints Act. Upon the analogy with discovery, indeed a fortiori, the respondent cannot be permitted to rely on other documents. It is, in the nature of the matter, highly unlikely that there is any non-documentary evidence that the respondent could or would wish to produce. No actual suggestion of the possibility of any such material was made. In any case, lest the highly unlikely should nevertheless be the actuality, I would reserve liberty to apply on this aspect.
· There would appear to be the possibility of further litigation should we not permit reliance to be placed on the matters sought to be argued. There is, for example, an arguable case that the Tribunal denied the appellant procedural fairness and failed to comply with its statutory duty to give reasons as to the way that it dealt with cl B.13. Despite the respondent's admission to the Tribunal (against litigious interest) that the post 1 July 1997 form of the clause was relevant and operative, I assume, as the primary judge held, that it was theoretically open to the Tribunal to go behind this. However, that would be so only if the appellant had been apprised of the Tribunal's possible intention to do so and given an opportunity to argue to the contrary. Such argument to the contrary might certainly have been put, despite the way that the appellant's subsequently retained counsel evidently viewed the matter when it came to appealing to the Court from the Tribunal's decision. The appellant and his solicitors were not put on notice that anyone regarded this matter as being in issue. A legitimate expectation that only the later form of the clause would be considered, absent notice to the contrary, had surely been engendered. The situation has similarities to the position of an appellant to a District or County Court, in the familiar "all grounds" appeal against a decision of a magistrate in a criminal case. The District Court can increase a sentence when the appeal has concerned guilt or supposedly excessive severity by the magistrate. However, as a matter of longstanding practice the Court does not do so, without putting the appellant on notice of his or her risk: Reischauer v Knoblanche (1987) 10 NSWLR 40 at 47. If the rules of natural justice were breached, proceedings in the nature of a constitutional writ or otherwise under s 39B of the Judiciary Act 1903 (Cth) might be brought.
· Likewise, the matter was so central to the Tribunal's decision that written reasons were arguably required as to why it chose to override the Trustee's own approach to the matter. Section 39B, subject to discretionary matters and questions of Anshun estoppel, might be available to test the failure to give such reasons.
· Costs can amply be provided for. The respondent is not a natural person: no question of non-monetary prejudice arises. It appears unlikely that, apart from legal costs, the Trustee will have incurred any other significant expense in relation to this matter. Any necessary involvement of any of the Trustee's officers or employees in instructing in relation to the proceedings in the Court can be provided for in a costs order.
· The case was manifestly misconceived by the appellant's advocate in the proceedings in this Court before the primary judge.
· The course of proceedings at first instance was (through no fault of the primary judge) apt to divert and prevent her Honour from dealing with the real legal issues thrown up by the case.
· The appellant is not personally responsible for any of the litigious defaults of his erstwhile counsel.
Collectively, despite the course of the proceedings, these factors make this an exceptional case or at least one such that the public interest in regular and orderly proceedings and in the dispensation of justice actually requires, in my opinion, that the Court take the very unusual course of permitting the raising of the points now sought to be relied upon by the appellant.
The operative form of cl B.13
65 If there were no more, the Deed as it existed at the time of the appellant's claim on the Trustee in April 1997 and as at the Trustee's initial determination of it in May or June 1997 would, as the Tribunal considered, have been the operative text. But there was more.
66 There were three additional factors. The first was that, once the appellant chose to seek "internal review" of the Trustee's initial decision (both a right assured to him by s 101 of the SIS Act and a limitation imposed by s 19 of the Complaints Act upon his right to challenge the Tribunal's decision before the Tribunal) that decision of the Trustee changed from one of a final character to one of a provisional or contingent character: the October 1997 "review" decision by the Trustee could have swept away its earlier decision.
67 The second additional factor was that the Deed itself altered that prima facie position. Clause 55 (in the main part of the Deed) provided, so far as is material:
"(1) The Trustee may with the consent of the Consultative Committee at any time and from time to time by deed alter, add to or repeal all or any of the provisions contained in the Deed, including the provisions of this clause other than the provisions of sub-clause (5) hereof.
…
(3) Any alteration, addition or repeal:
(a) so made shall come into force on the execution of such deed and shall take effect as from that date or as from such other earlier or later date as may be specified for that purpose in such deed;
(b) so made and for the time being in force shall be of the same validity as if it had been originally contained in the Deed and may in like manner be altered, added to or repealed.
(4) The trustees shall notify each member of such alteration, addition or repeal and all members shall be bound thereby. No accidental failure or omission to give any such notification shall prejudice or invalidate the relevant alteration, addition or repeal.
(5) No alteration, addition or repeal as aforesaid shall:
(a) prejudice or affect any pension or other benefit payable under the Scheme or the rights of any member who is then excused from or not liable for contribution;
(b) have the effect of altering the purpose of the Scheme which shall continue to be in the provision of benefits for members and their dependants;
(c) result in the return to any of the employers of any part of the Fund but subject to the provisions of clause 56."
68 Subclause 5(a) is clearly enough beneficially intended in relation to individual members: it was obviously not intended to have an operation such that benefits payable under the Scheme could not be improved. Thus understood, subcl 5(a) is not in issue here, because the 1 July 1997 changes improved the benefits by narrowing the classes of pension claimants relegated to receiving the small cl B.13 lump sum.
69 It follows that the final decision was not made in respect of the appellant's claim until after the execution of the amending deed in July 1997 and that the new cl B.13 took effect before the appellant's claim was determined. The Deed does not expressly provide for such a case. As the amendment deed effected a beneficially intended change, it should be liberally construed as to its intended application in such a situation: there are unlikely to have been many members in such a position, and the relative cost to the Scheme, having regard to the fund's likely size and the likely large number of Scheme members, of such a beneficial application would not be great.
70 The third factor is that such is the way the Trustee itself, by its directors, saw the matter. It is only the Trustee which can (albeit with the consent of a consultative committee) alter the Deed. What should be regarded as the intended application of an alteration of the Deed, when the Deed and the alteration are silent or ambiguous, can best be deduced by knowing what the Trustee itself regarded as its intended application. Although in many cases it only tends to encourage what might be called self-serving opinionation by a party to an instrument to have regard to that party's view of a contract's meaning after it has been entered into, here there is neither injustice nor, as a matter of judicial policy, inutility in doing so. See Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290; Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 316 and White Property Developments Ltd v Richmond Growth Pty Ltd & Ors [1998] FCA 26 (unaffected by the appeal therefrom, see: White Property Developments Ltd v Richmond Growth Pty Ltd & Ors [1998] FCA 1422). The Trustee's own view is a powerful reason to look beyond the prime facie position.
71 Thus, the post July 1997 version of cl B.13 was applicable and, as the Tribunal found as a matter of fact and as was agreed on all hands, the appellant was not caught by it.
The meaning of cl B.13 before its July 1997 amendment
If that view be mistaken, it is necessary to consider Clause B.13 before its 1997 amendment.
72 The Deed was, of course, to be read as a whole and Division B's regime of entitlements was to be read subject to the main part of the Deed: see [8] above. In Division B of the Deed, cl B.3 provides: "Subject to the Deed other than the provisions of Division A… the Trustee shall pay" (emphasis added), among other things, the disablement benefit calculated according to cl B.5. This means that the right to the disablement benefit was subject to cl 6, including cl 6(3) in the main part of the Deed: set out at [10] above.
73 Thus understood, the Deed dealt with the whole question of pre-existing health problems in accordance with an evident conceptual framework which, it may be thought, all "stakeholders", as current jargon calls them, in the provision and receipt of superannuation for University administrative staff, would be likely to find tolerable. That evident framework was this:
(1) Where, at the point of joining the Scheme, information was or came to be at hand that materially increased the risk of an employee becoming disabled or dying, the Trustee might impose special conditions as to benefits, contributions or otherwise. For example, in an extreme case, benefits might be made not payable for condition X. Less draconically, benefits might be reduced, or contributions increased, by some fixed percentage, or a requirement for continuing medical examinations imposed. All of this is seen to by cl 6(2).
(2) At the point of a claim being made, upon death or disability, and regardless of whether the death or disability occurred more than 3 years after the member had joined the Scheme, the benefit might be reduced or "adjusted" (unfavourably to the claimant, no doubt) by the Trustee in the case of a relevantly false, misleading or inappropriate statement in relation to the application for membership, or in a Scheme-related medical examination, or a failure at any such time to "disclose" relevant information: see cl 6(3). There was and is no necessary requirement that the benefit should be "adjusted" to zero; some lesser degree of downward adjustment might be chosen.
(3) Clause B.13 dealt further with the special case of death or disability within three years of joining the Scheme. If it applied, there was to be a draconic and non-discretionary reduction in benefit apt to have dramatic consequences, as the information in this case indicates (see [4]). In the case of a young employee deceased or gravely disabled, any dependants or the employee, respectively, might be left with what it would be fair to call only a pittance, instead of what was plainly conceived to be, in the usual case, affordably decent, if in many cases frugal, support. Unlike main cl 6(3), cl B.13 provided no intermediate position. It is very likely that such a harsh result was intended reserved only for deliberate wrongdoing of the most pertinent kind by a member.
The logic and the structure of cl B.13 itself strongly suggested that that was so. Clause B.13 appears to address two hypotheses material to the Fund's risk:
· The first is that the cause of death or disability was a condition which existed at the time of joining the Scheme but was not then "disclosed" to the Trustee. But one cannot be taken to lose an entitlement for not disclosing what one does not know: see Fry v Commission for Superannuation (1984) 2 FCR 472. Thus, in order that the first hypothesis disentitle a claimant the member concerned must have failed to tell the Trustee of the disabling (or fatal) medical condition although the member knew that he or she had that condition.
· The second hypothesis apparently addressed by cl B.13 was failure by the member, at the point of joining the Scheme, to provide an accurate statement as to the member's health and such other matters as the Trustee required.
74 The nature of default by a member necessary to satisfy the first cl B.13 hypothesis, so as to justify the extreme reduction in benefits is, as I have sought to explain, understandably narrow and clear, and relates to a centrally material matter. It seems, then, inconceivable that the terminology expressing the second hypothesis should have been intended to justify such a reduction for any lesser default in any markedly less material respect.
75 Thus, that express terminology needs to be understood in the light of a number of implicit qualifications. One is that the subject matter of the offending statement should bear closely upon the likelihood of the existence of the fatal or disabling condition. Another is that the inaccuracy should be of high relevance to such likelihood. A third is that the member concerned must have known that the subject matter was inaccurate. A fourth is that either the member should have known, or any reasonable person in the member's subjective circumstances would have known, that such subject matter would likely be of real relevance to the possible existence or occurrence in the reasonably near future of a disabling or fatal condition. In the light of main cl 6(3), anything less would be both unnecessary and of such a harshness that it cannot reasonably be imputed to the framers of the Deed.
76 In other words, once it is appreciated that the Deed must be read as a whole in its context, and the power and reach of main cl 6 are understood, it is clear that the part of the clause concerned with the member providing an accurate statement as to his or her health must be given a very limited meaning.
77 On that limited meaning, the Tribunal might well have decided that the appellant had not knowingly provided an inaccurate statement and/or that any knowingly inaccurate statement was not such as would properly move the Trustee of this Scheme to exclude the appellant entirely from benefits under the Scheme. The Tribunal made an off-hand reference to this matter, as a kind of post-script to its decision suggesting a contrary view, but this was made without the benefit of having afforded the appellant's solicitors a reasonable opportunity to be heard on that matter and without an exposition of the material it relied upon or its processes of reasoning in relation to its conclusion. Had the matter proceeded as it should have, a quite different conclusion may have been reached. Again, main cl 6 and its context are relevant. The Scheme is not a profit-making venture like an insurance company, but a cooperative arrangement between public educational institutions and their employees aimed at the future welfare of the latter and their dependants for the present benefit of, among others, the former. The "Consultative Committee" is of that bipartite nature. To say the least of it, it is by no means self-evident that, had the Trustee known, at the point of the appellant's application to join the Scheme, of his previous troubles, it would, without more, have abandoned him entirely. Clause 6(2) would have allowed further medical enquiry and, as thought fit, an adjustment of benefits or contributions. Such matters should have been the subject of proper inquiry by the Tribunal and an opportunity should have been given to the appellant to be heard in relation to them.
Consideration of main cl 6(3)
78 By contrast to cl B.13, cl 6(3) is not limited to cases of knowingly "false, misleading or inappropriate" statements (although failure "to disclose any … relevant [health] fact" is limited to non-disclosure of known facts and, possibly to such facts as a reasonable person in the applicant's position would think relevant, see Fry (supra) and Liversidge v Anderson [1942] AC 206. It is the very flexibility of cl 6(2) and (3) that enables this view, along with the reference to "inappropriate" statements. It is not usual to understand an inappropriate statement to be limited to one that was knowingly inappropriately made.
79 The Tribunal might well take the view that the appellant made an intentionally or unintentionally misleading or inappropriate statement. It would, for example, be an outcome well open to the Tribunal on its reconsideration of this matter, from the Trustee's standpoint and bearing in mind the employment context, to make some considerable but reasonable diminution of the benefit payable to the appellant, rather than a reduction of it to nothing or next to nothing. Again, of course, any such course by the Tribunal must be preceded by giving the appellant an opportunity to be heard upon it.
80 On this basis, I would propose that,
(a) subject to (c) below, the appeal should be allowed and the matter remitted to the Tribunal differently constituted for reconsideration according to law;
(b) the parties should bring in, by fax within 7 days, short minutes and submissions as to costs; and
(c) liberty to the respondent to apply generally within 7 days, having regard to the matter referred to in [64] above, should however be granted.
I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.
Associate:
Dated: 28 August 2002
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 1592 OF 2001
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: WARREN ARTHUR HOWITT-STEVEN
APPELLANT
AND: UNISUPER LTD
RESPONDENT
JUDGES: MADGWICK, DOWSETT & STONE JJ
DATE: 28 AUGUST 2002
PLACE: SYDNEY
REASONS FOR JUDGMENT
DOWSETT & stone jJ:
Introduction
81 This is an appeal from a decision of Branson J, dismissing an appeal brought pursuant to s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the "ROS Act"), from a decision of the Superannuation Complaints Tribunal (the "tribunal").
Relevant events
82 The respondent, Unisuper Ltd (the "trustee") is the trustee of a superannuation scheme pursuant to a trust deed, originally dated 1 December 1994, to which there have been numerous amendments. The scheme is primarily designed to serve the superannuation needs of Australian universities and their employees. On 10 April 1996 the appellant, who was at that time employed by the University of Sydney, joined the scheme. On 10 April 1997 he signed and subsequently submitted a "disablement claim notification form" in which he asserted that he had ceased work on 11 February 1997, suffering from a disability caused by severe depression, anxiety and insomnia. He indicated that he did not consider himself "ever being able to resume a normal working life in this current type of environment, due to state of mental health". This claim was supported by a medical report submitted by a psychiatrist, Dr Smith. It indicated that the appellant was totally disabled. In the form completed by Dr Smith he was asked (Question 15): "If you consider the claimant to be permanently disabled, please give your reasons …". He responded: "Poor ability to focus and concentrate on issues at workplace and generalized anxiety and depression." Clearly, Dr Smith considered the appellant's disability to be permanent.
83 In his claim form, the appellant was asked: "If illness, when did symptoms first appear, who did you see and when? Have you suffered from this condition before (details) …". He provided the information: "November 1994 - Dr Peter Gilkes, and staff at Wandene Private Hospital November 1994 - No." He was asked to give details of all doctors whom he had seen regarding this disability. He responded:
Date Name Address Reason
Nov ´94 Dr P Gilkes 60 Coachwood Cres, Alfords Point Depression/Anxiety
Nov ´94 Resident psychiatrist Wandene Private Hospital 7 Blake Street Kogarah " "
Dec ´96 Dr F Donaghy 60 Coachwood Cres, Alfords Point Insomnia/Depression
Feb ´97 Dr P Gilkes 60 Coachwood Cres, Alfords Point Depression/Anxiety
Feb ´97 Dr S Smith 13 Grantham Street " "
84 He was also asked (Question 7): "Were you hospitalised, if yes, give details, name of hospital, dates, treatment …". He responded: "Yes Wandene Private Hospital - Kogarah November 1994 7 days - counselling, prescription drugs."
85 In the application for membership which he completed in 1996, he was asked, (Question 3):
"Have you ever had any of the following?
(a) …
(b) …
(c) mental or nervous disorder
(d) …
(e) …
(f) …
If you have answered yes to any (a) through (f) please give more details below."
86 At that time, the appellant indicated that he had not previously suffered from mental or nervous disorder.
87 At all material times prior to 1 July 1997, cl B.13 of the trust deed provided:
"Notwithstanding anything expressed or implied to the contrary in this Division, where the Trustee is of the opinion based on such evidence as the Trustee considers satisfactory that the member died or became disabled or suffered temporary incapacity within three years of joining the Scheme by reason of a condition which existed at the time of joining the Scheme which was not disclosed to the Trustee at that time or the member did not provide an accurate statement in a form approved by the Trustee as to the member's health and such other matters as the Trustee may require at the time the member joined the Scheme, the benefit in respect of the Member's death or disablement shall be a lump sum calculated in accordance with the following formula:
benefit salary x contributing service x 21% x ASF.
The temporary incapacity benefit under Clause B.8 shall not be payable unless by reason of special or exceptional circumstances the Trustee other determines in any particular case."
88 The death and disablement benefits payable pursuant to this clause would be substantially less than those payable if the clause did not apply.
89 On 5 June 1997 the trustee advised the appellant that on 20 May 1997 it had decided that because of the alleged non-disclosure of his illness in 1994, his benefit was to be limited in accordance with cl B.13. At some time after such notification the appellant sent an undated, hand-written letter to the trustee, which letter is headed "Notice of Complaint". It sought review of the trustee's decision. Although the letter is difficult to read, the thrust appears to be that the appellant's 1994 hospitalization was not for anxiety or depression, but for alcohol abuse brought on by work-related stress causing "emotional symptoms (an adjustment disorder)". In other words the appellant asserted that his 1994 condition had not involved mental or nervous disorder and so disclosure of that prior condition was not required in his answer to question 3. Dr Smith provided a report dated 19 August 1997 in which he also sought to distinguish between the appellant's 1994 hospitalization "in connection with alcohol abuse and a number of personal stressors" and the anxiety and depression for which he was being treated in 1997. Dr Empson, who apparently treated him at the hospital in 1994, said that he was then suffering from an adjustment disorder and an alcohol problem, both of which were short-lived. Dr Empson observed that the appellant drank excessively "because of work-related stressors".
90 The records of the Alfords Point Medical Practice (where the appellant had consulted Dr Gilkes and Dr Donaghy) indicated that he had been treated as follows:
Date Condition treated
1989 or 1992 work stress and lethargy
October-November 1994 work-related stress
May 1996 sleep problems due to work stress "eighteen months previously"
February 1997 depression
91 Dr Gilkes had a note concerning the 1994 hospital admission as follows:
"recent severe stress, numerous phone discussions with patient and wife 17/10 - 20/10. Admitted to Wandene under Dr Empson. Work-related stress - problems with three staff members (supervisors) now resolving, coping well, will leave job."
92 The appellant's complaint concerning the rejection of his claim was handled pursuant to the trustee's internal complaints procedure. It was referred to the membership committee and considered and rejected by that committee on 13 October 1997. On that day, the committee's decision was adopted by the board of the trustee. By this time the trust deed had been amended in an arguably material particular. Deed of Amendment (No 15), which took effect on 1 July 1997, deleted all of the words in cl B.13 commencing with the words "which was not disclosed to the trustee …" to and including the words "… at the time the member joined the scheme". Thus the amended clause read:
"Notwithstanding anything expressed or implied to the contrary in this Division, where the trustee is of the opinion based on such evidence as the trustee considers satisfactory that the member died or became disabled or suffered temporary incapacity within three years of joining the scheme by reason of a condition which existed at the time of joining the scheme the benefit in respect of the member's death or disablement shall be a lump sum calculated in accordance with the following formula …".
93 In these reasons, the deed of trust in the form in force prior to 1 July 1997 will be referred to as the "trust deed (pre-1997)". The deed in the form in force after that date will be referred to as the "trust deed (post-1997)". Individual clauses, particularly cl B.13, will be similarly identified.
94 It appears from the minutes of the membership committee meeting of 13 October 1997 that:
"The committee reviewed the claim and agreed to enact cl B.13 as it now stands. As Mr Howitt-Steven had a pre-existing condition the appeal was not upheld. Mr Howitt-Steven will be entitled to his resignation benefit only."
95 In the board minutes, it was noted that:
"Professor Wood, as Chairman of the Membership Committee, tabled a memorandum which that Committee had considered immediately prior to the meeting. He indicated that the Membership Committee had decided to apply the provisions of Clause B.13 (as it now stood) to a claim from Mr Warren Howitt Steven, thereby restricting the amount payable to him on account of his disablement.
After members of the Membership Committee had retired from the meeting the Board confirmed the decision of the Membership Committee that Mr Steven's claim was due to a condition which existed at the time of joining the scheme, and so should be restricted."
96 It may be significant that the membership committee and the board purported to apply the deed in its amended form. The trustee advised the appellant of the decision by letter dated 17 October 1997. On 3 November 1997 he lodged a "registration of complaint" with the tribunal. Pursuant to the ROS Act, the tribunal had jurisdiction to grant relief where a decision by a superannuation fund trustee was unfair or unreasonable. Relevant statutory provisions will be discussed later in these reasons. In the course of subsequent correspondence the trustee, in a letter to the tribunal dated 1 December 1997, advised that:
"The Trustee determined Mr Howitt-Steven had failed to disclose a pre-existing condition and that his benefit should be restricted in accordance with Clause B13. Mr Howitt-Steven was advised of the decision on 5 June 1997 (attachment 8).
UniSuper received a complaint from Mr Howitt-Steven on 30 July. Included with his letter was a copy of the admission form from Wandene Hospital stating he was admitted to the Psychiatric Unit for 8 days from 18/10/94 (attachment 9).
The complaint was considered by the Membership Committee, a sub committee of the … Board, at meeting MC 97.4 on 13 October 1997.
The Committee declined the claim. An extract from the Minutes is attached (attachment 10).
The Board considered Mr Howitt-Steven's complaint at meeting 97.5 on 13 October 1997. The Trustee upheld the decision of the Membership Committee to decline the claim. An extract of the Minutes is attached (attachment 11).
97 Dr Smith provided a further report which was largely supportive of the appellant's position. This was submitted to the trustee with an invitation to reconsider the claim. In April 1998 the trustee obtained a report from Dr Kornan. He said, referring to Dr Smith's report:
"The personal stressors (the appellant) experienced in October 1994 may or may not have been different to the ones he had in February 1997 but I am perplexed by the sentence which compares impairments to stressors, rather than impairments to impairments. Quite frankly it seems that when he has now been treated by Dr Selwyn Smith that he now is being treated for depression. In my opinion there would have been clearly anxiety/depression in 1994 and thus, in fact, the illness is primarily a continuing ongoing chronic illness situation. Naturally, as often happens in psychiatry, there are some minor or different variations from time to time.
…
I cannot understand why Dr Selwyn Smith would have ever indicated to you in a previous report that he had not suffered any significant previous psychiatric illness when in fact he obviously had a major pre-existing psychiatric illness requiring inpatient treatment for the adjustment disorder (codeword for anxiety and depression basically) and secondary alcoholism.
To sum up, this is a man who evidently has had a psychiatric admission in 1994 for an adjustment disorder and secondary alcoholism. Adjustment disorder is basically a code word substantially meaning anxiety and depression. Given that there was anxiety and depression in 1994 associated with alcoholism, on the strong balance of probabilities and, as well, that there has been further depression in 1997, I consider that this man had a pre-existing illness from 1994 onwards in a fluctuating way.
To put it in the terms used in your covering letter, I consider that the adjustment disorder suffered in 1994 can be considered a pre-existing condition in relation to his current anxiety and depression from the reading of these files.
98 The appellant's employment was formally terminated on 5 June 1998 although it seems that he had not worked since 11 February 1997. On or about 16 May 2000 the tribunal advised that a review meeting would be held on 17 July, to be conducted "on the papers without oral submissions". A review meeting is apparently the occasion upon which the tribunal determines a complaint. The parties were invited to make relevant submissions in advance of the meeting. The trustee responded to that letter on 29 May 2000, submitting that:
"The Trustee contends that Mr Howitt-Steven made a false statement regarding his state of health (Clause 6(3)) and his benefit is therefore restricted in accordance with Clause B13 of the Trust Deed.
99 This appears to have been the first written reference to subcl 6(3). Clause 6 provided as follows:
"(1) Every eligible employee shall as a condition of membership complete an application for membership in such form as the Trustee shall from time to time determine and in so doing shall be deemed to agree to comply with and to be bound by the provisions of the Deed.
(2) The Trustee may in relation to the employees of an employer or generally require applicants for membership of the Scheme to undertake such medical examinations including blood tests and provide such statements of medical history in such form as the Trustee may specify or require. Any employee who fails to undertake or fails to pass such medical examinations including any blood tests or fails to provide a satisfactory statement as aforesaid may at the discretion of the Trustee be refused membership of the Scheme or may be admitted to membership on such special conditions relating to benefits contributions or otherwise as the Trustee may determine and notify to the employee and the employer concerned.
(3) Where the Trustee is of the opinion that a member has made a false, misleading or inappropriate statement as to the member's age state of health or otherwise or has failed to disclose any relevant fact or information in relation to his or her application for membership or in any medical examination or test for the purposes of the Scheme the Trustee may reduce or adjust any benefit payable to or in respect of the member in such manner as the Trustee may determine."
100 The trustee's reference to subcl 6(3) suggested that it was relying on the power conferred by that sub-clause to vary a benefit. Such reliance would seem only to have been necessary if the trust deed (post-1997) were being applied. In its pre-1997 form, cl B.13 itself operated to reduce the benefit. It is possible that the trustee believed that even under the trust deed (pre-1997), exercise of the subcl 6(3) power was necessary. However, when the reference to that sub-clause is taken with the references in the minutes to the amended deed, it seems more likely that in affirming the earlier decision, the trustee believed that it was applying the trust deed (post-1997).
101 The appellant's solicitors also responded to the invitation to make submissions. They submitted that there was a distinction between the work-related stress experienced in 1994 and the depression experienced from February 1997. They also submitted that the tribunal should prefer the evidence of Dr Smith to that of Dr Kornan and that the references to the 1994 hospitalization in the appellant's original claim were in error. They then submitted that:
"In our submission, the trustee has improperly determined that Mr Howitt-Steven was suffering from a 'condition which existed at the time of joining the scheme', as referred to in clause B.13 of the Amended Trust Deed. In our submission the conditions are entirely separate, which is supported by the medical evidence."
102 The solicitors wrote a further letter dated 5 July 2000 in which they sought to explain the circumstances surrounding the appellant's hospitalisation in 1994. They asserted that he had believed that he was admitted to hospital to "dry out" and was not aware of any "adjustment disorder". They then submitted:
"At the time that he completed the form, Mr Howitt-Steven was totally unaware of any such diagnosis and accordingly the form was completed in total good faith. It should be noted that the form does not specify in any manner whether or not Mr Howitt-Steven had been admitted to hospital in the last five years and for what he had been treated. If those questions had been asked, then Mr Howitt-Steven would have answered in the affirmative, but given the wording of the question and Mr Howitt-Steven's own information at the time, he answered the form correctly and made no false statement regarding the state of his health."
103 The solicitors then set out part of cl B.13 as follows:
"… died or became disabled or suffered temporary incapacity within three years of joining the scheme by reason of a condition which existed at the time of joining the scheme …".
104 They submitted that Mr Howitt-Steven had made no false statement and had not been disabled as a result of a condition which existed at the time of joining the scheme.
105 The tribunal rejected the complaint and affirmed the trustee's decision.
Legislation
106 Before considering the tribunal's reasons, it is appropriate to make some brief observations as to its jurisdiction and powers. Pursuant to s 101 of the Superannuation Industry (Supervision) Act 1993 (Cth) (the "Supervision Act"), the trustee was required to have an internal system for dealing with complaints such as that made by the appellant. Pursuant to s 19 of the ROS Act, the tribunal was not to deal with a complaint until such internal procedures had been exhausted. Section 14 of the ROS Act relevantly provided as follows:
"(1) This section applies if the trustee of a fund has made a decision (whether before or after the commencement of this Act) in relation to:
(a) a particular member or a particular former member of a regulated superannuation fund; or
(b) a particular beneficiary or a particular former beneficiary of an approved deposit fund.
(1A) …
(2) Subject to subsection (3) and section 15, a person may make a complaint (other than an excluded complaint) to the Tribunal, that the decision is or was unfair or unreasonable.
…
(6A) The Tribunal cannot deal with a complaint under this section about a decision of a trustee relating to the payment of a disability benefit because of total and permanent disability unless:
(a) the decision is made on or after 1 November 1994; and
(b) the complaint is made within a period of one year after the making of the decision to which the complaint relates.
(6B) The Tribunal cannot deal with a complaint under this section abut a decision of a trustee relating to the payment of a disability benefit because of total and permanent disability if:
(a) before the making of the decision, the person permanently ceased particular employment (whether before or after commencement of this subsection) because of the physical or mental condition that gave rise to the claim for disability benefit; and
(b) the claim was not lodged, or is not lodged, with the trustee, within one year after the person permanently ceased that employment.
(6C) Without limiting the meaning of a decision of a trustee relating to the payment of a disability benefit in any other provision of this Act, that expression means, for the purposes of subsections (6A) and (6B), the original decision of the trustee in relation to the matter."
(6D) For the purposes of subsection (6C), if, as a result of a complaint about the original decision of the trustee under arrangements made under section 101 of the Supervision Act, the original decision was confirmed or varied, or another decision was substituted for the original decision:
(a) the decision as so confirmed or varied, or the substituted decision, is taken to be the original decision; and
(b) the decision as so confirmed or varied, or the substituted decision, is taken to have been made at the time when the original decision was made."
107 Section 37 provided:
"Tribunal powers - complaints under section 14
(1) For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14:
(a) the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and
(b) subject to subsection (6), must make a determination in accordance with subsection (3).
(2) If an insurer or other decision-maker has been joined as a party to a complaint under section 14:
(a) the Tribunal must, when reviewing the trustee's decision, also review any decision of the insurer or other decision-maker that is relevant to the complaint; and
(b) for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision-maker; and
(c) subject to subsection (6), must make a determination in accordance with subsection (3).
(3) On reviewing the decision of a trustee, insurer or other decision-maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing:
(a) affirming the decision; or
(b) remitting the matter to which the decision relates to the trustee, insurer or other decision-maker for reconsideration in accordance with the directions of the Tribunal; or
(c) varying the decision; or
(d) setting aside the decision and substituting a decision for the decision so set aside.
(4) The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists.
(5) The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.
(6) The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision, in its operation in relation to:
(a) the complainant; and
(b) so far as concerns a complaint regarding the payment of a death benefit - any person (other than the complainant, a trustee, insurer or decision-maker) who:
(i) has become a party to the complaint; and
(ii) has an interest in the death benefit or claims to be, or to be entitled to benefits through, a person having an interest in the death benefit;
was fair and reasonable in the circumstances."
108 Section 14AA also relevantly provided:
"(1) To avoid doubt, a complaint may be made under this Part about a decision whether or not the decision involved the exercise of a discretion.
(2) However, a decision that did not involve the exercise of a discretion is taken to have been unfair and unreasonable if the decision was contrary to law."
109 Pursuant to s 14AA a decision was amenable to the complaints process whether or not it involved a discretion. A decision not involving a discretion was to be taken to be unfair and unreasonable if it was contrary to law. The section made no express reference to non-discretionary, non-legal questions, for example errors of fact. Presumably it was for the tribunal to determine whether such error rendered the decision unfair or unreasonable. It seems to follow from subs 14(2) that the tribunal could only have set aside or varied a decision if it was unfair or unreasonable. Pursuant to subss 37(3), (4) and (6) the tribunal might only make an order if it would place the complainant, as nearly as practicable, in such a position that any unfairness or unreasonableness no longer existed. If the tribunal were satisfied that the decision was fair and reasonable, it was to be affirmed.
110 Sections 14 and 37 both contemplated the existence of an identifiable decision of the relevant trustee. For the purposes of s 14, the date upon which the relevant decision was made was of some importance in that it triggered various time limits, particularly pursuant to subs 14(6A) and 14(6B). The effect of those subsections was that subsequent decisions by a trustee confirming, varying or substituting another decision for the original decision were to be, in effect, "backdated" to the date of the original decision. That did not mean that for all purposes, any such subsequent decision was to be taken as being made on the date of the original decision. In particular, those provisions do not resolve the present question as to whether or not the trust deed is to be applied in its pre-1997 or post-1997 form. The original decision was made on 20 May 1997, confirmed on 13 October 1997 and again confirmed on 25 May 1998 (according to the tribunal's reasons). Clause B.13 was amended with effect from 1 July 1997 and again with effect from 6 April 1998. The effect of the 1997 amendment is set out above. The 1998 amendment varied the amount payable but not the circumstances in which such amount was to be payable.
The tribunal's reasons
111 At p 4 the tribunal recognized that the deed had been amended between the time when the appellant applied to join the fund (10 April 1996) and the date when he ceased employment (5 June 1998). At p 6 the form of cl B.13 (pre-1997) is set out. The medical evidence is then summarized. The tribunal observed at p 9:
"The complainant submitted that the Trustee has improperly determined that he was suffering from a 'condition which existed at the time of joining the scheme' as referred to in Clause B.13 of the Deed. The conditions are entirely separate and this is supported by medical evidence."
112 In summarizing the trustee's argument the tribunal observed:
"The trustee submitted that the complainant made a false statement about his state of health (Clause 6(3)) and that his benefit is restricted in accordance with Clause B.13 of the Deed."
The terms of cl 6(3) are then set out. On p 10, the tribunal observed that the decision on 20 May 1997 was based upon cl B.13 of the trust deed and observed:
"The Board again decided on 13 October 1997 and on 25 May 1998 that the claim was based on a condition which existed at the time the Complainant joined the scheme, being a condition which had not been disclosed when the Application for Membership form was completed and on this basis should be denied."
113 The tribunal's reasons thereafter appear to have been based upon cl B.13 (pre-1997). It described the clause as containing two "limbs" and directed itself to consider whether:
"1. The member became disabled or suffered temporary incapacity within three years of joining the scheme by reason of a condition which existed at the time of joining the scheme which was not disclosed to the trustee at that time; or
2. The member did not provide an accurate statement in a form approved by the trustee as to the member's health and such other matters as the trustee may require at the time the member joined the scheme."
114 The tribunal considered that in either case, the appellant's benefit would be limited as prescribed in cl B.13 (pre-1997). It noted that whereas the heading associated with cl B.13 referred to "pre-existing conditions" the text actually referred to "a condition which existed at the time of joining the scheme". It also noted that the application form had enquired: "Have you ever had any of the following (medical conditions)?" The tribunal considered that the term "pre-existing condition" included any prior illness, whether or not the relevant person was still suffering from it at the time of joining the scheme. The better view is that the expressions "pre-existing condition" and "a condition existing at the time of joining the scheme" meant the same thing, namely a medical condition from which the relevant person was suffering at the time of joining, whether or not he or she was exhibiting symptoms at that time. Such a condition was a pre-existing condition because its onset pre-dated the appellant's joining the scheme. Neither expression was apposite to describe a condition from which the relevant person had previously suffered, but from which he or she had effectively recovered at the relevant time. On the other hand, the question asked in the application form required the disclosure of any previous mental or nervous disorder, whether or not the person in question was still suffering from it at the time of application.
115 The tribunal appears to have accepted the evidence of Dr Kornan. It observed that although "Dr K refers to a pre-existing illness from 1994 onwards 'in a fluctuating way', but does not conclude that the Complainant had the condition at the time he joined the Fund." It also observed that:
"Dr K, on the other hand, concluded that 'an adjustment disorder would basically include increased anxiety and depressive features' and that as these symptoms are common to an adjustment disorder and the generalised anxiety disorder and major depression disorder for which the Complainant made the claim, the adjustment disorder is a pre-existing condition."
116 It is clear from the earlier paragraphs of the tribunal's reasons that it used the expression "pre-existing condition" to describe any condition suffered prior to joining the fund. Having accepted the evidence of Dr Kornan, the tribunal:
"… concluded that even if subtle differences could be determined between the 1994 and the 1997 conditions, the Complainant should have disclosed the existence of the 1994 condition when applying for Membership of the Fund in 1996. It was the Tribunal's view that the 1994 condition of adjustment disorder was in the nature of a mental or nervous disorder which ought to have been disclosed."
117 In accepting Dr Kornan's evidence, the tribunal accepted that the appellant was not suffering from any relevant condition at the time of joining the scheme. If, in concluding that his prior condition ought to have been disclosed, the tribunal meant that the first limb of cl B.13 (pre-1997) was satisfied, then it erred. If the relevant condition did not exist at the time of joining the scheme, then non-disclosure of a similar condition suffered at an earlier time was irrelevant for the purposes of the first limb. However the tribunal then turned to the second limb of cl B.13 (pre-1997) and held:
"For the reasons set out above, the Tribunal is of the view that the Complainant was also in breach of the second limb of cl B.13 in that the Complainant did not provide an accurate statement as to his health when he joined the Fund.
Accordingly, the Complainant's Complaint is dismissed. Furthermore, the Tribunal does not find that there are special or exceptional circumstances to justify payment of the benefit under clause B8."
118 Prima facie, the appellant did not provide an accurate statement concerning his health as required by the trustee at the time of joining the scheme. It would follow that the second limb of cl B.13 (pre-1997), if it applied, operated to reduce his benefit, subject only to two arguments advanced by the appellant. The first is that at the time of joining the scheme, the appellant was not aware of the nature of his 1994 condition and so did not deliberately mislead the trustee. This argument was advanced before Branson J who treated it as irrelevant. The second argument, advanced for the first time during the current appeal, is a construction point, namely that the obligation to make disclosure only extended to facts of which the relevant person had actual knowledge.
Proceedings before branson J
119 Pursuant to subs 46(1) of the ROS Act:
"A party may appeal to the Federal Court, on a question of law, from the determination of the Tribunal."
120 Upon determining such an appeal the Court may make such order as it thinks appropriate (subs 46(3)). Such an order may include an order affirming or setting aside the determination of the tribunal or an order remitting the matter to be determined again by the tribunal in accordance with directions of the Court (subs 46(4)). The appellant appealed to this Court, which appeal was heard by Branson J; [2001] FCA 1599. His amended notice of appeal appears at AB 319 - 325. Unfortunately, it is of the kind which seeks to convert questions of fact into questions of law in a vain attempt to expand the limited rights of appeal conferred by sections such as subs 46(1). In the course of argument, counsel for the appellant seemed to suggest that once an error of law was demonstrated, the Court could deal with the matter afresh. Clearly, however, the power of the Court is limited to dealing with the consequences of a demonstrated error of law. In the present appeal, the appellant has sought to raise matters not raised before Branson J. Such a course is not generally viewed favourably. For that reason, it is necessary to consider the course of proceedings before her Honour. That can best be done by reference to the grounds of appeal argued in those proceedings and her Honour's consideration of them.
121 Grounds 1 to 2.5 are no longer relevant. Ground 2.6 is as follows:
"The applicable version of the Trust Deed of the Superannuation Scheme for Australian Universities (the Scheme) was the version current as at the date of the Applicant's claim. The Tribunal erred in determining that the applicable version of the Trust Deed governing the Scheme was the one in force at the University of Sydney. Accordingly the Tribunal considered the wrong version of date when the Applicant ceased employment with the Trust Deed and erred in so doing."
122 Clearly, this was an assertion that the trust deed (pre-1997), was the relevant instrument for the purposes of the appeal. Branson J dealt with the matter on that basis, as had the tribunal. However counsel for the appellant now seeks to argue that the relevant version was that in force as at the date upon which the appellant's employment was formally terminated, namely 5 June 1998, in other words the trust deed (post-1997). For reasons set out above, it is probable that the trustee's "decision" on 13 October 1997 was based upon that trust deed. Further, it is likely that the trustee's written submissions to the tribunal were also made on that basis. As was pointed out in argument, some aspects of the appellant's submissions to the tribunal were also arguably consistent with reliance upon the trust deed (post-1997). However the fact remains that the tribunal applied the trust deed (pre-1997), and the notice of appeal from that decision did not challenge that aspect of the decision. In the circumstances it is understandable that the matter proceeded before Branson J on that same basis. Ground 2.7 seems also to have related to this question.
123 Ground 2.8 is of no relevance for present purposes. Ground 2.9 asserted that the tribunal erred in construing cl B.13 by taking into account the heading, contrary to the provisions of cl 1.2 of the deed. As explained above, there was no inconsistency between the heading and the relevant substance of cl B.13. Clause 2.9.1 dealt with the same point. Clause 2.10 asserted that the tribunal erred in law in determining that the trustee's conduct was fair and reasonable because of four identified matters, namely:
® The tribunal failed to consider the appellant's evidence as to his knowledge and understanding of his condition when he filled in his application and erred in assuming that his knowledge as at 17 April 1997 (when he filled in the form) was the same as at the date on which he joined the fund.
® The tribunal failed to consider adequately the statement as to health made at the time of application.
® The tribunal failed to assess the conduct of the trustee towards the appellant in that it did not consider whether its interpretation of the deed was unfair or unreasonable "against (the appellant)".
® The tribunal failed to apply the principle that the onus of proving non-disclosure lay upon the trustee.
124 Ground 2.11 raised a factual matter which is not now relevant. Some of the grounds of appeal were repeated in par 4 of the notice of appeal, but no new ground was there advanced.
125 Branson J was justifiably concerned by the lack of precision in the so-called grounds of appeal. At [4] her Honour identified the following grounds as having been argued:
"(a) that the Tribunal erred in law by failing to conduct an oral hearing before reaching its decision;
(b) that the Tribunal erred in law in failing to try to settle the complaint by conciliation;
(c) that the Tribunal erred in law in failing to join certain medical practitioners as parties to the complaint;
(d) that the Tribunal erred in law by failing to consider whether there were special or exceptional circumstances to justify the payment of a benefit to the Applicant;
(e) that the Tribunal misconstrued cl B.13 of the SSAU Consolidated Trust Deed in that it found that cl B.13 deals with disclosure of pre-existing conditions rather than disclosure of "a condition which existed at the time of joining the Scheme";
(f) that the Tribunal erred in law in that it wrongly acted on the basis that the Applicant bore an onus of proving that he had not failed to make proper disclosure at the time that he joined the SSAU;
(g) that the Tribunal erred in law in failing to take into account evidence that it was bound to take into account, namely evidence that the Applicant was not, at the relevant time, aware of the condition which was not disclosed by him;
(h) that the Tribunal erred in law in failing to "apply" the Act and the "principles of fiduciary duties" in considering the Applicant's complaint; and
(i) that the Tribunal erred in law in taking an adverse view of the Applicant's credit."
126 Grounds (a), (b), (c), (d) and (i) are not relevant to the present appeal. However, as is observed above, some aspects of the current grounds of appeal were not raised before Branson J. Before considering that matter, it is appropriate to examine her Honour's reasons for dismissing the appeal, to the extent that they are now challenged. Branson J dealt with the matter upon the basis that the trust deed (pre-1997) applied for all material purposes. The appellant had asserted as much in his grounds of appeal. Her Honour adopted the tribunal's view that cl B.13 contained two limbs. At [35] her Honour recorded the appellant's submission that it was unfair and unreasonable for the trustee to invoke cl B.13 against him in view of his asserted lack of knowledge of the nature of his previous condition. Branson J also recorded that it had not been argued that a statement which was accurate, to the best of the knowledge of the relevant person, would satisfy the requirements of cl B.13. In other words, there was no argument that cl B.13 should be construed as requiring only disclosure to the best of the relevant person's knowledge.
127 At [36] her Honour recorded that counsel for the appellant had submitted that the trustee had misinterpreted the deed by equating a "pre-existing condition" with "a condition that existed at the time of the application to join" the fund. As previously explained, the real point is whether or not the obligation to disclose imposed by the application form related only to pre-existing conditions (those arising prior to the application and still affecting the relevant person at that time) or whether it related to any prior condition, even if the person in question had fully recovered. Counsel for the trustee conceded before Branson J that the appellant was not suffering from any relevant condition "which existed at the time of joining the scheme which was not disclosed to the trustee at that time …". Thus it seems that whatever the difference in terminology, the trustee's case was that the appellant should have disclosed his prior condition despite the fact that he was not suffering from it at the time he joined the scheme. As a result of the trustee's concession, Branson J concluded that she had only to consider the correctness of the tribunal's decision to the extent that it relied upon the second limb of cl B.13.
128 The only argument before her Honour as to construction of the second limb appears to have been the appellant's submission that the expression "an accurate statement in a form approved by the trustee as to (his) health … at the time (he) joined the scheme" described a statement as to his health at that time and did not include his prior history. This argument appears in the notice of appeal to this Court as an assertion that Branson J erred in holding that cl B.13 contained two limbs. It is quite clear, as her Honour held, that the words "at the time the member joined the scheme" described the time at which the relevant statement was provided and did not in any sense limit the ambit of the enquiry as to the appellant's medical history. In those circumstances, and absent any submission as to the correctness of applying cl B.13 (pre-1997), her Honour concluded that the tribunal had correctly upheld the decision of the trustee in so far as it relied upon the second limb of that clause.
129 Branson J then dealt with the question of onus of proof, which issue was not raised in the present appeal. Her Honour next considered the alleged failure by the tribunal to take into account the appellant's evidence that at the time he joined the fund, he was not aware of the nature of the condition from which he suffered in 1994. Branson J was unsure as to the alleged relevance of that evidence, pointing out again that there was no submission that the requirements of cl B.13 would be satisfied by a statement which accurately reflected the appellant's state of knowledge. Her Honour observed that the evidence may have related to arguments under the Insurance Contracts Act 1984 (Cth), which arguments were not raised before her. The appellant's counsel applied to amend to raise those issues, but the application was refused. Alternatively, her Honour considered that the evidence may have gone to the question of whether or not the trustee had acted unfairly or unreasonably. Branson J concluded that the trustee's conduct was to be assessed primarily by reference to the deed and that the expression "unfair or unreasonable" was not to be taken as detracting "from the obligation of a tribunal to act in accordance with the governing rules of a fund." In other words, it was the terms of cl B.13 (pre-1997), and not any decision of the trustee, which resulted in the adverse consequences of which the appellant complained. To the extent that the trustee relied upon cl B.13 (pre-1997), that was the case. However, if the appellant is correct in asserting that the clause in its post-1997 form applied, then the trustee could only have varied the appellant's benefit by exercising the discretion conferred by subcl 6(3). It may be that such evidence would have been relevant to the exercise of that discretion, but that argument was not raised before Branson J. In the end, her Honour was not satisfied that the tribunal had overlooked any evidence which ought to have been taken into account.
The present appeal
130 Before us seven grounds of appeal were raised and argued to some degree. They can be summarized as follows:
® Branson J erred in construing cl B.13 as providing for the payment of a lump sum benefit when it really restricted the amount of any benefit payable under cl B.3.
® Her Honour ought to have applied the trust deed (post-1997).
® Her Honour erred in concluding that the respondent had made a determination under cl B.13 that the appellant suffered from disablement within the meaning of the trust deed when it had in fact decided that the appellant was not eligible to claim a benefit and that it had not considered his claim.
® Her Honour erred in construing cl B.13 (pre-1997) as having two limbs.
® Her Honour erred in holding that the trustee had been entitled as at 10 April 1997 to require from the appellant a statement as to his health at any point in time prior to the date on which he joined the scheme.
® Her Honour erred in concluding that the appellant's statement was not accurate within the meaning of cl B.13 (pre-1997). This is the construction point which was not argued before Branson J.
® Her Honour erred in concluding "that it was not unfair or unreasonable not to pay the appellant a temporary incapacity benefit because he contended that he had suffered from permanent disablement …".
Each of these grounds is dealt with below.
Effect of cl B.13
131 It is correct to say that cl B.13 provided a limitation upon an entitlement prescribed elsewhere in the deed, particularly, for present purposes, by cl B.3. However nothing turns upon that point. The case has proceeded upon the basis that the appellant was entitled to a benefit, subject only to any limitation flowing from his failure to disclose his 1994 condition.
Significance of the 1997 amendment to the deed
132 This was the most substantial point raised on appeal but, as already pointed out, it was not raised before Branson J. The appellant submits that he should be allowed to ventilate the question now, notwithstanding his failure to ventilate it below. It is submitted that it is purely a question of law and that the trustee can have suffered no detriment as a result of its not having been argued below. It is relevant that the trustee seems to have expressly invoked the amended deed after 1 July 1997 and at least hinted at reliance upon it in its submissions to the tribunal. On the other hand, it is not clear that the parties ever addressed the facts of the case, having regard to the significance now said to flow from the amendment.
133 It is also important to note that the jurisdiction of the tribunal depended upon there having been a decision by the trustee. The decision which the appellant sought to challenge by his complaint form dated 3 November 1997 was that of the trustee made on 20 May 1997 and confirmed on 13 October 1997. In each case, the trustee was adjudicating upon his claim dated 10 April 1997. The appellant now submits that he then had no right to any benefit under the scheme as he had not then satisfied the definition of "disablement". He also submits that in any event, he was not entitled to any benefit until his contract of employment was terminated on 5 June 1998. If either argument is correct, then his application was premature and therefore necessarily unsuccessful. His complaint to the tribunal was also doomed to failure. It is possible that he could have made a fresh application once his entitlement to benefit arose according to his arguments, but he has not done so. If the appellant's new submissions are correct, then the tribunal was either without power to intervene because there had been no decision which it could review or it was obliged to dismiss the claim because it had been made prematurely.
134 Both arguments must be assessed in light of the fact that the appellant asserted in his claim dated 10 April 1997 that he was disabled and had been disabled since 11 February 1997. This matter has always proceeded upon that basis. It would be truly exceptional to allow the appellant to depart from that factual basis at this late stage. The definition of disablement is as follows:
"… 'disablement' in relation to a member means being absent from employment through injury or illness for three months within a period of twelve consecutive months and in such state of health (not due to or induced by any wilful action on the part of the member designed or intended to bring about a state of health to obtain a benefit under the Scheme) as in the opinion of the Trustee, after consideration of all the facts in evidence before it, renders the member permanently incapable of performing duties or engaging in employment for which the member is or was by reason of training and experience, reasonably qualified; … ."
135 The appellant argues that as at 10 April 1997 he had not been absent from his employment for three months within a period of twelve consecutive months, nor had the trustee formed an opinion as to whether his state of health was such as to render him permanently incapable of performing duties or engaging in employment. As to the first aspect, it is sufficient answer to observe that although he may not have been absent from his employment for three months at the time that he applied, by the time the decision was made on 20 May 1997 he had been absent for in excess of three months. Turning to the question of the trustee's opinion as to whether the appellant was disabled, it is not correct to treat the trustee's opinion as a condition precedent to the existence of such disablement. The definition assumes a disability and confers upon the trustee the power to determine whether or not it is such as to render the member relevantly incapable of performing appropriate duties in employment. It is not entirely clear whether the trustee formed such an opinion in the present case, but it has never asserted to the contrary. The better view is that the trustee has treated the appellant as disabled and entitled to whatever benefit is applicable, given that cl B.13 applies so as to reduce any such entitlement.
136 The appellant also argues that no entitlement to benefit arose until formal termination of the appellant's employment which is said to have occurred on 5 June 1998. The primary source of the appellant's entitlement to benefit appears to have been cl B.3 which relevantly provided:
"Subject to the Deed other than the provisions of Division A and to any agreement or undertaking entered into or given pursuant to clause 12(2) the Trustee shall pay or cause to be paid out of the fund in the event of a member ceasing to be in the service:
(a)
(i) by retirement on or after the member's 55th birthday - at the option of the member a retirement pension calculated in the manner set out in clause B.4 or the lump sum benefit referred to in clause B.7;
(ii) on disablement - the disablement pension calculated in the manner set out in clause B.5;
(iii) on death in service - the benefits referred to in clause B.6; or
(iv) for any reason not coming within any of the previous paragraphs - the lump sum benefit referred to in clause B.7; and
(b) the supplementary benefit referred to in clause B.14.
137 In so far as concerns disablement, construction of this clause depends upon three other provisions. The first is the meaning of the expression "the service". According to cl 1 of the deed the term "service" means:
"… continuous employment with an employer since last becoming a member provided that service shall be deemed to be continuous although performed partly with one such employer and partly with another or others of such employers … ."
138 The second is the meaning of the term "disablement" which is set out above. Finally, the benefit payable was to be calculated in accordance with cl B.5 which relevantly provided:
"(1) The disablement benefit prior to age 65 shall be an immediate pension payable until the member's 65th birthday or earlier death at an annual rate calculated in accordance with the following formula … ."
139 The appellant's argument is that the reference in cl B.3 to "a member ceasing to be in the service" refers to the formal termination of a contract of employment and the words "on disablement" describe the reason for the relevant person ceasing to be in the service rather than the event upon which the benefit is payable. However the definition of "service" made no reference to any contract of employment. It rather referred to the fact of "continuous employment". It is somewhat difficult to see how a person could be said to be in continuous employment once he had ceased work and had asserted that he was permanently disabled from resuming it. Further, the definition of "disablement" appears to contemplate a person acquiring that capacity by accumulated periods of absence over a one year period, suggesting that it is disability rather than termination of any contract which is to be the basis of entitlement. Clause B.3 provided that the disablement pension was a pension to be paid "in the event of a member ceasing to be in the service … on disablement". Clause B.5 provided for the disablement benefit being payable as an "immediate pension". The better view appears to be that the pension was payable upon disablement and not upon the termination of any vestigial contractual relationship which may have survived it.
140 This conclusion is also suggested by certain other provisions of the trust deed. Clause 20 contemplated the possibility that a disabled person might still be capable of earning income, presumably in employment. Any amount received would result in a reduction in the amount of the disablement pension. That such a possibility was contemplated makes it unlikely that existence of ongoing contractual relations between the employer and the relevant employee would operate to suspend or defer commencement of the latter's entitlement to the benefits conferred by the deed. Similarly, par 20(3)(c) contemplated reductions in the amount of the disablement pension to reflect amounts paid to the pensioner "under any legislation dealing with workers' compensation and like payments or under any award or agreement relating to his or her employment with the employer". Once again, it seems to have been contemplated that there might be an ongoing contractual relationship between employer and employee. It may be that in any event, disability would inevitably have resulted in frustration of any contract of employment. See Simmons Ltd v Hay (1964) 81 WN (Part 1) (NSW) 358, Notcutt v Universal Equipment Co (London) Ltd [1986] 1 WLR 641 and Finch v Sayers [1976] 2 NSWLR 540. See also the article by G J McCarry at (1987) 61 ALJ 35. As can be seen from Finch, whether or not a contract of employment is frustrated may depend upon the terms of the contract between the parties. This matter was not investigated in these proceedings. It is not necessary to take it further. The better view is that any entitlement arose at the time of disability. It follows that it should be determined by reference to the trust deed (pre-1997).
141 A further ground for rejecting the appellant's argument arises out of the amendment power itself. Clause 55 provided:
"(1) The Trustee may with the consent of the Consultative Committee at any time and from time to time by deed alter, add to or repeal all or any of the provisions contained in the Deed, including the provisions of this clause other than the provisions of sub-clause (5) hereof.
(2) The Trustee may at any time and from time to time by deed alter, add to or repeal all or any of the provisions contained in the Deed other than the provisions of sub-clause (5) hereof in such manner and to such extent as the Trustee considers necessary or desirable to ensure that the Scheme complies with any relevant requirement of the Superannuation Law or the Assessment Act in respect of complying superannuation funds.
(3) Any alteration, addition or repeal:
(a) so made shall come into force on the execution of such deed and shall take effect as from that date or as from such earlier or later date as may be specified for that purpose in such deed;
(b) so made and for the time being in force shall be of the same validity as if it had been originally contained in the Deed and may in like manner be altered, added to or repealed.
(4) The trustee shall notify each member of such alteration, addition or repeal and all members shall be bound thereby. No accidental failure or omission to give any such notification shall prejudice or invalidate the relevant alteration, addition or repeal.
(5) No alteration, addition or repeal as aforesaid shall:
(a) prejudice or affect any pension or other benefit payable under the Scheme or the rights of any member who is then excused from or not liable for contribution;
(b) have the effect of altering the purpose of the Scheme which shall continue to be the provision of benefits for members and their dependants;
(c) result in the return to any of the employers of any part of the Fund but subject to the provisions of clause 56.
(6) Where in the opinion of the Trustee an alteration, addition or repeal requires the consent or approval of any person in order to comply with any relevant requirement of the Superannuation Law relating to deed amendments then the alteration, addition, or repeal shall not be made without the consent or approval of the person or persons concerned."
142 The question for present purposes is whether par 55(5)(a) protected all benefits conferred by the trust deed or only those which were due and payable at the time of the amendment in question. Given the nature of the scheme, it is unlikely that members were to be readily deprived of the benefits prescribed under the deed. The composition of the consultative committee was dealt with in cl 39. Although that clause was somewhat obscure, it is clear that the consultative committee was to comprise only one or two representatives of employees, together with one or two representatives of employers. It seems most unlikely that such a committee was intended to be able to bind finally all of the members of the scheme in so far as concerns such a critical issue as the benefits accruing to them pursuant to it. Amounts are payable under the scheme upon certain occurrences, for example death, disability, retirement or "ceasing to be in the service … for any other reason". Once a member joins the scheme and makes a contribution, it is virtually certain that he or she will become entitled to a payment at some time in the future. The better view is that the word "payable" is used in par 55(5)(a) to describe any amount to become payable upon the occurrence of such an identified event. It follows that amendment pursuant to s 55 cannot
vary the circumstances in which a benefit is to be paid to a member who has joined prior to such amendment.
143 To some extent the appellant's argument appeared to proceed upon the basis that the 1997 amendment to cl B.13 was designed to create a more generous situation for scheme members. That is simply not so. Although the deletion of the second limb of cl B.13 meant that non-disclosure did not automatically result in a reduced benefit, the matter was, in effect, left within the discretion of the trustee pursuant to subcl 6(3). Further, under the first limb of cl B.13 (pre-1997) a pre-existing condition causing death or disability would only result in a reduced benefit if it had not been disclosed to the trustee. After the amendment death or disability from any pre-existing incapacity was to have that effect, regardless of whether it had been disclosed. Unless subcl 55(5) applied to protect the future entitlements of existing members, a person who had joined the scheme, having disclosed a pre-existing condition would have suffered a reduction in his or her benefit as a result of the amendment. Of course, such a person may only have been admitted to the fund pursuant to special arrangements as to level of contribution or entitlement to benefits but nonetheless, application of the amendment to him or her would have reduced his or her benefits. The better view is that subcl 55(5) prevented the application of the 1997 amendment to entitlements previously conferred, whether or not they had yet become due and payable. It follows that the appellant's entitlement was to be determined by reference to cl B.13 in its pre-1997 form.
144 Finally, it is likely that the appellant would have fared no better if the trust deed (post-1997) had been applied to his case. As has been observed above, the trustee would then have had power pursuant to subcl 6(3) to reduce his benefit. It is hard to see why it would have been unfair or unreasonable to have done so, given his failure to disclose a prior condition which was at least arguably related to the cause of his disablement. The 1994 hospitalization had occurred only eighteen months prior to his application to join the scheme and a little over two years prior to his disablement. In his claim, he volunteered the opinion that the first symptoms of his disabling illness had emerged in November 1994. Although he seems now to assert that he discovered this at some time subsequent to 10 April 1996, it is not clear how that occurred. In any event, even if, in April 1996, he was not aware of the precise nature of his 1994 illness, its apparent severity (evidenced by a week in hospital) ought to have prompted him to make appropriate enquiries prior to completing his application form. Even if the form required something less than absolute accuracy, it is difficult to accept that failure to make appropriate enquiries of one's medical practitioners as to a relatively severe illness quite shortly before the time in question could amount to an appropriate discharge of whatever obligation was placed upon him. Of course these would be matters for the trustee. It is not necessary to decide whether the trustee's purported application of the trust deed (post-1997) after 1 July 1997 was liable to review by the tribunal in view of the conclusion that the trust deed (pre-1997) applied for present purposes.
Nature of the tribunal's determination
145 It is submitted that the tribunal did not consider whether or not the appellant had suffered a disablement, but only whether he was entitled to claim a benefit. It seems more likely that the trustee accepted that the appellant was disabled, but it does not matter for present purposes. The matter in issue is the correctness of the decision of Branson J. That decision concerned only the tribunal's decision to reduce any benefit for non-disclosure.
Construction of clause B.13 (pre-1997) as containing two limbs
146 For reasons which have been given, her Honour's construction was clearly correct.
Trustee's entitlement to enquire as to the appellant's prior health
147 It is submitted that the trustee was not entitled to enquire as to the appellant's medical history at any time prior to the date on which he joined the scheme. No justification is advanced for this view. No such point was taken at the time of joining. The appellant accepted the obligation imposed by the trustee and cannot now complain that he was not obliged to do so. In any event, the point is unarguable. The only question is whether, in the circumstances, cl B.13 applied.
DUTY TO DISCLOSE
148 The appellant's argument is that the obligation upon the appellant at the time of joining and for the purpose of cl B.13 was to disclose relevant circumstances of which he was aware. This point was not argued before Branson J, and the factual matters to which it relates were, in her Honour's view, not otherwise relevant to the proceedings before her. Thus it may be unfair to assume that the trustee accepted that the appellant was not aware of the nature of his 1994 illness. In any event, nothing in the application form suggested that the appellant was obliged only to answer to the best of his knowledge or that he was not obliged to make reasonable enquiries as to a condition which he had so recently suffered. The expression "mental or nervous disorder" is very broad and may be somewhat imprecise, but as is pointed out above, the appellant himself, in completing his claim form, thought it appropriate to refer to the prior condition. Apart from that, it is clear that his condition in 1997 was, in his view, attributable to stresses experienced in the workplace. He apparently informed Dr Gilkes, in 1994, that his problems had arisen from his relations with supervisors in his employment and that he was going to leave that job.
149 Clause B.13 applied if "the member did not provide an accurate statement in a form approved by the trustee as to the member's health and such other matters as the trustee may require …". There can be no doubt that the statement was not accurate. It is impossible to conceive of any construction of either cl B.13 or of the application form which would be sufficiently favourable to the appellant to enable him to succeed in this matter. In those circumstances no good point would be served by allowing him to raise this construction point. It must fail.
unfair or unreasonable not to pay a temporary incapacity benefit
150 There appears never to have been an application for a benefit for temporary incapacity. The appellant submits that no such application was necessary. Branson J did not consider the matter to be in issue before her. See TS 67 ll 21-23. It was certainly not referred to in the notice of appeal which was before her Honour. The appellant points to a number of equivocal references to such a benefit in the material. The references at AB 237, 255, 307 and 308 take the matter no further. It is true that in oral submissions before Branson J (TS 55 ll 32-33 and TS 56 ll 1-6) there is reference to the last paragraph of cl B.13. That clause, prima facie, reduced death, disability and temporary incapacity benefits. However the last paragraph permitted payment of a temporary incapacity benefit if the trustee so determined "by reason of special or exceptional circumstances". However, contrary to the appellant's submission to her Honour, the tribunal had found that there were no special or exceptional circumstances. See p 12 of the tribunal's reasons, at par 2. Clause B.8 dealt with temporary incapacity benefits. No basis has been demonstrated for disturbing this aspect of the tribunal's decision. There is no substance in this ground of appeal.
Orders
151 The appeal should be dismissed with costs.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of their Honours Justices Dowsett and Stone.
Associate:
Dated: 28 August 2002
Counsel for the Appellant: Mr P Bingham
Solicitor for the Appellant: Maurice Blackburn Cashman
Counsel for the Respondent: Mr TGR Parker
Solicitor for the Respondent: Allens Arthur Robinson
Date of Hearing: 22 May 2002
Date of Judgment: 28 August 2002
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SZIAU v Minister for Immigration and Multicultural Affairs [2007] FCA 899
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2007/2007fca0899
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2024-09-13T22:50:42.947790+10:00
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FEDERAL COURT OF AUSTRALIA
SZIAU v Minister for Immigration and Multicultural Affairs [2007] FCA 899
SZIAU v MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS AND REFUGEE REVIEW TRIBUNAL
NSD 1306 OF 2006
ALLSOP J
15 JUNE 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1306 OF 2006
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZIAU
Appellant
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: ALLSOP J
DATE OF ORDER: 15 JUNE 2007
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The notice of appeal filed on 6 July 2006 be treated as an application for leave to appeal from the orders of the Federal Magistrates Court made on 22 June 2006.
2. Time be extended for the filing and serving of such application for leave to appeal up to and including 6 July 2006.
3. The said application for leave to appeal be dismissed.
4. The appellant to the notice of appeal being the applicant to the said application for leave to appeal pay the first respondent's costs of the appeal treated as said application.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1306 OF 2006
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: SZIAU
Appellant
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: ALLSOP J
DATE: 15 JUNE 2007
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This proceeding was commenced by the filing of a notice of appeal against the orders of the Federal Magistrates Court made on 22 June 2006. For the reasons given below, the appeal is incompetent, given that leave was required. The matter was treated by the Minister as an application for leave to appeal, an application for an extension of time and as a substantive appeal.
2 The proceeding was called on for hearing before me on Friday 2 March 2007. During the days before 2 March 2007, the appellant had made an application for an adjournment based on a medical certificate indicating some back problems. I refused this informal application made without proper notice. On 2 March 2007, I gave reasons for that refusal. The appellant renewed his application for an adjournment on 2 March 2007. With the assistance of an interpreter he agreed to his substantive application being dealt with on the papers. I gave the parties an opportunity to file further written submissions which both parties took up.
3 The application for review before the Federal Magistrates Court was in respect of a decision of the Refugee Review Tribunal (the "Tribunal") made on 28 November 2005 and handed down on 15 December 2005, affirming a decision of the delegate of the Minister not to grant a protection visa.
4 On 19 October 2005, the Tribunal wrote to the appellant advising him that, on the material before it relating to his application, the Tribunal was unable to make a finding that was favourable to him. The Tribunal therefore, as it was obliged to do, invited the appellant to attend, and give oral evidence and present arguments, at a proposed hearing on 24 November 2005. On 21 November 2005, shortly prior to that hearing date, the appellant in writing advised the Tribunal that he did not wish to give oral evidence and that he consented to the Tribunal proceeding to make a decision. He also indicated that he would "submit a submission in the meanwhile". No such submission was provided to the Tribunal, which proceeded to deal with the matter.
5 On pages 4 to 6 of its reasons, the Tribunal summarised the appellant's claims as it understood them. They can be summarised as follows: The appellant is a citizen of Pakistan. Before the Tribunal the appellant claimed to have well-founded fear of persecution because of his membership of the Pakistan Peoples Party (the "PPP"). The appellant claimed to have been an important member of the PPP who took part in all elections and participated in demonstrations against the President of Pakistan's actions to dismiss the PPP government. When the Pakistan Muslim League ("the PML") won elections, the appellant was targeted because the PPP had previously been in opposition to the PML. Although the PML and PPP united to fight against the military dictatorship, the appellant claimed to have had false cases brought against him by the regime in Punjab and was unable to obtain police protection as the Interior Minister in Punjab was from the PML. The appellant's claims also included being detained, tortured, shot, having his shoulder dislocated and having his restaurant closed because of his political opinion.
6 The Tribunal's reasons were expressed as follows:
I accept that the applicant is a national of Pakistan. However, I have a number of problems with his claims. For example, although the applicant asserts that he was an important member of the PPP, he has provided little detailed information concerning his political activities. In relation to this, the applicant claimed to have been involved in elections, for instance, but has not provided details of his role in these elections. The applicant has also failed to provide details of the alleged false cases against him, or when, where and under what circumstances he was allegedly interrogated or arrested. The applicant stated that he went to Muscat, but has not explained what he did in Muscat, how long he remained there, or how he was able to return to leave and return to Pakistan if he was of adverse interest to the Pakistani authorities.
Overall, there is insufficient detail in the protection visa application to allow me to make findings of fact. As I am unable too make findings of fact in relation to the applicant's claims, I am not satisfied that the applicant has a well-founded fear of persecution for a Convention reason.
CONCLUSION
Having considered the evidence as a whole, I am not satisfied that the applicant is a person to whom Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. He therefore does not satisfy the criterion set out in s.36(2) of the Act for a protection visa.
7 The application to the Federal Magistrates Court was amended after a directions hearing. The terms of the documents were set out in the reasons of the Federal Magistrate at [6] and [7]:
[6.] The applicant filed an application on 3 January 2006 under s.39B of the Judiciary Act setting out the following three grounds:
1. That the RRT did not gave the applicant a fair chance of hearing. The RRT failed to appreciate the evidence and the claim of the applicant.
2. That the RRT did not took in to consideration the amount of the persecution to which the applicant has to face and the threat of life and liberty of the applicant is in danger.
3. That the applicant's claims self-explanatory as the interior minister is after the applicant. The RRT has erred in law and facts, the procedural unfairness was committed by the member of the RRT. (copied without alteration or correction)
[7.] The applicant attended first directions on 14 February 2006, and was granted leave to file an amended application. The amended application was filed on 13 April 2006 and contained the following three new grounds:
1. That the applicant was an active member of Pakistan Peoples Party working for the party from very beginning while he was a student. The interior minister of the previous regime who was than in the Pakistan Muslim League Nawaz Group was very personal against the applicant, after the army coup he her joined the ruling party namely PML (Q) group. As the applicant was working for the restoration of the democracy, the said minister who is in the power, the applicant was tortured and was open to persecution. The applicant was arrested many a times, and was bashed by the police under the instructions of the authorities. The applicant joined the above party while he was a student, the applicant use to take out the processions against the present regime working under the army authorities.
2. That the applicant being an active member of the party took part in the general elections in Pakistan. The applicant was known for his activities in the politics, the applicant use to take part in the demonstrations which were made against the present regime. The applicant was the president of the youth wing of the party within his own area, this shows the importance of the applicant. The applicant was open to persecution even before when the PML Nawaz group was in power and Pakistan Peoples Party Sialkot dated 15/01/2006. The president of the party was in the jail previously when the applicant requested before, the President of the Sialkot district party mentioned this in his letter, the applicant is attaching this letter with the amended application. This letter which is enclosed with this amended application bears the signature of the president duly dated 15/01/2006. The applicant was arrested many a times, the applicant was bashed by the hands of the police, the applicant was also many a times bashed by the workers of the opposition. The applicant was running a small hotel which was attacked many a times by the opposition, the ruling party. They have the full support of the ruling party as such the applicant was not given any type of remedy by the authorities despite the fact that the applicant many a times requested the authorities to give him the protection.
3. The Refugee Review Tribunal gave the verdict that the case of the applicant does not falls within the refugee law, it is submitted that in the refugee law and in the general laws of the refugee any person who can not be given protection in any way can be given the protection. The applicants family was under the constant harassments of the authorities concerned. The RRT did not took in to consideration the fact that the applicant was an active member of the political party, and is a person of importance as far as the acts of violence against the applicant are concerned. In the month of May 2005 the applicant was again arrested by the police, the applicant was kept in the lock up, the applicant was released after three days, the applicant took out the procession against the ruling party, The applicant was kidnapped by the workers of the ruling party, the applicant tried his beset to get the remedy, but the applicant could not get the remedy. The applicant left for Muscat to save his life for sometimes, the applicant came back to his country to see the situation, the applicant was again put to persecution, the applicant was again harassed by the hands of the opposite party, again the state protection was not available to the applicant, despite the request made to them. The applicants hotel was closedown as the opposite workers of the ruling party use to always attack on the said business place of the applicant. The case of the applicant falls well within the definition that any person who can not be given the protection can be given the protection. The applicant is not an criminal as such the applicants case was not considered by the RRT.
The Tribunal did not make findings in relations to these claims, specifically whether the events might occur again and whether the applicant had a well founded fear of persecution on this basis. In these circumstances, the tribunal decision involved jurisdictional error. (copied without alteration or correction)
8 The application to the Federal Magistrates Court was for an order:
…that the respondents show cause why a remedy should not be granted in exercise of the Court's jurisdiction under section 476 of the Migration Act 1958 in respect of the following decision.
9 Rule 44.12 of the Federal Magistrates Court Rules 2001 deal with a show cause hearing in the following terms:
(1) At a hearing of an application for an order to show cause, the Court may:
(a) if it is not satisfied that the application has raised an arguable case for the relief claimed — dismiss the application; or
(b) if it is satisfied that the application has raised an arguable case for the relief claimed — adjourn the proceeding and order a respondent to show cause at a final hearing why an order for the relief claimed should not be made on such of the grounds mentioned in the application as are specified by the Court; or
(c) without making an order under paragraph (b), make final orders in relation to the claims for relief and grounds mentioned in the application.
(2) To avoid doubt, a dismissal under paragraph (1) (a) is interlocutory.
10 The Federal Magistrate came to the view that there was no foundation to conclude that there was any error in the Tribunal's approach. He accepted the submissions of the first respondent that there was no breach of s 424A of the Migration Act 1958 (Cth) citing WAGP of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 124 FCR 276; SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2; SZEZI v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1195; and SZCIA v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 238.
11 Relying on these cases, the Federal Magistrate concluded that the reason for the affirmation of the decision of the delegate was, and was only, the lack of any assistance to enable the Tribunal to reach a state of satisfaction required to grant a visa. The Tribunal could not be satisfied that Australia had protection obligations without further assistance. The appellant declined to give that assistance.
12 The Federal Magistrate was of the view that the application and amended application so clearly lacked merit that he should dismiss the application under rule 44.12(1)(a). This was clearly an interlocutory decision, as confirmed by rule 44.12(2).
13 The notice of appeal stated that the Federal Magistrate erred in concluding that the application and amended application did not disclose an arguable case. In submissions filed on 19 February 2007, the appellant set out his factual claims for asylum. The complaint enunciated in those submissions was that the Tribunal failed to make findings in relation to the claims there set out. This overlooks the fact that the Tribunal was unable, on the material submitted by the appellant, to reach a state of satisfaction favourable to the grant of a visa for the purposes of s 65 of the Migration Act 1958 (Cth). In these circumstancesthere was no obligation on the Tribunal to make findings of fact one way or the other as to the material put forward. If the Tribunal was not satisfied by that material that Australia had protection obligations, it was obliged to invite the appellant to a hearing to provide more information. It did so. The invitation was declined. It was then obliged to say why it was not so satisfied. It did so.
14 In submissions filed on 28 March 2007, the appellant stated that he was not given "a chance for hearing before" the Tribunal. Reliance was also placed on SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63. No coherent basis wasput forward for either contention. The appellant was offered a hearing and declined it. The Tribunal did not in any way deny the appellant procedural fairness.
15 There was no arguable error in the Federal Magistrate's reasons. There was no arguable error attending the decision of the Tribunal. There is no basis for granting leave to appeal.
16 The orders of the Court will be:
1. The notice of appeal filed on 6 July 2006 be treated as an application for leave to appeal from the orders of the Federal Magistrates Court made on 22 June 2006.
2. Time be extended for the filing and serving of such application for leave to appeal up to and including 6 July 2006.
3. The said application for leave to appeal be dismissed.
4. The appellant to the notice of appeal being the applicant to the said application for leave to appeal pay the first respondent's costs of the appeal treated as said application.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.
Associate:
Dated: 15 June 2007
The Appellant appeared in person with the assistance of an interpreter.
Counsel for the Respondent: Ms R Pepper
Solicitor for the Respondent: Blake Dawson Waldron
Date of Hearing: 2 March 2007
Date of Final Submissions: 28 March 2007
Date of Judgment: 15 June 2007
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DZADG v Minister for Immigration and Citizenship [2012] FCA 1279
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2012/2012fca1279
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2024-09-13T22:50:45.591852+10:00
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FEDERAL COURT OF AUSTRALIA
DZADG v Minister for Immigration and Citizenship [2012] FCA 1279
Citation: DZADG v Minister for Immigration and Citizenship [2012] FCA 1279
Appeal from: DZADG v Minister for Immigration and Another [2012] FMCA 873
Parties: DZADG v MINISTER FOR IMMIGRATION AND CITIZENSHIP and GERRY CARWARDINE IN HIS CAPACITY AS INDEPENDENT PROTECTION ASSESSOR
File number: NTD 30 of 2012
Judge: MANSFIELD J
Date of judgment: 16 November 2012
Date of hearing: 14 November 2012
Place: Darwin
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 39
Counsel for the Appellant: A Burt and A Abayasehara
Solicitor for the Appellant: Northern Territory Legal Aid Commission
Counsel for the Respondents: T Anderson and M Dixon
Solicitor for the Respondents: Australian Government Solicitor
IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
GENERAL DIVISION NTD 30 of 2012
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: DZADG
Appellant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
GERRY CARWARDINE IN HIS CAPACITY AS INDEPENDENT PROTECTION ASSESSOR
Second Respondent
JUDGE: MANSFIELD J
DATE OF ORDER: 16 NOVEMBER 2012
WHERE MADE: DARWIN
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the first respondent's costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
GENERAL DIVISION NTD 30 of 2012
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: DZADG
Appellant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
GERRY CARWARDINE IN HIS CAPACITY AS INDEPENDENT PROTECTION ASSESSOR
Second Respondent
JUDGE: MANSFIELD J
DATE: 16 NOVEMBER 2012
PLACE: DARWIN
REASONS FOR JUDGMENT
INTRODUCTION
1 The appellant is a 60 year old Iranian citizen, who arrived in Australia on 6 March 2011. On 14 May 2011 the appellant applied for a protection visa. A delegate of the first respondent made a decision to refuse the application for a visa on 4 July 2011. The appellant's claim was then automatically referred for Independent Protection Assessment by the Independent Protection Assessor (the Assessor) and on 10 February 2012 the Assessor affirmed the decision of the delegate of the Minister.
2 The appellant applied for judicial review of the Assessor's decision in the Federal Magistrate's Court on 21 March 2012 based upon jurisdictional error. On 16 August 2012 that Court dismissed the application. The present appeal is an appeal from the decision of the Federal Magistrate.
BACKGROUND
3 The Federal Magistrate helpfully summarised the background of this matter at [4]-[5] as follows:
In substance, the case concerns a retired teacher from Iran. He had suffered various difficulties at the hands of the regime in that country throughout his life. He initially was unable to continue his preferred topic of studies at university as a result of his anti-regime activities. He then became a teacher and taught for 30 years, it seems, without incident or restriction other than that he was the subject of an interview each year, which not every teacher suffered. Although from some years, it seems all teachers were interviewed by the regime officers and other years only those that they had a higher level of concern about were interviewed, such as the applicant.
Following his retirement, he then participated in demonstrations in 2009. Following those demonstrations, he was concerned that he would have been of greater concern to the authorities and claimed that he had been photographed and would ultimately be located by internal security forces, and that he had participated in some underground activities. Some time after this, around 14 months later (see paragraphs 97 and 98 of the decision), he left Iran.
4 The appellant's claim for a protection visa was expressed to the Assessor in the following way (the Assessor's reasons at [15]-[16]):
[H]e left because he was concerned about his safety for participating in demonstrations after the 2009 election. He participated in four or five. Asked why he was concerned about his safety he responded that a friend had seen his photo with those of other demonstrators. The friend told him this in December 2009 and said, 'The police might come and arrest you.' As he was travelling they could not find him. Asked why he did not leave until a year after he was told, he responded that it was after six months. Nothing happened, but he was concerned that it would. There were no other reasons for leaving.
Asked were there any reasons why he could not return to Iran, he responded that the government did not respect humans. He might be persecuted and detained because of the photographs. Asked how they would know he had returned, he replied that he had to return through the airport. Why he was asked, after the passage of time should something now happen? He observed that they did not know where he was before. His friend has told him that the intelligence services were 'finding people who attended by their photos'. There were no other reasons for not wishing to return.
5 Further clarification of the claim was provided to the Assessor by way of letter from the appellant's solicitor dated 25 October 2011. That letter states:
Our client will be perceived as opposing the Iranian regime for the following reasons:
a. his participation in the following anti-regime activities:
i. Numerous demonstrations after the national elections of June 2009, including the Ashura Day celebrations in 2009;
ii. Underground meetings after 2009 to discuss political opinions.
b. his attempt to secure protection in Australia.
Prior to travelling to Australia, the Iranian authorities prevented our client from continuing his university studies and restricted his activities while he was a university student. Additionally, the authorities closely monitored his activities after he participated in the 2009 demonstrations. In fact, his friend warned him that the Etelaat were pursuing him. In response, he was obliged to go into hiding.
Unjustifiable and discriminatory conduct directed at an individual or group is capable of being characterised as persecution.
THE ASSESSOR'S REASONS
6 The Assessor accepted that the appellant's evidence with respect to his life and experiences up to the 2009 protests. Regarding the evidence beyond this, the Assessor stated at [77] that:
However some inconsistent and contradictory evidence concerning events during and after the protests, together with his introduction of new information are not unimportant and cannot be ignored in regard to credibility. Moreover some of his assertions going beyond his own personal experience were at variance with reliable country information. These matters are discussed later in these reasons.
7 The Assessor then assessed the factual basis of the appellant's claim in approximately chronological order. Beginning with the appellant's claim that regarding his university studies, the Assessor found:
84. In regard to prevention of his completing industrial accounting studies at university due to political views in 1979, the Assessor notes that he returned to teaching and taught until he retired in 2008. Whilst he was questioned at the start of each school year by the Herasat, so were some other teaching colleagues; on occasions all teachers were questioned. So whilst he suffered some harm by not completing accounting studies, he nonetheless had a career of over 30 years as a teacher (he commenced in 1976). [Section] 91R(1)(b) of the Act requires persecution to involve serious harm. [Section] 91R(2) sets out a non-exhaustive list of the types and levels of harm that will meet the serious harm test. These range from a threat to life, to significant physical harassment or ill-treatment to significant economic hardship threatening the capacity to subsist, through denial of access to basic services or the capacity to earn a livelihood, which again threatens the capacity to subsist. The Assessor, noting the contended discrimination involves removal from university and then annual questioning, whilst seeing this as harmful, finds it falls well short of the types and levels of harm needed to be qualified as 'serious harm'. So in regard to this discrimination it does not involve serious harm and the claimant in any event had expressed no sense of concern or fear about the matter. Given all this the Assessor accepts that he had some modest subjective fear, but as the harm faced was not 'serious harm' there is no objective basis to his fear of persecution.
8 Then, addressing the Ashura Day protests, the Assessor stated that he accepted the appellant's claim about his participation in that event: at [87].
9 The Assessor did not accept the appellant's claim, however, with respect to the photograph and underground activities:
92. In regard to the claimant's actions after the Ashura Day protest, the Assessor takes account that without hindrance he continued to process his retirement formalities with the education department, a government organisation; he continued to draw his pension until he departed Iran and it continued being paid into his account until at least September 2011 and payment may be continuing; he used teacher's accommodation in Iran though he moved around frequently – the CMN [the appellant's solicitor] submission mentions that he also stayed at home or in a relative's home, the claimant did not state this at either the POE [Protection Obligation Evaluation] or IPA [Independent Protection Assessment] hearing; he himself applied for and obtained a valid passport and the aircraft ticket in his own name; and he departed Iran using his passport though the smuggler may have bribed an official at the departure gate. It is also noted the claimant told the POE delegate that he ceased protesting after Ashura Day as he was busy processing his retirement. The claimant and the agent have mentioned at various times that the claimant went into 'hiding' or went 'underground' after being told the Etelaat was searching for him.
93. The weight of the foregoing shows the claimant continued interacting with a range of government authorities from Ashura Day until he departed Iran. He showed few if any signs that he perceived that he was being sought by the authorities. After consideration of all the available material the Assessor finds that the claimant did not go into hiding or go underground after Ashura Day or that he was in fear of persecution. Given this the Assessor does not accept the Etelaat were seeking the claimant and find accordingly.
10 The Assessor then considered some of the country information in regards to the Ashura Day protests, in particular the reports of arrests: at [96]. The Assessor considered that the appellant was not a high visibility activist. The Assessor did not accept that the claimant came to the adverse notice of the authorities, and that that was supported by the earlier finding that the appellant had not gone into hiding and did not in fact fear persecution, and that accordingly, the appellant was of no interest to the authorities.
11 The Assessor then considered the reason for the 14 month delay in leaving, noting the inconsistency between the appellant's claim of hiding, needing money and then claims of having to make payments to his wife. The Assessor did not find the appellant a credible witness concerning subsequent events after the demonstrations. The Assessor states at [98]:
Taking account of this and the earlier finding that he did not go into hiding or go underground or that the Etelaat were seeking him, the Assessor is not satisfied and so finds that the claimant was photographed and identified at the protests by the Etelaat or any other authorities.
12 After addressing two minor factual points, the Assessor concluded that he did not accept that there is a real chance the claimant will suffer serious harm due to his actual or imputed political opinion: at [101].
13 The Assessor then considered the appellant's claim that he would be perceived as opposing the regime due to seeking protection in Australia. The Assessor's findings are at [103]-[108]. The Assessor's findings on that point were not appealed against.
THE FEDERAL MAGISTRATE'S REASONS
14 The appellant applied for review to the Federal Magistrates Court on the following basis:
(1) The decision of the [Assessor] was made in breach of an essential pre-condition to its jurisdiction or the exercise of its power to recommend that the appellant not be recognised as a person to whom Australia has protection obligations under the 1951 Convention relating to the Status of Refugees, as amended by the 1967 Protocol relating to the Status of Refugees and/or it failed to observe the requirements of procedural fairness and/or it exceeded its jurisdiction and/or constructively failed to exercise jurisdiction and/or its decision was affected by an error of law.
Particulars
(a) The [Assessor] failed to address one of the claimed bases of the appellant's fear of persecution and/or to consider and/or deal with an integer of the claims and/or a relevant consideration and/or the case as put and/or a central element of the appellant's claim being the claim that the appellant feared persecution by reason of his "profile" of continued individualised monitoring while he was a teacher for over 30 years which was separate from the claims of serious harm due to his actual/imputed political opinion of opposition to the regime by way of participation in protests in 2009, underground activities around the time of the protests, or dissident activities over 30 years ago, or that due to any of the foregoing his pension payments would be stopped. This claim which was not considered compounded his accepted conduct of attendance at protests in 2009 and provided an additional adverse dimension to his anti-regime activities.
15 The Federal Magistrate considered that the 14 month period after the demonstrations and prior to the appellant leaving Iran "allowed a considerable period of time from which one could assess the impact of his overall activities in Iran from his earliest days to date" and that the Assessor found "that there was no adverse action against him or interest taken in him during this time which fuelled the finding that he was not at risk": at [16]-[17]. In contrast to cases where the appellant leaves immediately, or goes into hiding, the Federal Magistrate found:
19. Here, however, the actual impact of his overall political profile over a 14-month period was before the Assessor. This provided an opportunity to make findings with respect to his actual risk during that 14-month period. It did not absolve the Assessor from considering the future. However, given the circumstances of the case, it does not appear to me that it required lengthy discussions rather than references to the findings that had substantially been made. To this extent, paragraph 105, in considering the future, squarely deals with this aspect of the claim.
20. Ultimately, I am therefore not persuaded that the Assessor failed to deal with an integer of the claim, namely, the applicant's profile, as he certainly dealt with the totality of the applicant's circumstances and the totality of those as viewed against the possibilities of action by the regime, with the benefit of the evidence of what occurred over the 14-month period prior to the applicant leaving and also specifically considering the future if he were to return and continue to participate in the way in which he had in the past at paragraph 105.
21. For these reasons, I would refuse the applicant's application.
16 The Federal Magistrate also considered that the question of separating the appellant's profile from the actual circumstances, "is more a matter of academic distinction than practical reality" (at [22]) because of the period of 14 months after the appellant ceased working as a teacher, and that nothing of significance had apparently occurred during that period or since the appellant had left Iran.
GROUNDS OF REVIEW
17 The appellant's contention before the Federal Magistrate was reargued on appeal, namely that the Assessor had failed to consider an integer of the Appellant's claim that he feared persecution by reason of his "profile" of continued individualised monitoring while he was a teacher for over 30 years.
18 The appellant submits that the claim that the appellant would be at risk on account of his political profile (his perceived opposition to the Iranian regime) was put to the Assessor at the interview with the Assessor on 18 November 2011, namely that "the claimant had a profile; he was monitored and has been photographed". During that hearing, the appellant said:
• At the beginning of every school year he would be questioned [by the authorities] on personal information like where he lived and how many kids he had. This interviewing was only for certain people, a "sub-set" of teachers who were being monitored.
• The reason for the appellant being in that subset was because when he first started teaching he had been expelled from university, because of his political views.
• The appellant had a normal teaching career, but knew that he was being watched and there were things he could not do any more.
As noted, the Assessor accepted the appellant's account of his pre-2009 background.
19 It is argued that the Assessor did not however make a finding as to whether the appellant feared persecution by reason of his profile, as demonstrated by his treatment prior to 2009. The separate claim, based upon that treatment, it is accepted, was rejected because the treatment did not constitute serious harm, even though the Assessor also accepted that the appellant had the "modest subjective fear" of that conduct by the regime continuing.
CONSIDERATION
20 The Tribunal has an obligation to consider any claim that the appellant fears persecution for a particular reason which, if accepted, would justify concluding that the appellant has satisfied the relevant criteria and if that contention is supported by probative material: Applicant WAEE v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 184 at [45]. Failure to do so is a jurisdictional error. It may, however, not be necessary to make an express 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 that has been rejected: Applicant WAEE v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 184 at [46].
21 The issue in this appeal as exposed by the respective submission is whether the appellant made the claim that his "profile" (as evidenced by him being monitored prior to and over the 30 years of his teaching career), so that he had a well-founded fear of persecution by reason of perceived political opinion, was made as a claim separate from and additional to the claim of fear of persecution for that reason by his participation in demonstrations in 2009, and underground meetings after 2009.
22 In my judgment, the Assessor is not shown to have overlooked any basis of the appellant's claims, or to have misunderstood any of those claims or any separate integer of them.
23 In relation to his "profile", that is the history of 30 years of superintendence or oversight of his activities, the Assessor accepted his evidence that he therefore was perceived as having certain political opinions. The Assessor accepted that the appellant, by reason of that conduct on the part of the regime until he retired as a teacher in 2008, had a subjective fear of further harm of that character. The Assessor did not accept that the harm the appellant had suffered over that period was serious, judged objectively, as required by s 91R of the Migration Act 1958 (Cth). It followed that unless there was, objectively, some basis for the appellant facing more serious consequences in the future, at least from 2009, as a result of his profile, he would still not be eligible for a protection visa.
24 The Assessor also accepted that the appellant subjectively feared more serious harm, should he return to Iran, by reason of his conduct in demonstrations during and after 2009. The appellant's fears extended to him being imprisoned and tortured. That fear was identified by the Assessor as being based on grounds of his actual or imputed political opinion (at reasons [85]).
25 In that context, the Assessor identified the appellant had participated in demonstrations, including the Ashura day protest, during 2009. However, for reasons the Assessor gave, the claims of the appellant that he had been photographed in 2009 by the authorities and that the appellant had been in hiding for much of the following 14 months were not accepted. They are summarised in the Assessor's reasons at [92] and [93] quoted above.
26 In addition, the Assessor looked at the appellant's claims from the more general perspective of the information about the persons that the authorities were pursuing after the 2009 election protests. There was obviously a campaign by the authorities to target a range of persons involved in the demonstrations. The Assessor noted they may have exceeded 5000 persons. The Assessor recorded that those persons were generally "high visibility" targets such as "human rights and student activists, journalists, bloggers, potential leaders, independent trade unionists and political dissidents".
27 The Assessor found that the appellant did not fall into any of those categories. In making that assessment, reference was made to the appellant some 30 years before having been removed from University for political activity and to his years of teaching, and to his age, and to his role in the demonstrations in particular the Ashura day protest. Counsel for the appellant acknowledged that the only missing information in that recital of factors is relevant to his profile is in the annual interview or monitoring of the appellant.
28 The Assessor also accepted that the initial wave of arrests included many ordinary people, but they were released after short periods. The appellant did not contend that he fell into that category for present purposes.
29 Then the Assessor found that the appellant had not come to the attention of the authorities during the demonstrations. Reference in that context was to the fact that he did not go into hiding following the Ashura day protest, and what the assessor regarded as unreliable evidence of the appellant participating in any underground meetings after 2009.
30 As noted, counsel for the appellant accepted that the only matter missing from the recital of factors explaining why the appellant was not in the categories of persons targeted by the authorities as a result of the demonstrations is that, during his teaching career, he was annually interviewed and monitored.
31 However, in the context of that fact of the Assessor's reasons, I am not persuaded that the Assessor overlooked that matter. That is particularly so because reference is made at the same point to the appellant's political activities causing his removal from his university studies. In addition, even though his evidence was that he (and only selected other teachers) were on the list of teachers to be monitored, he had a normal teaching career except for being restricted in what he could do. He did not expand on those restrictions in his evidence.
32 It is apparently correct, as counsel for the appellant said, that his concerns were not simply that he may be exposed to the sort of monitoring after retirement that he had experienced for some 30 years.
33 She contended that he claimed to be, and was, vulnerable to serious harm by reason of perceived political opinion in any event either because of his profile (irrespective of his participation in demonstrations during 2009) or because of his profile in conjunction with his overt participation in demonstrations in 2009.
34 In my view, the former of those two claims was not in fact made by the appellant in terms which obliged the Assessor to consider it: cf NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) (2004) 144 FCR 1 at [68]. The Assessor records his claims from his entry interview of 9 March 2011, his statutory declaration of 14 May 2011, and his solicitor's letter of 25 October 2011. They all focus on the consequences of him having participated in demonstrations between about June and December 2009. Counsel for the appellant submitted, however, that the particular claim emerged clearly from the transcript of the Assessor's interview of 17 November 2011. I accept that the transcript shows the appellant refers to him having been put on a list for his perceived or actual political opinions when at University, now over 30 years ago, and having remained on that list, as evidenced by his annual monitoring whilst working as a teacher. But it does not claim that that profile of itself exposed him to the risk of persecutory conduct.
35 The transcript shows that the appellant claimed to have become concerned for his safety, after participating in the demonstrations, only when he was told that a photograph of him had been taken during one of the demonstrations, and that the security forces were looking for him. His previous profile, he feared, would be or had been used as a means of identifying him. It was, he said, only then he went into hiding. That is the way in which, in his evidence to the Assessor, he gave significance to his earlier profile.
36 As the Federal Magistrate pointed out, that claim was carefully considered by the Assessor. It was rejected because, in significant respects, the appellant's factual assertions were not accepted. In particular, as the passages quoted above from the Assessor's reasons show, it was not accepted that the appellant had been photographed during the demonstrations, or that he had been identified by the security forces or that they were looking for him. The key link to his previous "profile" was not made out.
37 In any event, in my view, the Assessor considered whether the appellant's profile prior to the demonstrations was, or might have been, a matter which drew him to the attention of the security services following the demonstrations. The Assessor at [96] of his reasons addressed that question. As I have noted above at [27], I do not accept that error, and certainly not jurisdictional error, is shown by the Assessor at that point by not specifically referring to the teaching career as being subject to monitoring. Clearly the assessor could not have overlooked that, in the context of his references to that elsewhere in his reasons.
38 Accordingly, I consider that the appeal must be dismissed. The error asserted by the appellant both before the Federal Magistrate and on this appeal is not made out.
39 The appellant must pay to the first respondent costs of the appeal.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.
Associate:
Dated: 16 November 2012
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Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (No 2) [2007] FCA 36
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2007/2007fca0036
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2024-09-13T22:50:46.609750+10:00
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FEDERAL COURT OF AUSTRALIA
Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (No 2) FCA [2007] 36
COSTS – intervenor – examination proceedings under Corporations Act 2001 (Cth) - powers of court – constitutional validity – intervention by Australian Securities and Investments Commission – whether intervenor liable to costs – substantive participation – costs awarded against ASIC and apportioned with other respondents
Corporations Act 2001(Cth) s 1330
Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd [2007] FCA 13 cited
HIGHSTOKE PTY LTD (ACN 109 142 225) AS TRUSTEE FOR HOLDERS OF DEBENTURE STOCK ISSUED BY PERFORMANCE FINANCE LIMITED (IN RECEIVERSHIP) v HAYES KNIGHT GTO PTY LTD (ACN 009 101 286) AND JOHN MICHAEL O'BRIEN
WAD 198 OF 2005
FRENCH J
19 JANUARY 2007
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAD198 OF 2005
BETWEEN: HIGHSTOKE PTY LTD (ACN 109 142 225) AS TRUSTEE FOR HOLDERS OF DEBENTURE STOCK ISSUED BY PERFORMANCE FINANCE LIMITED (IN RECEIVERSHIP)
AND: HAYES KNIGHT GTO PTY LTD ACN 009 101 286
First Respondent
JOHN MICHAEL O'BRIEN
Second Respondent
judge: french j
DATE OF ORDER: 19 january 2007
WHERE MADE: PERTH
THE COURT ORDERS THAT:
The respondents' costs of the application up to 8 February 2006 be paid by the applicant and the costs thereafter be paid as to two-thirds by the applicant and one-third by the intervener.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAD 198 OF 2005
BETWEEN: HIGHSTOKE PTY LTD (ACN 109 142 225) AS TRUSTEE FOR HOLDERS OF DEBENTURE STOCK ISSUED BY PERFORMANCE FINANCE LIMITED (IN RECEIVERSHIP)
AND: HAYES KNIGHT GTO PTY LTD ACN 009 101 286
First Respondent
JOHN MICHAEL O'BRIEN
Second Respondent
JUDGE: FRENCH J
DATE: 19 january 2007
PLACE: PERTH
REASONS FOR JUDGMENT ON COSTS
1 On 3 August 2005 the Australian Securities and Investments Commission (ASIC) authorised Highstoke Pty Ltd (Highstoke) to apply to the Court for the issue of a summons under s 596A of the Corporations Act 2001 (Cth) (the Act) in relation to Hayes Knight GTO Pty Ltd (Hayes Knight). Highstoke was the successor to Hayes Knight as the trustee for the debenture holders of Performance Finance Ltd (Performance Finance). Receivers had been appointed to Performance Finance by Hayes Knight as trustee shortly before its removal from that office on the application of two of the debenture holders. On 2 September 2005 Lee J made an ex parte order on the application of Highstoke fora summons toissue for the examination of John O'Brien, a director of Hayes Knight, in relation to the examinable affairs of that company.
2 The purpose of the examination was to ascertain, inter alia, the level of insurance cover carried by Hayes Knight at the relevant time so that Highstoke could assess the prospect of satisfying any judgment it might obtain in a damages action commenced by it against Hayes Knight on behalf of the debenture holders. Hayes Knight applied to the Court in those proceedings (the Examination Proceedings) for an order discharging the summons on the basis that the power of the Court to conduct an examination in connection with the examinable affairs of a company did not extend beyond companies under external administration, and if the power did extend to a company not under such administration, it involved the exercise by the Court of non-judicial or executive power beyond the competence of the Parliament to confer upon it.
3 Hayes Knight also sought judicial review of the ASIC decision to authorise Highstoke to apply for the summons (the Judicial Review Proceedings). Hayes Knight first raised the constitutional point at the commencement of the hearing before Siopis J on 18 November 2005. The point having been raised, the hearing was adjourned so that notices could be issued under s 78B of the Judiciary Act 1903 (Cth) to the Attorneys‑General of the Commonwealth and the States. On 8 February 2006, ASIC filed a notice of intervention pursuant to s 1330 of the Act. That section provides:
'(1) ASIC may intervene in any proceeding relating to a matter arising under this Act.
(2) Where ASIC intervenes in a proceeding referred to in subsection (1), ASIC is taken to be a party to the proceeding and, subject to this Act, has all the rights, duties and liabilities of such a party.'
Subsection (3) is not relevant for present purposes.
4 The Examination Proceedings and the Judicial Review Proceedings were heard together. At the hearing ASIC, as intervenor, supported Highstoke's construction of the power under s 596A as extending beyond corporations subject to external administration. It also argued for the constitutional validity of the section thus construed. ASIC opposed the judicial review application in which it was named as a respondent along with Highstoke.
5 On 16 January 2006 I delivered judgment discharging the examination summons and quashing the decision made by ASIC on 3 August 2005. ASIC and Highstoke were directed to pay the costs of the judicial review proceedings. Costs were reserved until today on the application to discharge the summons. The parties were given an opportunity to make submissions as to the costs in the Examination Proceedings – Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd [2007] FCA 13.
6 Hayes Knight seeks an order that ASIC pay two-thirds of its costs in the Examination Proceedings from 8 February 2006, which was the date upon which ASIC intervened. Its submissions were, in substance, as set out at par 15, listing circumstances which it said weighed heavily in favour of an order that ASIC pay two-thirds of its costs in relation to the constitutional matter:
'(a) ASIC's charter, under s 1(2) of the Australian Securities and Investments Commission Act 2001(Cth), is to duly and properly administer the laws conferring functions and powers on it;
(b) this proceeding, and WAD 281 of 2005, arose as a result of ASIC having improperly exercised the powers conferred on it;
(c) ASIC elected to intervene in this proceeding under s 1330(1) of the [Corporations Act], and by virtue of s 1330(2) of the [Corporations Act] is taken to be a party with all the duties and liabilities of a party;
(d) the interpretation of the [Corporations Act] is a matter of public importance and as ASIC is charged with administering the legislation, it was appropriate for ASIC to intervene under s 1330(1)of the [Corporations Act]. However, parliament has seen fit to impose on ASIC, by s 1330(2) of the [Corporations Act], the usual liabilities of a party (including costs) as a consequence of intervening under s 1330(1)of the [Corporations Act];
(e) ASIC aggressively defended its position generally. In this regard:
(i) the Respondents' first submissions on the constitutional matter dated 4 April 2006 set out the legal argument on the constitutional matter in 8 paragraphs (at [16] to [23];
(ii) ASIC's submissions filed on 2 May 2006 raised detailed arguments concerning the construction of s 596A of the [Corporations Act], as well as detailed arguments on the constitutional validity of the proposed examination; and
(iii) ASIC filed supplementary submissions on 18 May 2006;
(f) ASIC contentions have been held to be incorrect;
(g) ASIC's involvement in this proceeding caused the Respondent to incur substantial, additional costs in responding to ASIC's submissions and additional hearing time; and
(h) the Respondents were entirely successful'
7 Highstoke, seeking to spread the burden of the costs in the Examination Proceedings, submits that ASIC and itself should be ordered to pay them, in effect, jointly and severally. It submits that if there is any differentiation to be drawn then ASIC should bear two-fifths of the costs and Highstoke three-fifths. Highstoke, in effect, accepts that any costs order, as against ASIC, should apply to costs incurred after 8 February 2006, the date of ASIC's intervention.
8 ASIC argues that the ordinary rule that costs follow the event, does not apply to interveners. It says that there should be no order as to costs against it and its reasons for that are set out in summary in par 15 of its submissions. I refer to those now:
'15.1 the respondents raised the constitutional matter on 18 November 2005 against the applicant;
15.2 the hearing scheduled for 18 November 2005was adjourned to allow the respondents to issue notices under section 78 of the Judiciary Act;
15.3 ASIC intervened on 8 February 2006;
15.4 the respondents were required to file submissions in support of the constitutional matter first;
15.5 the intervener and the applicant filed responsive submissions;
15.6 the intervener did not adduce any evidence;
15.7 the constitutional matter raised novel and important questions concerning the interpretation of Commonwealth legislation;
15.8 there was [sic] conflicting interpretations of the judicial opinions related to this issue and no case directly on point;
15.9 if the intervener had not become involved, the constitutional matter would still have been argued between the respondents and the applicant;
15.10 the hearing was rescheduled for 24-26 May 2006 to ensure sufficient time for all arguments inthis application and WAD281 of 2005;
15.11 the intervener made oral submissions on the afternoon of 24 May 2006 only, and the hearing time was not extended due to the intervenor's involvement;
15.12 the intervener's role was to assist the Court in the interpretation of a new issue raised in relation to the Corporations Act which the intervener administers;
15.13 a courtesy extended to the intervener's senior counsel to address the Court before the applicant's counsel in order to permit senior counsel to save time, resulted in the applicant being in a position to endorse any submissions made on behalf of the intervener, which were of principal benefit to the applicant in assisting its case. It did not mean that the intervener was responsible for the majority of the submissions associated with the constitutional matter, as the applicant made some different submissions on the point;
15.14 the interpretation of the Corporations Act is a matter of general public importance, and the intervener should not be discouraged from actively participating to assist the Court by costs orders which effectively penalise the intervener for its involvement;
15.15 there are no special circumstances which require that the intervener pay all or part of the respondents' costs on the constitutional matter they raised.'
9 In my opinion s 1330 of the Act does contemplate that an intervener, as a party, may be liable to a costs order. It is not necessary, for present purposes, to expound any general rules for the imposition of a costs order on an intervener under that provision. In my opinion if special circumstances are required to support such an order and I am inclined to think that they are not, albeit there may be a restraint principle which emerges from the very nature of intervention, they are made out here. ASIC was the decision-maker, which, in a sense, precipitated the proceedings by authorising Highstoke, as an eligible applicant, to apply for a summons for a purpose which, as I have held, was beyond power. ASIC took a substantive and not merely an assisting role in the proceedings. The public interest dimension of that role did not have any special features about it and was closely related to the particular interest of other parties, as well as the legitimate interest of ASIC in the scope of the powers, which are conferred by the particular provisions with which the Court was concerned.
10 In my opinion ASIC should bear some, but not all, of the costs of the Examination Proceedings from the date of its intervention. I do not consider that they should be limited to the costs of the constitutional matter. ASIC put in substantive submissions in relation to the constructional issue, which was, of course, of equal importance to it as a matter of principle, it being one of the classes of eligible applicant who may apply for a summons under s 596A. I will order that ASIC pay one-third of the respondents' costs of the application from 8 February 2006 and that Highstoke pay two-thirds of the costs from that date. Highstoke is to bear the costs of the application up to that date.
11 While Highstoke argued for an equal apportionment from that date, I consider it had the principal carriage of the proceedings and occasioned the litigation by its application. The order, in the Examination Proceedings, WAD198 of 2005, will be:
The respondents' costs of the application up to 8 February 2006, be paid by the applicant and the costs thereafter be paid as to two-thirds by the applicant and one-third by the intervener.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French .
Associate:
Dated: 31 January 2007
Counsel for the Applicant: Mr DR Kilpatrick
Solicitor for the Applicant: Williams & Hughes
Counsel for the Respondents: Mr J Garas
Solicitor for the Respondents: Allens Arthur Robinson
Counsel for the Intervenor: Ms KA Vernon
Solicitor for the Intervenor: Australian Securities and Investments Commission
Date of Hearing: 19 January 2007
Date of Judgment: 19 January 2007
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Hakimi v Minister for Immigration & Multicultural Affairs [2000] FCA 84
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2000/2000fca0084
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2024-09-13T22:50:49.579896+10:00
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FEDERAL COURT OF AUSTRALIA
Hakimi v Minister for Immigration & Multicultural Affairs [2000] FCA 84
MIGRATION - appeal from decision of Refugee Review Tribunal affirming refusal to grant protection visa – Afghani national – whether Tribunal erred in law in rejecting application on the basis of factual inconsistencies and credibility – factual findings adverse to applicant on issues critical to refugee status – whether findings adequately explained – no reviewable error – application dismissed.
Migration Act 1958 (Cth) s 430
Migration Regulations 1958 (Cth) cl 866.221
MOHAMMAD NABI HAKIMI v MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
W139 OF 1999
FRENCH J
11 FEBRUARY 2000
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY W139 OF 1999
BETWEEN: MOHAMMAD NABI HAKIMI
Applicant
AND: THE MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: FRENCH
DATE OF ORDER: 11 FEBRUARY 2000
WHERE MADE: PERTH
THE COURT ORDERS THAT:
1. The application is dismissed.
2. The Applicant is to pay the Respondent's costs of the application.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY W139 OF 1999
BETWEEN: MOHAMMAD NABI HAKIMI
Applicant
AND: THE MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: FRENCH
DATE: 11 FEBRUARY 2000
PLACE: PERTH
REASONS FOR JUDGMENT
The Background to these Proceedings
1 Mohammad Hakimi is an Afghani citizen. He was born in Afghanistan on 31 March 1978. He is married with two very young sons who remain with his wife in Afghanistan. His parents, three brothers and two sisters also live in Afghanistan. In April 1999 he left Afghanistan and travelled to Australia. His father paid $8,000 to a "smuggler" to arrange for the journey. He arrived in Australia as an illegal immigrant, having travelled here by boat with no relevant travel documents. He was placed in detention at the Port Hedland Detention Centre and has remained at the Centre since his arrival.
2 On 24 June 1999, Hakimi made an application for a protection visa. A statement was submitted with the application by his then legal advisers, Macpherson & Kelley. He claimed that early in 1999, shortly after fighting between Taliban militia forces and those of a political party called Jamiat-E-Islami, near his hometown of Emamsahib, the Taliban had conscripted his three brothers to fight for them. His brothers had been forced to go and were beaten by the Taliban on account of their initial refusal. He and his father were also beaten but Hakimi was not taken at the time because of his father's age. In spite of this apparent exemption, Taliban personnel came to his home again about six weeks later to "recruit" him. However he was sick at the time and on his father's promise to send him to the Taliban when he was better, they went away. According to Hakimi's initial statement he did not agree with Taliban actions and did not want to go and fight for them. The very next day, his father took Hakimi to an uncle's home at Kunduz as it was not safe for him to remain in Emamsahib. His father raised money to pay a smuggler to get Hakimi out of Afghanistan. Hakimi said he expected that had he remained in Afghanistan the Taliban would have killed him for not agreeing to fight for them or would have sent him to fight where he would be killed.
3 On 25 August 1999 a delegate of the Minister refused the protection visa application on the basis that Hakimi was not a person to whom Australia had protection obligations under the Refugee Convention. On 30 August 1999, Hakimi lodged an application for review of that decision with the Refugee Review Tribunal. It was supported by a submission prepared by his lawyers. On 11 November 1999, the Tribunal affirmed the decision not to grant a protection visa. On 16 November 1999, Hakimi lodged an application in this Court seeking an order for review of the Tribunal's decision.
The Decision of the Refugee Review Tribunal
4 Following a reference to the relevant provisions of the Refugees Convention and case law, the Tribunal referred to "The applicant's claims" by which it appears to have meant the applicant's written submissions to departmental officers and the records of interview with them together with written submissions to the Tribunal. It also referred to Hakimi's oral evidence given to the Tribunal at a hearing on 3 November 1999.
5 Hakimi had told the Tribunal and/or departmental officers that his father was a farmer in Afghanistan although initially he could not say what kind of farming they carried out as the work was done by his father and brothers. Later he said they cultivated wheat and rice which were sold in the town of Emamsahib. He added, at the Tribunal hearing, that his father owned land about fifteen minutes walk out of the village. Prior to leaving Afghanistan, he lived in one large house with his parents, three brothers, their wives and their eleven children, his wife and two children and his unmarried sister. His brothers had begun working on the land when they finished school. They were each married with a child by the time they were about twenty. At the same time Hakimi was married with a child but did not have any "proper employment". He helped with work at home and also worked for his political party, the Afghan Mellat. He explained his special position, vis a vis his brothers on the basis that he was the youngest child of the family and it was expected that he would study.
6 Hakimi told the Tribunal that his brothers had been conscripted by the Taliban militia about three days after the militia took over in his area and about six weeks before he left Afghanistan. Asked how he had travelled to his uncle's place in Kunduz, Hakimi said he had put on a veil and covered himself and went there with his father in a bus. He had stayed with his uncle for five or six days. His father and uncle had made an arrangement whereby his uncle agreed to buy the land from his father to provide enough money to pay for a smuggler to take Hakimi out of Afghanistan. His uncle is well off. He is a clothing merchant who sells goods wholesale in Kunduz.
7 Asked to explain how he left Afghanistan, Hakimi said his journey out of the country took two nights, the first of which he spent in a hotel. He was told not to ask where it was. He did not know the names of the places he travelled through on his way out. He had never been outside his village and had not travelled anywhere before. It was put to him that if he had not travelled before and was concerned about getting out of Afghanistan he would have been paying attention during the trip. He said he was very depressed and did as the smuggler told him. Although the Tajikistan border is not far from Hakimi's village, he had not gone over the border to the north because he was afraid he would be suspected of drug smuggling. Other Afghans had done that. It was better for him to go to Pakistan.
8 The Tribunal considered what it regarded as independent evidence indicating that recruitment into the Taliban militia was largely voluntary and that it was possible to pay for an exemption. It was put to Hakimi that it would have been possible for his father to pay for his exemption and also for that of his brothers. Hakimi said in reply that this would be true if the Taliban simply wanted to conscript him. The Taliban, he said, knew he had been involved in anti-Taliban activities so conscription would just be an excuse. Asked how they knew of his involvement, he said three of his political colleagues had been arrested. Taliban had come to Hakimi's house looking for him. His father told his inquirers that Hakimi was sick. They told his father that he had to present Hakimi to their office for questioning. He came home at about 12 or 1 o'clock in the morning. His father told him that the Taliban had been looking for him. After that they went to Kunduz and his uncle's place.
9 Hakimi told the Tribunal that he had joined the Afghan Social Democratic Party (Afghan Mellat) when studying English three years ago. Under the Mujahadeen he used to distribute newspapers. After the Taliban took control he put posters attacking them on the walls of mosques and shops. The posters asserted that the Taliban were ruthless and despotic and were the puppets of Pakistan. They also explained the aims of the Afghan Mellat. Asked where the party was based, Hakimi said most of the members were in Europe and he would receive documents from Germany. He said it is only in Europe that party activities could be conducted.
10 In the Tribunal's view the membership card for Afghan Mellat provided by Hakimi showed a person whose appearance differed from his in that the hairline of the person in the photograph was not the same as Hakimi's. It appeared particularly new for a card which was allegedly three years old. The Tribunal told Hakimi that it had difficulty accepting his involvement with Afghan Mellat as he was unaware the party was actually based in Peshawar. Hakimi said he did not have that information because he was getting material from a friend. He produced papers which had been sent to him by his uncle. His uncle had been in Peshawar because he travelled there on business. But the Tribunal's view was that as his uncle obtained the documents in Peshawar it could not accept the documents as evidence that Hakimi was involved in political activities in his village. Asked why he had not previously mentioned, to the department officers, being involved in political activity he said the smuggler had told him not to say anything about being involved in politics.
11 The Tribunal referred to various reports on the condition of human rights in Afghanistan. It then set out its own findings and the reasons for those findings. It criticised Hakimi's evidence as internally inconsistent and implausible. His explanations for serious inconsistencies were unconvincing and the Tribunal did not accept that he was a credible or reliable witness. It did not accept his claim to have been actively involved with the Afghan Social Democratic Party. When initially interviewed by the delegate his stated purpose for departing Afghanistan was fear of conscription into the Taliban forces. He had said nothing about involvement in any political activity nor that Taliban wished to apprehend him because of his involvement. When assessing his credibility, the Tribunal noted that Hakimi had been warned at the outset of the consequences of making differing claims later in the process. He was legally represented when he lodged his application for a protection visa and his advisor was present when the delegate interviewed him. He was also given the opportunity to confer with his legal advisor and to raise issues which had not been raised. Hakimi had maintained that the interpreter had told him not to raise his political activities and that she thought Taliban was a good government and that she hoped there would be a Taliban government in Australia. The Tribunal referred to independent evidence concerning the Taliban's treatment of women and found it inherently implausible that a female Afghan interpreter would express a desire for a Taliban government in Australia.
12 In relation to Hakimi's claim to be a village man who had not travelled outside of Afghanistan, the Tribunal observed that he had undertaken a trip from Afghanistan to Indonesia and from there to Australia which had required at least some degree of planning and negotiation. It did not accept that his village background explained his failure to mention at the outset his involvement in political activities. That evidence as advanced in any event was vague and unconvincing. So too, as the Tribunal found, was the evidence concerning the visit of the Taliban to his home. It was inherently implausible that the Taliban would have left Hakimi's house without him if they had suspected him of being involved in anti-Taliban activities. It was also implausible that the Taliban would have accepted his sickness as an excuse for not arresting him. The improbability of his evidence in conjunction with his failure to raise the claim earlier led the Tribunal to conclude that Hakimi was not involved in political activities and that the Taliban had not raided his home looking for him. The Tribunal also referred to the opportunity for potential conscripts to the Taliban to pay an exemption fee which would enable them to avoid military service with the Taliban.
13 The Tribunal found Hakimi to be a Pushtun and a Sunni, as are most members of the Taliban. While he might not be a Taliban supporter, there is no reason to consider that Taliban would take any adverse interest in him for a convention reason if he were to return to Afghanistan. According to his evidence he had complied with Taliban regulations by growing his beard when they took control of his area. The evidence did not suggest that Hakimi demonstrated opposition to the Taliban in any way.
14 In summary, the Tribunal accepted that Hakimi is an Afghani national and that he does not support the Taliban but did not accept that he had evaded conscription by them or that they would forcibly conscript him if he returned to Afghanistan. The Tribunal did not accept that he was engaged in anti-Taliban political activities, either as a member of the Afghan Mellat or in any other way. It did not accept that he was of adverse interest to the Taliban at the time he left Afghanistan or that he would be of interest if he returned. The Tribunal acknowledged that the human rights situation in Afghanistan is extremely poor but was not satisfied that Hakimi faced adverse treatment in that country for reason of his race, religion, nationality, membership of a particular social group or his political opinion. It was therefore not satisfied that he had a well-founded fear of persecution for a Convention reason.
The Application for an Order for Review
15 As noted earlier, an application for an order for review of the decision of the Tribunal was filed on 16 November 1999. The application was in common form alleging error of law. The grounds were, however, particularised at the hearing of the appeal by Mr Moen, who made his services available on a pro bono basis to argue the appeal on behalf of Hakimi. The particularised grounds were as follows:
"1. The decision involved an error of law, being an error involving the incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found by the Tribunal or both.
(a) The Tribunal erred in that it made no allowance for the difficulties faced by the Applicant fearing persecution and being outside his normal country of residence;
(b) The Tribunal failed to speculate by reference to the material before it, on whether there was a real chance of persecution for a Convention reason if the Applicant were to return to Afghanistan;
(c) The Tribunal by a process of factual finding on particular elements of the material provided, foreclosed reasonable speculation upon the chances of persecution emerging from a consideration of the whole of the material;
(d) The primary decision maker was satisfied that the claimed harm to or mistreatment was of sufficient gravity to constitute persecution and that according to Chan, a threat to life or freedom always amounts to persecution, however, the Tribunal failed to consider the question "what if I am wrong?", and determine whether the claimed mistreatment was of sufficient gravity to constitute persecution;
(e) The Tribunal failed to adequately deal with the Applicant's fear of persecution for reasons of imputed political opinion, the fact that his beliefs are opposed to the beliefs of the Taliban;
(f) The Tribunal failed to find that the harm feared by the Applicant was of a level sufficiently grave to constitute persecution within the meaning of the Convention;
(g) The Tribunal failed to determine whether the Applicant was differentially at risk of serious harm;
(h) The Tribunal failed to adequately consider whether or not it would be reasonable for the Applicant to re-locate to Afghanistan safely and effectively where he would not face the chance that he would be persecuted;
(i) The Tribunal's finding that the Applicant was not a Taliban supporter, and that there was no reason why the Taliban would take an adverse interest in him for a Convention reason was an inconsistent finding on the evidence before the Tribunal;
(j) The fact that the Tribunal considered that the Applicant had not shown any active opposition to the Taliban before he left Afghanistan was an irrelevant consideration in considering the test to be applied;
(k) The finding that the Applicant would not actively oppose the Taliban if he were to return to Afghanistan was not open on the evidence before the Tribunal;
2. The decision of the Tribunal involved an error of law in that the Tribunal made findings upon which its decision was based that were not rationally supported by probative evidence and it failed to rationally consider the probative evidence that was before it.
(a) The Tribunal failed to adequately refer to the independent evidence indicating that conscription into the Taliban militia was largely voluntary and that it was possible to pay an exemption;
(b) The Tribunal erred in failing to find that the payment of an exemption or extortion of money to advert conscription or indeed penalty was a form of persecution giving rise to a Convention reason;
(c) The Tribunal by a process of factual finding on particular elements of the material provided, foreclosed reasonable speculation upon chances of persecution emerging from consideration of the whole of the material;
(d) The Tribunal failed to comply with s 430(1)(d) Migration Act 1958 by failing to refer to the material in which its finding on ability to return was based;
(e) The Tribunal failed to make specific findings in respect of the occurrence of events reported in the Amnesty International Report ASA 11/12/96 entitled Afghanistan: Grave Abuses in the Name of Religion (November 1996), and also the Amnesty International Country Report for 1999, such a failure evidenced a misconception by the Tribunal of its duty to apply itself to all of the material issues it was required to consider.
(f) The misconception as detailed in para (d) above, constituted a breach of procedure and a constructive failure to exercise jurisdiction reviewable under ss 476(1)(a), (c) or (e) Migration Act 1958;
(g) Even if the Tribunal did make findings that events as described in the reports detailed in para (d) above did not occur, it failed to meet the requirements of s 430(1)(d) Migration Act 1958, as it did not refer to the evidence or material on which the findings were based.
(h) The Tribunal did not deal adequately with the information about the human rights situation in Afghanistan as submitted by the Applicant;
(i) The Tribunal's failure to have regard to all material arguably relevant to determining whether the applicant's circumstances come within the legal test, amounted to an error of law."
Contentions and Conclusions
16 A first perusal of the particulars of the two grounds of review left the strong impression that the contentions advanced on behalf of Hakimi went to factual findings of the Tribunal. That impression was confirmed in the written and oral submissions made on his behalf. Particular (c) of ground 1, sets the tone for much of the argument with the proposition that the Tribunal "by a process of factual finding on particular elements of the material provided, foreclosed reasonable speculation upon the chances of persecution emerging from a consideration of the whole of the material".
17 There is no doubt that the Tribunal's findings of fact led to its conclusion that Hakimi did not have a well-founded fear of persecution for a Convention reason. The findings of the Tribunal relevant to that conclusion may be summarised as follows:
1. Hakimi was not involved in political activity or with the Afghan Mellat – the Tribunal gave extensive reasons for rejecting his late contentions in this respect.
2. The Taliban did not come to his home, did not attempt to conscript him and were not looking for him.
3. Even if the Taliban had sought to recruit him, service could be evaded for a fee payable to Taliban which Hakimi could well afford.
4. Taliban militia are free to leave their units except in the face of battle and face no punishment for doing so. Hakimi could not be treated as holding an adverse political opinion merely because he did not wish to fight for the Taliban.
5. Hakimi had not been denied employment in Afghanistan and would not be denied employment on his return. It was highly improbable that he did not work on his father's farm in equal measure with his brothers. There is no reason to suppose that the Taliban would take any adverse interest in Hakimi if he were to return to Afghanistan.
6. The evidence does not suggest that Hakimi demonstrated active opposition to the Taliban in any way.
7. The Tribunal was not satisfied that Hakimi faced adverse treatment in Afghanistan for any Convention reason.
The findings of fact which I have set out are unimpeachable in the setting of judicial review. They allow no room for the conclusion that Hakimi could qualify as a refugee in terms of the Convention.
18 The comprehensive written submissions prepared by Mr Moen, who appeared pro bono for Hakimi and the oral argument he advanced on the judicial review application, could not surmount the obstacle to the applicant's case posed by the Tribunal's findings of fact. It was submitted that Hakimi has "a "well-founded" basis for fearing that he will be subjected to discrimination because of unacceptable political opinions and views opposed to the Taliban which will be ascribed to him". That contention must fail in the light of the Tribunal's findings of fact. It was submitted further that the Tribunal had failed to make any allowance for difficulties faced by Hakimi in fearing persecution and being outside his normal country of residence. In particular the Tribunal had failed to speculate by reference to the material before it on whether there was a "real chance" of persecution for a Convention reason if he were to return to Afghanistan. It was submitted that the Tribunal failed to have regard to all material arguably relevant to determining whether Hakimi's circumstances came within the legal test. So the Tribunal, by a process of fact finding on particular elements of the material, foreclosed reasonable speculation on chances of persecution emerging from consideration of the whole of the material. As to all of this, there is nothing on the face of the Tribunal's reasons which indicates that it has failed to properly consider the evidence before it. That is not to essay a conclusion on the correctness or otherwise of its findings but this Court is precluded from itself inquiring into the correctness of factual conclusions by the Refugee Review Tribunal.
19 It was submitted that independent evidence before the Tribunal showed that the fundamentalism of the Taliban with its strict adherence to Islamic principles has resulted in a totalitarian regime whereby the slightest dissent or infraction results in swift, cruel and excessive punishment, and those most at risk include those who fail to carry out the decrees of the Taliban and are believed to be demonstrating their opposition to the Taliban. Assuming that contention to be correct, it does not affect Hakimi's position having regard to the Tribunal's finding that he was not involved in political activity in opposition to the Taliban and that the Taliban had no adverse view of him.
20 The Tribunal's statement of reasons was attacked for non-compliance with s 430 of the Migration Act. That section provides:
"430(1) Where the Tribunal makes its decision on a review, the Tribunal must prepare a written statement that:
(a) sets out the decision of the Tribunal on the review; and
(b) sets out the reasons for the decision; and
(c) sets out the findings on any material questions of fact; and
(d) refers to the evidence or any other material on which the findings of fact were based."
It was submitted that the Tribunal had failed to comply with s 430(1)(d) in that it did not refer to material on which its findings about Hakimi's ability to return to Afghanistan were based. Having regard, however, to the Tribunal's rejection of the evidence advanced by Hakimi, its rejection of evidence necessary to establish the fundamental grounds of refugee status under the Convention and its comprehensive explanation for the rejection of that evidence, the Tribunal has done, in my opinion, all that it was necessary to do to explain the findings of fact which were dispositive of the case. In my opinion, no reviewable error has been disclosed and the application must be dismissed with costs.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.
Associate:
Dated: 11 February 2000
Counsel for the Applicant: Mr D P A Moen
Counsel for the Respondent: Mr P R Macliver
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 4 February 2000
Date of Judgment: 11 February 2000
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Federal Court of Australia
Gold Coast Marine Aquaculture Pty Ltd v HTC Trading Pty Ltd [2020] FCA 1324
File number: VID 1659 of 2018
Judgment of: ANASTASSIOU J
Date of judgment: 15 September 2020
Catchwords: PRACTICE AND PROCEDURE – application for extension of time in relation to earlier orders – power to extend time under rule 1.39 of the Federal Court Rules 2011 (Cth) – discretionary power to avoid injustice to prospective applicant – reasonable explanation for failure to comply with orders – application granted in part
Legislation: Biosecurity Act 2015 (Cth)
Federal Court of Australia Act 1976 (Cth), s 37M
Federal Court Rules 2011 (Cth), rr 1.39, 39.05
Cases cited: FAI General Insurance Company Limited v Southern Cross Exploration NL (1988) 165 CLR 268
Flint v Richard Busuttil & Co Pty Ltd [2013] FCA 925
Gold Coast Marine Aquaculture Pty Ltd v HTC Trading Pty Ltd [2019] FCA 1995
Gold Coast Marine Aquaculture Pty Ltd v HTC Trading Pty Ltd [2020] FCA 684
Nucoorilma Clan of the Gamilaaroy Aboriginal People v NSW Minister for Land & Water Conservation [2009] FCA 1043
Pfizer Ireland Pharmaceuticals v Samsung Bioepis Au Pty Ltd [2017] FCA 573
Pro-Pac Packaging (Aust) Pty Ltd v Penn (No 2) [2020] FCA 710
Skinner v Commonwealth of Australia [2012] FCA 1194
Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia (No 2) [2012] FCA 419
Division: General Division
Registry: Victoria
National Practice Area: Other Federal Jurisdiction
Number of paragraphs: 21
Date of last submissions: 9 September 2020
Date of hearing: Determined on the papers
Solicitor for the Prospective Applicant: Mills Oakley Lawyers
Counsel for the First Prospective Respondent: Mr David A Klempfner
Solicitor for the First Prospective Respondent: Colin Biggers & Paisley
Solicitor for the Second Prospective Respondent: Barry.Nilsson Lawyers
Solicitor for the Third Prospective Respondent: Kawakami Lawyers
Counsel for the Fourth Prospective Respondent: Mr Nicholas De Young SC
Solicitor for the Fourth Prospective Respondent: King & Wood Mallesons
ORDERS
VID 1659 of 2018
BETWEEN: GOLD COAST MARINE AQUACULTURE PTY LTD (ACN 082 848 262)
Prospective Applicant
AND: H T C TRADING PTY LTD (ACN 102 463 847)
First Prospective Respondent
ORIENTAL MERCHANT PTY LTD (ACN 007 368 925)
Second Prospective Respondent
AQUA STAR PTY LTD (ACN 074 614 538) (and another named in the Schedule)
Third Prospective Respondent
order made by: ANASTASSIOU J
DATE OF ORDER: 15 September 2020
THE COURT ORDERS THAT:
1. The time for compliance with paragraphs 3 and 6 of the orders made by Justice Anastassiou on 5 December 2019 is extended to 12 October 2020.
2. The time for compliance with paragraph 2 of the orders made by Justice Anastassiou on 20 May 2020 is extended to 12 October 2020.
3. The Prospective Applicant pay the costs of and incidental to the interlocutory application filed on 18 August 2020 of each of the Prospective Respondents.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ANASTASSIOU J
Background
1 The Prospective Applicant, Gold Coast Marine Aquaculture Pty Ltd, conducts business farming black tiger prawns at a number of location in Australia. The Prospective Applicant alleges that the First to Third Prospective Respondents – HTC Trading Pty Ltd, Oriental Merchant Pty Ltd and Aqua Star Pty Ltd – may be responsible for an outbreak of White Spot Syndrome Virus which caused it loss or damage. The Prospective Applicant further alleges that the Fourth Prospective Respondent – the Department of Agriculture and Water Resources – may have caused or contributed to the outbreak by failing to properly discharge its duties pursuant to the Biosecurity Act 2015 (Cth).
2 On 21 May 2019, 23 May 2019, 5 December 2019 and 20 May 2020, I made orders (the earlier orders) requiring, among other things, that each of the Prospective Respondents give preliminary discovery. Those previous orders provided that if the Prospective Applicant did not commence proceedings within specified time periods, the Prospective Respondents would be entitled to the costs of making preliminary discovery as well as the costs of and incidental to the application for preliminary discovery.
3 The 21 May 2019 and 23 May 2019 orders, which related to the application for preliminary discovery from the Second and Third Respondents, were made by consent. By paragraph 2 of the respective orders, the Prospective Applicant was liable to pay the Second and Third Prospective Respondents' costs for collating, reviewing and providing the discovered documents (subject to paragraph 3). By paragraph 3 of the respective orders, the costs referred to in paragraph 2, as well as costs of and incidental to the application for preliminary discovery, would be costs in the substantive proceedings if the Prospective Applicant commenced substantive proceedings within 3 months of the date of the orders.
4 The 5 December 2019 and 20 May 2020 orders were made following my judgments on 27 November 2019 (Gold Coast Marine Aquaculture Pty Ltd v HTC Trading Pty Ltd [2019] FCA 1995) and 20 May 2020 (Gold Coast Marine Aquaculture Pty Ltd v HTC Trading Pty Ltd [2020] FCA 684). In summary, the 5 December 2019 orders provided that the First and Fourth Prospective Respondents were entitled to the costs of collating, reviewing and providing discovered documents unless the Prospective Applicant commenced a proceeding within five months of the date of the orders (i.e. by 5 May 2020) for the Fourth Prospective Respondent or 6 months of the date of the orders (i.e. by 5 June 2020) for the First Prospective Respondent. The 20 May 2020 orders dealt with the separate issue of the costs of and incidental to the preliminary discovery application. Paragraph 1 of those orders provided that the costs of the preliminary discovery application were costs in the cause in any proceeding commenced by the Prospective Applicant. However, if no such proceeding was commenced within three months of the date of the order (i.e. by 20 August 2020), the First and Fourth Prospective Respondents were entitled to half of their costs of and incidental to the application.
5 By an interlocutory application filed on 18 August 2020, the Prospective Applicant seeks an extension of time to 12 October 2020 by which it may file an originating application and accompanying statement of claim without being liable for any of the costs in the previous orders (this application). The Application is supported by an affidavit of Stuart Graeme Walter dated 18 August 2020 (Walter Affidavit) and written submissions filed by the Prospective Applicant on 9 September 2020. Each of the First to Fourth Prospective Respondents opposed the Application and filed written submissions in that respect on 2 September 2020.
6 For the reasons that follow, I shall grant the extension of time in respect of the First and Fourth Prospective Respondents, extending the time for compliance in the 5 December 2019 and 20 May 2020 orders until 12 October 2020. The extension is for a reasonable duration, with a justifiable explanation, and I am not persuaded that there would be any prejudice to those Prospective Respondents. However, I am not satisfied that there is a reason to vary the orders made by consent on 21 May 2019 and 23 May 2019 in respect of the Second and Third Respondents. I shall also make an order that the costs of and incidental to this application are to be paid by the Prospective Applicant in respect of each of the Prospective Respondents. In my view this is appropriate as although this application has been successful in respect of the First and Fourth Prospective Respondents, the Prospective Applicant nonetheless seeks an indulgence in relation to the time limited by the relevant earlier orders.
Jurisdiction & Relevant principles
7 In determining this application, I rely on the power in r 1.39 of the Federal Court Rules 2011 (Cth), which provides that the Court may extend a time fixed by order of the Court, before or after that time expires, and irrespective of whether the application for an extension of time is made before the time provided for in the order expires or after the order has taken effect. I do not invoke the Court's power under r 39.05 of the Rules to vary or set aside an order after it has been entered, as that power reflects the Court's inherent power to correct an error in a judgement or order: see Flint v Richard Busuttil & Co Pty Ltd [2013] FCA 925 at [43] (Katzmann J).
8 The principles relevant to the discretion to grant an extension of time under r 1.39 are settled: see e.g. Skinner v Commonwealth of Australia [2012] FCA 1194 at [9]-[14] (Flick J). Most relevantly, the power of the Court to extend time for compliance with an order is a discretionary power, which is to be exercised judicially and by reference to the facts and circumstances of each particular case: Skinner at [10]-[11]. It is also an established principle that the Court has the power to extend time to avoid an injustice: Nucoorilma Clan of the Gamilaaroy Aboriginal People v NSW Minister for Land & Water Conservation [2009] FCA 1043 at [22] (Buchanan J) and Pfizer Ireland Pharmaceuticals v Samsung Bioepis Au Pty Ltd [2017] FCA 573 at [9] (Nicholas J).
9 Where, as in the present case, the extension of time is sought in relation to an order for which the time provided for compliance has passed, the making of the order requires the Court to be satisfied that it is in the interests of justice to grant the extension and that there is a reasonable explanation for the failure to comply: Skinner at [9]-[10] citing FAI General Insurance Company Limited v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284 (Wilson J). While the discretion is broad, such an order should be granted cautiously and with 'due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored': Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia (No 2) [2012] FCA 419 at [10] (Cowdroy J).
10 Relevant factors that the Court may consider in determining whether to exercise the discretionary power include: the nature of the order which has not been complied with; the reasons for non-compliance with that order; the history of the proceeding (including any previous delays or non-compliance with orders); the duration of the extension sought; the prejudice that may be suffered by the party seeking the extension of time; and the prejudice that may be suffered by an opposing party: Pfizer at [4]; Skinner at [11]. Ultimately, in exercising the power, the Court is required to balance the different, and often competing, interests of the parties: Skinner at [13].
Consideration
11 I am not satisfied that it is appropriate to grant an extension of time in respect of the Second and Third Prospective Respondents in circumstances where those orders were made by consent. However, there are compelling reasons to grant the extension of time for compliance with the earlier orders for the First and Fourth Prospective Respondents.
12 Firstly, I am satisfied that the Prospective Applicant has generally conducted the litigation in an efficient manner, consistent with the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth). This matter raises potentially complex legal and factual issues, and the 'deliberative' approach adopted by the Prospective Applicant is appropriate in the circumstances. I have had regard to – but do not accept – the submission that the Prospective Applicant has had ample time to commence proceedings and that to grant the extension in relation to costs would be contrary to the modern imperative to conduct litigation in an efficient manner.
13 Second, I accept that there is a reasonable explanation for the failure to commence proceedings by an earlier date, which justifies granting the extension of time in respect of the First and Fourth Prospective Respondents. Those are as follows.
(a) At [26]-[28] of the Walter Affidavit, the Prospective Applicant deposes that there was a further outbreak of the white spot disease in the Logan River region in April 2020. This means that the Prospective Applicant was no longer able to assume that white spot disease had been eradicated and, as a result, had to instruct its loss and damage expert to revise his assessment. While this information may not be directly relevant to the Prospective Applicant's cause of action, I consider it may nevertheless be of importance in informing their decision as to whether it is appropriate to commence proceedings for a myriad of reasons.
(b) At [29]-[30] of the Walter Affidavit, the Prospective Applicant indicates that although it received documents from the Fourth Prospective Respondent on 18 March 2020 it was not able to consider such materials until 13 May 2020 due to agreed confidentiality arrangements. Those documents had to be reviewed by the Prospective Applicant and its instructing solicitors, and it was only at that point that the Prospective Applicant could properly consider whether to commence proceedings against at least the Fourth Prospective Respondent.
(c) At [31]-[32] of the Walter Affidavit, the Prospective Applicant deposes that junior counsel was unexpectedly unavailable for a period of eight weeks commencing in or around mid-May 2020. In conjunction with other circumstances, especially those identified in (b) and (d), it is understandable that this might have delayed the progress of the Prospective Applicant in reviewing the materials provided through preliminary discovery or in formulating a legal claim.
(d) At [33] of the Walter Affidavit, the Prospective Applicant explains that stage 3 and stage 4 lockdown restrictions in Melbourne, in place to varying degrees since March 2020, have hampered its ability to prepare the claim. I accept that these circumstances have imposed material and practical impediments, many of which were not readily foreseeable or predictable at the time of making the earlier orders.
I also accept that the present circumstances are distinguishable from those in Pro-Pac Packaging (Aust) Pty Ltd v Penn (No 2) [2020] FCA 710, in which Burley J refused to grant a one month extension and observed as follows [at 13]:
It is in the interests of the administration of justice that a prospective applicant commence proceedings expeditiously upon compliance with the orders made. One means of encouraging that outcome is to provide a reasonable, but not overly generous time frame for the prospective applicant to commence proceedings, failing which it should bear the costs of the application.
The most significant factual difference is that in Pro-Pac only one document was produced to the Prospective Applicant, albeit a document that was 300 pages in length, and that document was discovered two months prior to the application. By contrast, the Prospective Applicant in this instance had to consider a greater volume of preliminary discovery materials as well as an extensive body of materials including legislation, government policy documents, scientific papers and other third party documents (totalling many thousands of pages). Moreover, I accept that the current restrictions in Victoria are likely far more restrictive than those experienced by the practitioners in Pro-Pac.
14 Third, the duration of the extension sought in relation to the First and Fourth Prospective Respondents, is between four to five months for the 5 December 2019 orders and two months for the 20 May 2020 orders. While this is a considerable extension of time in the context of the original orders, it is reasonable in circumstances where the First and Fourth Prospective Respondents have not identified any real or specific prejudice that would arise from the extension being granted.
15 Fourth, it is apparent that the Prospective Applicant may suffer prejudice if the application is refused. The Prospective Applicant identified that prejudice as being that if proceedings are commenced against the Prospective Respondents – and those proceedings are ultimately successful – it will have paid a portion of the unsuccessful parties' costs. I agree that such prejudice ought to be avoided, particularly in the absence of a countervailing prejudice to the First and Fourth Prospective Respondents.
16 Fifth, and related to the preceding points, the First and Fourth Prospective Respondents have not identified any real or specific prejudice if the Court grants the extension of time. The Prospective Respondents directed attention to the overarching principle of finality in litigation and the fact that they are entitled to seek a resolution of the matter with relative expedition. I recognise the importance of this principle but maintain that the Prospective Applicant has acted consistently with such a pursuit and any prejudice is merely general in nature.
17 It follows that if the Prospective Applicant does not commence proceedings by 12 October 2020, it will be liable to pay the First and Fourth Prospective Respondents' costs in accordance with the earlier orders. However, if the Prospective Applicant does commence proceedings by 12 October 2020, those costs will be costs in the cause.
18 In relation to Second and Third Prospective Respondents, there are material differences which mean I am not satisfied an extension of time is appropriate. Most relevantly, the orders dated 21 May 2019 and 23 May 2019 were made by consent between the parties. Further, the duration of the extension sought would be unreasonable, having regard to the limited number of documents discovered and the timeframe which has elapsed. It follows that the orders made in respect of the Second and Third Prospective Respondents should not be disturbed.
19 The Prospective Applicant sought to justify an extension to the consent orders on the basis that it contemplated issuing only one proceeding and accordingly the time limited by the consent orders should be extended to correlate to the orders in relation to the First and Fourth Prospective Respondents. I do not accept that submission. Firstly, the time limited by the consent orders had expired prior to the orders made in respect of the First and Fourth Respondents. Second, the Prospective Applicant could have issued a proceeding and applied to defer filing a statement of claim until it was in a position to decide whether to issue a proceeding against the First and Fourth Prospective Respondents. Third, the orders in respect of the First and Fourth Prospective Respondents were plainly and explicitly relevant only to the position of those Prospective Respondents. In these circumstances I am not persuaded that the time limited by the consent orders should be extended.
20 Finally, for the avoidance of doubt I note that the orders in question relate solely to the cost consequences of the application for, and costs of, preliminary discovery. They do not relate to the time in which the Prospective Applicant may bring a proceeding against any of the Prospective Respondents. Any such time limits are to be determined by reference to relevant statutory provisions or common law principles relating to limitations of actions.
Disposition
21 For the reasons set out above, I make orders extending time for compliance with the earlier orders in respect of the First and Fourth Prospective Respondents. I do not make the orders sought in the application in respect of the Second and Third Prospective Respondents. The Prospective Applicant is required to pay the costs of each of the Prospective Respondents in respect of this application.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou.
Associate:
Dated: 15 September 2020
SCHEDULE OF PARTIES
VID 1659 of 2018
Respondents
Fourth Prospective Respondent: DEPARTMENT OF AGRICULTURE AND WATER RESOURCES
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Bilwani v Minister for Immigration & Multicultural Affairs [2000] FCA 1097
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2000/2000fca1097
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2024-09-13T22:50:50.156698+10:00
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FEDERAL COURT OF AUSTRALIA
Bilwani v Minister for Immigration & Multicultural Affairs
[2000] FCA 1097
MIGRATION – appeal from decision of primary judge to dismiss application for review of Refugee Review Tribunal's decision to refuse a protection visa – whether Tribunal erred in not addressing material questions of fact - whether Tribunal erred in basing its decision on the non-existence of a fact which did exist – whether transcript of the Tribunal's hearing establishes actual bias.
Migration Act 1958 s 430, s 476(1)(g)
SERGE OWOWOS BILWANI v MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
N 51 OF 2000
SPENDER, MADGWICK, EMMETT JJ
9 AUGUST 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 51 OF 2000
BETWEEN: SERGE OWOWOS BILWANI
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
RESPONDENT
JUDGE: SPENDER, MADGWICK, EMMETT JJ
DATE OF ORDER: 9 AUGUST 2000
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the respondent's costs of and incidental to the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 51 OF 2000
BETWEEN: SERGE OWOWOS BILWANI
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
RESPONDENT
JUDGE: SPENDER, MADGWICK, EMMETT JJ
DATE: 9 AUGUST 2000
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This is an appeal from the dismissal by a single judge of this Court, Finn J, on 8 December 1999 of an application for an order of review by Serge Owowos Bilwani. Mr Bilwani is a national of the Democratic Republic of Congo. He had been refused a protection visa both by the delegate of the respondent Minister and the Refugee Review Tribunal (the Tribunal), who were not satisfied that he was a refugee. Mr Bilwani sought review of the Tribunal's decision under Part 8 of the Migration Act 1958 (the Act). Mr Bilwani represented himself at the hearing before the Tribunal, before the learned primary judge, and on this appeal.
2 The application for review as filed listed only two grounds: first, "Decision was wrong", and second, "Decision was not unbiased". The ex tempore reasons for judgment of the primary judge assert that the ground of review in the application was merely "that the Tribunal's decision was wrong". There is no express reference in those reasons to the ground of the application that the Tribunal was biased.
3 The reasons for judgment of the learned primary judge indicate that, as presented to his Honour, Mr Bilwani's challenge was based on a claim that, contrary to the requirements of s 430(1)(c) of the Act, the Tribunal's statement of reasons did not address material questions of fact raised by him; and that in reliance on s 476 (1)(g) of the Act, the Tribunal's decision was based on the non-existence of a fact that did exist - this being a reference to the finding by the Tribunal that Mr Bilwani was not a member of the Resemblement Congalais pour la Democratie (the RCD) and did not engage in activities organised by it. Mr Bilwani, by this ground, essentially challenges the correctness of that finding.
4 The essence of the primary judge's conclusion was:
"I should state at the outset that in substance Mr Bilwani has sought no more than to have this Court engage in merits review of the Tribunal's decision. Put shortly, the case he advanced to the Tribunal was not accepted in its essentials, the Tribunal weighing what he relied upon against independent evidence and country reports touching the issues he raised. It preferred the latter. The Tribunal equally was unimpressed by the applicant's failure to mention "relevant information" until late in the processing of his application. So clear cut is this case that little purpose would be served by a lengthy narrative of the factual setting and of the Tribunal's reasons for decision."
5 In respect of the claim based on non-compliance with s 430 of the Act, the primary judge noted:
"All that Mr Bilwani has been able to point to in support of this claim is that the Tribunal and its reasons did not refer to all of the information he provided to it concerning his situation and events in Goma at the time of the Red Cross incident and that it did not fully evaluate or take into account the risks he faced if he goes to Kinshasa because of the circumstances in eastern Congo."
6 His Honour said:
"What Mr Bilwani is presently seeking is to go beyond the identification of the substantial issues, and the reasons and findings dealing with those, and to trespass into the impermissible territory of merit review. It is not the responsibility of the Tribunal in complying with the requirements of s 430 to refer to, and to respond to, each and every item of information provided by an applicant to it, the more so when the significance to be attributed to such information might itself be contingent upon a finding on the applicant's credibility. Here there can be no doubt that the Tribunal identified the material questions of fact on the information before it. In my view it [dealt] with them adequately and appropriately. Mr Bilwani was not believed. There was no reviewable impropriety committed by the Tribunal in reaching its decision on his credibility. The present ground of complaint is no more than an attempt via s 430 to circumvent the consequences of that adverse decision. It is without warrant. I can discern no reviewable deficiency in the Tribunal's reasons statement."
7 As to the claim based on s 476(1)(g) of the Act, the learned primary judge concluded that the Tribunal had rejected this claim for reasons of credibility, and that:
"It was, in the circumstances, open to the Tribunal to arrive at the decision it did. All the claim amounts to is again one of merit review."
8 Mr Bilwani's notice of appeal, filed on 18 January 2000, states under the heading "Grounds" that:
"His Honour erred in finding that the Refugee Review Tribunal had [not] failed to provide adequate reasons as required by the s430 of the Migration Act 1958 and it was not open to persua[s]ion in favour of the Appellant."
9 In the written submissions in support of the first limb of these grounds of appeal, Mr Bilwani said:
"I find that the tribunal made an error of law because my member did not consider some of my major claims and that therefore she did not correctly perform her duty under [the] Migration Act 1958 which required her to produce a statement of reasons in accordance with section 430." (typographical mistakes corrected).
10 He then set out some claims which he says were not taken into consideration, and continued:
"All these details were not taken in consideration by the tribunal I hereby request the court to consider all these details and give me a fair trial."
11 Mr Bilwani also repeated his claim that the Tribunal had erred because it did not accept his claims concerning his involvement in the RCD.
12 Concerning the claim that the Tribunal failed to provide adequate reasons, it is clear that, as Finn J said, it is not necessary for the Tribunal to refer to every allegation or piece of evidence before it. The finding by the primary judge was that:
"…there can be no doubt that the Tribunal identified the material questions of fact on the information before it. In my view it [dealt] with them adequately and appropriately."
13 In the context of the broader passage of His Honour's reasons earlier set out, this finding reveals no error; nor is there any reviewable error in the Tribunal's failure to find as the appellant contended concerning his involvement with the RCD.
14 As to the question of bias, there is no specific reference to this ground of Mr Bilwani's application in the ex tempore reasons for judgment of the learned primary judge, nor in the written submissions of Mr Bilwani on the appeal. On the material available to this Court when the appeal was heard on 30 May 2000, the claim of bias appeared to have been based on the fact that Mr Bilwani's claims had not been accepted, or that not all of them had been the subject of an express finding by the Tribunal.
15 Out of an abundance of caution, the Court granted leave to Mr Bilwani to put before it the transcript of proceedings before the Tribunal and at first instance in this Court, so that the Court might consider for itself whether there might be anything in that material which had been overlooked and which could provide a basis for an appeal by Mr Bilwani on the basis of bias.
16 The Court has had the opportunity to examine each transcript in detail. There is nothing in either transcript which suggests that the proceedings before the Tribunal, or its conclusions, were affected by bias, nor any basis for thinking that the learned primary judge failed to deal adequately with a matter that was before him. In particular, there is no basis to doubt the correctness of the learned primary judge's finding that:
"There was no reviewable impropriety committed by the Tribunal in reaching its decision on [Mr Bilwani's] credibility."
17 The evidence in the transcript of the manner in which the hearing was conducted by the Tribunal does not even suggest, let alone establish, actual bias.
18 For the above reasons, the appeal has to be 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 Justices Spender, Madgwick and Emmett.
Associate:
Dated: 8 August 2000
The Appellant appeared in person
Counsel for the Respondent: Mr Justin Smith
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 30 May 2000
Date of Judgment: 9 August 2000
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House v Defence Force Retirement and Death Benefits Authority [2011] FCAFC 72
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2011/2011fcafc0072
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2024-09-13T22:50:51.539774+10:00
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FEDERAL COURT OF AUSTRALIA
House v Defence Force Retirement and Death Benefits Authority
[2011] FCAFC 72
Citation: House v Defence Force Retirement and Death Benefits Authority [2011] FCAFC 72
Appeal from: House v Defence Force Retirement and Death Benefits Authority [2010] AATA 147
Parties: DAVID HOUSE v DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
File number(s): QUD 103 of 2010
Judges: GREENWOOD, GILMOUR AND LOGAN JJ
Date of judgment: 1 June 2011
Catchwords: ADMINISTRATIVE LAW – consideration of an appeal from the Administrative Appeals Tribunal ("Tribunal") on the ground that the Tribunal failed to apply the correct legal test of "prescribed physical or mental impairment" for the purposes of s 34(1B), s 34(1A)(c) and Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth) – consideration of whether the citizen is to be deprived of a remedy under s 44(4) or s 44(5) of the Administrative Appeals Tribunal Act 1975 (Cth) notwithstanding that an error of law is made out and conceded by the respondent – consideration of the general principles to be applied in determining whether a remedy should go – consideration of the principle that when the question involves the exercise of the discretion and the error of law determines the framework within which the facts are to be determined and upon which the statutory discretion is exercised, the Court ought to exercise great caution before deciding that the error of law could make no difference to the result already reached – consideration of the authorities on that question
MENTAL HEALTH – consideration of the notion of "prescribed physical or mental impairment" for the purposes of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth)
PRACTICE AND PROCEDURE – consideration of the general principles to be applied in determining whether the citizen is to be deprived of a remedy in circumstances where an error of law is made out and conceded by the respondent – consideration of the authorities on the question of whether the error of law could make no difference to the result already reached
DEFENCE AND WAR – consideration of the notion of "prescribed physical or mental impairment" for the purposes of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth) – consideration of s 34(1A) and s 34(1B) in the context of a reclassification application under s 34 of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth)
Legislation: Administrative Appeals Tribunal Act 1975 (Cth), s 44(1), (3), (4), (5) and (7)
Defence Force Retirement and Death Benefits Act 1973 (Cth), ss 34(l), 34(1A), 34(1B), 34(2), 37
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Cases cited: Stead v State Government Insurance Commission (1986) 161 CLR 141 - applied
Minister for Aboriginal Affairs v PekoWallsend Ltd (1986) 162 CLR 24 - considered
Lu v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 340; (2004) 141 FCR 346 - applied
R v RossJones; Ex parte Green (1984) 156 CLR 185 - cited
Hill v Repatriation Commission [2005] FCAFC 23; (2005) 218 ALR 251 - considered
McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609 - considered
Austin v Deputy Secretary, AttorneyGeneral's Department (1986) 12 FCR 22 - cited
State Rail Authority (NSW) v Collector of Customs (1991) 33 FCR 211 - cited
Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550; (1995) 41 ALD 71 - cited
Harris v Repatriation Commission [2000] FCA 1687; (2001) 62 ALD 161 - cited
Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575 - cited
Hoskins v Repatriation Commission (1991) 32 FCR 443 – cited
3D Scaffolding Pty Limited v Commissioner of Taxation (2009) 75 ATR 604 - cited
BTR PLC v Westinghouse Brake and Signal Co (Australia) Ltd (1992) 34 FCR 246 - cited
Defence Force Retirement and Death Benefits Authority v House (1989) 22 FCR 138; (1989) 91 ALR 286 - cited
House and Defence Force Retirement and Death Benefits Authority [1994] AATA 442 - cited
House and Defence Force Retirement and Death Benefits Authority [2001] AATA 375 - cited
House v Defence Force Retirement and Death Benefits Authority [2002] FCA 65 - cited
House and Defence Force Retirement and Death Benefits Authority [2008] AATA 38 - cited
Hyundai Automotive Distributors Australia Pty Ltd v Australian Customs Service (1998) 81 FCR 590 - cited
Defence Force Retirement and Death Benefits Authority v House [2009] FCA 302; (2009) 49 AAR 525 - cited
Klinkert v Australian Postal Corporation (1992) 16 AAR 86 - cited
Re House and Defence Force Retirement and Death Benefits Authority [1997] AATA 836 - cited
Re House and Defence Force Retirement and Death Benefits Authority [2004] AATA 667; (2004) 83 ALD 792 - cited
Re House and Defence Force Retirement and Death Benefits Authority [2010] AATA 147 - cited
Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 - applied
Dolan v Australian and Overseas Telecommunications Corporation (1993) 42 FCR 206 - cited
Defence Force Retirement and Death Benefits Authority v House [2009] FCA 302 – cited
Freeman v Defence Force Retirement and Death Benefits Authority (1985) 5 AAR 156 - considered
Re Greer and Defence Force Retirement and Death Benefits Authority [2001] AATA 186; (2001) 63 ALD 282 - cited
Secretary, Department of Education, Employment and Workplace Relations v Holmes [2008] FCA 105; (2008) 168 FCR 301 – considered
Date of hearing: 13 August 2010
Date of last submissions: 13 August 2010
Place: Brisbane
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 176
Counsel for the Applicant: A Harding
Solicitor for the Applicant: Woods Prince Lawyers
Counsel for the Respondent: D O'Donovan
Solicitor for the Respondent: Australian Government Solicitor
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION QUD 103 of 2010
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: DAVID HOUSE
Applicant
AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
Respondent
JUDGES: GREENWOOD, GILMOUR AND LOGAN JJ
DATE OF ORDER: 1 JUNE 2011
WHERE MADE: BRISBANE
THE COURT ORDERS THAT:
1. The decision of the Administrative Appeals Tribunal ("the Tribunal") in the matter of David Richard House and Defence Force Retirement and Death Benefits Authority [2010] AATA 147 is set aside.
2. The application to the Tribunal by the David House is remitted to the Tribunal to be decided again.
3. The Court directs pursuant to s 44(5) of the Administrative Appeals Tribunal Act 1975 (Cth) that the parties be at liberty to file further submissions as to the affects of Mr House's personality disorder upon the capacity of a person exhibiting Mr House's vocational, trade and professional skills, qualifications and experience, to reasonably undertake the kinds of civil employment (found by the Tribunal in the relevant classes of civil employment), on the footing that Mr House's personality disorder is a "prescribed physical or mental impairment" for the purposes of the Defence Force Retirement and Death Benefits Act 1973 (Cth).
4. The matter is to be decided again by the Tribunal without the hearing of further evidence.
5. The Tribunal is to determine as a matter of its own procedure whether further oral submissions will be entertained from the parties.
6. The respondent pay the applicant's costs of and incidental to the application before this Court.
THE COURT ORDERS THAT:
7. The personality disorder described in the Tribunal's decision under the heading "The Prescribed Impairments" and described, more particularly, at paragraphs 25 to 29 of the Tribunal's reasons for decision is, as a matter of law, a "prescribed physical or mental impairment" for the purposes of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth) and in particular, for the purposes of, ss 34(1A) and 34(1B) of that Act.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION QUD 103 of 2010
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: DAVID HOUSE
Applicant
AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
Respondent
JUDGES: GREENWOOD, GILMOUR AND LOGAN JJ
DATE: 1 JUNE 2011
PLACE: BRISBANE
REASONS FOR JUDGMENT
GREENWOOD J
Introduction
1 By this application, Mr David House, appeals from a decision of the Administrative Appeals Tribunal (the "Tribunal") constituted by Deputy President Hack SC, by which the Tribunal affirmed a decision of the Defence Force Retirement and Death Benefits Authority (the "Authority") which had confirmed (upon Mr House's application to the Authority for a re-consideration), its delegate's rejection of Mr House's application for a "reclassification" of the Authority's existing "incapacity determination" concerning the extent of Mr House's incapacity for civil employment as a retired member of the Permanent Military Forces (a soldier) discharged on 19 May 1975 as "being medically unfit".
2 The Court's original jurisdiction in this appeal arising under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the "AAT Act") on a question of law is exercised by the Court constituted as a Full Court: s 44(3) of the AAT Act.
The relevant statutory provisions
3 Subject to considerations not presently relevant, s 26 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (the "Act") confers an entitlement to an invalidity benefit under Part V of the Act on a member of the Defence Force (who satisfies the description "contributing member" under s 3(1) of the Act, as Mr House did), retired from the Defence Force on the ground of invalidity or of physical or mental incapacity to perform his or her duties.
4 By s 30, where a person who is or has been an eligible member of the Defence Force is, or is about to become, entitled to an invalidity benefit, the Authority, established under the Act, is required to determine the eligible member's "percentage of incapacity in relation to civil employment" and shall classify the person according to the following classes:
Percentage of incapacity Class
60% or more A
30% or more but less than 60% B
Less than 30% C
5 Sections 31, 32A and 33 address the basis for calculating or adjusting the "invalidity pay" applicable to an "invalidity benefit" falling within each of the above classes of incapacity. Section 34 confers power on the Authority to reclassify the percentage incapacity of a recipient member, in these terms:
34 Reclassification in respect of incapacity
(1) The Authority may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment.
6 Section 34(1A) provides that in determining the percentage of incapacity in relation to civil employment of a recipient member, the Authority shall have regard to only the following matters:
(a) the vocational, trade and professional skills, qualifications and experience of the recipient member;
(b) the kind of civil employment which a person with skills, qualifications and experience referred to in paragraph (a) might reasonably undertake;
(c) the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b);
(d) such other matters (if any) as are prescribed for the purposes of this subsection.
7 One of the factors to be taken into account is the degree to which a prescribed physical or mental impairment of the recipient member, has or had diminished the capacity of that member to undertake the kinds of civil employment referred to in s 34(1A)(b). The notion of a "prescribed physical or mental impairment" in s 34(1A)(c) is defined by s 34(1B) in these terms:
(1B) In subsection (1A), prescribed physical or mental impairment, in relation to a recipient member or a deceased member who was immediately before his or her death a recipient member, means:
(a) a physical or mental impairment of the member that was the cause, or one of the causes, of the invalidity or physical or mental incapacity by reason of which the member was retired, whether or not that impairment changed, for better or worse, since that retirement; or
(b) any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a).
8 The use of the disjunctive "or" in s 34(1B) between sub-paragraphs (a) and (b) in the statutory meaning ascribed to "prescribed physical or mental impairment" is to be understood not as a reference to "either or" but as an inclusive reference with the result that a relevant physical or mental impairment of the member is an impairment that was the cause or one of the causes of the physical or mental incapacity by reason of which the member was retired from the Defence Force and includes any other physical or mental impairment of the member causally connected with the impairment which was the cause or one of the causes of the incapacity by reason of which Mr House was retired as a member of the Defence Force.
The error of law conceded by the respondent
9 The Tribunal by its decision of 26 February 2010 determined at [28] and [29] that "Mr House's drinking, categorised as alcoholism … caused the incapacity that was the reason for his discharge". That observation must be taken to mean, using the language of the Act, that Mr House's impairment, categorised as alcoholism, caused the physical or mental incapacity that was the reason for his discharge. The Tribunal also observed at [28] that the applicant's drinking was caused by a personality disorder and at [29] the "drinking may have been the overt manifestation of the underlying personality [disorder]". Having recognised the contribution or causally connected mental impairment of Mr House's personality disorder to his alcoholism impairment, the Tribunal then observed at [29] that the alcoholism was the "proximate cause of the discharge". The Tribunal determined that because Mr House's alcoholism was the proximate cause of his discharge, the Tribunal could not be satisfied that "Mr House's personality disorder ought to be accepted as a prescribed impairment" [emphasis added].
10 The applicant contends that having regard to s 34(1B) of the Act, the Tribunal fell into methodological error in so finding. The respondent accepts and thus concedes the contention of the applicant that once the Tribunal determined that the applicant's impairment of alcoholism was caused by the applicant's personality disorder, the legal consequence which necessarily follows is that the impairment constituted by the personality disorder is to be treated as a "prescribed impairment". The respondent accepts that to the extent that the Tribunal sought to disregard Mr House's personality disorder as a prescribed impairment required to be taken into account by force of s 34(1A)(c) of the Act in assessing under s 34(1) of the Act the applicant's percentage of incapacity in determining his reclassification application, the Tribunal was in error.
11 The applicant contends that since the Tribunal did not regard Mr House's personality disorder as a "prescribed impairment", it is impossible to conclusively know from simply reading the Tribunal's Reasons whether the Tribunal gave proper, genuine and full consideration to the elements of the disorder in assessing whether Mr House's percentage of incapacity for civil employment should be altered resulting in a reclassification having regard to s 34(1A) of the Act. (T 3, lns 20-25). The applicant says that although the Tribunal appears to have given some consideration to the effects of the personality disorder, the error at the threshold means that the applicant cannot be confident that his personality disorder has been fully taken into account in assessing the statutory requirement, namely, his capacity to undertake the kinds of civil employment which a person with his vocational, trade and professional skills, qualifications and experience might reasonably undertake. Secondly, the applicant says that had the error at the threshold not occurred, the assumption of the correct analytical framework could or might have brought about a different outcome. The applicant asks: "… did the Tribunal fully grapple with the incapacitating effects of the personality disorder or did it not, because it had determined already that it wasn't a prescribed impairment?" (T 6, lns 26-28; see also T 7, lns 30-36; T 8, lns 1-4; T 11, lns 10-33; T 15, lns 13; T 15, ln 15; and T 19, lns 3843).
12 Counsel for the applicant contends that it is enough that the Tribunal's Reasons do not expose whether the Tribunal fully came to grips with the impact of the personality disorder and to the extent that it did address the effects of the disorder, it failed to do so in a discrete way and, properly analysed, viewed the applicant's personality disorder as an incidental feature of the alcoholism impairment. (T 11, lns 9-31).
13 It follows, it is said, that the Tribunal's decision ought to be set aside and the matter remitted to the Tribunal for reconsideration on the merits.
14 Although the respondent concedes error on the part of the Tribunal, the error is said not to be a material error because the Tribunal's reasons demonstrate that the features of the applicant's personality disorder, drawn from the expert evidence, were taken into account on the merits; the evidence of the experts was that disaggregating the effects of the alcoholism impairment from the personality impairment was complex and difficult; the evidence of the experts to that effect was accepted by the Tribunal; the Tribunal elected to consider the impact of both impairments together; and, "despite an error being established it would not have affected the result" and the error does not "vitiate the Tribunal's decision" (para 52, respondent's written submissions). That result is said to follow because all of the effects of both the alcoholism and the personality disorder which as a matter of analysis could not be disentangled, were examined and attributed in the aggregate to the impairment of alcoholism. Thus, treating the applicant's personality disorder as a prescribed impairment would not have resulted, it is said, in a finding of any additional or greater degree of incapacity.
15 Ultimately the Tribunal determined at [75]:
The result is that in the majority of occupational groups there is, at best, a minimal reduction in Mr House's capacity to undertake employment in those areas. If required to attribute a percentage to the reduction I would put it no higher than 10%. Within the category of security officer, the reduction is a little higher, perhaps as high as 20%. Overall I consider that the extent of the diminution of Mr House's capacity to undertake civilian employment attributable to his prescribed impairment is in the range of 10% to 15%. That accords, as it happens, with the observable improvement in Mr House following the last decision of the Tribunal in June 2004.
The content of the test to be applied
16 The threshold question to be determined before examining the Tribunal's treatment of the evidence of both impairments and the impact of those impairments upon Mr House's capacity to undertake civilian employment, is the content of the test to be applied in determining whether Mr House should be denied relief arising out of a demonstrated error of law on the part of the administrative decisionmaker, in this case the Tribunal, on the ground that the error could not have materially affected the decision. Is it enough to support a remedial order under s 44(4) or s 44(5) of the AAT Act setting aside the Tribunal's decision that the exposed reasons reveal that had the error not occurred the outcome could or might have been different, as the applicant contends?
17 In Stead v State Government Insurance Commission (1986) 161 CLR 141 ("Stead") the High Court (Mason, Wilson, Brennan, Deane and Dawson JJ) in the context of demonstrated procedural unfairness on the part of a trial judge in the conduct of the trial said this at p 145 of the remedial qualification on the general principle that everyone is entitled to a fair trial unaffected by procedural unfairness:
That general principle is, however, subject to an important qualification. … That qualification is that an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility.
For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.
Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference.
… [W]hen [an appeal court] is invited by a respondent to exercise these powers in order to arrive at a conclusion that a new trial, sought to remedy a denial of natural justice relevant to a finding of fact, could make no difference to the result already reached, it should proceed with caution. It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact.
[emphasis added]
18 In the context of an application for an order of review under the statutory regime of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act") Mason J in Minister for Aboriginal Affairs v PekoWallsend Ltd (1986) 162 CLR 24 observed at 40:
Not every consideration that a decisionmaker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be reexercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision.
[emphasis added]
19 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 ("Ex parte Aala") concerned a failure to observe the principles of procedural fairness in the course of administrative decisionmaking by the Refugee Review Tribunal ("RRT") in the exercise of a statutory power. Gaudron and Gummow JJ at [80] observed, in reliance upon the principles set out in Stead, in the context of whether a remedial order ought to go, that:
It is sufficient that "the denial of natural justice deprived [the prosecutor] of the possibility of a successful outcome".
20 Gleeson CJ agreed with that statement of principle and observed at [3] that had the visa applicant been given an opportunity to correct a misunderstanding created by an incorrect statement on the part of the RRT which had a bearing upon the credibility of the applicant, "a different view might have been taken as to his credibility". The Chief Justice also cited the principles identified in Stead concerning the caution a Court of Appeal must keep in mind when invited by a respondent to conclude that a denial of natural justice, relevant to a finding of fact, could make no difference to the result already reached. At [4] Gleeson CJ observed that: "It cannot be concluded that the denial of that opportunity [to correct the RRT's error on the facts] made no difference to the outcome of the proceeding" and further observed:
It is possible that, even if the prosecutor [aggrieved applicant] had been given an opportunity to deal with the point, the Tribunal's ultimate conclusion would have been the same. But no one can be sure of that.
21 At [122] McHugh J accepted that the test of remedial intervention is whether the breach of the fairhearing rule deprived the visa applicant of "the possibility of a successful outcome". Hayne J at [172] agreed with Gaudron and Gummow JJ. Callinan J at [211] could not rule out the possibility of a different result had the visa applicant not been misled by the RRT. Kirby J at [131] regarded the "governing law" as the statement of principle in Stead and observed that only where compliance with the requirements of procedural fairness "could have made no difference to the result" will relief be withheld. The Chief Justice's conclusion that no one could be sure that the RRT's decision would have been the same was influenced by the consideration that the error went to credibility and that decisions as to credibility "are often based upon matters of impression, and an unfavourable view taken upon an otherwise minor issue may be decisive": at [4]. The character and content of the error therefore bears on the relevant "possibility".
22 Ex parte Aala concerned a question of whether prohibition should go under s 75(v) of the Constitution in remedy of a failure to comply with the requirements of procedural fairness upon which the exercise of the statutory power by the RRT was conditioned. Gaudron and Gummow JJ at [59] noted that a failure to provide procedural fairness goes to the "observance of fair decisionmaking rather than with the character of the decision" [emphasis added] which is "a different rationale from that which generally underpins the doctrine of excess of power or jurisdiction".
23 Those observations might be thought to suggest that if the error is an error of law or excess of power or jurisdiction going to the character of the decision rather than a failure to observe the requirements of fair decisionmaking (by observing the requirements of procedural fairness (such as in Stead) upon which the exercise of the power is conditioned), the test for determining whether a remedy ought to go or be withheld may be different, by reason of the different underlying rationale.
24 In Lu v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 340; (2004) 141 FCR 346 ("Lu v MIMIA"), Sackville J (Black CJ agreeing) concluded that nothing their Honours had said in Ex parte Aala was inconsistent with adapting the approach taken in cases of alleged procedural unfairness to jurisdictional error or error of law and in so concluding, put to one side the position arising under the statutory regime of the ADJR Act which has its own particular jurisprudence. As to the test, Sackville J at [64] said this:
It seems to me that the correct approach is that stated in Stead and adopted by the High Court in Aala. The test is whether the applicant has been deprived of the possibility of a successful outcome by the decisionmaker's failure to observe the requirements of the statute. If so, the jurisdictional error could have had a bearing on the outcome and the applicant is not to be denied relief on the basis that the error was insignificant. … The question is not whether the decisionmaker would probably have reached the same result even if the omitted consideration had been taken into account.
[emphasis added]
25 At [29] Black CJ said this:
Had [the relevant matter] been correctly stated and put before the Minister there is a rational possibility that a more favourable assessment of the risk of recidivism would have been made in the Issues Paper or, in any event, by the Minister. There would have been a rational possibility of the risk … being seen as low and of the case being seen as one in which the Minister's discretion could be exercised favourable to the appellant in all the circumstances. I stress "possibility".
[original emphasis]
26 At [6] Black CJ also said this:
The circumstance that a case seems very heavily weighed against a person does not logically deny that the error may possibly – not "probably" – have affected the outcome adversely to the person's interests.
27 As to the question of whether a factor not taken into account might be so insignificant (or so trivial) that a failure to take it into account could not have materially affected the decision, Gaudron and Gummow JJ at [59] and [60] in Ex parte Aala, in the context of procedural unfairness, observed that the "bearing of the breach upon the ultimate decision should not of itself determine whether prohibition under s 75(v) should go". Their Honours observed at [59] (Gleeson CJ and Hayne J agreeing at [5] and [172]) that the issue "always is whether or not there has been a breach of the obligation" and at [51] endorsed the statement of principle of Gibbs CJ in R v RossJones; Ex parte Green (1984) 156 CLR 185 at 194, that once the excess of jurisdiction has been made out, the remedy will lie "almost as of right" although the Court retains its discretion to refuse relief "if in all the circumstances that seems the proper course".
28 That statement of principle is consistent with the observations of the Full Court in Hill v Repatriation Commission [2005] FCAFC 23, (2005) 218 ALR 251 Wilcox, French and Weinberg JJ, at [81]: "If an error of law can be seen to have affected the decision reached, or arguably even possibly have done so, ordinarily the decision will be set aside" [emphasis added]. The remedy will go (at [82]) unless it is "manifestly clear that the error in no way contributed to the decision".
29 The Full Court in Hill v Repatriation Commission also observed at [83] that in the context of appeals from the Tribunal, the Court may decline to set aside the decision, notwithstanding a demonstrated error of law, provided it considers that the Tribunal arrived at a decision that was "clearly correct on the material before it".
30 In McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609, the Full Court (Spender, Foster and O'Loughlin JJ) at p 618 accepted that s 44(4) of the AAT Act by conferring power to "make such order as [the Court] thinks appropriate by reason of its decision" contemplates that if the Court is of the opinion that although error of law has been demonstrated, the decision is nevertheless clearly correct on the material before the Tribunal, it is open to the Court to dismiss the appeal. See also, to the same effect, Austin v Deputy Secretary, AttorneyGeneral's Department (1986) 12 FCR 22 at 26, per Fisher, Sheppard and Burchett JJ; and, State Rail Authority (NSW) v Collector of Customs (1991) 33 FCR 211 at 217 per Beaumont, Burchett and Foster JJ. That principle was applied by Sackville J in Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550 at 560561; (1995) 41 ALD 71 at pp 80 and 81 and accepted by the Full Court in Harris v Repatriation Commission [2000] FCA 1687; (2001) 62 ALD 161, per Whitlam, Sackville and Mansfield JJ at p 163 [7]. The scope of the power under s 44(4) and s 44(5) of the AAT Act however, is not unconstrained: Morales; Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575 at 585, Sheppard J.
31 It follows therefore that when the Court is considering whether an applicant should be denied relief on the ground that a demonstrated error of law could not have materially affected the Tribunal's decision, the Court must be satisfied that the error of law did not deny the aggrieved applicant of the possibility of a successful outcome (Ex parte Aala; Lu v MIMIA) or, put another way, the error of law (ultimately relevant to the Tribunal's findings of fact) could make no difference (Gleeson CJ, Ex parte Aala) to the result already reached. Dismissing an appeal in the face of a demonstrated error of law, on the ground that the decision of the Tribunal is "clearly correct", is to be understood as a conclusion that the Court is satisfied the demonstrated error did not deny the aggrieved applicant of the possibility of a successful outcome. A conclusion that the Tribunal's decision is "clearly correct" necessarily means no possibility of a successful outcome on the material before the Tribunal subsists. A test framed by the Full Court in Hill v Repatriation Commission in terms of the Court not refusing relief if satisfied that the error of law "arguably even possibly" affected the decision reached is simply an emphatic restatement of the test in Ex parte Aala and applied in Lu v MIMIA that relief will not be refused in the face of demonstrated error unless there is no possibility of a successful outcome. An arguable possibility remains a possibility. As to the application of Stead v State Government Insurance Commission (supra) to appeals under s 44 of the AAT Act, see Hoskins v Repatriation Commission (1991) 32 FCR 443 per Pincus J and Dolan v Australian and Overseas Telecommunications Corporation (1993) 42 FCR 206 per Spender J.
32 The question to be determined then is whether or not, without descending into merits review, the Tribunal's treatment of the evidence concerning the kinds of civilian employment a person with Mr House's skills, qualifications and experience might reasonably undertake (s 34(1A)), on the footing that Mr House's personality disorder was not a prescribed impairment, leaves no possibility of a successful outcome in the review of the exercise of the s 34(1) discretion, had the error of law not occurred.
Background to the Tribunal's decision
33 Mr House joined the Defence Force on 1 October 1968 and was retired from the Force effective from 29 May 1975. His Interim Discharge Certificate describes the ground of discharge as medical unfitness for service in the Military Forces (AB, Part B, 220). That description of the ground of discharge seems to have emerged as a result of a decision taken under s 44(2) of the Defence Act 1903 (Cth) to amend an earlier description of the ground of discharge. On 6 August 1979, the Authority determined that Mr House was entitled to invalidity benefit under s 26 of the Act having regard to a retirement impairment of "alcoholism and alcoholic liver disease". On 30 August 1985, the Authority determined under s 37 of the Act that Mr House ought to have been retired from the Defence Force on the ground of "invalidity or of physical or mental incapacity to perform his duties" and that Mr House would be treated as having retired on that ground.
34 Since 1985 Mr House's percentage of incapacity for particular classes of civil employment and his classification under s 30 have been the subject of many applications for reclassification and proceedings before the Tribunal and Courts. The various classifications seem to have been these: from 30 May 1975, Class B, 30 per cent; from 16 January 1977, Class B, 35 per cent; from 4 May 1990, Class B, 40 per cent; from 22 June 1999, Class B, 30 per cent; from 10 August 2001, Class C, 20 per cent; and, from 15 February 2002, Class C, 20 per cent.
35 On 19 November 2004, the applicant requested the Authority to review his incapacity classification within s 30 of the Act. Mr House requested the incapacity classification take into account impairment by reason of a personality disorder and injuries suffered in a car accident which had the effect, he contended, of diminishing his capacity for relevant civil employment. On 14 March 2005, the Authority's Delegate rejected the request for review under s 34 of the Act on the footing that the additional impairments were not causally connected to Mr House's alcoholism impairment.
36 Mr House requested the Authority to reconsider the Delegate's decision and it did so.
37 The Authority observed that on 8 May 2001 the Tribunal had reduced the applicant's classification from 40 per cent to 30 per cent (Class B) and on 3 July 2001 the Authority's Delegate reclassified Mr House's level of incapacity as 20 per cent (Class C). The Authority noted that the Delegate's decision had been confirmed by the Authority upon reconsideration on 15 February 2002. The Authority also observed that Mr House's request for a review on 19 November 2004 was made two years and nine months after the last re-consideration on 15 February 2002 resulting in the prevailing Class C classification at 20 per cent and that Mr House had not provided evidence that his capacity to undertake the relevant classes of civil employment had significantly diminished in the interim period.
38 The Authority also made observations about the contended relationship between a personality disorder and Mr House's history of alcoholism and the extent to which that question already had been addressed in the Authority's determination of 15 February 2002.
39 On 1 August 2005 the Authority determined that the applicant's request for review be rejected in the absence of any evidence of diminished capacity since February 2002 and such evidence of diminished capacity would need to be evidence addressing the applicant's capacity to undertake employment as driver, mobile plant operator, storeperson, mining and construction labourer, and security officer, arising only from the applicant's prescribed impairment of alcoholism and alcoholic liver disease, or a causally connected physical or mental impairment.
40 On 15 January 2008, the Tribunal constituted by Senior Member Mr P McDermott RFD set aside the Authority's decision of 1 August 2005 and substituted the following decision:
1 For the purposes of section 34(1B)(a) of [the Act], alcoholism and the personality disorder of Mr House were the prescribed physical and mental impairments of the recipient member; and
2 The percentage of incapacity in relation to civil employment of Mr House for the purposes of s 34(1) is 30%; and
3 For the purposes of s 30 of the Act, the invalidity classification of Mr House is Class B with effect from 19 November 2004.
41 On 1 April 2009 the Tribunal's decision was set aside and the matter remitted to the Tribunal to be determined according to law: Defence Force Retirement and Death Benefits Authority v House [2009] FCA 302 per Collier J.
42 The Tribunal's decision of 26 February 2010, constituted by Deputy President Hack SC, is the decision now under appeal arising out of the remission order made by Collier J.
The Tribunal's Decision
43 The Tribunal notes at [14] that all earlier determinations of the applicant's incapacity had been made on the footing that the applicant's sole prescribed impairment was alcoholism. In the proceedings before the Tribunal the applicant contended that his personality disorder; upper left limb injuries as a result of motor vehicle accidents in 1975 and 1976; and a condition of chronic dysthymia (described as "a chronically low mood") ought to be accepted as impairments causally connected with his accepted prescribed impairment of alcoholism. At [34]-[[38] the Tribunal finds that the upper limb injuries are not causally connected to alcohol consumption on the evidence and thus s 34(1B)(b) is not made out. At [39] - [41], the Tribunal finds that it is not satisfied that Mr House suffers from the condition chronic dysthmyia.
44 There is no challenge to those findings.
45 The Tribunal's findings at [28] and [29] concerning the relationship between Mr House's alcoholism and his personality disorder have already been noted. The Tribunal however begins that discussion at [26] by observing at the outset that whether Mr House's personality disorder ought to be regarded as a "prescribed condition [impairment]" is "controversial". The Tribunal notes at [26] that there is no issue, on the evidence, that Mr House has a personality disorder. The Tribunal refers to the evidence of Dr Barbara McGuire, a consulting psychiatrist, and notes that in her report of 19 April 2006 (AB, Part B, 402) Dr McGuire refers to reports of other psychiatrists as early as 1983 describing Mr House's personality disorder. The Tribunal notes the oral evidence of Dr McGuire that Mr House suffers from a personality disorder and that the disorder caused him to drink. The Tribunal also notes at [26] the opinion of Dr McGuire that the two conditions of alcoholism and personality disorder "are so intertwined as to make attempts at teasing them apart at best only an academic exercise".
46 At [27] the Tribunal notes the evidence of Dr Jill Reddan a consulting psychiatrist who provided three reports in evidence dated 22 June 1997 (AB, Part B, 287), 8 May 2000 (AB, Part B, 334) and 15 January 2003 (AB, Part B, 567). The Tribunal notes the opinion set out at pages 10, 11 and 12 (AB, Part B, 296, 297 and 298) of Dr Reddan's report of 22 June 1997 that Mr House has a personality disorder and particularly notes Dr Reddan's observation about primacy and the difficulty of sequential isolation of the affects of the two conditions, at p 12 of the report (AB, Part B, 298), in these terms:
(ii) The relationship between Mr House's personality disorder and his alcohol consumption is complicated and it is impossible to state which is the primary problem and which is the secondary.
47 The remaining part of the quote at point (ii) on page 12 of Dr Reddan's report is this:
It is likely however, that Mr House sought to deal with any uncomfortable affects or anxieties by alcohol abuse but, because of his need to project blame onto others and refusal to see any problems within himself, he has consistently refused to address his alcohol problem. It is likely, however, that is ongoing alcohol consumption did narrow his ability to think through the consequences of his actions and assisted in maintaining the rigidity and self-absorption of his personality.
48 There is no doubt that by these references the Tribunal is conscious of the complexity of the inter-relationship between or intertwining of the two conditions based on an assessment of the reports of the psychiatrists.
49 At [28] the Tribunal accepts the opinion of Dr McGuire that the applicant's drinking was caused by the personality disorder. The Tribunal notes that it is plain that Mr House was retired from the Defence Force on the ground of his alcoholism impairment. At [29] the Tribunal recognises and accepts, based on the evidence of the difficulty of sequential isolation of primary and secondary factors and the demonstrated interrelationship between the two conditions, that it is "artificial in the extreme" to "seek to separately consider the two conditions".
50 The Tribunal at that point in its methodological treatment of the evidence of the two conditions makes its acceptance of the extreme artificiality of separate consideration of the affects of each condition (impairment), plain. At [29] the Tribunal also recognises the long-standing inter-relationship of the two conditions by observing in the following terms that:
… in all likelihood Mr House's long-standing personality disorder pre-dated his discharge from the Australian Army … [and] it was the drinking [impairment] which caused the incapacity that was the reason for the discharge [emphasis added].
51 The Tribunal at [29] notes that the drinking may have been the "overt manifestation of the underlying personality [disorder]".
52 At [29], as already noted, the Tribunal finds the alcoholism impairment to be the "proximate cause" of the discharge and thus the applicant's personality disorder ought not to be accepted as a mental impairment falling within s 34(1B), and by so finding, the Tribunal fell into error. Notwithstanding that error, the Tribunal at [30] notes, having regard to the earlier references, that the medical evidence recognises the "difficulties inherent in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder".
53 The Tribunal also notes however at [30] that the task of separation is "now easier given that Mr House has been abstaining from alcohol for a considerable period of time". The Tribunal at [30] sets out its essential analytical method in these terms:
… I propose to first consider the totality of … [Mr House's] mental conditions and the extent to which they lead to incapacity for employment before determining whether there is an apparently logical basis for differentiating between the consequences of the two conditions.
54 The Tribunal notes at [31] that there is a "considerable body of psychiatric evidence … available" including "the evidence referred to in … [26] and [27] … , of the interconnection between the two conditions". In terms of method, the Tribunal also said at [33] that it was logical, helpful and a useful task to compare Mr House's condition as determined by the Tribunal's decision of June 2004 with his condition as disclosed in the evidence before the Tribunal in the course of the subject hearing, to consider what might have changed. This approach was also thought to be useful because Mr House was no longer drinking; was in a stable relationship; and was undertaking voluntary work three days per week. The abstention from alcohol was earlier identified at [30] as one factor making separation of analysis easier. Nevertheless, at [42] the analytical course adopted is described in this way:
It follows that I propose to consider the extent of Mr House's incapacity by reference only to the condition of alcoholism accepting the reality that it may not be possible to differentiate between incapacity attributable to that cause and that attributable to underlying personality disorder.
55 The implementation of that course is further described at [43] in this way: "As it seems to me, the first step is to consider the evidence that touches upon the question of incapacity arising from prescribed impairments [alcoholism] to examine what that evidence says of the relevant consequences to Mr House's capacity from the impairments".
56 At [44], the logical starting point for the Tribunal as it had suggested at [33] was the decision the earlier Tribunal reached in June 2004 as to incapacity. That was a decision of 29 June 2004 affirming the Authority's decision of July 2001 (affirmed on reconsideration by the Authority on 15 February 2002) to classify Mr House's incapacity as Class C at 20%. By that decision the Authority recognised Mr House's prescribed impairment as alcoholism but excluded alcoholic liver disease as a prescribed impairment. Mr House did not contend in the earlier Tribunal hearing (leading to the decision of 29 June 2004) that his personality disorder was a prescribed impairment.
57 Deputy President Hack SC notes at [44] that because Mr House had abstained from alcohol; was in a stable relationship; was a carer for his spouse; and, was undertaking voluntary work assisting blind people three days a week, his "level of incapacity … on one view … ought to be reduced … as [t]hose matters … suggest[ed] a marked improvement rather than a worsening of his capacity".
58 That assessment as a matter of impression, of course, does not in terms take into account at the outset any aspect of Mr House's personality disorder unless the emotional factors of a stable relationship; acting as a carer; and performing voluntary work assisting blind people are factors the Tribunal treated as bearing upon the expression (or not) of aspects of Mr House's accepted personality disorder. Those factors, however, seem to be directly related to anticipated improvements in Mr House's capacity for civilian employment by reason of his abstention from alcohol.
59 At [45], the Tribunal, having noted what might be, on one view, a marked improvement in Mr House's capacity, said it was nevertheless necessary to look at the evidence.
60 The Tribunal began that examination at [46] by considering the neuropsychological evidence of the extent of any cognitive impairment suffered by Mr House. The Tribunal notes that as long ago as 1992, Mr House was assessed by a clinical neuropsychologist, Ms Maureen Field, and in her report of 21 January 1992 she described cognitive impairments in several areas suffered by Mr House including "significant memory impairment". The Tribunal notes a further neurological assessment of Mr House undertaken in March 2007 by Ms Chris Schumann and notes Ms Schumann's report of 17 April 2007 describing Mr House's memory as being "moderately impaired for immediate recall and learning". The Tribunal notes Ms Schumann's observation that Mr House suffered "a retrieval deficit which was consistent with his history of chronic alcohol excess". The Tribunal also notes at [46] the result of Ms Schumann's testing which indicated the following problems:
1) Moderate depression,
2) Mildly slow processing speed on some tasks,
3) Mild verbal fluency deficit,
4) Memory problems that included:
a. Moderate retrieval deficit,
5) Executive problems that included:
a. Mild conceptual shifting problems,
b. Mild to severe planning and organising deficit,
c. Mild to moderate visuoperceptual organization deficit
61 The Tribunal at [47] notes that Ms Schumann described the results as consistent with the assessment in 1992 and that there had been no change between 1992 and 2007. At [48], the Tribunal observes that Dr McGuire, in her report of 19 April 2006 had said that Mr House suffered "no obvious cognitive deficits". That observation of Dr McGuire was consistent with Deputy President Hack SC's own observations of Mr House in the course of the hearing.
62 These observations at [46], [47] and [48] address the extent of any cognitive impairments evident in Mr House in the context of his history of chronic alcohol excess. At [49], the Tribunal turns to the psychiatric evidence and observed that the extent of Mr House's memory deficits were the subject of a report from a consulting psychiatrist, Dr Philip Morris. The Tribunal notes the view expressed by Dr Morris in his report and evidence, in these terms:
On examination on various occasions he has been cooperative and showed no obvious distress. His speech shows difficulty with verbal fluency, and with word finding difficulties. His speech is coherent. His affect showed good range and was appropriate. His mood was euthymic. No psychotic features were noted. He does not have any suicidal or homicidal intent now but has had suicidal thoughts in the past. He has been alert on all assessments. His is of average intelligence. His judgment and insight are preserved. Cognitive examination using the Addenbrooke Cognitive Exam revealed problems with verbal memory recall and impaired phonemic verbal fluency. The remainder of his cognitive functions, including attention and orientation, language and visuospatial capacities were impaired. His mini mental state exam score was 29/30 and his ACER score was 96/100. Neither indicates dementia.
Computer based neuropsychological testing … revealed impairments in switching of attention … and verbal interference … and his verbal memory recall after a short and long delay was well below what would be expected based on his premorbid intelligence. These results indicate a mild disturbance of cognition in the areas of attention and concentration, executive function and memory recall that are consistent with his subject complaints.
63 At [49], the Tribunal notes that in oral evidence Dr Morris said that the deficits he had observed were not recent and were consistent with heavy consumption of alcohol.
64 At [50], the Tribunal concludes:
This evidence leads me to conclude that the degree of demonstrable impairment is objectively quite minor and is, at best for Mr House, unchanged over the past few years.
65 Although the Tribunal at [49] refers to the psychiatric evidence of Dr Morris, that evidence is assessed in the context of Dr Morris's view of any cognitive impairment suffered by Mr House in the context of Mr House's heavy consumption of alcohol.
66 At [51], the Tribunal notes Mr House's reliance on the additional matter of "manifestations of his personality that he contends affect his capacity to engage in employment". The Tribunal notes that the particular manifestations relied upon are "character traits" described by Dr Reddan in her report of 22 June 1997 following a consultation with Mr House on 19 June 1997. The Tribunal notes the content of that view, drawn from Dr Reddan's report, as follows:
Mr House has difficulty in seeing the points of view of others. His thinking is inflexible and marked by grandiosity and a sense of entitlement. He tends to overstate his case and to project blame onto others for all of his own misfortunes. He thus refuses to accept any responsibility for his situation in life and pursues compensation as part of his drive to prove that others are responsible for any misfortune he has. He is selfabsorbed and unwilling to look at the effect of his behaviour on his family. He consciously and determinedly refuses to change.
67 The Tribunal then notes the further report of Dr Reddan of 15 January 2003 in the following terms:
There have been some shifts in his presentation in that on this occasion [28 November 2002] he expressed more concern for others and a greater capacity for empathy. He also appeared to have insight into certain aspects of his belief patterns. However, he continues to exhibit paranoid traits and he defends against his low self esteem and feelings of inferiority by some narcissistic defences. He has long been reluctant to accept responsibility and he has been absorbed in selfpity (which he describes as a sense of victimisation) for many years. He has been rigid and inflexible in his thinking, but this has been challenged of recent times. His alcohol use has been selfdefeating.
68 At [52], the Tribunal notes that Dr McGuire generally agreed with this aspect of Dr Reddan's evidence.
69 At [53], the Tribunal notes that the attributes identified by Dr Reddan are said to affect Mr House's "soft skills" of "initiative, communication, team work, ability to problem solve, selfmanage, plan and learn", according to the evidence of an occupational therapist, Ms Rowe. The Tribunal notes that Dr Reddan and Dr McGuire had said that as Mr House had stopped drinking, he could no longer be diagnosed as having either alcohol abuse or alcohol dependence, "the relevant psychiatric diagnoses". The Tribunal notes Dr McGuire's evidence that Mr House's relationship, role as a carer and voluntary work was indicative of empathy, care and compassion and shows somebody who is improving. In this context, the Tribunal also notes the evidence of Dr Reddan that those factors reflect "an improvement in his mental state". As to the relationship between the physical effects of ceasing to drink, and disposition, moods and personality, the Tribunal notes Dr Reddan's comments as follows:
First of all there is the recovering effects physically on the brain and the improvement of overall competent functioning … [i]f you are not subjecting the brain to a drug that is actually – the central nervous system depresses. So, gradually the brain does recover. Very often it also leads to more stabilisation of moods. Often an improvement in motivation in particular. There is a general decrease in irritability and what we would call dysphoric or unhappy feelings. Alcohol tends to be a drug that over time makes people miserable. You usually find when people have abused alcohol, even if there's a binge pattern of drinking or its intermittent abuse, that their mood improves when they either sip or drink at low levels.
70 At [54], the Tribunal generally preferred the evidence of Dr Reddan and said this:
But Dr Reddan's evidence, and that of Dr McGuire, satisfies me that the personality traits earlier identified by Dr Reddan would be less marked now that Mr House is no longer drinking and is in a stable relationship. … I am then satisfied that by the time of the present application to the Authority, Mr House was no longer abusing alcohol which had the effect of considerably improving his capacity for care, compassion and empathy as well as leading to an improvement in his "soft skills".
The classes of employment
71 Mr House contended before the Tribunal that someone with his skills, qualifications and experience might reasonably undertake employment as a driver (including truck, taxi or courier driver); operator of equipment, plant and machinery; work requiring mechanical aptitude; work as a subcontractor in mining or construction; a labourer; a storeman; a security officer; and work as a foreman in any of those fields. The Authority contested whether a person with Mr House's skills could perform the role of a worker undertaking work requiring mechanical aptitude and work as a foreman in any of the other occupations. The Tribunal concluded at [59] that employment in areas requiring mechanical aptitude was not the type of employment that a person with Mr House's background might reasonably undertake and nor did the Tribunal accept that a person with his background might reasonably undertake employment as a foreman: [60] and [61].
72 At [63], the Tribunal adopts a method of assessing the extent of Mr House's capacity to undertake the remaining categories of employment by examining the duties or work demands of each calling as identified by Ms Rowe, and the affect of his "conditions" upon his capacity to perform those duties or work tasks.
73 As to employment as a delivery driver or truck driver, the Tribunal said this at [65]:
The only difficulties identified that are capable of being attributed to Mr House's accepted condition [impairment] of alcoholism is a deficiency in his capacity to plan and to find geographical locations and an inability to relate to customers because of his aggression. I am prepared to accept that the first of these is the consequence of alcoholism and is the manifestation of the memory deficits first reported on by Ms Field in 1992 and more recently by Dr Morris and Ms Schumann. … The other difficulty identified, that of aggression, seems more likely to be the consequence of Mr House's personality disorder. But, as Dr Reddan observed, Mr House is quite capable of controlling his emotions. Moreover, there is evidence of considerable maturation on the part of Mr House from 2004 onwards.
74 At [66], the Tribunal observed that these two matters "even taken together" suggested that the extent of any impairment to Mr House's capacity to undertake employment as a truck driver of any type is minimal at best.
75 As to employment as a driver of mobile plant, the Tribunal observed that Ms Rowe had identified a range of difficulties but that the "only relevant difficulty is a claimed inability on Mr House's part to work as part of a team". The Tribunal at [67] said this:
Mr House identified to Ms Rowe episodes of aggression in the workplace on his part and a warning from his employer [by reference to two letters] … I hardly think that an occasional incident of aggression in the workplace should lead to the conclusion that Mr House had difficulty working as part of a team. It is to be borne in mind that he was a longterm employee in two workplaces and left both employers of his own accord. His longevity seems to me to be inconsistent with the notion of having difficulties working as part of a team.
76 At [68], the Tribunal reached the conclusionary opinion that "[i]t is not apparent to me how this difficulty could be regarded as being attributable to Mr House's alcoholism however even if it be assumed that it was, I regard the extent of reduction of Mr House's capacity for employment of this type to be minimal at best".
77 In respect of the category of truck driver or delivery driver and, more particularly, the category of driver mobile plant, the applicant contends that the Tribunal has undertaken its assessment of incapacity by reference to Ms Rowe's analysis (AB, Part B, p 422 to 424), without proper regard to the evidence of Dr Reddan. Although the applicant concedes that in the case of employment as a truck driver, the Tribunal has had regard to Mr House's personality disorder, the applicant says that in each case (but particularly with regard to the consideration of work as a driver of mobile plant) the Tribunal did not take into account the evidence of Dr Reddan at AB, Part B, p 297 concerning Mr House's inflexibility and marked grandiosity and sense of entitlement. The applicant contends that those matters (also the subject of Dr Reddan's oral evidence at AB, Part C, p 82) were not taken into account in the assessment of the affects on the capacity of a person exhibiting Mr House's skills to undertake the work of a driver of mobile plant. The applicant further contends that the elements of Mr House's personality disorder were not "fully given consideration [by the Tribunal] … because of the way it set up its task" (T 15, lns 13). The applicant further says that the Tribunal's reliance upon the skills and affects analysis undertaken by Ms Rowe was simply not sufficient in taking into account the demonstrated elements of Mr House's personality disorder in the exercise of the discretion for the purposes of s 34(1).
78 As to employment as a storeman, the Tribunal at [69] notes Ms Rowe's comments to the effect that there are concerns in the nature of workplace, health and safety concerns due to Mr House's history of aggression, difficulty taking orders from supervisors, interpersonal communication skills and poor interpersonal/social skills in the workplace. The Tribunal elected not to accept the conclusions of Ms Rowe as the evidence did not support concerns of workplace, health and safety due to Mr House's history of aggression and the other matters mentioned. The Tribunal concluded that this was all the more so having regard to changes in Mr House's behaviour and temperament since 2004 and thus the reduction in capacity, in the context of the duties of a storeman, was minimal.
79 The applicant relies upon the conclusion of the Tribunal that nothing in the evidence supports Ms Rowe's conclusion, as indicating that the Tribunal has failed to have regard to the evidence of Dr Reddan contained in her report of 22 June 1997 as modified by the shifts noted by Dr Reddan in her report of 15 January 2003, which did support the comments and conclusions of Ms Rowe. The applicant also relies, in that regard, upon the transcript (AB, Part C, pp 9293) of the Tribunal hearing where Dr Reddan is taken to two letters of Mr House's coworkers which express concerns they had held of difficulties working with Mr House, in part, because of his social problems and aggression. However, at p 88 of the Transcript (AB, Part C) Dr Reddan seemed to be guarded about suggestions put to her that Mr House suffered from a major impairment by reason of an inability to work as a team player. Dr Reddan observed that the impairment was not significant and that it was somewhere between 0% and 5%. The point the applicant makes about this evidence is that there was evidence before the Tribunal supporting the conclusions of Ms Rowe and thus the failure to deal expressly with the aspects of Dr Reddan's evidence suggests that the Tribunal did not give full consideration to the evidence before it concerning the all of the elements of applicant's personality disorder. The applicant says the Tribunal failed to do so because it started from the very point that the personality disorder was not a prescribed condition (T 16, ln 46 - T 17, ln 6).
80 At [70], the Tribunal examines the category of work as a labourer and notes that although Ms Rowe refers only to the building industry, the Tribunal treats this occupational group as one falling within the construction or mining industry. The Tribunal observes that for the reasons previously indicated, the impairment of Mr House's capacity is minimal.
81 The applicant (at T 17, lns 2544) contends that at T 93, lns 1013 (AB, Part C, p 97) of Dr Reddan's evidence, there is evidence that shows that Mr House's personality disorder would diminish his capacity to work as a labourer in the mining and construction industries in more ways than was recognised for the position of storeman (that is, by reason of his aggression and inability to work as part of a team). At that part of the Transcript, counsel for the applicant put to Dr Reddan that in the mining and construction industries, you do not want someone who thinks that they are the sole holder of all knowledge on how to mine or construct. Dr Reddan responded by observing that it was a matter of degree and "so as I said there, I think there would be a significant degree of impairment".
82 At T 91 of AB, Part C, p 95, Dr Reddan was asked about her earlier observation that in the mining and construction industries a combination of Mr House's personality disorder and alcoholism meant that he suffered from a 40% impairment. Dr Reddan said that the impairment is likely to be less than 40% now that Mr House is no longer drinking (AB, Part C, T 91, lns 2931). At T 92, ln 27, Dr Reddan also agrees that when he suggested to the Tribunal in 2003 that a probable apportionment of the 40% impairment between alcoholism and personality disorder was 50/50, Dr Reddan was undertaking a somewhat artificial exercise.
83 The applicant contends that the Tribunal did not fully address the incapacities for this category of employment flowing from Mr House's personality disorder.
84 The Tribunal began its perceived task of assessing the affects of Mr House's impairment of alcoholism upon his capacity to undertake the classes of civilian employment a person with his skills might reasonably undertake, by recognising that the two conditions of alcoholism and personality disorder (one treated as a prescribed impairment and one not) were so intertwined that attempts at teasing them apart were at best only an academic exercise; determining which was primary and which secondary was impossible; and, to separately consider the two conditions was artificial in the extreme. The Tribunal considered the conditions so integrated that Mr House's drinking was the overt manifestation of his underlying personality disorder.
85 Those foundation observations of the Tribunal rationally suggest that the affects upon Mr House's capacity for civilian employment were analysed by reference to both conditions notwithstanding that the Tribunal treated, as a matter of law, only the alcoholism impairment as a prescribed impairment.
86 However, the Tribunal had in mind that separation was relevant and had been made analytically easier by reason of Mr House's abstention from drinking. The impression the Tribunal reached at the threshold arising out of Mr House's changed and stable circumstances, before examining the evidence in detail, was that Mr House's capacity for civilian employment had improved, that impression did not seem to take into account, in terms, any aspects of Mr House's well recognised personality disorder. The Tribunal recognised however the applicant's reliance on manifestations of a personality disorder; "character traits" reflecting those manifestations identified by Dr Reddan (generally agreed with by Dr McGuire) such as inflexible thinking; grandiosity; a sense of entitlement; paranoid traits; the particular affects upon Mr House's soft skills; and, Dr Reddan's evidence that lifestyle changes reflected an improvement in his mental state and soft skills.
87 Although the Tribunal accepted the inseparability of the two conditions, the Tribunal ultimately elected to consider incapacity by reference "only to the condition [impairment] of alcoholism" although accepting that "in reality it may not be possible to differentiate between incapacity attributable to [alcoholism] and that attributable to the underlying personality disorder" (see the discussion at [52] – [55] of these reasons). In analysing the aggregated affect attributed entirely to alcoholism of both conditions upon the capacity of someone exhibiting the vocational, trade and professional skills, qualifications and experience of Mr House in each of the classes of employment, emphasis was placed upon the occupational affects identified by Ms Rowe without expressly weighing in each class of employment, the impact of the elements or integers of the personality disorder identified by Dr Reddan in her reports (and accepted by the Tribunal) and the subject of general agreement by Dr McGuire.
88 These matters are not examined, of course, so as to enable the Court to substitute its own view of the merits or of the competing factual contentions. The examination of the methodological approach of the Tribunal is undertaken for one purpose only, that is, to enable the Court to consider and form a view as to whether relief ought to be denied to the applicant under the AAT Act on the footing that the Court can be confident that there is no possibility of a more favourable outcome to Mr House had the decision been made according to law rather than in error of law.
89 When the question involves the exercise of a discretion and the error of law is relevant to the framework within or foundation upon which the facts are to be determined and upon which the discretion is exercised, the Court ought to exercise great caution before deciding that the error of law could make no difference to the result already reached. The result may be precisely the same when the Tribunal makes its decision recognising correctly that Mr House's personality disorder is a "prescribed impairment" for the purposes of the Act, but no one can be sure of that. Although, unfortunately, the matter has engaged a number of administrative determinations and subsequent challenges as exhibiting errors of law (as Gilmour J has observed), the only question to be determined in these proceedings is whether the citizen ought to be denied a remedy in the face of demonstrated and conceded error of law in the present decision of the Tribunal under review.
90 In my view an order ought to be made under s 44(4) of the AAT Act setting aside the Tribunal's decision and remitting the matter for determination according to law as I cannot be confident that there is no possibility that the decision already reached might be different having regard to all of the factors I have mentioned. An order, declaring the correct position as a question of law, ought also to be made to the effect that the personality disorder described at paragraphs 28 and 29 of the Tribunal's Reasons for Decision of 26 February 2010 (and as elaborated according to the evidence accepted by the Tribunal) as a personality disorder that caused the overt manifestation of Mr House's alcoholism impairment, is a prescribed impairment for the purposes of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth).
91 Such an order is appropriate as it reflects the correct position as a question of law having regard to the Tribunal's findings of fact. Although such a declaratory order is, of course, inconsistent with the conclusion reached by the Tribunal on the legal question of whether Mr House's accepted personality disorder is a prescribed impairment for the purposes of the Act, the respondent rightly concedes that having regard to the findings of fact, it necessarily follows that Mr House's personality disorder is a prescribed impairment.
92 Making a declaration to that effect does not offend s 44(7) of the AAT Act as the declaration does not operate as a finding of fact but operates to declare the correct legal conclusion arising out of findings of fact made by the Tribunal.
93 The case ought to be remitted to the Tribunal to be decided again with a procedural direction that the parties be at liberty to make further submissions as to the affects of Mr House's personality disorder upon the capacity of someone exhibiting Mr House's vocational, trade and professional skills, qualifications and experience to reasonably undertake the kinds of civil employment found by the Tribunal to be the relevant classes of civil employment, on the footing that Mr House's personality disorder is a "prescribed impairment" for the purposes of the Act.
94 The case ought to be remitted to be decided again without the hearing of any further evidence: s 44(5) of the AAT Act.
I certify that the preceding ninetyfour (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.
Associate:
Dated: 1 June 2011
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION QUD 103 of 2010
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: DAVID HOUSE
Applicant
AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
Respondent
JUDGES: GREENWOOD, GILMOUR & LOGAN JJ
DATE: 1 JUNE 2011
PLACE: BRISBANE
REASONS FOR JUDGMENT
Gilmour J
95 The appeal is from a decision made on 26 February 2010 by the Administrative Appeals Tribunal ("the Tribunal"), constituted by Deputy President Hack SC, which affirmed the decision under review in relation to reclassification of the applicant in accordance with s 34(l) of the Defence Force Retirement and Death Benefits Act 1973 (Cth) ("the Act") ("the decision").
96 The respondent concedes that in relation to the only ground of appeal pressed that the Tribunal was in error when it failed to characterise the applicant's personality disorder as a prescribed "impairment" for the purposes of s 34(1A)(c) of the Act. The principle issue in the appeal, in light of that concession, is whether there is any possibility that the Tribunal, had it not made that error, would have come to a different decision. Put another way, the question is whether the applicant has been deprived of a different and successful outcome by the respondent's admitted error. The respondent says that there is no such possibility and that the error was an immaterial one.
Legislative scheme
97 Part V of the Act provides invalidity benefits for members of the scheme established by the Act, who have been retired on the ground of invalidity or physical or mental incapacity to perform their duties.
98 The initial classification of a member is made under s 30 of the Act. This section provides that the Authority shall determine the member's percentage of incapacity in relation to civil employment and shall classify the person according to the percentage of incapacity as follows:
60% or more: Class A
30% or more but less than 60%: Class B
Less than 30%: Class C
99 Section 31 provides for the rate of invalidity pay in respect to a member classified either Class A or B. A member classified Class C is not entitled to invalidity pay.
100 Section 34(1) of the Act provides:
34(1) The Authority may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment.
101 Section 34(lA) of the Act provides:
(1A) In determining:
(aa) what is the percentage of incapacity in relation to civil employrnent of a recipient rnember; or
(aab) ...
the Authority shall have regard to the following matters only:
(a) the vocational, trade and professional skills, qualifications and experience of the recipient member;
(b) the kinds of civil employment which a person with skills, qualifications and experience referred to in paragraph (a) might reasonably undertake;
(c) the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b);
(d) such other matters (if any) as are prescribed for the purposes of this subsection.
102 Section 34 (1B) of the Act provides (emphasis added):
(1B) In subsection (1A), prescribed physical or mental impairment, in relation to a recipient member or a deceased member who was immediately before his or her death a recipient member, means:
(a) a physical or mental impairment of the member that was the cause, or one of the causes, of the invalidity or physical or mental incapacity by reason of which the member was retired, whether or not that impairment changed, for better or worse, since that retirement; or
(b) any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a).
103 Section 34(2) states that the respondent must specify the date from which the reclassification shall have effect.
Background
104 The applicant, born on 20 March 1950, commenced service with the Australian Defence Force (Army) on 1 October 2010.
105 On 29 May 1975, the applicant was discharged from the Army on the ground that his: 'Retention in the Military Forces was not in the interests of those Forces'.
106 In October 1976, following representations by the Defence Force Ombudsman, a medical assessment of the applicant was arranged. Based on that assessment, the applicant's mode of discharge was amended to 'medically unfit for further service. The physical or mental impairments that caused the medical discharge were said to be alcoholism and alcoholic liver disease.
107 A minute paper dated 3 February 1977 from the Office of Director General of Army Health Services discloses that the applicant was discharged from the Army with the disabilities of alcoholism and alcoholic liver disease. It further stated that the applicant was considered to be a man suffering from alcohol addiction with a severely damaged personality, and that his composite percentage disability for employment in the general labour market was assessed at 20% at that time. The respondent first considered the extent of the applicant's incapacity in 1979 and classified him as Class C with a percentage of incapacity of 10% with effect from the date of his discharge.
108 On 30 August 1985, under s 37 of the Act, the respondent decided to treat the applicant as though he had been retired on the ground of invalidity or physical or mental incapacity.
109 On 11 October 1985, a delegate of the respondent, under s 30 of the Act, assessed the applicant's incapacity at the time of discharge as 20% Class C. This was not sufficient for the applicant to be entitled to a benefit. On 11 April 1986, the respondent varied the applicant's classification to 30% Class B which did entitle him to a benefit. The applicant's retirement impairments were said to be 'alcoholism and alcoholic liver disease'.
110 The question of Mr House's benefits has a long history of disputes in the Tribunal and the Federal Court. It is helpful to have an understanding of that history which follows.
First Tribunal Proceedings
111 On 5 December 1986, a delegate of the respondent reviewed the applicant's incapacity under s 34 of the Act. The applicant was reclassified to 20% Class C with effect from 16 January 1987. The respondent affirmed the delegate's decision. The applicant appealed to the Tribunal. On 24 June 1988, the Tribunal affirmed the decision under review. The applicant appealed to this Court which allowed the appeal and remitted the matter to the Tribunal for further consideration. The respondent's appeal to this Court was dismissed and the matter was remitted to the Tribunal: Defence Force Retirement and Death Benefits Authority v House (1989) 22 FCR 138; (1989) 91 ALR 286.
Bulley Tribunal
112 Meanwhile, in 1989, the applicant requested from the respondent a review of his incapacity. On 10 November 1989, a delegate of the respondent decided that the applicant's classification was 20% Class C. On 4 May 1990, the respondent affirmed the delegate's decision. The applicant's retirement impairment remained 'alcoholism and alcoholic liver disease'.
113 On 20 March 1992, the Tribunal set aside the respondent's decisions of June 1987 and May 1990 and classified the applicant as 35% Class B from 16 January 1987 and 40% Class B from 10 November 1989 ('Bulley Tribunal'). The Bulley Tribunal specifically rejected personality disorder as a prescribed impairment.
Muller Tribunal
114 Meanwhile, the applicant again applied for review of his incapacity. On 6 November 1992, a delegate of the respondent determined that the applicant's incapacity remained 40% Class B. That decision was affirmed by the respondent on 3 April 1993. The retirement impairments remained alcoholism and alcoholic liver disease. The applicant appealed to the Tribunal ('Muller Tribunal'). The Tribunal in its decision of 16 February 1994 noted that the timing of the decision under review was proximate to the decision of the Bulley Tribunal: House and Defence Force Retirement and Death Benefits Authority [1994] AATA 442. The Tribunal therefore found:
We adopt the findings of fact, the analysis of the law and the decision of the Tribunal on 20 March 1992. We see no point in repeating what was said there.
The applicant's subsequent appeal to this Court was withdrawn.
Purcell Tribunal
115 In 1995, the applicant requested a review of his incapacity by the respondent. On 23 May 1995, a delegate of the respondent determined that the applicant's incapacity remained 40% Class B and that the applicant's prescribed impairment remained 'Alcoholism and Alcoholic Liver Disease'. That decision was subsequently affirmed by the respondent on 27 October 1995. The applicant appealed to the Tribunal ('Purcell Tribunal'). On 16 June 1997, the Purcell Tribunal affirmed the reviewable decision: House and Defence Force Retirement and Death Benefits Authority [1997] AATA 836. At [18]-[19], the Tribunal adopted the reasoning and conclusion of the Bulley Tribunal that the applicant's personality disorder was not a separate impairment.
Beddoe Tribunal
116 In October 1997, the respondent rejected a review requested by the applicant. That decision was reconsidered and affirmed by the respondent on 11 November 1998. The applicant appealed to the Tribunal. In addition, in 1999, the applicant requested yet another review of his incapacity. A delegate of the respondent decided that the applicant's classification remained 40% Class B with effect from 20 June 1999. The respondent affirmed the decision. The applicant again appealed to the Tribunal.
117 The Tribunal heard the above applications together ('Beddoe Tribunal') and delivered its decision on 8 May 2001: House and Defence Force Retirement and Death Benefits Authority [2001] AATA 375. The Tribunal stated at [7]:
The applicant says he was discharged from the Army because of alcoholism. He has also attributed the discharge to racist attitudes of his commanding officer and to drunkenness. During his Army service he served in South Vietnam and attributes his heavy drinking to his service in Vietnam.
118 In relation to incapacity and prescribed impairment, the Tribunal stated the following:
It seems to us to be the case that the applicant's abuse of alcohol is a controlled abuse reflecting personality disorder rather than addiction. On the material before us he seems to be in control of his situation at all times, except when intoxicated, and he reaches that state because that is something that he sets out to achieve rather than because he is unable to control an addiction for alcohol. It is more likely, in our view that the applicant has an aggravated but endogenous personality disorder. [41]
However we were not asked to change the prescribed physical or mental impairment by the respondent and we have decided that it is now too late in the day to do so. The history of the payment of pension to the applicant denies that there is not a prescribed physical or mental impairment. [42]
The prescribed physical or mental impairment in this case is Alcoholism and Alcoholic Liver Disease. As we have already noted we have doubts, with the benefit of hindsight, that those conditions are a correct diagnosis of the applicant's present condition. There is deliberate alcohol abuse but in a controlled way so as to mitigate against a finding of alcoholism. However we accept that the applicant's controlled binge drinking can be accepted as alcoholism and that abuse of alcohol had its genesis in the applicant's war service. [46]
119 The Tribunal reclassified the applicant from 40% to 30% Class B with effect from 22 June 1999. The applicant's appeal to this Court was dismissed: House v Defence Force Retirement and Death Benefits Authority [2002] FCA 65.
Cowdroy Tribunal
120 Meanwhile, the applicant sought another review of his incapacity. On 3 July 2001, a delegate of the respondent reclassified the applicant to 20% Class C. The respondent reconsidered and affirmed the decision on 13 February 2002. The applicant appealed to the Tribunal.
121 In its decision of 29 June 2004 ('Cowdroy Tribunal'), the Tribunal affirmed the respondent's decision: Re House and Defence Force Retirement and Death Benefits Authority (2004) 83 ALD 792. At [42] the Tribunal found:
The tribunal shares the view of the delegate that the incapacity by reason of which the applicant was retired was the effects of alcoholism. It is not in dispute that the applicant's prescribed physical or mental impairments are alcoholism and alcoholic liver disease. It finds that there is, within the relevant time period to which this tribunal must have regard, no evidence of any impairment arising from alcoholic liver disease. Therefore, the tribunal has to consider the effects of alcoholism, which has been described in terms such as alcohol abuse and alcohol dependence.
122 The applicant's appeal to this Court was referred to the Federal Magistrates Court. The appeal was subsequently dismissed.
Current matter
123 The history of the current matter commenced on 19 November 2004 when the applicant sought review of his invalidity classification. The respondent declined the applicant's request for review, which was affirmed on reconsideration. The applicant appealed to the Tribunal.
McDermott Tribunal
124 On 15 January 2008, the Tribunal ('McDermott Tribunal') set aside the respondent's decision and reclassified the applicant to 30% Class B with effect from 19 November 2004: House and Defence Force Retirement and Death Benefits Authority [2008] AATA 38. The Tribunal considered that the applicant's prescribed physical and mental impairments were alcoholism and personality disorder. The respondent appealed to this Court.
125 On 1 April 2009, the Court upheld the respondent's appeal and the matter was remitted to the Tribunal: Defence Force Retirement and Death Benefits Authority v House [2009] FCA 302; (2009) 49 AAR 525.
Hack Tribunal
126 On 26 February 2010, Deputy President Hack determined that the applicant's classification remains Class C, assessing the applicant's incapacity as 10-15%: Re House and Defence Force Retirement and Death Benefits Authority [2010] AATA 147. The Tribunal observed at [14] that all earlier determinations of the applicant's incapacity had been made on the footing that the applicant's sole prescribed impairment was alcoholism. The Tribunal rejected the applicant's contentions that his upper left limb injuries as a result of motor vehicle accidents in 1975 and 1976; and a condition of chronic dysthymia (described as "a chronically low mood") were impairments causally connected with his accepted prescribed impairment of alcoholism. There is no challenge to those findings. The Tribunal determined that personality disorder did not form part of the applicant's prescribed impairments, considering that it was "plain that alcoholism was the basis on which Mr House was retired" at [28].
127 On 26 March 2010, the applicant instituted the present appeal.
The appeal
128 The only ground of appeal pressed was that the Tribunal erred in law in failing to properly consider whether the condition of "personality disorder" was a mental impairment which was, in addition to alcoholism, "one of the causes of the invalidity or physical or mental incapacity by reason of which the applicant was retired".
129 As I mentioned at the outset, the respondent conceded jurisdictional error on the part of the Tribunal in failing to characterise the applicant's personality disorder as a prescribed impairment for the purposes of s 34(1A)(c) of the Act. This concession flowed from the respondent's acceptance of the contention of the applicant that once the Tribunal determined that the applicant's impairment of alcoholism was caused by the applicant's personality disorder, the legal consequence which necessarily follows is that the impairment constituted by the personality disorder is to be treated as a prescribed impairment.
130 The applicant contends that, in light of the admitted error, it is impossible to conclude that the Tribunal gave proper, genuine and full consideration to the elements of the personality disorder in assessing whether the applicant's percentage of incapacity for civil employment should be altered resulting in a reclassification having regard to s 34(1A) of the Act. The applicant says that although the Tribunal appears to have given some consideration to the effects of the personality disorder, the legal error demonstrates that no one can be sure that the applicant's personality disorder was fully taken into account by the Tribunal in assessing the statutory requirement, namely, his capacity to undertake the kinds of civil employment which a person with his vocational, trade and professional skills, qualifications and experience might reasonably undertake. It follows, the applicant contends, that had the error not occurred, the assumption of the correct analytical framework could or might have brought about a different outcome.
131 The applicant contends that the Tribunal's Reasons do not expose whether the Tribunal fully came to grips with the impact of the personality disorder and to the extent that it did address the effects of the disorder, it failed to do so in a discrete way and, properly analysed, viewed the applicant's personality disorder as an incidental feature of the alcoholism impairment. This, it contends, is sufficient to warrant the decision being set aside and the matter being remitted to the Tribunal for reconsideration on the merits.
132 The respondent concedes error on the part of the Tribunal but submits that it is not a material error because the Tribunal's reasons demonstrate that the features of the applicant's personality disorder drawn from the expert evidence were taken into account on the merits; the evidence of the experts was that disaggregating the effects of the alcoholism and personality impairment was complex and difficult; the evidence of the experts to that effect was accepted by the Tribunal; the Tribunal elected to consider the impact of both impairments together; the result is said to follow because all of the effects of both the alcoholism and the personality disorder which as a matter of analysis could not be disentangled were examined and attributed in the aggregate to the impairment of alcoholism. Accordingly, it further submits that treating the applicant's personality disorder as a prescribed impairment would not have resulted in a finding of any additional or greater degree of incapacity.
The relevant test
133 Where, as in this case, there is demonstrated jurisdictional error on the part of the Tribunal and which is conceded by the respondent, it is sufficient, in order to attract relief setting aside the Tribunal's decision, that had the error not occurred the outcome could or might be different: Stead v State Government Insurance Commission (1986) 161 CLR 141. Being deprived of the mere possibility of a successful outcome is enough to warrant a remedial order: Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 per Gleeson CJ at [3]-[4]; per Gaudron and Gummow JJ at [80]; McHugh J at [122]; per Kirby J at [131]; per Callinan J at [211]. Here, "successful outcome" would require an outcome such that the applicant's percentage incapacity be determined, at the least, at 30% or more giving him a Class B determination under s 30 of the Act and thereby an entitlement to an invalidity pay under s 31 of the Act. This would require an assessment of his percentage incapacity at least double that of the top of the range of percentages determined by the Tribunal from 10-15%. An assessment at less than 30% would not entitle the applicant to invalidity pay.
134 Indeed, once the jurisdictional error is established, the remedy, as sought here, will lie almost as of right although the Court retains its jurisdiction to refuse relief if in the circumstances that seems the proper course: R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 194; Ex parte Aala per Gaudron and Gummow JJ at [59]; Gleeson CJ and Hayne J agreeing at [5] and [172].
135 Accordingly, it is not every error of law that will result in a matter being remitted for re-determination: the error in question must be material to the Tribunal's decision: BTR PLC v Westinghouse Brake and Signal Co (Australia) Ltd (1992) 34 FCR 246 at 253-254 per Lockhart and Hill JJ; Klinkert v Australian Postal Corporation (1992) 16 AAR 86 at 92 per Hill J; Hyundai Automotive Distributors Australia Pty Ltd v Australian Customs Service (1998) 81 FCR 590, 599D; 3D Scaffolding Pty Limited v Commissioner of Taxation (2009) 75 ATR 604 at [35].
136 Here, the question for the Tribunal was the degree of the applicant's incapacity as at 19 November 2004 (the date that the applicant applied for his review of his classification) and since. The Tribunal determined that the applicant's incapacity for employment was minimal (10-15%). For the reasons which follow I am satisfied that in making that assessment the Tribunal took into consideration both the applicant's alcoholism and his personality disorder. I am satisfied that the Tribunal would have reached the same result, had an error of the kind demonstrated not been made: cf. Stead v State Government Insurance Commission at 145 per Mason, Wilson, Brennan, Deane and Dawson JJ.
137 Before the Tribunal, the applicant had contended that his personality disorder was centrally connected to his alcoholism. The Tribunal at [26] observed that, whilst there was no issue that the applicant had a personality disorder, the question whether his personality disorder ought to be regarded as a "prescribed condition [impairment]" was "controversial". It referred to the evidence of Dr Barbara McGuire, a consulting psychiatrist, and her report of 19 April 2006 where she referred to reports of other psychiatrists as far back as 1983 describing the applicant's personality disorder. Dr McGuire said that the applicant suffered from a personality disorder which caused him to drink. The Tribunal at [26] then noted the opinion of Dr McGuire that the two conditions of alcoholism and personality disorder were "so intertwined as to make attempts at teasing them apart at best only an academic exercise".
138 At [27] the Tribunal referred to the evidence of Dr Jill Reddan, another consulting psychiatrist, who provided three reports dated 22 June 1997, 8 May 2000 and 15 January 2003. The Tribunal noted Dr Reddan's opinion contained in her report of 22 June 1997 that the applicant had a personality disorder and importantly Dr Reddan's observation that:
The relationship between Mr House's personality disorder and his alcohol consumption is complicated and it is impossible to state which is the primary problem and which is the secondary. It is likely however, that Mr House sought to deal with any uncomfortable affects or anxieties by alcohol abuse but, because of his need to project blame onto others and refusal to see any problems within himself, he has consistently refused to address his alcohol problem. It is likely, however, that his ongoing alcohol consumption did narrow his ability to think through the consequences of his actions and assisted in maintaining the rigidity and self-absorption of his personality. (Emphasis added)
139 It was Dr McGuire's opinion, accepted by the Tribunal at [28], that the applicant's drinking was caused by the personality disorder but that it was "artificial in the extreme" to "seek to separately consider the two conditions". The Tribunal then stated at [29]-[30]:
It seems clear that Mr House's personality disorder is a long-standing condition and, in all likelihood, pre-dated his discharge from the Australian Army. But it was Mr House's drinking, categorized as alcoholism, which caused the incapacity that was the reason for his discharge. The drinking may have been the overt manifestation of the underlying personality but nonetheless the alcoholism was the proximate cause of the discharge. I am, then, not satisfied that Mr House's personality disorder ought to be accepted as a prescribed impairment.
140 Then the Tribunal stated at [30]:
The medical evidence recognises the difficulties inherent in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder however that task is now easier given that Mr House has been abstaining from alcohol for a considerable period of time. In the practical application of the statute to Mr House's circumstances I propose to first consider the totality of his mental conditions and the extent to which they lead to incapacity for employment before determining whether there is an apparently logical basis for differentiating between the consequences of the two conditions. (Emphasis added)
141 I take, in its stated context of "the difficulties inherent in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder …" the expression "the totality of his mental conditions" as including the effects upon the applicant of his personality disorder. Indeed, at [32] the Tribunal concluded that there was no unfairness in permitting the applicant to argue his case on a "wider basis" than he had previously done in the June 2004 decision. At that earlier hearing the applicant had not contended that he had a personality disorder which was a separate impairment. However, before the Tribunal, the argument was widened to include incapacity as a result of his personality disorder.
142 Then, at [43] the Tribunal, in effect, repeated its proposed approach which was to consider the evidence on incapacity arising from prescribed impairments. The use of the plural "impairments" again, in context, I infer, is inclusive of his personality disorder.
143 Deputy President Hack SC observed at [44] that because the applicant had abstained from alcohol; was in a stable relationship; was a carer for his spouse; and, was undertaking voluntary work assisting blind people three days a week, his "level of incapacity … on one view … ought to be reduced … as [t]hose matters … suggest[ed] a marked improvement rather than a worsening of his capacity".
144 The Tribunal considered neuropsychological evidence of the extent of cognitive impairment suffered by the applicant. The main cognitive impairment appeared to have been a significant memory impairment, although the Tribunal said that the applicant had suffered no obvious cognitive deficits in the course of the hearing which reflected the view of Dr McGuire. Another consulting psychiatrist, Dr Morris, indicated a mild disturbance of cognition in the areas of attention and concentration, executive function and memory recall that are consistent with his subject complaints and were consistent with heavy consumption of alcohol. The Tribunal concluded that the applicant's degree of demonstrable impairment was objectively quite minor.
145 At [51], the Tribunal noted the applicant's reliance on the additional matter of "manifestations of his personality that he contended affect his capacity to engage in employment". The Tribunal noted that the particular manifestations relied upon were "character traits" described by Dr Reddan in her report of 22 June 1997 following a consultation with the applicant on 19 June 1997. Her description was that:
Mr House has difficulty in seeing the points of view of others. His thinking is inflexible and marked by grandiosity and a sense of entitlement. He tends to overstate his case and to project blame onto others for all of his own misfortunes. He thus refuses to accept any responsibility for his situation in life and pursues compensation as part of his drive to prove that others are responsible for any misfortune he has. He is selfabsorbed and unwilling to look at the effect of his behaviour on his family. He consciously and determinedly refuses to change.
146 These were undoubtedly referrable to his acknowledged personality disorder.
147 The Tribunal then set out the following extract from a further report of Dr Reddan of 15 January 2003 which again are an expression of the applicant's manifest personality disorder:
There have been some shifts in his presentation in that on this occasion [28 November 2002] he expressed more concern for others and a greater capacity for empathy. He also appeared to have insight into certain aspects of his belief patterns. However, he continues to exhibit paranoid traits and he defends against his low self esteem and feelings of inferiority by some narcissistic defences. He has long been reluctant to accept responsibility and he has been absorbed in selfpity (which he describes as a sense of victimisation) for many years. He has been rigid and inflexible in his thinking, but this has been challenged of recent times. His alcohol use has been selfdefeating.
148 At [52], the Tribunal noted that Dr McGuire generally agreed with this aspect of Dr Reddan's evidence.
149 At [53], the Tribunal observed that these personality attributes identified by Dr Reddan were said to affect the applicant's "soft skills" of "initiative, communication, team work, ability to problem solve, selfmanage, plan and learn", according to the evidence of an occupational therapist, Ms Rowe. The Tribunal noted that Dr Reddan and Dr McGuire had said that as the applicant had stopped drinking, he could no longer be diagnosed as having either alcohol abuse or alcohol dependence, the relevant psychiatric diagnoses. The Tribunal noted Dr McGuire's evidence that the applicant's relationship, role as a carer and voluntary work was indicative of empathy, care and compassion and showed somebody who was improving. In this context, the Tribunal also noted the evidence of Dr Reddan that those factors reflect "an improvement in his mental state". As to the relationship between the physical effects of ceasing to drink, and disposition, moods and personality, the Tribunal noted Dr Reddan's observations as follows:
First of all there is the recovering effects physically on the brain and the improvement of overall competent functioning … [i]f you are not subjecting the brain to a drug that is actually – the central nervous system depresses. So, gradually the brain does recover. Very often it also leads to more stabilisation of moods. Often an improvement in motivation in particular. There is a general decrease in irritability and what we would call dysphoric or unhappy feelings. Alcohol tends to be a drug that over time makes people miserable. You usually find when people have abused alcohol, even if there's a binge pattern of drinking or its intermittent abuse, that their mood improves when they either sip or drink at low levels.
150 At [54], the Tribunal stated:
But Dr Reddan's evidence, and that of Dr McGuire, satisfies me that the personality traits earlier identified by Dr Reddan would be less marked now that Mr House is no longer drinking and is in a stable relationship. … I am then satisfied that by the time of the present application to the Authority, Mr House was no longer abusing alcohol which had the effect of considerably improving his capacity for care, compassion and empathy as well as leading to an improvement in his "soft skills". (Emphasis added)
151 When the degree of incapacity for each category of civilian employment was considered by the Tribunal, I am satisfied for the reasons which follow that the Tribunal took into consideration all the incapacities upon which the applicant relied whether said to be the result of his personality disorder or his alcoholism.
Categories of employment
152 The applicant contended before the Tribunal that someone with his skills, qualifications and experience might reasonably undertake employment as a driver (including truck, taxi or courier driver); operator of equipment, plant and machinery; work requiring mechanical aptitude; work as a subcontractor in mining or construction; a labourer; a storeman; a security officer; and work as a foreman in any of those fields. The respondent contested whether a person with the applicant's skills could undertake work requiring mechanical aptitude and work as a foreman in any of the other occupations. The Tribunal concluded at [59] that employment in areas requiring mechanical aptitude was not the type of employment that a person with the applicant's background might reasonably undertake and nor did the Tribunal accept that a person with his background might reasonably undertake employment as a foreman: [60] and [61].
153 At [63], the Tribunal adopted a method of assessing the extent of the applicant's capacity to undertake the remaining categories of employment by examining the duties or work demands of each category of work as identified by Ms Rowe, and the affect of his "conditions" upon his capacity to perform those duties or work tasks.
Delivery driver or truck driver
154 The Tribunal said at [65]:
The only difficulties identified that are capable of being attributed to Mr House's accepted condition [impairment] of alcoholism is a deficiency in his capacity to plan and to find geographical locations and an inability to relate to customers because of his aggression. I am prepared to accept that the first of these is the consequence of alcoholism and is the manifestation of the memory deficits first reported on by Ms Field in 1992 and more recently by Dr Morris and Ms Schumann. … The other difficulty identified, that of aggression, seems more likely to be the consequence of Mr House's personality disorder. But, as Dr Reddan observed, Mr House is quite capable of controlling his emotions. Moreover, there is evidence of considerable maturation on the part of Mr House from 2004 onwards. (Emphasis added)
155 At [66], the Tribunal observed that "[t]hese matters even taken together" suggested that the extent of any impairment to the applicant's capacity to undertake employment as a truck driver of any type is minimal at best.
156 I am accordingly satisfied that the Tribunal considered the relevant aspect of the applicant's personality disorder, namely aggression, as well as the cognitive deficits caused by his alcoholism in making its assessment.
Driver of mobile plant
157 In respect of this category the applicant contends that the Tribunal undertook its assessment of incapacity by reference to Ms Rowe's analysis without proper regard to the evidence of Dr Reddan.
158 Although the applicant concedes that in the case of employment as a truck driver the Tribunal has had regard to his personality disorder he says that in each case, but particularly with regard to the consideration of work as a driver of mobile plant, the Tribunal did not take into account the evidence of Dr Reddan concerning his inflexibility and marked grandiosity and sense of entitlement.
159 It is correct that Dr Reddan had identified those traits in her June 1997 report. However, the position concerning his personality traits had shifted significantly, as Dr Reddan noted in her January 2003 report. Moreover, the applicant's contention in relation to employment as a driver of mobile plant was that the only relevant difficulty was his claimed inability to work as part of a team and that in that respect the applicant had relied upon episodes of his aggression in the workplace which, as I have observed, was considered and dealt with by the Tribunal.
160 At [68], the Tribunal concluded that it was not apparent as to how this difficulty could be regarded as being attributable to the applicant's alcoholism however even if it be assumed that it was "the extent of reduction of Mr House's capacity for employment of this type (was) minimal at best".
161 Whether this aggression was the product of alcoholism or his personality disorder I am satisfied that the Tribunal, in making its assessment, considered this relevant manifestation and its apparent consequences in the work place relied upon by the applicant as evidence of his diminished capacity to undertake civil employment.
162 Moreover, the Tribunal in its consideration of this claim by the applicant observed that the applicant had been a long term employee in two workplaces and had left both employers of his own accord and that longevity in those workplaces was inconsistent with a notion of him having difficulties working as part of a team. I am satisfied that the Tribunal, in making its assessment, fully considered the personality disorder based evidence and contentions relied upon by the applicant in this respect.
Storeman
163 The Tribunal noted Ms Rowe's comments to the effect that there were concerns in the nature of workplace health and safety concerns due to the applicant's history of aggression, difficulty taking orders from supervisors, interpersonal communication skills and poor interpersonal social skills in the workplace. These concerns are referrable to the applicant's history of personality disorder. The Tribunal however, as it was entitled to do, did not accept Ms Rowe's conclusions as the evidence as a whole did not support concerns of workplace health and safety due to those matters. The Tribunal concluded that this was all the more so having regard to changes in the applicant's behaviour and temperament since 2004.
164 The Tribunal came to the same conclusion and for essentially the same reasons in relation to the applicant's claimed reduction in capacity to work as a labourer in the building industry or as a security officer. In each case the degree of diminished capacity was found to be "minimal" or "modest".
Conclusion
165 I am not persuaded that the Tribunal failed to take into account the relevant personality disorder traits when considering the various categories of civil employment for the purposes of s 34(1A)(c) of the Act. Indeed I am satisfied that it did. The fact that it referred initially to only one impairment, namely, alcoholism does not affect that conclusion. That it did not consider the personality disorder issues in isolation apart from express references to some of them or to their manifestations is because, as the Tribunal found, it is impossible to unravel these conditions or at least their manifestations from those caused by alcoholism.
166 The evidence and the Tribunal's observations go beyond characterising the inter-relationship of the applicant's alcoholism and personality disorder as complex or intertwining. The force of Dr McGuire's evidence was that the intertwining was such "as to make attempts at teasing them apart at best only an academic exercise" and Dr Reddan regarded the inter-relationship as so complicated that it "is impossible to state which is the primary problem and which is the secondary". At [139], as I mentioned, the Tribunal recognised and accepted these opinions, and characterised any attempt to disengage the two conditions as "artificial in the extreme". It is the force of the accepted opinions of each of these psychiatrists which it seems to me is fundamental to the disposition of the appeal. There is no appeal from those findings. If the matter were to be remitted the Court would, in effect, be inviting another Tribunal to perform an analysis which the Tribunal found was, in effect, incapable of being done.
167 For all these reasons, I would dismiss the appeal with costs.
I certify that the preceding seventythree (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.
Associate:
Dated: 1 June 2011
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION QUD 103 of 2010
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: DAVID HOUSE
Applicant
AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
Respondent
JUDGES: GREENWOOD, GILMOUR AND LOGAN JJ
DATE: 1 JUNE 2011
PLACE: BRISBANE
REASONS FOR JUDGMENT
LOGAN J
168 I have had the advantage of reading in draft the reasons for judgment of Greenwood J. I agree generally with his Honour's reasons and with the orders he proposes. I wish to make some additional observations.
169 It was common ground between the parties to the appeal that the learned Deputy President had erred in his construction of s 34(1B) of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (the "DFRDB Act"). In this they were not mistaken. In the definition of "prescribed physical or mental impairment" for the purposes of s 34(1A)(c) of the DFRDB Act, found in s 34(1B) of that Act, the word "or" acts as a connecting conjunction between paragraphs (a) and (b) of that definition.
170 In Freeman v Defence Force Retirement and Death Benefits Authority (1985) 5 AAR 156 at 160, Sheppard J, with whom Sweeney J agreed, remarked:
The provisions of s 34(1A) are similar, but not precisely the same as the provisions of s 30(2) earlier referred to. It is to be observed that the matters specified in s 34(1A) as the matters to which the Authority is to have regard are the only matters with which the Authority is to be concerned. The subsection is exhaustive in this regard. It is also to be observed that because of the definition of 'prescribed physical or mental impairment' in s 34(1B) a member may be reclassified at any time and may be reclassified so that he is found to have either a greater or a lesser degree of incapacity than was previously the case. That is because the definition in s 34(1B) takes one back to the physical or mental impairment that was the cause of the original invalidity or physical or mental incapacity by reason of which the member was retired. It follows that the Authority is always obliged to look at the current capacity of a member and reach a conclusion on the degree to which the original physical or mental impairment which caused his incapacity has diminished his capacity for civil employment.
When one recalls the definition of "prescribed physical or mental impairment" much may lie behind the remark by Sheppard J that the provisions of s 34(1A) of the DFRDB Act are similar, but not precisely the same as the provisions of s 30(2) of that Act. Materially, s 30(2)(c) of that Act provides:
(c) the degree to which the physical or mental impairment of the member that caused the invalidity or physical or mental incapacity because of which he or she was retired has or had diminished the capacity of the member to undertake the kinds of civil employment referred to in paragraph (b).
Unlike s 34(1A), there is no particular definition of "physical or mental impairment" for the purposes of s 30(2)(c) of the DFRDB Act. In particular, unlike the position with respect to s 34(1A), it is not expressly stated in or for the purposes of s 30(2)(c) of the DFRDB Act that "physical or mental impairment" includes, "any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a)".
171 Referring to the DFRDB Act, the learned Deputy President (at para 28) stated, "[The] legislation requires a determination of the cause or causes of the invalidity or physical or mental incapacity by reason of which the member was retired". By way of authority for that proposition, he then referred to Re Greer and Defence Force Retirement and Death Benefits Authority [2001] AAT 186; (2001) 63 ALD 282 at [33] in which Deputy President Forgie had stated, "The focus is not upon the invalidity or physical or mental incapacity upon which a person could, or should, have been retired. The focus is upon those invalidities, physical or mental incapacities upon which he was retired." That statement though was made by Deputy President Forgie with respect to s 30(2) of the DFRDB Act, not s 34(1A). To rely on that statement for the purpose of approaching the reclassification task under s 34 is, given the presence of the definition in s 34(1B) of the DFRDB Act, apt to, and in fact did, mislead.
172 It is not necessary for the purpose of deciding this appeal to attempt to reconcile 30(2)(c) with s 34(1A) of the DFRDB Act or to determine the correctness of statements made in past cases in the Tribunal as to the meaning of s 30(2)(c) of that Act.
173 One of the cases to which Greenwood J refers in considering whether it would, notwithstanding the identified error of law, be an exercise in futility to remit the matter to the tribunal is Stead v State Government Insurance Commission (1986) 161 CLR 141 ("Stead"). In Hoskins v Repatriation Commission (1991) 32 FCR 443 and in Dolan v Australian and Overseas Telecommunications Corporation (1993) 42 FCR 206 Pincus J and Spender J respectively applied Stead by analogy in appeals under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act") to remit a matter to the tribunal in circumstances where the identified error of law was a denial of procedural fairness by the tribunal. That was on the basis that all that the appellant needed to show was that the denial deprived the appellant of the possibility of a successful outcome.
174 Where, as in those cases, findings of fact made by the tribunal rely in part on an assessment of an applicant's credibility a deprivation of the possibility of a successful outcome constituted by a denial of procedural fairness is inherently likely. Here, there was no denial of procedural fairness, but because of the error of law, Mr House's application for review was not determined against the correct statutory criteria. Sometimes, even though the tribunal applies an incorrect statutory test, it can be seen that the same issues would have fallen for consideration had the correct statutory test been applied and that, given the findings of fact made by the tribunal, the same decision must necessarily have resulted. In those circumstances an order remitting the matter to the tribunal would be an exercise in futility. In Secretary, Department of Education, Employment and Workplace Relations v Holmes [2008] FCA 105; (2008) 168 FCR 301 I dismissed the Secretary's appeal on just such a basis. In so doing and by reference to earlier authority I observed (at [66] to [67]):
66 There is a limited class of case in which an error of law does not vitiate the Tribunal's decision such that, without violating the role consigned to it in an appeal on a question of law, the Court may, in determining the appeal, dismiss the appeal. The authorities concerning this class of case were collected and discussed by Sackville J in Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550 at 560-561 where his Honour observed:
In certain circumstances, however, the Court may exercise the power in s 44(4) of the AAT Act and make orders finally resolving the matter. In Harradine v Secretary, DSS, for example, the only question was the construction of a particular section of an Act. The parties agreed that whoever succeeded on that issue was entitled, as a matter of law, to succeed in the AAT. Accordingly, the Court made orders finally disposing of the case without remitting the matter to the AAT (at 36, 43, 49). Similarly, if the Court hearing an appeal from the AAT finds an error of law in its reasons, but nonetheless considers that the decision was clearly correct on the material before the AAT it is open to the Court to dismiss the appeal: Austin v Deputy Secretary, Attorney-General's Department (1986) 12 FCR 22 (FCA/FC), at 26-27; McAuliffe v Secretary, Department of Social Security [1992] FCA 483; (1991) 23 ALD 284 (FCA/von Doussa J), at 295-296, aff'd at (1992) 28 ALD 609 (FCA/FC), at 618-619; State Rail Authority of New South Wales v Collector of Customs [1991] FCA 610; (1991) 33 FCR 211 (FCA/FC), at 217.
The scope of the power conferred by s 44(4) of the AAT Act is, however, subject to limitations. These flow from both the fact that an appeal from the AAT is on a question of law only and from the language of s 44(4) and (5). The limitations were explained by Sheppard J in Minister for Immigration and Ethnic Affairs v Gungor [1982] FCA 99; (1982) 63 FLR 441 (FCA/FC), at 454-455:
It is in my opinion not correct to say that this Court is by these provisions given wide powers to make such orders as it thinks fit. Implicit in its powers are a number of restrictions. The appeal is expressly limited to error of law, which alleged error is the sole matter before this Court and is the only subject matter of any order made consequent on the appeal. The order which this Court can make after hearing the appeal is also similarly restricted to an order which is appropriate by reason of its decision. It follows that the only order which can be properly made is one the propriety of which is circumscribed by and necessary to reflect this Court's view on the alleged or found error of law. To go further I would see as amounting to exceeding the jurisdiction of this Court under this section. A power to make "such order as it thinks appropriate by reason of its decision" is much more restrictive than a power "to make such order as it sees fit" or a power "to make a decision in substitution for the decision" the subject of the appeal. S 44(5) confirms, though it states that it does not purport to limit, this as an appropriate reading of the power in s 44(4) when it limits its statement to the express power of the Court when setting aside a decision to the making of an order remitting the case to be heard again. Having set aside a decision, it has no express power to substitute what it sees as the correct decision unless such is the appropriate order by reason of its decision on the point of law in the context of the particular proceedings.
67 Later in time and having referred with approval to Morales 60 FCR 550, the Full Court (Ryan, O'Connor and Weinberg JJ) in Tankey v Adams (2000) 104 FCR 152 at [119] stated that, "The relief which may be granted will depend on the effect of the error of law on the decision-making process. Errors of law which are 'harmless' or 'trivial' do not normally warrant the setting aside of an administrative decision — Department of Social Security v McKenzie (1993) 31 ALD 55". This statement, in my respectful opinion, is peculiarly apposite in the circumstances of the present case. The Tribunal did err in law in formulating the questions before it for decision but, for the reasons I have given, that error was "harmless". It seems to me that this is a case in which it is open to determine the appeal by dismissing it.
175 It is tempting in this case, having regard to the difficulty on the medical evidence, as noted by the learned Deputy President (at [30]), "in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder" just to treat this case as one where the error of law was "harmless" because the tribunal in substance looked at the effects of the two conditions in any event in deciding to affirm the reclassification decision under review. The comprehensive analysis by Greenwood J of the medical evidence and the learned Deputy President's reasons demonstrates, that it is a temptation to be resisted.
176 The constitution of the tribunal on remission following a successful appeal under s 44 of the AAT Act is usually a matter for that Tribunal's President and those to whom he has delegated his authority in relation to determining such matters. There is no reason in this matter, exceptionally, to give any direction as to the constitution of the Tribunal on remission. I do no more than observe that the nature of the identified error of law is not such as would prevent the learned Deputy President from again constituting the Tribunal if that accords with the President's determination as to how best efficiently to administer the Tribunal's business.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.
Associate:
Dated: 1 June 2011
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Yilan v MIMA [1998] FCA 422
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2024-09-13T22:50:51.702912+10:00
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FEDERAL COURT OF AUSTRALIA
CATCHWORDS
MIGRATION - application for review of decision of Refugee Review Tribunal ("RRT") refusing refugee status - whether fresh evidence not before the RRT can be admitted in proceedings before the Court - whether merits review - whether error of law - whether RRT failed to set out reason for findings or look at "critical" issues.
Migration Act 1958 (Cth), ss 420(1), 430(1)(d), ss 476(1)(a), 476(1)(g), 476(2)(a), (b), 476(4)(b)
Sun Zhan Qui v Minister for Immigration and Ethnic Affairs (Full Court, Wilcox, Burchett, North JJ, 23 December 1997, unreported), cited
Kemal Ozberk, and Ors v The Minister for Immigration and Multicultural Affairs (Marshall J, 19 January 1998, unreported) cited
Joseph Francis Aravind Fernando v Minister for Immigration and Multicultural Affairs (Finn J, 5 November 1997, unreported), applied
Dharam Raj v Minister for Immigration and Ethnic Affairs, (Davies J, 18 July 1996, unreported) applied
Minister for Immigration and Ethnic Affairs v Singh 144 ALR 284, applied
CIGDEM YILAN -v- MINISTER FOR IMMIGRATION
AND MULTICULTURAL AFFAIRS
VG 234 of 1997
O'CONNOR J
SYDNEY(HEARD IN MELBOURNE)
28 APRIL 1998
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY VG 234 of 1997
BETWEEN: CIGDEM YILAN
Applicant
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: O'CONNOR J
DATE OF ORDER: 28 April 1998
WHERE MADE: SYDNEY (heard in melbourne)
THE COURT ORDERS THAT:
The application be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY VG 234 of 1997
BETWEEN: CIGDEM YILAN
Applicant
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: O'CONNOR J
DATE: 28 April 1998
PLACE: SYDNEY (heard in melbourne)
REASONS FOR JUDGMENT
HER HONOUR:
This is an application by Cigdem Yilan to review a decision of the Refugee Review Tribunal ("RRT") made on 30 April 1997 when it affirmed the decision of the delegate of the Minister for Immigration and Multicultural Affairs not to grant a protection visa to the applicant.
The grounds of the application are:
· that procedures required by the Migration Act 1958 (Cth) (the "Migration Act") in s 420 to be observed by the RRT in connection with the making of the decision were not observed (s 476(1)(a)).
· the decision involved an error of law being an incorrect interpretation of
s 476(1)(e) of the Migration Act.
· the decision involved an error of law incorrectly applying the law to the facts as found by the RRT (s 476(1)(e)).
The applicant seeks an order that the decision of the RRT made on 30 April 1997 be quashed and a declaration that on 30 April 1997 the applicant was a person who had a well-founded fear of persecution and was entitled to the grant of a protection visa. Alternatively, the applicant seeks an order that the application for determination of her refugee status be referred to the RRT to be further determined according to law.
Legislative Context
The relevant provisions of the Migration Act in respect of this application are as follows:
420 (1) The Tribunal, in carrying out its functions under this Act, is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick.
(2) The Tribunal, in reviewing a decision:
(a) is not bund by technicalities, legal forms or rules of evidence; and
(b) must act according to substantial justice and the merits of the case."
"476. (1) Subject to subsection (2), application may be made for review by the Federal Court of a judicially-reviewable decision on any one or more of the following grounds:
(a) that procedures that were required by this Act or the regulations to be observed in connection with the making of the decision were not observed;
...
(e) that the decision involved an error of law, being an error involving an incorrect interpretation of the applicable law or an incorrect application of the law to the facts as found by the person who made the decision, whether or not the error appears on the record of the decision;
...
(2) The following are not grounds upon which an application may be made under subsection (1):
(a) that a breach of the rules of natural justice occurred in connection with the making of the decision;
(b) that the decision involved an exercise of power that is so unreasonable that no reasonable person could have so exercised the power."
It is a criterion for the grant of a protection visa that at the time of the application the applicant claims to be a person to whom Australia has protection obligations under the Refugees Convention and either makes specific claims under the Convention or claims to be a member of the family unit of a person who is also an applicant and has made such a claim. It is also a criterion for the grant of a protection visa that at the time of decision the Minister is satisfied the applicant is a person to whom Australia has protection obligations under the Refugees Convention.
Article 1A(2) of the Convention as amended, defines a refugee as any person who:
"owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; ..."
Factual Background
The applicant is a 22 year old Kurdish woman, a citizen of Turkey. She arrived in Australia in July 1995, travelling on a Turkish passport. Her application for a protection visa was lodged with the Department of Immigration and Multicultural Affairs on 11 October 1995. The application was rejected by a delegate of the Minister on 30 July 1996. The applicant applied for review of that decision to the RRT on 22 August 1997. The application for review was rejected by the RRT and her application for a protection visa refused on 30 April 1997.
RRT's Decision
The RRT made the following findings:
"The applicant was not a credible witness, I do not accept that she was arrested and tortured on two separate occasions due to her involvement with a student organisation, nor her involvement with Dev Yol. ...
I do not accept that she was involved in Dev Yol to the extent which she claimed, nor do I accept that she faced persecution in the past based on this. ...
I do not accept that she would have remained in Turkey for over a year after the torture she describes had it in fact occurred. ...
That is, I find she was not persecuted prior to her departure from Turkey.
The applicant claimed that she has been involved with radio ... and community associations in Australia. ... but there is no evidence that the authorities are interested in this. There is not a real chance that the applicant would be persecuted for this were she to return to Turkey. ...
I find that there is not a real chance that she would be persecuted on the basis of her political opinion, actual or imputed were she to return to Turkey.
I do not accept that she had been persecuted in the past on the ground of her ethnicity ..."
The RRT accepted that the applicant was a member of a student organisation which organised events celebrating Kurdish nationalism and that these events were harshly suppressed by Turkish authorities.
The RRT did not accept that although the applicant was able to go about her life without interference from March 1994 until her departure in July 1995, the police started looking for her, trying to arrest and/or summons her, only after that departure.
The RRT accepted that the Siwas incident, and the demonstrations in its aftermath, produced shock waves in Turkey and around the world. There were reports about the incident in a very wide range of news media. The lack of any mention of large demonstrations in Ankara (as claimed by the applicant) in the newspaper reports read by the decision-maker, or arrests, indicated strongly to the RRT that there were no such demonstrations or arrests, at least in the days immediately following the Siwas incident.
If the applicant had truly been detained and tortured on the two occasions that she had spoken of, the RRT did not accept that she would have remained in Turkey for over a year after the second incident.
The RRT states:
" ... It is of course, accepted that the applicant does not need to 'prove' his case. However, in this case, the Tribunal is confronted with an applicant who is not credible, and a story that is not plausible - it cannot find as fact things which clearly appear to it to be fictions."
The RRT then said that an applicant needs to show something more than a general abuse of human rights in his country of nationality. The Tribunal must be satisfied that there is a real chance that the applicant will face persecution on one, or a combination, of the Convention grounds. It is not the case that a person faces a real chance of persecution throughout Turkey solely based on his ethnicity, that is, simply because she/he is a Kurd.
The RRT concluded:
"Based on the evidence available to me, and the findings I have made on that evidence, the applicant does not satisfy the definition of refugee in that:
Although she is outside her country of nationality, and is unwilling to avail herself of the protection of that country, she does not have a well-founded fear of persecution, in the sense that there is no real chance that she will be persecuted for a Convention reason if she returns to Turkey."
Notice of Motion to admit new evidence
At the hearing of this matter counsel for the applicant sought to tender an affidavit of Paul Joseph White sworn on the 26 February 1998, to which was attached three exhibits, relying on a decision to admit fresh evidence, made by Wilcox J in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs (unreported, 23 December 1997, Full Court, Wilcox, Burchett, North JJ), on the basis that if there were material to establish that the inquiries made by the decision-maker in this matter were inappropriate, inadequate and incorrect it could be admitted for the purpose of demonstrating substantial inujustice towards the applicant in relation to proceudres before the RRT.
The respondent initially objected to the tender of the affidavit on any basis. The applicant then submitted that the affidavit should be received and read down to exhibit only material concerning a demonstration in Ankara. None of this material was authenticated by the applicant (as would usually be the case if the material were to be used in court proceedings). I am not prepared to admit and consider the affidavit material sought to be tendered. In this case the circumstances are quite different to that which faced the Full Court in the Sun Zhan Qui case. Here the material tendered was to demonstrate the alleged inadequacy of the inquiry made by the decision-maker as to a demonstration in Ankara where the applicant said she was a participant and was subsequently arrested and tortured. It did not concern a failure to inquire at all as in Sun, but was concerned with the quality of the inquiry or the nature of the inquiry made. If a Court were to consider such evidence in the course of judicial review, even for the purpose of evaluating an inquiry, it would, as Marshall J said in Kemal Ozberk, and Ors v The Minister for Immigration and Multicultural Affairs (unreported, 19 January 1998);
"be that the Court viewed the new evidence as evidence upon which the RRT would be most likely to revisit the issue of the authenticity of the first warrant and come to a different view on that factual issue".
It would, in my view, amount to the Court engaging, albeit indirectly, in merits review.
Submissions of the Parties
The applicant made submissions about four issues at the hearing in support of the grounds of review. Firstly, that the decision-maker should not have rejected evidence which had been relied on by the applicants concerning a notice and summons which had been tendered by the applicant at the RRT this rejection amounted to substantial injustice to the applicant and a breach of Section 420 of the Act.
Secondly, the decision-maker should have asked herself the question, were inquiries in relation to the genuineness of the documents necessary? The failure to ask that question amounted to an error of law.
Thirdly, the decision-maker in deciding that it was highly probable that there was no demonstration in Ankara at the time the applicant said that such a demonstration had taken place had done so as a result of an inadequate inquiry about the issue. This amounted to substantial injustice to the applicant and a breach of Section 420 of the Act.
Fourthly, the decision-maker's treatment of the expert evidence of Dr Gardiner, a general practitioner, who provided a report to the Tribunal amounted to legal error because the Tribunal referred in its decision to medical tests in respect of a condition. This was, it was submitted, an opinion which she had no expertise to make.
In relation to all these matters, the respondent relied, in the first instance upon the remarks of Finn J in the case of Joseph Francis Aravind Fernando v Minister for Immigration and Multicultural Affairs (unreported, 5 November 1997), where His Honour made the following comments:
"The applicant was represented at the hearing before the Tribunal. Secondly, it is not for the Tribunal go out to make its own inquiries for the purpose of making the applicant's case for him Dharam Raj v Minister for Immigration and Ethnic Affairs, (unreported, 18 July 1996, Davies J). Thirdly, it is not the function of this Court to engage in merits review."
This passage aptly summarises my view of the case before me. The majority of the grounds for review and submission put are based on the proposition that the Tribunal has a positive duty to assist the applicant establish her case.
Is there a duty to inquire?
In relation to the duty, if any, to inquire and to authenticate documents, the relevant principle is found in a decision of the Full Court in Minister for Immigration and Ethnic Affairs v Singh 144 ALR 284, in which the majority (Black CJ, von Doussa, Sundberg and Mansfield JJ) said at pages 290 to 291:
"Accepting for the purposes of argument that s 420(2)(b) requires a procedure to be observed in connection with the making of a decision within s 476(1)(a), the question is whether the obligation to act according to substantial justice requires the tribunal to make an inquiry of the nature suggested here. The way in which the tribunal is required to operate and the powers conferred on it suggest that there may be circumstances in which inquiry by the tribunal will be necessary in order that it discharge its obligation to act according to substantial justice and the merits of the case. ...
... Section 427(1)(d) empowers the tribunal to require the secretary to arrange for the making of any investigation it thinks necessary with respect to the review, and to furnish a report of that investigation. These provisions show that the tribunal's role in cases that come before it for review is not a passive one although the circumstances in which the tribunal could be found to be under an obligation to make a particular inquiry will no doubt be rare, as they have been in cases under the ADJR Act.
In our view the respondent has fallen short of showing that the tribunal's failure to make inquiries through official channels about the authenticity of the warrants involved a denial of substantial justice. The tribunal gave reasons for concluding that the letters and the warrants that accompanied them were not authentic, and those were conclusions to which it was entitled to come. ..
Although we have concluded that there may be circumstances in which the tribunal's obligation to act according to substantial justice requires it to make inquiries, we are respectfully unable to agree with the primary judge's general proposition that, where an applicant produces a document which purports to be an official document issued in a foreign country, its disputed authenticity is a matter appropriate for verification by the tribunal through official channels, if by that her Honour intended to convey (as the respondent suggested) that the tribunal was under a duty to verify in such cases. In a particular case the tribunal may indeed be obliged to verify a document in this fashion, but there is no general rule to that effect."
In this case only copies of the documents relied upon were provided to the decision-maker who came to the conclusion that the documents were not what they purport to be. The decision-maker relies upon background material and the view she formed as to the credit of the applicant. Having formed the view that the applicant was not deeply involved in the activities in which she claimed to be involved, then the likelihood of these documents coming into existence, in the way that they purported to come into existence, was found to be remote and was rejected by the decision-maker.
The legal error it was submitted which was made in relation to this matter is that the Tribunal Member failed to ask herself the question should I have the documents authenticated? The respondent submitted that, as the material is copied material, it is not able to be authenticated in the same way as original documents might be by the Document Evaluation Unit. The respondent also submitted that the applicant was represented at all times and that views about the authenticity of the document had already been expressed by the Departmental Officers and these were known to the applicant. There was ample opportunity for the applicant to provide any further material and explanations as to the authenticity of the document at the hearing before the Tribunal.
I consider that the decision-maker was entitled to make the finding that she did without any question or further inquiry as to the authenticity of the document. The bases of that finding are properly dealt with in the decision and this is not a case in my view where to fail to ask oneself the question as to whether a further inquiry should be conducted amounts to a breach of substantial justice.
A second aspect of a duty to inquire was raised in relation to a demonstration in Ankara about which the applicant gave evidence. The affidavit material which was sought to be tendered before me purports to be reports from Turkish newspapers of a demonstration of the kind referred to by the applicant before the decision-maker. In the decision under review the decision-maker did refer to newspaper reports of demonstrations in Turkey at that time. Her inquiries did not reveal that there had been any reports of demonstrations in Ankara. Counsel for the applicant submits that the decision-maker looked in the wrong place and that using particular newspapers, like the Irish Times, in the decision demonstrated an inadequate inquiry about this matter. In my view, this is no more than an invitation to the Court to conduct merits review. As I said previously, it is a situation quite different to that in the Qui case because the applicant is attacking the quality of the inquiry and not the fact that the inquiry was or was not made. It may be that if the decision-maker had had access to other newspapers, she may have come to a different view on some issue. However, that is not a matter that is able to be agitated in the process of judicial review. There are of course other places for this applicant to take any relevant material for reconsideration of her case. This decision-maker, relying on the material before her, was entitled to make the findings that she did and made no error of law.
The final submission of the applicant that the decision-maker, without expertise, came to a conclusion or expressed an opinion as to the medical condition of the applicant, is, in my view not made out. A proper reading of the decision - in particular paragraphs 51 and 52 - would conclude that the decision-maker rejected Dr Gardiner's evidence on two grounds; (a) she was not a specialist psychiatrist, and (b) the "factual substratum" of the diagnosis, ie a traumatic event was not accepted as having occurred. The decision-maker was entitled to come to the conclusion she did and no error of law was made in so doing.
The application is dismissed with costs.
I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Connor
Associate:
Dated: 28 April 1998
Counsel for the Applicant: D.P. Holdenson
Solicitor for the Applicant: Erskine Rodan & Associates
Counsel for the Respondent: R. Downing
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 6 March 1998
Date of Judgment: 28 April 1998
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SZVCB v Minister for Immigration and Border Protection [2017] FCA 479
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2024-09-13T22:50:51.772137+10:00
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FEDERAL COURT OF AUSTRALIA
SZVCB v Minister for Immigration and Border Protection [2017] FCA 479
Appeal from: SZVCB & Anor v Minister for Immigration & Anor [2015] FCCA 1172
File number: NSD 603 of 2015
Judge: MARKOVIC J
Date of judgment: 11 May 2017
Catchwords: MIGRATION – appeal from a decision of the Federal Circuit Court of Australia – whether Tribunal gave appellant clear particulars of information the Tribunal considered would be the reason or part of the reason for affirming the decision under review – whether Tribunal invited appellant to give evidence and present arguments relating to the issues arising in relation to the decision under review – appeal dismissed
Legislation: Migration Act 1958 (Cth) ss 424A, 424AA, 425
Cases cited: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152
SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609
SZLPO v Minister for Immigration and Citizenship (No 2) (2009) 177 FCR 29
SZNKO v Minister for Immigration and Citizenship and Another (2010) 184 FCR 505
Date of hearing: 21 February 2017
Registry: New South Wales
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 49
Counsel for the Appellants: Mr R Chia
Solicitor for the First Respondent: Ms L Buchanan, Australian Government Solicitor
Counsel for the Second Respondent: The second respondent filed a submitting notice, save as to costs
ORDERS
NSD 603 of 2015
BETWEEN: SZVCB
First Appellant
SZVCC
Second Appellant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: MARKOVIC J
DATE OF ORDER: 11 MAY 2017
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The first appellant pay the first respondent's costs as agreed or taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MARKOVIC J:
1 This is an appeal from orders made by the Federal Circuit Court of Australia on 8 May 2015 dismissing an application for judicial review under s 476 of the Migration Act 1958 (Cth) (Act) of a decision of the Refugee Review Tribunal, as it then was (now the Administrative Appeals Tribunal (Tribunal)), made on 26 August 2014. The Tribunal had affirmed an earlier decision made by a delegate of the first respondent (Minister) not to grant the appellants Protection (Class XA) visas.
2 The first and second appellants are mother and daughter respectively and citizens of the People's Republic of China (China). On 9 November 2016 Collier J made orders by consent in relation to the second appellant, allowing her appeal, quashing the Tribunal's decision insofar as it affirmed the decision not to grant her a Protection (Class XA) visa and remitting her application for review of the Minister's decision to the Tribunal for determination according to law. At that time her Honour also made orders for the first appellant's appeal to be fixed for final hearing and set a timetable for the filing of submissions. This appeal proceeds pursuant to those orders.
background
3 The first appellant (Appellant) arrived in Australia on 26 June 2007. At that time her daughter, who was then a minor, was the holder of a student visa and the Appellant was the holder of a student guardian visa. The Appellant's student guardian visa expired on 31 December 2008. She thereafter remained in Australia as an unlawful non-citizen.
4 On 29 October 2013 the Appellant made an application for a Protection (Class XA) visa which included her de facto partner and her daughter. In her protection visa application the Appellant claimed to fear harm from her husband, who she said had physically, mentally and sexually abused her, forced her to have children and who would prevent her from continuing to work. She had four children with her husband and, as a result, claimed that she had to go into hiding to avoid the authorities, who she feared would perform tubal ligation on her. She also claimed that she would be pursued by debt collectors who have connections to the authorities.
5 On 15 April 2014 a delegate of the Minister refused the Appellant's protection visa application. The delegate found that the Appellant's claims were not credible and considered that she did not hold a genuine fear of return to China on account of her stated claims.
6 On 30 April 2014 the Appellant applied to the Tribunal for review of the delegate's decision. She appeared before the Tribunal to give evidence and present arguments. On 26 August 2014 the Tribunal affirmed the decision under review.
the Tribunal decision
7 The Tribunal found the Appellant not to be a credible witness. It noted that there were inconsistencies in her evidence, that some of her claims were implausible and found that the Appellant was not convincing or persuasive. The Tribunal's concerns were as follows:
(1) the Appellant gave evidence at the hearing that she was almost 50 years old and was no longer able to bear children. The Tribunal was of the view that it was therefore highly unlikely that the Chinese authorities would force her to undergo tubal ligation;
(2) the Appellant claimed in her visa application that her husband had physically, mentally and sexually abused her; that she feared being physically, mentally and sexually harmed; and that the Chinese authorities regard sexual offences in a marriage as domestic matters and will not become involved. At the hearing the Appellant gave evidence that she separated from her husband when she left China and came to Australia in June 2007; that she had had no contact with her husband since 2009; and that she wishes to divorce him. She also said that if her husband did not agree to the divorce he would beat her to death. The Tribunal was of the view that if the Appellant and her husband had been separated since June 2007 and had had no contact since 2009 then it was highly unlikely that her husband would oppose their divorce, let alone "beat her to death";
(3) the Appellant claimed that her husband was controlling: he stalked her; opposed her taking a job as a masseuse or otherwise; and restricted her from doing as she wished. The Tribunal found that those claims were inconsistent with the husband permitting the Appellant to travel to Australia with her daughter, where he would have no control over what she did. The Tribunal also found that the Appellant's claim that her husband prevented her from taking a job was inconsistent with the evidence she gave at the hearing that she did not have a job in China because she had to stay home with her four children;
(4) the Appellant claimed that she would be harmed by debt collectors as a result of her husband borrowing money from loan sharks at high interest rates for his business ventures, fish farming and coal mining, because he could not borrow from a bank. The Tribunal found that this claim was inconsistent with the fact that the Appellant had provided evidence of a bank loan to her husband to support her student guardian visa application. Relevantly, at [32]-[34] of its decision record the Tribunal said:
32. The Tribunal asked the second named applicant why her husband did not borrow the money from a bank rather than from a loan shark at high interest rates. She responded that they had nothing they would provide as security for a loan and that people from villages are unable to get bank loans. In her application for a Student Guardian visa, the second named applicant provided the Department with a number of documents including a letter from her husband's employer. It stated that he had worked as a manager of a Decoration Store since February 2000. When the Tribunal put this information to the second named applicant, pursuant to s.424AA of the Act, she responded that this was the job she referred to earlier where he made posters and advertising signs. The Tribunal does not accept this response as being a manager of a store is very different from making posters and advertising signs.
33. In her application for a Student Guardian visa, the second named applicant provided the Department with a document from the CITIC Industrial Bank in relation to a study loan to her husband. She also provided the Department with a letter from her agent in China stating that her husband had borrowed 650,000 RMB from the bank to support her and their daughter in Australia. When the Tribunal put this information to the second named applicant, pursuant to s.424AA of the Act, she responded that the money her husband borrowed from the bank had to be repaid and he borrowed money from the loan shark to repay the bank. When the Tribunal noted that this was inconsistent with her earlier evidence, she responded that her husband looked after their financial affairs and she only had a rough idea about their finances.
34. The documentary evidence that the second named applicant provided to the Department in support of her application for a Student Guardian visa indicates that her husband had obtained a loan from the bank which is inconsistent with her evidence to the Tribunal that they had no security, were unable to get a bank loan and that people from villages are unable to get bank loans. Her evidence that her husband borrowed money from a loan shark to invest in a fish farm and coal mining is inconsistent with her subsequent evidence that her husband borrowed money from a loan shark in order to repay the bank loan. These inconsistencies in the second named applicant's evidence raise concerns in relation to her credibility and the veracity of her claims.
(5) the Appellant had waited over six years after her arrival in Australia before lodging her protection visa application. The Tribunal was of the view that if the Appellant had genuine fears she would have taken steps to lodge her protection visa application prior to the expiry of her student guardian visa in 2008. The Tribunal did not accept the Appellant's response for not doing so, namely, that she did not know how to apply and had poor English, finding that she was a very resourceful person; and
(6) the Tribunal found that the Appellant was "prepared to say anything to obtain a Protection visa without any regard for the truth" and that she had fabricated her claims for the purpose of obtaining a protection visa.
8 The Tribunal concluded, having considered all of the Appellant's claims singularly and cumulatively, that there was no real chance that the Appellant would be at risk of persecution if she returned to China now or in the reasonably foreseeable future. The Tribunal found that the Appellant did not have a well-founded fear of harm for a Convention reason and that she did not meet the complementary protection criteria.
Federal Circuit Court proceeding
9 In her application for judicial review filed in the Federal Circuit Court of Australia the Appellant, with her daughter, raised one ground of review which was in the following terms:
The decision of the Tribunal:
(a) is affected by the procedural unfairness.
(b) failed to take into account relevant considerations.
10 The ground was not particularised. However, in his reasons for decision, the primary judge noted that the Appellant and her daughter made a number of oral submissions at the hearing. They both submitted that the procedure that the Tribunal adopted was not fair because it failed to consider the seriousness of the material that was before it. Insofar as the Appellant was concerned, the primary judge noted that she submitted that the Tribunal did not consider what happened to her daughter or the domestic violence to which she was subjected.
11 In relation to the ground that was included in the Appellant's application for judicial review, the primary judge found that there was nothing in the Tribunal's reasons for decision that indicated that it did not comply with s 425 of the Migration Act 1958 (Cth) (Act) or any other provision of Div 4 of Pt 7 of the Act or otherwise did not afford procedural fairness to the Appellant and her daughter. The primary judge noted that the Appellant was invited to appear before the Tribunal to give evidence and make submissions pursuant to s 425(1) of the Act and that she appeared before the Tribunal in response to that invitation. The primary judge also noted that the Tribunal complied with s 424AA of the Act in relation to two particular items of information, the first concerning her husband's job and the second concerning the loan obtained from a bank by her husband. The primary judge found that there was nothing in the Tribunal's reasons that suggested that it failed to consider any aspect of the Appellant's and her daughter's claims: SZVCB & Anor v Minister for Immigration & Anor [2015] FCCA 1172 (SZVCB) at [17]-[18].
12 The primary judge then considered the oral submissions made by the Appellant. His Honour noted that the Tribunal did not consider what would happen to the Appellant's daughter. But his Honour observed that, if by that submission the Appellant intended to submit that the Tribunal did not consider her daughter, then the Tribunal's failure would not amount to any error because the Appellant's daughter did not make a claim for a protection visa in her own right. Rather, the Appellant's daughter had applied for a protection visa as a dependent of the Appellant. The primary judge also noted that if, alternatively, the Appellant intended by her submission to refer to any other daughters she has, the Tribunal similarly made no error by not considering their situation because there was nothing before it that indicated that the Appellant relied on the present or future situation of her other daughters: SZVCB at [19].
the appeal
13 The Appellant's amended notice of appeal, which she was given leave to file at the hearing of the appeal, raises four grounds of appeal as follows:
1. His Honour erred in finding at [17] that the Second Respondent complied with section 424AA of the Migration Act 1958 ("Act") and therefore did not fail to accord procedural fairness to the First Appellant.
2. His Honour ought to have found that the Second Respondent failed to comply with section 424AA and therefore did not comply with the mandatory requirements of section 424A of the Act:
a. the Second Respondent failed to give clear particulars and/or comply with the requirements of subsection 424AA(1)(b) in respect of "a letter from [the First Appellant's] agent in China stating that her husband had borrowed 650,000 RMB from the bank to support her and their daughter in Australia"; and
b. further or in the alternative, the Second Respondent failed to ensure the First Appellant understood why the following information was relevant to the review:
i. the letter from the First Appellant's husband's employer; and/or
ii. the document from the CITIC Industrial Bank in China.
3. Further or in the alternative, his Honour erred in finding at [17] that there was nothing to indicate the Second Respondent did not comply with section 425 of the Act.
4. His Honour ought to have found that the Second Respondent failed to invite the First Appellant to give evidence and present arguments relating to the issues arising in relation to the decision under review.
legislative framework
14 The Appellant's grounds of appeal concern ss 424A, 424AA and 425 of the Act. Those sections relevantly provide as follows:
424A Information and invitation given in writing by Tribunal
(1) Subject to subsections (2A) and (3), the Tribunal must:
(a) give to the applicant, in the way that the Tribunal considers appropriate in the circumstances, clear particulars of any information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review; and
(b) ensure, as far as is reasonably practicable, that the applicant understands why it is relevant to the review, and the consequences of it being relied on in affirming the decision that is under review; and
(c) invite the applicant to comment on or respond to it.
…
(2A) The Tribunal is not obliged under this section to give particulars of information to an applicant, nor invite the applicant to comment on or respond to the information, if the Tribunal gives clear particulars of the information to the applicant, and invites the applicant to comment on or respond to the information, under section 424AA.
(3) This section does not apply to information:
(a) that is not specifically about the applicant or another person and is just about a class of persons of which the applicant or other person is a member; or
(b) that the applicant gave for the purpose of the application for review; or
(ba) that the applicant gave during the process that led to the decision that is under review, other than such information that was provided orally by the applicant to the Department; or
(c) that is non‑disclosable information.
…
424AA Information and invitation given orally by Tribunal while applicant appearing
(1) If an applicant is appearing before the Tribunal because of an invitation under section 425:
(a) the Tribunal may orally give to the applicant clear particulars of any information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review; and
(b) if the Tribunal does so—the Tribunal must:
(i) ensure, as far as is reasonably practicable, that the applicant understands why the information is relevant to the review, and the consequences of the information being relied on in affirming the decision that is under review; and
(ii) orally invite the applicant to comment on or respond to the information; and
(iii) advise the applicant that he or she may seek additional time to comment on or respond to the information; and
(iv) if the applicant seeks additional time to comment on or respond to the information—adjourn the review, if the Tribunal considers that the applicant reasonably needs additional time to comment on or respond to the information.
…
425 Tribunal must invite applicant to appear
(1) The Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review.
…
Grounds 1 and 2 of the amended notice of appeal
The Appellant's submissions
15 By grounds 1 and 2 the Appellant alleges that the primary judge erred in finding that the Tribunal complied with s 424AA of the Act and that it therefore did not fail to accord procedural fairness to her. The Appellant alleges that the primary judge ought to have found that the Tribunal failed to comply with s 424AA and that it therefore did not comply with the mandatory requirements of s 424A of the Act. The Appellant says this is because the Tribunal failed to give clear particulars of and/or comply with the requirements of s 424AA(1)(b) in relation to the letter from the Appellant's agent in China and, further or in the alternative, because the Tribunal failed to ensure that the Appellant understood why the letter from her husband's employer and the document from CITIC Industrial Bank in China were relevant to the review.
16 This ground concerns three documents which were obtained from the Appellant's application for the student guardian visa. They are:
(1) a certificate dated 29 January 2007 from Pingtan County Chengguan Shiwen Decoration Store (Employer's Letter) which included, among other things, that the Appellant's husband "works in Pingtan County Chengguan Shiwen Decoration Store from Feb., 2000 to current and works as the manager in our store";
(2) a letter dated 5 February 2007 from Fujian Jianan Overseas Study Service Centre addressed to Offshore Processing Centre (Agent's Letter) which provided:
This is regarding the application of student [second appellant] and her mother [Appellant]. The student is going to apply for the student visa and the mother is going to apply for the guardian visa (she will live with the student in Australia until her child turns to 18 years old). The father has been approved a bank loan of RMB 650,000 to support both the student and the mother for their stay in Australia.
Please find the attached photocopy of the loan certificate of RMB 650,000. The original certificate is included in the student's application documents.
(3) a letter dated 2 February 2007 from CITIC Industrial Bank headed "Advice for study abroad loans" (Bank Document), which was enclosed with the Agent's Letter and provided, among other things:
In accordance with the stipulations and methods for study abroad loans of our bank, we hereby give our assent that [the Appellant and her husband] can formally carry out the procedures of the RMB650,000.00 loan for his/her child's study abroad, the term of which is preliminarily set to three years, at our bank after his/her child i.e. [the Appellant's daughter] has acquired the preliminary visa of your country.
(original emphasis)
17 The Appellant submitted that each of the Employer's Letter, the Bank Document and the Agent's Letter was "information that the Tribunal considered would be … part of the reason" for affirming the decision under review. She further submitted that those documents constituted "information" because they were items of documentary evidence and not inconsistencies in the Appellant's own evidence. She contended that the Tribunal considered that each of those documents would be part of the reason for affirming the decision under review for two reasons. First, the Tribunal expressly said at the hearing that the information it would refer to would be the reason or part of the reason for affirming the delegate's decision. Secondly, it could be inferred to be the case from the Tribunal's reference to and reliance upon each of those documents in its reasons at [32]-[33].
18 The Appellant also submitted that none of the documents fell within the exception provided in s 424A(3). Each of the documents was specifically about the Appellant's husband and had not been given to the Tribunal or the Department during the protection visa application process. The Appellant had given the documents to the Department in support of her prior application for a student guardian visa.
19 The Appellant contended that there was no written invitation given to her in accordance with s 424A(1) of the Act but that at [32]-[33] of its reasons the Tribunal purported to have put to the Appellant at the hearing the Employer's Letter, the Bank Document and the Agent's Letter pursuant to s 424AA. Notwithstanding that, the Appellant further contended that, based on the transcript, the Tribunal did not refer to the Agent's Letter and therefore did not give clear particulars of that information to the Appellant orally in accordance with s 424AA(1)(a). The Appellant contended that the Tribunal therefore failed to comply with s 424A(1).
20 Further, the Appellant contended that, contrary to what the Tribunal said, the Bank Document did not, in its terms, say that the Appellant's husband had borrowed RMB650,000 to support the Appellant and her daughter in Australia or that he had borrowed any money at all. Rather, that document only "confirmed that the [husband] meets the requirements of [the] bank for study abroad loans" and gave its "assent that [the husband] can formally carry out the procedures of the RMB650,000 loan … after [the daughter] has acquired the preliminary [Australian] visa…". That is, the Appellant contended that the Bank Document was merely a certificate seeking to prove to the Department that she had access to funds from an acceptable source as required by the student guardian visa criteria. The assertion that the husband had in fact taken out the loan and done so "to support both the student and the mother for their stay in Australia" were embellishments or inferences made in the Agent's Letter and accepted by the Tribunal.
21 The Appellant also submitted that the Tribunal did not ensure that she understood the relevance of the Bank Document as required by s 424AA(1)(b)(i) and made no attempt to explain with what evidence and claims the Bank Document was inconsistent and how that inconsistency was relevant to the review. Similarly, the Appellant submitted that the Tribunal did not explain how the Employer's Letter was inconsistent with her evidence and claims and the relevance of that inconsistency. She further submitted that by not identifying how the Bank Document and the Employer's Letter were inconsistent with her evidence and claims and not explaining how the inconsistencies were relevant to the review the Tribunal failed to comply with s 424AA(1)(b)(i) of the Act.
Consideration
22 In order to consider the Appellant's submissions it is of assistance to first set out the relevant extracts from the transcript of the Tribunal hearing, which was included in the appeal book, including an extract in which the Tribunal member took steps to comply with s 424AA of the Act. Relevantly, the following exchanges took place:
Tribunal: What work does your husband do?
Appellant: Like a poster or – the word postmaster – postmaster – a person with a sign.
Tribunal: He makes posters and signs.
Appellant: Yes. Then he tries to do fish – fish farming. And then coal – he mines matter – in coal all day.
And later:
Tribunal: Who was this person our husband borrowed money from?
Appellant: A local – a loan shark.
Tribunal: Why didn't he borrow money from the bank?
Appellant: Nothing can be a mortgage at home. Normally people from village are not able to get their loan – loan back.
Tribunal: And what was the money borrowed for?
Appellant: To do the investment in this business.
Tribunal: How much is borrowed?
Appellant: I'm not sure. The first loan is about 600,000 and the second one dozens of thousand.
Tribunal: RMB?
Appellant: Yes.
And later:
Tribunal: I want to talk to both of you now about something important. I'm going to first explain to you why it's important and then we can talk about it. So I need you to please listen carefully. Now, I have information before me which would be the reason or part of the reason for affirming the decision made by the Department of Immigration. This information is important because it could lead to me forming the view that none of you are entitled to a protection visa. If I came to – sorry. If I came to this conclusion then I would have to make the same decision the department made. And what this would mean is that your application to the tribunal would not be successful, and you would not be entitled to the protection visas.
So you understand why this is important. Now, I'm going to tell you what the information is and then give you an opportunity to comment on or respond to that information. You are not obliged to do so immediately. You can seek additional time to do so. If you seek additional time I will consider whether or not I should adjourn this review to give you the additional time. This is a legal requirement that I have to comply with to ensure that you have a fair hearing. This does not mean that I have already reached – made up my mind and reached a decision in your case. ...
…
Tribunal: [Appellant], this information relates to you. I have before me the department's file in relation to your application for a student guardian visa. That file contains documents that you provided to the Department of Immigration. One of those documents is a letter from your husband's employer. It states that he worked as the manager of a decoration store since February 2000. This is inconsistent with the evidence you gave today and your case - - -
Appellant: That's the one – decoration one. What I said is that one.
Tribunal: You said you worked in posters and signs.
Appellant: That's the one I was talking about but I don't know how to say it – the proper – I did not …
Tribunal: This also relates to you, [Appellant]. Your file from the department in relation to the student guardian visa contains a document from the CITIC Industrial Bank in China. It says that your husband borrowed 650,000 RMB from the bank to support you and your daughter in Australia. This is inconsistent with your evidence today and with your claims.
Appellant: The money needed to be repaid. There is the monthly repayment – interest. So gets the money from loan shark and then pay it back to the bank.
Tribunal: That's not what you said earlier today. You said that he had borrowed money from the loan shark to invest in the coal mining and the fish farming.
…
Tribunal: Do either of you want to say anything else?
Appellant: Whatever more I want to add you don't believe me.
23 The first issue that arises for consideration is whether the content of the Agent's Letter and the Bank Document was information for the purposes of s 424A(1) of the Act. The Agent's Letter informed the Department that the Appellant's husband had "been approved a bank loan of RMB 650,000 to support both the student and the mother for their stay in Australia". The Bank Document confirmed that the Appellant's husband "[met] the requirements" of the bank for "study abroad loans" and that he could "formally carry out the procedures" of the loan for a three year period.
24 In SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 (SZBYR) a majority of the High Court (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) said at [17]-[18]:
17. Secondly, the appellants assumed, but did not demonstrate, that the statutory declaration "would be the reason, or a part of the reason, for affirming the decision that is under review". The statutory criterion does not, for example, turn on "the reasoning process of the tribunal", or "the tribunal's published reasons". The reason for affirming the decision that is under review is a matter that depends upon the criteria for the making of that decision in the first place. The tribunal does not operate in a statutory vacuum, and its role is dependent upon the making of administrative decisions upon criteria to be found elsewhere in the Act. The use of the future conditional tense (would be) rather than the indicative strongly suggests that the operation of s 424A(1)(a) is to be determined in advance – and independently – of the tribunal's particular reasoning on the facts of the case. Here, the appropriate criterion was to be found in s 36(1) of the Act, being the provision under which the appellants sought their protection visa. The "reason, or a part of the reason, for affirming the decision that is under review" was therefore that the appellants were not persons to whom Australia owed protection obligations under the Convention. When viewed in that light, it is difficult to see why the relevant passages in the appellants' statutory declaration would itself be "information that the tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review". Those portions of the statutory declaration did not contain in their terms a rejection, denial or undermining of the appellants' claims to be persons to whom Australia owed protection obligations. Indeed, if their contents were believed, they would, one might have thought, have been a relevant step towards rejecting, not affirming, the decision under review.
18. Thirdly and conversely, if the reason why the tribunal affirmed the decision under review was the tribunal's disbelief of the appellants' evidence arising from inconsistencies therein, it is difficult to see how such disbelief could be characterised as constituting "information" within the meaning of para (a) of s 424A(1). Again, if the tribunal affirmed the decision because even the best view of the appellants' evidence failed to disclose a Convention nexus, it is hard to see how such a failure can constitute "information". Finn and Stone JJ correctly observed in VAF v Minister for Immigration and Multicultural and Indigenous Affairs that the word "information":
… does not encompass the tribunal's subjective appraisals, thought processes or determinations … nor does it extend to identified gaps, defects or lack of detail or specificity in evidence or to conclusions arrived at by the tribunal in weighing up the evidence by reference to those gaps, etc …
If the contrary were true, s 424A would in effect oblige the tribunal to give advance written notice not merely of its reasons but of each step in its prospective reasoning process. However broadly "information" be defined, its meaning in this context is related to the existence of evidentiary material or documentation, not the existence of doubts, inconsistencies or the absence of evidence. The appellants were thus correct to concede that the relevant "information" was not to be found in inconsistencies or disbelief, as opposed to the text of the statutory declaration itself.
(footnotes omitted)
25 The Minister submitted that there was nothing in the material in the student guardian visa file which itself constituted a rejection, denial or undermining of the Appellant's claims. He submitted that the Agent's Letter and the Bank Document only became relevant after the Appellant gave evidence at the Tribunal hearing that the Tribunal found to be inconsistent with the contents of the documents, which led to a finding regarding her credibility. The Minister contended that it was the inconsistencies (or the process of comparison between the Appellant's evidence and the evidence with which it was compared by the Tribunal) that was the information and that such inconsistencies or comparative processes did not constitute "information" for the purposes of s 424A(1) of the Act.
26 In my opinion, the Agent's Letter and the Bank Document contain information that would be the reason or part of the reason for affirming the decision under review, namely, the decision not to grant the Appellant a protection visa. The contents of those documents was information for the purposes of s 424A(1) of the Act.
27 The Tribunal's disbelief of the Appellant's evidence arose from the inconsistencies revealed by the Appellant's evidence given at the Tribunal hearing on the one hand and the contents of the Agent's Letter and the Bank Document on the other. It may be the case, as the Minister submitted, that the Agent's Letter and the Bank Document only became relevant when, at the hearing, the Appellant gave evidence that was inconsistent with their contents. As the Minister submitted, those inconsistencies were not themselves information for the purposes of s 424A(1) of the Act. But the contents of the Agent's Letter and the Bank Document was information for the purposes of s 424A(1) of the Act because it formed part of the basis upon which the Tribunal was concerned about the veracity of the Appellant's claims and, ultimately, her credibility.
28 In SZNKO v Minister for Immigration and Citizenship and Another (2010) 184 FCR 505 (SZNKO) the tribunal had before it a letter from the applicant in support of his claim that he was a Christian. The tribunal member found that the applicant's letter was substantially the same as another letter he had come across in an unrelated proceeding and the member's concern was whether the letter relied upon by the applicant was a letter "made to order". Flick J noted that the tribunal's reasons for decision exposed its conclusion that it did not find the applicant to have given a "truthful and credible account of his past experiences" and that the concern as to the reliability of the letter only "fuelled the reservations that the Tribunal Member had formed about the present appellant's credibility": at [14]. His Honour held that the details not disclosed to the applicant about the person who wrote the other letter, the Union Council from which it had come, and its date constituted "information" for the purposes of s 424A of the Act: at [19]. The letter found on the other applicant's file was clearly material which undermined the claim made by SZNKO that he was a Christian. It undermined the applicant's claim because it was the basis upon which the tribunal in that case was concerned about the authenticity of the applicant's evidence of his Christianity.
29 In the Appellant's case the contents of the Agent's Letter and the Bank Document was evidentiary material which undermined the Appellant's claim to fear harm from debt collectors. It was the existence of that material which exposed the inconsistencies in her evidence and was a basis upon which the Tribunal was concerned about the veracity of her claims, which in turn led to the Tribunal's credibility finding.
30 As the contents of the Agent's Letter and the Bank Document was information for the purposes of s 424A(1), the Tribunal was obliged to give that information to the Appellant pursuant to s 424A(1)(a).
31 That being the case, the next issue which arises is whether the Tribunal gave the Appellant clear particulars of the information comprised in the Agent's Letter and the Bank Document, namely, that a bank loan to the Appellant's husband of RMB650,000 had been approved to support the Appellant and her daughter in Australia.
32 I accept the Minister's submission that the Tribunal put to the Appellant clear particulars of the information comprised in those documents. That is so despite the Tribunal not expressly referring to the Agent's Letter in its exchanges with the Appellant. Notwithstanding that, it clearly put the substance of the Agent's Letter, which summarised the effect of the Bank Document, to the Appellant when it said "[i]t says that your husband borrowed 650,000 RMB from the bank to support you and your daughter in Australia". There was no relevant distinction between the information in the Agent's Letter and that in the Bank Document. The Tribunal's summary put the substance of both documents to the Appellant.
33 In my opinion, the fact that the Tribunal incorrectly described the effect of the Agent's Letter and the Bank Document as the husband having "borrowed" RMB650,000 rather than having been "approved" a bank loan for that amount does not change the outcome. That misdescription was immaterial to the substance of what was being put to the Appellant. Whether the husband had "borrowed" RMB650,000 or merely been approved a loan for that amount, the information comprised in the Agent's Letter and the Bank Document was inconsistent with the Appellant's evidence to the Tribunal that her husband was unable to get a bank loan and that people from villages are unable to get bank loans.
34 The Appellant relied on SZLPO v Minister for Immigration and Citizenship (No 2) (2009) 177 FCR 29, a decision of a Full Court of this Court (Lindgren, Stone and Bennett JJ). That case concerned the issue of whether the sources included in a letter from the Department of Foreign Affairs and Trade to the Tribunal should have been provided to the applicant together with the conclusions included in the letter. The Full Court found at [31] that:
In our respectful opinion, it is to be inferred from the terms of the Tribunal's request of DFAT and the terms of the Tribunal's reasons for decision to which we have referred that following receipt of the information from DFAT on 1 or 2 August 2007, the Tribunal thought that the nature of the sources that had been consulted by the Office of the National Ameer would itself be part of the reason for affirming the decision under review.
35 The Full Court concluded that the sources should have been provided because they formed part of the reason for affirming the decision under review. A failure to provide particulars of the sources to the applicant constituted a breach of s 424A of the Act. In reaching that conclusion the Full Court found that it was not clear from the applicant's response to the s 424A letter that "he appreciated that Mr Bhuiyan had said that he had not signed the letter of introduction or that inquiries had been made locally of the Jama'at at Sreemangal, Moulvibazar in relation to [the applicant's] membership". The Full Court found that the applicant's response "could well have been different had he known the source of the information". But the Appellant's case is different. The Tribunal did not have before it sources of information and a conclusion derived from those sources. It had only one category of information, being primary sources of information, the Agent's Letter and the Bank Document. It put the information comprised in those documents to the Appellant for comment at the hearing, including by express reference to the Bank Document.
36 Further, the Tribunal clearly explained to the Appellant the relevance of the documents when it said "[i]t says that your husband borrowed 650,000 RMB from the bank to support you and your daughter in Australia. This is inconsistent with your evidence today and with your claims" and "[t]hat's not what you said earlier today. You said that he had borrowed money from the loan shark to invest in the coal mining and the fish farming". There was no failure to comply with s 424AA(1) of the Act.
37 I turn then to the Employer's Letter. The Appellant's submission that there was a failure to comply with s 424AA(1)(b)(i) of the Act because the Tribunal failed to clearly explain the relevance of the Employer's Letter to the review must also be rejected. In my opinion, for the same reasons as set out at [23] to [30] above, the Employer's Letter was information for the purposes of s 424A of the Act. But the Tribunal clearly put the information to her. It informed the Appellant that the Employer's Letter "states that [your husband] worked as the manager of a decoration store since February 2000. This is inconsistent with the evidence you gave today and your case" and "[y]ou said [he] worked in posters and signs". The Appellant tried to explain this saying "[t]hat's the one – decoration one. What I said is that one".
38 The Appellant submitted that the Tribunal failed to say with what the Employer's Letter was inconsistent and how it was inconsistent. I do not think that is so. It is clear that the Tribunal was putting to the Appellant that the Employer's Letter was inconsistent with evidence she had already given and that the Appellant understood what the Tribunal was putting to her.
39 It follows from the matters set out above that grounds 1 and 2 should be dismissed.
Grounds 3 and 4 of the amended notice of appeal
The Appellant's submissions
40 These grounds concern s 425 of the Act. The Appellant alleges that the primary judge erred in finding that there was nothing to indicate that the Tribunal did not comply with s 425 of the Act and that his Honour ought to have found that the Tribunal failed to invite the Appellant to give evidence and present arguments relating to the issues arising in relation to the decision under review.
41 The Appellant submitted, based on the decision of the High Court in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 (SZBEL), that unless a tribunal tells an applicant otherwise, he or she would be entitled to expect that the "issues arising in relation to the decision under review" are the same issues that the delegate had considered to be dispositive. In that regard the Appellant submitted that the delegate's reasoning was that she had claimed that her husband in China would "treat her badly", yet she had never sought help from the police or any agency; that, given her time apart from her husband, the delegate did not accept that the dangers still persisted; and that her husband would not be motivated to mistreat her because of his business debts in circumstances where she had no legal connection with the businesses and he had never asked her for financial support while she was in Australia.
42 The Appellant further submitted that one aspect of her claims that was rejected by the Tribunal was her claim that she would not only be harmed by her husband but by villagers and the authorities because she wanted to work as a masseuse and be a financially independent woman. The Appellant contended that this issue only received cursory treatment at the Tribunal hearing. The Tribunal did not ask her to elaborate upon why it was "very hard" to find a job in China and whether this was due to fear of harm from villagers or the authorities or challenge her evidence on the issue. The Appellant submitted that as a result she was not put on notice by the Tribunal that this was an issue that it may decide against her and, in failing to do so, the Tribunal failed to comply with the requirement of s 425 to invite her to give evidence and present arguments relating to the issues arising in relation to the decision under review.
Consideration
43 In SZBEL the High Court (Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ) held that, unless a tribunal tells an applicant something different, he or she would be entitled to assume that the reasons given by the delegate for refusing to grant an application would identify the issues that arise in relation to that decision: at [36]. Their Honours said at [47] that:
First, there may well be cases, perhaps many cases, where either the delegate's decision, or the Tribunal's statements or questions during a hearing, sufficiently indicate to an applicant that everything he or she says in support of the application is in issue. That indication may be given in many ways. … The proceedings are not adversarial and the Tribunal is not, and is not to adopt the position of, a contradictor. But where, as here, there are specific aspects of an applicant's account, that the Tribunal considers may be important to the decision and may be open to doubt, the Tribunal must at least ask the applicant to expand upon those aspects of the account and ask the applicant to explain why the account should be accepted.
44 In the present case the delegate did not regard the Appellant's claims as credible and considered that the Appellant did not hold "a genuine fear of return on account of her stated claims". The delegate also found that the Appellant's written claims were "vague"; that the Appellant "provided no convincing detail when outlining [her] claims at interview"; and that, on the basis of the written and oral information and evidence supplied with her application, she could not be satisfied that the Appellant was "in genuine danger and would not be protected by the Chinese authorities". That is, the delegate rejected the entirety of the Appellant's claims made in her protection visa application and made adverse findings as to her credibility. That included her claim to fear "being unable to continue to work in the massage industry" and her fear of being mistreated by other villagers and the authorities if she did continue with that work. In my opinion the Appellant was on notice that one of the issues dispositive of the review was whether there was any credibility to her claim to fear harm on the basis that she wished to continue to work in her chosen field.
45 In any event the Tribunal questioned the Appellant at the hearing in relation to the work she carried out in China and in Australia. The following exchanges took place:
Tribunal: Did you do any paid work?
Appellant: No. I – the kids are small and I had a lot of the kids.
…
Tribunal: What was the first job that you did in Australia?
Appellant: Curtains.
Tribunal: How long did you do that job?
Appellant: Two or three years.
Tribunal: And what did you do after that?
Appellant: Clothes.
Tribunal: Clothes – what did you do with clothes?
Appellant: Clothes and fashion.
Tribunal: That doesn't tell me what you did.
Appellant: The clothes that where we are wearing – what we are wearing.
Tribunal: What does that mean? Did you make them, did you sell them, did you buy them? What did you do with the clothes?
Appellant: Sewing clothes.
Tribunal: Sorry.
Appellant: Sewing.
Tribunal: Sewing clothes.
Appellant: A sewing machine. She's…
Tribunal: Sewing clothes.
Appellant: Make – make – make clothes.
Tribunal: Making clothes.
Appellant: Yes.
Tribunal: Did you do this for – you worked for someone else or for yourself?
Appellant: Work for someone else.
Tribunal: How long did you do that?
Appellant: Around one year. Sometimes I did – sometimes no job.
Tribunal: What was your next job?
Appellant: Massage.
Tribunal: When did you start doing that?
Appellant: I do not have a record.
Tribunal: Was it a few months ago, was it a few years ago?
Appellant: About two or three years ago.
Tribunal: That is the current job you're doing now
Appellant: Yes.
And:
Tribunal: … Have you ever worked in China?
Appellant: After marriage I only looked after my children.
…
Tribunal: I will talk about the money shortly. Would you want to work if you returned to China?
Appellant: Of course I want to.
Tribunal: What kind of work would you do?
Appellant: It's very hard to find a job in China.
46 The Appellant was also asked at the conclusion of the hearing if there was anything else she wished to tell the Tribunal. However, she declined to provide any further information saying that "[w]hatever more I want to add you don't believe me". The Appellant did not provide any further information about her claim to fear harm from the villagers and authorities and clearly exhibited an understanding that her credibility was an issue.
47 The Tribunal rejected the Appellant's claim to fear harm in relation to her desire to work as a masseuse. As a result of its questioning of the Appellant the Tribunal made the following finding at [38] of its decision record:
The Tribunal does not accept that the second named applicant's husband opposed her taking a job as a masseuse and intimidated and threatened her if she took up any kind of job. The Tribunal does not accept that she will be harmed by her husband and mistreated by other villagers and authorities if she works as a masseuse. The Tribunal does not accept that the second named applicant has no other skill than as a masseuse. Her evidence to the Tribunal is that she has 2 to 3 years work experience in Australia making curtains and also has experience making clothes for the fashion industry in addition to her work experience as a masseuse.
48 There was no breach by the Tribunal of s 425 of the Act. The Appellant was clearly on notice that the veracity all of her claims and her credibility were in issue. There was no error in the finding by the primary judge at [17] of his Honour's reasons that "[t]here is nothing in the Tribunal's reasons for decision that indicates the Tribunal did not comply with s.425 or any other provision of Division 4 of Part 7 of the Act, or otherwise did not accord procedural fairness to the applicants".
conclusion
49 The appeal should be dismissed with costs. I will make orders accordingly.
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.
Associate:
Dated: 11 May 2017
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FEDERAL COURT OF AUSTRALIA
Federal Commissioner of Taxation v Brewing Investments Ltd [2000] FCA 920
INCOME TAX – assessable income – liquidation distribution received by the taxpayer, an Australian resident company, where distribution made out of liquidation distribution received by a non-resident company from liquidator of another non-resident company – whether distribution to taxpayer company made by liquidator out of income – whether s 47(1) of the Income Tax Assessment Act 1936 (Cth), by deeming liquidation distribution to be a dividend paid out of profits, applied to deem liquidation distribution to the taxpayer to be made out of income.
Income Tax Assessment Act 1936 (Cth) ss 44(1), 47(1)
WORDS AND PHRASES: "for the purposes of this Act", "dividends paid ... out of profits"
Harrowell v Commissioner of Taxation (1967) 116 CLR 607 considered
Gibb v Commissioner of Taxation (1966) 118 CLR 628 discussed
Commissioner of Taxation (NSW) v Stevenson (1937) 59 CLR 80 referred to
Hill v Permanent Trustee Co of New South Wales Ltd [1930] AC 720 referred to
Inland Revenue Commissioners v George & Burrell [1924] 2 KB 52 referred to
Federal Commissioner of Taxation v Uther (1965) 112 CLR 630 discussed
Federal Commissioner of Taxation v Blakely (1951) 82 CLR 388 discussed
Archer Bros Pty Ltd (in liq) v Federal Commissioner of Taxation (1953) 90 CLR 140 discussed
Federal Commissioner of Taxation v W E Fuller Pty Ltd (1959) 101 CLR 403 discussed
Inland Revenue Commissioners v Blott [1920] 2 KB 657 cited
Parke Davis & Co v Commissioner of Taxation (1959) 101 CLR 521 discussed
Glenville Pastoral Co Pty Ltd (in liq) v Federal Commissioner of Taxation (1963) 109 CLR 199 considered
THE FEDERAL COMMISSIONER OF TAXATION v
BREWING INVESTMENTS LTD (ACN 004 233 005)
V 64 of 2000
HILL, HEEREY AND SUNDBERG JJ
10 JULY 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 64 OF 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: THE FEDERAL COMMISSIONER OF TAXATION
APPELLANT
AND: BREWING INVESTMENTS LTD (ACN 004 233 005)
RESPONDENT
JUDGES: HILL, HEEREY AND SUNDBERG JJ
DATE OF ORDER: 10 JULY 2000
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be allowed.
2. The judgment appealed from be set aside and in lieu thereof it be ordered that:
(i) the objection decision appealed from be affirmed;
(ii) the applicant pay the respondent Commissioner's costs.
3. The respondent pay the appellant's costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 64 OF 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: THE FEDERAL COMMISSIONER OF TAXATION
APPELLANT
AND: BREWING INVESTMENTS LTD (ACN 004 233 005)
RESPONDENT
JUDGES: HILL, HEEREY AND SUNDBERG JJ
DATE: 10 JULY 2000
PLACE: SYDNEY
REASONS FOR JUDGMENT
HILL J
1 Just as it seems that the present system of business taxation involving the concept of assessable income less allowable deductions is to be replaced by what is said to be a more commercially acceptable approach to the computation of taxable income, the Court is presented with an appeal which concerns issues which have bedevilled the present conventional system of taxation for at least a century and yet have still not been completely resolved.
2 The present appeal is an appeal from the judgment of a Judge of this Court. The facts are agreed. It raises the issue of the operation of s 47(1) of the Income Tax Assessment Act 1936 (Cth) ("the Act") where the assets of a non-resident company with accumulated profits (largely resulting from the derivation of non Australian income) are distributed to its parent company on liquidation, the parent also being not a resident of Australia, and where in turn that company is liquidated and a distribution is made by the liquidator to the ultimate parent company which is a resident of Australia. The learned primary Judge held that the ultimate parent company, the respondent, Brewing Investments Ltd ("BIL") was not required to include in its assessable income for the year ending 30 September 1993, a substituted accounting period adopted in lieu of the year of income ending 30 June 1993, any amount, whether under s 47(1) directly, or in combination with s 44(1) of the Act. It is from this judgment that the appellant, the Commissioner of Taxation ("the Commissioner"), appeals.
The agreed facts
3 The following statement of facts is taken from the judgment under appeal.
"BIL (formerly Henry Jones Investments Limited) is an Australian resident company for the purposes of the Act. It was the sole beneficial owner of all the issued share capital of Rowsom Investments Limited ("Rowsom"). Rowsom was in turn the sole beneficial owner of all the issued share capital of Clarkson Holdings Limited ("Clarkson"); and Clarkson was the sole beneficial owner of all the issued share capital of Elders Investments Limited ("EIL"). None of Rowsom, Clarkson and EIL was a resident company of Australia for the purposes of the Act. They were residents of unlisted countries for the purposes of Part X of the Act. Rowsom and Clarkson were incorporated in the Turks and Caicos Islands. EIL was incorporated in Bermuda. All three companies had their central management and control in Hong Kong. Neither Rowsom nor Clarkson derived any relevant income from Australian sources. Although EIL derived income from both Australian and non-Australian sources, the Commissioner expressly disavowed any reliance in this appeal on that fact.
Clarkson was placed in voluntary liquidation on 3 June 1991. On 10 June 1991, Clarkson's liquidator distributed net assets amounting to US$52,013,763 to Rowsom. For accounting purposes, the distribution was treated as a capital receipt in Rowsom's books of account. In the books of Clarkson, the distribution was represented by the following shareholders' funds accounts:
Issued Share Capital US$4,943
Share Premium US$16,075,723
Revenue Reserve (Retained Earnings) US$35,933,097
_____________
US$52,013,763
Clarkson's Retained Earnings consisted of Income Reserves amounting to US$10,415,507 and Capital Profits Reserves (on the sale of shares and exchange gains) amounting to US$25,517,590.
In September 1993, EIL was placed in voluntary liquidation and, on 24 September 1993, EIL's liquidator distributed net assets amounting to US$62,264,631 to Rowsom. For accounting purposes, the distribution was treated as a capital receipt in Rowsom's books of account. In the books of account of EIL, the distribution was represented by the following shareholders' funds accounts:
Share Capital US$5,590,122
Share Premium Reserve US$39,636,406
Profit and Loss Account (Retained Earnings) US$17,038,103
_____________
US$62,264,631
EIL's Retained Earnings consisted wholly of Income Reserves. These Reserves included profits which had been accumulated and not distributed before the date of liquidation.
In September 1993, Rowsom was placed in voluntary liquidation and, on 24 September 1993, Rowsom's liquidator distributed net assets amounting to US$70,238,424 to BIL. For accounting purposes, the distribution was treated as a capital receipt in BIL's books of account. In the books of account of Rowsom, the distribution was represented by the following shareholders' funds accounts:
Share Capital US$5,000
Share Premium US$12,902,369
Profit and Loss Account – Capital (Capital Profits Reserve) US$52,971,200
Profit and Loss Account – Revenue (Retained Earnings) US$4,359,855
____________
US$70,238,424
As at 24 September 1993, US$70,238,424 was equivalent to Aus$107,299,762. Rowsom's Capital Profits Reserve contained the distributions by the liquidators of EIL and Clarkson. Those distributions comprised:
EIL – Income Reserves US$17,038,103
Clarkson – Income Reserves US$10,415,507
Clarkson – Capital Profits US$25,517,590
Reserve _____________
US$52,971,200
As already noted, in its 1993 return, BIL included in its assessable income an amount of Aus$48,599,855, which was equivalent to US$31,813,465, made up of:
Rowsom – Retained Earnings US$4,359,855
Part of Rowsom's Capital Profits US$27,453,610
Reserve _____________
US$31,813,465
The Capital Profits Reserve was made up of all of EIL's reserves (US$17,038,103), represented as income in EIL's profit and loss account, and that part of the distribution made by Clarkson's liquidation which represented interest income (US$10,415,507). It is not in contest that the balance of the distribution from Rowsom to BIL (US$38,524,959) was a return of capital and, on no view, was deemed dividends.
As we have seen, BIL subsequently departed from this approach. It now claims that the only amount properly to be included in its assessable income is the amount that represents the retained earnings of Rowsom, namely, US$4,359,855. The Commissioner declines to accept the validity of BIL's altered approach."
The statutory provisions
4 Income tax as assessed in accordance with the Act is imposed upon taxable income, that being the result reached when there is deducted from assessable income all allowable deductions. The starting point for the computation of assessable income is s 25 which, in the case of a resident taxpayer, includes the income of that taxpayer derived directly or indirectly from sources within or outside Australia. In the case of a non-resident it will be only such income as is derived from sources in Australia that are included in assessable income. Income derived by a non-resident from sources wholly outside Australia is exempt income under s 23(r).
5 Section 44(1) of the Act is concerned with dividends. It provides:
"The assessable income of a shareholder in a company (whether the company is a resident or a non-resident) shall, subject to this section and to section 128D –
(a) if he is resident – include dividends paid to him by the company out of profits derived by it from any source; and
(b) if he is non-resident – include dividends paid to him by the company to the extent to which they are paid out of profits derived by it from sources in Australia."
6 At the relevant time s 47(1) of the Act provided:
"Distributions to shareholders of a company by a liquidator in the course of winding up the company, to the extent to which they represent income derived by the company (whether before or during liquidation) other than income which has been properly applied to replace a loss of paid up capital, shall, for the purposes of this Act, be deemed to be dividends paid to the shareholders by the company out of profits derived by it."
The judgment appealed from
7 As I have already noted the learned primary Judge rejected the submission of the Commissioner that s 47(1) of the Act, which was without territorial limitation, operated recursively to make successive distributions on the winding up of a series of interrelated companies assessable pursuant to s 44(1). It was the Commissioner's argument before her Honour, as before us on appeal, that in consequence the distributions by the liquidators of Clarkson, EIL and Rowsom all constituted income, deemed by force of s 47(1) of the Act to be dividends paid out of profits with the consequence that the ultimate liquidation distribution by Rowsom to BIL constituted assessable income pursuant to s 44(1)(a).
8 In her Honour's view the case of the Commissioner rested largely on whether the case fell within the decision of the High Court in Harrowell v Commissioner of Taxation (1967) 116 CLR 607. The case of BIL on the other hand depended upon what was said by the majority of that Court in Gibb v Commissioner of Taxation (1966) 118 CLR 628. After a discussion of the case law and, in particular, the two cases just mentioned, her Honour found that Harrowell was inapplicable to the facts before her. The decision in Harrowell, in her Honour's view, depended upon the fact that the two companies in the chain, the liquidation of which resulted in the ultimate distribution to the taxpayer, were residents of Australia so that s 47(1) operated at each stage together with s 44(1) of the Act so as to treat each liquidation distribution as being included in the assessable income of the recipient. Section 47(1) was not, in her Honour's view, intended to operate on its own to treat a liquidation distribution as income in circumstances where s 44(1) had no application to bring the distribution into assessable income.
9 Her Honour's decision is best summarised in the following passage from the judgment, intended as a summary of the reasons:
"As I have already indicated, I reject the Commissioner's submissions as to the operation of s 47(1) with respect to the distributions from Clarkson and EIL to Rowsom because at the time those distributions were made there could be no deeming 'for the purposes of [the]Act. At the time those distributions were made, neither s 44(1) nor any other relevant provision of the Act had any relevant application to the distributions from Clarkson and EIL to Rowsom. As the Commissioner properly conceded, neither s 44(1) in conjunction with s 47(1) nor any other provision of the Act rendered the receipt of those distributions assessable income. Critically, for the purposes of this appeal, the distributions from Clarkson and EIL did not give rise to a receipt by Rowsom in the nature of income in the ordinary sense: see Burrell and the authorities cited earlier in connection with Burrell. Nor did those distributions give rise, for the purposes of the Act, to deemed dividends pursuant to s 47(1). In this circumstance, as BIL submits, Harrowell can have no direct application. If those distributions did not represent income in Rowsom's hands, then the subsequent distribution by Rowsom to BIL did not represent income derived by Rowsom; and, in consequence, that distribution could not, for the purposes of the Act, be deemed to be dividends paid to BIL out of profits derived by Rowsom, by force of s 47(1) or otherwise."
10 Senior counsel for BIL relies upon and urges the Court to adopt her Honour's reasoning as expressed in this passage.
The Commissioner's submissions
11 The Commissioner at the close of argument on the appeal summarised his submissions in writing as follows:
1. Section 47(1) is a provision dealing with a transaction according to its character.
2. Section 47(1) has an application which is independent of considerations of locality.
3. Section 47(1) deems what the shareholder receives from the liquidator to be, for all purposes of the Act, income derived by the shareholder.
4. The operation of s 47(1) is not confined to the bringing of distributions within s 44(1).
5. These propositions can be combined as follows:
Where – as in the present case – a question arises about whether s 47(1) applies to a liquidator's distribution to a resident shareholder (so as to render the distribution assessable income of the shareholder under s 44(1)(a)) the following rule applies:
'If the distribution in question has its source in an earlier liquidator's distribution, then if the earlier distribution is of the character defined by s 47(1) – that is, it represents income derived by the company making the first distribution – then it necessarily follows that the later distribution is a distribution to which s 47(1) applies'."
The submissions of BIL
12 As I have already indicated, senior counsel for BIL relied upon the reasons which the learned primary Judge has given. In reply to the written submission which I have set out, he joined issue with the Commissioner on the fourth submission, which, if incorrect, would result in the rejection of the conclusion as stated in the fifth submission. It was the submission for BIL that s 47 had no operation, that is to say, did not apply, either alone or with s 44(1), to the distributions to Rowsom. That company, as a non-resident, had no taxable income under the Act and no tax payable. Thus when the liquidator of Rowsom distributed its assets to BIL there was a distribution out of capital, not income, with the consequence that s 47(1) had no application, alone or in combination with s 44(1), to include any amount in the assessable income of BIL.
13 To understand and evaluate the competing submissions it is necessary to discuss in some detail the historical background to s 47(1) and the many cases in which the High Court has analysed it or the principles underlying it.
Discussion of the cases bearing upon s 47(1) of the Act
14 As is well known s 47(1) had its origin in the differences that exist in a system of taxation of income between the liability for tax of a person in receipt of dividends and the liability for tax of a person in receipt of a liquidator's distribution.
15 As the joint judgment of Rich, Dixon and McTiernan JJ in Commissioner of Taxation (NSW) v Stevenson (1937) 59 CLR 80 at 97-100 points out, in a system directed at the taxation of income it could be possible to treat what is received by a shareholder, other than an original shareholder, as, at least in part, a return to the shareholder of a part of the amount paid for the shares. However, such an approach is not adopted. Rather the law distinguishes between income and capital by reference to "the source of the receipt". Distributions by a company out of profits, or at least those earned during the period in respect of which a distribution is made, "clearly fall", as their Honours say, within the concept of income. However, it has not proven possible to distinguish between shareholders in accordance with the relation to which a particular individual may stand to the particular profit distributed and so no attention is paid to the fact that, as their Honours say, to one shareholder the distribution may be but a return of the amount the shareholder paid for the share.
16 In terms of company law and the law of income tax the distribution by a company of profits, be they profits accumulated or current year profits, is seen as the "detachment", "release" or "liberation" of the profits. The share itself remains in existence and is held by the shareholder. So, as the Privy Council said in Hill v Permanent Trustee Co of New South Wales Ltd [1930] AC 720, a case concerned with the meaning of "income" for trust law purposes, it was said at 734 that:
"If payment to the shareholders is made out of profits it is income of the shares, and no statement of the company or its directors can change it from income into corpus."
17 It may be noted that the influence on Australian income tax law so far as it distinguishes between income and capital, rather than the analysis made by economists in distinguishing between the two concepts, has been the subject of criticism by some commentators and forms the basis for the drive towards the fresh approach to the calculation of taxable income proposed in what is presently referred to as "Option 2": cf Krever "Simplicity and Complexity in Australian Income Tax" in Peterson & Gallagher (eds) Tax and Transfer Reform in Australia and Germany (Berliner Debatte Wissenschaftsverlag 2000) at 67-69.
18 But, whether for trust law purposes or for the purposes of a tax based upon concepts of income and capital (absent a special provision such as s 47), where a company goes into liquidation and the mass of assets of the company, representing as it might accumulated profits or profits earned up to the date of liquidation is distributed to the shareholder on liquidation the rule adopted is different. In such a case shareholders are returned the ultimate capital value of the intangible property constituted by their shares which no longer exist. Profits are not detached, released or liberated leaving the share intact. There is, as their Honours said in Stevenson at 99, "no dividend" and
"no distribution of profits because they are profits. The shareholder simply receives his proper proportion of a total net fund without distinction in respect of the source of its components and he receives it in replacement for his shares."
19 What the shareholder receives is not income, it is capital. And this is so, whether the context is trust law (see Hill at 729) or the taxation of income: see Inland Revenue Commissioners v George & Burrell [1924] 2 KB 52.
20 These cases and the many cases which have since applied them explain the structure of ss 47 and 44 and the language which the legislature employed.
21 First it must be said that the legislature determined to reverse, for the purposes of the Australian income tax law, decisions such as George & Burrell. Thus s 47 was enacted to ensure that a distribution made by a liquidator (to the extent that the distribution had been made out of income) should be taxable to a shareholder who received it. To achieve this it was not sufficient to deem the distribution to be a dividend, for that word could contemplate and was used in the Act to cover acts or transactions not necessarily of a revenue nature. So, for example, s 6(1) of the Act now defines "dividend" as "any distribution made by a company to its shareholders". A distribution on capital account could thus be a dividend as defined. It will be noted that the definition, of itself, would thus be incomplete to determine the character of the distribution to be either income or capital. The source from which the distribution is to be made is not revealed. The present definition of "dividend" may be compared with the definition of "dividend" first introduced in 1934 which qualified the definition by requiring that the distribution be out of profits. The qualification was dropped in the 1936 Act, no doubt because s 44(1) of the Act, introduced at the same time, required a dividend to be paid out of profits before it was comprehended within s 44(1) and thus became, albeit depending upon the geographic source of profit, assessable income: cf Federal Commissioner of Taxation v Uther (1965) 112 CLR 630 at 636 per Kitto J. The fact that his Honour dissented in the result does not affect the historical analysis which his Honour there sets out. See too per Taylor J at 642 and per Menzies J at 643. The judgment of Fullagar J in Federal Commissioner of Taxation v Blakely (1951) 82 CLR 388 at 406 repeats the history.
22 Section 47 itself contained no territorial limitation. Since the basal concept of the Act was to levy tax on residents of Australia deriving income wherever sourced, but to contain the impact of the tax on non-residents to Australian sourced income, s 44(1) not only explained what dividends were to be brought into assessable income, but also supplied a territorial limitation, consistent with s 25(1). Hence while taxpayers resident in Australia would pay tax on all dividends out of profits wherever sourced, non-resident taxpayers would only pay tax on dividends to the extent that the profits out of which the dividends were directly or indirectly paid were from an Australian source.
23 The first High Court decision to address some of the issues relevant to the present case was Blakely where shareholders obtained the assets of a company in the course of what may be described as an informal liquidation. It was held that no amount was to be included in assessable income. In the course of his judgment, Latham CJ at 397 accepted a submission of the Commissioner that the criterion of assessability under s 44(1) was not whether what was received by a shareholder was detached from the capital asset, namely the shares, but whether what the shareholder received came from the profits of the company. His Honour was of the view that there had on the facts of the case been no distribution, although at least in part what was received by the shareholder represented profits derived by the company. Fullagar J, with whom Dixon J agreed, was of the view that there had been no distribution of profits because they were profits. Rather the shareholders had received a proportion of a net fund without distinction as to the source of the components: at 404. Because all that happened was that the shareholders received but a proportion of the net fund without distinction as to the source of its components, there was nothing in the Act which gave the receipt the character of an income receipt, the character that it would otherwise have being capital.
24 The second case (historically) dealt with by the High Court was Archer Bros Pty Ltd (in liq) v Federal Commissioner of Taxation (1953) 90 CLR 140. The question which arose in that case was whether a private company which in the year of income went into liquidation should be treated as making a sufficient distribution for the purposes of the then Division 7 of the Act, which imposed a tax upon private companies which had not distributed at least as much as the Act prescribed to be a sufficient distribution. It was held that a distribution to shareholders made by the liquidator, to the extent that that distribution was made out of income, was to be treated by force of s 47 of the Act as a dividend and that this was for the purposes of Division 7 as well as the other purposes of the Act. Perhaps the only significance the case has in the present discussion is to illustrate some of the work which the words "for the purpose of the Act" have to perform. For this, it provides the foundation of the Commissioner's third summary submission. It is, however, important to note that in the joint judgment of Williams ACJ, Kitto and Taylor JJ their Honours refer to s 47 as assimilating for the purpose of the Act a distribution by a liquidator in the course of winding up for the purpose of the Act to dividends paid to shareholders by a company out of profits. On the other hand this may be seen as no more than a paraphrase of the language of s 47(1). However, their Honours did, at 155, emphasise that s 47(1) was not to be seen as "merely" ancillary to s 44(1).
25 Next in time was Federal Commissioner of Taxation v W E Fuller Pty Ltd (1959) 101 CLR 403. In that case a company made a bonus share issue to its shareholders. The taxpayer, who had made a loss in the year of the issue, claimed to be entitled to carry forward that loss, notwithstanding the bonus issue. It was held by majority (Fullagar and Menzies JJ, Dixon CJ dissenting) that the bonus shares were exempt income within s 80(1) of the then Act, the section governing the carry forward of losses, with the result that the amount of the loss carried forward was reduced by the amount of the value of the bonus share. The majority reached this conclusion because s 6(1) defined dividend as including the paid-up value of shares distributed by a company to its shareholders. Being a dividend, the bonus share issue was thus, it was held, income.
26 The judgment of the majority need not now be explored. It has subsequently been disapproved and the minority judgment of Dixon CJ has been said to be correct: cf Gibb v Federal Commissioner of Taxation (1966)118 CLR 628 at 632.
27 It was the Chief Justice who held that, in the ordinary sense, a bonus share issue resulted in the shareholder receiving capital: Inland Revenue Commissioners v Blott [1920] 2 KB 657. The fact that a bonus share was included in the definition of "dividend" for the purposes of the Act did not produce the result that the issue was income. More was required where the share issue had the nature of capital.
28 Parke Davis & Co v Commissioner of Taxation (1959) 101 CLR 521 was decided in the same year. In that case a subsidiary company of the taxpayer, incorporated in Colorado and a non-resident, was liquidated and its assets distributed on liquidation to its parent which was also not a resident of Australia. The assets distributed included profits derived from sources in Australia as well as profits sourced outside Australia. It was held that s 47(1) was to be treated as having an application independent of considerations of locality. This is the Commissioner's summary submission 2. It was concerned only with a kind of transaction which comes within the ambit of s 44(1) relating to the assessability of dividends. Section 44(1) provided the territorial criteria for including dividends in assessable income. Section 44(1), so far as it concerned source was expegetical to s 23(r) which was the general provision providing the nexus between residence and source and thus confining the assessability of non-residents to income from an Australian source. Accordingly, to the extent that there was an Australian source, s 44(1) applied to include an amount in the assessable income of the non-resident.
29 Of s 47(1) their Honours said at 530-1 (and it is from this passage that the Commissioner's submission 1 is derived):
"Section 47(1) is a provision dealing with a transaction according to its character. Its purpose is obvious enough. The section was first enacted in an earlier form to meet the situation, made clear enough by Inland Revenue Commissioners v Burrell which decided in effect that a distribution of a mass of assets, although in a colloquial sense they represented or contained profits, was a distribution of capital. There is no ground, we think, for adding territorial restrictions to s 47. That does not mean, of course, that in the description of the transactions s 47 gives, in reference to winding up and to a liquidator, and so on, grounds may not be found for saying that some particular procedure or process prescribed by a foreign law will be outside the terms of the section. But it is, we think, of general application, quite independently of questions of locality. It is when a transaction comes within the terms of s 47 that you go back to the provisions relating to locality if the case be one of a non-resident. It is at that stage that you consider the source of imputed dividend."
30 An argument based upon lack of territorial connection with Australia likewise failed.
31 Glenville Pastoral Co Pty Ltd (in liq) v Federal Commissioner of Taxation (1963) 109 CLR 199 is more to the point. In that case the appellant company, which had received a liquidation distribution from its subsidiary, then went into liquidation and a distribution was made by its liquidator to its shareholders. The question in issue was whether there had been a "sufficient distribution" by the appellant for the purposes of Division 7 of the Act as it then stood. The appellant took the distribution it received from the liquidator of its subsidiary into its books as capital, as indeed it was (other than by force of s 47 with or without s 44(1)). It was argued by the Commissioner that the only part of the distribution made by the appellant which qualified as a deemed dividend by the appellant for the purposes of s 47 was the amount by which the appellant's funds exceeded the amount of its paid up capital which represented profit in the company law sense. The argument was rejected. Kitto, Taylor and Owen JJ said at 206-7:
"In no sense, apart from the provisions of this section, did any part of the distributions which the appellant received from the liquidator of Killens constitute income of the appellant. But since, to the extent of £243,402, they represented income derived by Killens they were to that extent to be deemed, for the purposes of the Act, to be dividends paid to the appellant by Killens out of the profits derived by it. As already mentioned, one result was that to that extent what the appellant received from Killens constituted by force of s 44(1)(a) the appellant's assessable income for the year in question. But the purposes of the Act are not limited to the purposes of s 44(1)(a); they include the purposes of every provision of the Act: see Archer Brothers Pty. Ltd. v. Federal Commissioner of Taxation. Accordingly, in applying s 47(1) itself in relation to distributions by the appellant to its shareholders, it is necessary to treat the amount the appellant received from Killens as constituting, to the extent of £243,402, dividends paid out of Killens' profits and therefore as being income derived by the appellant. That being so, the whole amount of the distribution made by the appellant's liquidator on 29th October 1957, namely £241,669, must be deemed to have represented income derived by the appellant, and therefore to be deemed dividends paid by the appellant out of its profits except as regards any part of it which had been 'properly applied to replace a loss of paid-up capital'."
32 One "significance", at least, of Glenville for present purposes is that it demonstrates, if demonstration be necessary, that s 47(1) can have a multiple operation, at least where the companies in the chain of companies liquidated are all resident in Australia. The real argument in the case was actually whether, since the appellant had lost its capital, a distribution which represented income had to be treated as excluded from the operation of s 47 on the ground that to the extent of the lost capital, it had necessarily been applied to make good that loss. That argument, which has no resonance in the present case, was rejected.
33 Next in terms of reported cases was Federal Commissioner of Taxation v Uther (1965) 112 CLR 630, a case dealing with a distribution to shareholders by way of reduction in capital. In that case Taylor and Menzies JJ (Kitto J dissenting) found that the distribution was neither a distribution of profits or out of profits, but that what the shareholders received was capital. The majority took the view that the decision in Blakely, to which reference has already been made, governed the case. While an ordinary dividend necessarily had to be paid out of profits, that was not the case with a reduction of capital. As Taylor J said, the fact that the distribution came within the definition of "dividend" told nothing. His Honour, however, distinguished s 47, where the dividend as defined was deemed to have been paid out of profits. Likewise, Menzies J commented at 645:
"To deal with the same sort of problem as here confronts us when there is the liquidation of a company rather than a reduction of its capital, a special provision was found to be necessary, viz s 47"
34 Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 again concerned the making of a bonus issue. The bonus shares were sold and the company subsequently placed into voluntary liquidation. The issue for decision was whether the proceeds of the bonus shares were to be treated as income. Were Fuller to be accepted as correct, the bonus shares were income by force of the fact that they constituted a "dividend" under s 6(1) and the subsequent liquidation was to that extent thus made from "income". However the High Court by majority, Barwick CJ, McTiernan, Taylor and Windeyer JJ (Owen J dissenting), refused to follow the majority view in Fuller but rather approved the dissenting view of Sir Owen Dixon. The bonus shares had, the Court said, the character of capital and were not, by force of s 6, made income. All the definition of s 6 did was give a meaning to the word "dividend" as it was used in the Act. Their Honours continued at p 635:
"Consequently, any distribution of the character mentioned in the definition is for the purposes of the Act a 'dividend' whether it constitutes an income or a capital receipt to the shareholders. The line of reasoning employed to support the respondent's contention does not, of course, suggest that the effect of the definition is to convert every distribution of the nature described in the definition into dividends in the ordinary sense of that term. It asserts that, since dividends, in the ordinary and natural sense of that term, are income it follows that when the Act defines the term in a different and artificial sense – that is, to include distributions which are not dividends or income in the ordinary sense – it operates to invest dividends as so defined with the character of income. In our view, and with respect to those who think otherwise, this line of reasoning is fallacious. The function of a definition clause in a statute is merely to indicate that when particular words or expressions the subject of definition, are found in the substantive part of the statute under consideration, they are to be understood in the defined sense - or are to be taken to include certain things which, but for the definition, they would not include…
We agree with Dixon CJ when he said:
'the conception of 'dividend' does not affect the meaning or application of the word 'income'; at all events so it appears to me. The Act is not expressed to bring the defined conception of dividend within the word 'income'."
35 In a passage which, while not directly relevant to the facts in issue in Gibb, has great persuasion since it represented the refutation by Barwick CJ, McTiernan and Taylor JJ of the view of the majority in Fuller, which their Honours did not follow, their Honours commented at 637:
"One further matter may be mentioned which, it seems to us, operates to confirm the views which we have expressed. By force of s 47 of the Act, distributions to shareholders of a company by a liquidator in the course of winding up the company, to the extent to which they represent income derived by the company other than income which has been properly applied to replace a loss of paid-up capital, are deemed to be 'dividends' paid to the shareholders by the company out of profits derived by it. But although in the language of the Act they may to this extent be properly described as 'dividends' they do not, by force of their character as such, further assume the character of assessable income, or, for that matter, of income. This we think, is clear enough from the observations in Glenville Pastoral Co Pty Ltd v Commissioner of Taxation of the Commonwealth and Commissioner of Taxation of the Commonwealth v Uther. The 'statutory fiction' (see Muller v Dalgety & Co Ltd) introduced by s 47 merely provides a basis for the operation of s 44 which is concerned exclusively with what dividends shall or shall not form part of a taxpayer's assessable income. It would, in our view, be anomalous to hold that distributions which constitute 'dividends' because they are comprehended by the definition of that term thereby, necessarily, achieve the character of income whilst distributions of a character which are not comprehended by the definition but which are deemed by s 47 to be 'dividends', do not by force of that provision achieve that character."
36 It is this passage which is relied upon by BIL in refutation of the Commissioner's third proposition. Indeed, it is submitted that this passage is part of the ratio of Gibb and provides a complete answer to the Commissioner's submissions, it being conceded that the Commissioner's argument must fail if the third summary submission is incorrect. I shall return to this question later.
37 Windeyer J expressed the view that the word "income" where appearing in s 47(1) of the Act included both that which was income by ordinary concepts as well as that which was assessable income. However, the bonus dividend was neither income in ordinary concepts, nor was it made assessable income under s 44. In consequence s 47(1) did not operate to include any amount in the assessable income of the taxpayer. His Honour labelled as "fallacious" an argument that might be expressed in the following terms: any dividend paid out of profits has the character of income in ordinary concepts; therefore anything which is comprehended within the definition of "dividend" is given the character of income by the Act. By this argument, the word "income" as used in the Act comprehends anything which is a "dividend" in the defined sense. I should say in anticipation of the later discussion that it would not be fallacious, however, to say that because any dividend paid out of profits has the character of income in the ordinary sense, anything which the Act deems to be a dividend paid out of profits is given the character of income for the purposes of the Act so that when the Act uses the word "income" in s 47 it is capable of comprehending anything which the Act deems to be a dividend paid out of profits.
38 Gibb was shortly afterwards followed by Harrowell v Commissioner of Taxation (1967) 116 CLR 607. That case concerned successive distributions, the first the distribution to a parent company on the winding up of its subsidiary and the second the distribution to the parent company's shareholders of its assets on liquidation. The argument for the taxpayer was that what the parent received on liquidation of its subsidiary, while deemed by s 47 to be a dividend paid out of profits, was actually of a capital and not an income nature. Accordingly the liquidation distribution by the liquidator of the parent was made out of capital, not out of income, and so did not enliven s 47. In arriving at this conclusion the Court expressed the view that Gibb did not require a contrary view. It had been submitted that the deeming of the distribution, to which s 47 referred, to be a dividend paid out of profits did not enable the Commissioner to treat any part of the amount of the distribution as income, just as the deeming of the bonus shares to be a dividend by force of s 6 did not have the effect of making the proceeds of the bonus shares income. The judgment is brief and significant to the present appeal. That part of it (at 611-2) which addresses the submission made may usefully be repeated:
"The argument, however, is fallacious and the reasoning applied in Gibb's Case has no application to the circumstances of this case. Distributions by a liquidator to the shareholders of a company can be made only after the debts of the company have been paid or provided for and this must be borne in mind when we come to consider s 47(1). Accordingly, when the sub-section expresses the initial condition for its operation – 'Distributions … to the extent to which they represent income derived by the company' – it proceeds on the basis that if a distribution is made to shareholders in the course of a winding up out of a fund which, either in whole or in part, represents income derived by the company, such distribution, or such part thereof, is to be regarded as a revenue profit and it is in that context that the distribution 'is deemed to be dividends paid to the shareholders by the company out of profits derived by it'. Within this framework there is, therefore, no room for the view that a deemed dividend under s 47 may in some circumstances consist of or include a capital profit and the reasoning in Gibb's Case can have no application. It seems to us that the concluding words of the sub-section were introduced to accommodate its provisions to the language of s 44. But it is clear enough that when the legislature used these words it was speaking of a profit derived by a company on its revenue account and not otherwise. Accordingly the sub-section, for the purposes of the Act, deems the distribution, to the extent to which the distribution is made out of income derived by the company, as dividends paid to the shareholders out of such profits. The distribution by the liquidator of Killens, representing, as it did, income derive by Killens, the conclusion is inescapable that the effect of the sub-section was to invest the distribution with the character of a dividend paid to Glenville out of, and only out of, profits derived by Killens on revenue account and, therefore, income in Glenville's hands. That being so the appellant's contention must be rejected ..." [original emphasis]
Conclusions to be drawn from the case law
39 The following propositions are critical to the Commissioner's case:
1. That when s 47(1) deems a liquidation distribution to be a dividend paid out of profits, that deeming has the consequence that the distribution is to be treated as "income" for the purposes of the Act.
2. That when the language of s 47(1) is satisfied, it has operation "for the purposes of the Act", notwithstanding that the distribution to the shareholder is not made assessable income by the operation of s 44(1).
3. That it follows that s 47(1) can operate successively through the liquidation of a chain of companies where some of the companies in the chain are non-resident and the source of the initial distribution is income, whether or not having a source in Australia.
40 The first of the three propositions stated above is submitted by senior counsel for BIL to be contrary to the decisions of the High Court in cases such as Uther and, more particularly, Gibb. Just as these cases stand for the proposition that merely because a distribution is deemed by s 6 of the Act to be a dividend it does not thereby have the character of income, so too the deeming in s 47 does not give the distribution the character of income. It is only when s 47(1) operates together with s 44(1) to bring an amount into assessable income that the distribution is given a revenue character. Particularly, it was submitted, the propositions set out above run directly counter to what the majority in Gibb said at 637 when propounding a further reason why the majority of the High Court in Fuller, should not be followed.
41 The argument of BIL fails, in my view, to distinguish between, on the one hand, the way s 6 treats the distributions there referred to as being a dividend and no more, and, on the other, the deeming in s 47(1) of a liquidation distribution, to the extent it is made out of income, not only to be a dividend but a dividend which is paid out of profits. To treat a distribution as a dividend gives that distribution no characteristic as capital or income. Some distributions, for example of bonus shares, are clearly capital. Others, such as the normal company law dividend, will have the character of income. But that is not the case of a distribution which is made by a company out of profits.
42 As I have sought to explain, a company law dividend which of necessity is paid out of profits will be income in ordinary concepts. The fact that it is so treated for trust law purposes without statutory deeming demonstrates this. There are passages in the cases discussing s 47 in particular which say as much, for example the passage in the joint judgment of Kitto, Taylor and Owen JJ in Glenville which I have earlier set out. What s 47(1) lacks as a taxing provision in a territorial system of taxation is any suggestion of source, for the basic structure of the Act is that, while resident taxpayers will pay tax on ordinary income from all sources, non-residents will only be assessed to tax on income which has an Australian source: see, for example, s 25(1) and s 23(r). Without more, a question would arise whether the source of a dividend paid out of profits would need to be determined by reference to the location of the share or some other matter. For that reason it is necessary that s 47(1) operate together with s 44(1) to determine whether any amount is to be included in assessable income. Section 44(1) adopts, as the relevant territorial test, the source of the profits out of which the dividend is paid.
43 It does not, however, follow from the fact that ordinarily s 47(1) will operate together with s 44(1) to include an amount in assessable income, that s 47(1) can not operate to deem a liquidation distribution to have the character of income. Section 47(1) is expressed to apply for the purposes of the Act and may do so, notwithstanding that s 44(1) may have no operation to include amounts in assessable income. For example, as Archer Bros demonstrates, when Division 7 was in the Act, for the purposes of that Division, s 47(1) operated to determine whether a company had made a sufficient distribution and so was not to be assessed for tax under that Division.
44 There remains, as the learned primary Judge observed, the question whether what was said in Gibb requires a contrary conclusion, particularly having regard to the decision in Harrowell. It will be recalled that in Harrowell Taylor, Windeyer and Owen JJ expressed the view that the reasoning in Gibb had no application to the facts of Harrowell. Likewise the decision in Gibb was concerned with facts and issues completely different from those raised by the present facts. There the question in issue was whether the proceeds of the sale of bonus shares was income so as to make applicable s 47(1) to a liquidator's distribution. The case had nothing at all to do with the question whether the Act treats distributions literally falling within s 47(1) as being income so as then to enliven the operation of that section when a subsequent liquidation distribution is made from what represented the proceeds of an earlier s 47(1) distribution.
45 As the learned primary Judge herself observed, it is possible that not all that is said in Gibb is easy to reconcile with what was said in Harrowell, in spite of the fact that the members of the Court who participated in each decision were the same. Clearly they did not think, when they decided Harrowell, that Gibb was wrongly decided or, for that matter, that what they said in Harrowell was inconsistent with what they had only shortly before said in Gibb. It is, thus, necessary to consider with greater care what their Honours said in Gibb in the passage which I have earlier set out. In so doing it is important to bear in mind that their Honours were addressing their remarks to the reasoning of the majority of the Court in Fuller with which they did not agree.
46 It will be recalled that in Fuller Fullagar J had first expressed the view that the underlying company law principles on which issues of bonus shares proceeded dictated that the taxpayer in that case had received a share of capitalized profits which had been applied in payment for the bonus shares in fact issued. This meant that, contrary to Inland Revenue Commissioner v Blott [1921] 2 AC 171, what was received was income in ordinary concepts and thus capable of being exempt income. This was not a view which commended itself to Menzies J. Both of their Honours were, however, of the view that the structure of the Act, by treating bonus share issues as dividends, gave the distribution effected by the bonus share issue the character of income. This was so because dividends had the character of income in ordinary concepts. What s 44(2) did was to remove such distributions from assessable income so as not to fall within s 44(1). But the distribution remained income and as such had to be taken into account in determining the carry forward of losses. As I have already noted, this was not the view which commended itself to Dixon CJ who dissented.
47 Gibb, it will be recalled, was likewise concerned with bonus shares. However, the issue was not the impact of the bonus share distribution on the computation of exempt income so as to determine whether there was a loss to be carried forward under the provisions of s 80 of the Act, but rather whether the proceeds of those shares were "income" for the purposes of s 47(1). There was, as Barwick CJ, McTiernan and Taylor JJ in Gibb perceived, a parallel in that s 47(1) (like the definition of dividend in s 6(1)) also operated to deem a distribution of a particular kind to be a dividend. So it was in this context that their Honours said, with respect correctly, that in their capacity just as dividends, liquidation distributions were not income. That explains what their Honours meant when they said at 637:
"But although in the language of the Act they [ie the liquidation distributions] may to this extent be properly described as 'dividends' they do not, by force of their character as such, further assume the character of assessable income, or, for that matter, of income." [emphasis added]
To that extent the passage in Gibb does not stand in the way of the Commissioner. It is the balance of the passage after the reference to Glenville and Uther to which senior counsel for BIL points. It is clear that in this passage their Honours wished to convey and did convey the view that, for the purpose of determining whether a liquidation distribution was assessable income, s 47(1) operated in conjunction with s 44(1). It did not operate on its own to make the distribution assessable income. Such a distribution, as their Honours observed, did not become assessable income merely because the distribution was to be treated as a dividend. So to say, is clearly, with respect, unexceptionable. If the passage gives any assistance to BIL it is, in my opinion, only in the one sentence, viz:
"The 'statutory fiction' … introduced by s 47 merely provides a basis for the operation of s 44 which is concerned exclusively with what dividends shall or shall not form part of a taxpayer's assessable income." [emphasis added]
48 It is a slender reed upon which to rely to give too much emphasis to the word "merely" as it appears in this sentence. It can not be the case that their Honours intended to say that the only purpose of the Act to which the deeming of s 47 had application was s 44(1) for that would be inconsistent with Archer Bros. Rather, I think, all their Honours intended to convey in that sentence and the balance of the paragraph in which it is contained was the fundamental point that s 47 did not operate on its own to make a distribution assessable income; that was the role of s 44(1). That fundamental point is consonant with Parke Davis and Glenville. It can also be arrived at by noting that section 47(1) has no territorial limitation at all. That territorial limitation is to be found in s 44(1). To use the language of Parke Davis and the Commissioner's second submission, s 47(1) is independent of considerations of locality. That locality is supplied by s 44(1) and for this purpose the deeming in s 47(1) provides the touchstone for the application of s 44(1). This, however, says nothing about the deeming required by s 47(1) so far as it is sought to be applied to a series of liquidation distributions such as the present case raises.
49 While it is true that s 47(1) can not operate by itself to make a distribution assessable income, it can operate "for the purposes of the Act" on its own as we have seen. So, when Clarkson was liquidated, the resultant distribution was treated for the purposes of the Act as a dividend paid out of profits and thus income. Thus when Rowsom was liquidated the resultant distribution was, by the application of s 47(1) to the Clarkson distribution, to be treated as income and in the result there was deemed to be a distribution to BIL, being a dividend paid out of profits to which the terms of s 44(1) then fell to be applied.
50 It must be said that it would be strange indeed if there were any other result. Let us take two examples. In both examples there are three companies. The top company, A, a resident of Australia, is wholly owned by the intermediate company, B, which is wholly owned by the bottom company, C. C is a resident of Australia in each example. In the one example B is a resident of Australia; in the other B is not a resident of Australia. A is liquidated and a distribution is made by its liquidator to its shareholder, B, out of profits. In turn, B is liquidated and a liquidation distribution is made to C. It is immaterial for the purposes of the example whether the profits of A have an Australian or an ex-Australian source.
51 In the example where company B is a resident of Australia, Archer Bros has the consequence that the whole of the liquidation distribution of company B is included in the assessable income of company C by successive applications of s 47(1). It is irrelevant that the original source of A's profits is in Australia.
52 In the other example, on the submission of BIL, company B receives a distribution which for the purposes of company law has the character of capital. Section 47(1) is ignored for this purpose. When company B is liquidated s 47(1) can have no application for the liquidation distribution by company B is made out of capital and not income. In consequence no amount is treated as being included in the assessable income of company C, even if the whole of the profits of company A which are the original source of the ultimate distribution has an Australian source.
53 An interpretation of the Act which would equate the two examples is to be preferred, if it is open as, with respect to the learned primary judge, it is, over one which would produce different results depending upon the residence of the intermediate company.
54 Of course anomalies do arise in taxation. So much may be conceded. But when the language of the Act can be interpreted so as not to give rise to anomalies there is no reason to reject that interpretation. It is not, with respect to the learned primary Judge, an anomaly which the language of the Act itself suggests. Nor, when one examines, as I have, the history of the legislation and the cases decided on it, is it an anomaly which that history suggests. To the contrary, once it is recalled that a dividend paid out of profits is treated for ordinary purposes as income in ordinary concepts, the language of s 47(1) becomes clear, as does its operation in the present case.
55 I would, for these reasons, allow the appeal, set aside the judgment appealed from and, in lieu thereof, affirm the objection decision and dismiss the application with costs. BIL shall pay the costs of the appeal.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.
Associate:
Dated: 10 July 2000
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 64 OF 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: THE FEDERAL COMMISSIONER OF TAXATION
APPELLANT
AND: BREWING INVESTMENTS LTD (ACN 004 233 005)
RESPONDENT
JUDGES: HILL, HEEREY AND SUNDBERG JJ
DATE: 10 JULY 2000
PLACE: SYDNEY
REASONS FOR JUDGMENT
HEEREY J
56 I agree with Hill J.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.
Associate
Dated: 10 July 2000
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 64 OF 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: THE FEDERAL COMMISSIONER OF TAXATION
APPELLANT
AND: BREWING INVESTMENTS LTD (ACN 004 233 005)
RESPONDENT
JUDGES: HILL, HEEREY AND SUNDBERG JJ
DATE: 10 JULY 2000
PLACE: SYDNEY
REASONS FOR JUDGMENT
SUNDBERG J
57 For the reasons given by Hill J I would make the orders his Honour proposes.
I certify that this page is a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.
Associate:
Dated: 10 July 2000
Counsel for the Applicant: C Maxwell QC, M Connock
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the Respondent: B J Shaw QC, G T Pagone QC, Helen Symon
Solicitor for the Respondent: Corrs Chambers Westgarth
Date of Hearing: 22 May 2000 (Melbourne)
Date of Judgment: 10 July 2000
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SZJYR v Minister for Immigration and Citizenship [2010] FCA 135
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2010/2010fca0135
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2024-09-13T22:50:51.849458+10:00
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FEDERAL COURT OF AUSTRALIA
SZJYR v Minister for Immigration and Citizenship [2010] FCA 135
Citation: SZJYR v Minister for Immigration and Citizenship [2010] FCA 135
Parties: SZJYR and SZJYS and SZJYT v MINISTER FOR IMMIGRATION AND CITIZENSHIP and MIGRATION REVIEW TRIBUNAL
File number: NSD 1473 of 2009
Judge: BESANKO J
Date of judgment: 24 February 2010
Date of hearing: 23 February 2010
Place: Sydney
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 15
Counsel for the Applicants: The Applicants appeared.
Counsel for the First Respondent: Ms N Johnson
Solicitor for the First Respondent: Sparke Helmore Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1473 of 2009
BETWEEN: SZJYR
First Applicant
SZJYS
Second Applicant
SZJYT
Third Applicant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
MIGRATION REVIEW TRIBUNAL
Second Respondent
JUDGE: BESANKO J
DATE OF ORDER: 24 FEBRUARY 2010
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application for an extension of time within which to file and serve a notice of appeal be refused.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1473 of 2009
BETWEEN: SZJYR
First Applicant
SZJYS
Second Applicant
SZJYT
Third Applicant
AND: MINISTER FOR IMMIGRATION AND CITIZENSHIP
First Respondent
MIGRATION REVIEW TRIBUNAL
Second Respondent
JUDGE: BESANKO J
DATE: 24 FEBRUARY 2010
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This is an application for an extension of time within which to file and serve a notice of appeal from an order made by the Federal Magistrates Court. The application is brought under O 52 r 15(2) of the Federal Court Rules. On 13 October 2009, the Federal Magistrates Court dismissed an application for judicial review with respect to a decision made by the Migration Review Tribunal ("the Tribunal"). The Tribunal's decision was to affirm decisions of a delegate of the Minister for Immigration and Citizenship not to grant Child (Residence) (Class BT) visas to the three applicants. The application for an extension of time is dated 22 December 2009 and it is accompanied by an affidavit of the first applicant to which a proposed notice of appeal is annexed.
2 The three applicants are not named because they previously applied for protection visas, and, although they were unsuccessful, the federal magistrate considered that s 91X of the Migration Act 1958 (Cth) ("the Act") operated to prevent the Court from publishing their names.
3 The matters which are relevant to an application for an extension of time are well known. They include the length of the delay, the explanation for the delay, the prejudice to the applicant if time is not extended, the prejudice to the respondent if time is extended, and the merits of the proposed appeal. In this case, I have reached the conclusion that the explanation for the delay is not a satisfactory one, but that that in itself should not lead me to refuse the application. I have reached the conclusion that the proposed appeal has no prospect of success, and in those circumstances, the application for an extension of time should be refused.
4 The first applicant was born on 2 October 1961. He is married to the second applicant who was born on 13 October 1968. The third applicant is the son of the first and second applicants and he was born on 27 May 1991. The person named in the applications as the sponsor was a Mr Toufic Laba Sarkis, who is an Australian citizen.
5 On 19 December 2008, the applicants applied for the relevant visas. The first applicant was the primary applicant and the second and third applicants were secondary applicants. On 15 January 2009, a delegate of the Minister for Immigration and Citizenship decided to refuse to grant such visas to the applicants. The delegate refused the applications on the ground that the first applicant did not satisfy cl 802.212 of Sch 2 to the Migration Regulations 1994 (Cth) ("the Regulations") because he was older than 25 years and was not incapacitated for work in the relevant sense.
6 On 12 February 2009, the applicants applied to the Tribunal for review of the delegate's decisions. On 30 April 2009, the Tribunal wrote to the applicants inviting them to comment on, or respond to, information that the Tribunal considered would, subject to any comments or response they may have, be the reason, or a part of the reason, for affirming the decisions that were under review. The applicants responded to the Tribunal's letter on 8 June 2009. The Tribunal conducted a hearing on 14 July 2009 and the first and second applicants appeared and were assisted by an interpreter in the Hindi (Indian) and English languages. On 22 July 2009, the Tribunal handed down its decision. As I have said, the Tribunal affirmed the decisions of the delegate not to grant the relevant visas to the applicants.
7 The relevant provisions in the Regulations are as follows:
802.212
(1) The applicant:
(a) is a dependent child of a person who is an Australian citizen, holder of a permanent visa or eligible New Zealand citizen; and
(b) subject to subclause (2), has not turned 25.
(1A) If the applicant is a step-child of the person mentioned in paragraph (1)(a), the applicant is a step-child within the meaning of paragraph (b) of the definition of step-child.
(2) Paragraph (1)(b) does not apply to an applicant who, at the time of making the application, was a dependent child within the meaning of subparagraph (b)(ii) of the definition of dependent child.
…
802.214
(1) If the applicant has turned 18:
(a) the applicant:
(i) is not engaged to be married; and
(ii) does not have a spouse; and
(iii) has never had a spouse; and
(b) the applicant is not engaged in full-time work; and
(c) subject to subclause (2), the applicant has, since turning 18, or within 6 months or a reasonable time after completing the equivalent of year 12 in the Australia school system, been undertaking a full-time course of study at an educational institution leading to the award of a professional, trade or vocational qualification.
(2) Paragraph (1)(c) does not apply to an applicant who, at the time of making the application, is a dependent child within the meaning of subparagraph (b)(ii) of the definition of dependent child.
8 The relevant definitions for present purposes are those of "dependent child", "dependent" and "adoption".
"Dependent child":
the natural or adopted child, or step-child, of a person (other than a child who has a spouse or is engaged to be married), being a child who:
(a) has not turned 18; or
(b) has turned 18 and:
(i) is dependent on that person; or
(ii) is incapacitated for work due to the total or partial loss of the child's bodily or mental functions
(See reg 1.03.)
"Dependent":
1.05A(1) Subject to subregulation (2), a person (the "first person") is dependent on another person if:
(a) at the time when it is necessary to establish whether the first person is dependent on the other person:
(i) the first person is, and has been for a substantial period immediately before that time, wholly or substantially reliant on the other person for financial support to meet the first person's basic needs for food, clothing and shelter; and
(ii) the first person's reliance on the other person is greater than any reliance by the first person on any other person, or source of support, for financial support to meet the first person's basic needs for food, clothing and shelter; or
(b) the first person is wholly or substantially reliant on the other person for financial support because the first person is incapacitated for work due to the total or partial loss of the first person's bodily or mental functions.
"Adoption":
1.04
(1) A person (in this regulation called "the adoptee") is taken to have been adopted by a person (in this regulation called "the adopter")if, before the adoptee attained the age of 18 years, the adopter assumed a parental role in relation to the adoptee under:
(a) formal adoption arrangements made in accordance with, or recognised under, the law of a State or Territory of Australia relating to the adoption of children; or
(b) formal adoption arrangements under which the persons who were recognised by law as the parents of the adoptee before those arrangements took effect ceased to be so recognised and the adopter became so recognised; or
(c) other arrangements entered into outside Australia that, under subregulation (2), are taken to be in the nature of adoption.
(2) For the purposes of paragraph (1)(c), arrangements are taken to be in the nature of adoption if:
(a) the arrangements were made in accordance with the usual practice, or a recognised custom, in the culture or cultures of the adoptee and the adopter; and
(b) the child-parent relationship between the adoptee and any other person or persons, having regard to the nature and duration of the arrangements; and
(c) the Minister is satisfied that:
(i) formal adoption of the kind referred to in paragraph (1)(b):
(A) was not available under the law of the place where the arrangements were made; or
(B) was not reasonably practicable in the circumstances; and
(ii) the arrangements have not been contrived to circumvent Australian migration requirements.
9 A summary of the Tribunal's principal conclusions is as follows:
1. The Tribunal found that the first applicant, who was nominated on the visa application form as the child, was 47 years old at the time the visa application was lodged. As he exceeded the age of 25 years, he needed to satisfy the requirement in cl 802.212(2) (that is, he was incapacitated for work due to the total or partial loss of the child's bodily or mental functions: see definition of dependent child in reg 1.03).
2. Although the Tribunal accepted that the applicant had been involved in a car accident before he came to Australia, it did not accept that he was incapacitated for work as a result. Based on the pay slips the first applicant had provided, the Tribunal was satisfied that the first applicant was working on a full-time basis and, accordingly, he did not meet the requirements of cl 802.212(2).
3. The Tribunal considered the applicants' claim to have been "adopted by" Mr Laba Sarkis. The Tribunal found that there was no evidence that the applicants had been adopted by Mr Laba Sarkis (see the definition of "adoption" in reg 1.04). The Tribunal found that there was no evidence that Mr Laba Sarkis assumed any parental role in relation to any of the applicants before any of them turned 18 years of age.
4. The first and second applicants did not satisfy the requirement of cl 802.214 because they were married to each other and because the first applicant was engaged in full-time work. In relation to the third applicant, the Tribunal noted that he was 17 years of age at the date of the visa application. Accordingly, cl 802.214 did not apply to him.
5. Although it was not required to do so, the Tribunal considered whether the third applicant could satisfy the requirements of a primary applicant. He was not caught by cl 802.214 because of his age. However, he could not satisfy the requirements of cl 802.212 because his parents were not Australian citizens and he could not otherwise satisfy the provisions of cl 802.212(1)(a).
10 The Tribunal concluded that the applicants did not satisfy the requirements in cl 802.212 and cl 802.214 and that therefore the decisions to refuse the relevant visas should be affirmed.
11 The federal magistrate found that none of the grounds of the applicants' application for judicial review were made out and that the appropriate order was that the application be dismissed.
12 The application for an extension of time is approximately 49 days outside the prescribed period. The application is supported by an affidavit of the first applicant. In that affidavit, the first applicant deposes to the fact that he wrote to the Minister for Immigration and Citizenship on 2 November 2009 asking him to intervene in his case. Although it is not expressly stated in his affidavit, it seems that it is by reference to that act that he explains his failure to lodge his appeal within the prescribed period. That is not a satisfactory explanation for the delay: M211 of 2003 v Refugee Review Tribunal (2004) 212 ALR 520.
13 The applicants' draft notice of appeal contains the following grounds:
1. I am incapacitated and both the Department, Migration Review Tribunal and his Honour failed to accept.
2. His Honour was sympathetic and failed to remit the case.
3. The Tribunal and his Honour failed to take into consideration the claims in the refugee application.
14 None of the matters identified in the proposed notice of appeal raise, or arguably raise, a matter of jurisdictional error. There was a good deal of debate about the Tribunal's finding concerning the first applicant's capacity for work. No jurisdictional error in relation to that finding was identified. In any event, it must be remembered that that was only one of the requirements that the applicants failed to meet. It seems to me that not only was it open to the Tribunal to find that there was no adoption relationship between Mr Laba Sarkis and the applicants, but it is hard to see how any other finding could be made. Furthermore, the first applicant could not satisfy cl 802.214 because he had a spouse. The third applicant could not satisfy the requirements of the Regulations as a primary applicant because plainly he could not satisfy the requirement in cl 802.212(1)(a).
15 It seems to me that the decision of the Tribunal was plainly right. In those circumstances, the proposed appeal has no prospects of success and the application for an extension of time within which to file and serve a notice of appeal should be refused.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.
Associate:
Dated: 24 February 2010
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federal_court_of_australia:irc/1996/1996irca0246
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Halliday v Beeson [1996] IRCA 246
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/irc/1996/1996irca0246
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2024-09-13T22:50:53.826888+10:00
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DECISION NO: 246/96
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - whether TERMINATION at the initiative of the employer - whether to award COSTS against applicant under Section 347.
Industrial Relations Act 1988 ss 170EA, 170CB, 170ED, 170ED(1), 347
Termination of Employment Convention, Article 3
Mohazab v Dick Smith Electronics Pty Ltd, unreported, Full Court, Industrial Relations Court of Australia No. 625/95, 28 November 1995
Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257
Scott v Access Industries for the Disabled (1994) 58 IR 172
Canceri v Taylor (1994) 1 IRCR 120
Andrews v Uniting Church in Australia Frontier Services t/a Old Timers (1995) 60 IR 437
Keller v QBE Group (Investments) Limited, unreported, Gray J, Industrial Relations Court of Australia No. 325/95, 5 June 1995
Thompson v Hodder (1989) 29 IR 339
Lee v Manuela Goldsmith trading as Goldie's Muffins/Goldie's Gourmet, unreported, Ryan JR, Industrial Relations Court of Australia 154/94, 22 December 1994
Alana Maree HALLIDAY v Mark John BEESON - WI 1082 of 1996
Before: BOON JR
Place: PERTH
Date: 24 APRIL 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WI 1082 of 1996
B E T W E E N:
Alana Maree HALLIDAY
Applicant
A N D:
Mark John BEESON
Respondent
MINUTE OF ORDERS
24 APRIL 1996 BOON JR
THE COURT ORDERS THAT:
1. The application is dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WI 1082 of 1996
B E T W E E N:
Alana Maree HALLIDAY
Applicant
A N D:
Mark John BEESON
Respondent
REASONS FOR DECISION
24 APRIL 1996 BOON JR
1. This is an application under Section 170EA of the Industrial Relations Act 1988. The application was filed by the applicant in the Australian Industrial Relations Commission on 22 February 1996. By certificate dated 13 March 1996, Commissioner Blair certified in accordance with subsection 170ED(1) of the Industrial Relations Act that it had been unable to settle this matter by conciliation within a reasonable period and that the parties in this matter had not elected to have the matter dealt with by consent arbitration. The Commission then referred the matter to the Court pursuant to the provisions of Section 170ED of the Act. The parties attended a directions hearing before Deputy District Registrar Richardson on 11 April 1996. Deputy District Registrar Richardson directed that the matter be set down for hearing of the preliminary question of whether or not there was a "termination at the initiative of the employer" in this matter.
THE EVIDENCE
2. Mr Beeson, the respondent, is a pharmacist and the proprietor of a pharmacy at Bullcreek known as "Pharmacy Plus Cosmetics". From 1978 until 16 October 1995 he operated the pharmacy in partnership with another. That partnership dissolved on 16 October 1995 and all of the employees of the pharmacy were paid their entitlements such as holiday pay. Mr Beeson commenced the conduct of the business on his own account on 17 October 1995.
3. The applicant, Ms Halliday, had been employed at the pharmacy since 1989 as a pharmacy assistant, first by the partnership and subsequently by Mr Beeson.
4. Ms Halliday applied for a position with her present employer as a dispensary assistant on 7 December 1995. She heard she had been successful in her application on Friday, 8 December 1995. She considered the matter over the weekend and when she returned to work on Monday, 11 December, she asked to speak to Mr Beeson. Her new employer had indicated to Ms Halliday that he was willing to work in with her in relation to a starting date for her new position. Ms Halliday told Mr Beeson on 11 December 1995 that she was resigning to take up a new position. The conversation was amicable. There is a conflict of evidence as to what Mr Beeson said to Ms Halliday on 11 December 1995. Ms Halliday said that Mr Beeson did not give her a definite finishing date but that he said she was to speak to Betty Tilly, the respondent's bookkeeper, who was away on holiday until 18 December 1995. Ms Halliday said that she indicated to Mr Beeson on 11 December 1995 that she would work through to the end of December. She said that she thought she was doing the right thing by offering to do that as the last few weeks of December were always very busy. According to Ms Halliday, Mr Beeson indicated to her that he wanted her to work until the end of December.
5. According to Mr Beeson, on 11 December 1995 in the course of his conversation with Ms Halliday he asked her to continue to work until 24 December 1995 and she agreed. Mr Beeson said, however, that Ms Halliday should check with Ms Tilly when she returned from leave as there may be a problem with the rosters if she finished on that date. Mr Beeson denies that he told Ms Halliday that she could continue to work until the end of December 1995.
6. Ms Tilly gave evidence that when she returned from her holidays on 18 December 1995, Mr Beeson told her that "Alana had resigned". He told Ms Tilly that 24 December was mentioned as a finishing date but that he had told Ms Halliday that he would discuss it with Ms Tilly. Ms Tilly spoke to Ms Halliday on 18 December 1995. According to Ms Tilly, Ms Halliday said "I thought I'd go on the 28th". Ms Tilly said to Ms Halliday "That's the middle of the week" and that she would have to speak to Mr Beeson about it. According to Ms Tilly, Ms Halliday said that she didn't want to work on Friday the 29th as she was going to leave that day for a holiday in Dunsborough. Ms Halliday conceded that she did not want to work on Friday, 29 December as she had been rostered to work between the hours of 1.00 and 9.00 pm. She did not want to leave at 9.00 pm as it was her last day and as she was due to leave in the late afternoon to travel to Dunsborough. Both Ms Tilly and Ms Halliday agreed that Ms Tilly told Ms Halliday she should finish on 24 December 1995. Ms Halliday gave evidence that she felt she was bullied by Ms Tilly into leaving on 24 December against her will. Ms Tilly and Mr Beeson both said that 24 December was chosen as it was the most convenient date for the respondent. Ms Halliday was not satisfied with this as she had arranged to start her new job on 2 January 1996. Her evidence was that she could not afford to be without pay for one week. She mentioned this to Ms Tilly who said that she had 2˝ days leave accrued to her. Ms Halliday had wanted to work on Wednesday 27 and Thursday 28 December 1995 and be paid for the public holidays of 25 and 26 December. Mr Beeson did not agree to this. In any event, Ms Halliday's evidence was that she contacted her new employer and arranged to start in her new job on Wednesday 27 December 1995.
7. Ms Halliday discussed the matter with a friend after speaking to Ms Tilly on 18 December 1995. On 20 December 1995 she provided her employer with a letter dated 21 December 1995 reading as follows:
"Dear Mark
I would like to advise you that I will be resigning on Friday, 29 December 1995.
I have had the opportunity to further my dispensing experience and believe this is the direction I want my career in the Pharmacy Industry to go.
I would like to thank you for your support over the last 8˝ years, the decision wasn't an easy one and I'll certainly miss everyone at Bullcreek but I'm sure you'll agree its a step in the right direction for me to achieve my personal goals.
Yours sincerely
Alana Halliday"
8. Ms Tilly told Ms Halliday that the terms stated in her letter were unacceptable to Mr Beeson.
9. During cross-examination, Ms Halliday conceded that she had resigned on 11 December 1995, and that the letter of 21 December 1995 was a written confirmation of a resignation that had occurred ten days before. It was agreed that the only matter which was in dispute was the date on which she was to finish her employment with Mr Beeson.
10. I find on the evidence that in the conversation that took place between Mr Beeson and Ms Halliday on 11 December 1995, no final date for the conclusion of Ms Halliday's employment was agreed. Rather, it appears that several dates may have been mentioned but that the matter was not to be decided finally until Ms Tilly returned on 18 December 1995. Once Ms Tilly returned, although Ms Halliday wanted to finish on 28 December 1995, it was made clear to her that this was unacceptable to Mr Beeson and it was arranged that Ms Halliday was to finish on 24 December 1995.
TERMINATION AT THE INITIATIVE OF THE EMPLOYER
11. Pursuant to Section 170EA of the Act, an employee may lodge with the Commission an application for relief in respect of "termination of his or her employment". As stated earlier, the issue in this matter is whether or not Mr Beeson terminated the employment of Ms Halliday.
12. The expression "termination of employment" is not defined in the Act. Section 170CB of the Act, however, states that "an expression has the same meaning in this Division as in the Termination of Employment Convention". The Convention appears as Schedule 10 to the Industrial Relations Act. Article 3 of the Convention states:
"For the purposes of this Convention, the terms 'termination' and 'termination of employment' mean termination of employment at the initiative of the employer."
13. The meaning of the expression "termination of employment at the initiative of the employer" was considered by the Full Court of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd, unreported, Industrial Relations Court of Australia No. 625/95, 28 November 1995. The Full Court said at page 10-11 of its decision:
"Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression 'termination at the initiative of the employer' as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship."
14. Further, at page 12 the Full Court said:
"In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship."
15. In this case it was clearly not the employer who took the initiative in terminating the employment relationship. The parties had an amicable and long standing working relationship. Ms Halliday herself made the decision to end her employment with Mr Beeson because she had decided to accept another job. Here there was no action by the employer which could be said to be the principal determining factor in terminating the employment relationship. It was clearly Ms Halliday herself who terminated the employment. Although there was some dispute or misunderstanding between the parties as to what was to be Ms Halliday's final day with Mr Beeson, Mr Beeson's action in deciding that Ms Halliday should finish on 24 December 1995 instead of on 28 December 1995 could not, in my view, be said to constitute a "termination at the initiative of the employer". It was Ms Halliday's resignation on 11 December 1995 which terminated the employment relationship. If she had not resigned on that date she would have continued in her employment with Mr Beeson.
16. In these circumstances, I find that there was no termination at the initiative of the employer and the application must be dismissed.
COSTS
17. Counsel for the respondent, Ms S Brown, submitted that it was appropriate in this case to make an order for costs against the applicant on the basis that the proceedings were instituted without reasonable cause. Section 347, subsection 1, of the Industrial Relations Act states:
"A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause".
18. It is not contended on behalf of the respondent that Ms Halliday instituted the proceedings in this matter vexatiously. I find that Ms Halliday was not motivated by malice in issuing these proceedings. She clearly felt aggrieved in that she considered that her employer cut short her period of notice by one week. Ms Halliday's position was that she was a long standing employee and she did her best to take her employer's interests into account in advising him at the earliest opportunity that she was resigning. Ms Halliday argued that she was terminated at the initiative of the employer in that she felt there had been an agreement that she was to finish at the end of December and Mr Beeson, after she had made her arrangements with her new employer, changed her finishing date to 24 December 1995.
19. Counsel for the respondent relies on the case of Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 where his Honour Wilcox CJ said at page 264-265:
"It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as 'being without reasonable cause'. But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause"
20. These dicta have been followed in other cases in this Court, including Scott v Access Industries for the Disabled (1994) 58 IR 172 (Beazley J), Canceri v Taylor (1994) 1 IRCR 120 (Moore J), Andrews v Uniting Church in Australia Frontier Services t/a Old Timers (1995) 60 IR 437 (Gray J). The respondent argues that as there was a clear unequivocal resignation in this matter and not a termination at the initiative of the employer, the applicant was doomed to fail and the proceedings were therefore instituted without reasonable cause. Further, Ms Halliday acknowledges that she received a letter from Messrs Dwyer Durack, the solicitors for the respondent, dated 18 March 1996 which states in part:
"As Ms Brown outlined during the course of this conference, we will argue, should this matter be brought before the Industrial Relations Court of Australia, that since the termination of your employment occurred at your initiative rather than at the initiative of your employer this is not an application properly brought under Section 170EA of the Industrial Relations Act 1988 (Commonwealth). We will argue further that it is an application instituted vexatiously or without reasonable cause."
We are obliged to put you on notice that should the Court agree with our arguments on this point we will apply to the Court for an order that you pay our client's costs in respect of proceedings before the Industrial Relations Court of Australia under Section 347 of the Act."
21. Ms Halliday was unrepresented in these proceedings. She says that she received advice from several quarters, including the Western Australian Industrial Relations Commission, that she should bring her proceedings in this Court. Further, she says that once she received the letter from the respondent's solicitors dated 18 March 1996, she telephoned the Australian Industrial Relations Commission and was advised that not only could she bring the proceedings on her own without any cost to herself, but she could not be ordered to pay the respondent's costs unless she had acted with malice. Ms Halliday maintains that she was treated unfairly by her employer in being forced to finish her employment one week earlier than she had intended and that that is why she brought the present proceedings.
22. In cases of this nature it is always difficult to balance the interests of the parties. As I have said, I find that Ms Halliday has not been motivated by any malice in bringing these proceedings. Although there is a power to order costs in cases in which proceedings were instituted without reasonable cause, it appears that the exercise of that power is a discretionary one. I refer in this regard to the case of Keller v QBE Group (Investments) Limited, unreported, Industrial Relations Court of Australia No. 325/95 in which Gray J said at page 11:
"Accordingly, I am of the view that the notice of motion was filed without reasonable cause. In the exercise of my discretion as to costs, I propose to order the applicant to pay the respondent's costs of that motion."
23. Further, in the case of Thompson v Hodder (1989) 29 IR 339 at 341 the Full Court (Woodward, Northrop & Ryan JJ) said:
"It is apparent from these authorities that an applicant who has the benefit of the protection of s.347 will only rarely be ordered to pay the costs of a proceeding in exceptional circumstances."
24. This Court has been reluctant to award costs against unrepresented applicants unless there have been exceptional circumstances. I refer to the decision of Lee v Manuela Goldsmith trading as Goldie's Muffins/Goldie's Gourmet, unreported, Industrial Relations Court of Australia No. 154 of 1994 where Ryan JR said at page 5:
"I am not satisfied that Ms Lee instituted this proceeding vexatiously and to harass Mrs Goldsmith. Furthermore, I am not satisfied that Ms Lee instituted the proceedings without reasonable cause but if I were wrong in that respect I would not in any event exercise the discretion to order costs against Ms Lee. She was unrepresented and she took advice both from the state authority Wageline and the national organisation Jobwatch. I am not proposing to make an order as to costs."
25. In this case Ms Halliday was unrepresented and took advice from both the Western Australian Industrial Relations Commission and the Australian Industrial Relations Commission. For these reasons, I do not consider it appropriate to exercise my discretion to award costs in this case. I make an order dismissing the application. There is no order as to costs.
I certify that this and the preceding ten (10) pages
are a true copy of the reasons for decision of
Judicial Registrar Boon as recorded in the transcript
and revised by the Judicial Registrar
Associate:
Dated:
APPEARANCES
Applicant in person
Counsel appearing for the respondent: Ms S Brown
Solicitors for the respondent: Dwyer Durack
Dates of Hearing: 16 April 1996
Date of Judgment: 24 April 1996
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Winton Shire Council v Lomas [2002] FCA 288
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2002/2002fca0288
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2024-09-13T22:50:54.838767+10:00
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FEDERAL COURT OF AUSTRALIA
Winton Shire Council v Lomas [2002] FCA 288
TRADE MARKS – appeal pursuant to s 56 Trade Marks Act 1995 (Cth) from the Delegate of the Registrar of Trade Marks whereby the Delegate dismissed the applicants' opposition to registration of the respondent's trade mark – whether the respondent is the owner of the mark the subject of the opposed application – whether there was a use prior to the Priority Date of the mark "Waltzing Matilda" in respect of the goods and services identified in the opposed application – whether use of the opposed mark is likely to deceive or cause confusion – whether opposed application is substantially identical or similar to two other trade marks the Priority Date for which is earlier than the Priority Date for the mark in question – due weight to be given to the opinion of the Delegate as that of a skilled and experienced person – the relationship between goods and closely related services is defined by the function of the services with respect to the goods.
Trade Marks Act 1995 (Cth), ss 56, 58, 43, 60, 44, 14(1)
Trade Marks Act 1955 (Cth), s 40
Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1953-1954) 91 CLR 592, applied
Blount v Registrar of Trade Marks (1998) 40 IPR 498, applied
Registrar of Trade Marks v Woolworths Ltd (1999) 45 IPR 411, applied
The Shell Company of Australia Ltd v Rohm and Haas Company and Anor (1948-1949) 78 CLR 601, cited
Aston v Harlee Manufacturing Company (1960) 103 CLR 391, cited
Moorgate Tobacco Co Ltd v Phillip Morris Ltd and Anor [No. 2] (1983-1984) 156 CLR 414, distinguished
Thunderbird Products Corporation v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592, applied
Buying Systems (Australia) Pty Ltd v Studio SRL (1995) 30 IPR 517, cited
In Re Hicks's Trademark (1897) 22 VLR 636, applied
Eclipse Sleep Products Inc v The Registrar of Trade Marks (1957) 99 CLR 300, applied
Registrar of Trade Marks v Woolworths Ltd (1999) 45 IPR 411, applied
Elkington, B., Hall, M. and D. Kell (2000) Trade Mark Law In Australia, Sydney: Butterworths
WINTON SHIRE COUNCIL and THE WALTZING MATILDA CENTRE LIMITED v BRENDA MAURICEEN LOMAS
No. Q 92 of 2000
SPENDER J
BRISBANE
20 MARCH 2002
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY Q 92 OF 2000
BETWEEN: WINTON SHIRE COUNCIL
FIRST APPLICANT
THE WALTZING MATILDA CENTRE LIMITED
SECOND APPLICANT
AND: BRENDA MAURICEEN LOMAS
RESPONDENT
JUDGE: SPENDER J
DATE: 20 MARCH 2002
PLACE: BRISBANE
REASONS FOR JUDGMENT
1 This is an appeal pursuant to s 56 of the Trade Marks Act 1995 (Cth) (the Act) from an unsuccessful opposition to the registration of the trade mark "Waltzing Matilda" in respect of various goods and services, as follows:
Class 29: Meat, fish, poultry and game; meat extracts; preserved, dried and cooked fruits and vegetables; jellies, jams, fruit sauces; eggs, milk and milk products; edible oils and fats; foodstuffs and prepared foods included in this class
Class 30: Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery; biscuits and cakes; ices; honey, treacle; yeast, baking powder; salt, mustard; vinegar, sauces (condiments); spices; ice; foodstuffs and prepared foods included in this class
Class 31: Agricultural, horticultural and forestry products and grains not included in other classes; living animals; fresh fruits and vegetables; seeds, natural plants and flowers; foodstuffs for animals, malt
Class 35: Services in class 35 namely, advertising; business management and administration; accountancy; franchising and licensing services including the appointment of franchises and licensees and the conduct and management of same; retail and wholesale services relating to acquisition, supply and sale of foodstuffs, beverages and groceries; statistical analysis; information surveys and marketing research; publicity press releases and supervision of promotional campaigns; consultancy services in regard to the above services
Class 42: Services in class 42 namely, the establishment, operation and conduct of outlets, venues and facilities for the supplying and provision of meals and refreshments, including restaurants, cafes, food outlets, meal rooms, dining venues, eateries, cafeterias, canteens, snack bars, takeaway stores and fast-food outlets; providing foodstuffs and beverages to the said outlets, venues and facilities; catering services; advisory and consultancy services pertaining to the said services."
2 The application registration by Mrs Brenda Lomas (the respondent) was opposed by the present applicants, the Winton Shire Council and the Waltzing Matilda Centre Limited (WMC). WMC is the operator of a tourist centre and major tourist attraction in Winton called "The Waltzing Matilda Centre". I will, as did the Delegate, use WMC to indicate both the company and the centre it operates, unless the contrary appears.
3 WMC was established under the auspices of the Winton Shire Council, and two of the directors of WMC are representatives of the Shire Council.
4 The Delegate of the Registrar of Trade Marks dismissed the applicants' opposition to the registration of the respondent's Australian Trade Mark Application Number 749100 in classes 29, 30, 31, 35 and 42 for the mark "Waltzing Matilda", and determined that the opposed application proceed to registration. He ordered each applicant to pay one half of the respondent's costs of the opposition proceedings.
5 The applicants seek orders that the opposition to the opposed trade mark be allowed; that the application for registration of Australian Trade Mark Application Number 749100 be dismissed; and that the respondent pay the applicants' costs of and incidental to the opposition and the appeal.
6 The grounds and particulars of the notice of appeal indicate that the applicants rely on s 58 of the Act for the first ground, s 43 of the Act for the second ground, s 60 of the Act for the third ground and s 44 of the Act for the fourth ground. The first and the fourth are the grounds of most concern.
7 In the context of an application for registration of a trade mark, the rights of the parties are to be determined as at the date of application, that is, the Priority Date: Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1953-1954) 91 CLR 592 per Kitto J at 595. The Registrar must accept the application unless satisfied that there are grounds for rejecting it: Blount v Registrar of Trade Marks (1998) 40 IPR 498 at 503. However, the nature of an appeal to the Federal Court was referred to by French J in Registrar of Trade Marks v Woolworths Ltd (1999) 45 IPR 411 at 422 where his Honour said:
"The jurisdiction conferred upon this court to entertain an appeal from the registrar is of the same character as that formerly conferred upon the High Court under s 45 of the Trade Marks Act 1905 and s 51 of the Trade Marks Act 1955. Being an 'appeal' from an administrative decision it is an exercise of the original jurisdiction of the court: Jafferjee v Scarlett, above. Dixon J said of the jurisdiction of the High Court in that case at 126:
'…the nature of the jurisdiction under s 76 of the Constitution and the terms of the subsection alike show that the court is to determine judicially whether the application should succeed on the merits, and not whether an administrative officer has lawfully discharged his duties. Of course weight will be given to the registrar's opinion as that of a skilled and experienced person.'
…
The approach adopted in Jafferjee v Scarlett, above, was reiterated in the joint judgment of Dixon CJ, Williams and Kitto JJ in Eclipse Sleep Products Inc v Registrar of Trade Marks (1957) 99 CLR 300 at 308. Again in that case the court which was exercising, albeit with three justices, its original jurisdiction on appeal from the registrar under the 1905 Act, said that (at 308):
'…due weight will of course be given to the opinion of the deputy registrar as that of a skilled and experienced person.'"
8 French J referred to the observation of Branson J in Blount v Registrar of Trade Marks (1998) 40 IPR 498 at 506 where her Honour said:
"Section 197 of the Act, like s 115A of the 1955 Act, discloses, in my view, a clear intention that the established practice of an appeal of this kind being conducted as a rehearing is to be maintained."
French J then said:
"There is therefore no presumption in favour of the correctness of the registrar's decision save that weight will be given to the registrar's opinion as that of a skilled and experienced person. But the court on appeal from the registrar must, in determining the question of acceptance of the application, apply to it the same legal criteria that the registrar is required to adopt. That is to say the application must be accepted unless the court is satisfied that it has not been made in accordance with the Act or that there are grounds for rejecting it."
9 So far as it is presently relevant, the evidence establishes that in April 1895 the song "Waltzing Matilda", the words of which were written by Banjo Patterson, was first performed in Winton. The words to "Waltzing Matilda" had been composed at Dagworth Station, about 100 kilometres from Winton. In March 1995 architectural construction plans for the design and development of WMC were submitted. In April 1995 the Winton Shire Council hosted the Waltzing Matilda Centenary Celebrations of the first performance of the song "Waltzing Matilda". Those celebrations were held in Winton. Evidence from Nicole Reeve, who was the General Manager of the Waltzing Matilda Centenary Celebrations, is that the Celebrations were a twelve day programme of special events, entertainment, historical displays and exhibitions designed to feature different elements of the themes of the song "Waltzing Matilda", its history and the connection between the song and the town of Winton. The central feature of the marketing and publicity campaign was the use of a logo:
Waltzing Matilda Centenary
1895 Waltzing Matilda 1995
Centenary
Winton Queensland
6 APRIL 1995
10 The logo shows a figure of a swagman with an animal over his shoulder in a swag with the words "1895 Waltzing Matilda Centenary 1995" in a scroll across the figure of the swagman and the words "Waltzing Matilda Centenary" above the logo and the words "Winton Queensland" and the date 6 April 1995 below it. Food and beverages provided during the Celebrations included damper, billy tea and food cooked in camp ovens by a person employed by the Winton Shire Council dressed in "swagman" character costuming.
11 From about March 1995 to April 1995, a Waltzing Matilda store was established in the main street of Winton offering a range of products, brochures and material promoting the celebrations and the town. Products available for sale included stubby holders, pannikin or tin cups, tea towels, T-shirts, teaspoons, postcards and caps. The tin cup, for instance, had "Waltzing Matilda Centenary Winton Queensland 1895-1995" printed on the outside of it, and the tea towel had a stylized swagman set against a depiction of the Southern Cross under which the words "Waltzing Matilda Centenary Winton Queensland 1895" appeared.
12 In October 1996 the Winton Shire Council decided to construct and operate a permanent and central attraction in Winton celebrating the song "Waltzing Matilda". In February 1997 the foundation stone for the WMC was laid. On 28 August 1997 the WMC logo was finalised and it was used thereafter. From October 1997 the Winton Shire Council conducted pre-opening advertising and publicity of WMC. On 20 November 1997 the present application for registration of the mark "Waltzing Matilda" was made for Classes 29, 30, 31, 35 and 42. In March 1998 the WMC opened for trade.
13 The respondent accepts that the town of Winton was associated with the song "Waltzing Matilda" and Banjo Patterson prior to the Priority Date, and the town of Winton organised the 1995 celebration commemorating the 100th anniversary of the writing and public performance of Banjo Patterson's "Waltzing Matilda" song. She accepts that the applicants were involved in discussions and negotiations relating to the building of a centre in Winton to be known as "The Waltzing Matilda Centre" in celebration and memory of the fact that the song "Waltzing Matilda" was written near Winton and first publicly performed in Winton.
14 The respondent contends that in respect of those activities the applicants used five marks, namely:
(i) The Waltzing Matilda Centenary Celebrations;
(ii) A particular logo being the Waltzing Matilda Centenary logo which is annexed as 'B' to the affidavit of N.P. Reeve and which has been described earlier above;
(iii) A particular logo being a Waltzing Matilda Centenary logo depicted as annexure 'C' to the affidavit of N.P. Reeve and which is similar to what appears on the tea towel described earlier;
(iv) A particular logo being the Waltzing Matilda logo depicted in annexures 'B' and 'E' to an affidavit of J. Atkin which shows a stylized slouch hat with three corks hanging from the brim, a stylized Southern Cross above and on the hat, and the words "Waltzing Matilda" in a stylized writing with the printed word "Centre" immediately underneath; and
(v) Waltzing Matilda Centre.
15 These are the marks which the respondent says the applicants used prior to the Priority Date. The contention by the respondent is that any reputation the applicants may jointly or severally have had prior to the Priority Date was limited to those five marks in the context of the 1995 celebrations commemorating the 100th anniversary of the writing and public performance of Banjo Patterson's "Waltzing Matilda" song, with the town of Winton being the potential location of the WMC.
16 The applicants dispute that the marks which they used were the five identified by the respondent. The claim by the applicants is that the first applicant used the mark "Waltzing Matilda" in April 1995 at the Waltzing Matilda Centenary Celebrations held in Winton, and that prior to the Priority Date of the opposed application, the second applicant used the mark "Waltzing Matilda" in taking preparatory steps to use this trade mark in relation to the licensed restaurant and bakery operated by the second applicant at its tourist centre and museum in Winton from about 1996 to the opening of the Centre in April 1998.
17 Mr Musgrave, counsel for the applicants, made plain that the applicants' case is that, when one uses the phrase "The Waltzing Matilda Centre", that is a use of the mark "Waltzing Matilda", a mark identical to the opposed mark. Mr Musgrave submitted:
"…when one says Waltzing Matilda Centre the mark which is used is the words Waltzing Matilda in the same way that one would say Waltzing Matilda Restaurant in the way that my learned friend's application intends to use it or the way that Malvern Star bicycle describes a bicycle, not part of a trade mark, by reference to the trade mark Malvern Star."
If that be accepted, however, the question becomes whether there was a use prior to the Priority Date of the mark "Waltzing Matilda" in respect of the goods and services identified in the opposed application.
18 It is convenient to consider the ground based on s 43 of the Act and the ground based on s 60 of the Act before considering the objections based on s 58 and s 44 of the Act.
19 Section 43 of the Act provides:
"An application for the registration of a trade mark in respect of particular goods or services must be rejected if, because of some connotation that the trade mark or a sign contained in the trade mark has, the use of the trade mark in relation to those goods or services would be likely to deceive or cause confusion."
Section 43 is directed to the mark itself. It is not concerned with any deception or confusion caused by the reputation in Australia of some other trade mark. That aspect of the matter is dealt with under s 60.
20 The applicants contend, on this ground, that consumers are likely to be deceived or confused on the basis that use of the mark "Waltzing Matilda" in respect of the goods and services for which application for registration was made suggests a connection with the song or with the town of Winton or an endorsement or approval by the town or its representatives that it does not have. It was submitted that the strong association between the Winton area and the song and story of "Waltzing Matilda" meant that the opposed application and the use of the words "Waltzing Matilda" mean that the respondent is attempting to generate an association in terms of geographic origin between the goods and services the subject of the opposed application, and the applicants. Further, it was submitted that the respondent, by the opposed application, is seeking to make a suggestion that there is some sponsorship, approval or affiliation between the applicants, the Winton area and the respondent.
21 I reject these contentions. The proposed use by the respondent of the mark "Waltzing Matilda" on or in respect of any of the goods or services sought in the application in my opinion brings to mind no more than the "Waltzing Matilda" song or, at the most, is likely to convey to the reasonable member of the public the Australian nature of those goods and services. There would not be a connotation of a connection with the WMC at Winton, the town of Winton or the Shire Council of the town of Winton.
22 Section 60 of the Act provides:
"The registration of a trade mark in respect of particular goods or services may be opposed on the ground that:
(a) it is substantially identical with, or deceptively similar to, a trade mark that, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, had acquired a reputation in Australia; and
(b) because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion."
23 The applicants contend that the opposed mark is likely to deceive or cause confusion. It was submitted that the mark is likely to deceive or confuse because it is so similar to the trade mark that, on a proper comparison between the ordinary person's possibly imperfect recollection of the trade mark and the opposed application, the impression which is gained from the opposed application is that of the song, the story behind the song and, as a consequence, the Winton district. It is claimed that, as a result of the extensive promotion and marketing, the town of Winton has a strong connection with the story and the song "Waltzing Matilda".
24 As I see the matter, the position is that the mark "Waltzing Matilda" has been used as a trade mark in respect of the Celebrations and in respect of the Centre established in the town of Winton to celebrate the song and the town of Winton's connection with it. The use of the mark in connection with the tourist centre or in respect of the Centenary Celebrations is not such as to cause confusion as provided for by s 60.
25 It seems to me that there are only a very small number of instances where the phrase "Waltzing Matilda" has been used by one or other of the applicants in connection with any of the goods or services in respect of which the opposed application is made. [That small use, before the Priority Date, is, as these reasons later attempt to show, good enough to get the applicants home on the s 58 ground.]
26 The evidence establishes that there is a coffee shop in the WMC that trades under and by reference to the name and trade mark "Coolibah Country Kitchen". The name "Waltzing Matilda Centre", when used in conjunction with the Coolibah Country Kitchen restaurant, is, in my opinion, used as an indicator of the physical location of the coffee shop, which is an integral part of WMC, which opened on 20 March 1998. So, too, in respect of the use of labels on bakery products produced by the Coolibah Country Kitchen as part of WMC. The labels which are affixed to those bakery products read: "Baked fresh and local at: Coolibah Country Kitchen Winton", and adjoining that statement is the slouch hat Waltzing Matilda Centre logo.
27 It is therefore necessary to turn to the question of s 58 of the Act. Section 58 provides:
"The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark."
28 The respondent contends that the applicants have used the five marks earlier indicated and have not used the mark "Waltzing Matilda". I disagree. In my opinion, the applicants have established a use of the mark "Waltzing Matilda" in relation to the tourist centre in Winton opened in March 1998 and in respect of the Centenary Celebrations in 1995. The question, it seems to me, is not whether there has been use of the mark "Waltzing Matilda" by the applicants, but whether there has been any use prior to the Priority Date of that mark in respect of any of the goods or services the subject of the opposed application.
29 "Ownership" in s 58 of the 1995 Act in my view has the same meaning as proprietorship under s 40 of the 1955 Act. In The Shell Company of Australia Ltd v Rohm and Haas Company and Anor (1948-1949) 78 CLR 601, Dixon J (as he then was) said at 627:
"The basis of a claim to proprietorship in a trade mark so far unused has been found in the combined effect of authorship of the mark, the intention to use it upon or in connection with the goods and the applying for registration…"
Insofar as the first element is concerned, that of authorship, authorship does not mean invention and a trader who uses another's mark as yet unused in Australia or for particular goods and services can claim to be its author. Fullegar J in Aston v Harlee Manufacturing Company (1960) 103 CLR 391 at 399 referred to the observations of Dixon J in the Rohm case at 628 that:
"Authorship involves the origination or first adoption of the word or design as and for a trade mark."
30 A ground of opposition to the registration of the mark, being that there was no intention in the applicant for registration to use it upon or in connection with all of the goods in respect of which the mark was sought, was suggested in the course of argument: cf s 59 of the Act. In this respect, Fullegar J in Aston said at 401:
"There is another element mentioned by Dixon J. in the Shell Co's Case (1949) 78 CLR at p 627, which is stated as essential to the proprietorship of an unused trade mark. That element is the intention of the applicant for registration to use it upon or in connexion with goods. As to this I need only say that I do not regard his Honour as meaning that an applicant is required, in order to obtain registration, to establish affirmatively that he intends to use it. There is nothing in the Act or the Regulations which requires him to state such an intention at the time of application, and the making of the application itself is, I think, to be regarded as prima facie evidence of intention to use. I cannot think that the Registrar is called upon to institute an inquiry as to the intention of any applicant, and I think that, on an opposition or on a motion to expunge, the burden must rest on the opponent, or the person aggrieved, of proving the absence of intention."
31 This point was not raised before the Delegate of the Registrar, nor in the notice of appeal to this court. Being a matter where the opponent bears the onus, and the intention of the application for registration at the Priority Date being a matter on which evidence might have been led, it is not open to the present applicant to take the point. Even if it were competent, it would fail on the present state of the evidence and the prima facie intention to use that arises on the making of the application referred to by Fullager J above.
32 The contest in this case is between the respondent who was first to file and the applicants who claim to have been the first to use. The learned authors in Trade Mark Law in Australia, Elkington, Hall and Kell say at p 77 in par 58.05:
"In such cases the first user prevails. But this ground of opposition is tightly confined. The use must have been commercial use, as a trade mark, of the very mark applied for or one extremely close to it, and for the goods or services of application or 'the same type of thing'."
33 Use of the marks "The Waltzing Matilda Centre" or "Waltzing Matilda Centenary Celebrations" is not a use of the mark applied for or "one extremely close to it". If those had been the trade marks used, then the owner of those trade marks is not the owner of the trade mark "Waltzing Matilda". In my opinion, however, the applicants have variously used the trade mark "Waltzing Matilda". That use has certainly been in the context of a trade mark for a tourist centre, and as a trade mark for an event celebration. The question is whether, before the Priority Date, there was a use by the applicants of "Waltzing Matilda" as a trade mark in commerce for the goods or services of the application or "the same type of thing".
34 I do not consider that the use of WMC as an indicator of the location of the Coolibah Country Kitchen was such a use, nor was any use of the words "Waltzing Matilda" when those words are used in connection with "Centenary Celebrations". There are, however, two instances where there may have been a use by one or other of the applicants of "Waltzing Matilda" as a commercial trade mark in respect of the goods or services of the application or "the same type of thing". I should say, before considering those instances, that there is no question here of whether the requirement that the marks be "identical or substantially identical" is different from the requirement under the 1995 Act. The question in this case is whether there has been, by the applicants, commercial use of the words "Waltzing Matilda" as a trade mark for the goods and services of the application "or the same type of thing".
35 I am not here concerned with the problem that has arisen in cases such as Moorgate Tobacco Co Ltd v Phillip Morris Ltd and Anor [No. 2] (1983-1984) 156 CLR 414 where the opponent had taken preparatory steps towards commencing use but not yet sold goods in Australia. In that case, Deane J said at 433-434:
"The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re Registered Trade Mark 'Yanx'; Ex parte Amalgamated Tobacco Corporation Ltd. (1951) 82 CLR 199 at pp. 204-5); or that the mark has been used in an advertisement of the goods in the course of trade: Shell Co. of Australia v. Esso Standard Oil (Australia) Ltd. (1963) 109 CLR at p. 422. In such cases, however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used."
36 If it is possible to identify an actual trade or offer to trade in the goods (or services) bearing the mark, or an existing intention to offer or supply goods (or services) bearing the mark in trade, that is sufficient.
37 As to the extent of use prior to the Priority Date, a very small amount of use will suffice. In Thunderbird Products Corporation v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592, an overseas company had sold a single prototype boat to a proposed Australian licensed manufacturer, and used its "Thunderbird" trade mark in correspondence relating to that sale. Jacobs J held that that sale established proprietorship in Australia and stated (at 600):
"The first question which arises is as follows: Since American Marine Distributors Pty. Ltd. did not use the trade mark in Australia prior to 1st December 1965, the date of the application, was it the proprietor of the mark at that date so as to entitle it to make application to the Registrar under s. 40 for the registration of that mark? It was only the claim that it was the 'author' of the trade mark in Australia which could sustain the right to registration: Blackadder v. Good Roads Machinery Co. Incorporated (1926) 38 CLR 332; Shell Co. of Australia Ltd. V. Rohm and Haas Co. (1949) 78 CLR 601, at pp. 625, 627-629 esp. per Dixon J. It was not the 'author' of the trade mark if that trade mark had been used by a person in Australia before the date of the application 'in relation to goods for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods' and that person. See the definition of 'trade mark' in s. 6. Such a use has been described as a use on the Australian market. It has been held that any use at all on the Australian market will suffice to deny to the applicant the right to claim authorship and consequent registration: Seven Up Co. v. O.T. Ltd. per Williams J. (1947) 75 CLR 203, at p. 211 in a passage adopted by Latham C.J. on appeal (1947) 75 CLR, at p. 216." (Emphasis added)
38 The passage quoted from Moorgate Tobacco clearly envisages that either of an alternative will suffice: preparatory steps coupled with an actual trade or offer to trade; or preparatory steps coupled with an existing intention to offer or supply goods in trade. The second of these was accepted by Gummow J in Buying Systems (Australia) Pty Ltd v Studio SRL (1995) 30 IPR 517 as constituting a prior use. In that case the opponent had taken preparatory steps towards launching a new magazine, including offering advertising space, but had made no sales or offers to sell magazines. His Honour said at 520:
"These steps amount to sufficient activity by the opponent to produce the result that the applicant for registration at the date of its application on 8 December 1983 could not accurately put itself forward as claiming to be proprietor of the relevant mark. The activities of the opponent were sufficient to constitute a relevant use of the mark in Australia for the purpose of indicating or so as to indicate a connection in the course of trade between it and the new magazine. This is not a case where those activities occurred without any existing intention to offer or supply the magazine in trade." [emphasis added]
39 Exhibit I to the affidavit of John Aitken filed 8 December 2000 is a copy of the RACQ Queensland Accommodation and Touring Guide dated 1 November 1997. At page 304 of that guide, under the heading "Winton", appears the following:
"Waltzing Matilda Centre. Waltzing Matilda Centre and Qantilda Museum. 07-46571188 Winton, the home of Waltzing Matilda, will open the Waltzing Matilda Centre based upon our national song during easter 1998. Plan to be part of the opening celebrations from 9-13 April 1998. Include the Waltzing Matilda Centre and Qantilda Museum in your next outback trip."
40 An advertisement at that page of the guide of approximately one quarter of a page is headed "The Waltzing Matilda Centre". That advertisement says, in part: "Travel the Matilda Highway to Winton, the home of the exciting Waltzing Matilda legend and visit the outback's exciting new attraction – the Waltzing Matilda Centre." The star next to a photograph of the complex has the statement: "Outback Qld's Newest Attraction Opening Easter 1998" and the last paragraph before the foot of the advertisement which says "For more information: Winton Shire Council PO BOX 228 WINTON QLD 4730" reads:
"Visit the Waltzing Matilda General Store for unique souvenirs and the Waltzing Matilda Country Kitchen for a traditional homestead meal.
Open 7 days – 9.00 am – 5.00 pm."
41 As it turned out, the restaurant or café in WMC at Winton was called "The Coolibah Country Kitchen".
42 I regard this as evidence of "an existing intention to offer or supply goods bearing the mark in trade". There was, in November 1997, a genuine intention to offer to supply foodstuffs and restaurant services bearing the mark "Waltzing Matilda". The use of the words "Country Kitchen" do not defeat this conclusion, in the same way that the description "Waltzing Matilda Restaurant" or "Waltzing Matilda Café" would be a use by the respondent of the trade mark applied for in relation to goods or services within the classes of goods and services in respect of which the application for a mark was sought. In my opinion, the goods or services of the prior user are the same as those of the opposed application, or at least "the same kind of thing", adopting the phrase from In Re Hicks's Trademark (1897) 22 VLR 636 at 640.
43 As Dixon J said in the Rohm case at 628:
"A man cannot be said to have adopted a name if someone else has done so before him."
44 One other use of the words "Waltzing Matilda" as a trade mark in connection with foodstuffs should be mentioned. John Aitken is the event producer and director of John Aitken Productions Pty Ltd, and in about October 1996 that company was engaged by the Winton Shire Council to consult and assist in developing the conceptual model and thematic guidelines for the construction and marketing of a permanent tourist facility in Winton to celebrate "Waltzing Matilda" and its history and connection with the town (the "Waltzing Matilda Centre (or WMC) project"). Mr Aitken swears (in his affidavit filed 8 December 2000 at par 17):
"I envisaged that the souvenir and merchandising outlet in the WALTZING MATILDA Centre would feature a range of products including a variety of food products, footwear, clothing and other items that were styled to reflect a uniquely Australian character and promote the WALTZING MATILDA brand and tourist centre."
He says that he commenced negotiations with a number of manufacturers and suppliers of promotional and souvenir products in order to develop and produce that product range in about September 1997. Some of those manufacturers included Arnott's of Australia, Zest Ice Creams, Sorbets, Ice Cream Cakes and Frozen Delicacies and Country Harvest Australia Pty Ltd. Mr Aitken says (at par 18):
"In or about October 1997 I engaged Dot Dash to design packaging for the proposed food products to be sold at the retail outlet at the Centre."
Exhibit K to Mr Aitken's affidavit is the revised proposal received from Dot Dash dated 23 October 1997 for the design of a number of items including food packaging. This was in response to an engagement of Dot Dash by Mr Aitken to design packaging for the proposed food products to be sold at the retail outlet at the centre. That response by Dot Dash commenced:
"RE: Revised proposal for Waltzing Matilda Merchandise
Please find a revised proposal for Waltzing Matilda Merchandise following."
Included with that letter was a document headed "Revised Proposal" dated 23 October 1997 and under the heading "Graphic Design Services" the following appeared:
"Waltzing Matilda Merchandise
Design and Design Development of current concepts for
a) Polo Shirt, b) Swagman T-shirt Design, c) Dog T-shirt Design,
d) Crow T Shirt Design, e) Windmill T Shirt Design, f) Cap, g) Spoon,
h) Tea Towel, i) Magnet, j) Placemat, k) Food Packaging"
45 In respect of this use of the words "Waltzing Matilda" there was, in my opinion, no existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all. In this case there were merely preliminary discussions and negotiations about whether the mark would be so used. The discussions and negotiations outlined in pars 17, 18 and 19 of Mr Aitken's affidavit were not a use of the mark "Waltzing Matilda" as a trade mark.
46 The final matter concerns s 44 of the Act, which relevantly provides:
"(1) … an application for the registration of a trade mark (applicant's trade mark) in respect of goods (applicant's goods) must be rejected if:
(a) the applicant's trade mark is substantially identical with, or deceptively similar to:
(i) a trade mark registered by another person in respect of similar goods or closely related services; or
(ii) a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and
(b) the priority date for the registration of the applicant's trade mark in respect of the applicant's services is not earlier than the priority date for the registration of the other trade mark in respect of the similar services or closely related goods."
47 Section 44(2) is in similar terms, in connection with an application for the registration of a trade mark in respect of "services".
48 The Priority Date for registration in respect of the name "Waltzing Matilda" held by Jolly Swagman Pty Ltd for mark 218783 in respect of Class 32 is 29 April 1968, and for mark 228232 in respect of Class 33, 23 April 1969. The Priority Date for those registrations therefore pre-date the opposed application. The marks in this case are identical. The questions therefore are whether the goods of the registered proprietor Jolly Swagman Pty Ltd are similar to the goods covered by the application: s 44(1) of the Act; or whether the goods of the registered proprietor are closely related to the services covered by the application: s 44(2) of the Act.
49 The goods covered by trade mark registration 218783 are: "All goods in Class 32", that is "beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages."
50 The goods covered by trade mark registration 228232 are: "Wines, spirits and liqueurs".
51 Section 14(1) of the Act defines goods as being similar to other goods if they are the same as those other goods or if they are of the same description as those other goods. The phrase "goods of the same description" (used in the 1955 Act) implies a relationship between the goods such that they would be taken as having the same trade origin if sold under deceptively similar marks.
52 The factors to be taken into account, at least in relation to goods, are the nature of the goods, their uses and the trade channels through which they are sold, although no single consideration is conclusive on its own: Southern Cross Refrigerating Company v Toowoomba Foundry Pty Ltd (1953-1954) 91 CLR 592 at 606.
53 In exercising the jurisdiction of the Court, due weight will of course be given to the opinion of the Delegate as that of a skilled and experienced person: Eclipse Sleep Products Inc v The Registrar of Trade Marks (1957) 99 CLR 300 at 308. However, no submission was made to the Delegate of the Registrar based on s 44 of the Act. It is therefore drawing a long bow to submit, as the respondent did, that the goods the subject of application 749100 were not goods similar to the goods the subject of the registrations, because the Delegate allowed the application to proceed to acceptance.
54 In my opinion, the Registered Goods are not the same as, or of the same description as, the goods the subject of the application. The Registered Goods are beverages, while the goods the subject of the opposed application are edible commodities, notwithstanding the reference to coffee, tea, cocoa and artificial coffee in Class 30. I regard all of Class 29 and Class 30 as not referring to beverages. Classes 35 and 42 related to services.
55 On the question of closely related services, the relationship should be defined by the function of the services with respect to the goods: Registrar of Trade Marks v Woolworths Ltd (1999) 45 IPR 411 at 424 par 38. There, French J said:
"Services which provide for the installation, operation, maintenance or repair of goods are likely to be treated as closely related to them. Television repair services in this sense are closely related to television sets as a class of goods… Similar examples were suggested in Caterpillar Loader Hire (Holdings) v Caterpillar Tractor Co (1983) 1 IPR 265; 48 ALR 511 by Lockhart J who saw service marks as potentially giving rise to problems of confusion with goods marks and other service marks '…of greater difficulty and subtlety than has previously been experienced in the case of goods marks alone'."
The only services of relevance in this context are those relating to the conduct of outlets for the supply and provision of meals and refreshments. The registered goods are beverages, purchased for domestic or restaurant use. Outlets for the supply of meals and refreshments are a catering service where food is prepared and beverages are made available to be consumed on the premises of the outlet. Are beverages goods which are "closely related" to a catering service, where food and beverages are made available to be consumed on the premises? The goods and the relevant services have different trade channels.
56 The question is not without difficulty but, on balance, I am not satisfied that the operational outlets for the supply and provision of meals and refreshments should be considered as being "closely related" to the Registered Goods, namely beverages.
57 I should note also that the only submission on s 44 of the Act in the written submissions of the applicants is "The goods sought to be registered under the opposed application are similar or closely related goods to the goods sought to be registered under the opposed application". In my opinion, the goods sought to be registered under the opposed application being those set out in classes 29 and 30 are not similar or closely related to the goods in the "Jolly Swagman" marks, being goods in class 33, and class 36.
58 For the above reasons, only the ground of opposition based on s 58 of the Act has been made out.
59 I will hear from the parties as to the form of orders I should make in the light of these reasons, and on costs.
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.
Associate:
Dated: 20 March 2002
Counsel for the Applicant: Mr A. Musgrave
Solicitor for the Applicant: Deacons Lawyers
Counsel for the Respondent: Mrs C. Champion
Solicitor for the Respondent: John Spence & Associates
Date of Hearing: 18-19 April 2001
Date of Judgment: 20 March 2002
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FEDERAL COURT OF AUSTRALIA
Trkulja v Morton (No 2) [2005] FCA 1044
COSTS – trustee in bankruptcy – application to remove – dismissed – form of costs order – whether against bankrupt personally or to be paid out of the bankrupt estate of the bankrupt
BANKRUPTCY – trustee – application to remove – dismissed – form of costs order – whether against bankrupt personally or to be paid out of the bankrupt estate of the bankrupt
Bankruptcy Act 1966 (Cth) ss 179(1), 32, 109(1)(a)
Federal Court of Australia Act 1976 (Cth) s 43(1)
Bankruptcy Regulations 1996 (Cth) reg 6.01, sch 3
Re Aley; Aley v Sweeney (unreported, Cooper J, Federal Court of Australia, 12 February 1996) cited
Re Carlos: Ex parte Official Trustee in Bankruptcy (unreported, Spender J, Federal Court of Australia, 14 April 1997) cited
Wallin v MJB Building Services Pty Ltd [2002] FCA 1355 cited
Coyne v Douglas-Brown [2002] FCA 1324 cited
Hughes v Holbrook [2002] FCA 920 cited
Re: Fuller; Fuller v Wily (unreported, Full Court, Federal Court of Australia, 28 June 1996) cited
MICHAEL TRKULJA v ROBERT MORTON
V 614 of 2004
GRAY J
22 AUGUST 2005
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 614 of 2004
BETWEEN: MICHAEL TRKULJA
APPLICANT
AND: ROBERT MORTON
RESPONDENT
JUDGE: GRAY J
DATE OF ORDER: 22 AUGUST 2005
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT the respondent's costs, except for the costs of the respondent's application for a costs order different from that first pronounced on 30 May 2005, be taxed and paid out of the bankrupt estate of the applicant in accordance with the Bankruptcy Act 1966 (Cth).
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 614 of 2004
BETWEEN: MICHAEL TRKULJA
APPLICANT
AND: ROBERT MORTON
RESPONDENT
JUDGE: GRAY J
DATE: 22 AUGUST 2005
PLACE: MELBOURNE
REASONS FOR JUDGMENT
1 On 30 May 2005, I dismissed an application by the applicant, who is a bankrupt, seeking an order removing the respondent as his trustee in bankruptcy, pursuant to s 179(1) of the Bankruptcy Act 1966 (Cth) ('the Bankruptcy Act'). The orders I then pronounced were in the following terms:
'1. The application be dismissed.
2. The respondent's costs be taxed and paid out of the bankrupt estate of
the applicant in accordance with the Bankruptcy Act 1966 (Cth).'
2 After I had pronounced these orders, counsel for the respondent requested that he be given an opportunity to make submissions to the effect that I should make an order that the applicant pay the respondent's costs of the unsuccessful application. Accordingly, I recalled par 2 of the order and, in substitution for that paragraph, made the following orders:
'2. The respondent file and serve any written submissions on the question
of costs on or before 6 June 2005.
3. The applicant file and serve any answering written submissions on that
question on or before 14 June 2005.
4. The question of costs be reserved.'
3 These reasons for judgment deal with the question of costs, consequent upon the submissions made by both parties in accordance with those orders.
4 It is clear that the Court has a discretion, both as to whether to make any order for costs, and as to the nature of any order it makes. Section 32 of the Bankruptcy Act and s 43(1) of the Federal Court of Australia Act 1976 (Cth) so provide. The exercise of the discretion is guided by principles, the most commonly applied of which is the principle that costs follow the event, ie that the losing party is ordered to pay the winning party's costs. In proceedings under the Bankruptcy Act, it is necessary to recognise that a bankrupt has no assets vested in him or her; the bankrupt's estate is vested in the trustee in bankruptcy. Thus, where a sequestration order is made on a creditor's petition, it is usual to order that the taxed costs of the petitioning creditor be paid out of the bankrupt estate, and provision for the priority of those costs is made by s 109(1)(a) of the Bankruptcy Act, reg 6.01 of the Bankruptcy Regulations 1996 (Cth) ('the Bankruptcy Regulations'), and sch 3 to the Bankruptcy Regulations.
5 When a trustee in bankruptcy is involved in a proceeding against the bankrupt, it is also common for the Court to make an order to the effect that the trustee's costs of the proceeding be paid out of the bankrupt estate. Thus, in Re Aley; Aley v Sweeney (unreported, Cooper J, Federal Court of Australia, 12 February 1996), upon the dismissal of an application for removal of a trustee in bankruptcy, it was ordered that one third of the trustee's costs 'be recoverable by the trustee as costs in the administration of the bankrupt estate.' In Re Carlos: Ex parte Official Trustee in Bankruptcy (unreported, Spender J, Federal Court of Australia, 14 April 1997), on the application of the trustee in bankruptcy, the Court made orders as to how certain funds collected under indemnities for the costs of litigation should be applied, and ordered that the costs of and incidental to the application 'be the costs of the Official Trustee in the administration of the estate.' In Wallin v MJB Building Services Pty Ltd [2002] FCA 1355, Moore J dismissed appeals by a bankrupt from the Federal Magistrates Court, which had dismissed applications by a bankrupt to stay the bankruptcy; in respect of one of the appeals, his Honour ordered that the trustee's costs 'be paid in priority out of the property of' the bankrupt estate. In Coyne v Douglas-Brown [2002] FCA 1324, French J dismissed an application pursuant to s 179 of the Bankruptcy Act and ordered that the trustee's costs of the application be paid out of the bankrupt estate. In such circumstances, costs ordered to be paid in this manner then become part of the trustee's remuneration and expenses for managing the bankrupt estate, and the trustee benefits from the priority given to that remuneration and those expenses by items 1A, 2, 3 and 6 of sch 3 to the Bankruptcy Regulations.
6 Counsel for the respondent submitted that the usual principle, that costs follow the event, should be applied in this case. He argued that, as the bankrupt estate has no funds, and the remuneration and expenses of the respondent to date are in the vicinity of $600 000. He contended that an order only permitting the respondent to have his costs out of the bankrupt estate would have the effect of preventing the respondent from recovering his costs of the proceeding, in which he was the successful party.
7 There is considerable controversy as to what are the assets of the applicant's bankrupt estate. In his written submissions, the applicant claims that the respondent has received $94 500, without paying anything to creditors. From the evidence that was before me in the application to remove the respondent as the applicant's trustee, I am aware that the respondent has been pursuing claims that assets held in the names of others are assets of the applicant, and are vested in the respondent as part of the bankrupt estate. I am not able to say whether those claims will be successful. Accordingly, I am not able to find that the bankrupt estate will ultimately be wound up without the respondent being able to recoup his remuneration and expenses, including his costs of this proceeding.
8 Counsel for the respondent also submitted that the respondent ought not to be placed in the position of competing with the applicant's creditors for any assets that may be part of the bankrupt estate of the applicant. This argument warrants some examination.
9 The system under which bankrupt estates are administered by private enterprise trustees has a degree of built-in conflict between the interests of the trustee and the interests of the creditors. As I have said in [4], provisions of the Bankruptcy Act and the Bankruptcy Regulations give the trustee's remuneration and expenses some priority in the winding up of a bankrupt estate. It is primarily for the trustee to decide what steps should be taken, or not taken, in the administration of a bankrupt estate. If there are funds in the estate, the trustee must decide whether it is appropriate to remunerate himself or herself from those funds in the pursuit of further possible assets, or whether to distribute those funds to creditors instead. Mostly, a trustee will not pursue further assets unless specifically funded by one or more creditors to do so. Such a decision itself will involve remuneration of the trustee for making or obtaining some assessment of the likelihood of recovering further assets.
10 The remuneration and expenses of a trustee in bankruptcy will also be dictated, to some extent, by events beyond the control of the trustee. There will be many situations to which a trustee has to respond in the administration of a bankrupt estate. Those situations will often include legal proceedings in which the trustee is a party in his or her capacity as trustee of the bankrupt estate. In responding to those situations, the trustee will be entitled to remuneration and may incur expenses. The more such situations occur, the greater will be the remuneration and the expenses, and the more creditors will be deprived of such funds as the estate has.
11 An application pursuant to s 179 of the Bankruptcy Act, to remove the trustee in bankruptcy, is a situation of a kind that can arise in the administration of a bankrupt estate. It is essential that there be a degree of supervision of a trustee in bankruptcy by the Court, to maintain the integrity of the private enterprise trustee system. Unfortunately, the presence of s 179 will lead, from time to time, to bankrupts making unmeritorious applications to remove their trustees. In that event, there is no particular reason why the success of the trustee in meeting such an application should not be regarded as entitling the trustee to be remunerated and reimbursed out of the bankrupt estate in the normal way. Such a result will not place a
trustee in bankruptcy in a position of greater conflict of interest with the creditors than will any other occasion for accrual to the trustee of a right to remuneration or expenses.
12 By contrast, an order of the kind sought by counsel for the respondent would create what I regard as an unacceptable conflict of interest. To make an order that the applicant pay the respondent's costs of the proceeding would be to make the respondent a creditor of the applicant. Ordinarily, this might cause no problem, but, as I have said, the respondent is pursuing claims that assets rightly belong to the applicant's bankrupt estate. In order to execute a judgment for costs, the applicant would also have to find assets against which to execute. In case of doubts as to whether assets uncovered should be treated as part of the bankrupt estate, or as being post-bankruptcy assets, the decisions would be for the respondent primarily. In making such decisions, the respondent would be in an impossible situation, given his personal interest in executing his judgment for costs and his fiduciary duty to the applicant's creditors in his administration of the bankrupt estate. In this light, an order that the trustee be entitled to costs out of the estate is plainly the lesser of the evils.
13 Counsel for the respondent was not able to point to any authority of significant assistance on the issue. He referred to Hughes v Holbrook [2002] FCA 920, in which Nicholson J made an order that two bankrupt applicants pay the trustee's costs of an unsuccessful application pursuant to s 179 of the Bankruptcy Act. Counsel also referred to Re: Fuller; Fuller v Wily (unreported, Full Court, Federal Court of Australia, 28 June 1996), in which a Full Court ordered a bankrupt appellant to pay his trustee's costs of an appeal from the dismissal of an application by the bankrupt pursuant to s 179 of the Bankruptcy Act. In neither case did the Court's reasons contain any discussion as to the appropriate order for costs. Similarly, in the cases to which I have referred in [5], there is no discussion as to the appropriate order, with the exception of Wallin where, at [3], Moore J described the order he made as to costs as 'an order of the type ordinarily made in proceedings such as this.' In Coyne, French J did not discuss the form of order at all. It is clear that his Honour's postscript in [68] of his reasons for judgment involved a discussion of the taxation of the trustee's remuneration in general, and not a discussion of the costs of the particular application. I do not therefore find the authorities to which counsel for the respondent referred me, or those which my own researches have uncovered, to be of assistance as to principle, other than to make clear that there are examples of cases in which costs in favour of a trustee in bankruptcy have been ordered to be paid out of the bankrupt estate, rather than by the bankrupt.
14 The practical consequences of either of the alternative orders available in this case do not differ if, in fact, the applicant has no assets. The respondent will not be able to recover his costs, either through the bankrupt estate or directly. Only if the respondent is able to uncover assets will there be a possibility of recovery. As I have said, in that event, the respondent would be placed in an impossible situation of conflict in deciding whether to treat assets as part of the bankrupt estate, or to execute his judgment for costs against them. In my view, he ought not to be placed in that position.
15 Accordingly, the appropriate order is the order that I pronounced initially on 30 May 2005. The only difference is that, having been unsuccessful in his application for a different costs order, the respondent ought not to have his costs of that application. An exception will be made in the order.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.
Associate:
Dated: 19 August 2005
Counsel for the applicant: The applicant appeared in person
Counsel for the respondent: TJ McLean
Solicitor for the respondent: Mulcahy Mendelson & Round
Date of Hearing: 30 May 2005
Date of Final Submissions: 8 June 2005
Date of Judgment: 22 August 2005
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Brown v Minister for Immigration and Border Protection [2015] FCA 75
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2015/2015fca0075
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2024-09-13T22:51:07.292812+10:00
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FEDERAL COURT OF AUSTRALIA
Brown v Minister for Immigration and Border Protection
[2015] FCA 75
Citation: Brown v Minister for Immigration and Border Protection [2015] FCA 75
Parties: DAVID CHARLES BROWN v MINISTER FOR IMMIGRATION AND BORDER PROTECTION
File number(s): NSD 666 of 2014
Judge(s): BENNETT J
Date of judgment: 16 February 2015
Catchwords: MIGRATION – application for review of decision made by Minister personally to cancel applicant's visa pursuant to s 501(2) of the Migration Act 1958 (Cth) – jurisdictional error – whether Minister misconstrued the terms of paragraph 9.21(1)(a)(i) of Direction 55 – whether Minister failed to take into account the date of the applicant's arrival in Australia – whether denial of procedural fairness – whether Minister refused the applicant an opportunity to submit parole reports from his parole officer – whether Minister failed to consider the best interests of the applicant's minor children –whether Minister has power to cancel and/or revoke the visa of a British Subject owing allegiance to the Crown who arrived in Australia as a child before 1984 and has become integrated into the Australian community
Legislation: Commonwealth of Australia Constitution Act 1901 s 51
Judiciary Act 1903 (Cth) s 78B
Migration Act 1958 (Cth) ss 476, 501, 501F
Cases cited: Brown v R [2008] NSWCCA 306
Graff v Minister for Immigration and Border Protection [2014] FCA 1125
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Minister for Immigration and Citizenship v SZNPG [2010] FCAFC 51
Minister of State for Immigration and Ethnic Affairs v Ah Hin Teoh (1995) 183 CLR 273
Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178
Re MIMIA; ex parte Bridge [2004] HCATrans 161
Re MIMIA; ex parte Bridge [2004] HCATrans 408
Re Patterson; ex parte Taylor (2001) 207 CLR 391
Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28
WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184
Date of hearing: 18 November 2014
Date of last submissions: 13 February 2015
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 96
Counsel for the Applicant: The Applicant appeared in person
Solicitor for the Respondent: Sparke Helmore Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 666 of 2014
BETWEEN: DAVID CHARLES BROWN
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
Respondent
JUDGE: BENNETT J
DATE OF ORDER: 16 FEBRUARY 2015
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The amended application dated 1 September 2014 be dismissed.
2. The applicant pay the respondents' costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 666 of 2014
BETWEEN: DAVID CHARLES BROWN
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
Respondent
JUDGE: BENNETT J
DATE: 16 FEBRUARY 2015
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 By an amended application dated 1 September 2014 Mr Brown seeks review of a decision by the Minister for Immigration and Border Protection (Minister) on 30 May 2014 to cancel Mr Brown's Class BF Transitional (Permanent) visa (Visa) (Decision). The Visa was cancelled by the Minister pursuant to s 501(2) of the Migration Act 1958 (Cth) (the Act).
2 Mr Brown seeks orders that the Decision 'be Quashed' and that the Decision be 'redetermined … according to law' pursuant to s 476A of the Act.
facts
3 Mr Brown's history is set out in the Minister's written submissions. The following facts are not in dispute:
Mr Brown is a 49 year old citizen of the United Kingdom.
He first came to Australia on 12 March 1968 and has not departed since.
From 1 September 1994 he held the Visa which was deemed to have been granted to him under the Migration Reform (Transitional Provisions) Regulations. The Visa was a permanent visa which gave Mr Brown permission to remain in Australia on an indefinite basis (s 30(1) of the Act).
Furthermore, as he was regarded as having ceased to be an "immigrant" before 2 April 1984, and as he did not leave Australia before 1 September 1994, he was recognised by the Department of Immigration and Citizenship (as it then was) (Department) as having been the holder of an Absorbed Person visa (s 33 of the Act).
Although considered a member of the Australian community, permission for the holder of an Absorbed Person visa to remain in Australia continues to be regulated by the Act.
Mr Brown is married to an Australian citizen, with whom he has a 10 year old child, also an Australian citizen.
He has two children from a previous relationship, aged 25 and 23, and is the step-father to three children, aged 13, 20 and 22, all of whom are Australian citizens.
He has three grandchildren, who are Australian citizens.
His mother, three brothers and sister, although citizens of the United Kingdom, all live in Australia.
4 Relevantly, on 18 October 2006, Mr Brown was convicted in the District Court of New South Wales of shooting with intent to murder and was sentenced to 15 years imprisonment, including a non-parole period of 10 years. The NSW Court of Criminal Appeal refused leave to appeal the District Court decision and dismissed the appeal (Brown v R [2008] NSWCCA 306).
5 The facts of the offence are set out in the District Court's sentencing remarks. Mr Brown and his co-offender had been members and officer holders of the Outcast Motorcycle Club, as was the victim of the offence. Mr Brown was the Sergeant-at-Arms in charge of discipline in the club. The victim and Mr Brown's co-offender had been travelling from Brisbane to Sydney in the victim's truck on the premise that there was work for the victim in Sydney. The truck was driven to a place on the Pacific Highway about 10 kilometres south of Grafton where the victim and the co-offender were to meet Mr Brown. Mr Brown shot the victim while the victim was seated in the cabin of the truck.
6 As a result of this sentence of imprisonment, Mr Brown has a substantial criminal record under s 501(7) of the Act. The Minister found that Mr Brown did not pass the character test under s 501(6) of the Act, and that Mr Brown had not satisfied the Minister that he passed the character test.
7 Mr Brown's criminal history includes other offences, but of a less serious nature, including:
On 27 February 1984, possession and smoking of Indian hemp.
On 12 October 1989, driving whilst his licence was cancelled and exceeding the speed limit.
On 17 March 1998, cultivation of a prohibited plant, possession of equipment for administering prohibited drugs, possession of a prohibited drug and administeringIattempting to administer prohibited drug to another.
On 21 April 1998, driving with a low range of prescribed concentration of alcohol.
8 These offences, each of which resulted in a fine, are not presently relevant and were not relevant to the Minister's decision.
The Minister's decision
9 Mr Brown held both the Visa and an Absorbed Person visa, both of which were cancelled as a result of the Decision. The Visa was cancelled in the exercise of the Minister's discretion under s 501(2) of the Act, which enables the Minister to cancel a visa if:
He reasonably suspects that the person does not pass the character test; and
The person does not satisfy the Minister that the person passes the character test.
10 The Absorbed Person visa was cancelled by operation of law pursuant to s 501F(3) of the Act.
11 The Decision followed a period of correspondence between the Department and Mr Brown in relation to the possible exercise of the cancellation of power under s 501(2). It commenced with a letter from Mr Brown to the Minister dated 3 January 2012 headed "Review for Residential Status and an allocated Case Manager". The applicant noted that he was eligible for certain programs in prison but that the General Manger of Grafton Correctional Centre (where he was held) was unable to process his case until his immigration status was finalised. Mr Brown requested 'an expedient review of my residential status so I can participate in rehabilitation programs and support my Family'.
12 On 5 April 2012, the Minister sent to Mr Brown a "Notice of intention to consider cancellation of your visa under subsection 501(2) of [the Act]" (Notice). The Notice stated that:
Your visa is to be considered for cancellation under subsection 501(2) of [the Act] on the grounds that you appear to have a substantial criminal record. This does not mean that your visa will necessarily be cancelled when a decision-maker considers your case. The decision-maker will take all relevant available information into account when making the decision about your visa.
Before any decision is made, you have the opportunity to comment on the information that will be considered by the decision-maker and to submit extra information if you wish.
13 In the Notice, Mr Brown was informed that he had the opportunity to provide information in relation to whether he passed the character test in s 501 of the Act. The Notice further said that 'it is in your interest to provide any information of relevance that we may not have'; giving examples of appropriate information including statements from family members, welfare officers etc. The Notice also enclosed a copy of Direction No. 41 – Visa Refusal and Cancellation under s 501 (Direction 41).
14 Mr Brown responded to the Notice on 27 April 2012. The response attached various documents, including documents from the NSW Department of Corrective Services. In particular, Mr Brown's response included a work report from Grafton Correctional Centre which stated, inter alia, that Mr Brown had commenced employment in corrective services, with Corrective Services Industries, Grafton Correctional Centre in which period he 'has excelled in the areas of general maintenance due to his hands on skills'. The manager of Industries has also stated that Mr Brown was always 'very polite and helpful', that he had undergone a work readiness assessment which the manager endorsed and that he was of 'very good character' with no misconduct while at Grafton.
15 On 26 November 2012, a case officer from the Department wrote to Mr Brown offering the opportunity to comment on new information, being a National Police Certificate dated 26 April 2012.
16 Mr Brown provided his response to the National Police Certificate by dated 6 December 2012, in which he noted that the National Police Certificate listed four offences over a 22 year period, three of which were minor offences and the fourth being the offence for which he was incarcerated. Mr Brown gave a detailed explanation of his personal circumstances at the time of the offence, the offence itself and his family. He explained why he believed that he had been rehabilitated and referred to his goals on release.
17 On 23 May 2013, a case officer from the Department's National Character Consideration Centre again wrote to Mr Brown to give him an opportunity to comment on new information, being a National Police Certificate dated 13 May 2013 and a NSW Department of Corrective Services Conviction, Sentences and Appeals Report dated 23 April 2013.
18 The 23 May 2013 letter was followed by another letter to Mr Brown on 13 June 2013, which gave him the opportunity to comment on further new information comprising:
A letter from Stuart Murray dated 7 June 2013. Mr Murray wrote on behalf of the Glen Innes Correctional Centre. The letter expressed positive views about Mr Brown saying, inter alia, that he had 'good work and custodial reports' that he was considered 'a mature and complaint [sic] inmate'.
A certificate of achievement – CALM (Controlling Anger and Learning to Manage it) dated 5 September 2011, being a course completed at the Grafton Correctional Centre on 5 September 2011.
A memo dated 9 January 2012 concerning the VOTP Program (Violent Offenders Therapeutic Program). Mr Brown had been referred to that program but he was found to be ineligible, as his risk assessment placed him in the low/medium range of risk of re-offending category, and that he did not appear to have a history of violent convections.
The urinalysis history report dated 7 June 2013.
An Alerts Detailing Report dated 7 June 2013.
An Integrated Case plan screen printout sent on 7 June 2013.
Offence In Custody printout sent on 7 June 2013.
A Case Note Report dated 7 June 2013.
19 That Case Note Report consisted of a number of entries over a period of time from various staff members in the NSW Department of Corrective Services noting, among other things, that Mr Brown:
Had completed certain courses;
Had no issues;
Received regular visits from family and phone calls;
Was working well with good reports;
Was continuing to do an excellent job as a workshop foreman and building maintenance;
Had been proactive in trying to sort out a character assessment check through the department with the view to becoming an Australian Citizen;
Indicated no requirement for alcohol or other drug intervention.
20 It could be said that all of the material to which Mr Brown was being asked to respond consisted of positive statements about him both personally and as to his work history.
21 On 19 June 2013, Mrs Brown sent three emails to the Department attaching a number of documents. She forwarded further documents via email on 20 June 2013. Those documents included statements from Mrs Brown and other members of his family, including his children, as well as various documents concerning Mr Brown's work performance, behaviour and courses undergone while in prison.
22 On 28 June 2013, the Department wrote to Mr Brown inviting him to comment on the information that had been attached to the emails from his wife. In particular, the letter noted that 'as Mrs Brown sent the above materials attached to a number of emails, I would ask that you examine them to ensure that all were received and advise us if you consider that any are missing'.
23 On 9 July 2013, Mr Brown acknowledged receipt of the Department's letter of 13 June 2013, saying that he had read everything in that package and was 'agreeable to its contents'. He also directed the case worker to contact Mrs Brown if she required any further information.
24 A NSW Department of Corrective Services case note entry on 17 December 2013 records that Mr Brown's parole officer, Mary Deen, had tried to contact the current case officer from the Department but that the latter was on leave, and that a decision was still pending.
25 A case note entry dated 1 January 2014 notes the work that Mr Brown had been undertaking in various areas and that he was reintegrating into the community well and looked forward to entering the workforce and providing for his family on release.
26 A further case note entry dated 6 January 2014 records that the NSW Department of Corrective Services had received a contact from the Department's case officer, who had advised that Mr Brown was under consideration and that she would advise of the outcome.
27 The Department made contact with Mrs Brown on 7 January 2014. Mr Brown had authorised the Department to contact Mrs Brown for further information. A file note of the conversation shows that Mrs Brown was advised that the Department had neglected to enclose the current Ministerial Direction (No. 55) (Direction 55) with the Notice. Direction 55 replaced Direction 41. Mrs Brown was advised that the Direction 55 would be sent to Mr Brown for his comment. Mrs Brown was asked what she would do in the event that Mr Brown's Visa was cancelled. Mrs Brown advised as follows:
• She doesn't know.
• She has thought about it a lot.
• Her son is going to the army, they have grandkids and another grandkid due in mid 2014.
• No one in the family has a passport.
• She has 'honestly never considered leaving this country'.
• Her parents and grandparents are here.
• They have no connection to the UK – not even [Mr Brown].
• If [Mr Brown]'s visa is cancelled, she and their family members will experience a lot of hardship either way (whether they go with him or stay in Australia).
• She does not want either of these outcomes.
• She is waiting for the department to make its decision.
• If the decision is to cancel, she will be forced to make a decision then – she is unable to at present.
28 Mrs Brown agreed to a copy of the record of the conversation being provided to Mr Brown for his information and possible comment.
29 On 7 January 2014, the Department wrote to Mr Brown enclosing Direction 55. The Department noted that if the decision maker is a delegate, the delegate must follow Direction 55 but that if the Minister makes the decision personally, he is not required to give consideration to the Direction although it provides a broad indication of the types of issues that the Minister may take into account. Mr Brown was instructed to read Direction 55 carefully and to address each paragraph in Part A of Direction 55 that was relevant to his circumstances.
30 At the time of this letter, Mr Brown's most recent response to the Department was over 6 months old. He was therefore invited to comment about his current situation including any recent rehabilitation or educational courses that he had completed, his recent present conduct and his current contact with family members and friends. He was invited to provide any other information 'that you feel the Minister or his delegate ought to take into account'. The letter also enclosed a copy of the file note of the Department's conversation with Mrs Brown on 7 January 2013, and gave Mr Brown the opportunity to comment.
31 A lengthy case note dated 7 January 2013 by Ms Deen sets out an interview with Mr Brown. The case note records that:
Ms Deen had been in contact with the Department.
The Department had advised that it was unsure whether a decision would be made.
The delay in the Department's decision would not impact on Mr Brown's release date, although he may be placed into detention until the decision was made.
32 Ms Deen also discussed with Mr Brown his role in the offence for which he had been convicted and sentenced. This element of the discussion appears to have been the primary purpose of the interview.
33 On 14 January 2014, the Department received a telephone call from Ms Bennett at Grafton Correctional Centre. A file note of the conversation records that Ms Bennett advised the Department case officer that Mr Brown had received the "further information letter" (presumably the letter dated 7 January 2014 enclosing Direction 55) and that he was now at Grafton Correctional Centre not at Glen Innes. The Department case officer advised that while the Department invited Mr Brown's response 'to satisfy natural justice', he was not obliged to respond. However, if Mr Brown wanted the Department to consider his case at Grafton, for instance, 'he should respond in writing'. The Department case officer also asked Ms Bennett to remind Mr Brown that he could respond with any changes to his general circumstances and 'anything he thinks it is relevant for the decision maker to consider'; including that he was expecting another grandchild. The Department asked that Mr Brown confine himself to material not currently before it, as it had already received a large volume of information which had been a subject of invitation for further comment.
34 Ms Deen conducted another interview with Mr Brown on 22 January 2014. The case note records that Ms Deen advised Mr Brown that information had been forwarded to the Department as requested and noted that Mr Brown was preparing a letter to the Department.
35 On 23 January 2014, Mr Brown wrote to the Department in response to the letter of 7 January 2014. Mr Brown noted that he was commenting on different sections of Direction 55 and addressed sections 9.1.2, 9.2, 9.3 and 10 of Part A. This included the risk to the community, in respect of which the applicant said:
I do not believe I represent any risk of harm to any individuals, groups or institutions within the Australian community because I have learned so much while being in prison through a variety of courses and I have become a stronger and better person. There is no likely possibility of me reoffending because of the rehabilitation I have received and achieved. I have progressed to the absolute lowest classification that can be achieved which is C3 Stage 2 which allows me to go home every weekend and I have been doing this for quite some time and it means the world to me and my family.
36 Mr Brown also explained his arrival in Australia with his family and his personal history, including meeting his present wife and the members of the family. He explained that he and Mrs Brown have four children; two of whom are under the age of 18, one being 12 and one being 9. He explained that his mother lives in Sydney with a brother and his family. Mr Brown also explained that, despite being in prison for over 9 years, he had continued to play an active role as a father to his children and that he believed would not be in the best interest of his children if he were to be deported, because they:
… would lose any possible chance of personal contact with their father who would be on the other side of the world… If I was to be deported, it would be absolutely devastating to me and my family because all my family and support all live in Australia.
37 Mr Brown also said that if he were to be deported, he would encourage Mrs Brown not to go with him 'as much as that would tear my heart out' because of the presence of 'family, social. medical and economic support' in Australia and the fact that it would be 'foreign to us' in another country.
38 On 5 February 2014, Mrs Brown wrote to the Department saying it would not be possible for her to go with Mr Brown if he left Australia and returned to Ireland. In that letter, Mrs Brown said that they have 6 children (two being Mr Brown's biological children with Mrs Brown, and the other four being step children whom, as Mr Brown had previously explained, he regarded as his own) who were all Australian citizens and that none of them had ever thought of leaving Australia as 'we are all very proud of being Australian, we have a grandchild on the way'.
39 Further, Mrs Brown noted, 'our son is due for intake in the Australian Army in 2015. Our youngest two girls are still at school and doing very well. All of my family and David's family are here in Australia. Neither of us have any family outside of Australia'. Mrs Brown also explained that the costs associated with obtaining passports and moving were 'way out of our savings or earning ability'.
40 On 30 May 2014, the Minister provided a statement of reasons for cancellation of the Visa under s 501(2) of the Migration Act (Reasons). It should be noted that the materials before the Minister in making the Decision for the stated Reasons included all of the material sent to and received from Mr Brown. It also included summaries of some of that material, in particular the sentencing remarks of the District Court judge.
41 In the Reasons the Minister noted the class of visa held by Mr Brown and that he was also the holder of an Absorbed Person visa. In summary, the Reasons were stated to be as follows:
Character Test
42 Mr Brown has a substantial criminal record and does not pass the character test. That is not in dispute. Mr Brown has not satisfied the Minister that he passes the character test.
Discretion
43 The Minister considered whether to exercise his discretion, mindful of the Government's commitment to use s 501 to protect the Australian community from harm that may result from criminal activity or other serious conduct by non-citizens.
Criminal Conduct
44 It is the general view that violent crimes involving physical force against another person and resulting in significant harm are considered to be very serious and contrary to community values and that Mr Brown was convicted of the offence of Shooting with Intent to Murder. The sentencing remarks indicated that Mr Brown actually shot and wounded his victim and that Mr Brown acted with the co-offender and that both were armed. The sentencing remarks described the offence as '[o]bjectively … a very serious offence' and 'a crime that was a cold-blooded assassination attempt pre-planned by the offenders who were each armed, and the victim was so seriously injured that he required five operations to save his life'. The judge had found the offence did not fall into the worst category but fell above the midrange of seriousness for that category of offence. The judge sentenced Mr Brown to a term of imprisonment of 15 years with a non-parole period of 10 years; the maximum penalty being 25 years. The Minister said in the Reasons that he considered the 'great harm' caused by Mr Brown to his victim and adopted the Court's finding that Mr Brown's offending was 'objectively very serious'.
Mitigating factors and risk of reoffending
45 The Minister had regard to information presented as factors relevant to Mr Brown's offending including his childhood experiences, his drug use and his reference to peer pressure and intimidation by fellow motorcycle club members. The Minister also noted that while there was no expression of remorse by Mr Brown at the time of his sentencing in 2006, he was now genuinely remorseful. The Minister noted that Mr Brown claims to have been rehabilitated, and that he has not returned a positive drug test or been a subject of a prison incident. The Minister also noted Mr Brown's 'very good employment history' and that he had 'received excellent work reports' such that his security classifications enabled him to perform work outside the centre and to participate in weekend leave. Mr Brown had the strong support of family members through his incarceration. The Department had received advice in early 2012 that Mr Brown had been assessed as posing a low to medium risk of reoffending. The Minister said that he considered that Mr Brown had continued his efforts of rehabilitation since that assessment. Despite this, the Minister concluded that:
… if Mr Brown were to reoffend by committing a serious, violent offence with the intent to murder, the consequences of his offending are likely to be grave. While I have found the risk of reoffending posed on Mr Brown is low, I found that great harm is attached to this low risk, should he reoffend.
Ties to Australia
46 Mr Brown arrived in Australia in 1968 aged two and that he had not since departed, meaning that he had lived in Australia for 46 years, approximately 10 of which were spent in jail. Mr Brown committed his only offence to result in a sentence for a term of imprisonment after 38 years of residence in Australia. He had a lengthy history of employment, had performed volunteer work and had extensive ties to Australia.
47 The Minister concluded that he found Mr Brown has long standing and significant ties to Australia.
Best interests of the children
48 The Minister gave primary consideration to the best interest of any children who were less than 18 years of age and whose best interests may be significantly affected by the cancellation of Mr Brown's visa. After stating details of Mr Brown's children and Mr Brown's contact with them, as well as the letters and support of their non-cancellation of the visa and written by the children and Mrs Brown, the Minister said:
I accept that, despite his lengthy period of imprisonment, [Mr Brown] has a close, paternal relationship with [the two children] which has been fostered through his frequent telephone and personal contact with each girl. I found that the best interests of [the two children] are served by the non-cancellation of [Mr Brown]'s visa.
49 The Reasons then referred to Mr Brown's three minor grandchildren and their contact with Mr Brown. The Minister then found that 'while it is in the best interest of [the three grandchildren] and the other minor children in [Mr Brown]'s extended family, that his visa is not cancelled, any negative effects upon their best interests are mitigated by their relationship with their own parents or carers'.
International Obligations
50 There were no claims that required this assessment.
Other considerations
51 The Minister noted that Mr Brown was married to an Australian citizen, Mrs Brown, with whom he has 'a genuine, committed, close, spousal relationship'. The Minister accepted that, as Mrs Brown had indicated, she does not intend to depart Australia and that the cancellation of the Visa would cause her significant hardship, which the Minister accepted. The Minister concluded that the cancellation of the Visa and Mr Brown's removal 'is likely to result in emotional hardship …' to his mother, siblings, adult members of his extended family and friends. Mr Brown had been absent from the United Kingdom for around 46 years (since he was 2 years old) and he had no living family members remaining in Northern Ireland and no familial support available to him. All of Mr Brown's education and employment has been undertaken in Australia.
52 The Minister accepted that Mr Brown would be likely to experience difficulty establishing himself in the United Kingdom and that the cancellation of the Visa will result in physical separation from his family. The Minister found that the cancellation of the Visa was likely to cause Mr Brown significant emotional hardship.
The Minister's conclusion
53 Having considered all relevant matters, the Minister formed the view that Mr Brown 'poses an unacceptable risk of harm to the Australian community' and that he still poses 'some risk of reoffending'. The Minister continued:
While I accept that [Mr Brown] has participated in rehabilitation and other activities to reduce his risk of reoffending, the seriousness of his offending, and the harm that would be caused if it were to be repeated, makes even a low risk of further offending unacceptable.
I conclude that the protection of the Australian community outweighed [Mr Brown]'s remorse and rehabilitation to date, the best interest of his minor daughters and the other minor family members, his strong ties to the Australian community, and any hardship he and his adult family members in Australia would experience if his visa is cancelled.
54 The Minister decided to exercise his discretion to cancel the Visa.
55 As a result of the Decision, both the Visa and the Absorbed Person visa were cancelled; the Visa being the subject of the exercise of the Minister's discretion under s 501(2) and the Absorbed Person visa through the operation of s 501F(3) of the Act.
The grounds of appeal
56 The application for review is made pursuant to s 476A of the Act. It is necessary for Mr Brown to establish that the Decision was affected by jurisdictional error.
57 The grounds of the application as set out in the amended application are:
(1) The Minister fell into Jurisdictional error in that he misconstrued the terms of paragraph 9.21(1)(a)(1) of Direction No.55 – Visa Refusal and cancellation under section 501 of the Migration Act (Direction).
Particulars
(a) Pursuant to paragraph 9.2(1)(a)(1) of the Direction, the Minister was required to determine whether I began offending soon after arriving in Australia in order to assess the strength, duration and nature of my ties to Australia.
(b) The Minister was required to use the date of my arrival in Australia as the reference date for his determination under paragraph 9.2(1)(a)(1) of the Direction.
(2) In the alternative to prayer 1, the Minister fell into Jurisdictional error in that he failed to take into account a relevant consideration when determining whether I began offending soon after I arrive in Australia. [sic]
…
(3) In the alternaive3 [sic] to prayer 1 and 2, the Minister fell into Jurisdictional error in that he took into account an irrelevant consideration when determining whether I began offending soon after arriving in Australia.
…
(4) The Minister denied me procedural fairness and fell into Jurisdictional error in that he failed to take into account a relevant consideration when determining the cancellation of my visa in that he refused me the opportunity to put in reports from my Parole Officer regarding my parole report.
Particulars
(a) The Minister refused my parole officer from sending in my parole reports saying to the officer that he does not require and he does NOT need the parole report.
(b) The Minister was bound by law and indeed Directions 55 to have regard and consider the parole report from my parole officer when determining whether or not to cancel my visa.
(c) The parole report is very critical and relevant material and material documentation that was relevant to the risk that pose to Australia and my conduct since I was released into the community and would have been and is relevant to the Ministers determination whether or not I still pose a risk to the Australian Community given that report from my parole officer.
(5) The Minister denied me procedural fairness and fall into Jurisdictional error in that he failed to consider the best interests of my minor children as a Primary consideration even though he said he did.
Particulars
(a) The Ministers consideration of the best interests of my minor children was done and left at a hypothetical level in other words a mere hypothesis.
58 The asserted grounds were characterised by the Minister in the following terms:
Grounds 1-3 are concerned with findings the Minister is said to have made concerning the length of time between Mr Brown's arrival in Australia and when his offending began. Mr Brown claims the Minister misconstrued paragraph 9.2(1)(a) of Direction 55, failed to take into account a relevant consideration (namely the date of his arrival in Australia) and took into account a consideration that was irrelevant to whether Mr Brown began offending soon after arriving in Australia;
Ground 4 is a claim of denial of procedural fairness on the basis that Mr Brown was refused an opportunity to put in parole reports from his parole officer;
Ground 5 states that the Minister failed to consider the best interests of Mr Brown's minor children – from the particulars, however, the real claim appears to be that the consideration of the children's interests was done "at a hypothetical level".
59 It is helpful to consider the grounds of review by reference to this characterisation.
sUBMISSIONS and consideration
Grounds 1-3
60 Mr Brown submits that the Minister was bound by law to follow Direction 55 and paragraph 9.2(1)(a)(1) of that Direction in the exercise of his discretion to cancel the Visa. Mr Brown further submits that the Act is binding on the Minister himself as well as his delegates.
61 Grounds 1-3 are not supported by the facts or the law.
62 Direction 55 is the direction given by the Minister with the purpose of 'guid[ing] decision-makers performing functions or exercising powers under section 501 of the Act to refuse to grant a visa to, or cancel the visa of, a person who does not satisfy the Minister that the person passes the character test'. Direction 55 is given in the exercise of the power under s 499(1) of the Act. Direction 55 does not bind the Minister where the Minister exercises a power under s 501 personally (Graff v Minister for Immigration and Border Protection [2014] FCA 1125).
63 Mr Brown's contentions centre on paragraph 9.2(1)(a)(i) of Direction 55. Paragraph 9.2 provides that a decision maker must have regard to '[h]ow long the person has resided in Australia, including whether the person arrived as a young child', noting that:
(i) Less weight should be given where the person began offending soon after arriving in Australia; and
(ii) More weight should be given to time the person has spent contributing to the Australian community.
64 Even if the Minister were bound by Direction 55, the Reasons show that the Minister did in fact give consideration to the length of Mr Brown's residence in Australia and the timing of his offences, noting (at [14]-[15] of the Reasons), that Mr Brown arrived in Australia on 12 March 1968 and that his earliest conviction was recorded in 1984, when Mr Brown had lived in Australia for around 16 years. The Reasons further noted that the only offence by Mr Brown to result in a sentence to a term of imprisonment was committed after 38 years of residence in Australia (at [15]). Indeed, the Minister ultimately concluded that Mr Brown had 'long-standing and significant ties to Australia' (at [17]).
65 On a fair reading of the Reasons, it is clear that the fact that Mr Brown had been in Australia for 16 years before his first recorded offence and 38 years before the only offence to result in imprisonment were considered and that the Minister did not reduce the weight given to Mr Brown's ties to Australia.
66 These grounds have not been established.
Ground 4
67 Mr Brown submits that the Minister 'refused' him the opportunity to put before the Minister relevant documents. At the hearing, Mr Brown took the Court to his Parole Pre-Release Report and a Prison Case Note Report issued by the NSW Department of Corrective Services (additional documents) and submitted that had the Minister 'had regard and taking into account these critical relevant materials and consideration, the decision of the Minister would have been a different one'.
68 Mr Brown notes that in considering the cancellation of the Visa, the Minister had before him a memorandum headed "Issues for Consideration for Possible Visa Cancellation under Subsection 501(1) of the Migration Act 1958" (Memorandum). Mr Brown asserts that none of the letters sent to him by the Minister, nor the Memorandum, noted the fact that Mr Brown had requested that the additional documents be put before the Minister for his consideration. Particularly, Mr Brown says, he was given no opportunity to put submissions to the Minister as to the relevance of the information contained in the additional documents. He says that this constitutes a denial of natural justice and procedural fairness and also constitutes a failure by the Minister to ask a relevant question and to take into account critical relevant material. Therefore, Mr Brown submits, the Minister fell into jurisdictional error.
69 The Minister rejects the allegation that Mr Brown, or Mr Brown's parole officer, were denied the opportunity to submit the additional documents. Mr Brown points to the reference in the additional documents to the low risk of his reoffending and the fact that he was granted parole on his first attempt. He submits that these matters would have established that he had been "rehabilitated". He also says that he assumed that the Department would have ensured that it had access to all relevant documents, including the additional documents. He also says that he assumed that the Minister would have contacted his case workers, including Ms Deen, who would have reinforced the fact that he presented a very low risk to the community and that he had participated in thirteen months of weekend release in the lowest classification.
70 Mr Brown, in his affidavit of 22 September 2014, asserts without any supporting evidence from Ms Deen, that she had offered information concerning Mr Brown's status and that the offer was rejected or not accepted. The Minister objected to the admissibility of this evidence. It is not in dispute that Ms Deen had been in contact with the Department but there is no evidence from her, or in her case notes, supporting the assertion.
71 The chronology shows that Mr Brown was repeatedly invited, without restriction, to provide any information he sought to place before the Minister, including the content of case reports. For example, in the letter dated 7 January 2014, Mr Brown was invited to comment on the substance of the case worker's conversation with Mrs Brown and also as to his 'current situation, including…your recent prison conduct'. The letter requested a response by 7 February 2014 but it also provided for Mr Brown to request an extension of the period to respond. The submission to the Minister did refer to the expected date of release and it was open to Mr Brown to note that this was the earliest date possible.
72 The Minister has no obligation to seek information. In any event, when the additional documents are compared to the information that was before the Minister, including other case reports (such as that dated 7 June 2013 and referred to in the letter of 13 June 2013), it is clear that there is nothing in the additional documents of which the Minister was not informed. A failure to consider a piece of evidence does not in itself establish jurisdictional error if the claims on which the person relies have been fully considered (Minister for Immigration and Citizenship v SZNPG [2010] FCAFC 51 at [28]; WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184 at [46]). It is apparent that all of the claims on which Mr Brown relies in support of the non-cancellation of the Visa were before the Minister and were considered.
73 This ground is not established.
Ground 5
74 Mr Brown submits that the Minister's reasons as a whole indicate that 'the Minister either found or assumed it is not clear … only that it may be in the children's best interests for my visa not to be cancelled, presumably on the basis that their interests may be significantly affected again, presumably adversely by reason of the fact they may suffer emotional and financial hardship by the cancellation of my visa'.
75 The Reasons demonstrate that the Minister considered the interests of the children.
76 The thrust of Mr Brown's submission on this ground seems to be that the children's best interests were left at the level of mere hypothesis, such that the Minister did not in fact treat the best interests of Mr Brown's children as a primary consideration, even though the Minister said that he did in the Reasons. Mr Brown submits that the Minister could not have done so because 'he was never confronted [with] the central question of what the best interests of my children required him to decide with respect to the proposed cancellation of my visa'. Mr Brown says that, not having done so as a starting point, the Minister 'also could not then assess whether any other considerations outweighed the best interests of my children understood as a Primary consideration'.
77 Mr Brown submits that he had a legitimate expectation that the children's interests would in fact be considered and balanced against other considerations. As they were not, he says, he was denied procedural fairness.
78 Minister of State for Immigration and Ethnic Affairs v Ah Hin Teoh (1995) 183 CLR 273 (Teoh) requires the Minister to give primary consideration to the best interests of any children who are less than 18 years of age and whose interests may be significantly affected by cancellation of the Visa. The Minister, at [18] of the Reasons, indicated his compliance with the Teoh obligation. The Reasons contain consideration of Mr Brown's relationship with his daughters with Mrs Brown, including noting the daily contact between Mr Brown and his daughters, the regular and frequent visits made by his daughters to see him in prison, and that since mid-2013 Mr Brown had accessed weekend leave to stay with his family. The Minister then noted the letters received from Mr Brown's daughters supporting the non-cancellation of the Visa and that both Mr and Mrs Brown had submitted that the cancellation would result in his separation from his daughters and would have a detrimental effect on them. The Minister expressly acknowledged that the best interests of Mr Brown's children would be served by the non-cancellation of the Visa, and that the interests of Mr Brown's grandchildren, nephews and nieces would also be affected by the cancellation of the Visa.
79 The Reasons set out and make repeated reference to Mr Brown's children, step-children and granddaughters. The Minister accepted the paternal relationship between Mr Brown and his children. The Minister found that the best interests of the children would be served by non-cancellation of the Visa.
80 The Minister complied with his obligations concerning the best interests of the children. The complaint by Mr Brown in this regard seems not to be that the children's best interests were not considered but that those interests did not outweigh countervailing considerations.
81 There are no particular aspects of Mr Brown's claims regarding the best interests of the children that are said not to have been considered, or not considered adequately. It is more likely that this ground of review reflects a difference of opinion on the part of Mr Brown as to the weight that should be given to the interests of the children. Given that the Minister did determine what the best interests of the children entail and did take those interests into account in deciding upon the cancellation of the Visa, the Minister has complied with his obligations concerning those interests. The weight to be given to those interests was a matter for the Minister (Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24). The conclusion that the protection of the Australian community outweighed other considerations, including the best interests of the children, was a finding that was open to the Minister in the exercise of his discretion. That others may disagree with that finding does not cause it to be affected by jurisdictional error.
82 This ground has not been established.
Australian citizen
83 Mr Brown submits that the Minister's power to cancel and/or revoke the Visa was "unavailable", and that the Minister had no power to cancel the Visa because he is an Australian citizen.
84 This ground of appeal was not contained in the amended application. The applicant advanced this ground in his written submissions which were filed on 17 November 2014, after the Minister had filed his submissions and a day before the hearing. Mr Brown elaborated his contentions at the hearing. The Minister did not have the opportunity to address this ground in his written submissions and said that there was insufficient opportunity to address the argument at hearing. For these reasons, the Minister was invited to provide additional written submissions addressing this ground. Mr Brown was given the opportunity to reply.
85 Mr Brown draws the Court's attention to the following undisputed facts, that he:
Is a citizen of the United Kingdom.
First came to Australia on 12 March 1968 and has not departed since.
Is married to an Australian citizen with whom he has a 10 year old child, also an Australian citizen.
Has 2 children from a previous relationship, and is stepfather to 3 children, all of whom are Australian citizens.
His mother, 3 brothers and sister all live in Australia.
Has no family outside of Australia.
86 Mr Brown submits that the above factors mean that he is 'a British Subject owing allegiance to the Crown who arrived in Australia as a child before 1984 and has become integrated into the Australian community [and therefore] is an Australia Citizen', in reliance on Re Patterson; ex parte Taylor (2001) 207 CLR 391 (Patterson). Mr Brown submits that his case is the same as in Patterson, and that the Regulations made pursuant to the Act providing for deemed visas could not convert the status of a citizen to that of a non-citizen.
87 The facts of Patterson were very similar to the present case. In Patterson, a majority of the High Court held that a British subject was not an alien but was a subject of the "Queen of Australia" and therefore cannot be deported under the aliens or immigration powers conferred on the Parliament by s 51 of the Commonwealth of Australia Constitution Act 1901(Cth) (the Constitution).
88 Mr Brown submits that he is an Australian citizen and not an alien and is, therefore, 'outside the reach of the [M]inister's power either under section 501 or 201' of the Act. In support of this proposition, he relies on and cites extensively from Patterson. He also cites support from the reasons of McHugh, Kirby and Callinan JJ in dissent in Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28. He submits that Shaw 'was wrongly decided and the justices have clearly made their views known'.
89 The Minister submits that there is no basis for the Mr Brown's assertion that he is an Australian citizen and that there is no authority for the proposition that a person can become an Australian citizen simply by having resided in Australia for a long period.
90 There is no evidence that Mr Brown has otherwise obtained Australian citizenship. Mr Brown was not born in Australia. There is no basis on which to find that he is an Australian citizen.
91 The Minister accepts that his power to cancel the Visa under s 501 of the Act extends only to persons who are "aliens" within the meaning of that term in the Constitution. It is in that context that Mr Brown's reliance on Patterson arises.
92 Patterson overturned an earlier decision of the High Court in Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 where it had been held that Mr Nolan, a citizen of the United Kingdom who had moved to Australia in 1967 and had lived here continuously, was a "non-citizen" under the Act. However, after Patterson, the High Court again considered the question of the ambit of the word "alien" in the Constitution in Shaw. Mr Shaw was a British subject who had lived in Australia since his infancy and had not left Australia since his arrival in 1974. A majority of the High Court (Gleeson CJ, Heydon, Gummow and Hayne JJ) were of the view that Mr Shaw had entered Australia as an alien in the Constitutional sense and that he did not lose that status by reason of his subsequent personal history in this country. Consequently, upon the cancellation of his visa, he became an "unlawful non-citizen" within the meaning of the Act (at [31]). The three dissenting Judges (McHugh, Kirby and Callinan JJ) essentially supported their own reasoning in Patterson. Justice McHugh accepted at [49] that Patterson has no ratio decidendi.
93 Subsequent attempts to re-open the issue of the ambit of the aliens power were rejected in the High Court (Re MIMIA; ex parte Bridge [2004] HCATrans 161 per Heydon J and again six months later in Re MIMIA; ex parte Bridge [2004] HCATrans 408 per McHugh J).
94 The Minister submits, and I accept, that there is authority binding on this Court to the effect that persons in the position of Mr Brown are "aliens" within the meaning of the Constitution. The contention that, because he is not an alien, the Minister did not have power under s 501 of the Act to cancel the Visa is rejected.
95 I note that Notices of a Constitutional Matter were sent by the Minister to the Attorneys-General of the Commonwealth and each of the States and Territories pursuant to s 78B of the Judiciary Act 1903 (Cth). Each of the Attorneys-General indicated that he did not wish to intervene in the proceedings.
CONCLUSION
96 Mr Brown has failed to establish any of the grounds of review. Accordingly, the amended application is dismissed.
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.
Associate:
Dated: 16 February 2015
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Hedges v Commissioner of Taxation [2022] FCA 1389
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2024-09-13T22:51:08.267787+10:00
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Federal Court of Australia
Hedges v Commissioner of Taxation [2022] FCA 1389
File number: NSD 44 of 2021
Judgment of: CHEESEMAN J
Date of judgment: 23 November 2022
Catchwords: INCOME TAX – capital gains tax – appeal from decision of the Administrative Appeals Tribunal – where Tribunal affirmed decision of the Commissioner of Taxation to disallow the taxpayer's objection to an assessment of discounted capital gain from disposal of goodwill in a partnership – where taxpayer is a retired partner of a law firm – where terms of partnership deed provided for the offsetting of moneys payable to and due from the retiring partner upon retirement – whether the relevant capital gain crystallised before or after amounts offset – Held: appeal dismissed with costs.
Legislation: Income Tax Assessment Act 1997 (Cth) ss 116-20(1), 103-10
Partnership Act 1892 (NSW) ss 19, 39
Cases cited: Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings [2005] HCA 3; 221 CLR 496; 79 ALJR 550
Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43; 242 CLR 508
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522
Division: General Division
Registry: New South Wales
National Practice Area: Taxation
Number of paragraphs: 52
Date of last submissions: 29 October 2021
Date of hearing: 10 December 2021
Counsel for Applicant: Mr M Bersten
Solicitors for Applicant: Walker Hedges & Co
Counsel for Respondent: Ms J Gatland
Solicitors for Respondent: ATO Review and Dispute Resolution
ORDERS
NSD 44 of 2021
BETWEEN: MR BRENT HEDGES
Applicant
AND: COMMISSIONER OF TAXATION
Respondent
order made by: CHEESEMAN J
DATE OF ORDER: 23 November 2022
THE COURT ORDERS THAT:
1. The appeal be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
CHEESEMAN J:
INTRODUCTION
1 Brent Hedges appeals from the decision of the Administrative Appeals Tribunal to affirm the objection decision of the Commissioner of Taxation, in which the Commissioner disallowed Mr Hedges' objection to his assessment of Mr Hedges' income for the 2009 tax year: Hedges and Commissioner of Taxation (Taxation) [2020] AATA 5307 (23 December 2020).
2 This appeal is brought pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) and is confined to a question of law. There have been a series of delays in the history of the matter which are detailed in the Tribunal's reasons. These are not revisited here, save to note that there was no suggestion by the Commissioner that Mr Hedges was being elusive or, by the time of the hearing, that he was being obstructive or unco-operative.
3 Mr Hedges is a retired solicitor who relevantly practiced as a partner of the Curwoods Lawyers Partnership. On his retirement from the Partnership at the end of 2008, he became entitled to a receipt for the disposal of goodwill under cl 25 of the Partnership Deed dated 25 September 2006. Under cl 26 of the Partnership Deed, the Partnership was entitled to be paid, by way of set-off, any amounts that Mr Hedges owed to it. On or about 30 September 2008, Mr Hedges and his then partners (the Ongoing Partners) executed a deed of partner's retirement (Retirement Deed). Clause 3.7 of the Retirement Deed provided that all moneys payable to the retiring partner were to be calculated in accordance with cll 25 and 26 of the Partnership Deed.
4 Under cl 25 of the Partnership Deed, Mr Hedges was entitled to a payment of $182,629 in respect of goodwill. Upon applying the set-off mechanism in cl 26 of the Partnership Deed, Mr Hedges contends that he received no payment because the goodwill amount of $182,629 was offset against an amount of $197,126 owed by Mr Hedges to the Partnership.
5 The Commissioner assessed Mr Hedges' capital gain in the 2009 tax year by taking the total capital gain of $182,629 with a cost base of $0 and reducing it by the standard CGT discount to produce a discount capital gain of $91,314.
6 On 23 December 2020, the Tribunal affirmed the Commissioner's objection decision on the basis that the assessable gain crystallised under cl 25 of the Partnership Deed before offsetting from that amount any amounts due from Mr Hedges in accordance with the set-off mechanism in cl 26 of the Partnership Deed.
7 The appeal turns on whether the capital gain crystallised before or after the operation of the set-off in cl 26 of the Partnership Deed. All other issues ventilated by Mr Hedges before the Tribunal have fallen away.
relevant provisions
Income Tax Assessment Act 1997 (Cth)
8 Pursuant to s 102-5 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997), any capital gain forms part of Mr Hedges' assessable income.
9 Section 116-20(1) of the ITAA 1997 sets out the general rules about capital proceeds, providing:
(1) The capital proceeds from a *CGT event are the total of:
(a) the money you have received, or are entitled to receive, in respect of the event happening; and
(b) the *market value of any other property you have received, or are entitled to receive, in respect of the event happening (worked out as at the time of the event).
Note 1: The timing rules for each event are in Division 104.
Note 2: In some situations you are treated as having received money or other property, or being entitled to receive it: see section 103-10.
Note 3: If you dispose of shares in a buy-back, the capital proceeds are worked out under Division 16K of the Income Tax Assessment Act 1936.
10 Section 103-10 of the ITAA 1997 provides for a constructive receipts rule:
103-10 Entitlement to receive money or property
(1) This Part and Part 3-3 apply to you as if you had received money or other property if it has been applied for your benefit (including by discharging all or part of a debt you owe) or as you direct.
(2) Those Parts apply to you as if you are entitled to receive money or other property:
(a) if you are entitled to have it so applied; or
(b) if:
(i) you will not receive it until a later time; or
(ii) the money is payable by instalments.
Partnership Act 1892 (NSW)
11 Mr Hedges refers in his submissions to s 39 of the Partnership Act 1892 (NSW) which provides:
On the dissolution of a partnership every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or his or her representatives may on the termination of the partnership apply to the Court to wind up the business and affairs of the firm.
12 Section 19 of the Partnership Act provides:
The mutual rights and duties of partners, whether ascertained by agreement or defined by this Act, may be varied by the consent of all the partners, and such consent may be either expressed or inferred from a course of dealing.
Agreed Facts
13 The parties have conducted the appeal with a high degree of co-operation. A comprehensive statement of facts has been agreed.
14 The capital gain in issue on this appeal is calculated at the time of the relevant CGT event giving rise to the tax liability. Mr Hedges acknowledges that the disposal of his interest in the Partnership on retirement is the relevant CGT event, and that the event occurred on about 30 September 2008 when he executed the Retirement Deed. Therefore, any capital gains liability is payable in the 2009 tax year. Before the Tribunal, there was some debate as to whether the relevant CGT event occurred on 30 September 2008 (the date of the execution of the Retirement Deed) or 31 December 2008 (the date Mr Hedges' retirement took effect). On appeal, it was common ground that the CGT event occurred on 30 September 2008. The Tribunal was correct in noting that whether the event occurred on 30 September 2008 or 31 December 2008 made no practical difference.
15 Upon his retirement, Mr Hedges became entitled to receive a number of payments, including, relevantly, in respect of his proportionate share of goodwill, which were subsequently paid in instalments during the 2009, 2010 and 2011 tax years. Mr Hedges' Partnership Interest was 12.57%: Recital C and Sch 1, Partnership Deed. The Partnership Deed provided for payment in instalments: cl 27. The Retirement Deed subsequently amended the instalment regime: cl 3.8.
16 Also upon his retirement, Mr Hedges was required to repay to the Partnership $197,126 in order to make good a shortfall in his capital account. The shortfall and its cause is not in issue in the appeal. The repayment of the capital account also occurred over the same three-year period.
17 It is agreed that the final payments were recorded as follows:
Total Amount entitled Year ended 30 June 2009 Year ended 30 June 2010 Year ended 30 June 2011
Capital and Current Account $0 - - -
Goodwill $182,629 $54,789 $91,315 $36,525
Work in progress $410,320 $131,265 $218,775 $60,280
Other amounts $3,250 $975 $1,625 $650
Repayment of capital account ($197,126) ($31,029) ($118,641) ($47,456)
Total $399,073 $156,000 $193,074 $50,000
18 On 10 September 2014, the Commissioner issued default assessments to Mr Hedges for his 2009, 2010 and 2011 years of income.
19 Relevantly, the Commissioner assessed Mr Hedges' taxable income for the year ended 30 June 2009 to include a discount capital gain from the disposal of the goodwill in the Partnership's business in the amount of $91,314 (as mentioned above, calculated as capital proceeds of $182,629, less cost base of $0, and applying a 50% CGT discount).
The Tribunal's decision
20 On the first day of the Tribunal hearing, Mr Hedges was granted leave to amend his grounds of objection, relevantly, as follows:
The 2009 assessment is excessive because:
1. the capital gain included in assessable income is based on an overstatement of the "capital proceeds" (for the purposes of s116-20(a) of the Income Tax Assessment Act 1997 (Cwth) [sic] (ITAA97) from the disposal of the Applicant's interest in the [Partnership] and in particular the goodwill asset. Under s116-20(a) the capital proceeds comprises "the money you have received, or are entitled to receive, in respect of the event happening." The Applicant says that the amount of "money" comprises the amount calculated by Curwoods Lawyers to be attributable to be goodwill less the debit in the Applicant's capital account upon retirement as required by clauses 25 and 26 of the [Partnership Deed].
21 The Tribunal found that (at [19] to [20]):
19. … the terms and effect of the partnership deed are clear enough. Clause [25.1] says the quantum of the various payments shall be determined and those amounts 'shall be paid'. The reconciliation contemplated in Clause [26] does not occur until after the amounts payable under Clause [25] have already crystallised. At that point, those amounts become the capital proceeds from the CGT event (i.e., disposal of the goodwill) within the meaning of s 116.20. The fact the amounts might thereafter be applied towards settling a debt does not matter: s 103.10 points out you are deemed to receive monies for present purposes where those monies are applied for your benefit.
20. Clauses [25] and [26] do not operate in the way suggested by the taxpayer. The capital proceeds from the disposition of the goodwill are determined pursuant to Clause [25] and it is that figure which is relevant for present purposes.
22 The reference to "Clause [25.1]" at paragraph [19] is a slip – the Tribunal should have referred to the chapeau of cl 25. Subclauses 25.1 to 25.4 are each addressed to particular categories of payment to the Outgoing Partner. Subclause 25.4 provides for payment of a proportionate amount in respect of the value of the goodwill of the Partnership. Nothing turns on the slip.
The ground of appeal
23 By the time the appeal was heard, it had reduced to a single issue, namely, what were the capital proceeds which Mr Hedges was entitled to receive for the purpose of s 166-20 of the ITAA 1997.
24 In his notice of appeal, Mr Hedges identifies the following question of law:
Whether the Assessment was excessive or otherwise incorrect because the amount relating to goodwill that was included in the capital proceeds under s 116-20 of the Income Tax Assessment Act 1997 (Cwth) [sic] (ITAA97) that the Applicant received or was entitled to received, in respect of his disposal of his interest in the Curwoods Lawyers partnership, was excessive?
25 The relevant ground of appeal is as follows:
1. Under clauses 25 and 26 of the Curwoods Lawyers Partnership deed (the Partnership Deed) dated 25 September 2006, the amount that the Applicant received or was entitled to receive in respect of goodwill and work in progress was a net amount once amounts that shall be paid under clause 25 are set-off or reduced by the operation of clause 26. As a result of the Commissioner incorrectly including the amount calculated under clause 25 in capital proceeds without reducing that amount because of the operation of clause 26 the Assessment was excessive.
Mr Hedges' submissions
26 Mr Hedges' submissions framed the error of law on the part of the Tribunal as a misconstruction of the effect of cl 25 of the Partnership Deed when read with cl 26 of the Partnership Deed and with cl 3.7 of the Retirement Deed.
27 Mr Hedges contends that a proper construction of the Partnership Deed and the Retirement Deed commences with cl 3.7 of the Retirement Deed. He submits that the requirement in cl 3.7 that "all moneys payable to the Retiring Partner in relation to the Partnership shall be calculated in accordance with [cll] 25 and 26 of the [Partnership] Deed" implies that what the retiring partner is to be paid crystallises only after the calculations in both cl 25 and cl 26 have been applied. Mr Hedges contends that the Tribunal erred in taking a serial approach to the calculations in cll 25 and 26 and says that this is contrary to cl 3.7 of the Retirement Deed. He submits that cll 25 and 26 must be read together to crystallise "all moneys payable" under cl 3.7, and that to do so is consistent with a principled approach to construing the deeds as a whole and in context: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 at [17]; Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings [2005] HCA 3; 221 CLR 496; 79 ALJR 550.
28 Finally, Mr Hedges submits that to construe the two deeds in this way is consistent with the general law of partnership, in that a partner's interest cannot be ascertained until completion of the liquidation of the partnership upon dissolution and the identification of any surplus share. Mr Hedges submits that cll 25 and 26 operate "merely as a device to calculate the surplus moneys owing under [cl] 3.7" of the Retirement Deed. In reliance on Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43; 242 CLR 508, Mr Hedges submits that, consistently with the analysis in Henschke, cll 25 and 26 of the Partnership Deed and cl 3.7 of the Retirement Deed have the effect that the relevant amount for the purpose of the assessment is the net amount payable under cl 3.7 of the Retirement Deed calculated in accordance with cll 25 and 26 of the Partnership Deed. As noted above, Mr Hedges points to s 39 of the Partnership Act, which is materially the same as the equivalent South Australian legislation considered in Henschke, and contends that it has the effect that the interest of each partner can only be ascertained finally after the liquidation of the partnership and the identification of any surplus share.
Consideration
29 For the reasons which follow, I am not satisfied that Mr Hedges has demonstrated that the Tribunal erred as a matter of law in its construction of the relevant deeds. It follows that I am not satisfied that Mr Hedges has demonstrated error in respect of the Tribunal's decision to affirm the Commissioner's objection decision.
30 Mr Hedges relied on Henschke, where the High Court was concerned with the meaning of "conveyance on sale" under s 60 of the Stamp Duties Act 1923 (SA). The issue in Henschke arose from the retirement of Doris Henschke from a partnership involving herself and three other winemakers which carried on the Henschke winemaking business. The relevant agreements comprised a partnership agreement dated 17 January 1986 and a separate retirement deed dated 23 December 2004. Clauses 22 and 23 of the partnership agreement provided for the retirement of partners upon the giving of particular notice, with an option for the continuing partners to purchase the share of the retiring partner, and, in default of such purchase, for the dissolution and winding up of the partnership. The retirement deed provided that Mrs Henschke retired with effect from 30 June 2003 and the other partners were to continue the partnership without purchasing Mrs Henschke's interest and without the partnership being dissolved. The deed provided for the adjustment of the remaining partners' interests in the partnership and for Mrs Henschke to receive a distribution of her partnership capital and income in the sum of $5,885,298 in full satisfaction of all claims she had against the partnership. The Commissioner of State Taxation for South Australia succeeded in establishing that the retirement deed was a "conveyance on sale" within the meaning of s 60 of the Stamp Duties Act and, as such, attracted stamp duty pursuant to s 4 of the Stamp Duties Act.
31 Unlike Henschke, the present appeal is concerned with the assessment of capital gains tax as part of the retiring partner's assessable income, not with stamp duty which is levied on instruments. Similarly to Henschke, the present appeal involves the construction of the two relevant deeds in order to determine the relevant tax consequence. It is necessary to begin by construing the relevant deeds.
32 Clause 2.5 of the Partnership Deed provides:
The Partners agree that the provisions of the Partnership Act 1892 (NSW) shall only apply to the Partnership where there is no corresponding provision herein, it being the intent of the Partners that this Deed sets out the terms and conditions that shall regulate their relations as partners and this Deed shall be construed accordingly.
That the mutual rights and duties of partners defined by the Partnership Act may be varied in this way is not controversial: s 19, Partnership Act.
33 Clause 3 provides:
The death, retirement (including deemed retirement), expulsion or the happening of an event which results in a Partner ceasing to be a member of the Partnership does not terminate the Partnership as between the other Partners as long as there are two or more other Partners to continue the Partnership.
34 Clause 32 of the Partnership Deed provides:
The partners agree that the Partnership shall continue notwithstanding the fact that
32.1 a Partner dies;
32.2 a new Partner is admitted; or
32.3 a Partner retires (by deemed retirement, expulsion or otherwise).
35 Clause 33 provides:
Upon the retirement or death of a Partner, the Continuing Partners shall use their best endeavours to cause the Outgoing Partner to be released from any guarantees, bills of sale, leases hire purchase agreements or other financial obligations that have been entered into by the Outgoing Partner and the Continuing Partners shall until so released indemnify the Outgoing Partner in respect of any liability under such guarantee (and the like) after his retirement or death.
36 Clause 41 provides:
41.1 Where the Partnership is terminated, then within three (3) months of the date of termination for the Partnership, a general account shall be taken of the assets and liabilities of the Partnership and the assets (including, but without limitation, the Partnership goodwill) must be realised and sold and in settling accounts between Partners the following rules must be observed:
41.1.1 losses, including losses and deficiencies of capital, must be paid first out of profits, next out of capital and lastly, if necessary by the Partners in the Partnership Interests; and
41.1.2 the assets of the Partnership, including the sums, if any, contributed by the Partners to make up losses or deficiencies of capital, must be applied in the following manner and orders:
(a) in paying the debts and liabilities of the Partnership to persons who are not members of the Partnership;
(b) in repayment to each Partner (pro rata if necessary in accordance with Partnership Interests) of any actual payment or advance made by a Partner to the Partnership;
(c) in payment to each Partner (pro rata if necessary in accordance with the Partnership Interests) of the final balance of his Current Account;
(d) in repayment to each Partner (pro rata if necessary in accordance with the Partnership Interests) of the balance of his Capital Account; and
(e) the balance, if any, remaining after the above amounts have been paid in full shall be divided between the Partners in accordance with the Partnership Interests.
41.2 Each Partner must sign all documents and do all acts as are reasonably required in connection with the winding up of the Partnership.
37 Clauses 3.4 to 3.7 of the Retirement Deed provide for mutual releases and indemnities between Mr Hedges and the Ongoing Partners.
38 The effect of cll 3, 32 and 33 of the Partnership Deed and cll 3.4 to 3,7 of the Retirement Deed is to bring about a "technical" dissolution of the Partnership upon Mr Hedges' retirement, rather than a "general" dissolution of the Partnership as contemplated by cl 41of the Partnership Deed in the sense described by the High Court in Henschke at [11] to [12] (footnotes omitted):
11. The general principles with respect to retirement of partners were explained as follows by Eichelbaum CJ in Hadlee v Commissioner of Inland Revenue (NZ):
"In law the retirement of a partner, or the admission of a new partner, constitutes the dissolution of the old partnership and the formation of a new one. Here, upon the happening of such events there were no overt signs of dissolution; the partnership's financial structure and arrangements were such that none was required but that does not alter the underlying legal significance of any retirement or new admission. Nor, in my opinion, is it possible to avoid those legal propositions by the terms of the partnership agreement: no doubt it is competent for partners to agree in advance that in the event of a retirement the remaining partners will continue to practise in partnership but that does not overcome the consequence that the partnership practising the day after the retirement is a different one from that in business the previous day."
12. These propositions reflect the distinction between what may be called a "technical" dissolution usually brought about by agreement, such as that in the Retirement Deed, and a "general" dissolution with a winding up of the partnership.
39 The High Court in Henschke recognised that it is competent for partners to agree in advance that in the event of a retirement, the remaining partners will continue to practice in partnership. In the Partnership Deed, the partners have agreed what is to occur in the event of the retirement of a partner which includes that the Partnership – although differently constituted and technically dissolved, and reconstituted afresh – will continue. Retirement of a partner does not cause the Partnership to be dissolved in the general sense, that is to say, terminated, and cl 41 is not triggered. Rather, the dissolution of the Partnership is "technical" in the sense described in Henschke and the retiring partner's rights and obligations are ascertained in accordance with the regime agreed between the partners in the Partnership Deed and the Retirement Deed.
40 Clause 24 provides for a partner to retire by giving a written notice. The Retirement Deed records that Mr Hedges is retiring from the Partnership "upon" 31 December 2008, which is described as the "Departure Date".
41 Clause 25 provides for what is to happen upon a partner's retirement:
25. EFFECT OF RETIREMENT AND PAYMENT
Upon the retirement of a Partner under clauses 22, 23, or 24 hereof, or otherwise however arising, or, upon the death of a Partner, he, or his legal personal representative, shall be paid:
25.1 the amount standing to the credit of his Capital Account in the books of the Partnership;
25.2 the amount standing to the credit of his Current Account in the books of the Partnership;
25.3 his proportionate part calculated in accordance with the Partnership Interests of the Work in Progress. The value of the Work in Progress for the purposes of this clause shall be determined either by the Partners, including the Outgoing Partner, or in the absence of such agreement by an independent costs consultant appointed by the President for the time being of the Law Society of New South Wales (or nominee), which consultant shall act as an expert and not as a mediator or arbitrator and whose decision shall be binding on the Partners unless in the case of a manifest and material error of fact. The costs of such consultant shall be a Partnership expense; and
25.4 his proportionate part calculated in accordance with the Partnership Interests for the goodwill of the Partnership, the value of the goodwill shall be the equivalent of 50% of the annual net trading profit of the Partnership (as opposed to the net taxable profit) averaged over the preceding three (3) years. For the purposes of calculating such net trading profit salaries paid to Equity Partners and the profit component of management fees paid by the Partnership to any associated service entity shall be excluded and shall be added back. In the event of a dispute concerning the proper basis for and/or the calculation of the net trading profit then such dispute shall be determined by the nominee of the accountants for the partnership (and being a member of that firm) who shall act as an expert and not a mediator or arbitrator and whose decision shall be binding on the Partners unless in the case of manifest and material error of fact. The costs of such accountants shall be a Partnership expense. If such accountants decline to so act then by an accountant appointed by the President for the time being of the Law Society of New South Wales (or nominee), which accountant shall act as an expert and not as a mediator or arbitrator and whose decision shall be binding on the Partners unless in the case of manifest and material error of fact.
The assessment decision in issue on this appeal relates to the payment in respect of goodwill pursuant to cl 25.4 upon Mr Hedges' retirement. Upon his retirement, Mr Hedges was entitled – "shall be paid" – to a payment of his proportionate part of the value of the goodwill of the Partnership calculated in accordance with cl 25.4. It is common ground that Mr Hedges' proportionate goodwill payment was $182,629.
42 Clause 25 is an example of the contractual modification of the process by which, and the basis upon which, the plus side of a retiring partner's ledger is to be determined. In Henschke, the High Court observed at [22] (footnotes omitted):
The significance of the interplay between the law of contract and the doctrines and remedies of equity was further explained by Lord Millett in Hurst v Bryk. His Lordship observed that disputes between partners and the dissolution and winding up of partnerships have always fallen within the jurisdiction of the Court of Chancery, and continued:
This is because, while partnership is a consensual arrangement based on agreement, it is more than a simple contract (to use the expression of Dixon J in McDonald v Dennys Lascelles Ltd); it is a continuing personal as well as commercial relationship. Neither during the continuance of the relationship nor after its determination has any partner any cause of action at law to recover moneys due to him from his fellow partners. The amount owing to a partner by his fellow partners is recoverable only by the taking of an account in equity after the partnership has been dissolved. Only the Court of Chancery was equipped with the machinery necessary to enable such an account to be taken, and the basis upon which the account was taken reflected equitable principles. These could be modified by agreement, but they did not find their source in contract.
43 Clause 26 of the Partnership Deed relevantly provides that:
SET-OFF
Upon the retirement … of any partner, any moneys owing by such Partner as at retirement…shall be determined and shall be offset against any amount found owing to the Outgoing Partner as at the date of retirement …
44 Pausing here, as noted above, at the time of his retirement Mr Hedges owed the Partnership $197,126 as a debt in respect of amounts drawn on his capital account which he was required to repay. This amount was required to be offset against the amounts due to Mr Hedges in respect of goodwill.
45 Clause 3.7 of the Retirement Deed provides that:
"… all moneys payable to the Retiring Partner in relation to the Partnership shall be calculated in accordance with Clauses 25 and 26 of the [Partnership] Deed …".
46 Clause 27 of the Partnership Deed provides for "Terms of Payment" as follows:
Subject to clauses 25 and 26 hereof the amount payable to the Outgoing Partner shall be paid by three (3) equal consecutive six (6) monthly instalments the first to be paid six (6) months after the date of retirement or death of the Outgoing Partner provided that:
27.1 in respect of the instalments or any or all of them, if the same are not paid within seven (7) days of the due date interest shall be payable in respect of such unpaid instalments at the rate for the time being charged to the Partnership on its bank overdraft account from the date on which the payment was due to the date of payment (and if the Partnership does not have an overdraft, then at the prescribed rate of interest payable on Judgments of the Supreme Court of new South Wales); and
27.2 irrespective of the provisions contained in this clause, the Continuing Partners shall use their best endeavours to discharge their liability hereunder within six (6) months, or such earlier time than eighteen (18) months as may be practicable, having regard to the overall financial position of the Partnership provided that it is not the intention of the Partners that this clause shall operate as a legally enforceable commitment to do so.
47 Clause 27 was modified by cl 3.8 of the Retirement Deed, which provides:
3.8 Notwithstanding Clause 27 of the Deed, in lieu of three (3) instalments payable thereunder on account of the Retirement Moneys the Ongoing Partners agree to pay or cause to be paid the Retirement Moneys as follows:
3.8.1 Instalment 1 – or before 31 March 2009 – 15% thereof;
3.8.2 Instalment 2 – on or before 30 June 2009 – 15% thereof;
3.8.3 Instalment 3 – on or before 30 September 2009 – 15% thereof;
3.8.4 Instalment 4 – on or before 31 December 2009 – 20% thereof;
3.8.5 Instalment 5 – on or before 31 March 2010 – 15% and;
3.8.6 Instalment 6 – on or before 30 June 2010 – 20%
PROVIDED THAT in the period commencing 1 January 2009 and ending 30 June 2009 the Ongoing Partners shall pay on account of instalment 1 and Instalment 2 of the Retirement Moneys $12,000 each fortnight in arrears until Instalment 1 and Instalment 2 have been paid in full ("the Payments") PROVIDED FURTHER THAT if at a time prior to Instalment 2 falling due the sum of the Payments so made equals the sum of Instalment 1 and Instalment 2 THEN the Ongoing Partners shall be relieved of making any further payments AND if the Payments so made shall be in excess of the sum of Instalment 1 and Instalment 2 then the Ongoing Partners shall offset the overpayment made by them against the next instalment of any other moneys becoming due and payable to the Retiring Partner hereunder on any account.
48 Clause 25 of the Partnership Deed is under the heading "Effect of retirement and payment". In plain terms, it provides that upon the happening of the designated event – here, retirement – the Partner shall be paid the amounts specified in cll 25.1 to 25.4. The amount that "shall be paid" "upon retirement" in respect of goodwill is Mr Hedges' proportionate part, calculated in accordance with his Partnership Interest of 12.57%, of the goodwill of the Partnership, the value of which is calculated as the equivalent of 50% of the annual net trading profit of the Partnership, averaged over the preceding three years. Clause 25 is the source of Mr Hedges' right to be paid an amount in respect of his proportionate share in the goodwill of the Partnership upon his retirement.
49 Clause 26 does not confer on Mr Hedges a right to receive payment upon his retirement in respect of, relevantly, goodwill. Clause 26 is directed to providing a set-off mechanism. It requires that "any moneys owing" by an Outgoing Partner "shall be determined" and "shall be offset against any amount found owing to" the Outgoing Partner. Clause 26 requires the determination of amounts owing by and to an Outgoing Partner, but it is not the source of the relevant obligations in respect of such payments. Clause 26 is merely a mechanism that provides a convenient method by which the Partnership can recover amounts owed by Outgoing Partners to the Partnership on their retirement.
50 Clause 3.7 of the Retirement Deed is similarly directed to the "calculation" of "the Retirement Moneys" which are "all moneys payable" to the Outgoing Partner. Clause 3.7 is directed to the net payment position. Of itself, cl 3.7 does not establish a right to the component payments. Clause 3.7 says that the Retirement Moneys "shall be calculated in accordance with [cll] 25 and 26 of the [Partnership] Deed". Attention is directed back to cl 25, which is the source of the entitlement to the four categories of payments identified in cll 25.1 to 25.4 (inclusive), and to cl 26, which addresses the mechanism by which the net payment is calculated after applying the contractually agreed set-off mechanism by which debts owed by the Outgoing Partner are recovered. The Tribunal was correct to construe the relevant deeds as giving Mr Hedges an entitlement upon his retirement to the goodwill payment which derived from cl 25, specifically cl 25.4. The relevant event for the purpose of s 116-20(1)(a) of the ITAA 1997 was Mr Hedges' retirement. Upon this event, Mr Hedges became "entitled to receive" the goodwill payment within the meaning of s 116-20(1)(a) of the ITAA 1997.
51 The Tribunal was also correct to recognise that, notwithstanding that the goodwill payment was liable to be applied to offset Mr Hedges' obligation to repay the debt due on the capital account, the capital proceeds of the CGT event were not reduced by the reason of the offset. The effect of s 103-10 of the ITAA 1997 was that Mr Hedges was deemed to receive the goodwill payment at the time it was applied for his benefit in reducing his debt in respect of the capital account.
Conclusion
52 For these reasons, the appeal must be dismissed. Mr Hedges has not demonstrated that the Tribunal's decision was affected by an error of law. I will make orders accordingly.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.
Associate:
Dated: 23 November 2022
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Federal Court of Australia
Australian Securities and Investments Commission v Marco (No 11) [2022] FCA 704
File number: WAD 481 of 2018
Judgment of: FEUTRILL J
Date of judgment: 14 June 2022
Date of publication of reasons: 17 June 2022
Catchwords: CORPORATIONS – application by Court-appointed Receivers for fixing remuneration and interim payment of remuneration pending determination by a Registrar – fixing of an appropriate percentage for interim payment – whether interim payment is subject to appropriate safeguards – supplementary interim payment refused
Legislation: Corporations Act 2001 (Cth) ss 425, 425(8), 601EE
Federal Court of Australia Act 1976 (Cth) s 20A(2)
Federal Court Rules 2011 (Cth) rr 39.32, 39.33, 39.35
Cases cited: Australian Securities and Investments Commission v Letten (No 7) [2010] FCA 1231; (2010) 190 FCR 59
Australian Securities and Investments Commission v Letten (No 9) [2010] FCA 1459
Australian Securities and Investments Commission v Letten (No 19) [2012] FCA 375
Australian Securities and Investments Commission v Letten (No 21) [2013] FCA 744
Australian Securities and Investments Commission v Letten (No 27) [2020] FCA 891
Australian Securities and Investments Commission v Marco (No 3) [2020] FCA 719
Australian Securities and Investments Commission v Marco (No 6) [2020] FCA 1781
Australian Securities and Investments Commission v Marco (No 7) [2021] FCA 429
Australian Securities and Investments Commission v Marco (No 8) [2021] FCA 885
Australian Securities and Investments Commission v Marco (No 10) [2021] FCA 1342
Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; (2012) 295 ALR 52
Re Banksia Securities Ltd (in liq) (receivers and managers appointed) [2017] NSWSC 540
Re Clynton Court Pty Ltd [2005] FCA 543; (2005) 53 ACSR 432
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 40
Date of last submission: 12 May 2022
Date of hearing: Determined on the papers
Solicitor for the Receivers: Ashurst Australia
ORDERS
WAD 481 of 2018
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: CHRIS MARCO
First Defendant
AMS HOLDINGS (WA) PTY LTD (RECEIVERS & MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 164 700 485)
Second Defendant
AMS HOLDINGS (WA) PTY LTD (RECEIVERS & MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 164 700 485) AS TRUSTEE FOR AMS HOLDINGS TRUST
Third Defendant
ROBERT MICHAEL KIRMAN AND ROBERT CONRY BRAUER AS RECEIVERS
Interested Persons
order made by: FEUTRILL J
DATE OF ORDER: 14 June 2022
THE COURT ORDERS THAT:
1. A Registrar of the Court is to review and fix the remuneration to which the Receivers are properly entitled for each of the periods from:
(a) 4 September 2021 to 3 December 2021; and
(b) 4 December 2021 and 4 March 2022,
under orders 5, 6, 7 and 10 made in this proceeding on 7 December 2020.
2. The Registrar will advise the Receivers if the Registrar requires further information to fix the remuneration the subject of the applications and copies of any such further information provided to the Registrar must also be provided to the Australian Securities and Investments Commission.
3. If the Registrar requests further information to fix the remuneration the subject the applications, the Receivers must provide such further information within 14 days of receipt of the Registrar's request.
4. As soon as reasonably practicable after receipt of the further information referred to in paragraph 3, the Registrar is to fix the remuneration the subject of the applications and deliver short written reasons for their determination.
5. Within 14 days of the Registrar fixing the remuneration and delivering their written reasons under order 4, the Receivers or any other party may apply to the Court to review the Registrar's determination and the Court may review the Registrar's determination and fix the remuneration the subject of the applications.
Interim payment of claimed remuneration by Receivers
6. Subject to the following, the remuneration of the Receivers for each of the periods from:
(a) 4 September 2021 to 3 December 2021 in the amount equivalent to 85% of $146,594.25 (inc GST); and
(b) 4 December 2021 to 4 March 2022 in the amount equivalent to 85% of $41,622.90 (inc GST),
is approved for payment on an interim basis:
(i) if the amount paid on an interim basis under this order is greater than the amount determined by the Registrar under orders 1 or 4 or any subsequent determination by the Court under order 5, the Receivers are to refund the difference together with interest at the Westpac 6 month business term deposit rate applicable at the time of drawdown of the interim remuneration amount; and
(ii) if the Registrar or Court determines that the Receivers were entitled to recover any amount greater than the amount paid on an interim basis under this order, then the Receivers may drawdown such an amount upon the Registrar or Court making orders reflecting the determination.
7. Until further order, upon the drawdown of any funds for the purposes of payment of the Receivers' interim remuneration under order 6, the Receivers are to file with the Court a Certificate in the form at Annexure A to these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
Annexure A
Certificate in respect of the Receivers' remuneration application
No. WAD 481 of 2018
Federal Court of Australia
District Registry: Western Australia
Division: General Division
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
CHRIS MARCO and others named in the schedule
Defendants
To: The Registrar
Federal Court of Australia
Western Australia Registry
Peter Durack Commonwealth Law Courts Building
1 Victoria Avenue
Perth WA 6000
Fax: (08) 9268 7208
NOTE: Terms defined in the orders made by McKerracher J on 7 December 2020 have the same meaning when used in this Certificate.
On [insert date] the amount of $[X] was paid to the Receivers from the Property as interim remuneration pursuant to order 6 of the orders made by Feutrill J on 14 June 2022.
Signed: …………………………
Date: ……………………
REASONS FOR JUDGMENT
FEUTRILL J:
INTRODUCTION
1 By orders of the Court made on 7 December 2020, Messrs Robert Kirman and Robert Brauer of McGrathNicol were appointed as joint and several receivers and managers of all property of the first and second defendants, all property of the third defendant immediately prior to the appointment of voluntary administrators to the third defendant, and all property of the managed investment scheme operated by each of the defendants described in the orders (Scheme and Property). Messrs Kirman and Brauer were also appointed as joint and several liquidators of the Scheme and AMS Holdings (WA) Pty Ltd (Receivers & Managers Appointed) (In Liquidation) (ACN 164 700 485) (the second defendant): Australian Securities and Investments Commission v Marco (No 6) [2020] FCA 1781. Before those orders, on 27 May 2020, Messrs Kirman and Brauer had been appointed as interim receivers or trustees of the property of the first defendant and interim receivers and managers of the property of the second and third defendants: Australian Securities and Investments Commission v Marco (No 3) [2020] FCA 719. Messrs Kirman and Brauer are referred to in these reasons as the Receivers.
2 After the Court made orders for their final appointment as receivers, the Receivers made a number of applications to the Court for orders to facilitate the fixing of their remuneration for various periods by a Registrar, as well as for orders approving, subject to certain safeguards, immediate interim payment of amounts equivalent to 85% of the total remuneration claimed for each period.
3 On 28 January 2021, the Court made orders, by consent, for fixing the Receivers' remuneration for work undertaken as interim receivers in the period from 27 May 2020 to 6 December 2020. Since those orders were made, the plaintiff (ASIC) and the first defendant (Mr Marco) have not engaged with, or sought to be heard on, the Receivers' remuneration applications.
4 By interlocutory process dated 7 April 2021, the Receivers sought orders fixing their remuneration for the period from 7 December 2020 to 5 March 2021 and approving interim payments of 85% of the remuneration claimed for each of the periods 27 May 2020 to 6 December 2020 and 7 December 2020 to 5 March 2021. On 19 April 2021, the Court made orders, in effect, granting that application: Australian Securities and Investments Commission v Marco (No 7) [2021] FCA 429.
5 By interlocutory process dated 9 July 2021, the Receivers sought orders fixing their remuneration for the period from 6 March 2021 to 4 June 2021 and approving an interim payment of 85% of the remuneration claimed for that period. On 14 July 2021, the Court made orders, in effect, granting that application: Australian Securities and Investments Commission v Marco (No 8) [2021] FCA 885.
6 By interlocutory process dated 21 October 2021, the Receivers sought orders fixing their remuneration for the period from 5 June 2021 to 3 September 2021 and approving an interim payment of 85% of the remuneration claimed for that period. On 29 October 2021, the Court made orders, in effect, granting that application: Australian Securities and Investments Commission v Marco (No 10) [2021] FCA 1342.
7 By interlocutory process dated 3 February 2022, the Receivers seek orders fixing their remuneration for the period from 4 September 2021 to 3 December 2021, approving an interim payment of 85% of the remuneration claimed for the period from 4 September 2021 to 3 December 2021, and approving an interim payment of 85% of supplementary remuneration claimed for the period from 15 July 2021 to 3 September 2021. The orders sought are in substantially the same terms as the orders the Court made on 7 April, 9 July and 21 October 2021.
8 By interlocutory process dated 12 May 2022, the Receivers seek orders fixing their remuneration for the period from 4 December 2021 to 4 March 2022 and approving an interim payment of 85% of the remuneration claimed for that period. The orders sought are in substantially the same terms as the orders the Court made on 7 April, 9 July and 21 October 2021.
9 On 14 June 2022, I made orders, in effect, granting the orders sought:
(a) in the Receivers' application of 3 February 2022, except that an order was not made approving a supplementary interim payment of the remuneration claimed for the period from 15 July to 3 September 2021; and
(b) in the Receivers' application of 12 May 2022.
These are the reasons for those orders.
Materials relied upon
10 The Receivers filed and relied upon an affidavit of Mr Brauer sworn 3 February 2022 in support of the interlocutory process dated 3 February 2022. The Receivers filed and relied upon an affidavit of Mr Brauer sworn 12 May 2022 in support of the interlocutory process dated 12 May 2022.
11 The Receivers filed written submissions dated 12 January 2021 in support of the interlocutory process dated 18 December 2020, written submissions dated 14 April 2021 in support of the interlocutory process dated 7 April 2021 and written submissions dated 13 July 2021 in support of the interlocutory process dated 9 July 2021. The Receivers relied on their previous written submissions mutatis mutandis in support of the interlocutory processes dated 3 February and 12 May 2022.
12 The Receivers requested that each of the interlocutory processes of 3 February and 12 May 2022 be determined on the papers. ASIC and Mr Marco have indicated that they do not wish to be heard on the applications.
13 The Court may deal with a matter without an oral hearing (either with or without the consent of the parties) if satisfied that determination of the matter would not be significantly aided by an oral hearing because the legal arguments in relation to the matter can be dealt with adequately by written submissions: s 20A(2)(c)(ii) of the Federal Court of Australia Act 1976 (Cth). I am so satisfied.
FIXing RECEIVERS' REMUNERATION
Orders of 7 December 2020
14 By paras 5, 6, 7 and 10 of the orders of the Court of 7 December 2020, the Receivers are entitled to reasonable remuneration properly incurred in the performance of their duties arising in connection with their appointment and in the exercise of their powers as may be approved by the Court on the application of the Receivers, together with all costs, expenses and disbursements. Such remuneration is to be calculated on the basis of time reasonable, spent by the Receivers and any partner or employee of the firm to which the Receivers are attached, at the standard rates of the Receivers' firm, from time to time, for work of that nature. The Receivers' remuneration, costs, expenses and disbursements are to be paid from the property.
15 The Receivers seek remuneration in the sum of $146,594.25 (inclusive of GST) for the period from 4 September 2021 to 3 December 2021 and supplementary remuneration in the sum of $41,317.65 (inclusive of GST) for the period from 15 July 2021 to 3 September 2021. For each of these periods, the Receivers now seek orders approving an interim payment of 85% of the remuneration claimed.
16 The Receivers seek remuneration in the sum of $41,622.90 (inclusive of GST) for the period 4 December 2021 to 4 March 2022. They also seek orders approving an interim payment of 85% of the remuneration claimed for that period.
17 Paragraphs 1 to 5 of the orders sought in each of the interlocutory processes dated 3 February 2022 and 12 May 2022 set out a mechanism for the approval by a Registrar of the Court of the amount of remuneration to which the Receivers are entitled under paras 5, 6, 7 and 10 of the orders of 7 December 2020.
Evidence
18 For each of the periods 4 September to 3 December 2021 and 4 December 2021 to 4 March 2022, the Receivers continued to undertake a significant amount of work. The nature of, need for and complexity of that work is explained in summary form in:
(a) the Receivers' Remuneration Approval Report for the period from 4 September 2021 to 3 December 2021 (Fourth Remuneration Report); and
(b) the Receivers' Remuneration Approval Report for the period from 4 December 2021 to 4 March 2022 (Fifth Remuneration Report).
The Fourth Remuneration Report is Appendix 2 of the Receivers (and Liquidators) Fourth Report to the Committees of Inspection dated 9 December 2021 which is annexed and marked RCB-1 to Mr Brauer's affidavit of 3 February 2022. The Fifth Remuneration Report is Appendix 2 to the Receivers (and Liquidators) Fifth Report to the Committees of Inspection dated 10 March 2022 which is annexed and marked RCB-1 to Mr Brauer's affidavit of 12 May 2022.
19 The Fourth Remuneration Report also contains an outline of additional work undertaken in the period 15 July 2021 to 3 September 2021. The remuneration for that additional work was not included in the Receivers' application for approval for an interim payment in their application of 21 October 2021 and, therefore, no order was made approving an interim payment of 85% of the remuneration claimed for that work in the orders of the Court made on 29 October 2021.
20 The additional amount of remuneration claimed for the period 15 July to 3 September 2021 is $41,317.65 (inclusive of GST). In his affidavit of 3 February 2022, Mr Brauer deposes that the amount claimed relates to work undertaken in part of the period covered by the remuneration application dated 21 October 2021 but which was inadvertently omitted from that application due to an internal reporting error with the McGrathNicol accounting system. Mr Brauer deposes that the Receivers consider the terms of paras 1 to 5 of the orders of the Court made on 29 October 2021 will apply to the fixing of the supplementary amount claimed for that period and, for that reason, no further order is sought in respect of fixing that remuneration.
21 The Receivers' view as to the effect of paras 1 to 5 of the orders made on 29 October 2021 is correct. The application for a supplementary interim payment and reasons for refusing it are addressed later in these reasons.
22 While the Receivers' applications are not made under Ch 5 of the Corporations Act 2001 (Cth), in exercising the Court's powers to fix a receiver's remuneration under s 425, the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the matters referred to in s 425(8). As under the Court orders of 7 December 2020 the Receivers are entitled to reasonable remuneration properly incurred, it is appropriate to take into account the same or similar matters that the Court would take into account in determining whether remuneration is reasonable under s 425(8): e.g., Re Banksia Securities Ltd (in liq) (receivers and managers appointed) [2017] NSWSC 540 (at [41]-[42]).
23 In each of his affidavits of 3 February 2022 (para 8) and 12 May 2022 (para 7), Mr Brauer deposes that details of relevant matters mentioned in s 425(8) of the Corporations Act are set out in each of the Fourth and Fifth Remuneration Reports. Each of the reports contains a declaration by the Receivers to the effect that they are satisfied that the remuneration claimed is in respect of necessary work properly performed. The tasks undertaken are described in the reports and schedules to the reports. The methodology for presenting, reviewing and for being satisfied that the work was necessary and properly performed is outlined in the reports. Mr Brauer deposes that each of the reports has been prepared with the requisite level of detail and to the standards of the applicable professional body - 'Practice Statement Insolvency 5: Remuneration Reporting' issued under the ARITA Code of Professional Practice.
No opposition by ASIC
24 ASIC has reviewed each of the Fourth and Fifth Remuneration Reports and expressed no opposition to the amount of remuneration claimed: affidavit of Mr Brauer of 3 February 2022, paras 11-12, RCB-3; affidavit of Mr Brauer of 12 May 2022, paras 10-11, RCB-3. ASIC was also served with a copy of each of the interlocutory processes and the Brauer affidavits. ASIC has advised the Court that it does not wish to be heard on the applications.
25 I am satisfied, based on ASIC's position, that nothing in the material provided to it has caused it to form the view that any aspect of the Receivers' claim for remuneration requires regulatory intervention or warrants the making of submissions before the Court.
No opposition by Mr Marco
26 Mr Marco was served with a copy of each of the interlocutory processes and the Brauer affidavits. Mr Marco has advised the Court that he does not wish to be heard on the applications.
No opposition by Committee of Inspection
27 The Receivers provided members of the Committee of Inspection for the Scheme and AMS Holdings (WA) Pty Ltd (Receivers & Managers appointed) (In Liquidation) (ACN 164 700 485) with a copy of each of the Fourth and Fifth Remuneration Reports at meetings held on 16 December 2021 and 17 March 2022, respectively. The Committee had no questions about or objections to the remuneration claimed in each of the remuneration reports and acknowledged that each of the reports would be submitted to the Court for approval. At the same meetings, the Committee passed resolutions approving the remuneration claimed by the Liquidators under a separate liquidators' remuneration report: affidavit of Mr Brauer of 3 February 2022, paras 9-10, RCB-2; affidavit of Mr Brauer of 12 May 2022, paras 8-9, RCB-2.
INTERIM PAYMENT OF RECEIVERS' CLAIMED REMUNERATION
Requested orders
28 By paras 7 and 8 of the interlocutory process of 3 February 2022 and paras 6 and 7 of the interlocutory process of 12 May 2022, the Receivers seek orders which will allow them, in effect, to obtain interim payment of 85% of their claimed remuneration from the property. The interim payment would be made on the basis that:
(a) if the interim payment were greater than the amount ultimately determined by the Registrar (or any subsequent determination by the Court), the Receivers would refund the difference together with interest; and
(b) if the Registrar or the Court were to ultimately determine that the Receivers were entitled to recover more than the interim payment, then they could do so.
Applicable principles
29 As was noted in Marco (No 7) (at [16]) and Marco (No 8) (at [18]), it is not in doubt that the Court has power to make orders for interim payments of the kind the Receivers have requested. The sources of the Court's power include s 601EE of the Corporations Act, in relation to the Scheme, and the Court's inherent power to control receivers appointed by the Court: e.g., Australian Securities and Investments Commission v Letten (No 7) [2010] FCA 1231; (2010) 190 FCR 59 (at [269]-[271]). Interim payment orders of the type the Receivers seek in the interlocutory processes were made in Australian Securities and Investments Commission v Letten (No 9) [2010] FCA 1459 and Australian Securities and Investments Commission v Letten (No 19) [2012] FCA 375 and, also, in these proceedings, in Marco (No 7), Marco (No 8) and Marco (No 10).
30 As McKerracher J observed in Marco (No 7) (at [18]) and Marco (No 8) (at [20]) (citing Letten (No 9) (at [11]) and Letten (No 19) (at [11])), when considering whether an interim payment order ought to be made, the following two questions arise.
(1) Should the Receivers be entitled to immediate payment of the remuneration on an interim basis?
(2) If so, is 85% an appropriate proportion and, in any case, what other safeguards should be put in place?
Entitlement to interim payment
31 As was noted in Marco (No 7) and Marco (No 8), the Receivers have undertaken a significant amount of work since their appointment. The issues that have arisen and continue to arise in the receivership are not straightforward and the task is not complete and is unlikely to be completed for some time. The facts deposed to in the affidavits of Mr Brauer of 3 February 2022 and 12 May 2022 indicate that the Receivers continue to perform a significant amount of work. It also remains the case that the issues that have arisen and that continue to arise in the receivership are complex and the receivership will continue for some time.
32 As was also noted in Marco (No 7) and Marco (No 8), it is not known when the Registrar will ultimately fix the remuneration claimed by the Receivers. Approval of remuneration for the periods 27 May 2020 to 6 September 2020, 7 December 2020 to 5 March 2021, 6 March 2021 to 4 June 2021 and 5 June 2021 to 3 December 2021 has not been undertaken.
33 I am satisfied that, in the circumstances described in these reasons, it is appropriate to make an order that allows the Receivers to obtain immediate interim payments for the work performed in the period from 4 September 2021 to 4 March 2022. Further, it is evident that there are sufficient funds available to allow for payment to be made of a substantial portion of the remuneration claimed out of the property.
Safeguards
34 An order authorising immediate payment of claimed remuneration on an interim basis must be subject to appropriate measures (or safeguards) to ensure that any overpayment of the Receivers' remuneration will not diminish the funds available for distribution out of the property or otherwise prejudice the interests of relevantly interested parties: e.g., Letten (No 9) (at [14]), Letten (No 19) (at [13]), Marco (No 7) (at [23]) and Marco (No 8) (at [25]).
35 The safeguard mechanisms included in the orders of the Court previously made in these proceedings and the orders made on 14 June 2022 are as follows.
(a) At the time an interim payment is made, the Receivers are to file a certificate in the form of Annexure A to the orders. That certificate requires the Receivers (who are officers of the Court) to confirm that the drawdown is consistent with the orders allowing for the interim payment.
(b) In due course, a Registrar of the Court will review and fix the remuneration to which the Receivers are properly entitled.
(c) The Receivers are obliged to repay any overpayments (with interest) if the amount ultimately determined by the Registrar (or the Court) is less than the amount paid on an interim basis.
(d) The interim payment is a proportion of the amount of remuneration claimed. Therefore, the risk of overpayment is mitigated to that degree.
36 There are other aspects of the circumstances which militate against the risk of overpayment. Namely, the Committee has been given and has considered the remuneration amounts claimed and makes no objection. Further, notice of the application was served on ASIC and Mr Marco and neither objected nor sought to be heard on the orders requested.
Appropriate proportion
37 Where there are appropriate mechanisms to protect the interests of relevantly interested parties, it is appropriate to take a 'broad brush approach' to the determination of the amount in which to approve an interim payment. In cases such as this, there is authority for the proposition that it may be appropriate to adopt 'a rule of thumb' of awarding 80%-85% of the remuneration claimed: Re Clynton Court Pty Ltd [2005] FCA 543; (2005) 53 ACSR 432 per Finkelstein J (at [21]); Letten (No 9) (at [15]); Letten (No 19) (at [17]); Australian Securities and Investments Commission v Letten (No 21) [2013] FCA 744; Australian Securities and Investments Commission v Letten (No 27) [2020] FCA 891 and Marco (No 7) (at [28]). The proposed figure of 85% in each of the applications is the same as the figure adopted in Letten (No 9), Letten (No 19), Letten (No 21), Letten (No 27), Marco (No 7), Marco (No 8) and Marco (No 10).
38 Taking into account the other safeguards referred to earlier in these reasons, I am satisfied that approving an interim payment of up to 85% of the remuneration claimed for each of the periods 4 September to 3 December 2021 (i.e., 85% of $146,594.25 (inclusive of GST)) and 4 December 2021 to 4 March 2022 (i.e., 85% of $41,622.90 (inclusive of GST)) is appropriate.
Supplementary interim payment
39 By para 6 of the orders of the Court of 29 October 2021, a payment of 85% of $87,379.05 (inclusive of GST) was approved on an interim basis for the remuneration claimed for the period 5 June to 3 September 2021. That is, an interlocutory order of this Court was made approving an interim payment of $74,272.19 (inclusive of GST) for the Receivers' remuneration for the period 5 June to 3 September 2021. That order was entered in accordance with rr 39.32, 39.33 and 39.35 of the Federal Court Rules 2011 (Cth) and there was no appeal from those orders.
40 By para 6 of the interlocutory process dated 3 February 2022, the Receivers have sought a supplementary interim payment of 85% of $41,317.65 for the period 15 July to 3 September 2021. That is, the Receivers now seek, in effect, an interim payment of 85% of the total remuneration now claimed for the period 5 June to 3 September 2021. The total remuneration now claimed for that period is $128,696.70 (inclusive of GST) ($87,379.05 plus $41,317.65). While framed as an order for 'supplementary remuneration' the requested order would have the effect of varying the order of the Court made on 29 October 2021 from an order approving an interim payment in the amount of $74,272.19 (inclusive of GST) for the Receivers' remuneration for the period 5 June to 3 September 2021 to an order approving an interim payment in the amount of $109,392.20 (inclusive of GST) for that period. That is, it would have the effect of varying an interlocutory order of the Court that has been entered without an appeal from that order.
41 The Court has power to vary or set aside an interlocutory order after it has been entered: r 39.05 of the Rules. However, the power is discretionary and is to be exercised with caution and only in 'exceptional circumstances'. Due weight is to be given to the principle of the finality of litigation even where the order in question is interlocutory: e.g., Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; (2012) 295 ALR 52 at [52].
42 The facts deposed to in Mr Brauer's affidavit of 3 February 2022 in support of the Receivers' interlocutory process of the same date do not identify 'exceptional circumstances' that would justify the Court reopening a perfected interlocutory order. The inadvertent omission to claim an interim payment of remuneration for part of the work undertaken in the period from 15 July to 3 September 2021 deposed in Mr Brauer's affidavit (at para 7) is not an exceptional circumstance. I do not consider that there are sufficient grounds to reopen the order of the Court of 29 October 2021 and vary the terms of the approval of an interim payment to the Receivers. In any event, even if I considered there were grounds to reopen the orders of 29 October 2021 or otherwise the Court has power to make the requested order, for the reasons which follow, I am not satisfied that it is appropriate to make an order approving a supplementary interim payment of remuneration for the period 15 July to 3 September 2021.
43 For the period during which the Receivers were interim receivers, from 27 May to 6 December 2020, and the period during which the Receivers were final receivers, from 7 December 2020 to 3 September 2021, the Receivers claimed total remuneration of $914,307 (inclusive of GST) of which 85% was approved for payment, or $777,161 (inclusive of GST). With the supplementary remuneration amount claimed for the period 15 July 2021 to 3 September 2021, the total amount claimed for the period 27 May 2020 to 3 September 2021 is $955,625. It follows that, under the orders of the Court made up to and including 29 October 2021, interim payments in the total amount of $777,161 were approved in respect of total remuneration now claimed in the amount of $955,625. That is, interim payments of approximately 81% of the total now claimed have already been approved. That percentage is within the rule of thumb referred to earlier in these reasons and the overall percentage will be improved by the orders of 14 June 2022 by which interim payments of 85% of the remuneration claimed in the periods from 4 September to 3 December 2021 and 4 December 2021 to 4 March 2022 were approved. Further, if and to the extent the Receivers have not recovered the remuneration to which they are ultimately entitled for the period 15 July 2021 to 3 September 2021, they will be entitled to do so under the orders made on 29 October 2021. Therefore, I do not consider it necessary or appropriate to make provision for any supplementary interim payment for the Receivers' remuneration for the period 15 July 2021 to 3 September 2021.
CONCLUSION
44 As the Receivers continue to undertake a substantial amount of work in relation to a complex scheme and it is not certain when the Registrar will fix the Receivers' remuneration, orders for further interim payments are appropriate. Given the safeguards provided in the orders and the broad brush approach to be taken to matters of this nature, 85% of the amount claimed in the interlocutory processes of 3 February and 12 May 2022 is also appropriate. Accordingly, orders substantially in the terms of the interlocutory processes were made on 14 June 2022.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.
Associate:
Dated: 17 June 2022
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Waiviata Pty Ltd v New Millenium Publications Pty Ltd [2002] FCA 98
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FEDERAL COURT OF AUSTRALIA
Waiviata Pty Ltd v New Millenium Publications Pty Ltd [2002] FCA 98
LEGAL PRACTITIONERS ‑ Solicitors ‑ Former client seeking to restrain solicitors acting for opposing party in litigation ‑ No claim that solicitors misusing confidential information ‑ Whether breach of duty ‑ Extent of solicitors' obligation to former client ‑ Source of duty
Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112 cited
Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 cited
Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248 considered and distinguished
WAIVIATA PTY LIMITED v NEW MILLENIUM PUBLICATIONS PTY LIMITED, DANIEL TOBIAS NISSEN, KAY THORNTON‑COHEN and NATHAN NISSEN
V 1177 OF 2001
SUNDBERG J
15 FEBRUARY 2002
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 1177 OF 2001
BETWEEN: WAIVIATA PTY LIMITED (ACN 005 577 873)
APPLICANT
AND: NEW MILLENIUM PUBLICATIONS PTY LIMITED (ACN 007 016 202)
FIRST RESPONDENT
DANIEL TOBIAS NISSEN
SECOND RESPONDENT
KAY THORNTON-COHEN
THIRD RESPONDENT
NATHAN NISSEN
FOURTH RESPONDENT
JUDGE: SUNDBERG J
DATE OF ORDER: 15 FEBRUARY 2002
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The motion notice of which was filed on 21 December 2001 be dismissed.
2. The applicant pay the respondents' costs of the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V 1177 OF 2001
BETWEEN: WAIVIATA PTY LIMITED (ACN 005 577 873)
APPLICANT
AND: NEW MILLENIUM PUBLICATIONS PTY LIMITED (ACN 007 016 202)
FIRST RESPONDENT
DANIEL TOBIAS NISSEN
SECOND RESPONDENT
KAY THORNTON-COHEN
THIRD RESPONDENT
NATHAN NISSEN
FOURTH RESPONDENT
JUDGE: SUNDBERG J
DATE: 15 FEBRUARY 2002
PLACE: MELBOURNE
REASONS FOR JUDGMENT
THE PROCEEDING
1 The applicant has sued the respondents claiming relief in relation to
· contravention of consumer protection provisions of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1999 (Vict)
· passing off
· defamation
· inducing breach of contract
· breach of duty of trust and confidence.
In its statement of claim the applicant alleges
· that for many years it has been engaged in the business of selling advertising space to parties desirous of promoting their businesses or products in a series of tourist books published under the title "Welcome To …" ("the Series"), and publishing and distributing, free of charge, copies of books belonging to the Series to hoteliers and others providing 5 star accommodation to members of the public in Australia ("the market")
· that the second, third and fourth respondents are former employees of the applicant
· that the applicant has acquired a substantial reputation in relation to the Series within the market
· that the respondents have represented to and within the market that the applicant is in liquidation, that the Series has gone out of publication, that the first respondent is the successor of the applicant, that a tourist information booklet published by the first respondent under the title "Destinations" is the successor to the Series, and that the first respondent is supplying hoteliers with copies of "Destinations" when in fact a number of such hoteliers are not distributing copies of "Destinations".
This is the conduct that is alleged to be misleading and deceptive, to constitute passing off and to be defamatory. It is then alleged that the respondents, being aware of existing contracts between the applicant and advertisers and hoteliers, interfered with the contracts intending to cause a breach thereof or prevent their performance by the advertisers or hoteliers. Further, as former employees possessed of the applicant's confidential information, the respondents are alleged to have acted in breach of their duty of trust and confidence by disclosing it to the first respondent. The information disclosed includes information relating to the first respondent's client base, advertising rates, and the names and addresses of contacts within the market with whom the applicant has contracts.
2 On 23 November 2001 Merkel J granted the applicant an interlocutory injunction restraining the respondents from engaging in the conduct complained of.
THE MOTION
3 The applicant has applied for an order that the respondent's solicitors, Norton Gledhill, be restrained from acting for them and from disclosing any confidential information acquired during the course of acting for the applicant or any associated company or individual. An affidavit sworn by a director of the applicant, Nicholas Dower, in support of the motion discloses that
· Minter Ellison were the solicitors for the Waivcom Group of companies ("the Group"), of which the applicant is a member, during 1999
· Anthony Seyfort, a solicitor at Minter Ellison, undertook much of the work for the Group
· The matters in which Mr Seyfort acted for the Group included the preparation of a deed of employment between the holding company and the fourth respondent, the preparation of employment agreements between a member of the Group and the second, third and fourth respondents, and the provision of advice in relation to a company which, though not a member of the Group, was 50 per cent owned by the holding company
· Mr Dower had contact with Mr Seyfort up until March 2001 on at least a weekly basis during which the latter provided advice on a wide range of issues
· In May 2000 Mr Dower sold his publishing company to the holding company and joined the latter's board of directors
· Mr Seyfort left Minter Ellison in mid‑2000 and became a partner at Norton Gledhill who then became solicitors to the Group
· Mr Seyfort acted for the Group in negotiations that resulted in the holding company obtaining its current lease over premises in St Kilda
· In May 2001, through a company structure, Mr Dower purchased the applicant from administrators of the Group
· In November 2001 when Mr Dower discovered that Norton Gledhill were acting for the respondents, he spoke to Mr Seyfort and asked that Norton Gledhill no longer act for the respondents on the ground of a conflict of interest
· Norton Gledhill refused to cease acting for the respondents.
4 Steven Metter, the applicant's financial controller, deposed that Mr Seyfort advised the Group on all corporate governance issues including
· the issuing of shares and the granting of options in the holding company
· ASX compliance requirements
· assistance with the convening and conduct of directors' and shareholders' meetings and the preparation of agendas and minutes
· advice as to the construction and interpretation of agreements relating to the sale of Mr Dower's company to the holding company
· taxation planning
· employer‑employee relations
· foreign exchange dealings.
Mr Metter also sought advice from Andrew Green, a solicitor at Norton Gledhill, about various matters.
5 The material relied on by the applicant was in a number of respects controverted by Norton Gledhill. But in the view I take of the matter I need not record these differences.
THE LAW
6 In Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112 at 118 Drummond J said:
"In my opinion, a solicitor is liable to be restrained from acting for a new client against a former client if a reasonable observer, aware of the relevant facts, would think that there was a real, as opposed to a theoretical possibility that confidential information given to the solicitor by the former client might be used by the solicitor to advance the interests of a new client to the detriment of the old client."
His Honour went on to say that before information will be recognised as confidential, it must be identified with precision and not merely in global terms (at 120).
7 In Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 the House of Lords adopted a similar approach. Lord Millett, with whom the other Law Lords agreed, having referred to the situation where relief is sought by an existing client who can point to a subsisting fiduciary relationship with his solicitor and need not rely on the imparting of confidential information, said (at 235)
"Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.
Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own."
8 A more expansive view of the basis of the Court's jurisdiction has been taken in other cases. A recent elaborate discussion is that of Brooking JA in Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248. In par 52 of his reasons his Honour said:
"I think it must be accepted that Australian law has diverged from that of England and that the danger of misuse of confidential information is not the sole touchstone for intervention where a solicitor acts against a former client. That danger can and usually will warrant intervention, but it is not the only ground. There are two other possible bases for an interdict. In the first place, it may be said to be a breach of duty for a solicitor to take up the cudgels against a former client in the same or a closely related matter."
His Honour went on to discuss the Court's jurisdiction over solicitors as officers of the court, which I understand to be the second basis for an interdict. He summarised the position by saying (par 60) that he rested the grant of an injunction against the solicitors in that case
"on three independent bases: first, the danger of misuse of confidential information; secondly, breach of the fiduciary's duty of loyalty; thirdly, the desirability of restraining the solicitors as officers of the Court."
Ormiston JA based his decision on misuse of confidential information, reserving his position as to the other bases (par 61). Chernov JA took the same view, though he said that Brooking JA had made a compelling case as to the other bases (par 63). The motion was argued on the basis of the approach in Spincode, though I think it would be correct to say that the respondents reserved their position as to its correctness.
CONCLUSION
9 Counsel for the applicant conceded that it was essential to his case that the law was as stated by Brooking JA in Spincode. He could not point to confidential information that is or may be relevant to the instant proceeding. Although counsel made a passing reference to the loyalty basis for intervention, it was Brooking JA's third basis upon which he fastened. Before dealing with this, I should say that counsel's approach is understandable. There is no satisfactory basis on which it could be said that the present proceeding is the same or closely related to matters in which Mr Seyfort or Norton Gledhill had earlier been engaged. Nor do I think this is a case in which Norton Gledhill should be restrained from acting on the basis applicable to their status as officers of the Court. The present case could not be more different from Spincode. There, in discussing the officers of the Court basis of intervention, Brooking JA said (at 58):
"what has been done by [the former solicitors] ‑ and I would have regard to the whole of their conduct here ‑ is so offensive to common notions of fairness and justice that they should, as officers of the Court, be brought to heel notwithstanding that they have not (on this hypothesis) infringed any legal or equitable right. … No experienced solicitor of sound judgment would have done what has been done in this case. And in my view the nature and objectives of the jurisdiction which the Court exercises over its officers, and the breadth of the discretion, permit regard to be had, not only to the nature of the dispute before litigation ensued, and the former retainer, and the new one, but also to the conduct of the solicitors at all stages. This includes the partisan approach of Kirton when he acted for the company and his undisclosed attempts to serve Moore's interests, the peremptory and unseemly way in which the solicitors changed sides, their denials that it was the company which had been their client and the uncandid affidavit of Kirton in which he tried to give the impression that the company had not been the client. It would, as they used to say, be pessimi exempli if McPherson + Kelly were not called to account."
10 No such set of circumstances exists here. In Spincode, solicitors who had acted for Look Software since its incorporation (including recently in disputes with Spincode), wrote to Look Software saying they acted for Spincode, made a series of allegations and complaints, raised the possibility that Look Software would be wound up, and concluded with an implied threat of legal action if no settlement was arrived at. When Look Software expressed surprise at this, the solicitors contended they had never acted for the company. This, said Brooking JA, was "remarkable and reprehensible". Spincode was a very clear case, where the injunction granted at first instance was sustained on appeal, at least by Brooking JA, on three independent grounds: misuse of confidential information, breach of the duty of loyalty and in reliance on the Court's control over its officers. In Spincode, the foundation for relief based on the Court's control over its officers consisted of the threatened misuse of confidential information and breach of the solicitors' duty of loyalty. What is striking about the present case is that no misuse of confidential information is asserted, and no serious case is propounded of a breach of the solicitors' duty of loyalty. Rather reliance is placed on the Court's control over its officers. It may be that an unusual case could arise when there is no threatened misuse of confidential information and no breach of the solicitor's duty of loyalty, yet it is appropriate to grant relief, but this is not such a case. The motion must be dismissed.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.
Associate:
Dated: 15 February 2002
Counsel for the Applicant: S Marantelli
Solicitors for the Applicant: Hall & Wilcox
Counsel for the Respondent: R Macaw QC and J Davis
Solicitors for the Respondent: Norton Gledhill
Date of Hearing: 8 February 2002
Date of Judgment: 15 February 2002
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2011-09-21 00:00:00
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Speedo Holdings B.V. v Evans [2011] FCA 1089
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2011/2011fca1089
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2024-09-13T22:51:12.841904+10:00
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FEDERAL COURT OF AUSTRALIA
Speedo Holdings B.V. v Evans [2011] FCA 1089
Citation: Speedo Holdings B.V. v Evans [2011] FCA 1089
Parties: SPEEDO HOLDINGS B.V. AND ANOR v DAVE EVANS
File number: NSD 1442 of 2011
Judge: FLICK J
Date of judgment: 21 September 2011
Catchwords: PRACTICE AND PROCEDURE – application for an order for deemed service of documents – application for substituted service
Legislation: Trade Marks Act 1995 (Cth)
Federal Court Rules 2011, rr 10.23, 10.24
Federal Court Rules, O 7 rr 9, 10
Cases cited: Astellas Pharma Inc v Kissei Pharmaceutical Co Ltd [2010] FCA 335, cited
Australian Competition and Consumer Commission v D M Faulkner Pty Ltd [2004] FCA 1666, cited
Beluga Shipping GMBH & Co v Headway Shipping Ltd (No 3) [2008] FCA 1989, cited
Commonwealth Bank of Australia v King [2011] FCA 790, cited
EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2010] FCAFC 110, 87 IPR 461, cited
GSM (Trademarks) Pty Ltd v Shao [2006] FCA 1272, cited
Statewide Secured Investments Pty Ltd v Tarrant [2011] FCA 1067, referred to
Date of hearing: 21 September 2011
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 21
Counsel for the Applicants: Mr M J Darke
Solicitor for the Applicants: Ms O Gourley (Corrs Chambers Westgarth)
Counsel for the Respondent: The Respondent did not appear
IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY
GENERAL DIVISION NSD 1442 of 2011
BETWEEN: SPEEDO HOLDINGS B.V.
First Applicant
SPEEDO INTERNATIONAL LIMITED
Second Applicant
AND: DAVE EVANS
Respondent
JUDGE: FLICK J
DATE OF ORDER: 21 SEPTEMBER 2011
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. Pursuant to Rule 10.23 of the Federal Court Rules 2011, the Originating Application and Statement of Claim in this proceeding are taken to have been served on the Respondent by the Applicants having sent a copy of those documents to the Respondent by email at the email address [email protected] on 29 August 2011.
2. Pursuant to Rule 10.24 of the Federal Court Rules 2011, until such time as the Respondent files and serves a notice of address for service or further order, that service by the Applicants on the Respondent of any further documents in this proceeding may be effected by the Applicants sending a copy of those documents to the Respondent by email at the email address [email protected].
3. A copy of these Orders, together with the reasons for decision, are to be served on the Respondent on or before midday on 22 September 2011.
4. Costs are reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY
GENERAL DIVISION NSD 1442 of 2011
BETWEEN: SPEEDO HOLDINGS B.V.
First Applicant
SPEEDO INTERNATIONAL LIMITED
Second Applicant
AND: DAVE EVANS
Respondent
JUDGE: FLICK J
DATE: 21 SEPTEMBER 2011
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 On 29 August 2011 there was filed in this Court an Originating Application and a Statement of Claim.
2 The two Applicants are Speedo Holdings B.V. and Speedo International Limited. The Statement of Claim alleges that the First Applicant is the registered owner of various registered Australian trade marks and further alleges that the Applicants distribute and sell swimwear in Australia by reference to the name and trade mark "SPEEDO".
3 It is alleged that the Respondent, Mr Dave Evans, "has, under aliases, registered a number of domain names containing the name SPEEDO without the Applicants' consent". Relief is sought against the Respondent pursuant to (inter alia) the Trade Marks Act 1995 (Cth).
4 The Interlocutory Application that is presently before the Court seeks orders that the Originating Application and Statement of Claim are taken to have been served by having sent to Mr Evans a copy of those documents at an email address and an order pursuant to Rule 10.24 of the Federal Court Rules 2011.
Service of Documents
5 Rule 10.01 of the Federal Court Rules 2011 provides that a "document that is to be served personally on an individual must be served by leaving the document with the individual".
6 Rule 10.23, however, provides for those circumstances in which the Court may make an order that documents are "deemed" to have been served. That Rule provides as follows:
10.23 Deemed service
A party may apply to the Court, without notice, for an order that a document is taken to have been served on a person on a date mentioned in the order if:
(a) it is not practicable to serve a document on the person in a way required by these Rules; and
(b) the party provides evidence that the document has been brought to the attention of the person to be served.
Rule 10.24 provides for those circumstances in which the Court may make an order for "substituted service". That Rule provides as follows:
10.24 Substituted service
If it is not practicable to serve a document on a person in a way required by these Rules, a party may apply to the Court without notice for an order:
(a) substituting another method of service; or
(b) specifying that, instead of being served, certain steps be taken to bring the document to the attention of the person; or
(c) specifying that the document is taken to have been served:
(i) on the happening of a specified event; or
(ii) at the end of a specified time.
7 The counterpart provision to Rule 10.23 was to be found in the Order 7 r 10 of the now repealed Federal Court Rules. Order 7 r 10 formerly provided as follows:
10 Informal service: confirmation
Where for any reason it is impractical to serve a document in the manner set out in the Rules, but steps have been taken to bring the document to the notice of the person to be served, the Court may order that the document be taken to have been served on that person on a date specified in the order.
Orders pursuant to that provision have been made on a number of occasions (e.g., Australian Competition and Consumer Commission v D M Faulkner Pty Ltd [2004] FCA 1666; GSM (Trademarks) Pty Ltd v Shao [2006] FCA 1272; EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2010] FCAFC 110, 87 IPR 461; Commonwealth Bank of Australia v King [2011] FCA 790) including orders for service by way of email or facsimile (e.g., Astellas Pharma Inc v Kissei Pharmaceutical Co Ltd [2010] FCA 335) and in circumstances where a party "will not respond or appoint anyone to accept service" (Beluga Shipping GMBH & Co v Headway Shipping Ltd (No 3) [2008] FCA 1989 at [33]).
8 The counterpart provision to Rule 10.24 was to be found in Order 7 r 9 of the now repealed Rules.
9 There are perhaps at least two respects in which the current Federal Court Rules 2011 may depart from those previously set forth in the now repealed Federal Court Rules.
10 First, Rule 10.23 may now impose a more onerous requirement than that previously imposed by Order 7 r 10. That rule, it will be noted, referred to steps that had "been taken to bring the document to the notice of the person to be served". Rule 10.23(b) now refers to the need for "evidence that the document has been brought to the attention of the person to be served". The significance of that difference in language, however, need not be further pursued.
11 The former Order 7 r 10 and the current Rule 10.23 share common features. Both provisions clothe the Court with power to make an order as to the manner of service preventing a respondent from, for example, evading service or otherwise rendering it "impractical" or "not practicable" to effect personal service. A respondent who does not wish to be personally served, and who is set upon a course of frustrating an applicant from effecting personal service, cannot by his own conduct preclude an applicant from pursuing in this Court claims for relief.
12 Second, unlike Rules 10.23 and 10.24 which both refer to it being "not practicable" to serve a document, the former Rules 9 and 10 referred to it being "impractical to serve a document". In the context of construing Rule 10.24 the view has nevertheless been expressed that "there is no reason why the expression …. 'not practicable' should be given any meaning more constrained than that previously given to Order 7 r 9. …. Rule 10.24 should not be given any meaning requiring the necessity to prove the impossibility of service of documents upon a party in accordance with the Rules or any requirement to prove that further attempts to effect service in accordance with the Rules would otherwise be futile or not sensible or feasible": Statewide Secured Investments Pty Ltd v Tarrant [2011] FCA 1067 at [9]. That construction of the phrase "not practicable" is adhered to. That conclusion is also supported by the Explanatory Statement to the Federal Court Rules 2011 which relevantly states in part that:
Part 10 adopts, simplifies and streamlines the process and procedures which operated under the former Rules and does not substantially alter existing practice.
13 Neither of these differences assumes any relevance in the present Interlocutory Application.
The Facts
14 The facts, for present purposes, need not be explored in any great detail.
15 It is sufficient to note that it is claimed that Mr Evans has been responsible for the publication on the internet of a series of websites. Each of those websites are said to set forth material that is "offensive" or "pornographic". Addresses which are set forth in a variety of ways employ the word "SPEEDO". Thus, for instance, one website provides the following address:
http://www.speedomoviespage.com
Another provides the following address:
http://www.speedosnextdoor.com
16 Searches of the various websites have disclosed "Dave Evans" as the "contact".
17 Letters and telephone calls were sent and made to a number of addresses with a view to identifying an address at which the Originating Application and Statement of Claim could be served on Mr Evans.
18 One email was sent on 16 August 2011 to the following address:
[email protected]
The email attached a "letter of demand and draft court documents". That email provoked a response from "Dave 'Speedo' Evans" in the following terms:
Mr. Gourley,
Is that your real name? It sounds like something a dog would bark up – say it with a cough.. (cough) uhdett Gowly.
I have no doubt that you are a very intelligent fellow – being a partner and all.
I see your paper work is from Corrs, Cambers and Westgarth. I've got a feeling Corrs, Chambers and Westgarth aren't in favour of gay marriage. No need for you guys to be haters. You aren't a man until you've had one right?
Thank you for sending that paperwork.
I wanted to let you know that this is a valid email address with regard to correspondence.
Perhaps you should read my blog… if you took the time you'd not only get some fees but you'd learn that I don't live in Queensland. Dave Evans doesn't have an Australian passport, my business is based in the BVI and I look forward to seeing how the NSW Federal Court deals with the jurisdiction issues.
The 'Speedo Corporation' is your client. It is an Australian brand and it should be interesting to see the 'reach' of the NSW Federal Court in imposing their decision regarding a 'generic' term.
Since you are making your living from 'Speedo' I hope to see you at the local pool speedo'ing it up Mr. Gourley.
Sincerely,
Dave 'Speedo' Evans
The content of that response may be left to one side. Of relevance is the fact that the Applicants have identified an email address at which the Respondent may be contacted and has indeed been contacted and has been accepted by Mr Evans as "a valid email address". Subsequent requests for the provision of a residential address at which personal service could be effected have been unsuccessful.
19 On 29 August 2011 the Applicants' solicitor forwarded a copy of the Originating Application and Statement of Claim as filed to the same email address as that used on 16 August 2011. The Respondent has confirmed receipt of those documents.
20 The unsuccessful attempts to secure a residential address for service, it is concluded, make it "not practicable to serve a document" on the Respondent personally within the meaning of and for the purposes of both Rules 10.23 and 10.24. The evidence also establishes the Originating Application and the Statement of Claim have "been brought to the attention of" the Respondent for the purposes of Rules 10.23(b).
Conclusions
21 It is concluded that orders should be made substantially as sought in the Interlocutory Application filed 6 September 2011.
ORDERS
The Orders of the Court are:
1. Pursuant to Rule 10.23 of the Federal Court Rules 2011, the Originating Application and Statement of Claim in this proceeding are taken to have been served on the Respondent by the Applicants having sent a copy of those documents to the Respondent by email at the email address [email protected] on 29 August 2011.
2. Pursuant to Rule 10.24 of the Federal Court Rules 2011, until such time as the Respondent files and serves a notice of address for service or further order, that service by the Applicants on the Respondent of any further documents in this proceeding may be effected by the Applicants sending a copy of those documents to the Respondent by email at the email address [email protected].
3. A copy of these Orders, together with the reasons for decision, are to be served on the Respondent on or before midday on 22 September 2011.
4. Costs are reserved.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.
Associate:
Dated: 21 September 2011
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Advanced Switching Services Pty Limited v State Bank of New South Wales T/as Colonial State Bank [2001] FCA 1508
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2001/2001fca1508
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2024-09-13T22:51:18.792950+10:00
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FEDERAL COURT OF AUSTRALIA
Advanced Switching Services Pty Limited v State Bank of New South Wales T/as Colonial State Bank [2001] FCA 1508
PRACTICE AND PROCEDURE - application for leave to join proposed second respondent – whether leave should be granted - where agreements provided that disputes arising "in connection with the agreement" should be dealt with by arbitration – whether this encompasses disputes arising in respect of pre-contractual misrepresentations – whether this encompasses disputes in respect of post-contractual misrepresentations – where joinder would be futile – where statement of claim embarrassing
Federal Court Rules O6 r 2, O 13 r 3
Trade Practices Act 1974 (Cth)
Commercial Arbitration Act 1984 (Vic) s 53(1), 53(2)
Judiciary Act (1903) (Cth) s 79
Posselt v Wolfenden (Nicholson J, 5 May 1998, unreported)
Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1
ADVANCED SWITCHING SERVICES PTY LIMITED v STATE BANK OF NEW SOUTH WALES LIMITED T/AS COLONIAL STATE BANK
N 88 OF 2001
HELY J
30 OCTOBER 2001
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 88 OF 2001
BETWEEN: ADVANCED SWITCHING SERVICES PTY LIMITED
ACN 077 773 589
APPLICANT
AND: STATE BANK OF NEW SOUTH WALES LIMITED T/AS COLONIAL STATE BANK
ACN 003 963 228
RESPONDENT
JUDGE: HELY J
DATE OF ORDER: 30 OCTOBER 2001
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The Notice of Motion filed on 28 August 2001 be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 88 OF 2001
BETWEEN: ADVANCED SWITCHING SERVICES PTY LIMITED
ACN 077 773 589
APPLICANT
AND: STATE BANK OF NEW SOUTH WALES LIMITED T/AS COLONIAL STATE BANK
ACN 003 963 228
RESPONDENT
JUDGE: HELY J
DATE: 30 OCTOBER 2001
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 The applicant seeks an order pursuant to Order 6 rule 2(b) of the Federal Court Rules that leave be granted to the applicant to join Akyman Financial Services Pty Ltd as the second respondent in these proceedings. For convenience, I shall refer to Akyman Financial Services Pty Ltd as "the second respondent".
2 Order 6 rule 2 provides:
"Two or more persons may be joined as applicants or respondents in any proceeding –
(a) where –
(i) if a separate proceeding were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and
(ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or
(b) where the Court gives leave so to do."
Leave of the Court is required in the circumstances of the present case, if only because the application for joinder is one which has been made after the commencement of the proceedings.
3 On 20 March 1997 and 12 September 1997 the applicant and the second respondent entered into three distribution agreements whereby the applicant acquired the exclusive right to distribute portable EFTPOS terminals manufactured by the second respondent in specified states and territories of Australia. The agreements were for a term of five years. Clause 25 of each agreement provides that any dispute "arising in connection with this agreement" which cannot be resolved by agreement between the parties is to be submitted to arbitration.
4 On 8 February 1999 the second respondent purported to terminate those agreements. As a result, on 20 June 2000 a notice of dispute was given by the applicant to the second respondent pursuant to the arbitration clause. The applicant delivered a statement of claim in the arbitration proceedings, and the second respondent lodged a defence and counter claim in the arbitration. The applicant lodged a statement of evidence, but since 31 January 2001 the applicant has taken no steps to progress the arbitration.
5 These proceedings were commenced by an Application and Statement of Claim against the State Bank of New South Wales filed with the Court on 1 February 2001. In that Statement of Claim, the applicant alleges that it suffered loss by reason of 28 misrepresentations on the part of the first respondent which broadly related to the distribution of the portable EFTPOS terminals which were the subject of the distribution agreements between the applicant and the second respondent. The loss was particularised as wasted expenditure in the 1998 year of $1,613,675, and $2,687,755 for the year 1999. Loss of profits from the sale of terminals of $12.675 million in the first year and $19.857 million in the second year was also claimed.
6 The present application was accompanied by a form of Amended Application and Amended Statement of Claim. In reliance upon Order 13 rule 3 the claim against the first respondent was amended so as to increase the number of representations relied upon from 28 to 88.
7 The claim against the second respondent begins at par 574 of the proposed pleading. It alleges various breaches of s 52 of Trade Practices Act 1974 (Cth) ("TPA") by the second respondent. The contraventions consist of a number of representations alleged to be misleading or deceptive or likely to mislead or deceive. Thirty four such misrepresentations are pleaded. The loss which the applicant alleges it sustained in consequence of those representations is the same loss and damage as is claimed from the first respondent. The representations alleged to have been made by the first respondent are different from the representations alleged to have been made by the second respondent, although in some cases they may relate to the same or similar subject matter. Although an affidavit filed in support of the application asserted a belief in the deponent that if separate proceedings were brought by the applicant against the second respondent "the same questions of law and fact would arise in those proceedings", Mr Wheelhouse, counsel for the second respondent, was unable to identify by reference to specific paragraphs in the pleading, specific questions of law or of fact which are common to the claim against the first respondent and the second respondent. Given that the claims relate to the one commercial transaction and that the same damage is claimed against each of the respondents, it is likely that some common questions will emerge, even though they have not been identified with any precision up to this point.
8 Mr Wheelhouse submitted that leave to join the second respondent and to amend the Statement of Claim so as to plead a case against the second respondent should be given, unless the second respondent can demonstrate that it would be an exercise in futility for that to occur. He relied, by way of analogy, on authorities which establish the limited circumstances in which summary dismissal of proceedings will be ordered, and on the general approach adopted by the courts on an application to amend pleadings. Where a party satisfies a court that the party genuinely desires to amend the pleading so as to alter an existing claim or to introduce a new claim, leave should be granted, subject to proper terms, unless the proposed amendment is obviously futile or would cause substantial injustice which cannot be compensated for. See, for example, Posselt v Wolfenden (Nicholson J, 5 May 1998, unreported).
9 On the other hand, Mr Collins, counsel for the second respondent, submitted that the issue is whether his client should be compelled to become a party to the proceedings between the applicant and the first respondent at this time having regard to the terms of the proposed Amended Statement of Claim. In addition to its other submissions, the second respondent made detailed criticisms of the form of the proposed Amended Statement of Claim, and complained that the second respondent is not alerted as to the case sought to be made against it. Whether and to what extent that case overlaps with the claim made against the first respondent so as to give rise to common issues does not emerge from the proposed pleading with any clarity.
The arbitration
10 The distribution agreements provide that they are governed by the laws of Victoria. Section 53(1) of the Commercial Arbitration Act 1984 (Vic) ("the Act") provides:
"If a party to an arbitration agreement commences proceedings in a Court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that Court to stay the proceedings and that Court, if satisfied -
(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration -
may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit."
Section 53 of the Act is capable of application by virtue of s 79 of the Judiciary Act (1903) (Cth) to proceedings in this Court. The second respondent has, as required by s 53(2) of the Act, not delivered pleadings or taken any step in the proceedings other than the entry of an appearance.
11 In one sense, consideration of the potential application of s 53 of the Act is premature as the second respondent would not be entitled to an order under s 53 until it is joined as a party to the proceedings. However, Mr Wheelhouse accepted that if a claim against the second respondent was within the arbitration clause, it would be proper to refuse the joinder application on the ground of futility.
12 Whether the claim against the second respondent is a dispute arising"in connection with the agreement" depends upon the breadth of the italicised expression and the proper characterisation of the claim. The representations relied upon can be broken down into two groups. The first group consists of representations 89-101 pleaded in pars 574-586 of the Amended Statement of Claim. The misleading qualities of those representations are alleged in pars 611-627. Paragraph 628 alleges that the applicant entered into the three distribution agreements to which I earlier referred in reliance on those representations.
13 Mr Wheelhouse submits that a dispute arising "in connection with this agreement" does not encompass pre-contractual misrepresentations. I do not agree. A dispute as to whether an agreement was induced by misleading and deceptive conduct is, in my view, a dispute arising in connection with the agreement. The nexus or connection between the dispute and the agreement is both clear and direct. The fact that the representations are alleged to have induced the agreement provides the requisite connection.
14 Cases decided on the construction of other arbitration clauses are of limited assistance, as so much depends upon the particular context. However, in Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1, Emmett J, as a member of the Full Court, reviewed many of the cases which were concerned with the application of arbitration clauses to causes of action arising under TPA. His Honour reached the following conclusions:
- where there is a dispute as to a claim in respect of conduct which is antecedent to the making of a contract, such a dispute cannot be said to arise from the contract in question;
- the expression "arising in connection with" is wider than the expression "arising out of";
- the expressing "arising in connection with" the relevant agreement is wide enough to include a claim alleging contravention of Part V of TPA inducing the contract in question (at 160);
- a claim arising out of contravention of TPA during the performance of an agreement could be a claim arising out of the agreement or from the agreement.
15 The expression "in connection with" is an expression of wide import, which simply requires a sufficient nexus between one thing and another. A further reason for construing the expression in a broad manner is that it can be assumed that the parties intended all of their disputes in connection with the contract to be capable of resolution in the one forum.
16 The applicant has already elected to refer its disputes with the second respondent to arbitration. Whilst the existing reference may be confined to performance of contractual terms and repudiation, there is no reason why it should not be extended if the applicant wishes to extend its claims so as to include alleged misrepresentations said to have induced the applicant to enter into the contracts, or induced the applicant to expend money or take other action by reason of the subsistence of the contracts, provided that the broader dispute is within the arbitration clause.
17 Representations 102-123 pleaded in par 587 of the Amended Statement of Claim and following are not alleged to have induced the entry into the distribution agreement. They were described by Mr Wheelhouse in the course of his submissions as representations which caused the applicant to adhere to the distribution agreements, or to continue to perform them. In Mr Wheelhouse's submission, disputes arising in connection with the agreement are confined to disputes as to the compliance by the applicant with the terms of the agreement, or as to breach by the second respondent of the terms of that agreement. In my view, that is too narrow an interpretation of the clause in question. A dispute may arise "in connection with" the agreements even though the subject matter of the dispute is something other than the performance or non-performance of a provision of that agreement.
18 Paragraphs 633, 638, 642, 648, 653, 659, 664-669, 679, and 712-718 are the allegations with respect to reliance on the post-contractual misrepresentations. It is not easy to encapsulate those allegations into a single paragraph, but in one way or another, the case which the applicant there seeks to make against the second respondent is that it committed funds and manpower to the performance of the agreements, or the achievement of the commercial objective intended to be secured by the agreements, which but for the misleading and deceptive conduct it would not have undertaken. That suggests that Mr Wheelhouse's characterisation of the post-contractual representations as being representations which caused the applicants to adhere to the agreements, and to continue to perform them, is very close to the mark. Disputes of that kind are properly characterised as disputes arising in connection with the distribution agreements, and are therefore within the arbitration clause. In my view, each of the post-contractual claims of misleading and deceptive conduct is within the arbitration clause.
19 As I will shortly explain, the Amended Statement of claim is an unsatisfactory document which does not expose with clarity or precision the case which the applicant seeks to make against the second respondent. However, what the applicant seeks to recover from the second respondent is expenditure on the faith of the distribution agreements which has been wasted, and profits which would otherwise have been made by virtue of those agreements but for the TPA contraventions. The way in which the damages claim has been formulated strongly supports the view that the claim as a whole is a dispute arising in connection with the distribution agreements.
20 Given the concession that if the matters the subject of the proposed claim against the second respondent are within the arbitration clause, then joinder of the second respondent as a party to the proceedings ought not to be permitted, the application for leave to the applicant to join Akyman Financial Services Pty Ltd as the second respondent in these proceedings should be dismissed.
21 It is at least theoretically possible, contrary to the conclusion which I have reached, that the view might be taken that a particular element of the applicant's claim is not appropriately characterised as being a dispute in connection with the distribution agreements. To take an example, the advance of $50,000 referred to in par 633 might be regarded as something wholly outside the distribution agreements. Even if that were so (and the terms of representation 102 indicate to my mind that it is not so), that would not provide a sufficient foundation for dragging the second respondent into the proceedings between the applicant and the first respondent which have a considerable sweep in terms of the conduct complained of and its consequences. If it were the case that there is some small part of the applicant's TPA claim against the second respondent that is outside the arbitration clause, then my decision in this case would not preclude the applicant from instituting other proceedings against the second respondent in relation to that matter.
22 The Amended Statement of Claim insofar as it seeks to make a claim against the second respondent is a wholly unsatisfactory document. To take an example, the first representation of the second respondent relied upon is the 89th representation. It is alleged in par 574. The allegation is that in or about March 1997 the second respondent represented that the M-Pos terminal is the only one of its kind in the marketplace. Par 611 alleges that the 89th representation is misleading or deceptive, but the only particulars given of that allegation are that the second respondent did not have reasonable grounds to make the 89th representation. The 89th representation is, however, as to an existing fact. Further and/or in the alternative, it is said that the 89th representation is positive and unqualified, and by failing to qualify the 89th representation it is said that the representation is misleading or deceptive or likely to mislead or deceive. No information is given as to in what way the 89th representation is false or likely to lead a person into error, nor is there any statement of the respects in which the representations should have been qualified if its misleading and deceptive character was to be avoided. The whole of the proposed pleading against the second respondent is replete with illustrations and recurrences of this problem.
23 The claim against the second respondent is pleaded in such an embarrassing and uninformative way that, considered as a self-contained claim against the second respondent, it would be liable to be struck out. Still less does it provide a foundation for a conclusion that I should grant leave for that claim to be brought forward in proceedings against the first respondent when the common issues do not emerge from the pleading and when the supposed benefits to be derived from joinder are at best speculative. This provides a further reason for not granting the relief sought in the Notice of Motion.
24 In written submissions lodged shortly prior to the hearing, the second respondent identified deficiencies in the pleading. In response to those submissions the applicant indicated that it did not press pars 590, 591 and 653, but otherwise maintained that the application for leave to join the second respondent should be determined upon the basis of the proposed Amended Statement of Claim. I enquired of Mr Wheelhouse as to whether it was his client's position that the application should be determined on the basis of that document. His response was that it should. For the reasons which I have given, the applicant has not made out a case for the granting of leave to join the second respondent as a party to these proceedings in order to enable the applicant to proceed against the second respondent in terms of the Amended Statement of Claim.
25 The second respondent opposed the grant of leave on the further basis that, in the circumstances, there was some onus on the applicant to demonstrate either that it would not be ordered to provide security for costs, or that it would be able to comply with such an order if one were made. In my view, considerations relating to security for costs have no bearing on the motion. They only arise, if at all, at a later stage in the proceedings.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.
Associate:
Dated: 30 October 2001
Counsel for the Applicant: Mr Wheelhouse, Ms Glover
Solicitor for the Applicant: Sukkar and Associates
Counsel for the Respondent: A A Henskens
Solicitor for the Respondent: L E Taylor
Counsel for Akyman Financial Services Pty Ltd: Mr D Collins
Solicitor for Akyman Financial Services Pty Ltd: Mulcahy Churkovich
Date of Hearing: 18 October 2001
Date of Judgment: 30 October 2001
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2018-08-10 00:00:00
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DWU16 v Minister for Immigration and Border Protection [2018] FCA 1191
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2018/2018fca1191
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2024-09-13T22:51:23.535606+10:00
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FEDERAL COURT OF AUSTRALIA
DWU16 v Minister for Immigration and Border Protection [2018] FCA 1191
Appeal from: Application for extension of time: DWU16 v Minister for Immigration & Anor [2018] FCCA 704
File number: NSD 597 of 2018
Judge: ROBERTSON J
Date of judgment: 10 August 2018
Catchwords: MIGRATION – interlocutory order of the Federal Circuit Court of Australia dismissing application to that Court pursuant to r 13.03B(1)(a) of the Federal Circuit Court Rules 2001 (Cth) – application for an extension of time – application for leave to appeal
Legislation: Federal Circuit Court Rules 2001 (Cth) r 13.03B(1)(a)
Federal Court Rules 2011 (Cth) r 35.13
Date of hearing: 9 August 2018
Registry: New South Wales
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 28
Counsel for the Applicant: The Applicant appeared in person with the assistance of an interpreter
Solicitor for the First Respondent: Mr L Leerdam of DLA Piper Australia
Counsel for the Second Respondent: The Second Respondent submitted save as to costs
ORDERS
NSD 597 of 2018
BETWEEN: DWU16
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
JUDGE: ROBERTSON J
DATE OF ORDER: 10 AUGUST 2018
THE COURT ORDERS THAT:
1. Time be extended so as to permit the applicant's application for leave to appeal to be filed on 16 April 2018.
2. The applicant's application for leave to appeal be refused.
3. The applicant pay the costs of the first respondent, as agreed or assessed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ROBERTSON J:
Introduction
1 This is an application for an extension of time and leave to appeal filed in this Court on 16 April 2018.
2 The proceedings concern the decision of the Administrative Appeals Tribunal (Tribunal) dated 17 November 2016, affirming the decision not to grant the applicant a Protection visa.
3 The applicant was found by the Tribunal to be a citizen of Pakistan. The applicant had stated that he could not return to Pakistan because he feared he would be harmed by relatives, extremists and his fellow Pakistanis because he is gay. He also stated that in Australia he had had a number of relationships, including a current relationship.
4 The orders of the Federal Circuit Court of Australia were made on 23 March 2018. The primary judge, acting pursuant to r 13.03B(1)(a) of the Federal Circuit Court Rules 2001 (Cth) dismissed an application to review the decision of the Tribunal due to the applicant's failure to comply with the Court's order, made on 8 September 2017, requiring that any application for an adjournment be supported by a medical opinion as to the fitness of the applicant to attend court.
5 The orders of the primary judge were interlocutory and an application for leave to appeal was required to be filed within 14 days after the making of the primary judge's orders: see r 35.13 of the Federal Court Rules 2011 (Cth). The applicant requires an extension of time of some 11 days to bring this application for leave to appeal.
Grounds
6 The grounds of the applicant's application to this Court are not particularised and are stated as follows:
1. The grounds of my appeal are;
a. jurisdictional error,
b. miscarriage of justice, and
c. the lacking of the FCC to take into account complete set of facts.
7 In the draft notice of appeal the following was added, as written:
Orders sought
1. The orders I seek is for the refusal of my Protection Visa to be overturned, as I have satisfied all requirements for grant.
2. Further to this, I seek costs for the financial and emotional toll that this refusal has placed me in.
The evidence
8 The applicant's affidavit in support, filed 17 April 2018, did not provide any further explanation of the content of the application for an extension of time, application for leave to appeal or the proposed grounds of appeal. It stated:
1. I AM THE APPLICANT IN THE PROCEEDINGS
2. ALL THE INFORMATION IS CORRECT AND TRUE TO MY KNOWLEDGE
3. ANNEXURE HERETO AND MARKED "AB1"IS THE COPY OF AAT DECISION DATED
4. ANNEXURE HERETO AND MARKED "AB 2"IS THE COPY OF DEPARTMENT OF IMMIGRATION AND BORDER PROTECTION'S NOTIFICATION AND DECISION RECORD
5. ANNEXURE HERETO AND MARKED "AB 3"IS THE COPY OF FEDERAL CIRCUIT COURT OF AUSTRALIA'S NOTIFICATION AND DECISION RECORD
9 It does not appear that all of this material was in fact annexed to this affidavit, although the reasons for judgment of the primary judge were so annexed.
10 There was however read on behalf of the first respondent, the Minister, an affidavit of Ms Charlotte Elizabeth Saunders, solicitor, affirmed 28 May 2018, which included as annexures copies of the written decision record of the Tribunal dated 17 November 2016 and the sealed orders of the primary judge dated 23 March 2018.
The decision of the Tribunal
11 The Tribunal said, at [12], that given the applicant's inconsistent testimony in relation to when and why he became aware of his homosexuality, it did not accept that the applicant was gay. The Tribunal also took into account that the applicant entered Australia on 24 July 2007 on a student visa that ceased on 1 June 2011 but did not apply for a protection visa until 4 July 2014.
12 At [13], the Tribunal said it did not accept that the applicant had had relationships with men as claimed. The Tribunal was not satisfied that the applicant was gay as claimed or that he told his family he was gay or that they pressured him to change his sexual preferences. The Tribunal did not accept that the applicant's family thought he was disgracing their family honour or that the applicant consulted a religious scholar regarding this.
13 At [14], the Tribunal did not accept that the applicant and another man the applicant claimed to have lived with for a time liked each other. Neither was the Tribunal satisfied that the applicant would be perceived to be homosexual now or in the reasonably foreseeable future.
14 For similar reasons the Tribunal rejected both the applicant's Convention claims and his claims for complementary protection.
The reasons of the primary judge
15 In his short reasons, the primary judge set out order 3 that he had made on 8 September 2017, as follows:
There be no adjournment of the final hearing by reason of an asserted illness unless the applicant provides an opinion of a medical practitioner as to his unfitness to attend Court.
16 The primary judge said, at [7]:
… In view of the applicant's default and the failure of the applicant to attend by telephone in order to address the circumstances, I have decided to dismiss the application on account of the applicant's default. There is a strong impression which I glean from the circumstances in this case that the applicant is, in fact, toying with the Court through these asserted medical conditions.
Submissions
17 I have set out the draft notice of appeal at [6]-[7] above.
18 No written submissions were filed on behalf of the applicant.
19 In oral submissions, the applicant said, on the question of an extension of time, that he had no knowledge of how long he had to appeal and that was why he was late in filing the application in this Court.
20 As I understood it, the solicitor for the Minister accepted this explanation.
21 There being a reasonable explanation for the delay, I propose therefore to grant the application for an extension of time, of some 10 days, and to consider whether there is sufficient doubt as to the correctness of the judgment of the primary judge in the context of the application for leave to appeal.
22 On that question, the applicant submitted that the primary judge rejected his application even though he was actually sick when the hearing was before the Federal Circuit Court. He did not tell the doctor providing the certificate about the court hearing so the doctor was not aware of that fact. If the applicant had told the doctor, the applicant said, the doctor then might have mentioned it in the medical certificate. I took this submission as referring to both the doctors referred to at [4] and [5] of the reasons of the primary judge.
23 In relation to the decision of the Tribunal, the applicant submitted that although the Tribunal had said his evidence was inconsistent, he was very upset and had depression at the time so he could not concentrate. He was not in a position to tell the Tribunal the exact dates of the incidents which occurred in the past and that was why he was not believed as a credible witness. He was moving from one address to another and he was unable to produce exact addresses and he could not remember exactly what the timeframe was. He had to tell the Tribunal about addresses but that was four to five years before and he could not remember as he was changing the places he was living, for his safety. That was why the Tribunal said his evidence was vague and inconsistent and that was the main reason his application was rejected.
24 The Minister submitted there was no error in the exercise of jurisdiction by the primary judge. It was clearly open to the primary judge to dismiss the application under r 13.03B of the Federal Circuit Court Rules 2001 (Cth) in circumstances where the applicant was in default of the orders, having made a further request for an adjournment without providing medical evidence of his unfitness to attend court, and having not appeared at the hearing. The Minister also submitted that the grounds of the draft notice of appeal did not demonstrate any merit in the substantive appeal.
25 As to the decision of the Tribunal, the Minister submitted that there was no arguable ground in the draft notice of appeal and there was otherwise no doubt as to the consideration of the issues by the Tribunal. The Minister noted that the applicant both attended the hearing before the Tribunal and responded to a subsequent written notice under s 424A of the Migration Act.
Consideration
26 In my opinion, the applicant has not shown sufficient, or any, doubt as to the correctness of the judgment below to warrant review. The decision by the primary judge had as its basis not only what the applicant now accepts were deficient medical certificates but also the unsuccessful attempts to contact the applicant on the day of the hearing and his absence from the hearing.
27 For completeness, the applicant has not articulated any error, let alone jurisdictional error, on the part of the Tribunal. I note that the decision of the Tribunal turned on whether or not it believed the applicant. Because of discrepancies in important parts of that evidence, the Tribunal did not believe the applicant. Neither did the delegate. In the absence of the applicant pointing to any relevant error, it was open to the Tribunal to make that finding.
Conclusion and orders
28 The application for leave to appeal is dismissed, with costs.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.
Associate:
Dated: 10 August 2018
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2000-08-17 00:00:00
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Riverside Nursing Care Pty Ltd v Honourable Bronwyn Bishop [2000] FCA 1147
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2000/2000fca1147
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2024-09-13T22:51:24.095950+10:00
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FEDERAL COURT OF AUSTRALIA
Riverside Nursing Care Pty Ltd v Honourable Bronwyn Bishop [2000] FCA 1147
RIVERSIDE NURSING CARE PTY LTD (A.C.N. 005 377 453) (Administrator appointed) v THE HONOURABLE BRONWYN BISHOP (as the Commonwealth Minister of State for Aged Care) and ANDREW PODGER (as the Secretary of the Commonwealth Department of Health and Aged Care)
V147 of 2000
RYAN, MARSHALL & EMMETT JJ
MELBOURNE
17 AUGUST 2000
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V147 of 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: RIVERSIDE NURSING CARE PTY LTD (A.C.N. 005 377 453) (Administrator appointed)
Applicant
AND: THE HONOURABLE BRONWYN BISHOP (as the Commonwealth Minister of State for Aged Care)
First Respondent
ANDREW PODGER (as the Secretary of the Commonwealth Department of Health and Aged Care)
Second Respondent
JUDGES: RYAN, MARSHALL and EMMETT JJ
DATE OF ORDER: 16 AUGUST 2000
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. Leave to appeal be refused.
2. The motion on notice dated 14 April 2000 be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY V147 of 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: RIVERSIDE NURSING CARE PTY LTD (A.C.N. 005 377 453) (Administrator appointed)
Applicant
AND: THE HONOURABLE BRONWYN BISHOP (as the Commonwealth Minister of State for Aged Care)
First Respondent
ANDREW PODGER (as the Secretary of the Commonwealth Department of Health and Aged Care)
Second Respondent
JUDGES: RYAN, MARSHALL and EMMETT JJ
DATE: 17 AUGUST 2000
PLACE: MELBOURNE
REASONS FOR JUDGMENT
THE COURT:
1 This is an application for leave to appeal from an interlocutory judgment of a single Judge of the Court refusing to stay the operation of a decision made by the second respondent ("the Secretary") on 5 March 2000 ("the March decision") forthwith revoking the approval of the applicant ("Riverside") as a provider of aged care services under the Aged Care Act 1997 (Cth) ("the Act"). By the same decision, the Secretary revoked Riverside's allocation of places for residential care at the Riverside Nursing Home ("the Home"). Riverside, on 15 March 2000 instituted an application for review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and pursuant to s 15(1)(a) of that Act sought a stay of the March decision. Section 15(1) of the ADJR Act provides:
"The making of an application to the Court under section 5 in relation to a decision does not affect the operation of the decision or prevent the taking of action to implement the decision but:
(a) the Court or a Judge may, by order, on such conditions (if any) as it or he or she thinks fit, suspend the operation of the decision; and
(b) the Court or a Judge may order, on such conditions (if any) as it or he or she thinks fit, a stay of all or any proceedings under the decision."
2 In rejecting the application for a stay, the learned primary Judge reviewed the grounds relied on by Riverside as impugning the March decision and rejected each of them as not demonstrating "a point of substance to argue which, if successful, will result in judgment in [Riverside's] favour"; Feingold v Zammit (1984) 1 FCR 87 at 92.
3 The principal ground relied on by Riverside is a claim that, in connection with the decisions in question, a breach of the rules of natural justice occurred. Specifically, Riverside claims that the March decision was made without affording procedural fairness to Riverside. Riverside also claimed that the March decision was affected by a number of other errors including a failure to observe various procedures laid down by or pursuant to the Act. The remaining grounds were identified in summary by his Honour in these terms:
· "the Secretary took irrelevant considerations into account, namely exaggerated and inflammatory assertions which were unsupported by probative evidence
· the Secretary failed to take relevant considerations into account, namely the interests of residents and the effect of the decisions on Illawong Retirement Equity Pty Ltd ("Illawong")
· the decisions were unreasonable
· the second decision was made for various improper purposes
· there was no evidence to support either decision."
4 However, most of the other flaws alleged in the decision appear to be based on the existence of an entitlement to procedural fairness in relation to the March decision. We shall therefore indicate in detail our reasons for rejecting Riverside's attack invoking a denial of natural justice.
Natural Justice
5 When a statute confers power upon a public official to destroy, defeat or prejudice a person's rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words or necessary intendment. An intention on the part of the legislature to exclude the rules of natural justice is not to be assumed nor spelled out from indirect references, uncertain references or equivocal considerations. Nor is such an intention to be inferred from the presence in the statute of rights that are commensurate with some of the rules of natural justice. Further, there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations subject only to the clear manifestation of a contrary statutory intention. Common law requirements of procedural fairness will, in the absence of a clear contrary legislative intent, be recognised as applying generally to governmental executive decision making, see Annetts v McCann (1990) 170 CLR 596 at 598.
6 In the present case, it is tolerably clear that a decision such as the March decision, revoking approval as a provider and an allocation of places, is one that would destroy, defeat or prejudice Riverside's rights, interests and legitimate expectations. Accordingly, unless excluded by the provisions of the Act, the rules of natural justice would regulate the exercise of the power to make such a decision. The question is whether the rules of natural justice have been excluded by the Act.
7 Section 67-1(1) provides that the Secretary must not impose sanctions on an approved provider (such as Riverside) for not complying with one or more of its responsibilities under Part 4.1, 4.2 or 4.3 (the basis upon which the March decision was made) unless the Secretary has completed each of the following steps:
(a) giving the approved provider a notice of non compliance;
(b) giving to the approved provider a notice of intention to impose sanctions or a notice to remedy the non-compliance; or
(c) giving to the approved provider notice of the Secretary's decision on whether to impose sanctions.
8 The requirement to complete those specified steps may not of itself be sufficient to exclude the rules of natural justice. However, the Act also contains s 67-2(2), which is in the following terms:
"(2) However, paragraphs (1)(a) and (b) do not apply if the Secretary is satisfied that, because of the approved provider's non-compliance, there is an immediate and severe risk to the safety, health or well being of care recipients to whom the approved provider is providing care."
9 By imposing a duty on the Secretary to complete the steps referred to in sections 67-1(1), the Act confers rights on an approved provider who may be affected by the imposition of sanctions. Those rights are commensurate with at least some of the rules of natural justice. Section 67-2(2) sets out the requirements for a notice of non-compliance. Under s 67-2(2)(b) the notice must invite the approved provider to make submissions to the Secretary addressing the matter and s 67-2(3) requires the Secretary to consider any submissions made by the approved provider.
10 Section 67-3(2) specifies the requirements for a notice of intention to impose sanctions. Under s 67-3(2)(d) the notice must invite the approved provider to make submissions to the Secretary and s 67-3(3) obliges the Secretary to consider any submissions made by the approved provider.
11 Thus, by virtue of the process contemplated by s 67-1(1), the provider has a right to be heard that is almost entirely commensurate with that afforded by common law requirements of procedural fairness or natural justice. Nevertheless, in the circumstances in which s 67-1(2) applies, the requirement to give a notice of non-compliance and a notice of intention to impose sanctions is excluded. The rights conferred by s 67-1(1) are no greater than the common law requirements of procedural fairness and natural justice. There would be no point in waiving the requirement to comply with s 67-1(1) if the common law requirement of procedural fairness or natural justice still had to be satisfied before the Secretary could impose sanctions.
12 There are good policy reasons why, in the circumstances contemplated by s 67-1(2), the right to be heard should be excluded. The exclusion takes place only if the Secretary is satisfied that there is an immediate and severe risk to the safety, health or well-being of care recipients. The object of excluding the steps referred to in s 67-1(1) in such circumstances is to ensure that the taking of those steps does not occasion a delay which might imperil the safety, health or well-being of care recipients. Any delay resulting from allowing an approved provider to exercise a common law right to be heard could jeopardise the safety, health or well being of care recipients. There would be no utility in excluding the steps contemplated by s 67-1(1) if a common law right to be heard remained.
13 It is clear, therefore, that the Parliament has, by the terms of ss 67-1, 67-2 and 67-3, excluded the rules of natural justice in circumstances where sanctions are to be imposed because the Secretary is satisfied that there is an immediate and severe risk to the safety, health or well being of care recipients. That is the conclusion reached by the primary judge. That conclusion is not attended by sufficient doubt to warrant its reconsideration by a Full Court.
Would refusal of a stay occasion substantial injustice to Riverside?
14 We accept that the grant or refusal of an interlocutory stay of a decision under review involves more than a mere point of practice. Accordingly, an application for leave to appeal from such a grant or refusal should attract the less restricted discretionary examination suggested by another Full Court of this Court in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 399-400. However, the order of the learned primary Judge in the present case in no sense effectively disposed of the matter and that is relevant to an assessment of whether substantial injustice would result if leave to appeal were refused, assuming the judgment below to have been wrong. In any event, we have not been persuaded that the judgment below was wrong in any of the respects urged in the comprehensive and earnest arguments of Mr Monotti of Counsel for Riverside. However, save for the discussion of natural justice undertaken above, it has been unnecessary to indicate in detail our reasons for that conclusion because, at the end of the submissions of Counsel for the applicant, we remained unpersuaded that a refusal of leave to appeal would cause a substantial injustice to Riverside.
(a) Availability of another remedy
15 In the first place this is an application for leave to appeal from a discretionary judgment. Accordingly, this Court must be directed by the well-known principles laid down by the High Court in House v The King (1936) 55 CLR 499 at 504:
"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
16 If we were persuaded, as we have not been, that the learned primary Judge's discretion has miscarried because of an error of fact or law, this Full Court would have to exercise the discretion for itself. Central to that fresh exercise of discretion would be the consideration that the substantive grant of relief under the ADJR Act is itself discretionary and that discretion has to be exercised with regard to s 10(2)(b) of that Act which provides:
"Not withstanding subsection (1):
.....
(b) the Court may, in its discretion, refuse to grant an application under section 5, 6 or 7 that was made to the Court in respect of a decision, in respect of conduct engaged in for the purpose of making a decision, or in respect of a failure to make a decision, for the reason:
(i) that the applicant has sought a review by the Court, or by another court, of that decision, conduct or failure otherwise than under this Act; or
(ii) that adequate provision is made by any law other than this Act under which the applicant is entitled to seek a review by the Court, by another court, or by another tribunal, authority or person, of that decision, conduct or failure."
17 It is common ground that a decision by the Secretary under s 65-1 of the Act is a "reviewable decision" by virtue of item 54 of s 85-1 of the Act. Relevant provisions of s 85-5 of the Act are:
"(1) A person whose interests are affected by a reviewable decision may request the Secretary to reconsider the decision.
.....
(3) The person's request must be made by written notice given to the Secretary:
(a) within 28 days, or such longer period as the Secretary allows, after the day on which the person first received notice of the decision; or
(b) if the decision is a decision under section 44-24 to determine a care recipient's ordinary income - within 90 days, or such longer period as the Secretary allows, after the day on which the person first received notice of the decision.
(4) The notice must set out the reasons for making the request.
(5) After receiving the request, the Secretary must reconsider the decision and:
(a) confirm the decision; or
(b) vary the decision; or
(c) set the decision aside and substitute a new decision.
(6) The Secretary's decision (the decision on review) to confirm, vary or set aside the decision takes effect:
(a) on the day specified in the decision on review; or
(b) if a day is not specified - on the day on which the decision on review was made.
(7) The Secretary is taken, for the purposes of this Part, to have confirmed the decision if the Secretary does not give notice of a decision to the person within 90 days after receiving the person's request."
18 A reviewable decision that has been confirmed, varied or set aside is, by virtue of s 85-8, further reviewable by the Administrative Appeals Tribunal ("the Tribunal"). Section 85-8 provides:
"An application may be made to the Administrative Appeals Tribunal for the review of a reviewable decision that has been confirmed, varied or set aside under section 85-4 or 85-5."
19 Section 25(4) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") provides that:
"The Tribunal has power to review any decision in respect of which application is made to it under any enactment."
20 The AAT Act also indicates comprehensively the procedures available to regulate a hearing before the Tribunal. Section 39 of the AAT Act provides:
"Subject to sections 35, 36 and 36B, the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents."
21 As well, the Tribunal is empowered by s 41(1) and (2) of the AAT Act to stay the operation or implementation of a reviewable decision pending the conduct by the Tribunal of the review. Those sub-sections provide:
"(1) Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.
(2) The Tribunal or a presidential member may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the "relevant proceeding"), if the Tribunal or presidential member is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal or presidential member considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review."
22 In the present case, Riverside, on 7 March sought a re-consideration under s 85-5 of the Act of the decision of 5 March 2000. The re-consideration has occurred and, on 4 May 2000, the Secretary confirmed the decision of 5 March. Accordingly, on 11 May, Riverside applied under the AAT Act for a review of a decision described as follows:
"Decision: The relevant decision was decision of a delegate of the Secretary of the Commonwealth Department of Health and Aged Care ("the Secretary") made on 5 March 2000 ("the reviewable decision") that has been confirmed by a decision of another Delegate of the secretary pursuant to the provisions of section 85-5 of the Aged Care Act 1997 made on 4 May 2000 ("the confirming decision"). Copies of the notices given in respect of the reviewable decision and the confirming decision are attached..
Date of Decision: The reviewable decision was made on 5 March 2000, and the confirming decision was made on 4 May 2000."
23 Riverside's application under the AAT Act for a review is still pending and it does not appear that any application has been made to the Tribunal for a stay of the operation of the decision of 5 March as confirmed on 4 May.
24 These circumstances have given rise to the first of the considerations leading to our refusal of leave to appeal because of the very high probability that, in the events which have happened, the discretion reposed in the Court by s 10 of the AAT Act will, on the hearing of the substantive application, be exercised adversely to Riverside. The errors which have been imputed to the Secretary in the application to this Court involve a denial of natural justice and other procedural oversights arising principally from a mistaken interpretation of relevant provisions of the Act. The other alleged errors are of the traditional kind, consisting in taking account of irrelevant considerations or failure to take account of relevant considerations, failing to recognise an absence of supporting evidence, abuse of power and unreasonableness. All of these errors which have been imputed to the Secretary also, presumably, infected the confirmatory decision of 4 May and the Tribunal is pre-eminently well placed to rectify them when it determines the application which Riverside has already instituted, and remains ready to prosecute, in parallel with its application to this Court. In Calvin v Carr [1979] 1 NSWLR 1, the Privy Council undertook this analysis, at 10, of the different effect of various modes of review of administrative decisions or determinations of domestic tribunals:
"Although, as will appear, some of the suggested inconsistencies of decisions disappear, or at least diminish, on analysis, their Lordships recognize, and indeed assert, that no clear and absolute rule can be laid down on the question whether defects in natural justice appearing at an original hearing, whether administrative or quasi-judicial, can be "cured" through appeal proceedings. The situations in which this issue arises are too diverse, and the rules by which they are governed so various, that this must be so.
There are however a number of typical situations as to which some general principle can be stated. First, there are cases where the rules provide for a rehearing by the original body, or some fuller or enlarged form of it. This situation may be found in relation to social clubs. It is not difficult in such cases to reach the conclusion that the first hearing is superseded by the second, or, putting it in contractual terms, the parties are taken to have agreed to accept the decision of the hearing body, whether original or adjourned. Examples of this are: De Verteuil v. Knaggs [1918] A.C. 557 at p 563; Posluns v. Toronto Stock Exchange (1965) 53 D.L.R. (2d.) 193; Re Clark and Ontario Securities Commission (1966) 56 D.L.R. (2d.) 585; Re Chromex Nickel Mines Ltd (1970) 16 D.L.R. (3d.) 273; and see also Ridge v. Baldwin [1964] A.C. 40, at p 79; per Lord Reid.
At the other extreme are cases, where, after examination of the whole hearing structure, in the context of the particular activity to which it relates (trade union membership, planning, employment etc.) the conclusion is reached that a complainant has the right to nothing less than a fair hearing both at the original, and at the appeal, stage. This was the result reached by Megarry J. in Leary v. National Union of Vehicle Builders [1971] Ch. 34. In his judgment in that case the learned judge seems to have elevated the conclusion thought proper in that case into a rule of general application. In an eloquent passage he said [1971] Ch. 34, at p.49: "If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? ... As a general rule ... I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body."
In their Lordships' opinion this is too broadly stated. It affirms a principle which may be found correct in a category of cases: these may very well include trade union cases, where movement solidarity and dislike of the rebel, or renegade, may make it difficult for appeals to be conducted in an atmosphere of detached impartiality and so make a fair trial at the first - probably branch - level an essential condition of justice. But to seek to apply it generally overlooks, in their Lordships' respectful opinion, both the existence of the first category, and the possibility that, intermediately, the conclusion to be reached, on the rules and on the contractual context, is that those who have joined in an organization, or contract, should be taken to have agreed to accept what in the end is a fair decision, notwithstanding some initial defect.
In their Lordships' judgment such intermediate cases exist. In them it is for the court, in the light of the agreements made, and in addition having regard to the course of proceedings, to decide whether, at the end of the day, there has been a fair result, reached by fair methods, such as the parties should fairly be taken to have accepted when they joined the association. Naturally there may be instances when the defect is so flagrant, the consequences so severe, that the most perfect of appeals or rehearings will not be sufficient to produce a just result. Many rules (including those now in question) anticipate that such a situation may arise by giving power to remit for a new hearing. There may also be cases when the appeal process is itself less than perfect: it may be vitiated by the same defect as the original proceedings: or, short of that, there may be doubts whether the appeal body embarked on its task without predisposition, or whether it had the means to make a fair and full inquiry, for example where it has no material but a transcript of what was before the original body. In such cases it would no doubt be right to quash the original decision. These are all matters (and no doubt there are others) which the Court must consider. Whether these intermediate cases are to be regarded as exceptions from a general rule, as stated by Megarry J. [1971] Ch. 34, at p.49, or as a parallel category covered by a rule of equal status, is not in their Lordships' judgment necessary to state, or indeed a matter of great importance. What is important is the recognition that such cases exist, and that it is undesirable in many cases of domestic disputes, particularly in which an inquiry and appeal process has been established, to introduce too great a measure of formal judicialisation. While flagrant cases of injustice, including corruption or bias, must always be firmly dealt with by the courts, the tendency, in their Lordships' opinion, in matters of domestic disputes should be to leave these to be settled by the agreed methods without requiring the formalities of judicial processes to be introduced."
25 In our opinion, the mechanisms of review prescribed by the Act, especially when regard is had to the right conferred by s 85-8, of ultimate review on the merits by the Tribunal, fall squarely at the first end of the spectrum identified by their Lordships. This view is confirmed by Twist v Randwick Municipal Council (1976) 136 CLR 106 which was cited with approval by the Privy Council in Calvin v Carr.
26 In Twist, Mason J observed at 113:
"Does the existence of the right of appeal, taken in conjunction with the terms of sub-s.(1), satisfy in full the duty of fairness, or does it sufficiently indicate a legislative intention that the duty of fairness has no application to the council when it decides to act under s.317B(1)? This, according to the appellant, is the question to be decided. It is a question which could be easily disposed of if the appeal were less than a full and comprehensive appeal from council's order. In that event it could scarcely be said that a limited right of appeal on the part of the owner is an adequate safeguard for him or that it constitutes an indication that the duty of fairness is displaced. The owner might find that certain matters were irrevocably decided against him by the council without its having the benefit of representations on his behalf.
However, the appeal is not restricted in any way. It is a full appeal on facts and on law in which the appellant is entitled to call evidence. The appeal extends to such elements of discretion as may enter into the making of the order as well as to the existence or non-existence of the conditions which are to be satisfied before an order can be made. There is nothing in the language of the section to preclude the court from considering afresh for itself these discretionary elements."
27 Those observations, we consider, can be paraphrased to apply with equal force to the rights of review afforded by the present Act.
(b) Prejudice to Riverside
28 In the second place, in light of the known facts, there is a distinct absence of evidence to demonstrate that Riverside will suffer any significant further financial or other detriment unless its approval as a provider of aged care services and its allocation of places are restored to it for the time needed for the hearing and determination of its substantive application to this Court. Through its Counsel Riverside contended that it would suffer irreparable damage from the loss of income that would be generated if it were permitted to continue its business of providing aged care services under the Act and the loss of the opportunity to re-establish that business.
29 Following the March decision, Riverside lost its ability to operate as a provider of aged care since it no longer had any entitlement to receive Commonwealth subsidies. After it was notified of the decision it ceased to provide aged care services. Employment of its staff was terminated and the tenancy of its premises was relinquished. That state of affairs prevailed before the hearing of its application for a stay of the March decision and has continued to the hearing of this application for leave.
30 Riverside accepts that, even if the operation of the March decision were suspended pursuant to s 15, it should be a condition of such suspension that Riverside would not provide aged care services until;
· Riverside has obtained suitable premises for that purpose as may be approved by the Department to the reasonable satisfaction of the Department;
· such premises have been fitted out and equipped to the reasonable satisfaction of the Department;
· such numbers of qualified staff and other staff as the Department may reasonably require have been engaged to work in such premises.
31 The making of an order under s 15 of the ADJR Act that the operation of the March decision be suspended would not, on any view, entitle Riverside to commence providing aged care services forthwith. Riverside accepts that it must take the steps referred to above before it could do so. Riverside contends, nevertheless, that if the decision were suspended, it would then be in a position to put in train arrangements to satisfy those requirements and re-establish itself in the business of providing aged care services.
32 However, there is no evidence before the Court that Riverside would be in any better position to take the steps necessary to re-establish its business if the operation of the March decision were suspended. Any such suspension would have only a temporary operation until the Court were able to make a final decision in the proceeding. It is not self-evident that financiers and prospective care recipients would be prepared to be involved with Riverside on the basis of a suspension which allowed for the possibility that the Secretary's decision to impose sanctions could still be upheld. It is by no means clear, therefore, that any additional prejudice is being suffered by Riverside by reason of the refusal of an order under s 15.
33 That is not to say that, if Riverside is ultimately successful, it will not have suffered some possibly significant damage. However, that damage arises by reason of the Secretary's having made the March decision and imposed sanctions. Of course, the position would be very different if Riverside were still conducting its business of providing aged care services and sought to suspend the operation of the March decision so as to enable it to continue to carry on that business pending the resolution of the proceedings. In those circumstances, there would clearly be significant damage that could give rise to substantial injustice if interlocutory relief were not ordered. However, that is not this case.
34 It was conceded by Counsel for Riverside that the final hearing of the proceeding would probably not have taken any longer than the hearing of the application for an order under s 15 of the ADJR Act. Further, Counsel for Riverside indicated that all evidence intended to be relied on at the final hearing was before the primary judge. Having regard to those matters and to the circumstances in which Riverside finds itself, it is curious that no application was made for the expedition of the final hearing of the proceeding, rather than pursuing the interlocutory application. It might be thought that the interests of Riverside would be better served, at this stage, by the pursuit of the review in the Tribunal on the merits of the Secretary's decision rather than the judicial review of that decision. The advantage to Riverside of the prosecution of the application to the Tribunal is the finality that will flow from that decision. The decision of the Tribunal will stand in place of the Secretary's decision. However, even if Riverside is successful in obtaining judicial review of the March decision, the best that it could obtain is remission of the matter to the Secretary for the matter to be reconsidered according to law.
Conclusion
35 It was for these reasons that we yesterday refused leave to appeal.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of this Honourable Court.
Associate:
Dated: 17 August 2000
Counsel for the Applicant: Mr B F Monotti
Solicitor for the Applicant: Efron & Associates
Counsel for the Respondents: Ms F P Hampel QC with Ms M E Kennedy
Solicitor for the Respondents: Clayton Utz
Dates of Hearing: 15 and 16 August 2000
Date of Judgment: 17 August 2000
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Sainsbury v Honourable Judge Salvatore Paul Vasta [2021] FCA 777
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0777
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2024-09-13T22:51:26.108452+10:00
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Federal Court of Australia
Sainsbury v Honourable Judge Salvatore Paul Vasta [2021] FCA 777
File number: ACD 57 of 2020
Judgment of: WIGNEY J
Date of judgment: 24 June 2021
Catchwords: PRACTICE AND PROCEDURE – application seeking an order for separate hearings to determine questions of liability and damages under r 30.01 of the Federal Court Rules 2011 (Cth) – where ordinary course is for all issues to be determined together – whether Court should exercise its discretion to depart from ordinary course of hearing all issues of fact and law together – whether it is just and convenient for an order to be made for issues to be tried separately – consideration of the Court's overarching purpose of civil practice and procedure under s 37M of the Federal Court of Australia Act 1976 (Cth) – consideration of the resolution of proceedings in a just, efficient, expeditious and economic manner – whether benefits outweighed risks of a separate hearing – where no good reason shown to depart from ordinary course – application declined
Legislation: Federal Court of Australia Act 1976 (Cth), s 37M
Federal Court Rules 2011 (Cth), r 30.01
Cases cited: Commissioner of Taxation v Hii (2014) 99 ATR 579; [2014] FCAFC 147
Dovuro Pty Limited v Wilkins (2003) 215 CLR 317; [2003] HCA 51
Energy Australia v Australian Energy Limited [2001] FCA 1049
Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 240 FCR 276; [1999] FCA 718
Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130
Division: General Division
Registry: Australian Capital Territory
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 21
Date of hearing: 24 June 2021
Counsel for the Applicant Mr P Herzfeld SC
Solicitor for the Applicant: Ken Cush & Associates
Counsel for the First Respondent: Mr J Kirk SC
Solicitor for the First Respondent: King & Wood Mallesons
Counsel for the Second Respondent: Mr T Howe QC with Ms J Carter
Solicitor for the Second Respondent: Australian Government Solicitor
Counsel for the Third Respondent: Mr J M Horton QC with Mr D Favell
Solicitor for the Third Respondent: Crown Law
ORDERS
ACD 57 of 2020
BETWEEN: GLEN SAINSBURY
Applicant
AND: HONOURABLE JUDGE SALVATORE PAUL VASTA
First Respondent
COMMONWEALTH OF AUSTRALIA
Second Respondent
STATE OF QUEENSLAND
Third Respondent
order made by: WIGNEY J
DATE OF ORDER: 24 June 2021
THE COURT ORDERS THAT:
1. The parties are to confer and agree, if possible, on appropriate case management orders for the progress of the matter, those orders to be conveyed to my associate at an appropriate time.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Delivered ex tempore, revised from transcript)
WIGNEY J:
1 The applicant in this matter, Mr Glen Sainsbury, has commenced a proceeding in this Court claiming damages against a judge of the Federal Circuit Court of Australia, Judge Salvatore Vasta, the Commonwealth of Australia and the State of Queensland. The essence of Mr Sainsbury's claim is that he was falsely imprisoned following, or as a result of, an order made by Judge Vasta which, it is contended, was beyond his Honour's power and was made without lawful justification. Each of the respondents has filed a defence to the proceeding.
2 The present controversy arises because Judge Vasta has applied for an order the effect of which would be that the question of liability would be heard and determined separately and before any hearing in relation to the quantification of damages. The Commonwealth supported the application by Judge Vasta. The position taken by the State of Queensland was ultimately fairly neutral. This issue was first raised at an earlier case management hearing, though no interlocutory application has been filed. Nor has any evidence been filed in support of the application.
3 The main basis for the application was and is said to be, in general terms, that the question of liability in the matter would hinge essentially on questions of law, in particular the law concerning judicial immunity and, perhaps to a lesser extent, questions of law concerning the authority pursuant to which officers of the Commonwealth and the State of Queensland detained Mr Sainsbury. It was suggested that the facts in relation to liability would be largely agreed or uncontested. In contrast, it was contended that the quantification of damages, should that issue arise, would most likely require extensive and potentially contested expert opinion evidence, including evidence from a psychiatrist, an occupational physician and a forensic accountant. It was submitted that in those circumstances the determination of liability separately and in advance of the question of damages would be just, efficient, expeditious and more economical than a hearing which involved the determination of all issues.
4 Mr Sainsbury opposed the making of an order that the question of liability be determined separately. He submitted, in essence, that the proceeding could be determined expeditiously and economically in any event and that there was at least a risk of overlapping evidence and issues if the questions of liability and damages were determined separately. Mr Sainsbury also submitted that there was no real or appreciable reason or justification to depart from the ordinary course of determining all issues together.
5 After the issue was first raised at the case management hearing on 5 May 2021, the parties were directed to file a statement of agreed facts and lists of the witnesses who would be called in respect of liability and quantum respectively. A detailed statement of agreed facts was subsequently filed.
6 As for the witness lists, both Judge Vasta and the Commonwealth indicated that they would call no witnesses at a hearing which related to liability alone. Judge Vasta indicated, however, that if there was a hearing of liability and damages, he would only call expert witnesses. The Commonwealth indicated that if there was a hearing in relation to both liability and damages, it would also call a security officer who was retained by the Commonwealth and a security expert in relation to the issue of damages. The State of Queensland's ultimate position was that it would call no witnesses at a trial of liability alone, but would call upwards of 38 witnesses at a trial in respect of liability and quantum. Those witnesses were, in general terms, the police and other officers who were responsible for detaining Mr Sainsbury, or dealing with him as a consequence of his detention.
7 The power to make an order for the separate determination of liability is to be found in r 30.01 of the Federal Court Rules 2011 (Cth). That rule simply provides that a party may apply to the court for an order that a question arising in the proceeding be heard separately from any other questions. There is a long line of authority which suggests that in the ordinary course all issues of fact and law should be determined at the one time and that the Court should generally exercise the power in r 30.01 of the Rules cautiously and sparingly: see, for example, Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 240 FCR 276; [1999] FCA 718 at [8]-[9]; Energy Australia v Australian Energy Limited [2001] FCA 1049.
8 The issue ultimately reduces to the question whether it is just and convenient for an order to be made. In considering whether certain issues should be tried separately and in applying r 30.01 of the Rules, the Court must consider the overarching purpose of civil practice and procedure provisions according to s 37M of the Federal Court of Australia Act 1976 (Cth). The parties seeking the order must generally point to some clear and appreciable benefit to be gained from splitting the case and hearing and determining an issue or issues separately, including that it would facilitate the just resolution of the dispute as quickly, inexpensively and efficiently as possible.
9 Having heard the comprehensive and helpful submissions by each of the parties I am not persuaded that an order should be made for the separate determination of the question of liability in the particular circumstances of this case. That is so for essentially five reasons.
10 First, the action for false imprisonment is an action in tort. It is not always possible to separate questions of liability from questions of damages in actions in tort: see for example Dovuro Pty Limited v Wilkins (2003) 215 CLR 317; [2003] HCA 51 at [142]. That is because the suffering of some damage is generally an element of the tort. It is true that the tort in question in Dovuro was negligence, not false imprisonment. It is not difficult to see how issues relating to liability and damages are likely to be intertwined in a case concerning the tort of negligence. In the case of the tort of false imprisonment, however, a finding that the applicant was detained would generally be sufficient, without more, to make out the element of damage insofar as liability is concerned. Nevertheless, there remains at least some risk in such a case that the questions of liability and damages may be intertwined given the nature of the cause of action.
11 Second, while many, if not most, of the facts relating to liability are agreed, there remains some potential for disagreement or controversy in relation to the facts that may be relevant to liability. While Judge Vasta and the Commonwealth both indicated that they would not call any witnesses at a hearing which was limited to the question of liability, Mr Sainsbury's position was that it was at least possible that he would want to give evidence which related to liability alone. He contended that there may be some evidence that he could give which was relevant to liability. That evidence was said to include evidence of what he saw and heard during the relevant proceeding before Judge Vasta. That potential evidence was not covered by the statement of agreed facts and would not necessarily be reflected or recorded in the transcript. Mr Sainsbury's evidence in that respect was said to be potentially relevant to his case that Judge Vasta acted with an improper purpose or that he was biased because he had pre-judged the case. For their part, Judge Vasta and the Commonwealth disputed or queried whether it could be said that any such evidence from Mr Sainsbury would be relevant given the pleaded facts, the terms of the statement of agreed facts and the law concerning judicial immunity.
12 It may turn out to be the case that there is little or no scope for Mr Sainsbury to give material evidence in relation to liability. I am, however, at this point at least, in no real position to reach a final or concluded view in relation to that issue. The proceeding is at an early stage. Orders have not even been made for the filing or service of affidavits or statements from the witnesses. Mr Sainsbury should at least be given the opportunity to give such evidence if he so wishes. The relevance and admissibility of such evidence can only be determined at the trial.
13 The position is also not so straightforward when it comes to the lay witnesses proposed to be called by the State of Queensland and, to a lesser extent, the Commonwealth. Mr Sainsbury submitted that he should be given the opportunity to cross-examine those witnesses in relation to issues that may potentially bear on the question of liability. That questioning, again, was said to be potentially relevant to Mr Sainsbury's case that Judge Vasta was motivated by an improper purpose and had pre-judged the issues in his case. The point is that Mr Sainsbury would not have the opportunity to cross-examine those witnesses in respect of matters potentially going to liability if there was a separate trial in relation to liability alone. That is because the State of Queensland and the Commonwealth would not call those witnesses at such a trial. Judge Vasta and the Commonwealth, again, questioned whether any factual issues addressed in the cross-examination of the witnesses proposed to be called by the State of Queensland and the Commonwealth could be relevant to the question of liability. For the same reasons as given in the context of Mr Sainsbury's evidence, however, that is an issue that cannot be determined at this early stage. It can only be determined at trial.
14 Third, and related to the second point, there is, in my view, at least some potential for overlapping evidence and the need to call some witnesses twice if the questions of liability and damages are to be heard and determined separately. In particular, as I have already noted, it is clear that Mr Sainsbury may need to be called at both hearings if the issues are to be separated. That would plainly be unsatisfactory.
15 Fourth, in my view, the separate hearing of the questions of liability and quantum could result in a significant delay in the finalisation of the proceeding by reason of a likely bifurcated appeal process. All the parties agreed that an appeal on the question of liability, in particular concerning questions concerning the scope and operation of the principles relating to judicial immunity in a case such as this, was likely, if not inevitable. If the question of liability was determined separately, the result would be an appeal to the Full Court, and perhaps even an application for special leave to appeal to the High Court, which would occur at the conclusion of the separate hearing in relation to liability. If the outcome of those appeals were that the respondents, or some of them, were held to be liable, the question of the quantum of damages would then be separately determined. There would then be scope for further appeals in respect of the Court's determination of that issue. The fragmentation and delays that would result from the bifurcated appeal process would be unsatisfactory, particularly from Mr Sainsbury's perspective.
16 Fifth, I am not, in any event, persuaded that there would necessarily be any substantial benefit in determining the issues of liability and damages separately. That really depends on the nature and extent of the expert evidence likely to be called in respect of damages and the nature and extent of the lay evidence likely to be called by the State of Queensland.
17 I am unable, at this early stage of the proceeding, to form a concluded view in respect of the nature and extent of that evidence. It may ultimately be the case that the evidence of the witnesses called by the State of Queensland would not be contested, or at least significantly contested. It may turn out to be the case that the affidavits of those witnesses, or a significant proportion of them, are read without objection and that the witnesses are not subjected to any, or any significant, cross-examination. The result would be the length of the hearing would not be significantly increased by that evidence. Even the expert evidence foreshadowed by the parties may turn out to be not particularly contentious or time consuming, particularly if, as may be anticipated, orders are made in due course for expert conclaves and joint reports.
18 In those circumstances, I am not at this stage persuaded that there are likely to be any significant time or costs savings if the questions of liability and damages are split as proposed by Judge Vasta and the Commonwealth.
CONCLUSION AND DISPOSITION
19 In the ordinary course, issues of liability and damages should be tried together: see Commissioner of Taxation v Hii (2014) 99 ATR 579; [2014] FCAFC 147 at [2], citing Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-142.
20 The experience of this and other courts is that, in many cases, despite what may initially be considered to be the situation by the parties and the court, unforeseen problems and issues can arise if the issues in a proceeding are separated. Moreover, the anticipated savings of time and costs from the separation of issues often turns out to be illusory. It is no doubt for that reason that a conservative and cautious approach is generally taken to such applications. Good reasons must be shown before the ordinary course is departed from. I am ultimately not persuaded that a good reason has been demonstrated in this case.
21 It follows that I decline to make the orders sought by Judge Vasta and the Commonwealth for the question of liability to be determined separately to and in advance of the question of damages. The order I propose to make is that the parties confer and agree on appropriate case management orders, so that the matter can be listed for trial.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.
Associate:
Dated: 8 July 2021
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2000-05-25 00:00:00
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Proprietors of Strata Plan No 3102 v Gardiner-Jones [2000] FCA 738
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2000/2000fca0738
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2024-09-13T22:51:26.345917+10:00
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FEDERAL COURT OF AUSTRALIA
Proprietors of Strata Plan Number 3102 v Gardiner-Jones [2000] FCA 738
THE PROPRIETORS OF STRATA PLAN NUMBER 3102 (ALSO KNOWN AS THE OWNERS OF STRATA PLAN NUMBER 3102) v GARDENER-JONES N P (ALSO KNOWN AS NORMA PHYLLIS GARDINER-JONES) (IN THE MATTER OF GARDINER-JONES N P)
N 7079 OF 2000
MOORE J
25 MAY 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 7079 OF 2000
BETWEEN: THE PROPRIETORS OF STRATA PLAN NUMBER 3102 (ALSO KNOWN AS THE OWNERS OF STRATA PLAN NUMBER 3102)
APPLICANT
AND: GARDENER-JONES N P (ALSO KNOWN AS NORMA PHYLLIS GARDINER-JONES)
RESPONDENT
JUDGE: MOORE J
DATE OF ORDER: 25 MAY 2000
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. A sequestration order be made against the estate of Gardener-Jones N P (also known as Norma Phyllis Gardiner-Jones).
2. The applicant creditor's costs (including reserved costs, if any) be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 7079 OF 2000
BETWEEN: THE PROPRIETORS OF STRATA PLAN NUMBER 3102 (ALSO KNOWN AS THE OWNERS OF STRATA PLAN NUMBER 3102)
APPLICANT
AND: GARDENER-JONES N P (ALSO KNOWN AS NORMA PHYLLIS GARDINER-JONES)
RESPONDENT
JUDGE: MOORE J
DATE: 25 MAY 2000
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 I am presently dealing with a creditor's petition filed by the Proprietors of Strata Plan Number 3102 ("the judgment creditor") seeking a sequestration order against Norma Phyllis Gardiner-Jones, or Gardener-Jones N P, based on the failure of Ms Gardiner-Jones to comply with a bankruptcy notice served on her on 3 August 1999, the bankruptcy notice having issued on 15 April 1999.
2 The bankruptcy notice was based on a judgment entered in favour of the judgment creditor on 9 July 1998 in the sum of $8622.77 which represented, I apprehend, outstanding strata levies payable by Ms Gardiner-Jones to the judgment creditor concerning a building in which she owns a unit which is her home. That is a matter I will return to later.
3 Mr Charles, solicitor for the judgment creditor, has taken me through the material upon which he relies. I am satisfied that the documents that are required to be served on Ms Gardiner-Jones have been served and I am otherwise satisfied as to the various matters I must be satisfied about under s 52 of the Bankruptcy Act 1966 (Cth). Accordingly, I have reached a point where the judgment creditor has established grounds for the making of a sequestration order.
4 When the matter was last before me, I made it plain to Ms Gardiner-Jones that these proceedings, potentially for her, had serious consequences including, potentially, the sale of the unit which is her home but which is also the indirect source of the judgment debt arising from the Local Court proceedings. I then invited Ms Gardiner-Jones to seek legal assistance, a step apparently she has not taken. I also indicated to her that she may wish to put on material for the next occasion, that is today, raising matters that might be relevant to whether a sequestration order should be made. She has not appeared today, though she was informed by my Associate that she should either appear or have someone appear on her behalf to provide some evidence to support a contention she made to my Associate that she had injured herself and was unable to attend. Neither of these things has occurred. The material that Ms Gardiner-Jones has put on between the time the matter was last before me and now, does nothing to disclose either the existence of any legitimate cross-claim or the like or to satisfy me that notwithstanding the act of bankruptcy arising from the failure to comply with the bankruptcy notice, she is solvent.
5 The court has a discretion that may be exercised in appropriate circumstances to not make a sequestration order. In this case, the circumstances of Ms Gardiner-Jones cause me some concern. It appears that she is either unwilling or unable, or both, to pay levies due to the judgment creditor concerning the property in which she lives. I am not entirely satisfied that she understands the import of these proceedings though I have not reached a level of satisfaction that would move me to refrain from making a sequestration order. However, the consequences of doing so potentially are serious for Ms Gardiner-Jones in the sense that there is the real possibility of her only or principal asset being sold to satisfy her debts with the result that she may be dispossessed of the unit which is presently her home.
6 All I can indicate publicly is that I hope, as Mr Charles suggests might occur, that her personal circumstances will be looked at with some care by her trustee when her estate comes to be administered as a consequence of the order I am about to make.
7 I make orders in accordance with the short minutes of order handed up by Mr Charles which I now initial. In so doing I note that the act of bankruptcy occurred on 24 August 1999.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.
Associate:
Dated: 25 May 2000
Solicitor/advocate for the applicant: Mr H Charles
There was no appearance for the respondent.
Date of Hearing: 25 May 2000
Date of Judgment: 25 May 2000
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2007-03-28 00:00:00
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Starr Partners Pty Limited v Dev Prem Pty Ltd [2007] FCAFC 42
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2007/2007fcafc0042
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2024-09-13T22:51:27.047518+10:00
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FEDERAL COURT OF AUSTRALIA
Starr Partners Pty Limited v Dev Prem Pty Ltd [2007] FCAFC 42
TRADE MARKS – infringement – registered mark of a partial star device and words "Starr Partners" – allegedly infringing mark of a partial star device and words "Star Realty" – both marks used in connection with provision of real estate services – whether respondent's mark "deceptively similar" to appellant's registered mark – whether primary Judge accorded too much weight to differences revealed by a side by side comparison, and insufficient weight to more unusual and memorable features – Held: yes.
Trade Marks Act 1995 (Cth) ss 10 ("deceptively similar"), 120(1)
Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 cited
Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 cited
STARR PARTNERS PTY LIMITED (ACN 054 801 375) v
DEV PREM PTY LTD (ACN 088 815 516)
NSD 1997 OF 2006
LINDGREN, EMMETT and FINKelSTEIN JJ
28 MARCH 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1997 OF 2006
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: STARR PARTNERS PTY LIMITED (ACN 054 801 375)
Appellant
AND: DEV PREM PTY LTD (ACN 088 815 516)
Respondent
JUDGES: LINDGREN, EMMETT AND FINKELSTEIN JJ
DATE OF ORDER: 28 MARCH 2007
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be allowed.
2. Orders 1 and 2 made on 25 September 2006 in proceeding NSD 422 of 2005 be set aside and in lieu thereof it be ordered that:
"1. The respondent, whether by itself, its servants, agents or otherwise howsoever, be restrained from using the mark that appears in paragraph 8 of the Full Court's Reasons for Judgment of 28 March 2007 ("the infringing mark") or any mark only colourably different from the infringing mark in connection with its business of providing services related to real estate.
2. Within 14 days after 28 March 2007, the respondent, by its proper officer, file and serve on the appellant an affidavit verifying the ways in which the infringing mark has been used, and identifying and quantifying all printed matter referring to such goods which bear the infringing mark and which are in the respondent's possession, custody or power, and deliver up to the appellant the said goods and printed matter for destruction.
3. The respondent have leave to apply by Friday 30 March 2007 for a variation of the immediately preceding order.
4. The respondent pay the appellant's costs of the proceeding."
3. The respondent pay the appellant's costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1997 OF 2006
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: STARR PARTNERS PTY LIMITED (ACN 054 801 375)
Appellant
AND: DEV PREM PTY LTD (ACN 088 815 516)
Respondent
JUDGES: LINDGREN, EMMETT AND FINKelSTEIN JJ
DATE: 28 MARCH 2007
PLACE: SYDNEY
REASONS FOR JUDGMENT
THE COURT:
Introduction
1 The appellant, Starr Partners Pty Limited, appeals from an order of a Judge dismissing its application for relief in respect of alleged infringement of its registered trade mark by the respondent, Dev Prem Pty Ltd (Starr Partners Pty Ltd v Dem Prem Pty Ltd (No. 2) (2006) 70 IPR 113; [2006] FCA 1269).
2 The primary proceeding was brought against the respondent and two of its directors, not only in respect of alleged infringement of trade mark under s 120 of the Trade Marks Act 1995 (Cth) ("the Act"), but also for contravention of s 52 of the Trade Practices Act 1974 (Cth) and for passing off. The appellant sought injunctive relief, damages, an account of profits, interest and costs.
3 By the time the proceeding came on for hearing, the appellant had discontinued as against the two directors, was pursuing only its claim of infringement of trade mark, and was seeking only an injunction and costs.
Background
4 The appellant carries on a real estate franchise business in New South Wales under the name "Starr Partners" and has done so since 1992. It has 36 franchisees carrying on business in the State under that name.
5 Since 18 January 1999, Starr has been the registered owner of trade mark No 783181 which is as follows:
As can be seen, the registered mark comprises a partial star device (with shadow) and two words, the word "Starr" being a proper noun and the word "Partners" being a common noun. Taken together, "Starr Partners" refers to the owners or structural identity of the business, as, for example, "Star and Co" might do.
6 The registered mark is not coloured. It is "black and white" as appears above.
7 The mark is registered for goods and/or services in various classes, including classes 35, 36, 37 and 42, all of which, in various ways, are services in relation to real estate.
8 The respondent carries on business as a real estate agent in certain northern suburbs of Brisbane under the name "Star Realty". In the course of its business it has been using the following unregistered device and word mark:
9 Like the appellant's registered mark, the respondent's unregistered one comprises a partial star device and two words. As in the case of the appellant's registered mark, the initial letter "S" is larger than the other letters of the first word. That letter intrudes into the star device more than the "S" in the appellant's registered mark does (if it does so at all). The word "Realty" describes the nature of the respondent's business activity.
10 In the case of the respondent, the partial star device and the words "Star" and "Realty" appear in white against a deep blue solid background.
11 The respondent has been using its mark in relation to services in respect of which the appellant's mark is registered (see s 120(1) of the Act), and services of the same description as that of services in respect of which the appellant's mark is registered (see s 120(2) of the Act). Nothing has turned on the defence provided to a claim of infringement in s 120(2) of the Act, and the case was fought as a s 120(1) case.
12 Under s 120(1), there was infringement if the respondent used as a trade mark a sign that was "substantially identical with" or "deceptively similar to" the appellant's registered mark in relation to services in respect of which the latter was registered.
13 The expression "deceptively similar" to is defined in s 10 of the Act as follows:
For the purposes of this Act, a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion.
14 It was not in dispute that the respondent had been using its mark as a trade mark. In its defence, the respondent admitted that it had used its mark in advertising, letterheads, business cards and brochures in the south east Queensland area.
15 The primary Judge found that the respondent's mark was neither "substantially identical with" nor "deceptively similar to" the appellant's registered mark. On the appeal, the appellant did not contest his Honour's conclusion in relation to "substantial identicality" and relied only on deceptive similarity.
Reasoning of the Primary Judge
16 His Honour discussed the meanings of the expressions "substantially identical with" and "deceptively similar to". He referred to the discussion of both expressions by Windeyer J in Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414-415. In particular, he referred to Windeyer J's "side by side comparison" test of substantial identicality, and his Honour's statement that deceptive similarity, in contrast, involved questions of recollection, memory and impression.
17 In a passage criticised by the appellant, the primary Judge said that the test for deceptive similarity is "one of impression based on recollection: … which will be an imperfect recollection, measured against a standard of side by side comparison" (at [44]). The appellant submits that this passage shows that his Honour erred by basing the test of deceptive similarity on a side by side comparison.
18 We reject the criticism: the passage quoted does not show this. His Honour's reasons demonstrate that he appreciated that whereas a side by side comparison was an appropriate description of the approach to be taken to the issue of substantial identicality, something different was involved in determining whether there was deceptive similarity. We are inclined to think that in referring to "an imperfect recollection, measured against a standard of side by side comparison", his Honour meant "an imperfect recollection, contrasted with a standard of side by side comparison". However, even if he meant that a side by side comparison had some role to play in the test of deceptive similarity, we would not disagree with him. A side by side comparison is the starting point, but only the starting point, for the test of deceptive similarity. Section 10 of the Act makes this clear. It is only possible to determine if two trade marks "resemble" one another by a side by side comparison of the two. The point is that the side by side comparison is all that is involved in the test of substantial identicality (although even in a side by side comparison, it is appropriate to allow for differences in the significance of, and weight to be given to, different features), but a side by side comparison is only the beginning of the inquiry as to deceptive similarity, which goes to the effect that resemblance will be likely to have on relevant minds in terms of recollection and impression.
19 While we reject the criticism made by the appellant of the passage set out above, the question remains whether his Honour did in fact err by giving too much weight to the differences in the content of the two marks. The differences that were influential were the presence of the word "partners" in the appellant's mark and "realty" in the respondent's mark, the different spellings of "Starr" and "Star", and the differences between the star logos. The primary Judge thought it important that the words "Starr Partners" and "Star Realty" were neither aurally nor visually similar. He likened the case to the dispute about the names "Rain King" and "Rainmaster" considered by the High Court in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538-539.
20 In the result, his Honour concluded that the visual and aural differences between the two marks were too great for there to be a real and tangible danger of deception or confusion, and that while one could not reject the possibility of deception or confusion, a mere possibility was not sufficient.
Reasoning on the Appeal
21 The test for deceptive similarity and the cases that have articulated the test are well known and need not be repeated. Having regard to the way the primary Judge approached his task, we think it is worthwhile making one or two points about the test. We will be brief.
22 The first step in the analysis is to identify the impression produced by the registered mark considered in its entirety. Similarity is not based on only part of the registered mark. On the other hand, when one decides upon the impression produced by that mark it is not improper to give more or less weight to particular features of it, provided the ultimate conclusion is based on a consideration of the mark in its entirety. This approach does no more than recognise that one word or feature of a mark can be more striking and memorable than another. This kind of analysis appears not to have been the approach taken by the judge.
23 It may also be appropriate when comparing the registered mark with the allegedly infringing mark to have regard to the pronunciation of words in the mark or any verbal translation of devices. But a comparison based on sounds is likely to be important only if the goods or services to which the mark relates are acquired by reference to words based on the mark. For example, one might commonly hear a person say "Can I have a Coke?" but not "We need to find a new tenant, let's call Star Realty". Put in another way, phonetic similarities and differences will not have a large role to play if words in the mark are not usually spoken or devices in the mark are not usually orally conveyed.
24 The final point we wish to mention arises from one of the appellant's submissions. It was said that the comparison required to determine deceptive similarity is between the registered mark as used and the allegedly infringing mark. The appellant drew attention to the fact that its mark was applied in a particular shade of blue, and, as we have mentioned, the respondent's mark appeared in white against a blue background. The appellant's argument cannot be accepted. In a trade mark case, the impression or recollection of the registered mark must be of the mark as registered. Naturally, the position is different in a passing off case or a case under s 52 Trade Practices Act 1974 (Cth). Nonetheless, the commercial setting in which the two marks are used can be relevant. For example, the strength or fame of the registered mark can be a relevant factor, as can be the similarity of the goods or services to which the marks in question are applied, and even the geographic area in which the marks are used. One could add to the list of potentially relevant factors the relationship between the parties' forms of advertising (whether the marketing takes place through the same media) and their respective channels of distribution (whether they are the same or similar). Conversely, if the marks are not encountered together, minor differences in style will not count for much.
25 Returning to the case at hand, we think that the respondent's mark so nearly resembles the appellant's registered mark that it is likely to deceive or cause confusion.
26 Because the likelihood of deception or confusion must be assessed in the light of the imperfection of human recollection, where a trade mark includes both common and uncommon words, the uncommon words (such as "Star" or "Starr") will be the more memorable, and therefore significant for infringement purposes, than the common words (such as "Partners" or "Realty").
27 The hypothetical person will have seen both marks. He or she may have seen both of them some time before the hypothetical moment at which the likelihood of deception or confusion is to be assessed, or he or she may have seen one or both of them only a short while before that moment. For some people the spelling of the family name "Starr" with its double "r" ending and the associated play on the "star" idea will be more striking than it will be for other people. Sensitivity to such matters differs widely in the community.
Essential features
28 The essential features of the two marks are the star device, its close relationship with the initial capital letter "S", and the idea or concept of a star. One does not expect to encounter such features as a matter of course in the advertising of a real estate agency, whereas the word "realty" is unremarkable in that context, and the word "partners" almost equally so.
29 The appellant has taken advantage of the association between the family name "Starr" and the idea of a star. By doing so, and juxtaposing the word "Starr" and the star device, it has drawn attention away from the double "r" ending of "Starr" as signifying a family name in favour of the star device and the capital letter "S".
Inessential features
30 While the word "Partners" differs from "Realty", the question is whether the two words would make such a lasting impression on the hypothetical reader's mind that he or she would not be likely to be deceived or confused. We do not think they would do so.
31 It must be remembered that both marks would be used in relation to real estate services. This consideration reduces the effect of the presence of the word "realty" in the respondent's mark: the reader knows from the context that the business entity in question is engaged in "realty" business.
32 Similarly, the word "Partners" in the appellant's registered mark is not distinctive. While it is encountered less frequently than "Pty Ltd" of "and Company", it is far from arresting and is certainly not calculated to cause the reader to ponder the form of business structure adopted by the appellant. The word "Partners" would not be remembered as indicating one form of business structure as distinct from another. Indeed, the respondent is a proprietary company, not a partnership. The word "Partners" is a fairly non-descript term that does not seriously convey much meaning more than "and Company". It would be forgotten very soon after being read.
33 In sum, a reader would gloss over the words "Partners" and "Realty", and would be likely to remember only the star device and a "star kind of word" associated with it as the mark of a real estate agency.
The question of aural infringement
34 The appellant's registered mark includes the partial star device: it is not simply "Starr Partners". The question before his Honour was whether "the registered trade mark" had been infringed, not whether only part of it had been, and whether it had been infringed by the respondent's mark taken as a whole.
35 Although there was a passing reference to aural similarity in his Honour's reasons for judgment, it was only visual representations of the respondent's mark that were pleaded (and admitted by the respondent in its defence). Therefore any question of aural similarity may be put to one side.
Role of appellate court
36 We are conscious of cautions against a too ready interference with the view of a primary Judge in matters of impression, but we are, with respect to his Honour, sufficiently clearly convinced that his Honour erred in over-emphasising a literal and side by side comparison of the respective marks at the expense of considerations of imperfect recollection, that we consider we should interfere.
Conclusion
37 The appeal should be allowed with costs; the primary Judge's order of dismissal and order that the appellant pay the respondent's costs should be set aside; there should be injunctive relief as sought below; and an order that the respondent pay the appellant's costs of the proceeding at first instance.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.
Associate:
Dated: 28 March 2007
Counsel for the Appellant: Mr DB Studdy
Solicitor for the Appellant: Abbott Tout Lawyers
Counsel for the Respondent: Mr APJ Collins
Solicitor for the Respondent: Stephens & Tozer
Date of Hearing: 5 March 2007
Date of Judgment: 28 March 2007
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Chenafa v Minister for Immigration & Multicultural Affairs [1999] FCA 1432
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1999/1999fca1432
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2024-09-13T22:51:27.763726+10:00
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FEDERAL COURT OF AUSTRALIA
Chenafa v Minister for Immigration & Multicultural Affairs [1999] FCA 1432
MIGRATION – application for review of decision of Refugee Review Tribunal ("RRT") refusing protection visa – grounds of appeal involving questions of fact – whether findings open on the evidence available – claimed persecution for evasion of military service – possibility of relocation within Algeria
Migration Act 1958 (Cth) ss 476(1)(g), 476(4)
Convention Relating to the Status of Refugees as amended by the 1967 Protocol, Article 1A(2)
TARIK CHENAFA v
MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
N 780 OF 1999
TAMBERLIN J
SYDNEY
13 OCTOBER 1999
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 780 OF 1999
BETWEEN: TARIK CHENAFA
Applicant
AND: MINISTER FOR IMMIGRATION
AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: TAMBERLIN J
DATE OF ORDER: 13 OCTOBER 1999
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application is dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 780 OF 1999
BETWEEN: TARIK CHENAFA
Applicant
AND: MINISTER FOR IMMIGRATION
AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: TAMBERLIN J
DATE: 13 OCTOBER 1999
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This is an application for review of a decision of the Refugee Review Tribunal ("the RRT") made on 9 August 1999. That decision affirmed a decision to the effect that the applicant should not be granted a protection visa on the grounds that he was a "refugee" within the meaning of the 1951 Convention Relating to the Status of Refugees as amended by the 1967 Protocol ("the Convention"). The relevant provision of the Convention is Article 1A(2) which provides that a refugee is a person who:
"… owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country …"
2 The applicant arrived in Australia on 25 April 1999, and five days later lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs. On 28 May 1999 a delegate of the Minister refused a protection visa and on 3 June 1999 the applicant sought review of that decision by the RRT. The question for determination by the RRT was whether as at the date of its decision, on 9 August 1999, the applicant was a "refugee" within the Convention definition.
3 The RRT in its findings and reasons for decision accepted that the applicant was a national of Algeria born in August 1965. It also accepted that the applicant had served as a conscript in the Algerian Army for two years from 5 January 1985 to 15 January 1987. The applicant's claim was that he had a well-founded fear of persecution by Algerian authorities because he had not complied with a recall notice from the Ministry of National Defence. He stated that on 15 September 1997 he received a call up notice from the Army which told him to report to an Army base. The way in which this fear of persecution is said to constitute anticipated persecution for a Convention reason is that the applicant says he is a conscientious objector to the drastic measures which the Army takes in its activities in Algeria. He also says that by reason of an imputed political opinion, any person who does not serve in the Army would be regarded as being against the authorities in Algeria and also would be acting contrary to prevailing political views in Algeria.
4 An error of law is said to have arisen in the present case, being an error involving the incorrect interpretation of the applicable law or the incorrect application of the law to the facts as found by the RRT.
5 This ground is particularised in the following terms:
6 (1) The RRT erred in law in finding that there is no recall up for Algerian military-reservists in 1997 when the fact was there was a recall of reservists in 1997.
7 (2) The RRT erred in law in finding that the applicant could relocate to another part of Algeria where he had never been, owned no property, nor had any friends or relatives to support his relocation.
8 In relation to the first claim, the ground relied on is in substance that set out in section 476(1)(g) of the Migration Act 1958 (Cth) ("the Act"), which is that there was no evidence or other material to justify the making of the decision. Section 476(4) provides that this ground is not made out unless the person who made the decision was firstly required by law to reach that decision only if a particular matter was established and that there was no evidence or other material from which the person could reasonably be satisfied that the matter was established. Alternatively, the subsection provides that the ground in s 476(1)(g) will be made out if the person who made the decision based the decision on the existence of a particular fact, and that fact did not exist.
9 In the present case, the RRT rejected the claim that there had been a recall notice. This was based on two grounds. The first was the inference which the RRT member drew from the form of the recall notice, and the conclusion reached on this was that, on its face and having regard to matters and wording contained therein, the RRT was not satisfied that the notice of recall was genuine. To some extent these conclusions are based on mis-spellings and wrongly placed or omitted French accents. Before me, the applicant has said that it is not uncommon in Algeria for there to be missing or wrong accents and that the incongruities in the form tendered do not establish that the notice of recall is other than genuine. In reaching its conclusion that the claim of a call up for Algerian military service in 1997 was not genuine, the member also had regard to detailed country information provided by the research director of the Immigration and Refugee Board of Ottawa.
10 The finding of the RRT was that the applicant had not in fact been recalled to serve as a reservist, and that there is not a real chance of the applicant being persecuted in Algeria for evading military obligations. For that reason the RRT concluded that his fear of persecution by the authorities whether for reasons of political opinion or for any other Convention reason was not well-founded. The issue raised by the applicant is one of fact for determination by the RRT. It does not raise a question of law or principle. There is no apparent error in the finding and the conclusion reached was open to it on evidence available.
11 In the decision of the RRT reference is made to another matter but that was not raised on appeal. Namely, the claim that because the applicant was a trader in wine grapes, he had attracted adverse attention from the Islamic fundamentalists who attempted extortion and threatened to kill him. However that ground was not pressed on the application before me and it seems in any event that any extortion which was attempted from the applicant was not for a religious or other Convention reason.
12 There are a considerable number of authorities in this court to the effect that extortion of funds from victims is not necessarily evidence of persecution for a Convention reason, in view of the consideration that there may be many other grounds on which money is sought to be extracted in a criminal way from citizens of a country.
13 The second error of law which has been alleged is the finding that the applicant could relocate to another part of Algeria. The applicant points out that there was no evidence that he had ever been to the other parts of Algeria or owned any property there or had any friends, relatives or connection with those areas. The finding of the RRT was based on country information, referred to in the penultimate paragraph of the decision and before the conclusion. The RRT noted that Algiers, for example, being a large city, was relatively secure and that the authorities had been claiming increasing success in containing rebel activity. This view was based on specified country information. The RRT member also referred to the fact that the applicant had been away from Algeria for almost two years and was satisfied that any attention the applicant might have received locally from any armed group before departure would not have ongoing significance.
14 Accordingly, the RRT expressed its satisfaction that the applicant would be effectively protected in areas away from his own home region. Although these areas are not specified, it seems to me that this finding was open on the material. It is apparent that the RRT member considered Algiers to be a relatively safe area. In addition, there is the consideration that it was only an alternative basis for the ultimate decision of the RRT and in view of the finding that there had been no recall notice and that there was no reasonable or well-founded fear or risk of persecution, it was not necessary to express any view on the relocation question as this was not material to the ultimate decision.
15 In the course of the hearing, the applicant sought to proffer a medical certificate, by way of evidence, as to one matter which was mentioned in the RRT's reasoning, concerning a fractured jaw. I did not accept this because it is not open to this Court to entertain fresh evidence and re-hear the merits of the matter, or the factual basis on which the decision was reached. The Court is only concerned with errors of principle, or of law, or of the application of the law to the facts on the evidence before the RRT, save in exceptional circumstances.
16 Accordingly, in this case, I am not persuaded that the applicant has made out a case for review of the RRT decision and I dismiss the application with costs.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice .
Associate: Dated: 20 October 1999
The Applicant appeared in person
Solicitor for the Respondent (appearing): A Markus
Date of Hearing: 13 October 1999
Date of Judgment: 13 October 1999
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Wong v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 490
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2006/2006fca0490
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2024-09-13T22:51:28.980062+10:00
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FEDERAL COURT OF AUSTRALIA
Wong v Minister for Immigration & Multicultural & Indigenous Affairs
[2006] FCA 490
ADMINISTRATIVE LAW – issue arising at first instance before AAT as to access to government documents – claims of privilege from production on grounds related to public interest sensitivity – recommendation for reference to Full Court for authoritative determination
Administrative Appeals Tribunal Act 1975 (Cth) ss 36(1)(a) and 36A(1) and (2)
WONG TAI SHING v MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
NSD 274 OF 2006
CONTI J
5 MAY 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 274 OF 2006
BETWEEN: WONG TAI SHING
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
FIRST RESPONDENT
THE ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA
SECOND RESPONDENT
JUDGE: CONTI J
DATE OF ORDER: 5 MAY 2006
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The interlocutory proceedings for determination of the viability of the respondents' claim to public interest immunity advanced pursuant to the Attorney General's certificate bearing date 10 April 2005 be referred to the Full Court for hearing and determination pursuant to s 25(6) of the Federal Court of Australia Act 1976.
2. Costs of the present proceedings to date be reserved.
3. The parties provide draft directions for consideration by the primary judge at least in the first instance as to the scope of the reference and as to the documentary material to be placed before the Full Court, and for the provision of submissions to the Full Court.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 274 OF 2006
BETWEEN: WONG TAI SHING
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
FIRST RESPONDENT
THE ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA
SECOND RESPONDENT
JUDGE: CONTI J
DATE: 5 MAY 2006
PLACE: SYDNEY
REASONS FOR REFERRAL OF PROCEEDINGS TO FULL FEDERAL COURT
1 The applicant seeks review by way of statutory appeal, pursuant to the Administrative Appeals Tribunal Act 1975 (Cth) ('the AAT Act'), from the interlocutory decision of the Administrative Appeals Tribunal ('AAT') made on 24 January 2006, whereby it was determined that documents listed in the respondents' schedule of exempt documents were privileged from disclosure to the applicant, save as to those numbered 41 and 79. That decision was made by Deputy President G D Walker, and his comprehensive reasons for decision extended over 56 pages. Both parties were represented by counsel on the present application.
2 By the applicant's notice of appeal filed on 17 February 2006, there was raised the following asserted questions of law:
(i) whether the answering of the several questions falling within the certificate issued by the Attorney-General dated 10 April 2005 under ss 36 and 36A of theAAT Act would be contrary to the public interest (ss 36A(2)(a) and 36D(2)(b) of the AAT Act);
(ii) whether the AAT has failed to take into account relevant considerations;
(iii) whether the proceedings before the AAT were in breach of the rules of procedural fairness; and
(iv) whether the AAT has taken into account an irrelevant consideration.
3 The applicant is a national of the People's Republic of China, having been born there on 26 November 1957. His wife and children presently reside in Hong Kong. On 22 August 1999, he entered Australia pursuant to a visitor's visa. Shortly after his arrival, he applied for and was granted a subclass 560 student visa, valid until 5 January 2001. His proposed course of study in Australia was to commence in the year 2000, and was to comprise a three year business management course. On 15 December 2000, he applied for renewal of that visa for the purpose of continuing his course of study during 2001. Virtually from the outset he retained his present solicitor for the purpose of lodging and pursuing his visa renewal application.
4 A decision on the applicant's visa application was made by the Minister adversely to the applicant on 22 January 2002. The applicant has claimed that the first time he became aware of that refusal was on the occasion of his arrest on 7 February 2002 by an officer of the Department of Immigration at his place of residence. Since then he has been continuously held in detention, all applications made for his release having been unsuccessful.
5 The applicant's original visa refusal decision was made by the Minister for Immigration and Multicultural and Indigenous Affairs pursuant to s 501(3) of the Migration Act 1958 (Cth). Subsequently on 13 February 2002 and on 4 March 2002, representations were made on his behalf by his solicitor to the Minister pursuant to s 503C of that legislation. On 28 May 2002, the Minister decided not to revoke the earlier refusal decision. Documentary information from authorities of the People's Republic of China concerning the applicant were apparently placed before the Minister at the times of her relevant decision-making. None of those documents are said by the applicant to have been provided to him, whether by way of photostat copies or otherwise for some considerable time, until on 8 April 2002 there occurred the partial release of documents, purportedly pursuant to the Freedom of Information Act 1982 (Cth). Exemption from disclosure and production of the remainder has been the subject of litigious claim on the respondents' part. I observe that in the reasons for decision of the AAT, it is said (at [19]) that 'a large volume of documents' was released to the applicant on 29 November 2004.
6 During the hearing before the AAT on 6 December 2004, in the course of cross examination of a witness, being Mr Craig Riviere, counsel for the first respondent was granted an adjournment to enable representations to be made to the Attorney General. Upon further hearing on 19 April 2005, a document described by the applicant's solicitor as consisting of 'a number of pages' was admitted into evidence, whereof the first page alone was said to have been provided to the applicant. That document comprised a certificate dated 10 April 2005 issued purportedly pursuant to ss 36 and 36A of the AAT Act. Privilege was claimed by officers of either or both of the respondents in relation to the remainder. The certificate, which is currently in contention, was to the effect that the disclosure of information specified in a confidential schedule to the certificate would be contrary to the public interest, in that it would prejudice the international relations of Australia within s 36(1)(a) of the AAT Act. I was also referred in that regard to s 36A(1) and (2) of the AAT Act. Upon the resumption of cross-examination of Mr Riviere, the Attorney-General objected to a number of questions which counsel for the applicant addressed to that officer, upon the footing that the abovementioned certificate excused the Attorney-General's witness from answering those and similar questions. The Attorney-General's objection was further upheld by the AAT, upon the basis of the certificate in relation to a large number of questions put in cross-examination to another witness called on behalf of the Attorney-General, being Mr Peter Coyne.
7 The current proceedings first came before me on 27 March 2006 and in response to the orders made on that occasion, the respondents submitted the following question for resolution by a Full Court on 13 April 2006:
'Does the Court on an appeal under section 44 of the Administrative Appeals Tribunal Act 1975 ("the Act") in relation to whether under section 36A of the Act the answering of a question would not be contrary to the public interest:
(a) make a decision on the merits, by reaching its own opinion;
(b) determine the issue by reference to whether there was an error of law in the forming by the Attorney-General of his opinion; or
(c) determine the issue on some other basis?'
The respondents have further submitted that there arises for consideration, for construction in particular not only of ss 36A(2) and 44(1) of the AAT Act, but also of s 36D(2) of the same legislation.
8 On 26 April 2006, the parties appeared again before the Court by their respective counsel, in the course of which debate occurred as to the desirability or otherwise of a Full Court addressing the issues arising as to privilege from production and consequential access, instead of a single judge. It became readily apparent, in the course of oral submissions in particular, that sensitive issues may well be involved in relation to the controversy as to access to the documents or categories of documents sought by the applicant, being issues concerning at least Australia's international relationship with the People's Republic of China. For that reason it became further readily apparent that the outcome of any first instance proceedings in favour of either party would inevitably be challenged on appeal, having regard to the implications to both parties of production of what the respondents contend to be sensitive governmental documentation involving Australia's relationships with China. Moreover I was informed by counsel for the Minister that the s 36A notion of 'public interest' raises or involves 'a novel question without judicial precedent'.
9 In the result, I adjourned the proceedings in order to determine whether the issues of statutory construction arising should be resolved in the first instance by a Full Court, if at all possible in the course of the next Full Court sittings in 2006. In light of the debate that took place, I am of the opinion that such a course would be both appropriate and expedient. If that course should be affirmed in principle, it would be necessary for the parties to submit to the court the precise text of the questions to be raised, and for any further procedural matters to be resolved by me, at least in the first place.
10 In the circumstances, I grant liberty to either party to reapply on 3 clear days notice.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.
Associate:
Dated: 5 May 2006
Counsel for the Applicant: Mr R B Wilson
Solicitor for the Applicant: Mr W H Leung
Counsel for the Respondent: Ms M Allars
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 26 April 2006
Date of Judgment: 5 May 2006
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Hui v Esposito Holdings Pty Ltd (No 2) [2017] FCA 728
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2017/2017fca0728
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2024-09-13T22:51:29.469329+10:00
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FEDERAL COURT OF AUSTRALIA
Hui v Esposito Holdings Pty Ltd (No 2) [2017] FCA 728
File numbers: VID 1192 of 2016
VID 1220 of 2016
Judge: BEACH J
Date of judgment: 26 June 2017
Catchwords: ARBITRATION – international commercial arbitration – application to set aside parts of partial arbitral awards – application to remove arbitrator – applications granted – form of orders – power of court to rewrite an arbitral award – orders made
Legislation: International Arbitration Act 1974 (Cth) ss 2D, 39
UNCITRAL Model Law on International Commercial Arbitration arts 5, 32, 34
Cases cited: AKN v ALC [2015] SGCA 18
AKN v ALC [2015] SGCA 63
Brunswick Bowling & Billiards Corporation v Shanghai Zhonglu Industrial Co Ltd [2009] 5 HKC 1
Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) (No 1) [2012] 4 HKLRD 1
Hui v Esposito Holdings Pty Ltd [2017] FCA 648
Date of hearing: Heard on the papers
Date of last submissions: 23 June 2017
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: International Commercial Arbitration
Category: Catchwords
Number of paragraphs: 14
Counsel for the Applicant in VID 1192 of 2016 and Second Respondent in VID 1220 of 2016: Mr AG Uren QC with Mr J Masters
Solicitors for the Applicant in VID 1192 of 2016 and Second Respondent in VID 1220 of 2016: Herbert Smith Freehills
Counsel for the Second and Third Respondents in VID 1192 of 2016 and First and Second Applicants in VID 1220 of 2016: Mr MR Scott QC with Mr CP Young
Solicitors for the Second and Third Respondents in VID 1192 of 2016 and First and Second Applicants in VID 1220 of 2016: Ashurst
Counsel for the First Respondent in VID 1192 of 2016 and VID 1220 of 2016: Mr GP Harris QC with Mr TB Maxwell
Solicitors for the First Respondent in VID 1192 of 2016 and VID 1220 of 2016: K&L Gates
Counsel for the Third Respondent in VID 1220 of 2016: The third respondent in VID 1220 of 2016 did not appear
ORDERS
VID 1192 of 2016
BETWEEN: WILLIAM YAN SUI HUI
Applicant
AND: ESPOSITO HOLDINGS PTY LTD (ACN 079 763 303)
First Respondent
UPD HOLDINGS PTY LTD (ACN 167 100 692) (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Respondent
5 STAR FOODS PTY LTD (ACN 005 714 616) (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Third Respondent
JUDGE: BEACH J
DATE OF ORDER: 26 JUNE 2017
THE COURT ORDERS THAT:
1. The following parts of the partial award made on 12 September 2016 be set aside:
(a) in paragraph 1, the word "only", which is implied between the words "subject" and "to";
(b) in paragraph 3, the word "only", which is implied between the words "subject" and "to"; and
(c) subparagraphs 4(b), (c) and (d).
2. Paragraph 1 of the partial award made on 15 September 2016 be set aside.
3. The mandate of the arbitrator be terminated.
4. There be liberty to apply within 28 days in the event that the parties have not agreed on the appointment of a substitute arbitrator.
5. The first respondent pay the applicant's costs of the proceeding on a party-party basis.
6. The first respondent pay the second and third respondents' costs of the proceeding on a party-party basis.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
VID 1220 of 2016
BETWEEN: UDP HOLDINGS PTY LTD (ACN 167 100 692) (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Applicant
5 STAR FOODS PTY LTD (ACN 005 714 616) (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Applicant
AND: ESPOSITO HOLDINGS PTY LTD (ACN 079 763 303)
First Respondent
WILLIAM YAN SAN HUI
Second Respondent
[THE ARBITRATOR]
Third Respondent
JUDGE: BEACH J
DATE OF ORDER: 26 JUNE 2017
THE COURT ORDERS THAT:
1. The following parts of the partial award made on 12 September 2016 be set aside:
(a) in paragraph 1, the word "only", which is implied between the words "subject" and "to";
(b) in paragraph 3, the word "only", which is implied between the words "subject" and "to"; and
(c) subparagraphs 4(b), (c) and (d).
2. Paragraph 1 of the partial award made on 15 September 2016 be set aside.
3. The mandate of the arbitrator be terminated.
4. There be liberty to apply within 28 days in the event that the parties have not agreed on the appointment of a substitute arbitrator.
5. The first respondent pay the applicants' costs of the proceeding on a party-party basis.
6. The first respondent pay the second respondent's costs of the proceeding on a party-party basis.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BEACH J:
1 On 9 June 2017, I delivered my reasons in these two proceedings (Hui v Esposito Holdings Pty Ltd [2017] FCA 648) and directed that the parties file and serve minutes of proposed orders and short submissions directed to the relief giving effect to those reasons. The present reasons are to be read with my earlier reasons.
2 In my earlier reasons, I proposed that I would set aside relevant aspects of the first partial award and aspects of the second partial award. Having now considered the further submissions of the parties, I propose to make orders substantially to the effect of Esposito's submissions, which were largely in agreement with Hui's submissions save as to one aspect concerning paragraph 3 of the first partial award. I have rejected the approach of UDP and 5 Star Foods, which in some respects was opportunistic. This is a characterisation, not a criticism.
3 Let me begin with a few general themes.
4 First, I have power under art 34 of the UNCITRAL Model Law to set aside part of an award.
5 Second, an award consists of both its express provisions and its implications. By analogy with contractual theory, an implication arising from the proper construction of an award is as much part of the award as any provision couched in express language. To hold otherwise is conceptually incoherent if not a hermeneutical heresy.
6 Third, in the first partial award it is apparent that the arbitrator can be taken to have intended, on any reasonable construction thereof, that:
(a) the word "only" was to be implied between the words "subject" and "to" in paragraph 1; and
(b) the word "only" was to be implied between the words "subject" and "to" in paragraph 3.
7 If I set aside the first partial award by deleting such implications, and also delete paragraphs 4(b), (c) and (d), in my view that will achieve a result that:
(a) is consistent with the proper scope of the preliminary hearing before the arbitrator that I have found;
(b) does no more than is necessary to remove the vices that I have described in my earlier reasons; and
(c) does not travel beyond what the arbitrator determined on the merits, in terms of that part of the permissible purview of the preliminary hearing that was transposed into his determination.
8 I reject the submissions of UDP and 5 Star Foods who have asserted that the whole of both of the partial awards must be set aside. In large part I agree with the submissions of Mr Greg Harris QC for Esposito on this aspect.
9 First, UDP and 5 Star Foods assert that I must set aside the whole of both awards because anything short of that step would involve an impermissible rewriting of the awards, which it is said that I do not have the power to undertake. It is said that I do not have the power to substitute my own view of what should have been the correct outcome on the merits by rewriting an award. I agree with those sentiments in the generality with which they have been expressed (see Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) (No 1) [2012] 4 HKLRD 1 at [7]), but their emphasis by UDP and 5 Star Foods is misplaced in the present context. I am entitled to set aside part of an award in a way that does not impermissibly rewrite the award to give it a merits complexion beyond what the arbitrator determined (in other words, injecting my own merits assessment under the guise of the addition or deletion of words), and that is all that I propose to do.
10 Relatedly, and as a boundary condition, I am only entitled to set aside those parts of an award that are infected by the substantiated art 34 grounds(s) (AKN v ALC [2015] SGCA 18 at [80] and Brunswick Bowling & Billiards Corporation v Shanghai Zhonglu Industrial Co Ltd [2009] 5 HKC 1 at [75] and [124]). But to accept the assertions of UDP and 5 Star Foods would be to go beyond what I am empowered to give and what they are entitled to receive. More generally, it would infringe the precept of minimal curial intervention that is enshrined in arts 5 and 34 of the UNCITRAL Model Law and ss 2D, 16 to 21 and 39 of the International Arbitration Act 1974 (Cth) (see also AKN v ALC [2015] SGCA 18 at [37]).
11 Now UDP and 5 Star Foods have asserted difficulties in a partial setting aside arising from what they describe as the interconnectedness and inseverability of the first partial award. But these problems are not insurmountable. Moreover, my orders will achieve a commercial result that binds UDP and 5 Star Foods to a result that they should be bound to, given that such a result was otherwise within the proper purview of the preliminary hearing that they chose to be absent from. I must also say that their assurances contained in [7] of their written submissions, if I was to accede to their broader orders, hardly instilled me with confidence notwithstanding the observations in AKN v ALC [2015] SGCA 63 at [61] and [62]. There could be no res judicata or issue estoppel as such if the determinations were set aside in the manner for which UDP and 5 Star Foods have contended. Moreover, it may be queried how an Anshun estoppel could apply to a later arbitral proceeding (given that an Anshun estoppel has a different juridical basis), let alone where the determinations in the first arbitral proceeding would have been set aside. Further, Mr Martin Scott QC's assertion, on behalf of UDP and 5 Star Foods, that to "subsequently change their position" would amount to an "abuse of the arbitral procedure" and an "abuse of the process of the Court" was nebulous, although it had a superficial allure.
12 Further, UDP and 5 Star Foods have asserted that one of the benefits flowing from their proposal is that the issues that I had adverted to in [255] to [258] of my earlier reasons would disappear. But it seems to me that the solution advanced by Esposito readily addresses the matter. As I am dealing with partial awards and then only setting aside part thereof, the termination provision of art 32 does not apply. Accordingly, the arbitration should be treated as still on foot in terms of the relevant claims, defences and set offs to the extent that they have not been finally disposed of in the first partial award (as modified by my orders). Moreover, for that purpose it should be clear that I am not also making any formal remittal order under art 34 (in addition to the setting aside order(s)) as this was only an option if I had not exercised my power to set aside. The parties, or at least some of them, appear to accept that even in the absence of remittal, which I cannot order given the disjunction in art 34(4), the arbitration nevertheless "returns to the point" before the publication of the award. I will accept that to be so for present purposes. And on that foundation, I will make the necessary orders to replace the arbitrator.
13 Finally, although Esposito should pay the costs of the two proceedings, I do not consider that it is appropriate to make a lump sum costs order in favour of UDP and 5 Star Foods as they have sought. First, I do not see much advantage in making such an order particularly given that as between Hui and Esposito no such order has been sought. Second, it would seem that costs questions may be the subject of contest and duelling material in any event, even if I was to entertain the proposal for a lump sum order. Third, no issue has been raised concerning the financial capacity of Esposito to meet any additional costs of taxation. Finally, if the parties perceive that there is the potentiality for yet further dispute between them and expense arising from being condemned to a taxation, then that perception should act as a discipline on their behaviour to resolve the quantum of costs commercially.
14 I will make orders in the terms sought by Esposito in each proceeding.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.
Associate:
Dated: 26 June 2017
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2018-06-14 00:00:00
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Beauglehole v The Griffin Coal Mining Company Pty Ltd [2018] FCA 899
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2018/2018fca0899
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2024-09-13T22:51:29.580834+10:00
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FEDERAL COURT OF AUSTRALIA
Beauglehole v The Griffin Coal Mining Company Pty Ltd [2018] FCA 899
File number: WAD 362 of 2017
Judge: BARKER J
Date of judgment: 14 June 2018
Catchwords: INDUSTRIAL LAW – determination of a separate question – construction of clause 21.1 of the Black Coal Mining Industry Award 2010 – payment of ordinary hours and overtime in a roster cycle – where ordinary hours of work must average 35 hours per week – where hours are averaged over the roster cycle – whether the Award requires ordinary hours to be divided evenly among the shifts in a roster cycle – whether proposed construction would give the words meaning they do not bear and effectively read words into the Award – where words are given ordinary meaning – where the textual, historical and legislative context confirms the ordinary meaning – where the employer sets the roster and may arrange ordinary hours of work and overtime in a roster – separate question answered "no"
Legislation: Acts Interpretation Act 1901 (Cth) ss 15AA, 15AB, 46(1)
Fair Work Act 2009 (Cth) ss 62, 63, 64, 134, 138, 139(1), 147, 156, 157(1), 157(3), 158, 160, Pt 2-2 Div 3 and Div 10
Workplace Relations Act 1996 (Cth) (repealed) ss 226, 576A, 576J, 576L, Pt 10A
Fair Work Bill 2008 (Cth)
Black Coal Mining Industry Award 2010 cll 3.1, 10, 15, 16, 17, 17.1, 17.2, 17.3, 17.4, 18, 19, 21, 21.1, 22, 23, 25, 26, 27, Pt 5, Sch A and Sch B
Coal Mining Industry (Engineers) Award 1990 cl 7 and cl 8
Coal Mining Industry (Production and Engineering) Consolidated Award 1997
Coal Mining Industry (Staff) Award 2004
Mining Industry Award 2010
Rail Industry Award 2010
Cases cited: Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24
CFMEU v Mackenzie River Bulkhaul Pty Ltd PR916549, AIRC, 9 April 2002, Bacon Commr
Commonwealth Bank of Australia v Finance Sector Union of Australia (2002) 125 FCR 9; [2002] FCAFC 193
Kucks v CSR Limited [1996] 66 IR 182; [1996] IRCA 141
Date of hearing: 19 December 2017
Registry: Western Australia
Division: Fair Work Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 134
Counsel for the Applicants: Mr MT Ritter SC
Solicitor for the Applicants: Turner Freeman
Counsel for the Respondent: Mr JB Blackburn SC
Solicitor for the Respondent: King & Wood Mallesons
ORDERS
WAD 362 of 2017
BETWEEN: PAUL JUSTIN BEAUGLEHOLE
First Applicant
AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION KNOWN AS THE AUSTRALIAN MANUFACTURING WORKERS' UNION (AMWU)
Second Applicant
AND: THE GRIFFIN COAL MINING COMPANY PTY LTD ACN 008 667 285
Respondent
JUDGE: BARKER J
DATE OF ORDER: 14 June 2018
THE COURT ORDERS THAT:
1. The separate question be answered as follows:
Question
In circumstances where:
(a) the Griffin Coal Mining Company Pty Ltd employs maintenance employees;
(b) the Black Coal Mining Industry Award 2010 applies to the employment of the maintenance employees;
(c) the maintenance employees are rostered to work 14 shifts of 10 hours each over a 3-week roster cycle, so that a total of 140 hours are worked in each 3-week roster cycle comprising 105 ordinary hours and 35 hours of overtime; and
(d) the 14 shifts are rostered on the basis of 7 shifts of 10 hours followed by 4 days off, then 7 shifts of 10 hours followed by 3 days off, so that in each 3-week roster cycle work is performed on 10 weekdays, 2 Saturdays and 2 Sundays;
does the Award require Griffin to roster the employees' hours of work such that:
(i) 7.5 hours per shift on each of the 14 rostered shifts are worked and paid as ordinary hours (a total of 105 ordinary hours); and
(ii) 2.5 hours on each of the 14 rostered shifts are worked and paid as overtime?
Answer
No.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BARKER J:
1 The applicants ask the Court to declare that The Griffin Coal Mining Company Pty Ltd ACN 008 667 285 is required, by the Black Coal Mining Industry Award 2010, to roster employees' hours of work such that:
(1) 7.5 hours per shift on each of the 14 rostered shifts are worked and paid as ordinary hours (a total of 105 ordinary hours); and
(2) 2.5 hours on each of the 14 rostered shifts are worked and paid as overtime.
2 The applicants recognise that they will only succeed on this claim if the Court construes the Award in the way they contend for.
3 The question of construction has arisen because Griffin has chosen to roster employees' hours of work such that:
(1) 10 ordinary hours are rostered on each of the 10 weekday shifts;
(2) 2.5 ordinary hours and 7.5 overtime hours are rostered on each of the Saturday shifts; and
(3) 10 overtime hours are rostered on each of the two Sunday shifts;
falling in the three-week roster cycle.
4 On 30 October 2017, Siopis J made orders agreed to by the parties that the following question be heard and determined as a separate question:
In circumstances where:
(a) the Griffin Coal Mining Company Pty Ltd (Griffin) employs maintenance employees;
(b) the Black Coal Mining Industry Award 2010 (Award) applies to the employment of the maintenance employees;
(c) the maintenance employees are rostered to work 14 shifts of 10 hours each over a 3-week roster cycle, so that a total of 140 hours are worked in each 3-week roster cycle comprising 105 ordinary hours and 35 hours of overtime; and
(d) the 14 shifts are rostered on the basis of 7 shifts of 10 hours followed by 4 days off, then 7 shifts of 10 hours followed by 3 days off, so that in each 3-week roster cycle work is performed on 10 weekdays, 2 Saturdays and 2 Sundays;
does the Award require Griffin to roster the employees' hours of work such that:
i. 7.5 hours per shift on each of the 14 rostered shifts are worked and paid as ordinary hours (a total of 105 ordinary hours); and
ii 2.5 hours on each of the 14 rostered shifts are worked and paid as overtime.
5 For the reasons which follow, I consider Griffin is entitled to roster on its chosen basis and the separate question should be answered "no".
Relevant clauses of the award
6 The following provisions of the Award are relevant.
7 Clause 3.1 provides definitions of a number of terms which apply "unless the contrary intention appears", including:
base rate of pay means the rate of pay payable to an employee for their ordinary hours of work, but not including any of the following:
• loadings;
• monetary allowances;
• overtime or penalty rates; and
• any other separately identifiable amounts
…
non-working day means any day on which an employee by virtue of the employee's roster is never rostered to attend for rostered hours of work
ordinary hours means the hours required to be worked by an employee for the payment of their award classification rate
ordinary week's pay means the amount in the total payment column for the award classification rate in respect of 35 ordinary hours
roster means any arrangement of rostered hours worked by an employee
roster cycle means the period over which a roster repeats and an employee's hours average 35
rostered day off or RDO each mean any day on which an employee, by virtue of the employee's roster, is not rostered to attend for rostered hours of work and does not include non-working days
rostered hours means ordinary hours of work and rostered overtime
rostered overtime means reasonable additional hours which are required to be worked by an employee as an integral part of the employee's roster
seven day roster employee means an employee, other than a six day roster employee who, over the roster cycle, may be rostered to work shifts on any of the seven days of the week
six day roster employee means an employee who, over a roster cycle, is rostered to work shifts, the hours of which occur during any six consecutive 24 hour periods in a span of seven consecutive 24 hour periods. The roster must include a non-working period of at least 24 consecutive hours at the same time each week.
standard rate means the minimum weekly wage for a Mineworker––Induction Level 2 in Schedule A––Production and Engineering Employees
8 Clause 10 of the Award deals with types of employment of employees under the Award, as follows:
10. Types of employment
10.1 An employer may employ an employee in any classification included in this award in any of the following types of employment:
(a) full-time;
(b) part-time; or
(c) in the case of classifications in Schedule B—Staff Employees, casual.
10.2 Full-time employment
A full-time employee is an employee whose average ordinary hours of work will be 35 hours per week.
10.3 Part-time employment
(a) A part-time employee is an employee who:
(i) works less than 35 hours per week;
(ii) has reasonably predictable hours of work; and
(iii) receives, on a pro rata basis, equivalent pay and conditions to those of full-time employees who do the same kind of work.
(b) At the time of engagement the employer and the part-time employee will agree in writing on a regular pattern of work, specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day.
(c) Any agreed variation to the regular pattern of work will be recorded in writing.
(d) All time worked in excess of the hours as mutually arranged will be overtime and paid for at the rates prescribed in clause 17—Overtime.
(e) A part-time employee will be paid per hour 1/35th of the weekly rate prescribed for the classification, group or level on which the employee is engaged.
9 Clause 10.4 of the Award provides for a casual employee as being "one engaged and paid as such". The payment of a casual employee is set out in cl 10.4(b) as "1/35th of the appropriate weekly rate, plus 25% instead of the leave entitlements under this award, with a minimum four hours payment on each engagement".
10 Classifications referred to in cl 10.1 are provided for in cl 15 of the Award, which simply says that the classifications in which employees may be employed are set out in "the following schedules". There is then mention of Sch A and Sch B employees.
11 Clause 16 of the Award is headed "Minimum wages and allowances". Clause 16.1 states "The wages and allowances which an employee is to be paid are specified in the following schedules". Again there is reference to Sch A and Sch B employees.
12 Clause 17 of the Award, dealing with the payment and calculation of overtime, provides:
17. Overtime
17.1 In calculating overtime, except for clause 17.7, each day is to be treated separately.
17.2 Payment for overtime
(a) Subject to the exceptions in clause 17.2(b), all time worked in excess of or outside the ordinary hours of any shift on the following days will be paid for at the following rates:
Day of week Rate of pay
Monday to Friday First 3 hours at time and a half
After 3 hours at double time
Saturday First 3 hours at time and a half
After 3 hours at double time
Sunday Double time
(b) All time worked in excess of or outside the ordinary hours of any shift by employees:
(i) who are six day roster employees or seven day roster employees;
(ii) who work a roster which requires ordinary shifts on public holidays and not less than 272 ordinary hours per year on Sundays; or
(iii) who work a roster which requires ordinary shifts on Saturday and Sunday where the majority of the rostered hours on the Saturday or Sunday shifts fall between midnight Friday and midnight Sunday;
will be paid for at the rate of double time.
17.3 Minimum payment for overtime on Saturday and Sunday
An employee called on to work overtime on a Saturday or Sunday (that is not continuous with work started on the previous day) will be paid for at least three hours at the appropriate rate.
17.4 Reasonable additional hours
Subject to the NES, an employer may require an employee to work reasonable additional hours in addition to their rostered hours and be paid the applicable overtime rates.
17.5 Averaging overtime payments
An employer and an employee employed in a classification in Schedule B—Staff Employees may agree to average overtime payments over a length of a defined period.
…
13 Clause 17.7 of the Award deals with the call-back of an employee to work and payment of overtime to that employee.
14 Clause 17.9 of the Award, inserted as at 22 August 2016, permits an employer and employee to agree to the employee taking time off instead of being paid for overtime.
15 Clause 18 of the Award is headed "Accident pay", and cl 19 "Allowances". Clause 19.1 provides that the allowances are set out in Sch A and Sch B to the Award. For Sch A employees, Sch A cl A.8.2 provides various allowances.
16 Those paragraphs are then followed by Pt 5 of the Award, under the heading "Hours of Work and Related Matters" which then contains cl 21 and cl 22, which are pivotal to the construction issues raised:
21. Ordinary hours of work
21.1 The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
21.2 All ordinary hours worked by an employee on the following days will be paid for at the following rates:
Day of week Rate of pay
Monday to Friday Single time
Saturday First 4 hours at time and a half
After 4 hours at double time
Sunday Double time
22. Shiftwork
22.1 Definitions
(a) Afternoon shift means any shift, the ordinary hours of which finish after 6.00 pm and at or before midnight.
(b) Night shift means any shift, the ordinary hours of which finish after midnight and at or before 8.00 am.
(c) Permanent night shift employee is an employee who:
(i) works night shift only; or
(ii) stays on night shift for a longer period than four consecutive weeks; or
(iii) works on a roster that does not give at least one-third of the employee's working time off night shift in each roster cycle.
22.2 Shiftwork rates
Rates for shiftwork are payable as follows:
Type of shift Shift rates
Day shift Ordinary time
Afternoon and rotating night shifts
Sunday Double time
(a) Ordinary hours (a) 115% of the ordinary time rate
(b) Overtime hours 6 or 7 day roster (b) Overtime penalty rate plus 15% of the ordinary time rate for time worked
(c) All others (c) Overtime penalty rates
Permanent night shift
(a) Ordinary hours (a) 125% of the ordinary time rate
(b) Overtime hours 6 or 7 day roster (b) Overtime penalty rate plus 15% of the ordinary time rate for time worked
(c) All others Overtime penalty rate
Type of shift S
Permanent n
…
17 Clause 23 deals with rostering in the following terms:
23. Rostering
23.1 Rostering of hours and length of shifts
(a) The employer can determine the type of rosters to be worked.
(b) The employer can determine the shift length to be worked as long as the ordinary hours do not exceed 10. Shifts of more than 10 ordinary hours can only be implemented by agreement between the employer and the majority of employees affected or, in the case of a dispute, as resolved in accordance with clause 9—Dispute resolution.
23.2 Shift starting and finishing times
The start and finish times of shifts up to 10 ordinary hours may be determined by the employer. Shifts in excess of 10 ordinary hours will be worked between the starting and finishing times that are agreed between the employer and the majority of employees affected or, in the case of a dispute, as resolved in accordance with the dispute resolution procedure.
23.3 Number and spread of shifts
The number and spread of ordinary shifts may be varied by the employer and, in the case of dispute, the dispute resolution procedure applies.
18 Clause 25 deals with annual leave. Clause 25.2 sets out the entitlements to annual leave. Under cl 25.2(b), an employee who is a seven day roster employee, amongst other things, is entitled annually to an additional "35 ordinary hours (one week) of annual leave".
19 Clause 25.3 sets out the accrual of annual leave for employees, other than casual employees. It provides a rate for employees, who would be entitled to annual leave of 210 hours (six weeks) of accruing 4.0385 hours of annual leave for each completed week of employment.
20 Clause 25.5 [25.5 renumbered as 25.7 by PR597971 ppc 01Dec17] deals with the deduction of annual leave in the following terms:
For each period of annual leave taken the ordinary hours of rostered shifts that would have been worked by an employee will be deducted from the employee's accrued annual leave entitlement.
21 Clause 25.7 [25.7 renumbered as 25.9 by PR597971 ppc 01Dec17] is about the payment of annual leave and provides:
An employee taking annual leave must be paid either:
(a) the employee's ordinary rate of pay plus a loading of 20% of that rate; or
(b) the employee's rostered earnings for the period of annual leave, which includes all rostered overtime and rostered public holidays (paid at double time), but does not include shift allowances, other than for seven day roster employees;
whichever is the greater.
22 I note here, in passing, that the phrase "ordinary rate of pay" in cl 25.7 is not defined in the Award.
23 Clause 26 of the Award is about personal/carer's leave. Clause 26.2 provides that a full-time employee is entitled to 105 ordinary hours of personal/carer's leave (inclusive of the employee's National Employment Standards (NES) entitlement) on commencing employment and on each anniversary of commencement. The clause then states that personal leave not taken by an employee "must accumulate without limitation".
24 Clause 26.4 is about the deduction of personal leave. The clause provides that where the absence is for fewer than half of the ordinary hours component of the shift, no deduction is made. The clause then says, in all other cases, "the full ordinary hour's component of the shift will be deducted for each absence".
25 Clause 27 of the Award deals with public holidays. Clause 27.1 confirms that public holiday entitlements are provided for in Div 10 of the NES. Clause 27.4 is as follows:
(a) An employee who is required to work on a holiday is to be paid at the rate of double time for work performed during ordinary hours, in addition to the payment prescribed.
(b) Work performed in excess of ordinary hours on a holiday is to be paid at the rate of treble time.
26 Clause 27.6 is about employees who work Monday to Friday shifts of up to 8.5 ordinary hours. The clause specifies that such an employee cannot, as an integral part of their roster cycle, be rostered for ordinary hours on public holidays. The clause says that such employees may, however, in exceptional circumstances, be required to work on public holidays to meet operational needs.
27 That is the final clause of the Award. Schedules A - H are then attached to the Award. The only schedules that are presently relevant are Sch A and Sch B.
28 Schedule A is entitled "Production and Engineering Employees". Schedule B is entitled "Staff Employees".
29 Clause A.1.1 of Sch A states: "The classification structure in this award determines the minimum weekly wages payable to employees whose employment is subject to this award". Schedule A then contains definitions of the different classifications of employees and provides for the requirements necessary for "advancement" to the next classification. Clause A.4 is headed "Minimum Rates". At material times, it provided as follows:
A.4 Minimum Rates
Classification Basic weekly 35 hour rate
$
Mineworker - Induction Level 1 762.80
Mineworker - Induction Level 2 777.50
Mineworker - Training 777.50
Mineworker 831.20
Mineworker – Advanced 871.30
Mineworker - Specialised 960.90
30 It may be noted in passing that, although the second column is headed "Basic weekly 35 hour rate", what is contained in the column is not a "rate" but is an "amount" payable for working a 35 hour week. This "style" of drafting is not unusual in industrial awards.
Outline of applicants' contructional argument
31 By reference to cl 21.1 of the Award, the applicants emphasise the emboldened words:
The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
32 The applicants contend this means that the 35 ordinary hours per week from the 105 ordinary hours of a three panel, three-week roster cycle, must be averaged so that a proportion of the ordinary hours is allocated to each one of the 14 shifts in the roster cycle, and the rostered hours on each shift will be comprised of both an amount of ordinary hours and rostered overtime.
33 On their approach, the applicants say that the words "will be an average of 35 hours per week" and "will be averaged" mean that an employee's ordinary hours must be divided evenly among each of the shifts in a roster cycle so that where 105 ordinary hours are worked over a three-week roster cycle containing 14 shifts, 7.5 ordinary hours must be worked on each one of the 14 shifts, with the balance of the time worked on each shift being overtime.
34 In broad terms, the applicants submit that the Award entitles Griffin to determine the type of roster and set a shift length of up to 10 ordinary hours, as long as it does not exceed 10 ordinary hours. Importantly, however, they say that entitlement is limited because of the requirement to have only 35 ordinary hours over a three-week cycle. This, they say, puts an "implicit brake" on the power of Griffin to determine shifts, shift lengths and whether the shifts worked are to be comprised of ordinary hours.
35 As a consequence, the applicants also say that the working of 10 hours for each of 14 shifts over 21 days, so that the employee is required to work in excess of the 38 hour week generally prescribed for under the Fair Work Act 2009 (Cth) (FW Act), means that each hour worked per shift that leads to the number of hours exceeding 35, on average, over the roster cycle, must be paid as overtime.
Outline of Griffin's constructional argument
36 Griffin submits that:
Clause 23 of the Award expressly allows it to determine the type of rosters to be worked, to roster shifts of up to 10 ordinary hours, to determine start and finish times and to vary the number and spread of ordinary shifts, subject only to the requirement in clause 21.1 that ordinary hours average 35 per week over the roster cycle.
The words "will be an average of 35 hours per week" and "will be averaged over the roster cycle" are intended to allow the number of ordinary hours in any week to be more or less than 35, provided the number of ordinary hours per week averaged over the roster cycle, is 35, that is, provided the total number of ordinary hours in the roster cycle divided by the number of weeks in the roster cycle is 35. They are not intended and do not require ordinary hours to be divided equally across each of the shifts in a roster cycle. Griffin contends this appears both from the ordinary meaning of the words and from their textual, historical and legislative context.
To the extent the applicants base their construction on cl 21.1 of the Award, they are attempting to give the words a meaning which they do not bear and, in effect, to read words into the Award.
There is no requirement in the Award, implicit or express, for Griffin to roster employees for only 7.5 ordinary hours on each shift and to roster ordinary hours on each shift in the roster cycle. That is contrary to the express stipulation in the Award that the employer may determine the type of rosters to be worked, may determine shift lengths of up to 10 ordinary hours, may determine start and finish times, and may vary the number and spread of ordinary shifts.
Consideration
37 In my view, the construction of the Award for which Griffin contends is the correct, or at least the preferable, one.
38 Each of the parties addresses the general principles that should be borne in mind when a court is asked to construe an industrial instrument, such as the Award in this case.
39 The applicants say the Award must not be interpreted in a vacuum, divorced from industrial realities.
40 The applicants also submit that the Court should note that the making of a modern award, such as the Award here and its provisions relating to overtime payments, relevantly occurs in the context of the requirements of the FW Act concerning overtime.
41 The applicants submit that case law and the terms of the FW Act recognise that the payment of work done outside of ordinary hours worked, as part of a work/wages bargain, constitutes "overtime".
42 The applicants say that the Award was made by the then Australian Industrial Relations Commission (AIRC) sitting as a seven member Full Bench, and published on 19 December 2008 with the title "Award Modernisation", pursuant to Pt 10A of the former Workplace Relations Act 1996 (Cth).
43 The applicants cite [154] and [155] from the Full Bench's determination.
44 The applicants also note that the first 122 modern awards commenced on 1 January 2010, coinciding with the introduction of the national workplace relations system brought into effect under the umbrella of the FW Act. Modern awards, together with 10 minimum NES, under the FW Act, made up the minimum safety net for national system employees.
45 The applicants note that modern awards are provided for by s 134 of the FW Act. The matters affected by them include that specified in s 134(1)(da), namely:
the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and ....
46 Additionally, the applicants note s 134(1)(f) provides for the object of the "likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden ...".
47 The applicants also draw attention to s 138:
A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.
48 The applicants also note that under s 139(1) a modern award may include terms about overtime rates.
49 The applicants note that Ch 2 Pt 2 of the FW Act deals with the NES. Division 3 sets out maximum weekly hours. In s 62, the FW Act provides that an employer must not request or require an employee to work more than 38 hours for a full-time employee "unless the additional hours are reasonable". Section 62(3) sets out criteria for determining whether additional hours are reasonable or unreasonable, and matters which must be taken into account in that assessment. Of the 10 items cited, s 62(3)(d) refers to "whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours". Section 62(3)(g) is "the usual patterns of work in the industry, or the part of an industry for which the employee works".
50 The applicants note that s 63 of the FW Act states that modern awards and enterprise agreements can provide for "averaging" of hours of work. Section 63(1) provides that a modern award may, amongst other things, include terms providing for the averaging of hours of work over a specified period. The average weekly hours over the period must not exceed 38 hours for a full-time employee. However, s 63(2) provides that the terms of a modern award or enterprise agreement may provide for average weekly hours that exceed the hours referred to in s 63(1) if the excess hours are reasonable for the purposes of s 62(1). Under s 63(2) there is a note which reads as follows:
Hours in excess of the hours referred to in paragraph (1)(a) or (b) that are worked in a week in accordance with averaging terms in a modern award or enterprise agreement (whether the terms comply with subsection (1) or (2)) will be treated as additional hours for the purposes of section 62. The averaging terms will be relevant in determining whether the additional hours are reasonable (see paragraph 62(3)(i)).
51 The applicants also draw attention to s 147 of the FW Act which provides that:
A modern award must include terms specifying, or providing for the determination of, the ordinary hours of work for each classification of employee covered by the award and each type of employment permitted by the award.
Note: An employee's ordinary hours of work are significant in determining the employee's entitlements under the National Employment Standards.
52 As a matter of history, the applicants note that when the Award first came into operation, maintenance employees' employment at Griffin in Collie was governed by enterprise-based agreements, not the Award. That situation continued until the decision to terminate the pre-existing 2012 agreement came into effect, from 14 August 2016. Until then, the Award was only indirectly relevant to maintenance employees in setting the benchmark for the "better off overall test" to apply to proposed enterprise bargaining agreements under the FW Act.
53 The applicants note that prior to the commencement of the Award, maintenance employees at Collie were covered by the Coal Mining Industry (Engineers) Award 1990 (1990 Award). The clauses of the 1990 Award that dealt with hours of work and overtime were cl 7 and cl 8, as follows:
7. HOURS
(1) As at the date this award came into force the hours of work, work rosters and conditions pertaining thereto applying to employees under this award, shall remain in force until varied by agreement in accordance with or permitted by the provisions of this award, or by arbitration.
(2) Except as otherwise provided under this Clause, the ordinary hours of work under this award shall be an average of 35 per week to be worked 7 hours per day, Monday to Friday.
(3) Notwithstanding the provisions of subclauses (1) and (2) of this clause, and Clause 9. - Shiftwork, and excluding only Christmas Day, Anzac Day and Good Friday by agreement between the Employer and the Union alternative ordinary working hours, working days and shift rosters may be negotiated to reflect any mutually acceptable working arrangement.
(4) Crib time not exceeding a half hour to be taken at a time mutually agreed between the employees and the Manager shall form part of the ordinary rostered hours of work. Where shifts of 4 hours or less are worked there shall be no entitlement to a crib.
8. OVERTIME
(1) All time worked in excess of, or in the case of Western Collieries in excess of or outside the ordinary working hours prescribed by this Award shall be paid for at the rate of time and one-half for the first three hours and double time thereafter.
An employee will not refuse unreasonably to work reasonable overtime when required by the employer after being advised of the nature of the overtime.
54 The Award then commenced on 1 January 2010.
55 Griffin, like the applicants, accepts that the principles of construing Awards are mostly settled. It submits, however, that case law about the meaning of "overtime" should not be imported into the Award and is apt to mislead; and primacy should be given to the text, construing it in textual, historical and legislative contexts.
56 Griffin questions the extent to which assistance may be gained from the perceived objects of the Award, the FW Act and relevant legislation.
57 Griffin submits that the Acts Interpretation Act 1901 (Cth) applies to the interpretation of a modern award, including the Award here, noting that the modern award is not a legislative instrument or a notifiable instrument: s 46(1)(a) of the Acts Interpretation Act.
58 Griffin notes s 46(1)(a), (b) and (c) of the Acts Interpretation Act provide:
(1) If a provision confers on a person (the authority) the power to make an instrument other than a legislative instrument, notifiable instrument or a rule of court, then:
(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and
(b) expressions used in any instrument so made have the same meaning as in the Act or instrument, as in force from time to time, that authorises the making of the instrument in which the expressions are used; and
(c) any instrument so made is to be read and construed subject to the enabling legislation as in force from time to time, and so as not to exceed the power of the authority.
59 While accepting that s 15AA of the Acts Interpretation Act, which Griffin submits does apply to the Award's construction, requires a construction or interpretation of words and phrases that promote the objects of legislation, Griffin says that the objects of the former Workplace Relations Act and the FW Act are intended to strike a balance between competing interests and even the phrase identified by the applicants, "fair minimum safety net", contains competing objectives. Similarly, Griffin submits, industrial awards also reflect a compromise between competing interests and should not be construed as being wholly for the benefit of one side or the other. In this regard, it refers to Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 426; [1995] HCA 24 (Brennan CJ, Dawson and Toohey JJ); Commonwealth Bank of Australia v Finance Sector Union of Australia (2002) 125 FCR 9 at [30]; [2002] FCAFC 193 (Gray, North and Gyles JJ).
60 While the Award here, Griffin points out, was not strictly a consent award, the majority of its provisions were agreed by the parties and it was also made having regard to the competing objects of the then Workplace Relations Act, including s 576A.
61 Thus, Griffin accepts that s 15AA of the Acts Interpretation Act does require an interpretation that would best achieve the purpose or objects of the Award to be preferred, and s 15AB allows consideration to be given to extrinsic material to confirm that the meaning of a provision is the ordinary meaning conveyed by the text of the provision, taking into account its context, or to determine the meaning of a provision when the provision is ambiguous or obscure.
62 Griffin seeks to add the following historical and legislative context in which the Award was made, to that mentioned above and relied upon by the applicants.
63 It notes that s 576A of the Workplace Relations Act set out the objects of Pt 10A under which modern awards could be made, to the following effect:
(1) The object of this Part is to provide for the Commission to make modern awards in accordance with an award modernisation request.
(2) Modern awards:
(a) must be simple to understand and easy to apply, and must reduce the regulatory burden on business; and
(b) together with any legislated employment standards, must provide a fair minimum safety net of enforceable terms and conditions of employment for employees; and
(c) must be economically sustainable and promote flexible modern work practices and the efficient and productive performance of work; and
(d) must be in a form that is appropriate for a fair and productive workplace relations system that promotes collective enterprise bargaining but does not provide for statutory individual employment agreements; and
(e) must result in a certain, stable and sustainable modern award system for Australia.
64 Griffin says that of present relevance is that the objects of modern awards should be "simple to understand and easy to apply", "provide a fair minimum safety net", and "promote flexible modern work practices and the efficient and productive performance of work".
65 It notes that s 576J(1) of the Workplace Relations Act provided that a modern award could include terms about, amongst other things:
(c) arrangements for when work is performed, including hours of work, rostering, notice periods, rest breaks and variations to working hours;
(d) overtime rates;
66 Griffin notes that relevantly s 576J(2) provided:
A modern award may also include terms about any other matter specified in the award modernisation request to which the award relates.
67 Griffin also notes that s 576L provided:
A modern award may include terms about the matters referred to in subsection 576J(1) or (2) or section 576K only to the extent that the terms provide a fair minimum safety net.
68 Griffin then records the sequence by which the Award came to be made:
On 28 March 2008, the Minister for Employment and Workplace Relations issued an award modernisation request.
The request began by setting out the objects in s 576A(2) of the Workplace Relations Act. In its decision to make the Award (and 16 other priority modern awards) on 19 December 2008, the AIRC referred to the terms of the request and s 576A(2), which it said "specifie[d] important characteristics of modern awards".
The request said (at [5]) that "modern awards may also include provisions relating to the proposed National Employment Standards (proposed NES)" and (at [26]) that "the proposed NES [would] be finalised prior to 30 June 2008 and provided to the Commission for the purpose of conducting the award modernisation process".
On 16 June 2008, the Minister wrote to the President of the AIRC issuing a variation to the request (as well as a consolidated version) and providing what was described as a "final version" of the NES.
The version of the NES released on 16 June 2008, included the following s 12(6):
(6) A modern award may include provisions for the averaging of hours of work over a specified period. The average weekly hours over the period must not exceed:
(a) for a full-time employee—38 hours; or
(b) for an employee other than a full-time employee—the lesser of:
(i) 38 hours; and
(ii) the employee's ordinary hours of work in a week.
Note: Hours in excess of the hours referred to in paragraph (6)(a) or (b) that are worked in a week in accordance with averaging provisions in a modern award will be treated as additional hours for the purpose of this section, but the averaging provisions will be relevant in determining whether the additional hours are reasonable (see paragraph (4)(i)).
[Emphasis added.]
The amended request included new paragraph 33 which stated, among other things:
33. The NES provides that particular types of provisions are able to be included in modern awards even though they might otherwise be inconsistent with the NES. The Commission may include provisions dealing with these issues in a modern award. The NES allows, but does not require, modern awards to deal with, among other things:
…
• averaging of hours of work;
69 Griffin observes that when the Award was ultimately made on 19 December 2008, the Full Bench in [2008] AIRCFB 1000 said it was appropriate to make modern awards by reference to the "final version" of the NES provided by the Minister.
70 The day before, on 18 December 2008, the Minister signed a further variation to the request. Paragraph 33 was amended to read, relevantly:
33. The NES provides that particular types of provisions are able to be included in modern awards even though they might otherwise be inconsistent with the NES. The Commission may include provisions dealing with these issues in a modern award. The NES allows, but does not require, modern awards to deal with, among other things include terms that:
…
• enable the averaging of hours of work over a specified period;
[Tracking added by Griffin.]
71 Those provisions of the NES are now found in Pt 2-2 of the FW Act. They include in Div 3 – Maximum weekly hours, ss 62-64.
72 Section 62(1), which (like the Division) is titled "Maximum weekly hours", provides that an employer must not request or require a full-time employee to work more than 38 hours "in a week" unless the additional hours are reasonable.
73 Section 62(3) sets out factors to be taken into account in determining whether additional hours are reasonable. They include:
(i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;
74 Section 63 states:
Modern awards and enterprise agreements may provide for averaging of hours of work
(1) A modern award or enterprise agreement may include terms providing for the averaging of hours of work over a specified period. The average weekly hours over the period must not exceed:
(a) for a full-time employee —38 hours; or
(b) for an employee who is not a full-time employee —the lesser of:
(i) 38 hours; and
(ii) the employee's ordinary hours of work in a week.
(2) The terms of a modern award or enterprise agreement may provide for average weekly hours that exceed the hours referred to in paragraph (1)(a) or (b) if the excess hours are reasonable for the purposes of subsection 62(1).
Note: Hours in excess of the hours referred to in paragraph (1)(a) or (b) that are worked in a week in accordance with averaging terms in a modern award or enterprise agreement (whether the terms comply with subsection (1) or (2)) will be treated as additional hours for the purposes of section 62. The averaging terms will be relevant in determining whether the additional hours are reasonable (see paragraph 62(3)(i)).
75 Griffin observes that s 63(1) and the note are in materially the same terms as s 12(6) and the note in the "final version" of the NES issued on 16 June 2008 (save that s 63(1) also provides for averaging terms to be included in enterprise agreements).
76 Section 64 of the FW Act states:
Averaging of hours of work for award/agreement free employees
(1) An employer and an award/agreement free employee may agree in writing to an averaging arrangement under which hours of work over a specified period of not more than 26 weeks are averaged. The average weekly hours over the specified period must not exceed:
(a) for a full-time employee —38 hours; or
(b) for an employee who is not a full-time employee — the lesser of:
(i) 38 hours; and
(ii) the employee's ordinary hours of work in a week.
(2) The agreed averaging arrangement may provide for average weekly hours that exceed the hours referred to in paragraph (1)(a) or (b) if the excess hours are reasonable for the purposes of subsection 62(1).
Note: Hours in excess of the hours referred to in paragraph (1)(a) or (b) that are worked in a week in accordance with an agreed averaging arrangement (whether the arrangement complies with subsection (1) or (2)) will be treated as additional hours for the purposes of section 62. The averaging arrangement will be relevant in determining whether the additional hours are reasonable (see paragraph 62(3)(i)).
77 Griffin submits and I accept that from this legislative history it can be seen that the NES in Div 3 of Pt 2-2 of the FW Act is concerned with the maximum weekly hours of work and the averaging of weekly hours of work, with the average weekly hours over a specified period not to exceed 38 for a full-time employee. Section 63 does not limit the period over which hours may be averaged under an award. Section 63(1) requires the Award to specify that period.
78 By contrast, s 64 provides that hours may be averaged over a period of up to 26 weeks. I also accept the NES do not contain provisions specifying, limiting or otherwise regulating daily hours of work.
79 The purpose and effect of s 63 of the FW Act may also be seen from the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) introduced into the House of Representatives on 25 November 2008:
252. Clause 63 permits a modern award or enterprise agreement to include terms providing for the averaging of hours of work over a specified period. The average weekly hours over the period must not exceed 38 hours (for a full-time employee), or the lesser of 38 hours or the employee's ordinary hours of work in a week (for an employee other than a full-time employee). Hours worked in a week in excess of this number of hours are additional hours and must not be unreasonable. The fact that additional hours are worked in accordance with an averaging arrangement does not necessarily mean that those hours are reasonable. Rather, the averaging arrangement is one factor to be considered in the particular circumstances.
253. The clause does not restrict the period over which the hours can be averaged under a modern award or enterprise agreement.
80 The Explanatory Memorandum (immediately after [257]) gave the following illustrative example:
Averaging arrangements and reasonable additional hours
The modern award regulating Alex's employment includes averaging arrangements in relation to hours of work so that full-time employees would ordinarily work 152 hours over four weeks (an average of 38 hours per week). Over a four week period, Alex's work pattern was as follows:
Week 1 – worked 21 hours
Week 2 – worked 60 hours
Week 3 – worked 38 hours
Week 4 – worked 33 hours
The averaging arrangement would be relevant in determining the reasonableness of the additional 22 hours that Alex was required to work in week 2. Other factors such as Alex's "family responsibilities", his health and safety and the notice he was given of having to work those "additional 22 hours" would also be relevant.
81 I consider that cl 21.1 of the Award is an averaging term within the meaning of s 63 of the FW Act and should be construed accordingly.
82 Further, by reason of s 46(1)(b) of the Acts Interpretation Act, the words "average" and "averaged" in cl 21.1 of the Award should have the same meaning as the word "average" and the cognate word "averaging" in s 63 of the FW Act.
83 Alternatively, the words "average" and "averaged" in cl 21.1 of the Award should have the same meaning as the word "average" and the cognate word "averaging" in s 12(6) of the version of the NES which the Minister provided to the AIRC on 16 June 2008 (and which is relevantly in the same terms as s 63(1) of the FW Act) and by reference to which the AIRC made the modern awards.
84 I consider the purpose of the averaging provisions provided for in the NES is to allow more or less than the maximum number of weekly hours to be worked in any given week, provided the average number of weekly hours over a specified period does not exceed the maximum number of weekly hours.
85 Griffin observes, and I accept, that nowhere in the extrinsic materials pertaining to the NES is there any suggestion that the averaging provisions have any other purpose or are intended to regulate daily hours of work or shift lengths.
86 As Griffin observes, it may also be noted that the averaging provisions in the NES followed averaging provisions in s 226 of the former Workplace Relations Act. Under s 226 of the Workplace Relations Act an employee could not be required or requested by an employer to work more than 38 hours per week, or, by agreement, more than an average of 38 hours per week "to be averaged over a specified averaging period that is no longer than 12 months", and reasonable additional hours. Again, the purpose of the provision was to limit maximum weekly hours of work and to allow for those hours to be averaged over a specified period.
87 This legislative background is relevant to the construction of the relevant provisions of the Award.
88 Griffin also notes that, for the purposes of construing the Award, the Award replaced a number of pre-reform awards and Notional Agreements Preserving State Awards (NAPSAs). In its written submissions, Griffin sets out how each of those awards and NAPSAs provided for averaging of the ordinary weekly hours of work, albeit in different terms.
89 Griffin submits that while each of the awards described the ordinary hours of work as an average of 35 hours per work, different or no averaging periods were prescribed.
90 I accept that this regulatory background is also relevant to the construction question and supports the construction I have adopted.
91 So far as the making of the Award here was concerned, Griffin notes that the major participants to the Award substantially agreed on the terms of the draft award. On 31 July 2008, the Coal Mining Industry Employer Group (CMIEG) submitted its draft award to the AIRC which, in cl 18.1.1, stated:
The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle unless another period is agreed between the employer and the individual employee. [Emphasis added.]
92 In written submissions, also filed on 31 July 2008, the CMIEG said (at [4]) that in preparing the employer draft modern award the employer group had generally used as a basis for the modern award the Coal Mining Industry (Production and Engineering) Consolidated Award 1997 (P&E Award) and the Coal Mining Industry (Staff) Award 2004 (Staff Award).
93 In relation to what would become cl 21.1 of the Award, the CMIEG said (on p 9):
Draft clause 18.1 deals with averaging periods for ordinary hours. It adopts and applies the current provisions of the Staff Award (clause 21.1.3) to all employees so that current award flexibilities are maintained and extended where it is appropriate to do so. No reduction of employee entitlements arises consequent upon the implementation of the employer's proposal. NES Section 12(6) provides that modern awards may include provisions for averaging of hours over a specified period.
94 The CMIEG submissions included further commentary on the hours, rostering and overtime provisions in the proposed award. As Griffin submits, it does not appear that the Construction, Forestry, Mining and Energy Union (CFMEU) (as it then was) demurred from these submissions, presumably because the clauses were largely agreed.
95 On 1 August 2008, the CFMEU submitted its draft award. Clause 17.1.1 of the CFMEU draft stated:
The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
96 Griffin submits that the only difference between the parties on this clause was the additional words which the CMIEG sought to include and which are emphasised in [91] above.
97 In its written submissions, dated 1 August 2008, the CFMEU said (at pp 3-4):
The major industry award in the coal mining industry is The Coal Mining Industry (Production and Engineering) Consolidated Award 1997 (The P&E Award). The parties have taken the approach that the P&E Award forms the basis of the modern industry award.
98 The CFMEU's submissions traced the background of the P&E Award noting that it had been simplified following lengthy contested proceedings commencing in 1999 and finishing in 2001. Copies of the relevant decisions were annexed to the CFMEU's submissions and included (as Annexure 9) print PR931940, a decision of Bacon Commr given on 8 October 2003. In that decision Bacon Commr said:
[134] . . . there will only be two types of 'hours' that can be worked. They are 'ordinary' hours and 'overtime' hours. Whilst the award may provide various penalties payable for work on different days, etc. (eg Saturdays and Sundays) none of that is relevant to the determination of whether hours are 'ordinary' or 'overtime'.
[135] The award hours clause will ultimately require that the ordinary hours of work shall average 35 per week. That is for each week in a roster cycle there must be included in the roster 35 ordinary hours. There is no requirement for each individual week in the roster to contain 35 ordinary hours unless of course the roster cycle is one week. A roster with a two, three, four or seven week cycle must contain somewhere in the roster 70, 105, 140 or 245 'ordinary' hours respectively. Such ordinary hours can fall anywhere in the roster (ie there need not be 35 ordinary hours in each individual week of the roster). It is the Commission's view that the ordinary hours in any roster need to be identified by the employer (or where such rosters are by agreement the ordinary hours need to be identified by agreement). [Emphasis added.]
99 I accept that it appears from this extract that it was the intention of the AIRC in simplifying the predecessor P&E Award, that ordinary hours could fall anywhere in the roster and that, save where rosters were to be determined by agreement, the employer would identify the ordinary hours in the roster. As stated by the CFMEU, the parties used the P&E Award as the basis for the proposed Award.
100 On 8 August 2008, the AIRC (by Lawler VP) heard oral submissions in relation to the proposed Award. The CFMEU was represented by Ms Gray, and the CMIEG by Mr Morris. On the question of the averaging clause, there was the following exchange:
PN465
THE VICE PRESIDENT: Yes. Now that takes us to 18 or 18 of the employer, 17 of the union.
PN466
MR MORRIS: Correct. There we think consistent with a modern award that is facilitative. It ought to be open to an employee to agree on an average if that is more than the cycle of that particular roster or indeed other than the cycle of a particular roster.
PN467
THE VICE PRESIDENT: Ms Gray you say they should have to bargain for that?
PN468
MS GRAY: Well we're saying that the roster cycle might be 12 weeks in length Your Honour and we're saying that that's sufficient time for an averaging of ordinary hours to ensure that there's no disadvantage to an employee.
PN469
MR MORRIS: That takes us to - - -
PN470
MS GRAY: Also to say Your Honour that to see that it may be also a back doorway in to annualised salary arrangements you could average the ordinary hours over 12 months for example and - - -
PN471
MR MORRIS: The next one is our 18.4 . . .
101 When the AIRC issued its exposure draft award on 12 September 2008, cl 17.1 was in the following terms (as proposed by the CFMEU and as now appears in the Award):
The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
102 In its submissions dated 10 October 2008, responding to the exposure draft award, the CMIEG said:
Clause 17 – Hours of Work
26. The employer group notes that the Full Bench has so far chosen not to include in the clause these words –
… unless another period is agreed between the employer and individual employee
as sought by the employers.
27. The employer group notes, however, that clause 7.1 will cover this matter. It would be helpful if the Full Bench were able to make a confirmatory comment to this effect.
103 When the AIRC issued its decision on 17 December 2008 making the Award (and the other priority modern awards), the AIRC said in relation to the averaging clause:
Ordinary hours of work
[163] We have not included a note sought by the CMIEG to the effect that the award flexibility clause would authorise the employer and an individual employee to agree to averaging of hours over a period other than the relevant roster cycle. Such a note is unnecessary. On any view an agreement of that sort can be made under the award flexibility clause.
104 When the AIRC made the Award in December 2008, the averaging clause was cl 20.1. It is now cl 21.1.
105 Griffin notes that in the same decision by which the AIRC determined the averaging clause in the Award, it made similar averaging clauses in two other modern awards.
106 In my view, it is clear from all the above that:
(1) cl 21.1 of the Award is an averaging clause as allowed for in the NES; and
(4) the words "Those hours will be averaged over the roster cycle" were included to define the period over which hours may be averaged – in circumstances where the NES did not prescribe the period but allowed for awards to include terms providing for the averaging of hours "over a specified period". The awards and NAPSAs being replaced prescribed different averaging periods or no period at all and the employers were seeking to allow for averaging over a longer or different period.
107 In my view, there is little or no support anywhere in the extrinsic materials for the proposition that the words, "Those hours will be averaged over the roster cycle" were also intended to require ordinary hours to be apportioned equally across each shift in the roster cycle.
108 As Griffin submits, the imposition, by a side wind, of a requirement that the same number of ordinary hours be worked on each shift of the roster cycle would introduce extraordinary rigidity into an award system which has as one of its objects the "promot[ion of] flexible modern work practices and the efficient and productive performance of work", the more so when it is considered that averaging provisions in other awards provide for hours to be averaged over significantly longer periods – for example 16 weeks in the case of the Rail Industry Award 2010 and 26 weeks in the case of the Mining Industry Award 2010 which were made by the AIRC at the same time. Such provisions were intended to allow, not curtail, flexibility.
109 The applicants' approach of spreading the ordinary hours across each shift in a roster would likely have the effect of preventing rosters from including standalone overtime shifts. Such shifts have been a feature of some types of roster in the coal industry and it must be considered unlikely that the AIRC in making the Award intended to preclude them. See CFMEU v Mackenzie River Bulkhaul Pty Ltd PR916549, AIRC, 9 April 2002, Bacon Commr.
110 In my view, when one takes into account the full legislative history and sequence of statutory provisions under the former and present legislation pertaining to the making of modern awards and, in particular, the Award in this case, the final submission made by Griffin, that when provisions of the Award are read together and given their ordinary meaning, the Award allows an employer to arrange the rostered hours of work and to roster shifts of up to 10 ordinary hours, should be accepted.
111 In particular, there is nothing in the definitions of the expressions "roster", "roster cycle", "rostered hours", "rostered overtime", "seven day roster employee", or "six day roster employee" in cl 3.1 of the Award, and set out above, to suggest a contrary construction.
112 Rather, those definitions support an inference that:
(1) employees may be "rostered" to work shifts and may be "required" to work reasonable overtime as part of their roster; and
(2) a roster is an "arrangement" of ordinary hours of work and rostered overtime; thus
(3) it is the employer who sets the roster and who, in doing so, may "arrange" the ordinary hours of work and overtime in a roster.
113 As to cl 17.1, set out above, concerning overtime, I accept it is a common provision in industrial awards and means that overtime payments are to be calculated on the basis that each day stands alone. Thus, as Griffin says, for example, in the case of the Award, if three hours' overtime are worked on a Monday and three hours' overtime are worked on a Tuesday, the first three hours on each day are paid at time and a half, that is, cl 17.2(a) (set out above) is to be read as prescribing payment at time and a half for the first three hours on each of Monday to Friday (rather than as prescribing payment at time and a half for the first three hours of overtime in the week and at double time for all hours after that). While the applicants, in their written submissions, say that Griffin's construction does not sit happily with cl 17.1 it is not clear to me that it does not. On the contrary, as Griffin submits, to the extent that cl 17.1 has anything to say on the point, it does not sit comfortably with the applicants' approach which is to aggregate all the overtime in a roster cycle and allocate a portion of it to each shift. Griffin's approach treats each shift separately.
114 Paragraphs 17.2(a) and (b) effectively define overtime to mean "all time worked in excess of or outside the ordinary hours of any shift" [Emphasis added.].
115 Overtime is not defined by reference to the number of hours worked in a week or roster cycle.
116 The Award does not, for example, define overtime to mean all time worked in excess of an average of 35 hours per week over the roster cycle. Nor does the Award impose overtime payments based on the number of hours worked in a week or roster cycle.
117 Overtime payments are imposed by reference to whether the "time worked [is] in excess of or outside the ordinary hours of any shift". The focus is on each shift.
118 Clause 17.2 is also significant because it provides that overtime on a Saturday shall be paid at time and a half for the first three hours and double time thereafter and that overtime on a Sunday shall be paid at double time.
119 Clause 17.3 leaves no doubt that an employee may be required to work overtime on a Saturday or Sunday, including as a standalone shift. It provides some additional protection for employees in that circumstance, by requiring payment for at least three hours, but otherwise it reinforces that such overtime is to be paid at the rates prescribed in the Award (the appropriate rate).
120 It is clear from cl 17.2 and cl 17.3 that the AIRC in making the Award made special provision for overtime worked on Saturdays and Sundays. I accept Griffin's submission that the AIRC must be taken to have regarded the rates prescribed as fair (fair having regard to the interests of both employers and employees). There is nothing anomalous or unfair about an employer rostering overtime on a Saturday or Sunday and paying those rates.
121 Returning to cl 21.1 (Ordinary hours of work), which provides:
The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
122 I accept Griffin's submission that, in light of the full context, the clause is not ambiguous. Ordinary hours are to average 35 per week over the roster cycle (which in this case is three weeks). That prescription is satisfied if 105 ordinary hours are worked over three weeks. There is no requirement for any particular number of ordinary hours, or for the same number of ordinary hours, to be worked each shift or each week. Hours are to be averaged over the roster cycle. They are not required to be averaged over each week or shift in the roster cycle.
123 The ordinary meaning of the text is consistent with the legislative and historical context discussed above. Those extrinsic materials confirm the ordinary meaning. Alternatively, if there is ambiguity, the extrinsic materials support Griffin's construction.
124 Employees may therefore be rostered to work reasonable additional hours as an integral part of their roster (as per the definitions of "roster", "rostered hours" and "rostered overtime") but may also be required to work reasonable additional hours in addition to their rostered hours (effectively, unrostered overtime), as provided for by cl 17.4.
125 Clause 23, in my view, indicates that the employer can determine the type of rosters to be worked (that is, the type of arrangement of ordinary hours and rostered overtime to be worked), the shift length to be worked (as long as ordinary hours do not exceed 10), the start and finish times of shifts up to 10 ordinary hours, and may vary the number and spread of ordinary shifts.
126 Griffin is therefore entitled to roster shifts of 10 ordinary hours and to determine the number of ordinary shifts, provided the number of ordinary hours average 35 per week over the roster cycle. There is no requirement in the Award, implicit or express, for Griffin to roster employees for only 7.5 ordinary hours on each shift. That is contrary to the express stipulation in the Award that the employer may determine shift lengths of up to 10 ordinary hours, including start and finish times, and may vary the number and spread of ordinary shifts. Nor is there any requirement in the Award, implicit or express, for Griffin to roster ordinary hours on each shift in the roster cycle. There is no reason why Griffin cannot roster one or more overtime shifts as part of the employee's roster. As mentioned, such shifts have been a feature of some types of roster in the coal industry and it is unlikely that the AIRC in making the Award intended to preclude them.
127 In my view, the words "will be an average of 35 hours per week" and "will be averaged over the roster cycle" in cl 21.1, are intended to allow the number of ordinary hours in any week to be more or less than 35, provided the number of ordinary hours per week averaged over the roster cycle is 35, that is, provided the total number of ordinary hours in the roster cycle divided by the number of weeks in the roster cycle is 35. That appears both from the ordinary meaning of the words and from their textual, historical and legislative context set out above.
128 I consider that to adopt the applicants' construction of the Award would be to give the words in cl 21 a meaning they do not bear and, in effect, to read words into the Award that are not to be found there.
129 There is, in the result, force in Griffin's contention that the applicants' real complaint in this proceeding is that it is not fair for Griffin to roster overtime on a Saturday or Sunday because the employees will receive less in total penalties than if those overtime hours were rostered on a weekday, and that the Award should therefore somehow be read as not permitting that outcome.
130 As to that, I accept that the Award is not to be construed as wholly for the benefit of employees or employers. The obligations which it imposes are various and intended to strike a balance between the interests of employees and employers. That was reflected in the objects in s 576A of the former Workplace Relations Act under which the Award was made and which required that modern awards "be simple to understand and easy to apply", "provide a fair minimum safety net" and "promote flexible modern work practices and the efficient and productive performance of work". It continues to be reflected in the "modern awards objective" in s 134 of the FW Act.
131 Also, as Madgwick J said in the frequently quoted statement in Kucks v CSR Limited [1996] 66 IR 182; [1996] IRCA 141:
… the task remains one of interpreting a document produced by another or others. 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.
132 The AIRC in making the modern award, determined that work on Saturday and Sunday would be paid at no more than double time whether it was ordinary hours or overtime. Griffin submits, and I accept, that the applicants should not be permitted to read into the Award a restriction on an employer's ability to roster overtime on a Saturday or Sunday simply because that would be more lucrative for employees.
133 Rather, if a party considers a modern award is not achieving the modern awards objective, then its remedy would appear to lie in the Fair Work Commission: see ss 157(1), 157(3), 158 and 160 of the FW Act; also s 156.
Conclusion
134 The separate question should be answered "no". The Award does not require Griffin to roster the employees' hours of work in the way contended for by the applicants.
I certify that the preceding one hundred and thirty-four (134) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.
Associate:
Dated: 14 June 2018
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Naudi, a joint and several trustee of the property of Taylor (a Bankrupt) v Pee Vee Nominees Pty Ltd [2013] FCA 536
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2013/2013fca0536
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2024-09-13T22:51:30.593208+10:00
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FEDERAL COURT OF AUSTRALIA
Naudi, a joint and several trustee of the property of Taylor (a Bankrupt) v Pee Vee Nominees Pty Ltd [2013] FCA 536
Citation: Naudi, a joint and several trustee of the property of Taylor (a Bankrupt) v Pee Vee Nominees Pty Ltd [2013] FCA 536
Parties: ROBERT WILLIAM NAUDI, A JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF BRENDAN TAYLOR, A BANKRUPT and PETER IVAN MACKS, A JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF BRENDAN TAYLOR, A BANKRUPT v PEE VEE NOMINEES PTY LTD (ACN 007 974 003) and CAPITAL FINANCE AUSTRALIA LIMITED (ABN 23 069 663 136)
File number: SAD 123 of 2012
Judge: LANDER J
Date of judgment: 10 April 2013
Catchwords: COSTS – application for indemnity costs
PRACTICE AND PROCEDURE – application for leave to file notice of discontinuance
Legislation: Bankruptcy Act 1966 (Cth), ss 77C, 81, 120, 121
Corporations Act 2001 (Cth), s 233
Fair Trading Act 1987 (SA), s 87
Federal Court Rules 2011, r 26.12
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd
(1993) 46 FCR 225
Crossman v Taylor (No 3) [2011] FCA 734
Taylor v Crossman [2011] FCAFC 139
Taylor v Crossman (No 2) (2012) 199 FCR 363
Date of hearing: 4 April 2013
Place: Adelaide
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 91
Counsel for the Applicants: Mr P Britten-Jones
Solicitor for the Applicants: Mellor Olsson Lawyers
Counsel for the First Respondent: Mr R Ross-Smith
Solicitor for the First Respondent: Fox Tucker Lawyers
Counsel for the Second Respondent: The Second Respondent did not appear
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 123 of 2012
BETWEEN: ROBERT WILLIAM NAUDI, A JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF BRENDAN TAYLOR, A BANKRUPT
First Applicant
PETER IVAN MACKS, A JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF BRENDAN TAYLOR, A BANKRUPT
Second Applicant
AND: PEE VEE NOMINEES PTY LTD (ACN 007 974 003)
First Respondent
CAPITAL FINANCE AUSTRALIA LIMITED
(ABN 23 069 663 136)
Second Respondent
JUDGE: LANDER J
DATE OF ORDER: 10 april 2013
WHERE MADE: ADELAIDE
THE COURT ORDERS THAT:
1. The first respondent's application for indemnity costs be dismissed.
2. The applicants have leave to discontinue the proceeding against the first respondent.
3. The applicants pay the first respondent's costs on a party/party basis.
4. The first respondent pay the applicants' costs of the first respondent's application for indemnity costs, on a party/party basis.
5. The time within which the first respondent has to appeal from these orders be extended until 14 days after publication of the reasons for these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 123 of 2012
BETWEEN: ROBERT WILLIAM NAUDI, A JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF BRENDAN TAYLOR, A BANKRUPT
First Applicant
PETER IVAN MACKS, A JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF BRENDAN TAYLOR, A BANKRUPT
Second Applicant
AND: PEE VEE NOMINEES PTY LTD (ACN 007 974 003)
First Respondent
CAPITAL FINANCE AUSTRALIA LIMITED
(ABN 23 069 663 136)
Second Respondent
JUDGE: LANDER J
DATE: 4 june 2013
PLACE: ADELAIDE
REASONS FOR JUDGMENT
1 This is an application by the first respondent for costs on an indemnity basis as a consequence of the applicants' application for leave to file a notice of discontinuance in this proceeding.
2 The discontinuance of a proceeding is governed by rule 26.12 of the Federal Court Rules 2011, which provides that an applicant may file a notice of discontinuance without the leave of a court or any other party's consent at any time before the return date fixed in the originating application or, if the proceeding is continuing on pleadings, at any time before the pleadings have closed. If the pleadings have closed, a notice of discontinuance can be filed with the opposing party's consent before judgment has been entered in the proceeding. If the pleadings have closed and the other party does not consent, then a notice of discontinuance can only be filed with the leave of the Court: rule 26.12(2)(c).
3 The first respondent, Pee Vee Nominees Pty Ltd (Pee Vee Nominees), has indicated that it does not object to the Court granting leave to the applicants to file a notice of discontinuance, but in the event that leave is granted it seeks an order that the applicants pay its costs on an indemnity basis.
4 Rule 26.12(7) provides "[u]nless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued".
5 The applicants accept that they are liable to pay Pee Vee Nominees' costs but oppose Pee Vee Nominees' application that the costs be on an indemnity basis. The applicants contend that the costs should be as between party and party.
6 The applicants have reached a settlement with the second respondent, Capital Finance Australia Limited (Capital Finance) which agreed to pay the applicants $120,000 in settlement of the applicants' claim. On 6 March 2013, in accordance with the terms of that settlement, the applicants filed a notice of discontinuance, discontinuing the whole of the proceeding against Capital Finance with no order as to costs.
7 On 26 March 2010, Ms Lynette Crossman commenced a proceeding in this Court (SAD 32 of 2010) (the first proceeding) against her former partner Mr Brendan Taylor and White Marina Pty Ltd, seeking orders pursuant to s 233 of the Corporations Act 2001 (Cth) (Corporations Act), and damages pursuant to s 87 of the Fair Trading Act 1987 (SA) (Fair Trading Act) or the Corporations Act (the first proceeding).
8 Mr Taylor was the registered owner of a houseboat named "Flat White". A company which he controlled, Maritime Ten Pty Ltd (Maritime Ten), of which he was the sole director, was the registered owner of another houseboat, "White Water". Each houseboat was subject to a chattel mortgage in favour of Capital Finance.
9 On 30 March 2010, Besanko J made freezing orders in the first proceeding restraining Mr Taylor from dealing with the assets identified in those orders, except in accordance with the order. Importantly, for the purpose of this application, the assets identified in those orders included the two houseboats.
10 On 29 June 2011, after a trial in the first proceeding, Besanko J published his reasons in the first proceeding in which he found that Ms Crossman was entitled to damages including compound interest against Mr Taylor: Crossman v Taylor (No 3) [2011] FCA 734. The freezing orders to which I have just referred were still in place at the time his Honour gave judgment on 29 June 2011.
11 On 11 July 2011, Besanko J entered judgment for Ms Crossman in the amount of $955,305.76 and ordered Mr Taylor to pay her costs.
12 On 14 July 2011, Mr Taylor filed a notice of appeal against the orders made in the first proceeding by Besanko J (the appellate proceeding).
13 On or about 9 August 2011, Ms Crossman served a bankruptcy notice on Mr Taylor.
14 On the next day, Capital Finance served a notice of intention to repossess Flat White relying upon Mr Taylor being in arrears in the sum of $7,036.53. The amount then owing on Flat White was approximately $180,000.
15 On 30 August 2011, Ms Crossman filed an interlocutory application in the appellate proceeding seeking dismissal of the appeal or an order that it be permanently stayed. That application was heard on 28 October 2011, during which Ms Crossman alleged that Mr Taylor's appeal was an abuse of process.
16 During the hearing, Ms Crossman's senior counsel contended:
(i) Mr Taylor procured acts that resulted in the sale of two houseboats (one called "Flat White" and the other called "White Water") by the mortgagee in contravention of the freezing orders; and/or
(ii) Mr Taylor did so with a deliberate and contumacious intention to defeat his creditors and the freezing orders; and/or
(iii) Mr Taylor took the steps he did in relation to the sale of the assets with a view to frustrating the appeal.
17 The application was dismissed by the Full Court on 7 November 2011: Taylor v Crossman [2011] FCAFC 139. However, the Full Court indicated that the sale of the houseboats "certainly invites careful scrutiny": at [31].
18 The appeal was dismissed by the Full Court on 24 February 2012: Taylor v Crossman (No 2) (2012) 199 FCR 363.
19 On 30 August 2011, Ms Crossman applied ex parte in the first proceeding for orders including an order that Mr Taylor provide an affidavit stating the circumstances in which he sold Flat White.
20 In support of that application, she filed an affidavit in which she deposed that she had spoken to Jamie Ginns, who is employed by the second respondent, on 29 August 2011 and was told of Mr Taylor's sale of Flat White on 22 August 2011.
21 On 2 September 2011, Mr Taylor swore an affidavit which was filed in the first proceeding, in which he said that he was unable to meet the lease payments for Flat White, which were in the sum of $5,945.62 monthly and that, as a result, Flat White was repossessed by Capital Finance and sold.
22 The evidence discloses that Mr Taylor was the registered owner of Flat White, which had been launched in January 2005 and was said by Mr Taylor to have cost $560,000. The evidence was that Mr Taylor's mother is said to have lent Mr Taylor $150,000. The houseboat was the subject of a chattel mortgage with Capital Finance.
23 The chattel mortgage disclosed the cash price of the houseboat at $217,116, which was based on the residual payout figure of the houseboat's previous chattel mortgage, which also had been with Capital Finance.
24 In one of his affidavits filed in the first proceeding, Mr Taylor stated that as at 31 March 2010, the payout sum on the chattel mortgage was $231,260.71. He further stated that he had had the houseboat on the market at an asking price of $675,000. He estimated in that affidavit that the realistic sale price could be anywhere from $450,000 to $650,000.
25 On 9 July 2011, he inserted an advertisement in the Adelaide newspaper, "The Advertiser", which was headed "$425,000 due to forced sale". The advertisement claimed that the houseboat would be sold with over $90,000 confirmed forward bookings.
26 Mr Taylor asserted in a statement of his assets and liabilities that the value of the houseboat was $365,000. On 22 August 2011, Flat White was sold to Pee Vee Nomineees; a company that was controlled by Mr Peter Walker. Pee Vee Nominees, trading as "Fantasy Houseboat Holidays", agreed to lease Flat White back to Mr Taylor for three years at monthly lease payments of $5,133.33.
27 At the time judgment was entered in the first proceeding against Mr Taylor, Maritime Ten was still the registered owner of White Water. Mr Taylor had signed a contract to build White Water in April 2006 and the contract price was said by him to be $660,000. He said a further $40,000 or so was spent on fittings and furnishings.
28 White Water was also subject to a chattel mortgage with Capital Finance. The cash price of that houseboat was stated to be $660,000. The chattel mortgage commenced on 28 September 2006 and was for a period of five years. It provided for a final payment of $264,000 in about September 2011. Mr Taylor stated in an affidavit that as at 31 March 2010 the payout figure was $365,706.39.
29 Both houseboats were sold after judgment was entered for Ms Crossman in the first proceeding, and before the appeal was heard. It was claimed that they were both sold by Capital Finance pursuant to the chattel mortgage. White Water was sold in July 2011. Flat White was sold on 22 August 2011 to Pee Vee Nominees; the first respondent in this proceeding. Both houseboats were sold to persons known to Mr Taylor. Both houseboats were subsequently leased back to Mr Taylor.
30 An officer of Capital Finance made the following notes:
Customer stressed he does not want ex to purchase boats.
Customer looking not sell through tender process as ex could possibly bid on boats.
Valuation – cd brochure on hand
Customer wants to understand Sale process.
what documents are required by Capital
Court order allows flat white to be sold but additional funds over payout need to go to solicitor trust fund.
…
— Ex taking brendan to Court.
— Current $845k legal & freeze Customer assets.
— both Contract & Bank frozen.
— Capital can take what ever action they deem fit
— 30 – 40x legal fee's.
— running off credit cards
— June – July – Aug — low season little to no income
— Sept Oct Nov – cashflow increases charter increases.
— Customer wants to put his hands up.
31 The tax invoice for White Water disclosed a sale price of $300,000 made up of two payments each of $150,000. The purchaser was said to be "James Dyer/Jacali Investments Pty Ltd". Mr Taylor did not disclose to Mr Dyer that there were freezing orders in relation to Mr Taylor's asset.
32 It was Mr Taylor's case that both houseboats were sold because he could not keep up the payments.
33 On 5 September 2011, orders were made joining Jacali Investments Pty Ltd (Jacali Investments) and Mr Walker as defendants in the first proceeding. Orders were also made preventing Jacali Investments from dealing with White Water, and Mr Walker from dealing with Flat White.
34 On 10 January 2012, Mr Walker filed an interlocutory application in the first proceeding to discharge and/or vary the freezing order, which was supported by an affidavit of Mr Walker. That application was never heard.
35 On 5 March 2012, a sequestration order was made against Mr Taylor's estate on the judgment obtained by Ms Crossman against Mr Taylor. Mr Naudi and Mr Macks, the applicants in this proceeding, were appointed the joint and several trustees of Mr Taylor's estate.
36 On 16 March 2012, upon the trustees in bankruptcy giving, in the first proceeding, an undertaking to the Court as to damages, the freezing order directed to Mr Walker was continued and Pee Vee Nominees was also restrained from dealing with Flat White. As a consequence of the orders made on that day, the trustees took possession of Flat White and operated the houseboat. An order was made that the trustees pay into Court from time to time the amount of the lease payments which would otherwise have been payable by Mr Taylor to Pee Vee Nominees.
37 On 17 April 2012, an order was made in the first proceeding that the trustees, if they were minded to bring a proceeding under s 120 and/or s 121 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) against Mr Walker, Pee Vee Nominees or Capital Finance, should bring that proceeding by no later than 8 May 2012, failing which the freezing orders would be discharged.
38 On 15 May 2012, the trustees disclaimed the lease from Pee Vee Nominees to Mr Taylor. No proceedings were issued by 8 May 2012 and the freezing orders in the first proceeding were discharged on 18 May 2012.
39 Prior to the issue of this proceeding, those acting for Pee Vee Nominees and Mr Walker advised the applicants that Flat White was not sold to it by the bankrupt Mr Taylor but by Capital Finance; those acting for Capital Finance claimed that Capital Finance never had possession of Flat White and the houseboat was sold by Mr Taylor to Pee Vee Nominees.
40 On 13 June 2012, the applicants commenced this proceeding seeking declaratory orders under s 120 and/or s 121 of the Bankruptcy Act. The applicants filed a statement of claim alleging that the transfer of the houseboat Flat White to Pee Vee Nominees was void by operation of s 120 and s 121 of the Bankruptcy Act.
41 In the further alternative, the applicants claimed that if Capital Finance sold Flat White to Pee Vee Nominees in its capacity as mortgagee, pursuant to the chattel mortgage and not as agent for or at the direction of Mr Taylor, then Capital Finance owed Mr Taylor an equitable duty to act in good faith. It was claimed that Capital Finance breached its equitable duty of good faith as a result of which it failed to obtain the best price appropriate.
42 On 6 July 2012, the applicants filed an amended statement of claim. In paragraph 13 of that amended statement of claim, they claimed that Mr Taylor sold Flat White to Mr Walker and then discharged the chattel mortgage. They alleged that on 1 September 2011, Fantasy Houseboat Holidays, the name under which Pee Vee Nominees carried on business, entered into an agreement to lease Flat White to Mr Taylor for a period of three years with a monthly lease payment of $5,133.33.
43 They claimed in paragraph 16 of the statement of claim that the transfer of the houseboat Flat White to Pee Vee Nominees was void by operation of s 120 of the Bankruptcy Act.
44 Section 120 of the Bankruptcy Act provides that a transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in bankruptcy, if the transfer took place in the period beginning five years before the commencement of the bankruptcy and the transferee gave no consideration for the transfer, or gave consideration of less value than the market value for the property.
45 The applicants alleged that the consideration provided was approximately $180,000 less than the market value of Flat White.
46 They pleaded in the alternative that the transfer of Flat White to Pee Vee Nominees was void by operation of s 121 of the Bankruptcy Act.
47 Section 121 of the Bankruptcy Act deals with transfers to defeat creditors and provides that a transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in bankruptcy, if the property would probably have become part of the bankrupt's estate or probably would have been available to creditors if the property had not been transferred, and the bankrupt's main purpose in making the transfer was to prevent the transferred property from becoming divisible among the bankrupt's creditors or to hinder or delay the process of making the property available for division amongst the bankrupt's creditors.
48 In paragraph 19 of the amended statement of claim, the applicants pleaded that if Capital Finance sold Flat White to Pee Vee Nominees solely in its capacity as mortgagee pursuant to the chattel mortgage, and not as agent for or at the direction of the bankrupt, then Capital Finance owed the bankrupt an equitable duty to act in good faith having regard to the bankrupt's interest in Flat White. They claim that Capital Finance breached that equitable duty and, as a consequence, the houseboat was sold at a price below market value and the bankrupt suffered damage to the extent of $180,000.
49 On 19 July 2012, Pee Vee Nominees filed its defence to the amended statement of claim. It claimed that Capital Finance enforced Capital Finance's rights under clause 11 of the chattel mortgage and, as a consequence, Pee Vee Nominees purchased Flat White from Capital Finance in the sum of $180,000.
50 At the same time, Pee Vee Nominees filed a cross-claim against the applicants claiming payment of a lease payment of $2,908.88, damages for the damage done to Flat White by the trustees, and damages in the amount of $15,399.99 for three months unpaid lease payments.
51 On the same day, Pee Vee Nominees issued a second cross-claim, this time against Capital Finance (second cross-claim).
52 Paragraph 22 of the statement of that second cross-claim said:
If this Honourable Court makes the declaration or any other order which affects Pee Vee's quiet enjoyment of Flat White, then Pee Vee respectfully request[s] that an order as to damages against Capital be made by this Honourable Court in favour of Pee Vee, due to Capital's breach of covenant and/or Warranties and/or Condition to Pee Vee that passed good title of Flat White (and therefore quiet enjoyment of Flat White) to Pee Vee at the time of the Purchase.
53 In the alternative, Pee Vee Nominees claimed that Capital Finance had engaged in misleading and deceptive conduct by representing that Capital Finance had title to Flat White and the right to sell Flat White.
54 In paragraph 25 of the statement of the second cross-claim, Pee Vee Nominees alleged that if a declaration were made, as sought by the applicants, against the respondents in the principal proceeding, then the representations made by Capital Finance would be misrepresentations.
55 On 23 July 2012, Capital Finance filed its defence in the principal proceeding. It did not admit that it sold Flat White solely in its capacity as mortgagee. Moreover, it pleaded that it did not breach its equitable duty of good faith to Mr Taylor. It pleaded that any claim against it for breach of any good faith duty vested in the trustees, by reason of Mr Taylor's bankruptcy. It pleaded that the price and terms of the sale were agreed between Mr Taylor on the one hand and Pee Vee Nominees and/or Mr Walker on the other hand.
56 Capital Finance also filed a defence to Pee Vee Nominees' second cross-claim. In that defence it denied that it exercised its rights under the chattel mortgage. It denied that it entered into an agreement with Pee Vee Nominees to sell Flat White to Pee Vee Nominees. It denied that it received the purchase price from Pee Vee Nominees. It said that on 24 August 2011 it received $180,000 and, at the direction of Mr Taylor, it paid those funds as to $173,182.59 in discharge of the chattel mortgage, and as to $6,817.41 into the Federal Court of Australia.
57 The various claims and defences starkly identified the issue for the trustees. On the one hand, Pee Vee Nominees asserted that it purchased Flat White from Capital Finance and, on the other hand, Capital Finance asserted that Pee Vee Nominees purchased Flat White from the bankrupt. In those circumstances, the trustees had no alternative but to bring the proceeding against both Pee Vee Nominees and Capital Finance. They could not have simply brought a proceeding against Capital Finance and run the risk of an adverse judgment and then, in a later proceeding against Pee Vee Nominees, running the risk of a second adverse and inconsistent judgment.
58 On 14 September 2012, Capital Finance filed an amended defence in the principal proceeding, continuing to not admit that it sold Flat White to Pee Vee Nominees in its capacity as mortgagee, and claiming that the price and terms of the sale were agreed between Mr Taylor on the one hand and Mr Walker and/or Pee Vee Nominees on the other. The issue, therefore, remained alive.
59 Capital Finance subsequently filed its evidence for the trial.
60 One of the affidavits filed by Capital Finance for the trial was sworn by Jeffery Singh, who had been employed by Capital Finance as a collections officer and was the person who had had frequent dealings with Mr Taylor in relation to Flat White and dealt with Pee Vee Nominees.
61 He deposed to a number of telephone conversations he had with Mr Taylor between June and August 2011, and in particular a telephone conversation on 22 August 2011, when he was told by Mr Taylor that Mr Walker was willing to pay the payout figure and Mr Taylor authorised Mr Singh to communicate directly with Mr Walker.
62 Mr Singh also deposed to a telephone conversation that occurred later on 22 August 2011 with Mr Walker, as to why Mr Taylor was selling the houseboat. He said in his affidavit at paragraph 43:
43. I believe that $180,000 represented a fair and reasonable sale price for Flat White after taking into account the substantial costs that would have been incurred by Capital were it to have taken physical repossession of Flat White and sold it. Based upon my experience repossessing and selling boats generally those costs would have included transporting Flat White to a secure location, mooring fees, maintenance costs and the costs associated with selling Flat White by auction or tender (the Costs).
63 He then identified the costs, and he said at paragraph 45:
45. After taking into account the Costs, I believe it was unlikely that Capital would have received materially more than $180,000 were it to have repossessed and sold Flat White.
64 In my opinion, that affidavit is evidence in support of Capital Finance's then position that it did not sell the houseboat pursuant to the chattel mortgage.
65 On 5 December 2012, Mansfield J made orders which included an order giving leave to Capital Finance to file and serve a further amended defence (to identify the vendor of the vessel and any consequential amendments) by 21 December 2012. Justice Mansfield also made an order that the proceeding be referred to mediation before a Registrar of the Court to be conducted not before 15 January 2013, but to be concluded by 24 February 2013, and for the Registrar to report by 2 March 2013.
66 However, on 18 December 2012, Capital Finance filed an amended defence in the principal proceeding in which it withdrew its allegation that the price and terms of the sale were agreed between Mr Taylor and Mr Walker and/or Pee Vee Nominees. Instead, it pleaded that Mr Taylor considered $180,000 was a fair and reasonable price for Flat White and had no objection to the sale.
67 The filing of that defence meant that Capital Finance accepted that it sold the boat under the terms of the chattel mortgage.
68 No explanation has been given as to why Capital Finance changed its position between Mr Singh's affidavit and the filing of the amended defence.
69 After receipt of the amended defence, the applicants' solicitors, by letter dated 25 January 2013, advised Pee Vee Nominees' solicitors that the applicants intended to seek leave to discontinue against Pee Vee Nominees. The application seeking leave to discontinue was filed on 7 February 2013.
70 The mediation took place on 12 February 2013. At that mediation, Capital Finance agreed to pay the trustees $120,000 within 14 days, which represented what would otherwise have been the trustees' claim for the breach of the equitable duty owed by Capital Finance in the sale of the houseboat. Pee Vee Nominees agreed to discontinue its cross-claims against the trustees and against Capital Finance without any order as to costs.
71 In this application for indemnity costs, Pee Vee Nominees contends that the trustees failed to make proper inquiries before they brought this proceeding and failed to exercise all of the powers which were available to the trustees which, if exercised, would have established that Capital Finance sold Flat White under the terms of the chattel mortgage.
72 Pee Vee Nominees points to the evidence which was filed in the first proceeding which, if the Court had accepted, would have supported Pee Vee Nominees' claim that it bought the houseboat from Capital Finance. It also argued that the trustees had the opportunity to issue notices under s 77C of the Bankruptcy Act or conduct public examinations under s 81 of the same Act.
73 Pee Vee Nominees' claim for indemnity costs rather rests on the proposition that as it is now known and accepted that Capital Finance sold Flat White to Pee Vee Nominees, that should have been known to the trustees prior to the issue of this proceeding.
74 That is simply not right. Capital Finance claimed, up until the time that it amended its defence on 18 December 2012, that it did not sell Flat White but that Flat White was sold by Mr Taylor to Mr Walker. If that claim had been established by way of defence to the proceeding brought by the trustees against Capital Finance, the applicants would have succeeded in their claim against Pee Vee Nominees either under s 120 or s 121 of the Bankruptcy Act because it seemed beyond doubt that Flat White was sold at an undervaluation.
75 In my opinion, the trustees cannot be criticised for commencing this proceeding in circumstances where that dispute of fact could not be resolved except in a Court in which all three parties were present.
76 There are other reasons why the trustees cannot be criticised for what they have done if regard is had to the circumstances that surrounded Mr Taylor's behaviour after judgment was given against him in the first proceeding.
77 After judgment for nearly $1 million was entered against him and he became liable for costs of many hundreds of thousands of dollars, Mr Taylor claimed that he was unable to make the finance payments on the two houseboats which he then owned. He arranged for two persons known to him to purchase one each of the houseboats at a cost which discharged his liability to Capital Finance, but left him without any amount that would have been available to his creditors, the largest of whom was his former partner, Ms Crossman. Not only did he allow those assets to be surrendered, but the two houseboats were sold to people known to him and immediately upon their sale were leased back to him at a similar cost to that which he was paying under the chattel mortgage. That allowed him to continue to operate those boats for his own benefit. The transactions look very suspicious. Any suspicion was heightened by the fact that Capital Finance said it did not sell Flat White to Pee Vee Nominees, but that Mr Taylor did. If Capital Finance was right about that and the houseboat was sold, as appears to be agreed, at an undervaluation, those suspicions are heightened.
78 Pee Vee Nominees has provided a number of submissions setting out the circumstances in which indemnity costs might be ordered. There is no doubt that the power exists. The principles that govern the exercise of the power were identified in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and the circumstances in which the power might be exercised were also identified. The categories in which indemnity costs may be ordered are not closed. If a party brings a proceeding against the advice of the party's lawyers, that might be a reason for ordering indemnity costs. If the proceeding is hopeless from the outside, that also might be a reason for ordering indemnity costs. If a party continues a proceeding after the party is either advised or becomes aware that the proceeding cannot succeed, then that might also be a reason for ordering continuing costs. None of that occurred in this case.
79 This proceeding was commenced because, on the advice given to the trustees, Flat White was sold at an undervaluation to the detriment of Mr Taylor's creditors. Because of the respective stands taken by Pee Vee Nominees and Capital Finance, the trustees had to proceed with recovery against both of those parties in the same proceeding.
80 In my opinion, it was reasonable for the trustees to bring this proceeding, and it was reasonable for the trustees to continue to prosecute these proceedings up until the time that Capital Finance amended its defence.
81 When Capital Finance amended its defence, the trustees acted appropriately and advised Pee Vee Nominees that it would seek to discontinue the proceedings against that company.
82 The fact that Pee Vee Nominees consistently maintained that it bought the houseboat from Capital Finance does not mean that the trustees were wrong to start or continue this proceeding, in light of the fact that Capital Finance denied that proposition. If Capital Finance had agreed with that proposition, then this proceeding, of course, should not have been brought nor maintained, but that is not the case, and it was not until Capital Finance filed its amended defence that the issue was resolved.
83 I mentioned earlier that Pee Vee Nominees was joined to the first proceeding and was subjected to the orders to which I have referred. It has also sought costs in that proceeding and indemnity costs against Ms Crossman. That application will be dealt with separately.
84 In this proceeding, Pee Vee Nominees says it has incurred costs of $193,900.79, of which $50,695.32 relate to its counterclaims that were filed in this proceeding and have been abandoned. Therefore, it is said that Pee Vee Nominees' total costs are $143,205.97. Pee Vee Nominees seeks indemnity costs in this proceeding in the amount of $136,045.67. It says that if it were to obtain an order for party and party costs, the costs recoverable would be $50,121.87 less than the indemnity costs claimed.
85 In the first proceeding it says it has incurred costs of $106,143.35, of which it claims $100,836.18 by way of indemnity costs. It says that if it were to be limited to party and party costs, it would receive $37,150.17 less than the indemnity costs sought.
86 It follows, therefore, that this application and the application for indemnity costs in the first proceeding is for about $87,272.
87 I asked and was told that the costs incurred on those applications up to the date of hearing of this application by Pee Vee Nominees are $46,144.64.
88 Those figures raise the question why this application has been made.
89 In any event, I dismiss the claim for indemnity costs.
90 I give leave to the applicants to discontinue the proceeding against Pee Vee Nominees and I order the applicants pay Pee Vee Nominees their costs on a party and party basis.
91 I order Pee Vee Nominees to pay the applicants' costs of this application on a party and party basis.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.
Associate:
Dated: 4 June 2013
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Federation Group Ltd (ACN 007 532 827) (in liq) [2005] FCA 900
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2024-09-13T22:51:30.648809+10:00
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FEDERAL COURT OF AUSTRALIA
Federation Group Ltd (ACN 007 532 827) (in liq) [2005] FCA 900
CORPORATIONS – company wound up – request to Supreme Court of British Columbia – jurisdiction in 'an external administration matter' – s 580 of the Corporations Act 2001 (Cth) – letter of request seeks orders based on declaration made in the Federal Court of Australia
Corporations Act 2001 (Cth), ss 436C, 445E, 446A(4), 471B, 580, 581(4)
Joye v Beach Petroleum NL and anor (1996) 67 FCR 275 followed
Re Crust 'n'Crumb Bakers (Wholesale) Pty Ltd [1992] 2 Qd R 76 cited
Re AFG Insurance Ltd (Administrators Appointed) [2002] 43 ACSR 60 followed
IN THE MATTER of ss 580(C) and 581(4) of the Corporations Act and IN THE MATTER of FEDERATION GROUP LTD (ACN 007 532 827) (IN LIQUIDATION) Ex parte Federation Group Ltd (ACN 007 532 827) (In Liquidation) and Bryan Kevin Hughes and Vincent Anthony Smith as Liquidators of Federation Group Ltd (In Liquidation)
WAD 132 OF 2005
SIOPIS J
3 JUNE 2005
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAD 132 OF 2005
BETWEEN: IN THE MATTER of ss 580(c) and 581(4) of the Corporations Act and IN THE MATTER of FEDERATION GROUP LTD (ACN 007 532 827) (IN LIQUIDATION)
EX PARTE
FEDERATION GROUP LTD (ACN 007 532 827) (IN LIQUIDATION)
FIRST PLAINTIFF
BRYAN KEVIN HUGHES and
VINCENT ANTHONY SMITH AS LIQUIDATORS OF FEDERATION GROUP LTD (IN LIQUIDATION)
SECOND PLAINTIFFS
JUDGE: SIOPIS J
DATE OF ORDER: 3 JUNE 2005
WHERE MADE: PERTH
THE COURT ORDERS THAT:
1 A declaration that on 30 May 2005, and by a resolution of creditors passed under s 445E of the Corporations Act 2001 (Cth):
1.1 the first plaintiff (Company) was wound up;
1.2 by virtue of section 446A(4)(a)(ii) of the Corporations Act, Bryan Kevin Hughes and Vincent Anthony Smith were appointed as liquidators of the Company, with such powers and functions as conferred on them by the Corporations Act.
2 An order that the registrar sign, seal and dispatch to the proper officer of the Supreme Court of British Columbia, a letter of request in the following terms:
'The Federal Court of Australia hereby requests the Supreme Court of British Columbia to assist this Court by making orders, to the extent the Supreme Court of British Columbia has jurisdiction so to order, as follows:
(1) Orders recognising and giving effect to the declarations made by the Federal Court of Australia on 3 June 2005 as follows:
(a) A declaration that on 30 May 2005, and by a resolution of creditors passed under section 445E of the Corporations Act:
(i) the first plaintiff (Company) was wound up;
(ii) by virtue of section 446A(4)(a)(ii) of the Corporations Act, Bryan Kevin Hughes and Vincent Anthony Smith were appointed as liquidators of the Company, with such powers and functions as conferred on them by the Corporations Act.
(2) Such orders as it would be open to the Federal Court of Australia to make within its jurisdiction applying and giving effect to the statutory provisions set out in the Act or orders applying and giving effect to such comparable Canadian statutory provisions in respect of such protections, entitlements, transactions or dealings as would have had application to the Company had it been made subject to a winding up order or similar order under Canadian insolvency law.
(3) Such orders as it would be open to the Federal Court of Australia to make within its jurisdiction to assist the liquidators in the exercise of their powers and the discharge of their functions as liquidators appointed pursuant to section 446A(4)(a)(ii) of the Act.
(4) Such further and other orders as the Supreme Court of British Columbia may consider just.'
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY WAD 132 OF 2005
BETWEEN: IN THE MATTER of ss 580(c) and 581(4) of the Corporations Act and IN THE MATTER of FEDERATION GROUP LTD (ACN 007 532 827) (IN LIQUIDATION)
EX PARTE
FEDERATION GROUP LTD (ACN 007 532 827) (IN LIQUIDATION)
FIRST PLAINTIFF
BRYAN KEVIN HUGHES and
VINCENT ANTHONY SMITH AS LIQUIDATORS OF FEDERATION GROUP LTD (IN LIQUIDATION)
SECOND PLAINTIFFS
JUDGE: SIOPIS J
DATE: 3 JUNE 2005
PLACE: PERTH
REASONS FOR JUDGMENT
1 This is an application in which two items of relief are sought. Firstly, the plaintiffs seek declarations that on 30 May 2005 and by resolution of creditors passed under s 445E of the Corporations Act 2001 (Cth) ('the Act') the first plaintiff was wound up, and that by virtue of s 446A(4)(a)(ii) of the Act Bryan Kevin Hughes and Vincent Anthony Smith were appointed as liquidators of the first plaintiff with such powers and functions as conferred on them by the Act. Secondly, the plaintiffs seek an order that the registrar sign, seal and dispatch to the proper officer of the Supreme Court of British Colombia a letter of request in the following terms:
'The Federal Court of Australia hereby requests the Supreme Court of British Columbia to assist this Court by making orders, to the extent the Supreme Court of British Columbia has jurisdiction so to order, as follows:
(1) Orders recognising and giving effect to the declarations made by the Federal Court of Australia on 3 June 2005 as follows:
(a) A declaration that on 30 May 2005, and by a resolution of creditors passed under section 445E of the Corporations Act:
(i) the first plaintiff (Company) was wound up;
(ii) by virtue of section 446A(4)(a)(ii) of the Corporations Act, Bryan Kevin Hughes and Vincent Anthony Smith were appointed as liquidators of the Company, with such powers and functions as conferred on them by the Corporations Act.
(2) Such orders as it would be open to the Federal Court of Australia to make within its jurisdiction applying and giving effect to the statutory provisions set out in the Act or orders applying and giving effect to such comparable Canadian statutory provisions in respect of such protections, entitlements, transactions or dealings as would have had application to the Company had it been made subject to a winding up order or similar order under Canadian insolvency law.
(3) Such orders as it would be open to the Federal Court of Australia to make within its jurisdiction to assist the liquidators in the exercise of their powers and the discharge of their functions as liquidators appointed pursuant to section 446A(4)(a)(ii) of the Act.
Such further and other orders as the Supreme Court of British Columbia may consider just.'
2 I deal firstly with the declarations. The plaintiffs rely upon affidavits of Mr Bryan Kevin Hughes sworn on 24 May 2005, an affidavit of Wayne Cole Zappia also sworn on the same day, and an affidavit of James Edward Scavell sworn on 3 June 2005. On the basis of the evidence which emerges from those affidavits, I am satisfied that the declarations which are sought in par 1 of the relief can be made.
3 I now turn to the second item of relief, which is the application made under s 581(4) of the Act. That subsection reads as follows:
'The Court may request a court of an external Territory or of a country other than Australia, that has jurisdiction in external administration matters to act in aid of, and be auxiliary to, it in an external administration matter.'
4 I need to mention very briefly the factual background of this matter. On 23 October 2003 a secured creditor of the first plaintiff appointed the second plaintiffs as joint and several voluntary administrators of the first plaintiff under s 436C of the Act. On 10 December 2003 the first plaintiff and the second plaintiffs executed a deed of company arrangement by which the second plaintiffs became the joint and several administrators of the deed.
5 During the time in which the first plaintiff was under the deed of company administration, default judgment was obtained against the first plaintiff in Canada in the Supreme Court of British Columbia by a company VRB Power Systems Incorporated ('VRB'). The amount of the judgment was CAD 226,980.86. On 22 February 2005, the second plaintiffs learned that unless the judgment debt was paid within 30 days certain shares in the company VRB belonging to the first plaintiff were to be sold by bailiffs in Canada pursuant to a writ of seizure and sale. The shares comprise a substantial asset of the first plaintiff. There is differing evidence as to the valuation of the shares but on at least one valuation the shares are worth over AUD 4 million.
6 As a consequence of finding out that one of the major assets of the first plaintiff was the subject of potential seizure pursuant to the writ of seizure and sale, the second plaintiffs have instructed Canadian solicitors to bring an application before the Supreme Court of British Columbia to enjoin any further steps being taken in relation to the execution against the shares and also to bring an application for the setting aside of the default judgment. These applications are now pending before the Supreme Court of British Columbia.
7 I might add that prior to the issue of the writ of seizure and sale, the second plaintiffs advised the solicitors acting on behalf of the judgment creditor that under Australian law a moratorium in respect of the enforcement of claims applied where a company was subject to a deed of company arrangement. However, notwithstanding that knowledge, the bailiffs, on the instructions of the judgment creditor, advised the second plaintiffs that they intended to take further steps to execute against the shares in Canada. The shares are subject to escrow conditions and cannot be transferred to any potential transferee without the consent of the Toronto Stock Exchange.
8 I now turn to consider the application made under s 581(4) of the Act in light of those facts. Section 581(4) of the Act provides that this Court may request a foreign Court to 'act in aid of, and be auxiliary to, it in respect of an external administration matter'. An 'external administration matter' is defined in s 580 of the Act relevantly as follows:
'External administration matter means a matter relating to:
(a) winding up, under this Chapter, a company…'
9 The scope of 'an external administration matter' and 'winding up' was considered in the case of Joye v Beach Petroleum NL and anor (1996) 67 FCR 275. In that case, the Full Court per Beaumont and Lehane JJ (at 287) approved the following definition of 'winding up' by McPherson SPJ in the case of Re Crust 'n' Crumb Bakers (Wholesale) Pty Ltd [1992] 2 Qd R 76 at 78:
'…Winding up is a process that consists of collecting assets realising and reducing them to money, dealing with proofs of creditors by admitting or rejecting them and distributing the net proceeds after providing for the costs and expenses to the persons entitled…'
10 The Full Court went on to say (at 287‑288):
'…in our opinion that any step taken by a liquidator in getting in the assets of the corporation is a step taken in winding up; and this is so whether or not the step involves litigation aimed at the recovery of the assets.'
11 I turn now, to consider the question of this Court's power to issue the letter of request in light of the requirement under s 581(4) that the aid of the Supreme Court of British Columbia be sought in relation to 'an external administration matter'. In this regard, I adopt the approach of Barrett J in the case of Re AFG Insurances Ltd (Administrators Appointed) and anor (2002) 43 ACSR 60. In that case declarations were sought in relation to the status of the appointment of an administrator under the Act in conjunction with an application for the issue of a letter of request to the English court. His Honour made those declarations. In reference to those declarations he said (at 61):
'Those declarations…once made will constitute orders of this court attracting in the particular circumstances of this case…a need for the English court to act in its jurisdiction in aid of and to be auxiliary to this court in recognising and giving effect to those orders.'
12 In my view, therefore, it is sufficient to satisfy the requisite part of s 581(4) of the Act that this Court has made the declarations which I have made. I note, however, that the decision of the Full Court in Joye v Beach Petroleum NL (above) recognises that it would not necessarily be required that there be orders or litigation in this Court for this Court to have the power under s 581(4) to issue a letter of request.
13 I turn now to consider whether the Supreme Court of British Columbia has jurisdiction in an external administration matter within the meaning of s 581(4). The Supreme Court of British Columbia has before it a matter in which a judgment creditor of the first plaintiff claims a right to execute against the assets of the first plaintiff. If the judgment creditor was allowed to proceed, this would affect the assets which would be available to the general body of creditors. Under s 471B of the Act the judgment creditor would not be entitled to proceed with enforcement processes in relation to that property except with the leave of a Court and in accordance with such terms if any as the Court imposes.
14 In my view, the process which is pending before the Supreme Court of British Columbia, comprising the competing claims of the judgment creditor and the second plaintiffs, falls within the definition of 'winding up' in that it relates to the getting in of assets, and the protection of the first plaintiff's assets by the second plaintiffs. Therefore, I am satisfied that the Supreme Court of British Columbia has jurisdiction in an external administration matter within the meaning of s 581(4) of the Act. In my view, therefore, the requirements for s 581(4) of the Act have been satisfied and accordingly I will make the orders in par 2 of the application which is before me. I accordingly make orders in terms of pars 1 and 2 of the application before me.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.
Associate:
Dated: 30 June 2005
Counsel for the Plaintiffs: Mr T O Coyle
Solicitor for the Plaintiffs: Phillips Fox
Date of Hearing: 3 June 2005
Date of Judgment: 3 June 2005
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Kim v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 956
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2004/2004fca0956
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2024-09-13T22:51:31.745945+10:00
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FEDERAL COURT OF AUSTRALIA
Kim v Minister for Immigration & Multicultural & Indigenous Affairs
[2004] FCA 956
MIGRATION – regulations ‑ whether ultra vires – whether regulation prescribes a class of visa – distinction between criteria for the grant of a visa and criteria for a valid application – s 48 of the Migration Act 1958 (Cth)
INTERPRETATION – severance– regulation rendered invalid by amending statutory rule – whether amending statutory rule a distinct act of subordinate legislation – whether original regulation stands
Migration Act 1958 (Cth) ss 31, 40, 46, 47, 48; subs 29(1) and subs 504(1)
Migration Regulations 1994 reg 2.12; Sch 2 subcl 832.211
Australian National Airways Proprietary Limited v The Commonwealth (1945) 71 CLR 29 followed
Shanahan v Scott (1957) 96 CLR 245 cited
The Queen v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 cited
MUONG GI KIM v MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS
N 367 of 2004
MYUNG SOO KIM v MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS
N 416 of 2004
BRANSON J
23 JULY 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 367 of 2004
BETWEEN: MUONG GI KIM
APPLICANT
AND: MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS
RESPONDENT
JUDGE: BRANSON J
DATE OF ORDER: 23 JULY 2004
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. It be declared that items [4] and [5] of Schedule 1 of the Migration Amendment Regulations 2001 (No 7) are invalid.
2. An order in the nature of certiorari issue quashing the decision of the respondent that the applicant's application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa is invalid.
3. An order in the nature of mandamus issue requiring the respondent to consider the applicant's application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa.
4. The respondent pay the applicant's costs.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 416 of 2004
BETWEEN: MYUNG SOO KIM
APPLICANT
AND: MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS
RESPONDENT
JUDGE: BRANSON J
DATE OF ORDER: 23 JULY 2004
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. It be declared that items [4] and [5] of Schedule 1 of the Migration Amendment Regulations 2001 (No 7) are invalid.
2. An order in the nature of certiorari issue quashing the decision of the respondent that the applicant's application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa is invalid.
3. An order in the nature of mandamus issue requiring the respondent to consider the applicant's application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa.
4. The respondent pay the applicant's costs.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 367 of 2004
N 416 of 2004
BETWEEN: MUONG GI KIM
APPLICANT
AND: MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS
RESPONDENT
BETWEEN: MYUNG SOO KIM
APPLICANT
AND: MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS
RESPONDENT
JUDGE: BRANSON J
DATE: 23 JULY 2004
PLACE: SYDNEY
REASONS FOR JUDGMENT
introduction
1 These two proceedings call for consideration of the one issue. That issue is the validity of sub‑reg 2.12(2) of the Migration Regulations 1994 ('the Regulations'). The Regulations are made under the Migration Act 1958 (Cth) ('the Act').
2 The applicants in these proceedings each completed and signed a Form 47SV for the purpose of applying for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa. Sub‑regulation 2.12(2) purports to qualify the right of certain non‑citizens in the migration zone to apply for Special Eligibility (Residence) (Class AO) visas by requiring that they meet the requirements of subclause 832.211(3) of Schedule 2 of the Regulations.
3 The forms completed and signed by the applicants respectively were in each case lodged with the Department of Immigration & Multicultural & Indigenous Affairs ('the Department'). In each case the applicant's representative was advised in writing by an officer of the Department that 'the application cannot be considered as it is not a valid application'. The reason for invalidity given in each case was:
'Based on the information that has been provided in your client's application, I am not satisfied that your client meets the requirements of subclause 832.211(3)(c)(iv). Insufficient evidence has been submitted to demonstrate that your client has developed significant ties with the Australian community.
As the application is not valid it cannot be assessed for the grant of a visa. In addition, you should note this is not a decision to refuse a visa and therefore it is not merits‑reviewable.'
4 For the reasons set out below I have concluded that sub-reg 2.12(2) of the Regulations is ultra vires. As the decision‑maker's lack of satisfaction concerning the requirements of subclause 832.211(3) is the only ground on which the decision that the applicants' visa applications are invalid has been sought to be supported, I have further concluded that the applicant in each proceeding is entitled to have his application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa considered by the Minister.
statutory framework
The Migration Act
5 Subsection 29(1) of the Act provides:
'(1) Subject to this Act, the Minister may grant a non-citizen permission, to be known as a visa, to do either or both of the following:
(a) travel to and enter Australia;
(b) remain in Australia.'
6 The classes of visas that may be granted to non‑citizens are governed by s 31 of the Act. Section 31 provides:
'(1) There are to be prescribed classes of visas.
(2) As well as the prescribed classes, there are the classes provided for by sections 32, 33, 34, 35, 36, 37, 37A and 38.
(3) The regulations may prescribe criteria for a visa or visas of a specified class (which, without limiting the generality of this subsection, may be a class provided for by section 32, 36, 37 or 37A but not by section 33, 34, 35 or 38).
(4) The regulations may prescribe whether visas of a class are visas to travel to and enter Australia, or to remain in Australia, or both.
(5) A visa is a visa of a particular class if this Act or the regulations specify that it is a visa of that class.'
7 Section 40 authorises the making of regulations concerning the circumstances in which visas may be granted. Section 40 provides:
'1) The regulations may provide that visas or visas of a specified class may only be granted in specified circumstances.
(2) Without limiting subsection (1), the circumstances may be that, when the person is granted the visa, the person:
(a) is outside Australia; or
(b) is in immigration clearance; or
(c) has been refused immigration clearance and has not subsequently been immigration cleared; or
(d) is in the migration zone and, on last entering Australia:
(i) was immigration cleared; or
(ii) bypassed immigration clearance and had not subsequently been immigration cleared.'
8 Section 46 is concerned with the validity of visa applications. Relevantly s 46 provides:
'(1) Subject to subsections (1A) and (2), an application for a visa is valid if, and only if:
(a) it is for a visa of a class specified in the application; and
(b) it satisfies the criteria and requirements prescribed under this section; and
…
(d) it is not prevented by section 48 (visa refused or cancelled earlier) ….
…
(3) The regulations may prescribe criteria that must be satisfied for an application for a visa of a specified class to be a valid application.
(4) Without limiting subsection (3), the regulations may also prescribe:
(a) the circumstances that must exist for an application for a visa of a specified class to be a valid application; and
….'
9 Section 47 imposes duties on the Minister with respect to valid visa applications. Section 47 provides:
'(1) The Minister is to consider a valid application for a visa.
(2) The requirement to consider an application for a visa continues until:
(a) the application is withdrawn; or
(b) the Minister grants or refuses to grant the visa; or
(c) the further consideration is prevented by section 39 (limiting number of visas) or 84 (suspension of consideration).
(3) To avoid doubt, the Minister is not to consider an application that is not a valid application.
(4) To avoid doubt, a decision by the Minister that an application is not valid and cannot be considered is not a decision to refuse to grant the visa.'
10 Section 48 is of central importance in these proceedings. Each of the applicants fell within its terms at the time that the form by which he sought to apply for a visa was lodged with the Department. The effect of s 48 so far as the applicants are concerned is that, because of their respective visa histories, each of them:
'… may, subject to the regulations, apply for a visa of a class prescribed for the purposes of this section but not for a visa of any other class.'
11 Section 504(1) relevantly provides:
'The Governor‑General may make regulations, not inconsistent with this Act, prescribing all matters which by this Act are required or permitted to be prescribed or which are necessary or convenient to be prescribed for carrying out or giving effect to this Act ….'
The Migration Regulations
12 Regulation 2.12 of the Regulations is the regulation that prescribes classes of visas for the purpose of s 48. Prior to the commencement on 1 July 2000 of the amendments made to the Regulations by Schedule 3 of the Migration Amendment Regulations 2000 (No 2), reg 2.12 did not prescribe the Special Eligibility (Residence) (Class AO) visa for the purposes of s 48 of the Act. By item [3108] of Schedule 3 of the Migration Amendment Regulations 2000 (No 2), which came into operation on 1 July 2000, par 2.12(1)(a) was amended by the substitution of the following:
'(a) Special Eligibility (Residence) (Class AO).'
That is, on 1 July 2000 the Special Eligibility (Residence) (Class AO) visa became a class of visa prescribed for the purposes of s 48 of the Act. The Special Eligibility (Residence) (Class AO) visa has two subclasses; subclass 831 (Prospective Marriage Spouse) and 832 (Close Ties) (see subclause 1115(4) of Schedule 1 of the Regulations).
13 By Schedule 1 to the Migration Amendment Regulations 2001 (No 7) par 2.12(1)(a) was again amended by substitution. The paragraph substituted, which remains operative, is:
'(a) subject to subregulation (2), Special Eligibility (Residence) (Class AO).'
14 Schedule 1 of the Migration Amendment Regulations 2001 (No 7) also inserted sub‑reg 2.12(2) into the regulations. Subregulation 2.12(2) provides:
'Paragraph (1)(a) applies to a person if he or she meets the requirements of subclause 832.211(3) of Schedule 2.'
15 Subclause 832.211(3) of Schedule 2 to the Regulations prescribes one of two alternative criteria to be satisfied by an applicant for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa at the time of application. It is convenient to set out Clause 832.211 in its entirety:
'(1) The applicant meets the requirements of subclause (2) or (3).
(2) An applicant meets the requirements of this subclause if the applicant:
(a) is the holder of a substantive visa, other than a Subclass 771 (Transit) visa; or
(b) is not the holder of a substantive visa, and immediately before ceasing to hold a substantive visa, was not the holder of a Subclass 771 (Transit) visa.
(3) An applicant meets the requirements of this subclause if:
(a) the applicant:
(i) is a person who:
(A) was in Australia on 1 September 1994; and
(B) was, immediately before 1 September 1994, a person to whom section 37 of the Act as in force immediately before that date applied; and
(C) has not been granted a substantive visa on or after 1 September 1994; or
(ii) is a person to whom section 48 of the Act applies; and
(b) the applicant has not been refused a visa or had a visa cancelled under section 501 of the Act; and
(c) the applicant:
(i) first entered Australia before the applicant turned 18; and
(ii) has never held either of the following:
(A) a student visa;
(B) an entry permit, or a transitional (temporary) visa within the meaning of the Migration Reform (Transitional Provisions) Regulations, for the purposes of a course of study; and
(iii) has turned 18; and
(iv) before turning 18, spent the greater part of the period that the Minister regards as the applicant's formative years in Australia; and
(v) ceased to hold an entry permit or a substantive visa before turning 18; and
(vi) immediately before ceasing to hold a substantive visa, did not hold a Subclass 771 (Transit) visa.'
consideration
16 As mentioned above, s 48 of the Act restricts the classes of visa for which certain non‑citizens in the migration zone can apply; they may only apply for a visa of a class prescribed for the purposes of the section. However, s 48 gives them an entitlement, subject to the regulations, to apply for a visa of a class prescribed for the purposes of the section.
17 The changes to reg 2.12 of the Regulations outlined above can be summarised in the following way. On 1 July 2000 a Special Eligibility (Residence) (Class AO) visa became a class of visa prescribed for the purposes of s 48. However, upon the coming into operation of Schedule 1 to the Migration Amendment Regulations 2001 (No 7) on 1 November 2001, the right to apply under s 48 for a Special Eligibility (Residence) (Class AO) visa became qualified by sub‑reg 2.12(2). Thereafter regulation 2.12 had the effect that a non‑citizen to whom s 48 applied could only apply for a Special Eligibility (Residence) (Class AO) visa if he or she met the requirements of subclause 832.211(3) of the Regulations. Subclause 832.211(3) of the Regulations in terms prescribes one of two alternative primary criteria that an applicant for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa must satisfy at the time of making his or her application.
18 The effects of requiring a non‑citizen to whom s 48 applies to meet the requirements of subclause 832.211(3) of the Regulations before he or she can apply for a Special Eligibility (Residence) (Class AO) visa appear to be at least the following. First, even if he or she is applying for a subclass 831 (Prospective Marriage Spouse) visa, he or she is required to meet a criterion prescribed as one of two alternative criteria to be satisfied at the time of an application for a subclass 832 (Close Ties) visa. Secondly, if he or she applies for a subclass 832 (Close Ties) visa, subclause 832.211(1), which requires an applicant for a subclass 832 (Close Ties) visa to meet the requirements of either subclause (2) or (3), is effectively rendered otiose. A non‑citizen to whom s 48 applies who applies for a subclass 832 (Close Ties) visa must meet the requirements of subclause (3) at the time of application. Thirdly, a decision as to whether he or she meets the requirements of subclause 832.211(3) is rendered immune from review by the Migration Review Tribunal. This last effect flows from the fact that regulation 2.12(2) renders a decision on this question necessary to a determination of the validity of the application. A decision, made for the purposes of determining the validity of an application for a visa, that an applicant does not meet the requirements of subclause 832.211(3) is not a decision to refuse to grant the visa (see s 47(4)). A decision to refuse to grant a visa is ordinarily open to merits review; a decision that an application for a visa is not a valid application is not open to merits review (Part 5 of the Act).
19 The critical issue to be determined in these proceedings is whether the Act discloses an intention to authorise the making of a regulation that has the above effects.
20 The Act would disclose the above intention if the general powers to make regulations under the Act, properly construed, authorised the making of sub‑reg 2.12(2). On that basis, the entitlement given to a non‑citizen in the migration zone by s 48(1), which is an entitlement subject to the regulations, would be an entitlement subject to sub-reg 2.12(2). Alternatively, the Act would disclose such an intention if the power to prescribe a class of visa for the purposes of s 48 necessarily involves the power to impose a qualification on the entitlement to apply for a visa of a particular class of the type sought to be imposed by sub‑reg 2.12(2).
21 I turn first to consider the general regulation‑making powers contained in the Act. These powers reflect a distinction between:
(a) criteria for a visa or visas of a specified class (see subs 31(3));
(b) criteria that must be satisfied for an application for a visa of a specified class to be a valid application (see subs 46(3)); and
(c) circumstances that must exist for an application for a visa of a specified class to be a valid application (see par 46(4)(a)).
22 Section 31 of the Act, which is set out in [6] above, is concerned with classes of visas. Subsection 31(3) authorises the making of regulations that 'prescribe criteria for a visa or visas of a specified class'. It is not necessary for me to reach a view on whether subs 31(3) discloses an intention to authorise criteria that would apply in respect of some, but not all, applicants for a particular visa. The language of subs 31(3) is not apt to authorise the making of regulations that prescribe criteria that must be satisfied for an application for a visa of a specified class to be a valid application. Subsection 31(3) authorises the making of regulations that prescribe criteria that must be satisfied before a visa of a specified class may be granted pursuant to a valid application for that class of visa.
23 Subsection 40(1) of the Act authorises the making of regulations that provide that visas, or visas of a specified class, may only be granted in specified circumstances. Examples of the circumstances that may be specified under subs 40(1) are given by subs 40(2) (see [7] above). Again, it is not necessary for me to reach a concluded view as to whether subs 40(1) discloses an intention to authorise the making of regulations that specify circumstances in which a visa of a specified class may be granted to some, but not all, applicants for the visa. The language of subs 40(1) is not apt to authorise the making of regulations concerning the circumstances that must exist for an application for a visa of a specified class to be a valid application.
24 Subsection 46(3) authorises the making of regulations that 'prescribe criteria that must be satisfied for an application for a visa of a specified class to be a valid application'. As is mentioned in [17] above, subclause 832.211(3) in terms prescribes a criterion that an applicant for a subclass 832 (Close Ties) visa must satisfy before he or she is entitled to a visa of that subclass. Subclause 832.211(3) is not in terms concerned with the validity of a visa application. Subsection 46(3) does not, in my view, disclose an intention to authorise the making of a regulation that ignores the distinction recognised by the Act between criteria to be satisfied by a visa applicant and criteria to be satisfied by a visa application. One effect of sub‑reg 2.12(2) is to transmogrify a criterion to be satisfied by a visa applicant into a criterion to be satisfied by a visa application. The validity of a regulation having this effect cannot, in my view, be sustained by reference to subsection 46(3).
25 That none of the above provisions is intended to authorise the making of a regulation such as sub‑reg 2.12(2) is confirmed, it seems to me, by s 47 of the Act (see [9] above). Section 47 is drawn on the premise that the Minister can and must make a decision as to the validity of an application for a visa. If the Minister's decision is that the application is not valid, the Minster is not to consider the application. If the Minister's decision is that the application is valid, the Minister must consider the application.
26 The distinction drawn by s 47 between the Minister's deciding that an application is not valid and the Minister's duty to consider a valid application suggests that the decision that must be made concerning the validity of an application is intended to be a decision capable of being made without consideration being given to the content of the visa application. Subsection 46(1) reveals the types of criteria that the legislature intended to affect the validity of an application – eg that it is an application for a visa of a class specified in the application; that the visa application charge has been paid; that any fees payable have been paid. These are criteria that call for evaluation against objective standards, not the formation of judgments.
27 The requirement that a person meet the requirements of subclause 832.211(3) of Schedule 2 of the Regulations calls for consideration of whether the applicant:
'before turning 18, spent the greater part of the period that the Minister regards as the applicant's formative years in Australia'.
A determination that an applicant did not spend 'the greater part of the period that the Minister regards as the applicant's formative years in Australia' calls for consideration of the content of the applicant's visa application. Additionally it calls for the making of a judgment by the Minister concerning an issue of some complexity personal to the visa applicant.
28 That the legislature did not intend a decision as to the validity of a visa application to require the making of a judgment of the above kind is, in my view, also confirmed by the provisions of Part 5 of the Act. Part 5 is concerned with review of decisions made under the Act. In broad terms it provides for a procedure of merits review of decisions to refuse to grant non‑citizens visas. It does not provide for merits review of decisions that applications for visas are not valid applications. This may, in my view, be assumed to be because there is no need for merits review of a decision required to be made by reference to objective standards. The decision is either correct or incorrect. If the decision‑maker misapprehends what is required by the standard, judicial review is available to correct his or her error.
29 I further conclude that sub‑reg 2.12(2) is not authorised by s 504 of the Act. For the above reasons, it does not prescribe a matter capable of being regarded as 'necessary or convenient to be prescribed for carrying out or giving effect to [the] Act' within the meaning of s 504.
30 I reject the contention that the making of sub‑reg 2.12(2) was authorised by any of the general regulation making powers contained in the Act.
31 The contention that the power to prescribe a class of visa for the purposes of s 48 necessarily involves the power to impose a qualification on the entitlement to apply for a visa of that class must, in my view, also be rejected. The power to prescribe a class of visa for the purposes of s 48 is a power to designate a class of visa for the purposes of s 48. It is not a power to determine criteria that must be satisfied for an application for a visa of that class, made by a non‑citizen in the migration zone who satisfies pars (a) and (b) of subs 48(1), to be a valid application. This conclusion is, in my view, compelled by the ordinary meaning of the language of subs 48(1), including the ordinary meaning of the word 'prescribe', and by the content of Subdivision AA of Division 3 of Part 2 of the Act (see [24]-[26] above).
32 I conclude that sub‑reg 2.12(2) is not a regulation that the Act authorised the Governor‑General to make. Being ultra vires it is invalid (Shanahan v Scott (1957) 96 CLR 245 at 250; The Queen v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170).
severance
33 It was contended by the Minister that sub‑reg 2.12(2) is not severable from regulation 2.12 and that a decision that sub‑reg 2.12(2) is invalid must have the result that par (a) of sub‑reg 2.12(1) is invalid. If par 2.12(1)(a) is invalid, the applicants had no entitlement to apply for Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visas.
34 It seems to me that the appropriate approach when it is the validity of an amendment of a provision that is in issue, is that adopted by Dixon J in Australian National Airways Proprietary Limited v The Commonwealth (1945) 71 CLR 29 at 95-96. Dixon J in that case adopted the approach that a Statutory Rule that purported to amend the Air Navigation Regulations was a distinct act of subordinate legislation and its validity was to be considered by what it affected to do. His Honour concluded that the Statutory Rule intended to achieve a purpose that would bring the regulation that it purported to amend into conflict with s 92 of the Constitution. At 96 he observed:
'That seems to me to mean that pro tanto the adoption of Statutory Rules 1940 No 25 was invalid and reg 79 stands in its original form; that is as it was in 1939. There was no intention to repeal former sub‑reg (3) independently of the adoption of the new sub‑reg (3). The invalidity of the new sub‑regulation, therefore, involves the consequence that the old sub‑reg (3) stands.'
35 I do not consider that the Migration Amendment Regulations 2001 (No 7) disclose an intention that, without the limitation intended to be imposed by the new sub‑reg 2.12(2), the class of visa known as Special Eligibility (Residence) (Class AO) should not be a prescribed class for the purposes of s 48. In my view, the invalidity of items [4] and [5] of Schedule 1 of the Migration Amendment Regulations 2001 (No 7) means that par (a) of sub‑reg 2.12(1) continues to prescribe the class of visa known as Special Eligibility (Residence) (Class AO) without qualification.
conclusion
36 In my view, the appropriate orders to be made in each case are as follows:
1. It be declared that items [4] and [5] of Schedule 1 of the Migration Amendment Regulations 2001 (No 7) are invalid.
2. An order in the nature of certiorari issue quashing the decision of the respondent that the applicant's application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa is invalid.
3. An order in the nature of mandamus issue requiring the respondent to consider the applicant's application for a Special Eligibility (Residence) (Class AO) subclass 832 (Close Ties) visa.
4. The respondent to pay the applicant's costs.
I certify that the preceding thirty‑six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.
Associate:
Dated: 23 July 2004
Counsel for the Applicants: C Jackson
Solicitor for the Applicants: Christopher Levingston & Associates
Counsel for the Respondent: G Kennett
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 1 July 2004
Date of Judgment: 23 July 2004
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Re: Maas, Nicholas Christopher & Ex Parte: Maas, Jill Elizabeth v Brien, Richard Campbell & Ors [1997] FCA 625
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1997/1997fca0625
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2024-09-13T22:51:32.002211+10:00
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FEDERAL COURT OF AUSTRALIA
BANKRUPTCY - application by wife for annulment of husband's bankruptcy consequent upon the acceptance of a debtor's petition - property proceedings pending in Family Court - transfer of annulment application to Family Court.
Bankruptcy Act 1966, ss 35A, 153B.
RE: NICHOLAS CHRISTOPHER MAAS
EX PARTE: JILL ELIZABETH MAAS v RICHARD CAMPBELL BRIEN & ORS
No. NG 7422 of 1997
JUDGE: WHITLAM J
PLACE: SYDNEY
DATE: 17 JULY 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 7422 of 1997
)
GENERAL DIVISION )
RE: NICHOLAS CHRISTOPHER MAAS
BETWEEN: Bankrupt
JILL ELIZABETH MAAS
Applicant
AND: RICHARD CAMPBELL BRIEN & ORS
Respondents
JUDGE: WHITLAM J
PLACE: SYDNEY
DATE: 17 JULY 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
1. This proceeding be transferred to the Family Court of Australia.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 7422 of 1997
)
GENERAL DIVISION )
RE: NICHOLAS CHRISTOPHER MAAS
BETWEEN: Bankrupt
JILL ELIZABETH MAAS
Applicant
AND: RICHARD CAMPBELL BRIEN & ORS
Respondents
JUDGE: WHITLAM J
PLACE: SYDNEY
DATE: 17 JULY 1997
REASONS FOR JUDGMENT
This is an application under s 35A of the Bankruptcy Act 1966 ("the Act") to transfer a proceeding pending in this Court to the Family Court. The proceeding in question is an application made by a wife under s 153B of the Act for an order annulling her husband's bankruptcy. The husband became bankrupt upon the acceptance of a debtor's petition.
Family Court Proceedings
The applicant, Jill Elizabeth Maas, and the bankrupt, Nicholas Christopher Maas, were married on 14 August 1976. They separated on 31 August 1993.
In December 1995 the bankrupt resigned from his employment as managing director of Upjohn Pty Ltd. On 22 February 1996 the applicant commenced proceedings against the bankrupt in the Family Court seeking property orders under s 79 of the Family Law Act 1975. An interim order was made by consent in those proceedings on 18 April 1996, restraining the bankrupt from disposing of the sum of $100,000 in a specified bank account.
On 18 April 1996 the bankrupt also produced to the Family Court a deed purporting to have been made that very day between the bankrupt and a company called K.D. Sales Force Specialists Pty Ltd ("K.D. Sales Force"). This deed acknowledges that the bankrupt lent the sum of $126,000 to K.D. Sales Force on 18 December 1995 and provides that the "loan shall be repayable ... upon the expiration of ten years from the date of this agreement". The bankrupt's defacto spouse, Krishna Devi Bassi is the sole director of K.D. Sales Force.
The applicant applied to the Family Court on 30 July 1996 for an order that the bankrupt sign an authority required by her solicitors "to obtain information as to the benefits to which the [bankrupt] is entitled in the Upjohn Foreign Service Employee Pension Plan and in relation to stock options held by the [bankrupt] in Pharmacia & Upjohn Inc. or any associated company". On 5 September 1996 the Family Court made that order on terms that, in the event that the bankrupt refused or failed to sign such authority, it may be signed on his behalf by a Registrar of the Family Court at Sydney. The bankrupt failed to sign an authority, which was in due course signed by a Registrar on 24 October 1996. The authority is not in evidence, but the applicant's solicitors evidently forwarded such a document on 1 November 1996 to a Mr Mark Durham. On 20 November 1996 Pharmacia & Upjohn Asia Ltd's chief legal counsel wrote from Hong Kong to the applicant's solicitors, declining to disclose the requested information "without either a direction from Mr Maas or a court order enforceable in the location of the information".
Meanwhile, on 19 November 1996 the bankrupt filed in the Family Court proceedings his statement of financial circumstances. An attachment to that statement set out details of his retirement package, his sale of stock options and his superannuation rights. It stated that the bankrupt had received a termination package for a net amount of $359,000 in December 1995. It further stated that he had obtained $208,397.27 as the result of the exercise of various stock options on 18 December 1995 and that he had invested $US156,000 of the proceeds in redeemable preference shares of a Western Samoan company called DDD Management Ltd. The statement claimed that these shares had been redeemed for the sum of $US156 and that the bankrupt had incurred a tax liability of approximately $110,113 as a result of the exercise of the stock options. The bankrupt disclosed a benefit under the Upjohn Foreign Service Employees Pension Plan, the value of which was said not to be currently ascertainable but which was estimated to be worth $US12,000 per annum from the age of fifty-five.
The Family Court made further interim orders on 28 November 1996. The earlier order restraining disposition of funds in the specified bank account was varied to permit the payment of mortgage instalments on the jointly-owned residential property occupied by the applicant and the payment of a costs order made in favour of the applicant. Fresh orders were made restraining the bankrupt from disposing of any assets or funds (save for an amount of $3,500 per month) or from expending any moneys on a boat owned by K.D. Sales Force, and requiring that any payments in reduction of the loan made to K.D. Sales Force be held in a bank account nominated by the applicant.
On 17 March 1997 the applicant filed in the Family Court an amended application for final orders. In addition to the property orders under s 79 of the Family Law Act, the application seeks orders under s 85 of that Act setting aside the disposition of a boat to K.D. Sales Force and of a motor vehicle to Ms Bassi. Also on 17 March 1997 the applicant's solicitors received a notice from the bankrupt's solicitor that he had ceased to represent the bankrupt in the Family Court proceedings.
The Husband's Bankruptcy
The bankrupt completed his statement of affairs on 17 March 1997 and filed it with the Official Receiver on 18 March 1997. The debtor's petition is not in evidence but, as I have mentioned, it was accepted on 20 March 1997. Nor is there evidence of the date upon which Richard Brien, the trustee of the bankrupt's estate, signed a consent to act.
The bankrupt's former solicitor now acts for Mr Brien. On 27 March 1997 he faxed to the applicant's solicitors a copy of Mr Brien's application for leave to intervene in the Family Court proceedings. The Family Court made an order on 1 April 1997 giving Mr Brien leave to intervene.
On 8 April 1997 the applicant's solicitors received from Mr Brien's solicitor a copy of the bankrupt's statement of affairs. This led to the applicant filing an application for annulment in this Court on 17 April 1997. Her affidavit in support deposed to the course of proceedings in the Family Court which I have set out above. She also relies on certain particulars set out in the bankrupt's statement of affairs.
In Part A of his statement, the bankrupt listed amongst his assets the sum owed to him by K.D. Sales Force as only $71,000; yet, on the liabilities side, he described K.D. Sales Force and Ms Bassi as unsecured creditors in respect of, respectively, a loan of $22,000 in May 1996 and a loan of $20,000 between December 1996 and March 1997. In Part B of the statement, the bankrupt disclosed in his income details that he had the use of a motor vehicle owned by Ms Bassi and that K.D. Sales Force (by whom he was not employed) made a superannuation contribution for his benefit. Also in Part B the bankrupt stated that he was the appointor of a trust called The Lime Street Trust which had been established for less than twelve months and which had assets with a market value of $50,000. Under the details of his financial position the bankrupt stated that he had disposed of a motor vehicle to Ms Bassi in January 1996 for a sum of $45,000. (This would appear to be one of the dispositions challenged in the application filed in the Family Court on 17 March 1997.)
The application for annulment specifies the grounds on which it is made as follows:
"(a) that the presentation of the debtor's petition by Nicholas Christopher Maas constituted an abuse of process having regard to the proceedings which had been instituted in the Family Court of Australia at Sydney (No. SY3109/96) by his wife Jill Elizabeth Maas for property orders;
(b the debtor's petition should not have been accepted by ITSA as the Statement of Affairs filed by Nicholas Christopher Maas was not adequate to disclose that he was unable to pay his debts as they fell due."
It may be noted that the bankrupt's statement of affairs shows assets exceeding liabilities in value. However, the bankrupt lists first among what he believes to be the causes of his bankruptcy the orders made by the Family Court "restraining use of my funds".
Mr Brien opposes the transfer of the annulment application to the Family Court. He has filed a report dated 26 May 1997 in accordance with r 57(3) of the Bankruptcy Rules. This report attaches a copy of Mr Brien's report to creditors dated 13 May 1997 which was evidently sent with the notice of a creditors' meeting to be held on 22 May 1997. In the report to creditors Mr Brien acknowledged that his investigation had been greatly assisted by the Family Court proceedings.
It is apparent that Mr Brien is still in the early stages of ascertaining the bankrupt's assets and liabilities. Already, however, it seems that he has received counsel's advice that the transfer of the motor vehicle to Ms Bassi and the loan to K.D. Sales Force are void against him under the Act. Mr Brien says that the transaction in the Western Samoan shares requires further investigation, as do (inter alia) the interests in the Upjohn Foreign Service Employees Pension Fund (which appears to be administered in Guernsey) and the Lime Street Trust.
Counsel for the applicant draw attention to the approach normally taken by the Family Court in the exercise of its discretion in proceedings under s 79 of the Family Law Act, especially the so-called "section 75(2) factors". These will include the bankrupt's "income, property and financial resources" and "eligibility ... for a pension ... under any superannuation fund". So too the transactions that may be void against the bankrupt's trustee are already or may be made the subject of challenge under s 85 of the Family Law Act. Thus there are, it is said, issues and factual matters common to the proceedings on foot in both courts. In particular, counsel say (without contradiction by their opponents) that a great many subpoenas have been issued already in the Family Court for the purpose of ascertaining the bankrupt's assets.
On the other hand, counsel for Mr Brien emphasize the discrete nature of the application for annulment. Such an application must be determined before property orders can be made by the Family Court. The question for determination will then be, it is said, not whether the bankrupt's assests exceeded his liabilities at the time he presented his petition, but whether he was at that time able to meet his debts as they fell due.
Mr Brien's counsel also foreshadow the necessity for ongoing applications under the Act, which would have to be made to this Court. But this submission begs the question whether the bankruptcy is to continue.
This is not a case, such as Re Sabri; Ex parte Sabri v Brien (1995) 60 FCR 131, where there is a possibility of conflict between orders made by this Court and the Family Court. Decisions on other applications under s 35A of the Act are, in any event, of limited usefulness. As Lindgren J observed in Re Sharpe; Ex parte Powell v Donnelly (unreported, 17 October 1996 at p 15), "... s 35A confers a discretion, and, in the context of discretionary assessments, no two cases are identical".
However, in the present case, like Lindgren J in Sharpe, considerations of efficiency and economy of judicial administration persuade me that the case is an appropriate one for transfer. I need not repeat what Lindgren J said (at pp 19-20) about such considerations many of which, I think, apply too in the present case. I would only add to those considerations the advantage of having one court (or better still, one judge) control the use that may be made in one set of proceedings of information or documents that are required to be disclosed in another set of proceedings: Harman v Secretary of State for Home Dept [1983] 1 AC 280, Crest Homes PLC v Marks [1987] AC 829; and Springfield Nominees Pty Ltd v Bridgeland Securities Ltd (1992) 38 FCR 217. In the present case there will be a substantial overlap with the issues in the Family Court proceedings, particularly in relation to the bankrupt's cash resources and liquidity when he presented the debtor's petition.
I will make an order that this proceeding be transferred to the Family Court. I have not been asked to make an order as to costs.
I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam
Associate:
Dated: 17 July 1997
Counsel for the Applicant: P.I. Rose QC and A.A. Robins
Solicitors for the Applicant: Farmer Campbell Edmunds
Counsel for the Trustee: M.D. Broun QC and J.T. Johnson
Solicitor for the Trustee: Ross Koffel
Date of Hearin 27 May 1997
Date of Judgment: 17 July 1997
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federal_court_of_australia:fca/single/2020/2020fca1838
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decision
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2020-12-18 00:00:00
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Gill v Ethicon Sarl (No 9) [2020] FCA 1838
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca1838
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2024-09-13T22:51:32.653508+10:00
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Federal Court of Australia
Gill v Ethicon Sárl (No 9) [2020] FCA 1838
File number: NSD 1590 of 2012
Judgment of: KATZMANN J
Date of judgment: 18 December 2020
Catchwords: PRACTICE AND PROCEDURE — application for stay of lump sum costs order pending appeal
Cases cited: Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685
Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 30 FCR 548
Flight Centre Limited v Australian Competition & Consumer Commission [2014] FCA 658
Gill v Ethicon Sárl (No 8) [2020] FCA 771
Henderson v Amadio Pty Ltd (1996) 65 FCR 66
Fair Work Ombudsman v Priority Matters Ltd [2016] FCA 1415
Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Number of paragraphs: 12
Date of hearing: 18 December 2020
Counsel for the Applicants: Mr AJL Bannon SC with Ms Z Hillman
Solicitor for the Applicants: Shine Lawyers
Counsel for the Respondents: Mr DTW Wong
Solicitor for the Respondents: Clayton Utz
ORDERS
NSD 1590 of 2012
BETWEEN: KATHRYN GILL
First Applicant
DIANE DAWSON
Second Applicant
ANN SANDERS
Third Applicant
AND: ETHICON SÁRL
First Respondent
ETHICON, INC.
Second Respondent
JOHNSON & JOHNSON MEDICAL PTY LIMITED (ACN 000 160 400)
Third Respondent
order made by: KATZMANN J
DATE OF ORDER: 18 DECEMBER 2020
THE COURT ORDERS THAT:
1. The respondents' interlocutory application filed on 17 December 2020 be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from transcript)
KATZMANN J:
1 On 21 November 2019 I delivered judgment in this long-running matter and on 3 March 2020 I made orders in the applicants' favour. Order 5 of those orders was that the respondents pay the applicants' costs. On 25 May 2020 I ordered that the costs be fixed in a lump sum and directed the Registrar to determine the amount of the lump sum. On 25 November 2020 the Registrar issued a determination, ordering that the costs be paid in a certain sum and that the amount be paid within 28 days. An appeal from my original orders is pending and due to be heard in February. On 17 December 2020 the respondents applied for a stay of the Registrar's orders pending the disposition of the appeal. In the alternative, the respondents sought an order that the costs be paid into and then held in escrow (to abide the outcome of the appeal) in an interest-bearing account under the joint management of the parties' legal representatives.
2 The application was supported by an affidavit of Colin Loveday, a partner of Clayton Utz and the solicitor on the record for the respondents in the proceeding. Mr Loveday's affidavit recited the history of the costs questions, the fact of the appeal and referred to some of the remarks by the Chief Justice at a case management hearing on the appeal, indicating the approach the Court would take to its disposition.
3 Annexed to the affidavit was correspondence between the parties relating to a proposal by Clayton Utz in the terms the subject of the alternative order sought in the interlocutory application; a proposal that Shine Lawyers, the applicants' solicitors, refused to accept.
4 Shine opposes the interlocutory application. While I was initially attracted to the alternative order, having heard the submissions advanced by Mr Bannon SC, who appeared with Ms Hillman for the applicants, I am persuaded the application should be refused.
5 The principles applying to an application of this kind are well known. I referred to them in Gill v Ethicon Sárl (No 8) [2020] FCA 771 at [48]–[51]:
First, while special circumstances are not required and the Court has a broad discretion, the judgment is not to be treated as provisional. The Court starts with the premise that the successful party is entitled to its benefit and to the presumption that it is correct. Consequently, an applicant for a stay carries the burden of establishing that a stay is appropriate. See, for example, Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 (CA) at 693–695; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 (FC) at 66 (Burchett J).
Second, the burden is not discharged merely by the filing of an appeal or an application for leave to appeal: Alexander at 694.
Third, a stay should not be granted unless the appeal is at least arguable, but "the existence of an arguable case on appeal does not of itself justify the granting of a stay": Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Limited t/as Sydneywide Bottlers Australia [2001] FCA 1750 at [6] (Hely J).
Fourth, in the exercise of the discretion, the Court will weigh up such factors as the balance of convenience and the competing rights of the parties, including, in particular, whether prejudice will be caused by the grant or the withholding of a stay. If there is a risk that the appeal would be rendered nugatory if a stay is not granted in the event that an appeal is successful, this will be a substantial factor in favour of granting a stay. See Alexander at 693–695; Phillip Morris (Australia) Pty Ltd v Nixon [1999] FCA 1281 (FC) at [17].
6 On this application, Mr Wong, who appeared for the respondents, referred to a similar summary by Rangiah J in Flight Centre Limited v Australian Competition & Consumer Commission [2014] FCA 658 at [9] reproduced by O'Bryan J in Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351 at [48]. O'Bryan J went on to point out at [50] that the principles in Alexander, to which I referred earlier, have been applied to costs orders, citing Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 30 FCR 548 at 552; Henderson v Amadio Pty Ltd (1996) 65 FCR 66 at 68; Fair Work Ombudsman v Priority Matters Ltd [2016] FCA 1415 at [27]–[28]. Mr Wong accepted that his clients bore the burden of demonstrating that there is a proper basis for a stay. He also accepted that the starting presumption was that the judgment appealed from is correct. He emphasised that there is no need for an applicant for a stay to demonstrate special or exceptional circumstances and that it was enough that the applicant demonstrate a reason or an appropriate case to warrant the exercise of the discretion in its favour.
7 The difficulty for the respondents is that they have not discharged the burden of demonstrating that there is a proper basis for a stay or that, in the particular circumstances of this case, the alternative order should be made.
8 First, no attempt was made to persuade the Court that the appeal was arguable. The notice of appeal was not even placed before me.
9 Second, the only ground advanced by the respondents was that there was a real risk of dissipation based on the fact that Shine, who represented the applicants on a no-win no-fee basis, had obtained a "disbursement funding facility" in the form of a loan, and it was submitted that, if the loan were repaid, there is a risk that the respondents would not be able to recover some or all of the funds. But this was little more than speculation. The respondents adduced no evidence to suggest that Shine was not in a position to repay the costs in the event that the orders in the applicants' favour were set aside on appeal.
10 Third, given the current financial situation, where interest rates are so low as to be virtually negligible, placing the monies in an interest-bearing deposit account would not alleviate the prejudice to Shine.
11 Fourth, there was some delay in approaching the Court which was wholly unexplained.
12 It follows that the interlocutory application should be dismissed with costs.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann.
Associate:
Dated: 21 December 2020
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federal_court_of_australia:fca/single/1995/1995fca1171
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1995-11-10 00:00:00
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Re Hegarty, John Lawrence Ex Parte Deputy Commissioner of Taxation & Anor [1995] FCA 1171
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1995/1995fca1171
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2024-09-13T22:51:33.186042+10:00
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IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF THE ) No. NX98 of 1995
STATE OF NEW SOUTH WALES )
RE: JOHN LAWRENCE HEGARTY
Debtor
EX PARTE: DEPUTY COMMISSIONER OF TAXATION
Applicant
WILLIAM EDWARD ANDREW
Respondent
CORAM: HILL J
PLACE: SYDNEY
DATED: 10 NOVEMBER 1995
REASONS FOR JUDGMENT
Before the Court is an application brought by the Deputy Commissioner of Taxation pursuant to s239 of the Bankruptcy Act 1966 (Cth) to set aside a composition under Part X of that Act between the debtor, Mr Hegarty, and his creditors, as a result of the special resolution passed at a meeting of creditors held on 11 July 1995. The creditors, who have lodged proofs of debt, total $32,141,602.00. Of that amount the most significant creditor is a Mr Knox who is proved in the amount of $30,861,565.00. The next largest creditor is the Deputy Commissioner, claiming a debt of $1,224,412.00.
Pursuant to directors made prior to the hearing before me, the parties were required to file and serve upon each other outlines of submissions. The outline of
submissions filed on behalf of the Deputy Commissioner alluded to the minimal sum available as a dividend as a result of the composition, that composition proceeding on the basis that there would be a distribution to creditors of the assets held by the trustee estimated as being $446,498.00, together with a sum of $100,000 which was to be advanced under the composition by the debtor's sister, Mrs Sheil. The submissions in para5 referred to the need for further investigation and explanation. They did not stipulate into what investigation would be conducted or to what end an explanation was indicated.
The document is open to the construction that the matters which the Commissioner suggested should be investigated were the matters set out in paras1 to 4. It could equally refer to the matters set out in para6. In that paragraph there is a reference to two matters. The first is that Mrs Sheil, who is advancing the sum of $100,000 under the composition, is a creditor in the sum of $18,000 and will receive in consequence a dividend under the composition of $288.
Most of the moneys available under the composition clearly will go to Mr Knox. Indeed, if the funds stay as presently contemplated, Mr Knox will receive a distribution of $493,785. Reference is also made in para6 to the fact that there had been an assignment which brought about the result that Mr Knox was the most substantial creditor. That fact on its own is of no particular significance. There are, however, two additional matters at least which at the present moment appear somewhat unexplained.
First, Mr Knox acquired the indebtedness by payment of a sum of approximately $50,000, being the present value of amounts which the debtor had agreed to pay over time in composition of the Tricontinental debt. A consequence of the payment of $100,000 under the composition is that for an outlay of $50,000 Mr Knox will receive $493,785. Second, under the arrangement with Tricontinental, the ability of Mr Hegarty to pay by instalments depended upon his compliance with a timetable. For Mr Knox to prove in the estate in the amount he does, it must follow that that timetable arose the day before or two days before the assignment the negotiations were being conducted.
With Tricontinental, it is possible there is no evidence on the matter that the default has occurred subsequently. Mr Knox is a professional man, he is an accountant and apparently a friend of long standing of Mr Hegarty. Mr Knox was subpoenaed, inter alia, to produce bank records of the payment he made of $50,000. He produced no document in answer to the subpoena. There may well be a question, indeed it is suggested by counsel for Mr Hegarty that there is, as to whether the subpoena is wide enough to cover the manner in which the payment was in fact made. For example, it was said the payment may have been made out of a savings account and it is possible that the subpoena would not be wide enough to encompass production of the savings bank book.
In the course of the hearing I raised in discussion with counsel for the Deputy Commissioner, and later in argument with both counsel, what I saw to be the difficulty in the way of Mr Hegarty's case and the strongest point on the part of the Commissioner's case. Namely, that the transaction between Tricontinental and Mr Knox is one that in the circumstances appears to call for further investigation in a public examination because, as the evidence stands at the moment, there is a possibility that Mr Knox was not the person who actually acquired the debt by way of assignment. This possibility, as the evidence presently stands, was reinforced by two things. First, by Mr Knox's failure to produce documents on subpoena and second, by correspondence produced from the file of Tricontinental which indicated that the assignment had been directed by Mr Hegarty and that Mr Hegarty had at various times nominated as assignee his sister, Mrs Sheil, "a nominee company" and Mr Knox.
In the course of submissions, counsel for Mr Hegarty sought an adjournment to enable him to call evidence from Mr Hegarty, who had not given evidence previously, and from Mr Knox. The application for adjournment obviously is also an application for leave to re-open the case on the part of Mr Hegarty. Ordinarily, I take the view that once evidence is completed the case is closed and it is generally inappropriate for leave to be given to re-open a case. There must be finality of litigation. There are, however, occasions where justice may well require that leave be given to re-open a case.
Once such case is where the party has been taken by surprise and was unaware that a particular issue was to be raised until very late in the case. Counsel for Mr Hegarty says that the present is such a case. He points out, and it is an important matter to take into account, that Mr Hegarty is a solicitor and the impact of a sequestration order which would follow if the case were to go adversely to him could work considerable harm to him. I must say I think that I would have expected counsel of the experience of Mr Hegarty's counsel to have grasped the significance of the issue at a stage earlier than it was raised, but I accept his statement that he was taken by surprise by the issue. That being the case it seems to me that an injustice could be done to Mr Hegarty if he were not given the opportunity to meet the case which has been put against him. I am conscious of the fact that an order for costs is not a particularly useful order in the present circumstances, but I will make an order that the adjournment be on terms as to costs thrown away.
I note the undertaking given by Mr Hegarty through his counsel to pay to the solicitors for the Deputy Commissioner the sum of $2,500 within seven days of today on account of the costs of today, and I will stand over the proceedings to a date to be determined with counsel.
I direct the Trustee to notify those creditors who have proved of the adjourned date and advising the creditors that they may if they so desire inspect the affidavit evidence filed by the parties and participate in the adjourned hearing.
I certify that this and the
preceding five (5) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.
Associate:
Date:
Counsel and Solicitors M R Aldridge instructed by the
for Debtor: Australian Government Solicitor
Counsel and Solicitors B Skinner instructed by
for Applicant: Sally Nash & Co
Counsel and Solicitors W E Andrew
for Respondent: (Trustee in person)
Date of Hearing: 10 November 1995
Date Judgment Delivered: 10 November 1995
| 1,698 |
federal_court_of_australia:fca/single/1998/1998fca0832
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1998-05-04 00:00:00
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Cabarrubias, Jovita & Anor v Minister for Immigration & Multicultural Affairs [1998] FCA 832
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1998/1998fca0832
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2024-09-13T22:51:33.230116+10:00
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FEDERAL COURT OF AUSTRALIA
IMMIGRATION - review of decision of Refugee Review Tribunal - Tribunal did not err in law in finding that the applicants could relocate within the Philippines and therefore were not refugees - question of whether applicants were members of "a particular social group" for the purposes of the Convention - necessity for characteristics that enable definition and/or recognition of such a group other than persecution of its members
Applicant A v Minister For Immigration And Ethnic Affairs (1997) 142 ALR 331, considered and applied
Migration Act 1958 (Cth): s 476
JOVITA CABARRUBIAS and CRESENCIO CABARRUBIAS v MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
NG 834 of 1997
MADGWICK J
SYDNEY
4 MAY 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG834 of 1997
BETWEEN: JOVITA CABARRUBIAS and CRESENCIO CABARRUBIAS
Applicants
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: MADGWICK J
DATE OF ORDER: 4 MAY 1998
WHERE MADE: SYDNEY
SHORT MINUTES OF ORDER
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The applicants pay the respondent's costs.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG834 of 1997
BETWEEN: JOVITA CABARRUBIAS and CRESENCIO CABARRUBIAS
ApplicantS
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
Respondent
JUDGE: MADGWICK J
DATE: 4 may 1998
PLACE: SYDNEY
REASONS FOR JUDGMENT
HIS HONOUR: The applicants seek a review for error of law of a decision by the Refugee Review Tribunal ("the Tribunal") affirming the decision of a delegate of the Minister, who declared a lack of satisfaction that either is a person to whom Australia has protection obligations under the 1957 Convention relating to the Status of Refugees (as amended by the 1967 Protocol relating to such status): c.f. ss 5(1) and 36(2) of the Migration Act 1958 (Cth).
Background
The applicants are a married couple in their forties and are nationals of the Republic of the Philippines. They have four children aged between 12 and 24 years. In or about 1977 they went to Hong Kong where they worked for about 10 years, before returning to the Philippines in 1987. They lived in a remote area of Northern Luzon, where they had applied their savings to the purchase of a small store and other properties.
In the mid 1970s it was said that the New People's Army ("the NPA") first became active, generally against military targets. The NPA was then friendly to the local community, and the local priest cooperated with the NPA. Local conditions were generally peaceful. In 1980 the applicants bought some land and had a house built upon it.
Matters changed after 1983 when the NPA killed some soldiers on a nearby farm. The Philippines Army suspected the townsfolk of the applicants' town of collaborating with the NPA. In 1984, when the applicants visited their home town from Hong Kong for a family funeral, the Army's presence had diminished but the NPA had begun to seek material help from the townspeople. Having worked abroad, the applicants were regarded as affluent enough to be fit targets for solicitation.
By 1987 the applicants considered that the situation had improved enough for them to return home. They bought a grocery business. The NPA, however, soon began making demands for provisions. The applicants were eventually handing over 25-30% of their income.
The local mayor told them the only way to survive was to submit to the demands of the NPA.
They fled to Australia in 1988, leaving their children, the youngest aged two, with their maternal grandmother.
The Tribunal's Decision
The applicants' case was that they were refugees within the Convention because:
"owing to well-founded fear of persecution for reasons of . . . membership of a particular social group . . ., [they were] outside the country of [their] nationality and unable or, owing to such fear, unwilling to avail [themselves] of the protection of that country . . ." (Art. 1A(2))
There were two major factual questions agitated before the Tribunal. One was whether the applicants now had a well-founded fear of future harmful attention from the NPA, and the other was whether they could not reasonably avail themselves of the protection of the Philippines' government elsewhere in that country.
The Tribunal accepted that the applicants:
"were forced out of their business and their home town because they were prime targets for the NPA as it turned from being supported by local people to being a much more violent and demanding armed group . . . in their home town and the surrounding district."
However, the Tribunal found that:
". . . the reason for that persecution was attached to the impression that, having worked overseas, they were wealthy and so could be a source of provisions for the NPA. There were peripheral political aspects to this, that is, they lived in a region where the government forces and the NPA suspected local peoples of taking sides. However, on their own evidence, they were targets precisely because they were thought to have money and resources because they had lived overseas.
. . .
The Applicant and her husband stated clearly that they were targeted because they had resources that someone else wanted. The brother who currently lives in their home probably faces the levy imposed by the NPA on all people in the area but is not singled out for any other reason. That is, the Applicant and her husband, and others living in the area, were targets of the NPA as individuals and not because they belonged to any group. They cannot be regarded as belonging to a group so much as being individuals living in the same area who have goods and money extracted from them in what are ostensibly [political (?)] but actually criminal actions by the NPA.
. . .
Ultimately, the application fails because the Applicant and her husband cannot be found to have been persecuted for reasons of their membership of a particular social group or for any other Convention reason. They were targets for extortion. They were not persecuted but victimised."
On the issue of the applicants' ability to escape the persecution by internal relocation elsewhere in the Philippines, the Tribunal found:
"I have considered whether the Applicant and her husband could have removed the problem by removing themselves elsewhere within the Philippines rather than to Australia. While this is unjust, in that it is the victims who are forced to take action, refugee protection is a substitute for the protection of one's own country. It is granted when the asylum seekers' country has no ability or willingness to protect them from the well-founded fear of persecution. While the Philippines has a number of difficulties, it is not the case that its citizens, in every part of the country, must live in constant fear of an ever diminishing group of subversives, the NPA. Current government policy is to eliminate the conflicts which have undermined civil society in the Philippines. That is, government policy at least is to protect its citizens from being harmed by the NPA. The NPA is not a dominant group in every area of the Philippines and there are an increasing number of areas where its influence is very small. It is reasonable to consider whether the Applicant and her husband could have removed themselves to such an area or if not then, then now, in 1997 as the NPA ceases to be a nationally dominant movement. Their children are studying in Manila and that must act as some sort of lure for the Applicant and her husband to re-locate there. I do not accept the Applicant's evidence that the children, now young adults, are in hiding. This is unconvincing, both in the manner in which the information was conveyed at the hearing and in its plausibility. The children were never targets of the NPA, living mostly with their grandparents away from the Applicant. They are not a source of funds for the NPA. They have no political profile which would lead the NPA to target them in Manila.
I also have taken into account that the Applicant and her husband have some of the skills needed for re-locating. They lived away from their home town for a number of years. They had the initiative to seek jobs abroad. They were not entirely without personal and financial resources. It is reasonable to expect that they should at least have tried to live elsewhere. There is no evidence that they would have been hounded in all parts of the Philippines. It was the particular business they ran in the particular area of the Philippines which made them victims of extortion. I note that the Applicant and her husband were able to set up a restaurant business in Australia. Although some of the money was borrowed and the business has now been sold, I find that it is reasonable to expect that the funds used for this purpose could have been used for the same purpose in a Philippines city such as Manilla. They apparently were not faced with unemployment nor with needing the help of a social welfare system."
Conclusions
Nothing, in my opinion, can be dressed up as a question of law to suggest legal error as to the second matter, the availability of protection elsewhere in the Philippines. It is a pure question of fact and it is unnecessary to consider it further. That would be enough to determine the appeal, but I offer the following on the other matters debated.
The first question depends upon the meaning to be assigned to the expression "for reasons of . . . membership of a particular social group", although it is also important to recognise, as the Tribunal did, that, in the words of Burchett J in Ram v Minister for Immigration and Ethnic Affairs (1995) 57 FCR 565 (at 568):
". . . there is a unity of concept about the whole definition of a refugee contained in the Convention, so far as it relates to membership of a particular social group, which should always be kept firmly in mind. That concept flows through the separate elements of the definition. The well-founded fear of which it speaks is a fear of 'being persecuted'. Persecution involves the infliction of harm, but it implies something more: an element of an attitude on the part of those who persecute which leads to an infliction of harm, or an element of motivation (however twisted) for the infliction of harm. People are persecuted for something perceived about them or attributed to them by the persecutors. Not every isolated act of harm to a person is an act of persecution. Consistently with the use of the words 'persecuted', the motivation envisaged by the definition (apart from race, religion, nationality and political opinion) is membership of a 'particular social group'. If harmful acts are done purely on an individual basis, because of what the individual has done or may do or possess, the application of the Convention is not attracted, so far as it depends upon 'membership of a particular social group'. The link between the key word 'persecuted' and the phrase descriptive of the position of the refugee, 'membership of a particular social group', is provided by the words 'for reasons of' - the membership of the social group must provide the reason....."
The meaning of that expression was, of course, extensively canvassed in Applicant A v Minister for Immigration and Ethnic Affairs (1996-7) 142 ALR 331. Brennan CJ said (at 335-337):
". . . a 'social group' is a group the members of which possess some characteristic which distinguishes them from society at large. The characteristic may consist in any attribute, including attributes of non-criminal conduct or family life, which distinguish the members of the group from society at large. The persons possessing any such characteristic form a particular social group. If membership of a social group, however constituted, attracts persecution, the enjoyment by the members of that group of their fundamental rights and freedoms is denied, and the denial is prima facie discriminatory.
. . .
If a characteristic distinguishes a social group from society at large and attracts persecution to the members of the group that is so distinguished, I see no reason why a well-founded fear of that persecution might not support an application for refugee status." (emphasis added)
Dawson J said (at 341):
"A particular social group, therefore, is a collection of persons who share a certain characteristic or element which unites them and enables them to be set apart from society at large. 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 . . .
However, one important limitation which is, I think, obvious is that the characteristic or element which unites the group cannot be a common fear of persecution."
McHugh J held that (at 355):
"[n]ot only is it impossible to define the phrase ['membership of a social group'] exhaustively, it is pointless to attempt to do so",
but that (at 358-9):
"[t]he concept of persecution can have no place in defining the terms 'a particular social group' . . .
Nevertheless, while persecutory conduct cannot define the social group, the actions of the persecutors may serve to identify or even cause the creation of a particular social group in society. Left-handed men are not a particular social group. But, if they were persecuted because they were left-handed, they would no doubt quickly become recognisable in their society as a particular social group. Their persecution for being left-handed would create a public perception that they were a particular social group. But it would be the attribute of being left-handed and not the persecutory acts that would identify them as a particular social group.
The fact that the actions of the persecutors can serve to identify or even create "a particular social group" emphasises the point that the existence of such a group depends in most, perhaps all, cases on external perceptions of the group. The notion of persecution for reasons of membership of a particular social group implies that the group must be identifiable as a social unit. Only in the "particular social group" category is the notion of "membership" expressly mentioned. The use of that term in conjunction with "particular social group" connotes persons who are defined as a distinct social group by reason of some characteristic, attribute, activity, belief, interest or goal that unites them. If the group is perceived by people in the relevant country as a particular social group, it will usually but not always be the case that they are members of such a group. Without some form of internal linking or unity of
characteristics, attributes, activities, beliefs, interests or goals, however, it is unlikely that a collection of individuals will or can be perceived as being a particular social group. Those indiscriminately killed or robbed by guerillas, for example, are not a particular social group."
Gummow J said (at 375-6):
". . .numerous individuals with similar characteristics or aspirations in my view do not comprise a particular social group of which they are members. I agree with the statement in Ram:
'There must be a common unifying element binding the members together before there is a social group of that kind. When a member of a social group is being persecuted for reasons of membership of the group, he is being attacked, not for himself alone or for what he owns or has done, but by virtue of his being one of those jointly condemned in the eyes of their persecutors, so that it is a fitting use of language to say that it is 'for reasons of' his membership of that group.' "
Kirby J said (at 389):
". . . They must be definable by reference to common pre-existingfeatures. Yet they need not be known as members of the group, even to each other, because the very persecution which helps to define or reinforce the 'group' may, in some cases, make such identification dangerous." (emphasis added)
Later, his Honour said (at 393-4):
"In the result, I agree with the opinion of Professor Fullerton citing the conclusions of Graves [297]. . . . Professor Graves urges that courts and agencies should turn away from attempts to formulate abstract definitions. Instead, [the courts] should recognise 'particular social groups' on a case by case basis. This approach conforms to the refusal of German courts to attempt a definition, or exhaustive description, of the category of 'particular social groups'. It accepts that an element of intuition on the part of decision-makers is inescapable, based on the assumption that they will recognise persecuted social groups of particularity when they see them. While this is not an entirely satisfactory conclusion, it is preferable to an attempt by courts unduly to narrow the operation of the Convention or to impose upon its deliberately broad and ambulatory language categories which are by no means exhaustive of the actual words used."
Thus, it is clear that:
(a) as Dawson J put it (at 340):
"the phrase 'particular social group' should be given a broad interpretation to encompass all those who fairly fall within its language and should be construed in light of the context in which it appears".
(b) Nevertheless, the phrase is not a catch-all or a "general safety net" for any collection of people in a society who are persecuted but who do not fall within the other criteria of Art. 1A(2) of the Convention: "for reasons of race, religion [or] nationality".
(c) "A particular social group" must have characteristics that enable its definition and recognition as such other than by the fact of persecution of its members. In that sense, the characteristics must "pre-exist" the persecution, although the persecution may be instrumental in creating the necessary perception or recognition that persons with those characteristics constitute a particular social group.
The Tribunal found that the applicants were simply "individuals . . . who [had] goods and money extracted from them". As a matter of inference, the only thing which could have made them members of anything which, on the broadest view, could be called a particular social group was that, in the opinion of the NPA, they were fit targets for mulcting. They exhibited, in other words, no characteristic "pre-existing" their persecution which could enable recognition that they were members of a particular social group. The Tribunal did not err in law, therefore, in concluding that they were not "persecuted for reasons of their membership of a particular social group or for any other Convention reason".
An effort was made to argue that, because the NPA has Marxist inspirations, the applicants must have been targeted on account of what the NPA's leaders must have supposed would be their political opinion. There was no evidence of this and any effort to require its inference must founder on the notorious facts of the diversity, by the 1980s, of the streams of Marxian thought and the variety of stages and means of insurrection by guerilla methods. It seems highly unsafe to me, given support for the NPA from elements of the Catholic clergy, to make the assumption implicit in the submission that NPA leaders would necessarily have a narrow view of the factors that determine an individual's political opinion. It can hardly be said that the Tribunal erred in law in not making such an assumption.
The application will be dismissed with costs.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick
Associate:
Dated: May 1998
Counsel for the Applicant: R Lee
Solicitor for the Applicant: Belen Oag Solicitors
Counsel for the Respondent: V Hartstein
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 7 April 1998
Date of Judgment: 4 May 1998
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Bromet v Oddie [2002] FCA 1148
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2024-09-13T22:51:33.680675+10:00
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FEDERAL COURT OF AUSTRALIA
Bromet v Oddie [2002] FCA 1148
ADMINISTRATIVE LAW – Failure to comply with Defence Instructions – effect on validity of subsequent decision – requirement to provide a psychologist's report – whether an indispensable requirement or merely an administrative procedure – the subject matter of the report a relevant consideration.
ADMINISTRATIVE LAW – Armed forces – power to suspend from flying duties – express power in Defence Instructions – exercise not justified by those Instructions – justified by general power of command.
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Judiciary Act 1903 (Cth), s 39B
Defence Act 1903 (Cth), s 9(2), s 9(3), s 9(4), s 9A
Defence Force Discipline Act 1982 (Cth), s 3(1), s 29(1), s 98, s 99
Defence Force Regulations Part XV, 75(1)
Defence Instructions (General) PERS 34-1, cl 1, cl 13
Defence Instructions (Air Force) PERS 4-19, cl 5, cl 12, cl 18, cl 19, cl 20, Annex B,
Annex D
Defence Instructions (Air Force) ADMIN 6-1, cl 16
The Commonwealth v Welsh (1947) 74 CLR 245 referred to
Marks v The Commonwealth (1964) 111 CLR 549 referred to
The Commonwealth v Quince (1944) 68 CLR 227 referred to
Anderson v Sullivan (1997) 78 FCR 380 applied
McManus v Scott-Charlton (1996) 70 FCR 16 referred to
Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 40 FCR 409 referred to
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 applied
NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 referred to
FLIGHT LIEUTENANT MARCUS ROBERT DAVID BROMET v GROUP CAPTAIN STEPHEN JOHN ODDIE, WING COMMANDER DIANE JENSEN, AIR MARSHAL ALLAN GRANT HOUSTON
A3 of 2002
FLIGHT LIEUTENANT MARCUS ROBERT DAVID BROMET v GROUP CAPTAIN I J MEYN
A16 of 2002
FINN J
16 SEPTEMBER 2002
CANBERRA
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A3 OF 2002
BETWEEN: FLIGHT LIEUTENANT MARCUS ROBERT DAVID BROMET
APPLICANT
AND: GROUP CAPTAIN STEPHEN JOHN ODDIE
FIRST RESPONDENT
WING COMMANDER DIANE JENSEN
SECOND RESPONDENT
AIR MARSHAL ALLAN GRANT HOUSTON
THIRD RESPONDENT
JUDGE: FINN J
DATE OF ORDER: 16 SEPTEMBER 2002
WHERE MADE: CANBERRA
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A16 OF 2002
BETWEEN: FLIGHT LIEUTENANT MARCUS ROBERT DAVID BROMET
APPLICANT
AND: GROUP CAPTAIN I J MEYN in his capacity as Director of Personnel Officers – Air Force
RESPONDENT
JUDGE: FINN J
DATE OF ORDER: 16 SEPTEMBER 2002
WHERE MADE: CANBERRA
THE COURT ORDERS THAT:
Applications A3 of 2002 and A16 of 2002 be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A3 OF 2002
BETWEEN: FLIGHT LIEUTENANT MARCUS ROBERT DAVID BROMET
APPLICANT
AND: GROUP CAPTAIN STEPHEN JOHN ODDIE
FIRST RESPONDENT
WING COMMANDER DIANE JENSEN
SECOND RESPONDENT
AIR MARSHAL ALLAN GRANT HOUSTON
THIRD RESPONDENT
JUDGE: FINN J
DATE: 16 SEPTEMBER 2002
PLACE: CANBERRA
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A16 OF 2002
BETWEEN: FLIGHT LIEUTENANT MARCUS ROBERT DAVID BROMET
APPLICANT
AND: GROUP CAPTAIN I J MEYN in his capacity as Director of Personnel Officers – Air Force
RESPONDENT
JUDGE: FINN J
DATE: 16 SEPTEMBER 2002
WHERE MADE: CANBERRA
REASONS FOR JUDGMENT
1 The circumstances giving rise to this combined proceeding could give no satisfaction to those charged with the command and administration of the Royal Australian Air Force. They are characterised by delay, error and confusion in the processes leading to the making of the four decisions of which the applicant, Flight Lieutenant Marcus Bromet, complains.
2 Those decisions were:
(i) the decision of the first respondent, Group Captain Stephen Oddie, on 2 November 2000 to suspend the applicant from flying duties, Group Captain Oddie being the Commanding Officer of 36 Squadron and Flight Lieutenant Bromet being a pilot in that Squadron ("the Suspension Decision");
(ii) the decision of either the second respondent, Wing Commander Jensen, or the third respondent, Air Marshall Alan Houston, of 27 November 2001 to take no further action in relation to an application for Redress of Grievance made by the applicant against the Suspension Decision ("the Redress of Grievance Decision");
(iii) the decision of Group Captain Oddie of 4 December 2001 to issue an Unsuitability Report recommending that the applicant be identified as unsuitable for employment in fixed wing tactical air transport ("the Unsuitability Report Recommendation");
(iv) the decision of Group Captain Ian Meyn, the respondent in A16 of 2002, on 20 March 2002 to uphold the Unsuitability Report ("the Unsuitability Report Decision").
3 The challenges to the decisions are made by way of an application for an order for review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and for writs of prohibition and certiorari under the Judiciary Act 1903 (Cth), s 39B. The ADJR Act application was out of time, but the respondents did not oppose the grant of leave for its filing. Neither did they prosecute the objection to competency they raised to some of the decisions for ADJR Act purposes.
4 To understand the nature and purpose of the various decisions challenged, it will be necessary to outline in a little detail both the events which gave rise to the decisions and the legal and administrative setting in which they occurred.
The Factual Background
5 This can be dealt with relatively shortly. In January 1999 Flight Lieutenant Bromet was posted to 36 Squadron to undertake C130H Hercules Aircraft Conversion. In May 2000 he was selected for a C130H Airborne Operations Course. He was awarded a fail grading for the Course and an ABNOPS ("Airborne Operations") Review Board assessed him as not able to achieve the required standard for a Co-pilot in the ABNOPS role.
6 Flight Lieutenant Bromet met with Group Captain Oddie in August 2000. His past and prospective performance were discussed at that meeting and a course of remedial action was proposed. One element in the proposals, to which I need refer because of its significance in this proceeding, was that he attended an interview with a service psychologist. The purpose of that interview was stated in a contemporary record of interview to be:
"to assist you to identify improvements that can assist your further development. The report from that interview will also assist me to decide what further training opportunities should be provided to achieve your development to meet unit expectations."
7 At the end of the interview (as recorded), Group Captain Oddie alerted the applicant to the following:
"If you are unable to achieve in any single segment of remedial training or my assessment of your overall performance on 1 Nov 00 is that your performance remains unsatisfactory for further progression to Cat B ALS Copilot in the immediate term and Cat C ABNOPS Captain in your future employment, I intend to take further administrative action." Emphasis added.
8 The psychologist's report (from Dr Ryder) was provided on 14 August 2000. It outlined (i) Flight Lieutenant Bromet's service background; (ii) a previous interview Dr Ryder had had with him in March 2000; (iii) the subject matter of the immediate interview; and (iv) Dr Ryder's behavioural concerns about the applicant which were discussed with him. It concluded with the observation that, though the Flight Lieutenant was very keen for a flying career in the RAAF, "he will have to make some major changes to his behaviour, if he is to achieve his goal".
9 As he had foreshadowed in the August meeting, Group Captain Oddie reviewed the applicant's achievements in the remedial programme on 1 November 2000. On 2 November 2000, the Suspension Decision was made by the Group Captain. It stated:
"PERFORMANCE REVIEW
1. I have reviewed your performance in accordance with the direction I gave you on 4 Aug 2000 and make the following observations:
a. You have generally achieved the minimum standard in all segments of the remedial training required of you, showing slight improvement in some cases.
b. With continued improvement you would be considered suitable for Category B upgrade training towards the middle of next year.
2. Taking into account the level of resources committed to you during the remedial period, and the limited resources available to assist your future progression, I am not confident that you have the ability to progress to the Category B induction standard within the immediate term. Further, I assess that you are unlikely to progress to Category C ABNOPS copilot, the lowest operationally declarable copilot skill at 36 Squadron, in the time remaining in your tour and within the resources available. The evidence of your flying achievements, subsequent to a previous command tour flying Twin Otters, is that your performance is considerably less than that of your peers, with whom you must compete for resources to reach these objectives.
3. I believe that your flying ability meets the minimum standard for your current category, but your demonstrated low rate of progression does not give you a reliable prospect of future achievement. I am therefore suspending you from flying duties at 36 Squadron immediately and am recommending to DPO that you be considered unsuitable for employment as a pilot on C130H at 36 Squadron.
4. If you choose to accept this decision, administrative action will progress immediately. If you choose to contest the decision, you may forward a rebuttal to me in writing by 16 Nov 00 and administrative action will be postponed until that date. I am seeking advice on your employment pending a final decision on your suitability and will advise you on this at the earliest opportunity."
At the foot of the document the following appeared:
"Acknowledgment of Unsuitability Report by Member:
I have read the Unsuitability Report made by CO36SQN and I have received a copy. I do/do not wish to make a statement in rebuttal of the Unsuitability Report."
The "do not" was crossed out and the acknowledgement was signed by the applicant.
10 The above "acknowledgement" was the first cause of confusion in the sequence of events that followed. To anticipate matters, the performance review document was not an Unsuitability Report, though it was the herald of the Report made by the Group Captain thirteen months later.
11 Flight Lieutenant Bromet made his statement in rebuttal on 16 November 2000. On 13 February, it was responded to by the Group Captain whose Minute indicated that, after reviewing all relevant information, he intended "continuing with the administrative process that commenced" with the 2 November notification of the Suspension Decision. He went on to require that (i) the applicant have a psychological assessment with Dr Ryder; (ii) he was to take steps (that were specified) that would lead to a decision on whether he would be required to undergo a Special Flying Assessment; and (iii) a request would be made that he be posted to Headquarters Air Lift Group ("HQALG"). The Minute then stated "[o]n completion of these tasks, all administrative action will be finalised". The two passages I have highlighted contained further seeds for confusion as I will later indicate.
12 A detailed written response to the statement in rebuttal was not provided to the applicant until 23 May 2001. The concluding observation in that response was "my decision to progress administration of an unsuitability report on you will remain extant".
13 Several significant events had occurred subsequent to the 13 February Minute and prior to the 23 May 2001 response. On 14 February the applicant submitted an Application for Redress of Grievance ("ROG") to Group Captain Oddie, such an application being provided for in the Defence Instructions (General) to which I will later refer. The "redress" sought was:
"to have the flying suspension that was issued on 02 Nov 00 removed, the period of posting at HQALG continue until Dec 01 to meet the needs of the Service, and a formal recommendation provided by CO36SQN returning me to flying duties NLT 31 Dec 01."
The only other matter in the application to which I need refer is that the applicant asked why the further appointment with Dr Ryder was "now necessary?"
14 On 16 February the applicant was posted to HQALG. On 19 February Group Captain Oddie wrote to the applicant formally acknowledging receipt of the ROG. He indicated that, pending resolution of the ROG, "all administrative action pertaining to your situation has been suspended". The following day he again wrote to the applicant indicating that, for reasons of conflict of interest, his ROG would be dealt with at Wing and not Squadron level. On 13 March Group Captain Plenty of 86 Wing informed the applicant that he would make the determination on the ROG. I would note in passing that the Defence Instructions (General) to which I earlier referred required that ROG's "be finalised without undue delay".
15 Group Captain Plenty's ROG Decision was communicated to Flight Lieutenant Bromet on 26 September 2001. It rejected the application. The only matters to which I need refer in the fourteen page statement of reasons are that (i) Group Captain Plenty considered that Group Captain Oddie had sufficient evidence before him to make the Suspension Decision; (ii) the labelling of the 2 November Suspension Decision document as an "Unsuitability Report" was erroneous but reflected a "statement of intent" to later raise such a Report; (iii) the applicant had experienced apparent (but not deliberate) unfairness, thoughtlessness and a reluctance to act expeditiously in the handling of his complaints; and (iv) if the applicant was not satisfied with the decision he had the right to have his ROG referred to the Chief of Air Force.
16 In response to a Minute of the applicant of 27 September concerning his future employment in the RAAF, the Group Captain indicated (apparently both in conversation on 27 September and then by letter of 15 October 2001) that the ROG related only to the Suspension Decision and that:
"I noted that your suitability for continued employment as an RAAF pilot would be determined after the Commanding Officer had submitted the Unsuitability Report. As you are aware, the lodgement of your Application for Redress of Grievance had placed the progression of the Unsuitability Report by the Commanding Officer in abeyance pending the outcome of your Redress."
17 After further correspondence between the applicant and the Group Captain, the latter indicated by letter of 14 November 2001 that, in consequence of an earlier request by the applicant, he was forwarding the ROG to the Chief of Air Force. I would interpolate that the terms "Chief of Air Staff" and "Chief of Air Force" are used interchangeably in the documentation in this proceeding.
18 On 17 November 2001 Group Captain Oddie wrote to the applicant a letter headed "Suspension From Flying – Administrative Action Closures". That letter stated in part:
"As you are aware, I was considering a number of actions to assist my deliberation in regard to your suspension from flying. These actions consisted of a requirement for further psychological assessment and a flying assessment. Following significant consideration, I have decided that I have sufficient advice to hand and will not be requiring further advice from DR Ryder DAFPS or from CFS in this regard."
I would note in passing that this letter did not link the "further psychological assessment" to the possible raising of an Unsuitability Report.
19 On 30 November 2001 Flight Lieutenant Bromet received from 86 Wing a copy of a Minute of Wing Commander Jensen of 27 November. This Minute evidences what has been called the Redress of Grievance Decision. It stated in part:
"REDRESS OF GRIEVANCE ACKNOWLEDGEMENT – FLTLT M.R.D. BROMET 0134590
References:
A. …
B. DI(G)PERS 34-1 Redress of Grievance – Tri-Service Procedures
…
2. The unsuitability reporting process employed by Air Force affords members the opportunity to know the case against them through the provision of documents, to sight and comment on, or rebut, the report findings before the report is submitted and to have those comments placed before the decision-maker when the matter is determined. Their right to procedural fairness is therefore protected. For this reason, the expectation of the Agency is that, in the first instance, members will use the opportunities afforded by the normal administrative processes to bring to the attention of the decision-maker any matters concerning the case against them. This includes perceived shortcomings in the processes leading to the raising of the report. In FLTLT Bromet's case this would include the matter of his suspension from flying.
3. Reference B does include provision for the suspension of executive action, where the ROG is against that action. The principle underlying the suspension of proposed executive action is that a determining authority should not take irrevocable action that would prejudice an appropriate remedy, should a member's ROG subsequently be upheld. In FLTLT Bromet's case, his suspension from flying is an integral part of the suspension report process. It is only at the conclusion of this process that executive action will be proposed. It is at this point that the ROG system should be invoked, if FLTLT Bromet is dissatisfied with the outcome. The exception is where a member considers that the administrative process is not being adhered to by management, ie, the member is being denied access to material used in the raising of the report, or an opportunity to respond.
4. For the reasons outlined in the preceding paragraphs, further action on FLTLT Bromet's ROG will be suspended until the unsuitability report process is complete. Accordingly, the unsuitability report should be processed and a decision made on FLTLT Bromet's future. FLTLT Bromet should be encouraged to take advantage of the opportunity afforded by this process to bring to the attention of the decision-maker any concerns he may have about his suspension from flying. Should FLTLT Bromet be dissatisfied with the decision taken on the unsuitability report, he should advise the Agency. He may then revise, or add to, his ROG and the matter will be referred to CAF or his redress delegate for consideration."
20 On the day he received Wing Commander Jensen's Minute, the applicant wrote to her indicating, amongst other things, that he considered to be incorrect the statement (not reproduced above) that "CO 36SQN is in the process of raising an unsuitability report on FLTLT Bromet".
21 Shortly after 30 November Group Captain Plenty directed Group Captain Oddie to proceed with processing of the applicant's Unsuitability Report without undue delay. On 4 December Group Captain Oddie sent a copy of his Unsuitability Report to the applicant. The psychological assessment of Flight Lieutenant Bromet of which it took account was the report of Dr Ryder 14 August 2000. The final paragraphs of the Report were in the following terms:
"Conclusion
21. Since his arrival at 36SQN, FLTLT Bromet's performance level as a C130H copilot has rarely risen above marginally acceptable. Any improvements have been incremental and resulted from intensive periods of training and supervision by my most senior pilots. Once this intensive training has ended, FLTLT Bromet's performance has generally fallen back to a marginally unacceptable level.
22. FLTLT Bromet has been unable to respond to the encouragement and guidance of a range of senior and very capable mentors, instructors and supervisors. Despite his assertions in his rebuttal, FLTLT Bromet has been given significant resources. His failure to progress beyond being an average C Category ALS copilot leads me to conclude that a C130 captaincy, in either [Air Logistic Support] or ABNOPS, is unlikely to be achievable within available resources.
23. Given the current resources available to me, I cannot dedicate additional flying hours to marginal performers. To do so would compromise 36SQNs capability to meet its obligations to the ADF. In previous years there was sufficient excess capacity within the system to absorb under-performing pilots, but in the current and foreseeable operational environment that option does not exist. I must therefore dedicate scarce resources to those pilots who can reach C Category ABNOPS Captain, which is the minimum standard for a pilot at 36SQN if directed capabilities are to be met.
24. Future Employment. FLTLT Bromet has demonstrated qualities that indicate that he has significant difficulties working within a crew environment. Further, he has demonstrated qualities that indicate a substantial inability to interface with the dynamic and chaotic challenge of the tactical environment. On the basis of this demonstrated performance I consider he is unsuitable for employment in multi-crew tactical transport including C130H/J or Caribou. Given personal willingness to change, significant training and the opportunity for employment in a steady, predictable environment supported by personnel with substantive Captaincy skills, I suspect that FLTLT Bromet could progress to become marginally suitable for employment in other aviation environments. However, I remain deeply concerned by his poor [Crew Resource Management] skills and is apparent incapacity to recognise his personal challenges. The potential for FLTLT Bromet to mislead an inexperienced crewmember remains significant.
25. Recommendations. I recommend the following:
a. FLTLT Bromet be identified as unsuitable for employment in fixed wing tactical air transport.
b. Consideration be given to FLTLT Bromet's ongoing viability as a productive Air Force pilot."
22 The Report was forwarded to the Directorate of Personnel Officers – Air Force on 19 December. After receiving recommendations from Wing Commander Willmott, Group Captain Meyn made his decision on the Report confirming the recommendations of Group Captain Oddie. He issued the following direction for further action:
"1. I have issued my determination upholding the recommendations of the Unsuitability Report dated 4 December 2001 that:
a. FLTLT Bromet be identified as unsuitable for employment in fixed wing tactical air transport.
b. Consideration be given to FLTLT Bromet's ongoing viability as a productive Air Force Pilot.
2. In order to give proper effect to paragraph (b) of the recommendation, I direct that:
a. A report be prepared covering FLTLT Bromet's duties and performance in those duties from 2 November 2000 to date be prepared and assessed (sic). The report is to include contemporary appraisal reports by FLTLT's supervisors.
b. FLTLT Bromet be assessed by a psychologist. This assessment is to address FLTLT Bromet's position within the terms of DI(AF) PERS 4-19, and in particular Annex B to DI(AF) PERS 4-19.
c. Options and Recommendations specifically addressing the consideration of FLTLT Bromet's ongoing viability as a productive Air Force pilot be prepared in light of the actions noted in paragraphs a. and b.": emphasis added.
23 I would add that, for reasons which will become apparent below, it is Wing Commander Willmott's evidence that he prepared his recommendation to Group Captain Meyn on the basis that the Report itself had been prepared pursuant to Annexure B of Defence Instruction (Air Force) PERS 4-19.
24 The applicant's ROG was reactivated, apparently, on 3 May 2002 by the Complaint Resolution Agency ("the CRA") when it sought the applicant's advice as to whether he wished to add dissatisfaction with the Unsuitability Report to his ROG. Subject to his so doing the matter would be referred to the Chief of Air Force. This action would seem to have rendered inoperative the Redress of Grievance Decision challenged in this proceeding. The applicant's lawyers wrote to the respondent's lawyers indicating that they had advised him to take no action to provide written advice to the CRA with respect to the ROG. That matter, they said, was best left to the Federal Court.
25 I should add that the CRA was established in 1998 under a joint directive issued by the Chief of the Defence Force and the Secretary of the Department of Defence. Its purpose was to ensure independence in the investigation, review and handling of complaints.
26 By letter of 27 May 2002 the respondents' lawyer indicated to the applicant's solicitors that Group Captain Oddie's 2 November 2000 Suspension Decision was made in the general administration and command of the RAAF and not by reference to any Defence Instruction (on which see below).
Legal and Administrative Setting
27 Part II, Division 1 of the Defence Act 1903 (Cth) ("the Act") makes provision for the command and administration of the Defence Force. Subject to the direction of the Minister, the Chief of the Defence Force (who is an officer of the Force) has command of the Defence Force: s 9(2). Section 9 also makes provision for the appointment of officers to be respectively Chief of Naval Staff, Chief of General Staff and Chief of the Air Staff.
28 Section 9A of the Act provides for the administration of the Defence Force (in contra distinction to "command" of it). Insofar as presently relevant, that section provides:
"9A. (1) Subject to section 8, the Secretary and the Chief of the Defence Force shall jointly have the administration of the Defence Force except with respect to:
(a) matters falling within the command of the Defence Force by the Chief of the Defence Force or the command of an arm of the Defence Force by the chief of staff of that arm of the Defence Force; or
(b) any other matter specified by the Minister.
(2) Instructions issued by or with the authority of the Secretary and the Chief of the Defence Force in pursuance of the powers vested in them jointly by virtue of subsection (1) shall be known as Defence Instructions (General).
(3) The powers vested in the Secretary and the Chief of the Defence Force by virtue of subsection (1) extend to authorizing a chief of staff of an arm of the Defence Force to administer, in accordance with that authority, matters relating to that arm of the Defence Force, and instructions or orders issued or made by or with the authority of a chief of staff in relation to the administration of an arm of the Defence Force shall be known as:
…
(c) in the case of the Air Force – Defence Instructions (Air Force)."
29 Sub-clause 9(4) gives Defence Instructions (General) priority over the cl 9(3) service specific Instructions in case of, and to the extent of, any inconsistency between them.
30 In the present proceeding one set of Defence Instructions (General) ("DI(G)") is of relevance. It is DI(G) PERS 34-1, Redress of Grievance – Tri-Service Procedures. This Instruction provide for the detailed implementation of the Redress of Grievance mechanism created in Part XV of the Defence Force Regulations. It is unnecessary to refer to these Regulations other than to note the following. The Regulations allow a member of the Defence Force to make a complaint to his or her Commanding Officer when that member considers he or she "has a grievance concerning any matter relating to his or her service": reg 75(1). The Regulations make provision (inter alia) for the referral, the investigation and the further referral of complaints. I would note that the referral process can lead ultimately to the complainant being able to have his or her complaint dealt with, for present purposes, by the Chief of the Air Force ("the CAF") and then the Chief of the Defence Force ("the CDF"). Where the complaint is to be referred at a complainant's request to either the CAF or CDF, the Complaint Resolution Agency ("CRA") will review the substance of the complaint and will prepare a brief for consideration and decision by the CAF or CDF.
31 Clause 13 of the Tri-Service Procedures upon which the applicant has placed general reliance provides:
"When a complaint relates to a proposed action, that action is not normally to be taken until the complaint has been resolved. The underlying principle is that approving authorities should not take irrevocable, or pre-emptive, action that would prejudice an appropriate remedy, if a member's complaint were subsequently upheld."
32 The service specific Defence Instruction of present relevance is Defence Instructions (Air Force) PERS 4-19 ("DI(AF) PERS 4-19). The aim of this Instruction is stated to be "to outline the policy relating to the management of unacceptable and unsuitable behaviour in the Air Force". It makes provision for the raising of an "Unsuitability Report", cl 5 of the Instruction stating that:
"Unsuitability Reports (Annex B). To be the subject of an unsuitability report does not reflect discredit on the member concerned, as the problem is identified to be outside the member's control. When the CO is convinced that a member is unsuited to a mustering/specialisation, rank or posting, an Unsuitability Report is to be raised in accordance with Annex B. … In addition to the general type of Unsuitability Report (ie Mustering/Specialisation, Rank or Posting), the following are particular Unsuitability Reports that may be considered more appropriate:
a. Incompatible With Service Life (Annex C). When a member is unable to meet the demands and stresses of Service life and is genuinely unsuited to the Service environment, a report should be raised by the CO or a standard application may be submitted by the member, to address the unsuitability.
b. Qualified Aircrew Assessed as Below Minimum Acceptable Standard (Annex D). An Unsuitability Report is to be raised when a qualified aircrew member is below the minimum acceptable standard in the performance of their aircrew duties."
33 Because of its significance in the present matter it is necessary to refer in a little detail to Annex B. It provides insofar as presently relevant:
"UNSUITABILITY REPORT – MUSTERING/SPECIALISATION, RANK OR POSTING
1. An Unsuitability Report does not reflect discredit on the member concerned and resolution of the report by Air Force Office will reflect this point.
2. Occasions for Unsuitability Reports. When a member, for reasons beyond their own control, is unable to perform satisfactorily the duties of the posting, rank, mustering or specialisation, a CO is to raise an Unsuitability Report. For example, a member may not possess the Service background or instructional skills demanded by a particular post; or the abilities predicted during selection and training for entry to a specialisation or mustering; or the ability to exercise the responsibilities of a rank. The CO is to be satisfied that the member's low performance is not due to lack of diligence or an unsatisfactory Service attitude, and is to specifically address this aspect in the report.
3. Unsuitability for Mustering/Specialisation. Where the CO is convinced that a member is unsuited to, or inefficient, in their mustering or specialisation, a report on unsuitability for mustering is to be raised, giving detailed reasons for the unsuitability and recommended remuster. The report must be accompanied by a psychologist's report which is to comment on the member's unsuitability in their present mustering or specialisation and assesses the member's suitability for alternative employment. Emphasis added.
…
6. Content of Unsuitability Reports. Unsuitability Reports are to be submitted in official letter format and must contain:
a. a description of the member's duties;
b. the nature of the member's unsuitability and the causes (if known);
c. recommended remedial action; and
d. a psychologist's report."
34 There is no direct explanation given for the requirement of the psychologist's report. Clause 12 of the Instruction deals generally with "Medical and Psychological Reports". It refers to their function in cases of involuntary discharge where both types of reports are required. It explains this need in the following terms:
"It is in the best interests of both the Service and its members to ensure that involuntary discharges are effected under the correct terms of discharge, and where applicable, that entitlements are preserved accordingly. Only by specialist assessment can the presence of medical (physical or psychiatric) illness or psychological aberrations be either detected or discounted, and the appropriate administrative action taken. Accordingly, specialists reports are to advise whether there were, or are, any medical or psychological factors contributing to the behaviour that led to the raising of the report. Reports of this nature are also required when an Unsuitability or Incompatibility Report is raised." Emphasis added.
35 I should interpolate that the issue of psychological reports looms large in this proceeding. No separate report was commissioned for the purpose of Flight Lieutenant Bromet's Unsuitability Report.
36 Annex D, which the applicant contends was relied upon by Group Captain Oddie in making his Unsuitability Report, provides (in part) that:
"1. Initial Action. When a CO considers that a qualified aircrew member is below the minimum acceptable standard in the performance of their aircrew duties and is unlikely to attain an acceptable standard of efficiency notwithstanding such further training as unit resources may permit, an Unsuitability Report or an Adverse Report is to be submitted.
2. The report is to include:
a. a brief resume of the member's flying history;
b. precise details regarding the member's inefficiency;
c. details of the extra training and tuition given to the member;
d. a Central Flying School (CFS) report (if applicable); and
e. a recommendation as to the member's future employment.
3. Recommendations. In recommending the member's future employment, the CO is to consider whether the member should be given an opportunity to demonstrate an acceptable standard of efficiency on another type of aircraft or whether the member would be suitable for transfer to another specialisation or mustering. The CO may suspend the member from flying duties when a report is submitted in accordance with this Instruction.
4. Special Flying Assessment – Pilots. Where the inefficiency of a pilot relates to their basic flying ability, as distinct from their flying ability as an operational pilot, the report is not to be submitted until the member's flying ability has been assessed by CFS."
37 I would note three matters about Annex D. First, in para 1 it refers to "such further training as unit resources may permit". Secondly, this Annex is the only one in the Instruction that makes express reference to suspension from flying duties. Thirdly, in para 4 reference is made to Special Flying Assessment. It will be recalled that when Group Captain Oddie wrote to the applicant on 13 February 2001, he indicated that in continuing the administrative process begun with Flight Lieutenant Bromet's suspension, a decision would need to be taken on whether he would be required to undergo a Special Flying Assessment.
38 Clauses 18-20 of this Instruction deal with the manner in which Unsuitability Reports are to be forwarded to the relevant decision-maker and a decision is to be made on them.
39 Turning to the status of Defence Instructions, I would note the following. First, a member of the Defence Force who does not comply with a lawful Defence Instruction (be it a General or a service specific Defence Instruction) which is applicable to that member is guilty of an offence under s 29(1) of the Defence Force Discipline Act 1982 (Cth): and see s 3(1) "general order". This provision sits unhappily with what now appears to be the Air Force's own perception of the present purpose and content of DI(AF). In DI(AF) ADMIN 6-1 it is stated in cl 16 that:
"Defence Instructions (Air Force). DI(AF) are prescribed by the Defence Act 1903 (Cwlth) and are issued to communicate CAS Instructions for the command of the RAAF. DI(AF) may include mandates, prohibitions, guidance or information. Whereas orders or directives are specific to an event, situation, appointment or person, DI(AF) have wider applicability. They may be expressed as doctrinal, policy, strategic, operational, administrative, implementation or procedural statements. They make subordinate commanders responsible and accountable, and provide the parameters for decisions and actions required to comply with the instructions. Instructions should be focussed on desired outcomes, rather than on procedures or methods used to achieve those outcomes. In some circumstances however, the inclusion of procedural mandates or guidance may be appropriate or desirable. Procedural information should be contained in an Annex or in a separate publication such as an AAP as appropriate …": emphasis added.
There must be a very serious question today as to whether the provisions of s 29(1) of the Defence Force Discipline Act 1982 are an appropriate sanction for non-compliance with DI(AF) generally. As I will later indicate Group Captain Oddie did not comply with the requirements of Annex B to DI(AF) PERS 4-19.
40 Secondly, in The Commonwealth v Welsh (1947) 74 CLR 245 at 268, Dixon J observed:
"in considering the meaning and effect of the Air Force Regulations their purpose cannot be neglected, namely to provide rules to govern one of the armed forces of the Crown. The relation to the Crown of members of the armed forces is no new subject; the rules of the common law define it. The regulations are not to be read in disregard of those rules and of the long tradition to which they have contributed."
41 In Marks v The Commonwealth (1964) 111 CLR 549 at 573 Windeyer J commented of this that while the remarks were directed at statutory regulations they were equally applicable to the Act itself. It goes without saying in my view that they apply as of course to Defence Instructions made under s 9A of the Act.
42 Thirdly, it is not open to doubt that the power of command given by s 9 of the Act to (inter alia) the CDF and the CAS had its origins in constitutional arrangements acknowledged by the common law: see The Commonwealth v Quince (1944) 68 CLR 227 at 254-255. A clear correlative of it is the obligation of a member of the Defence Force to obey lawful orders given by a superior: ibid; for the analogous position in relation to police and public servants see Anderson v Sullivan (1997) 78 FCR 380 and McManus v Scott-Charlton (1996) 70 FCR 16. It is an offence under s 27(1) of the Defence Force Discipline Act 1982 for a member of the Defence Force to disobey a lawful command.
Submissions and Conclusions
43 There are three substantial issues in this proceeding. The first is whether Group Captain Oddie had power in the circumstances to suspend the applicant from flying duties. The second is whether Group Captain Oddie complied with the requirements of DI(AF) PERS 4-19 when raising the Unsuitability Report on 4 December 2001 and, if he did not, whether that failure would preclude Group Captain Meyn making a decision on it. The third relates to such connection as there may be between the Suspension Decision on the one hand and the Unsuitability Report and Unsuitability Report Decision on the other. If the latter Decision is declared invalid, does the Suspension Decision fall with it?
(1) The Suspension Decision
44 The applicant's principal submission is that Group Captain Oddie intended to suspend the applicant under Annex D to DI(AF) PERS 4-19 and that suspension was ineffective because "no report had been submitted in accordance with [the] Instruction" when the Suspension Decision was made. Further, as Group Captain Oddie had found the Flight Lieutenant had achieved the "minimum standard", Annex D provided no foundation for the Decision.
45 Secondly, it is submitted that DI(AF) PERS 4-19 is a comprehensive document covering all aspects of decision making coming within its purview. Only Annex D made provision for suspension. Annex B did not, hence suspension was not appropriate for an Unsuitability Report under Annex B.
46 The submission for the first respondent is that he had power under his command powers to order the suspension and, whether or not he laboured under a misapprehension as to the power he was exercising, what he did was supported by the command power. He gave a lawful direction (ie command) relating to Flight Lieutenant Bromet's service and in so doing he exercised a power of the very kind he purported to exercise: Anderson v Sullivan, above, at 400.
47 Secondly, it is submitted that there is no justification for giving a code-like operation to DI(AF) PERS 4-19 so as to exclude suspension under the command power. Reliance for this was placed upon both the proper approach to construction of the Act, Regulations and Defence Instructions to which I referred above and to my decision in Anderson v Sullivan, above, where a similar "exclusive code" argument was raised.
48 For my own part I am unable to accept the applicant's contention. I am prepared to assume that Group Captain Oddie thought he was exercising the power to suspend under Annex D – if he directed his mind at all to the question of the actual source of his power. There are, in my view, significant textual and contextual suggestions (relating both to the 2 November 2000 document and to the Unsuitability Report itself) capable of linking what was done to Annex D. Group Captain Oddie did not give evidence.
49 To adapt what I said of a similar state of affairs in Anderson v Sullivan (at 400), if it was the case that the Group Captain mistakenly considered that the "head of power" for his Suspension Decision was Annex D, he intended an immediate suspension and it was and is open to him now to rely upon this command power at common law as his source of power. And again I rely analogically on "the general principle that an act purporting to be done under one statutory power may be supported under another": Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 40 FCR 409 at 412. There was nothing in the reasons given for the actual decision, or in the conditions regulating the exercise both of the Annex D power and of the command power respectively, that would make it inappropriate to rely upon the command power to justify the decision.
50 I also reject the applicant's submission as to the code-like quality of DI(AF) PERS 4-19. It clearly does not, and does not purport to, encompass all of the situations in which a member of the RAAF may have a Suspension Decision of some form made in relation to him or her. There are other Defence Instructions, and for that matter statutory provisions: see eg Defence Force Discipline Act 1982 s 98 and s 99; that deal with specific circumstances in which a Suspension Decision may be taken. But even within the particular area of concern of DI(AF) PERS 4-19 it is a most improbable intention to attribute to the CAF that, in issuing the instruction, the common law power was to be so curtailed with the consequences that might have for resource allocation, the proper management of the Air Force, and even safety. It must be recalled that under Annex D the suspension could only be ordered where an Unsuitability or Adverse Report is submitted. Having regard (i) to what appears to be the RAAF's current perception of its service specific Defence Instructions, (ii) to the power the CAF possesses to alter and amend Air Force specific Defence Instructions and (iii) to the rule of construction to which I earlier referred; The Commonwealth v Welsh, above at 268; I do not consider that the language of the Instruction necessitates attributing to it the meaning and effect for which the applicant contends. It provides merely a specific express instance in which suspension is permitted. It does not thereby preclude resort to the command power whenever that power may appropriately be exercised to order a suspension from flying duties.
51 Counsel for the applicant submitted, though increasingly faintly, that reasons were not given for this decision and that there was no pressing reason for it. I was invited in consequence to infer that there was no rational reason for it.
52 The decision may well be said to have been precipitate and harsh – though advance warning of the possibility of it was given months earlier at the August 2000 meeting after the applicant had failed the ABNOPS course. It is impossible, though, to say that there were no reasons given for the decision. The 2 November 2000 document notifying the decision, the statement of rebuttal, the Group Captain's response, and all that went with the ROG and Group Captain Plenty's ROG report could leave little doubt as to the grounds and the rational basis of the suspension. The decision was clearly not unlawful and it related to the applicant's service. I am unable to discern any available ground on which it properly can be impugned in judicial review proceedings.
53 The only question that remains is whether, if the Unsuitability Report Decision is invalid, this decision as a pendent decision also falls away. This is considered below.
54 Before turning to the Unsuitability Report I should indicate that I consider the challenge made to the Redress of Grievance Decision to be quite misconceived. Given that it is now the applicant who is insisting that the referral of this decision to the CAF not take place until this proceeding finishes, it will be a matter for him to determine whether he wishes the referral to proceed assuming that I uphold the Suspension Decision.
(2) The Unsuitability Report Decision
55 The communications made to Flight Lieutenant Bromet from 2 November 2000 onwards had the clear capacity to engender confusion and frustration in him. I say nothing of the advice on which some of those communications appear to have been based. He deserved better. But my concern in this proceeding is not with the care taken by, and thoughtlessness of, at least some of the officers dealing with him. Nor is it with the correctness of the advice on which they may have relied. It is with the lawfulness of their decisions.
56 Whatever he might have thought he had done on 2 November 2000 in relation to unsuitability, Group Captain Oddie did raise what was an Unsuitability Report on 4 December 2001. That Report could not be justified by Annex D. The basis now advanced for it is Annex B. That Annex required that "[t]he report must be accompanied by a psychologist's report which is to comment on the member's unsuitability in their present mustering or specialisation and assesses the member's suitability for alternative employment".
57 It is clear that Group Captain Oddie's Report was accompanied by a psychologist's report, being that of Dr Ryder of 14 August 2000. It is equally clear that that report was not prepared specifically for the purposes envisaged by Annex B, though it is the case that the content of the report could be said to have relevance to the question of the applicant's unsuitability for his mustering. It is not altogether clear from the terms of Annex B what was the sequence to be followed in the preparation of the Unsuitability Report and the psychologist's report. Was the former to precede the latter? Or were they to be prepared together so giving the Commanding Officer the opportunity to have regard to the psychologist's comments in making recommendations in the Unsuitability Report? What is not envisaged was a report prepared well before the Unsuitability Report which did not address at all one of the matters on which the Annex required comment (ie suitability for future employment) and which commented on aspects of the member's suitability for his mustering, but for a quite separate purpose (ie so as to help improve his performance).
58 There was non-compliance with the requirements of Annex B. The crucial question is what was the consequence of that non-compliance. The applicant contends that the stipulation for a psychologist's report commenting on the matters specified in the Annex was an essential requirement in that it prescribed what was essential information to be placed before the decision-maker and of which the decision-maker was required to take account. Absent that report, it is contended that Group Captain Meyn's decision is invalid either because that report was required before he could proceed to make a determination or else he failed to take a relevant consideration into account. It equally is contended that the Unsuitability Report itself should be set aside as it lacked an essential requirement that being the annexed report.
59 The respondents' contend that the effect of the non-compliance has to be considered in light of the principle affirmed in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391, ie the question of validity despite non-compliance is to be determined by asking whether it was a purpose of DI(AF) PERS 4-19 that an act done in breach of one of its requirements should be invalid.
60 Having noted that service specific Instructions were made by the Chief of Air Staff, for the purposes of, and pursuant to the power given by, s 9A of the Defence Act 1903, the respondents contend that the Chief of Air Staff would not have intended in making the Instruction that breach of Annex B would render the Unsuitability Report invalid. While the Instruction has the force of law it is a very particular form of delegated legislation. It is not a disallowable instrument; it is of an essentially administrative character; and it is not to be interpreted strictly. They then point to characteristics of the process in question and to the manner in which its requirements have been, or will be, complied with substantially in the present case. In particular it is contended:
(a) the requirement for a psychologist's report merely regulates the exercise of the unsuitability report function of a Commanding Officer rather than imposing an essential preliminary for the exercise of that function; cf NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 at [482].
(b) to the extent that the Instruction sets out administrative procedures for the unsuitability process, its purpose is to give general guidance as to the conduct of that process – rather than to set out fixed rules requiring strict compliance;
(c) Dr Ryder's report complied with the requirements of Annex B to the extent that it commented on the applicant's suitability in his current role and substantially complied with the requirement to address suitability for alternative employment;
(d) Dr Ryder's comments were taken into account by Group Captain Oddie, and later by Group Captain Meyn;
(e) to the extent that a psychologist's report is required to address suitability for alternative employment, that was for the use of those who would need to make the alternative employment decision; and
(f) a psychologist's report addressing alternative employment under Annex B is directed to consequential action, and Group Captain Meyn had sought such a report for that purpose.
61 Unfairly, in my view, the respondents seek to derive some additional comfort from the Flight Lieutenant's declared opposition to being required to undertake further psychological assessment. It must be said he was entitled to ask why such assessment was necessary, the more so as he reasonably could have believed prior to the date the Unsuitability Report was raised, that the requirement was unrelated to a prospective Unsuitability Report. Group Captain Oddie's communications were particularly unrevealing of the connection between these two matters.
62 For my own part I am satisfied that non-compliance with the psychologist's report requirement of Annex B did not of itself doom Group Captain Meyn's decision to invalidity. A notable characteristic of the language of the Instruction generally is that it is replete with the imperative language of "is to", "is to be" and "must". In a service environment such use of the language of command is unsurprising. It would be mistaken, though, to draw from it the conclusion that non-compliance robbed any affected action of its validity.
63 It is important, as Project Blue Sky indicates, to consider the purpose of Annex B not only in the light of the particular Instruction in question, but also in light of the legislative framework of which it is part. That the Instruction was made in the exercise a power relating to administration rather than of command does not of itself tell against a finding of invalidity. But it does invite attention to the administrative setting in which this particular Instruction finds its place. It is a setting in which there is a statutorily mandated Redress of Grievance procedure such that any decisions adverse to Flight Lieutenant Bromet under the Instruction could be referred by him to the Chief of Air Staff. The system so established, including the creation of the CRA, was to enable the correction of wrong or unfair decisions: see DI(G) PERS 34-1 cl 1.
64 The Instruction of present concern was related, unquestionably, to an important area of decision-making. It could involve in a real sense decisions about a person's employment, career and livelihood. It is, for this reason, understandable that the individual Annexes to the Instruction should prescribe information to be contained in, or to accompany, Reports envisaged by those Annexes. This is an area in which it properly can be said that "the inclusion of procedural mandates … may be appropriate or desirable": DI(AF) ADMIN 6-1, cl 16. I am satisfied that the purpose of those "procedural mandates" (or requirements) was to facilitate effective decision-making so assisting in achieving fair and correct decisions: cf DI(G) PERS 34-1, above. However this purpose did not go so far as to erect prerequisites for that decision-making.
65 Notwithstanding the significance of the decisions that can be made under the Instruction, I do not consider that a departure from a requirement of the Instruction relating to the content of, or annexures to, a report necessarily required that any decision made on such a report must be invalidated. The reason for the Annex's requirement of a psychologist's report is nowhere fully explained in the Instruction. One can infer from cl 12 of the Instruction set out earlier that such a report's objects were (a) to provide advice on whether psychological factors contributed to making a member unsuitable for his or her mustering and (b) to provide an assessment of the member's suitability for alternative employment in light of those factors (if any). One can likewise infer that such information was considered sufficiently important in the decision making process as to justify the imposition of a requirement that it be made available for the benefit and assistance of the decision-maker in making a correct and fair decision.
66 It can, in other words, properly be said that the Instruction identified a relevant consideration for the decision-maker to take into account. The Annex B requirement provided the means for facilitating this. It did not provide a condition precedent to the exercise of the power to make a determination on a member's suitability for his or her mustering. Rather it was a procedural provision in the processes antecedent to an exercise of the power which was designed to ensure that material of a particular character was brought to the attention of the decision-maker and hence regard would be had to it. It was a "procedural requirement serving … administrative purposes". I do not consider that non-compliance with it as such affected the validity of the power to make a determination on the Unsuitability Report: NAAV's case, above, at [482].
67 This said, such a determination might still be open to challenge if the decision-maker failed to have regard to information possessing the character the requirement was designed to bring to the decision-maker's attention. In the present case I am satisfied that the combined effect of having regard to Dr Ryder's 14 August 2000 and Group Captain Meyn's direction that a report from Dr Ryder be obtained as part of the process of giving consideration to Flight Lieutenant Bromet's "ongoing viability as a productive Air Force Pilot", were sufficient in the circumstances to ensure that the underlying purpose of the requirement was in fact satisfied. Regard was had, and would in the ensuing phase of decision making be had, to what the Instruction identified as relevant considerations. Dr Ryder's report was not prepared for the purpose of the Unsuitability Report, but it was prepared as part of a remedial program for the applicant. It related directly to causes of difficulty affecting his general performance as a C130H pilot. And it expressed an opinion on what the applicant would have to address if he was to achieve his goal of a flying career in the RAAF. In my view, given the setting in which it was prepared and the purpose of it, this report sufficiently exposed the psychological factors which, in the applicant's case, affected his general performance as a C130H pilot. And expressed an opinion on them. Regard, then, was had to what I have inferred was the first of the objects of the Annex B psychological report (ie the contribution of psychological factors to the applicant's unsuitability for his mustering). Group Captain Meyn's direction ensured that regard would likewise continue to be had to psychological assessments in implementing his determination.
68 I am satisfied that the Group Captain's decision did not fail to take into account a relevant consideration. The information relied upon may not have been derived in the way envisaged by Annex B. But it was sufficient to satisfy the purpose of the Annex B requirement.
69 My conclusion, then, is that the failure to annex the required psychologist's report to the Unsuitability Report did not invalidate Group Captain Meyn's decision, nor did it rob the Unsuitability Report itself of its character. If Flight Lieutenant Bromet wished to contest the decision the ROG procedure was open to him.
70 I should add, if I am incorrect in my conclusion, and that the Group Captain Meyn's decision was invalid, this would only affect the validity of that decision. Group Captain Oddie's report would remain unaffected although it would require a psychologist's report to be attached to it before it could be transmitted to Air Force Office for a determination on it.
(3) The Connection between the Suspension Decision and the Unsuitability Report Decision
71 My conclusion above makes it strictly unnecessary for me to consider this matter. I should indicate, though, that if Group Captain Meyn's decision was invalidated for reasons relating to non-compliance with Annex B, the Suspension Decision would stand unaffected. The state of affairs giving rise to it had not changed. The action taken consequent upon it may have been invalid. That did not invalidate the suspension. It merely created the need for a further action to be taken under Annex B.
Conclusion
72 This proceeding suggests that there is a need for the Air Force to review the procedures it has in place to monitor the progress of action being taken against one of its members in a matter affecting that person's career and aspirations. Flight Lieutenant Bromet has been treated with no little thoughtlessness. It is over two years since the prospect of administrative action was raised against him. It is unsurprising that he has displayed frustration at what has transpired in the interim.
73 I will order that the applications in A3 of 2002 and A16 of 2002 be dismissed.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.
Associate:
Dated: 16 September 2002
Counsel for the Applicant: Mr C Erskine
Solicitor for the Applicant: Meyer Clapham
Counsel for the Respondent: Mr T Howe
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 11 September 2002
Date of Judgment: 16 September 2002
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FEDERAL COURT OF AUSTRALIA
Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466
Citation: Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466
Parties: STRAITS RESOURCES LIMITED (ACN 056 601 417)
File number(s): NSD 1653 of 2010
Judge: JACOBSON J
Date of judgment: 20 December 2010
Catchwords: CORPORATIONS – scheme of arrangement – first court hearing for two schemes of arrangement - demerger scheme of arrangement and acquisition scheme of arrangement – convertible notes – conversion and voting agreements – whether separate class of shareholders
Legislation: Corporations Act 2001 (Cth) s 411
Securities Act 1933 (US) s 3(a)(10)
Cases cited: F.T. Eastment & Sons Pty Limited v Metal Roof Decking Supplies Pty Limited (1977) 3 ACLR 69 cited
CCI Holdings Limited [2007] FCA 832 followed
MAC Services Group Limited [2010] NSWSC 1316 referred to
Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 cited
Re Central Pacific Minerals NL [2002] FCA 239 cited
Re CSR Limited (2010) 77 ACSR 592 cited
Re ETRADE Australia Limited (1999) 30 ACSR 516 referred to
Re Hills Motorway Limited (2003) 43 ACSR 101 followed
Re Mosaic Oil NL [2010] FCA 985 referred to
Re Orica Limited [2010] VSC 231 cited
Re People Telecom Limited [2009] FCA 180 referred to
Re Seven Network Limited (No 3) (2010) 267 ALR 583 referred to
Re Telewest Communications Plc [2004] EWCH 924 (CH) referred to
Re Wattyl Limited [2010] FCA 854 cited
Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1467 referred to
Date of hearing: 17 December 2010
Date of last submissions: 20 December 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 53
Counsel for the Plaintiff: Mr F Gleeson SC
Solicitor for the Plaintiff: Corrs Chambers Westgarth
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1653 of 2010
IN THE MATTER OF STRAITS RESOURCES LIMITED (ACN 056 601 417)
STRAITS RESOURCES LIMITED (ACN 056 601 417)
Plaintiff
JUDGE: JACOBSON J
DATE OF ORDER: 20 DECEMBER 2010
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) ("Corporations Act"):
(a) Straits Resources Limited ACN 056 601 417 ("Straits") convene a meeting ("Scheme Meeting") of the holders of ordinary shares in Straits ("Straits Shareholders"), for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed to be made between Straits and Straits Shareholders ("Scheme"), being the scheme substantially in the form of the draft contained in Annexure E of the scheme booklet containing the explanatory statement in relation to the Scheme, being Exhibit "1" in these proceedings ("Scheme Booklet").
(b) The Scheme Meeting be held at 11am (Perth time) on 21 January 2011, at The Celtic Club, 48 Ord Street, West Perth, Western Australia, Australia.
(c) The Chairperson of the Scheme Meeting be Alan Good and in his absence Michael Gibson.
(d) The Chairperson appointed to the Scheme Meeting has the power to adjourn the Scheme Meeting in his absolute discretion.
(e) All voting at the Scheme Meeting be by poll as declared by the Chairperson.
(f) The explanatory statement in the Scheme Booklet for the Scheme be approved for distribution to Straits Shareholders.
(g) There be dispatched to each Straits Shareholder on the Straits register of members ("Register") (other than a shareholder referred to in paragraph (h) of these Orders, except in the circumstances described in paragraph 82 of the affidavit of Michael George Gibson affirmed on 16 December 2010):
(i) a document substantially in the form of the Scheme Booklet;
(ii) a proxy form for the Scheme Meeting; and
(iii) a reply paid (for use in Australia only) envelope addressed to Computershare Investor Services Pty Limited,
in the case of each Straits Shareholder who has a registered address in Australia, by prepaid post and, in the case of each Straits Shareholder who has a registered address outside Australia, by prepaid airmail or air courier, and in each case addressed to the relevant address set out in the Straits register of members.
(h) There be dispatched to each Straits Shareholder on the Register who in accordance with the Corporations Act has consented to receiving shareholder communications electronically, an email substantially in the form of the draft at tab 20 of exhibit "MGG-1" to the affidavit of Michael George Gibson affirmed 16 December 2010 to the nominated email address of the Straits Shareholder.
(i) Straits cause to be published on a website:
(A) the Scheme booklet including notice of the Scheme Meeting and proxy form; and
(B) a facility by which Straits Shareholders can electronically lodge a proxy online,
and cause those documents and that facility to be accessible by an electronic hyperlink given in the email referred to in paragraph (h) of these Orders.
(j) Straits place an advertisement in The Australian newspaper, substantially in the form of "Annexure A" to these Orders, on or before 21 January 2011 and Straits shall otherwise be exempted from compliance with the requirement to publish such notice following the Scheme Meeting and prior to the second court hearing for approval of the Scheme pursuant to Rule 3.4(3)(a) of the Federal Court (Corporations) Rules 2000 (Cth).
2. Pursuant to section 1319 of the Corporations Act, Straits be exempted from compliance with the requirements of rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) save that regulation 5.6.13 of the Corporations Regulations 2001 (Cth) shall apply to the Straits Scheme Meeting.
3. The proceeding be stood over to 31 January 2011 at 10.15 am before Justice Jacobson for the hearing of any application to approve the Scheme.
4. Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth), Annexure A to the affidavit of Wayne Anthony Huf affirmed 16 December 2010 be confidential and be available for inspection only by the legal representatives of the parties to the proceeding.
5. Liberty to restore to the list.
6. These orders to be entered forthwith.
Annexure A
Straits Resources Limited ACN 056 601 417
Notice of hearing to approve compromise or arrangement
TO all the creditors and members of Straits Resources Limited ACN 056 601 417 (Straits).
TAKE NOTICE that at [insert time] on 27 January 2011 the Federal Court of Australia at Level 17, Law Courts Building, Queens Square, Sydney, New South Wales 2000 will hear an application by Straits seeking the approval of an arrangement between Straits and its members, if agreed to by resolution to be considered by the members of Straits at a meeting of such members to be held on 21 January 2011 at The Celtic Club, 48 Ord Street, West Perth, Western Australia at 10.00am (Perth time).
If you wish to oppose the approval of the arrangement, you must file and serve on Straits a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Straits at its address for service at least 1 day before the date fixed for the hearing of the application.
The address for service on Straits is, c/o Corrs Chambers Westgarth, Level 36, 1 Farrer Place, Sydney, New South Wales (Reference: Stan Lewis).
Mark HandsCompany SecretaryStraits Resources Limited
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1653 of 2010
IN THE MATTER OF STRAITS RESOURCES LIMITED (ACN 056 601 417)
STRAITS RESOURCES LIMITED (ACN 056 601 417)
Plaintiff
JUDGE: JACOBSON J
DATE: 20 DECEMBER 2010
PLACE: SYDNEY
REASONS FOR JUDGMENT
Introduction and Overview
Two Schemes of Arrangement
1 I had before me on Friday 17 December 2010 the first court hearing of two schemes of arrangement proposed by Straits Resources Limited ("Straits"). The first scheme is described in the documentation as the "Demerger Scheme". The second is described as the "Acquisition Scheme".
2 The two schemes are separate in the sense that the Demerger Scheme is not conditional upon approval of the Acquisition Scheme and may therefore proceed even if the Acquisition Scheme does not. But they are related because the Acquisition Scheme is conditional upon the Demerger Scheme proceeding.
The Demerger Scheme
3 The Demerger Scheme is known by that name because it provides for the separation of one arm of the business of Straits from the other. The two arms are "the Coal Business" and "the Metals Business." Under the Demerger Scheme the assets of Straits referable to the Metals Business will be transferred to a wholly owned subsidiary of Straits known as Straits Metals Limited ("Straits Metals"). The Coal Business will remain in Straits.
4 Shareholders of Straits will receive one share in Straits Metals for each existing share in Straits, but they will retain their existing shareholding in Straits, thus the effect of the Demerger Scheme may be said to be that shareholders of Straits will receive one share in the Metals Business (through Straits Metals) and one share in the Coal Business (through Straits) for each share they presently hold in the conglomerate business of coal and metals presently conducts by Straits.
The Acquisition Scheme
5 The Acquisition Scheme provides for the acquisition by a company known as PTT Mining Limited ("PTT Mining") of all of the shares in Straits after the demerger for $1.72 per share, but this is subject to a possible reduction to $1.56 if there is an adverse event which I will explain further in my judgment on the Acquisition Scheme (see Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1467).
Interrelationship of the Schemes
6 If both the Demerger Scheme and the Acquisition Scheme proceed, shareholders will receive $1.72 per share, together with one share in Straits Metals for each existing share in Straits, that is to say, they will hold a share in the Metals Business and they will receive $1.72 per share in place of their previous investment in the division of Straits represented by the Coal Business.
7 If the Demerger Scheme is approved but the Acquisition Scheme is not, the existing shareholders of Straits will have their investments split into two separate businesses in place of their present investment in the conglomerate.
Orders Made
8 I made orders on Friday convening meetings of shareholders to consider each of the proposed Schemes. These are my reasons for the orders made in the Demerger Scheme.
ANALYSIS OF the Demerger Scheme
Straits
9 The operational structure of Straits is conveniently described in a graph which is set out at page 6 of the report of the independent expert, Ernst & Young Transaction Advisory Services Limited ("E&Y") on the Acquisition Scheme. The graph shows the structure of the Coal Business and the Metals Business prior to the proposed Demerger Scheme.
10 The Coal Business is conducted by a joint venture company owned as to 40% by Straits and as to the remaining 60% by PTT Mining.
PTT Asia Pacific
11 The joint venture company is known as PTT Asia Pacific Mining Pty Limited ("PTT Asia Pacific"). PTT Asia Pacific has a substantial interest in coal exploration prospects in Brunei and Madagascar. It also has an interest in a project in Western Australia and a 45.6% shareholding interest in Straits Asia Resources Limited ("SAR"), which is a company incorporated in Singapore and listed on the Singapore Stock Exchange. SAR conducts the Sebuku and Jembayan coal mines in Indonesia.
Straits Metals Business
12 The Metals Business of Straits consists of, inter alia, 100% interest in the Tritton Copper Mine in New South Wales, 100% interest in the Mount Muro Gold Mine in Central Kalimantan in Indonesia, and various other non-coal related assets and liabilities.
How the Demerger will be Effected
13 It is proposed that the demerger will be effected by Straits through:
A reduction of the share capital of Straits equal to the market capitalisation of Straits Metals (when that company is listed) less the demerger dividend (if any). This is explained below. This is subject to a proviso that in each case the amount does not exceed the maximum capital return permitted by law, applied equally against each share in Straits held by Straits shareholders on the Demerger Scheme record date in accordance with a proposed capital reduction resolution.
If declared by the Straits Board, a special dividend of an amount per Straits share determined by the Straits Board and announced on the ASX prior to the demerger date;
By applying the amount of the capital reduction and the demerger dividend as consideration for the transfer to Straits shareholders of one ordinary share in Straits Metals for every Straits share they hold pursuant to the Demerger Scheme. No amount of cash will be paid to Straits shareholders as a result of the capital reduction or the demerger dividend.
14 The market capitalisation is the amount which is the market value multiplied by the number of Straits Metals shares on issue on the Demerger Scheme record date.
15 The market value is the volume weighted average price of Straits Metals shares as traded on the ASX (whether on a deferred or normal settlement basis) over the first five trading days after the Demerger Scheme effective date. It is not possible to make this calculation before the approval of the Demerger Scheme because Straits Metals will not be listed until after that occurs.
16 It is estimated that the market value of Straits Metals shares may be in the range of $0.4695 to $0.49 and the market capitalisation in the range of $148.52 million to $155.01 million. Straits shareholders as at the Demerger Scheme record date other than foreign shareholders (who will be referred to below) do not need to pay any money for the Straits Metals shares they receive under the Demerger Scheme. Their distribution entitlement will be applied as consideration for the transfer of the Straits Metal shares under the Demerger Scheme.
Legal Principles Applicable to the First Court Hearing
17 The principles which apply to the first court hearing have been referred to in a number of authorities. I do not need to refer to them in detail.
18 It is sufficient to say that the court's approach is that it will not ordinarily summon a meeting unless the scheme is of such a nature and cast in such terms that if it receives the statutory majority at the meeting, the court would be likely to approve it on the hearing of an application that is unopposed: see F.T. Eastment & Sons Pty Limited v Metal Roof Decking Supplies Pty Limited (1977) 3 ACLR 69 at 72; Re Central Pacific Minerals NL [2002] FCA 239 at [8]; and Re CSR Limited (2010) 77 ACSR 592 at [12]. In addition, I endeavoured to state the principles in Re Seven Network Limited (No 3) (2010) 267 ALR 583 ("Seven Network") at [31]ff.
19 The principles were recently restated by Davies J in Re Orica Limited [2010] VSC 231 at [7] and [8]. Those passages were cited with approval by Barrett J in MAC Services Group Limited [2010] NSWSC 1316 at [5]. It is unnecessary to repeat what was said in those authorities.
Discussion
Deed Poll
20 The obligations of Straits Metals under the Demerger Scheme are supported by a Deed Poll given by Straits Metals in favour of Straits shareholders. This appears in the Demerger Scheme Booklet at Annexure F. The Deed Poll has been executed by Straits Metals.
Recommendation by Straits Directors
21 The directors of Straits unanimously recommend that in the absence of a superior proposal, Straits shareholders vote in favour of the Demerger Scheme at the Demerger Scheme Meeting.
22 The Straits directors believe that the demerger and, in particular, the reduction of capital will not materially prejudice the ability of Straits to pay its creditors.
Independent Expert Report
23 E&Y has prepared a report which is included as Annexure A in the Demerger Scheme Booklet. E&Y has concluded that the advantages of the demerger outweigh its disadvantages and has concluded that the proposed demerger is in the best interests of Straits shareholders.
24 E&Y have also concluded that the reduction of capital will not materially prejudice Straits' ability to pay its creditors.
Ineligible Foreign Shareholders
25 The position of ineligible foreign shareholders is dealt with in a manner which is common to schemes of this type.
26 If the demerger proceeds, ineligible foreign shareholders will retain their existing shares in Straits, which will be renamed as Straits ICH Limited, and the shares to be issued to them in Straits Metals under the Demerger Scheme will be transferred to a nominee appointed by Straits in order for those shares to be sold on their behalf. The net proceeds of sale will then be dealt with as described in section 1.8 of the Demerger Scheme Booklet.
27 There are only a very small number of ineligible foreign shareholders. The total number as at 30 November 2010 was 14, which represented 0.29% of the shareholders of Straits.
28 I do not consider that the ineligible foreign shareholders constitute a separate class of shareholders.
29 The position in relation to the ineligible foreign shareholders not constituting a separate class was explained by Barrett J in Re Hills Motorway Limited (2003) 43 ACSR 101 ("Re Hills Motorway"), in particular at [10] – [13].
30 There is also authority to support the proposition that a two-step demerger structure such as that which is proposed in the present case, that is to say, a capital reduction followed by the distribution of Straits Metals shares to the existing shareholders of Straits, is not to be regarded as a selective reduction of capital, even though shareholders in certain jurisdictions receive a cash amount rather than shares in the demerged entity; see Re ETRADE Australia Limited (1999) 30 ACSR 516 at 517 per Santow J.
Conversion and Voting Agreements
31 Standard Chartered Private Equity Limited ("Standard Chartered PE") holds 55 million 4% convertible notes issued by Straits with an aggregate face value of $79.8 million. The convertible notes are convertible into shares in Straits. The effect of the conversion rights is that upon conversion Standard Chartered PE will receive approximately 61 million shares in Straits, which is equal to a 19.4% shareholding in that company.
32 Straits has entered into a conversion agreement with Standard Chartered PE (the "Straits-Standard Chartered PE Conversion Agreement") to ensure that all of the Straits convertible notes will be converted to Straits shares:
in sufficient time to enable Standard Chartered PE to vote the Straits shares received upon conversion of the convertible notes at the Demerger Scheme Meeting and the Acquisition Scheme Meeting; and
in any event before the Demerger Scheme record date.
33 As a result, the Straits convertible notes are expected to be extinguished, and the Straits shares issued as a result of their conversion will participate with all other Straits shares in the Demerger Scheme and the Acquisition Scheme.
34 PTT Mining Limited has entered into a separate PTT Mining Limited-Standard Chartered PE Conversion Agreement to the same effect as the other conversion agreement described above.
35 Upon Standard Chartered PE converting the convertible notes before the record date for entitlements to vote at the Demerger Scheme Meeting and the Acquisition Scheme Meeting, Standard Chartered PE is required to vote in favour of each of the Demerger Scheme and the Acquisition Scheme.
36 It follows from what I have said above that the rights attaching to the convertible notes held by Standard Chartered PE and the voting arrangements which it has entered into are material matters to be disclosed to shareholders. What emerges from the Scheme Booklet in each of the Schemes is that:
On conversion of the convertible notes, Standard Chartered PE will be issued with approximately 61 million shares in Straits which will equal about 19.4% of the issued share capital of Straits.
If the Demerger Scheme is approved, Standard Chartered will then hold approximately 19.4% shareholding in each of Straits and Straits Metals.
If the Acquisition Scheme is approved, Standard Chartered PE will receive approximately $105 million for its shares in Straits (subject to reduction in the event of an adverse adjustment event) as a consequence of a conversion of the convertible notes which were acquired by Standard Chartered PE for nearly $80 million.
Also upon the approval of the Acquisition Scheme, shareholders who presently hold shares in the "conglomerate" Straits will only own shares in the Metals Business, through their holdings in Straits Metals, with that company being owned as to 19.4% by Standard Chartered PE. Shareholders will of course in addition receive $1.72 per share (or $1.56) for their coal interest.
Standard Chartered PE is committed to voting in favour of the Demerger Scheme and the Acquisition Scheme.
Votes at the Scheme Meeting
37 Straits seeks an order that a single meeting of Straits shareholders be convened to consider and, if thought fit, agree to each of the Schemes.
38 I do not consider the conversion rights or the voting rights entered into with Standard Chartered PE create separate classes of shares within the principles stated in the authorities.
39 The relevant question in such cases is governed by the principle stated over 100 years ago in Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 at 579 – 580 and 583. Barrett J referred to that principle in his decision in Re Hills Motorway. See also the observations of Stone J in Re Wattyl Limited [2010] FCA 854 at [15] – [17].
40 Barrett J in Re Hills Motorway summed up the test by saying that it is not one of identical treatment, it is one of community of interest. The court is to ask itself whether the rights and entitlements of the different groups, viewed in the totality of the scheme's context, are so dissimilar as to make it impossible for them to consult together with a view to their common interest. The focus is not on the fact of differentiation but on its effects. The extent and nature of the differentiation must be measured in terms of the effect on the ability to consult together in a common interest. That is to say, to come together at a single meeting and to debate the question of what is good or bad for the constituency as a whole.
41 In the present matter Standard Chartered PE will receive the same consideration for its equity as the other groups of shareholders in each of the Schemes, albeit that it will receive its consideration as a result of the conversion of the convertible notes. This will be so even though if the Acquisition Scheme proceeds it will effectively hold its 19.4% interest in Straits as what might loosely be called "a free carried interest" after receipt of the consideration for the Acquisition Scheme.
42 Whilst I do not consider these matters to be class-creating, I think it is appropriate for the votes of Standard Chartered PE to be separately tagged. I indicated on Friday that I would then be in a position to look at the separate allocation of the votes at the second court hearing on the question of fairness. That was the approach that was adopted by Emmett J, although in a different context, in CCI Holdings Limited [2007] FCA 832 at [19].
43 As to the position in relation to the voting arrangements, this seems to me to be covered by a number of authorities so that the view that has been taken is that it is not class-creating. What is important is that Standard Chartered PE is not being provided with any collateral benefit by agreeing to exercise its right to convert the Straits convertible notes.
44 I dealt with the position in relation to proxy voting deeds in Re People Telecom Limited [2009] FCA 180 at [7] – [8], although in that case the proxy deeds were given in favour of a person other than the acquirer of the shares. Here the voting agreements are with the company that will acquire the shares if the Acquisition Scheme is approved.
45 A similar approach was also taken by Stone J in Re Mosaic Oil NL [2010] FCA 985 at [15]. There is a useful explanation of the rationale for this approach to be found in the observations of David Richards J in Re Telewest Communications Plc [2004] EWCH 924 (CH) at [52] – [55]. That authority was referred to by Barrett J in MAC Services Group Limited [2010] NSWSC 1316 at [18]. The context in the MAC case was different but analogous because the issue concerned whether an option agreement with a significant shareholder was class creating.
46 The other matters which Mr F. Gleeson SC brought to my attention on Friday are sufficiently set out in Mr Gleeson's outline of submissions which I will mark as MFI 1.
Exemption under s 3(a)(10) Securities Act 1933 (US)
47 One matter to which I should draw to attention is that if the court grants approval to the Scheme, Straits Metals intends to rely upon the court's approval of the Scheme for the purposes of the exemption under section 3(a)(10) of the Securities Act 1933 of the United States.
48 That is a matter which has been dealt with in various authorities. It is well established that it is an issue to be dealt with at the second court hearing but the approach is that it is necessary for the court to be informed prior to the hearing that the plaintiff or the relevant company will rely on the exemption. That has been done in the present case.
Disclosure in Scheme Booklet
49 In conclusion, the authorities to which I have referred above emphasise the importance of the object of disclosure in the Scheme Booklet.
50 The detail and effect of this Scheme must be sufficiently disclosed so as to enable shareholders to make an informed decision.
51 In the course of the application on Friday, I pointed out a number of areas where in my opinion disclosure was not made with sufficient clarity in the Scheme Booklet. That observation is not intended as a criticism of those who have the ultimate carriage of drafting the Scheme documentation. It may well be that the approach which is adopted as a matter of course in modern scheme documentation tends to detract from a clear and concise statement of the essential details and effect of the scheme.
52 Nevertheless, as I said in Seven Network, the court relies heavily on counsel to bring to the court's attention those features of the scheme which would require attention, and that has been done in the present matter.
Conclusion
53 In accordance with the principles to which I have referred, I made orders on Friday convening the Scheme Meeting.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.
Associate:
Dated: 23 December 2010
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Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 6) [2014] FCA 1435
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FEDERAL COURT OF AUSTRALIA
Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 6) [2014] FCA 1435
Citation: Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 6) [2014] FCA 1435
Parties: PANKAJ OSWAL v IAN MENZIES CARSON, DAVID LAWRENCE MCEVOY AND SIMON GUY THEOBALD (IN THEIR CAPACITIES AS RECEIVERS AND MANAGERS OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151))
File number(s): WAD 370 of 2011
Judge(s): SIOPIS J
Date of judgment: 24 December 2014
Catchwords: CORPORATIONS – inquiry into the conduct of receivers and managers – whether statement of proposed relief sought relief which was unavailable – whether application needed to be made to expand the scope of the inquiry – whether allegations made in the statement of facts and contentions went beyond the scope of the inquiry as ordered.
Legislation: Corporations Act 2001 (Cth) ss 180, 181, 182, 183, 423, 423(1), 536, 1290(1), 1317E, 1317G, 1317J, 1317J(1), 1317J(4)
Cases cited: Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 4) [2013] FCA 398
Ah Toy v Registrar of Companies (1986) 10 FCR 356
BL & GY International Co Ltd v Hypec Electronics Pty Ltd (2010) 79 ACSR 558
Date of hearing: 15 October 2014
Place: Perth
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 78
Counsel for the Plaintiff: Mr M Goldblatt
Solicitor for the Plaintiff: Murcia Pestell Hillard
Counsel for the Defendants: Mr M Connock QC and Mr J Graham
Solicitor for the Defendants: Herbert Smith Freehills
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION WAD 370 of 2011
IN THE MATTER OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151)
PANKAJ OSWAL
Plaintiff
IAN MENZIES CARSON, DAVID LAWRENCE MCEVOY AND SIMON GUY THEOBALD (IN THEIR CAPACITIES AS RECEIVERS AND MANAGERS OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151))
Defendants
JUDGE: SIOPIS J
DATE OF ORDER: 24 december 2014
WHERE MADE: PERTH
THE COURT ORDERS THAT:
1. Paragraphs 1 and 2 of the plaintiff's statement of relief be struck out.
2. Paragraphs 50-54, 107-111, 116, 118, 120, 121(a)-(c), 122, 125, 127, 129, 131, 133, 134, 136, 138, 140-142 and Schedule 1 of the plaintiff's statement of facts and contentions be struck out.
3. The inquiry will be heard during the period 4 to 12 June 2015.
4. I will hear the parties on the question of further orders and directions.
5. Costs be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION WAD 370 of 2011
IN THE MATTER OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (acn 095 441 151)
PANKAJ OSWAL
Plaintiff
IAN MENZIES CARSON, DAVID LAWRENCE MCEVOY AND SIMON GUY THEOBALD (IN THEIR CAPACITIES AS RECEIVERS AND MANAGERS OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151))
Defendants
JUDGE: SIOPIS J
DATE: 24 december 2014
PLACE: PERTH
REASONS FOR JUDGMENT
1 After a contested application (Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 4) [2013] FCA 398 (Oswal (No 4)), on 26 April 2013, I made orders that there be an inquiry under s 423 of the Corporations Act 2001 (Cth) into the following matters:
(a) the level of the fees and expenses charged by the defendants during the last six weeks of the receivership of Burrup Fertilisers Pty Ltd (the company) between 17 December 2011 and 1 February 2012;
(b) the propriety of the defendants' conduct in accepting the appointment to act as the receivers and managers of the company;
(c) the extent to which the defendants, in respect of the whole period of the receivership of the company, charged:
(i) fees for the professional time that Melbourne based partners and staff spent in travelling; and
(ii) the expenses and disbursements incurred by Melbourne based partners and staff in respect of travel, accommodation and related activities; and
(d) the extent to which the fact that persons who worked on the receivership of the company were based in Melbourne, increased the fees, expenses and disbursements which were charged by the defendants in respect of the receivership.
2 On that day, I also made orders for the giving of discovery and inspection.
3 Thereafter, the process of discovery and the issuing of subpoenas ensued. Subsequently, I ordered the plaintiff, Mr Oswal, to file and serve a statement of facts and contentions, and also later, a document stating the relief for which Mr Oswal would contend at the hearing of the inquiry.
4 On 5 September 2014, Mr Oswal filed and served a statement of facts and contentions. The statement of facts and contentions is divided into a section setting out the facts for which Mr Oswal will contend at the inquiry and a section setting out the contentions which Mr Oswal would propose to make founded upon the facts for which he contends. A significant part of the contentions section consists of allegations that the defendants contravened ss 180 to 183 of the Corporations Act and their general common law duties to the company.
5 On 12 September 2014, Mr Oswal filed a document entitled "statement of relief".
6 In para 1 of that statement, Mr Oswal foreshadows seeking declarations under s 1317E of the Corporations Act that the defendants had, by reason of the allegations made in a number of identified paragraphs in the statement of facts and contentions, contravened ss 180 to 183 of the Corporations Act.
7 In para 2, Mr Oswal foreshadows seeking an order under s 1317G of the Corporations Act that the defendants pay a pecuniary penalty to the Commonwealth on the basis of the declarations of contraventions under s 1317E sought under para 1 of the statement of relief.
8 In para 3 of the statement, Mr Oswal foreshadows that he will seek orders for the payment of compensation in respect of what he alleges are excessive fees and expenses which the defendants charged the company during the last six weeks of the receivership, travel fees and expenses and also fees which Mr Oswal refers to as "pre-appointment fees". I will discuss the last mentioned category of fees in more detail later in these reasons.
9 In paras 4 to 7 of the statement of relief, Mr Oswal seeks orders that the defendants are not fit and proper persons to remain registered as liquidators and that each of them, pursuant to s 1290(1) of the Corporations Act, must request the Australian Securities and Investments Commission (ASIC) to cancel his registration as a liquidator. Mr Oswal also seeks orders either prohibiting or suspending each of the defendants from being registered as a liquidator for a number of years.
10 On 3 October 2014, the defendants filed an interlocutory application seeking to strike out para 1 and para 2 of Mr Oswal's statement of relief and a considerable number of paragraphs of Mr Oswal's statement of facts and contentions.
the statement of relief
11 I deal first with the defendants' application to strike out para 1 and para 2 of the statement of relief because, in my view, the application has some bearing upon that part of the application to strike out the numerous allegations in the statement of facts and contentions that each of the defendants breached his statutory and general common law duties.
12 The defendants contended that these two paragraphs should be struck out on the basis that only ASIC has the standing to apply for the relief foreshadowed in para 1 and para 2 of the statement of relief. It is the case that s 1317J(1) and 1317J(4) of the Corporations Act make it clear that the defendants' contention should be upheld.
13 In his written submissions, Mr Oswal acknowledged the force of the defendants' contention, and said that he would not seek the relief described in para 1 and para 2 at the hearing. I will, therefore, strike out para 1 and para 2 of the statement of relief.
14 In my view, this limitation which the legislature has placed on the standing of a person to apply for the relief described in para 1 and para 2 has consequences in relation to the complaints made by the defendants in relation to inclusion of allegations of breaches of duty in the statement of facts and contentions.
the statement of facts and contentions
15 I deal next with the defendants' objections made to the statement of facts and contentions.
16 In outline, the defendants' objections are founded primarily on a contention that the impugned paragraphs of the statement of facts and contentions travelled beyond the scope of the inquiry as ordered.
17 Although the objections are framed in the interlocutory application, by reference to individual paragraph numbers in the statement of facts and contentions, the objections can be grouped into discrete topics.
18 I deal with these topics below.
pre-appointment fees
19 The paragraphs in the statement of facts and contentions which are relevant to the pre-appointment fees issue and to which objection is taken, are paras 50 to 54 (which are to be found in the "facts" section of the document) and paras 109 to 111 (which are to be found in the "contentions" section of the document).
20 In the impugned paragraphs, Mr Oswal alleges that on 25 January 2011, which was about four weeks after the receivership had commenced, the defendants, in breach of duty to the company, caused the firm of which they were partners, PPB Advisory, to issue the company with PPB invoice 800511 in the sum of $341,800.49 for services described as "Preparation of appointment", and that they caused the company to pay the invoice. Mr Oswal goes on to contend that the defendants were not entitled to charge the company for work which was carried out for the benefit of, and at the instance of, the Australian and New Zealand Banking Group Limited (ANZ bank) and ANZ Fiduciary Services (ANZFS) prior to their appointment as receivers and managers of the company. Mr Oswal contends that PPB invoice 800511 included work which was unrelated to the receivership.
21 In support of that contention, Mr Oswal says that the invoice included charges in respect of meetings which occurred on 1, 2 and 6 December 2010 between one of the defendants, Mr Carson, and officers of the ANZ bank and a member of Freehills law firm. Those meetings occurred more than a year before the appointment of the defendants as receivers and managers of the company, and, according to Mr Oswal, did not relate to the receivership.
22 Mr Oswal also says that the impugned invoice included charges for work which included the time spent by two employees of PPB Advisory in carrying out surveillance of Mr Oswal's home in a Perth suburb. Mr Oswal contends that the charges are objectionable for two reasons. First, said Mr Oswal, engaging in surveillance of his home made no contribution to the receivership and, secondly, the carrying out of surveillance work was not within the ambit of the professional expertise of the two PPB Advisory employees whose time was charged for this work. In this regard, Mr Oswal also contends that the defendants caused the company to pay $63,909.30 to Executive Investigative Services on 18 January 2011 for investigative surveillance services. Mr Oswal said that those services were carried out pursuant to an instruction to the defendants from the ANZ bank to "dig up dirt" on Mr Oswal and that is not a task which could properly be regarded as relating to the receivership.
23 Mr Oswal also points to the fact that the PPB invoice 800511 included work which had been carried out, invoiced and paid for before the date of the appointment of the defendants as receivers and managers of the company. Mr Oswal says that the PPB invoice 800511 was originally in the amount of $421,571.70, but credits were recognised in respect of the work which had previously been carried out by PPB Advisory, invoiced and paid for so as to arrive at the total of $341,800.49.
24 Mr Oswal also complains that the PPB invoice included charges for time recorded by the employees of PPB Advisory at a rate of 7.5 hours per day. Mr Oswal goes on to contend that the defendants permitted that amount of time to be billed to the company without first considering the effectiveness of the work performed by each employee and whether the work billed was necessary and had been properly performed.
25 Mr Oswal conceded that the question of whether the defendants have acted properly in rendering the PPB invoice and causing the company to pay the PPB invoice 800511, was not within the scope of the inquiry as ordered. However, Mr Oswal contended that it was open to the Court, once it had ordered an inquiry, to inquire into matters other than those which comprised the original scope of the inquiry. Mr Oswal relied upon observations to that effect in the case of Ah Toy v Registrar of Companies (1986) 10 FCR 356 at 358, and other cases.
26 The defendants, however, contended that if Mr Oswal wanted to expand the scope of the inquiry, he needed to apply to amend the scope of the inquiry. The defendants said that Mr Oswal would need to satisfy the same requirements in respect of the inclusion of any proposed additional issue, as applied to the issues the subject of his original application. The defendants referred to the case of BL & GY International Co Ltd v Hypec Electronics Pty Ltd (2010) 79 ACSR 558 (BL & GY International) as an example of such an application to amend the scope of an inquiry.
27 In my view, it is incumbent upon Mr Oswal to satisfy the requirements for the making of an order for the holding of an inquiry under s 423 of the Corporations Act in respect of the proposed additional issue of whether the defendants acted properly in charging the company for work carried out before their appointment as receivers and managers. However, in my view, it is not necessary for Mr Oswal to commence a new originating application in order to commence that process.
28 In my view, it is sufficient to treat the filing of the statement of facts and contentions as being an application to that effect. However, it is incumbent upon Mr Oswal to identify more precisely the scope of the expanded inquiry in relation to the pre-appointment fees which he asks the Court to make and to file and serve any further evidence in support of that application.
29 Accordingly, I will make directions for the determination of the issue as to whether the scope of the inquiry should be expanded to deal with the question of pre-appointment fees. Those directions will, of course, incorporate the opportunity for the defendants to oppose the expansion of the scope of the inquiry. In the meantime, I will strike out the impugned paragraphs of the statement of facts and contentions.
the object and purpose of the receivership
30 One of the contentions originally made by Mr Oswal was that the scope of the inquiry should include an examination of the purpose for which the defendants conducted the receivership of the company. In short, Mr Oswal contended that the defendants had conducted the receivership for a purpose extraneous to the proper purpose of discharging the debt due by the company to ANZFS.
31 Much time and energy was devoted to the pursuit of this contention by Mr Oswal during that application. For reasons which I do not intend to repeat, in Oswal (No 4), I rejected Mr Oswal's contention that it was appropriate that an inquiry be conducted into whether the defendants had acted for an improper purpose in conducting the receivership.
32 The defendants complain that notwithstanding that Mr Oswal failed in his initial application to have an inquiry into whether the defendants acted for an improper purpose in conducting the receivership, Mr Oswal has made allegations to that effect in his statement of facts and contentions. The defendants complain that statements made in paras 49, 107 and 108, 110(d), 141 and 142 of the statement of facts and contentions, fall into this impermissible category. The defendants contend that these paragraphs should be struck out.
33 I deal with each of these paragraphs separately.
Paragraph 49
34 In para 49 of the statement of facts and contentions, Mr Oswal states that a large proportion of the fees and expenses incurred in the last six weeks of the receivership related to the carrying out of investigations and to the conduct of litigation. The essence of Mr Oswal's complaint is that these fees and expenses were not properly incurred because there was no legitimate purpose in conducting investigations and litigation during the period which Mr Oswal described as "the death throes of the receivership".
35 The defendants object that this allegation seeks to raise the same allegation in respect of the defendants acting generally for an improper purpose which the Court previously rejected. In my view, that objection is not accepted. Mr Oswal does not here refer to acting for an improper purpose generally, but rather in the context of a complaint about specific conduct, namely, conducting investigative work and litigation during the last six weeks of the receivership. It is a complaint which, in my view, legitimately calls upon the defendants to explain why, so late in the receivership, the defendants would be expending large amounts of money on investigations and litigation. In my view, on the face of it, Mr Oswal raises a legitimate question about the level of fees and expenses incurred in the last six weeks of the receivership, which falls within the scope of the inquiry as ordered.
36 Accordingly, para 49 of the statement of facts and contentions will not be struck out.
Paragraphs 107 and 108
37 In para 107 and para 108 of the statement of facts and contentions, Mr Oswal contends that the defendants were not appointed for the legitimate objective of realising the assets and undertakings of the company, but were appointed with the objective of removing Mr Oswal and his wife from their positions in relation to the ownership and management of the company, securing the assets of the company and using those assets to finance investigations and litigation against Mr and Mrs Oswal.
38 These two paragraphs will be struck out. These paragraphs impugn the purpose for which the defendants were appointed and also for which they acted in the conduct of the receivership as a whole.
39 As mentioned, in Oswal (No 4), I found that the question of whether the defendants conducted the whole of the receivership for an improper purpose, was not an appropriate matter to be the subject of an inquiry under s 423 of the Corporations Act. Albeit that Mr Oswal now contends that the defendants' purpose was improper for a slightly different reason to that which Mr Oswal originally advanced in Oswal (No 4), the rationale for rejecting Mr Oswal's initial application still applies.
40 Accordingly, para 107 and para 108 of the statement of facts and contentions will be struck out.
Paragraph 110(d)
41 The allegation made at para 110(d) is that the defendants had been instructed to "dig up dirt" on Mr Oswal and, therefore, the defendants did not approach the receivership free from bias, conflict of interest, or undue influence and did not take care to ensure that they were not influenced by personal feeling or prejudice.
42 This allegation is simply another way of expressing the same contention as set out in para 107 and para 108. The same reasoning applies in relation to this allegation.
43 Accordingly, para 110(d) forms part of para 110 of the statement of facts and contentions which has already been struck out.
Paragraphs 141 and 142
44 These paragraphs repeat the allegation that the defendants acted for an improper purpose throughout the receivership, namely, the purpose of removing Mr Oswal and his wife from any involvement in the ownership and management of Burrup Holdings Limited (BHL) or the company, gathering information for proposed litigation against Mr and Mrs Oswal and instituting litigation against them, rather than the proper purpose of realising the secured property and paying out the secured creditor's debt.
45 Mr Oswal acknowledges that this issue is not part of the inquiry as ordered. However, for the reasons set out at [38]-[39] above, para 141 and para 142 of the statement of facts and contentions will be struck out.
entry into share sale deed and solicitation
46 The defendants also contend that paras 68 to 74, 121 and 122 of the statement of facts and contentions should be struck out. Those paragraphs have been grouped together under the rubric referred to above.
47 In paras 68 to 74, Mr Oswal alleges that the defendants caused themselves to become parties to the share sale deed and so caused themselves to become obliged to carry out certain functions under that deed, including providing Apache Fertilisers Pty Ltd (Apache Fertilisers), the purchaser of Mr and Mrs Oswals' shares, with access to books, records and management reports of the company.
48 In those paragraphs, Mr Oswal goes on to say that during the last six weeks of the receivership, the defendants met with representatives of Apache Fertilisers on a weekly basis to discuss and provide reports to Apache Fertilisers of the ongoing financial management issues in relation to the company. Mr Oswal contends that during that period the defendants used their regular access to Apache Fertilisers to solicit post-receivership work from Apache Fertilisers.
49 At para 121 of the statement of facts and contentions, Mr Oswal makes two main contentions. First, Mr Oswal contends, in summary, that the entry into the share sale deed and the meetings with Apache Fertilisers were not undertaken for the proper purpose of providing for the repayment of the debt due to the secured creditor and were undertaken for the purpose of assisting in the sale of the BHL shares.
50 Secondly, it is said that the defendants charged the company for the time spent in soliciting post-receivership work from Apache Fertilisers for the benefit of PPB Advisory.
51 In para 122, Mr Oswal in general contends that by reason of the matters referred to in para 121 of the statement of facts and contentions, the defendants breached ss 180, 181 and 183 of the Corporations Act and their general common law duties.
52 The first of the contentions, namely, the allegation of an improper purpose, finds expression in para 121(a), (b) and (c). I have already mentioned that Mr Oswal's complaint that the defendants acted for an improper purpose formed the basis of Mr Oswal's claim for an inquiry which I rejected for the reasons given in Oswal (No 4). Those findings apply to the matters referred to in those paragraphs.
53 However, the second of the contentions, namely, that the defendants caused detriment to the company by charging the company for their time in soliciting post-receivership work from Apache Fertilisers, falls within the ambit of the inquiry.
54 Accordingly, I will strike out paras 121(a), (b) and (c) of the statement of facts and contentions, but not strike out paras 68 to 74 and paras 121(d) and (e).
55 I will also strike out para 122 of the statement of facts and contentions. That paragraph will be struck out because I did not order an inquiry specifically into whether the defendants had breached their general common law duties and/or their statutory duties under the Corporations Act.
56 It is convenient to refer to the description of the process for the conduct of an inquiry under s 536 of the Corporations Act given by Barrett J in BL & GY International. The observations also apply to an inquiry under s 423 of the Corporations Act. At [42]-[46], Barrett J observed as follows:
[42] Proceedings under s 536 involve three stages. At the first stage, the court, upon application made, decides whether an inquiry into the liquidator's conduct is warranted. In Hall…, the Court of Appeal pointed out that that there need not be a prima facie evidentiary case of lack of faithful performance or observance of requirements. But the applicant must point to something about the liquidator's conduct that is a sufficient basis for making an order for inquiry; and it is desirable that this be articulated in pleaded form: Re Fox Home Loans Pty Ltd [2005] NSWSC 1050. Once such a basis has been shown, the court has a discretion whether or not to order an inquiry.
[43] If the court sees fit to order an inquiry, the proceeding moves to its second stage and the inquiry itself takes place. Despite being an "inquiry", the second stage must be structured so as to be adversarial in nature, with the liquidator enjoying all the usual safeguards and protections: Harvey…
[44] The task of the court at the second stage is to make a judgment about the liquidator's conduct, viewed in the light of the whole of the requirements applying to liquidators and taking account, of necessity, of the circumstances of the particular winding-up. What the liquidator ought properly to have done will be conditioned by circumstances. Thus, for example, a liquidator without funds will not be expected to act in the same way as an adequately funded liquidator. In the same way, a liquidator has a degree of freedom in allocating available resources and prioritizing work. Leaving to one side matters of dishonesty, lack of due care and obvious failure to address the decision at hand, it can never be said in the abstract that a liquidator who fails to take a certain step (or, for that matter, one who takes a certain step) thereby engages in misconduct. Context is all-important.
[45] If, having heard the competing submissions at the second stage, the court decides that the liquidator's conduct was in some way deficient, it embarks upon the third stage and decides whether or not to make an order. The nature of the order will depend on the nature of the deficiency found. As noted above, the orders at the court's disposal include an order that the liquidator make good loss occasioned by the liquidator's deficient conduct. The predominant consideration, however, is effectuation of the purpose for which s 536 exists and, therefore, what is needed by way of regulation, supervision, discipline and correction for the due administration of the winding-up in the public interest.
[46] The power of the court at the third stage is the power to "take such action as it thinks fit". But that power is not exercisable unless and until the second stage has been completed by means of an inquiry. This is the effect of the statutory language: "and where the court…so inquires, the court may take such action as it thinks fit" [emphasis added]. The court cannot take substantive action except as a consequence of an inquiry. It follows that it is not open to the court, as a matter of jurisdiction, to make an order simply on the basis that relevant parties consent to the making of the order. (Original emphasis.)
57 It is apparent from Barrett J's observations that the question of whether a court will make an order pursuant to its power under s 423(1) "to take such action as it sees fit", and if so what kind of order, will be considered at the conclusion of the second stage and as part of the third stage of the inquiry. In other words, at a time after a court has had an opportunity to consider the evidence and submissions of both parties.
58 In this case, the terms of the inquiry do not expressly provide for an inquiry as to whether the defendants breached their statutory or general common law duties. However, the ambit of the inquiry is such that it is conceivable that at the end of the second stage, a submission may be made that it would be appropriate as an incident of "taking action", for the Court to make findings that the defendants have breached their duty in relation to aspects of their conduct which falls within the ambit of the inquiry. If such a situation were to arise, then submissions would need to be made as to whether any such finding could or should be made as part of the exercise of the Court's power under s 423 of the Corporations Act. One question which may then arise is whether findings to that effect could be made in the absence of ASIC being a party to the inquiry, bearing in mind its regulatory function and the statutory intent as manifest by s 1317J of the Corporations Act (see [12] above). Another question may be whether such findings could or should be made at the instance of Mr Oswal in light of the fact that his interest in the inquiry arises essentially from a complaint that the defendants charged excessive fees and expenses which caused him financial loss.
59 Because the terms of the inquiry do not expressly provide for an inquiry as to whether the defendants breached their statutory or common law duties, para 122 of the statement of facts and contentions will be struck out. However, as mentioned, that is not to say that this question may not arise incidentally at the end of the second stage, and beginning of the third stage of the inquiry, in respect of an aspect or aspects of the defendants' conduct which is within the scope of the inquiry.
breaches of statutory and common law duties
60 At paras 111, 116, 118, 120, 125, 127, 129, 131, 133, 134, 136, 138 and 140 of the statement of facts and contentions, Mr Oswal contends that the defendants variously breached ss 180 to 183 of the Corporations Act and their general common law duties. Mr Oswal relates each of these specific breaches to facts Mr Oswal has referred to in those parts of the statement of facts and contentions. Thus, for example, I have already referred to Mr Oswal's contention that the defendants caused the company to pay fees and expenses for the time spent in soliciting post-receivership work from Apache Fertilisers whilst still carrying out work under the receivership. Another example, is that the defendants caused the company to pay for a public relations consultant whose function was to promote the public image of the defendants.
61 The same considerations as referred to in [58] and [59] above, apply to these paragraphs.
62 In those circumstances, paras 111, 116, 118, 120, 125, 127, 129, 131, 133, 134, 136, 138 and 140 of the statement of facts and contentions will be struck out.
time recording
63 The defendants contend that para 126(e) of the statement of facts and contentions should be struck out. That paragraph falls within the contentions section of the statement of facts and contentions, and refers back to facts referred to in paras 79 to 83 which deal with the same topic.
64 In para 126 of the statement of facts and contentions, Mr Oswal contends that the defendants amended the descriptions in the PPB invoices of the work that was carried out in the last six weeks of the receivership which had the effect of disguising the true nature of the work, fees and expenses the defendants were charging the company. Mr Oswal contends that the alterations in the description of the work in the invoices were made in response to statements by ANZFS in January 2011 that it would not authorise the fees and expenses on the basis of the description of the work in the invoices as originally provided to ANZFS. Mr Oswal contends that had the amendments to the description of the work not been made by the defendants, ANZFS would not have authorised the payment of such fees and expenses.
65 In para 126(e), Mr Oswal refers to evidence of instructions been given by Mr Ben Verney in February 2011 to PPB Advisory staff in relation to billing in response to ANZFS' comments, and asserts that the practice sanctioned by Mr Verney was likely to have continued in relation to billing practices throughout the receivership, although the scope of this inquiry does not currently permit such a review. That statement in para 126(e) correctly recognises that the inquiry does not extend to undertaking a review of the level of expenses throughout the whole of the receivership. However, in my view, the scope of the inquiry permits Mr Oswal to refer to evidence of billing practices which, whilst initiated outside of the last six week period, allegedly continued to have an impact upon the level of fees and expenses in the last six weeks of the receivership.
66 I construe para 126(e) of the statement of facts and contentions to recognise this limitation and, therefore, I will not strike that paragraph out.
knowledge of anz bank and anzfs
67 The defendants seek orders striking out para 104 and para 106 of the statement of facts and contentions.
68 In para 104 and para 106, Mr Oswal says that prior to the appointment of the defendants as receivers and managers of the company, the ANZ bank and ANZFS were aware of the contractual arrangements which the company had for the acquisition of gas, its off-take arrangement with Yarra Australia Pty Ltd, that the company was generating substantial profits, that the company could service secured debt and repay it; and that the company could meet whatever the defendants' remuneration, fees and expenses were from its cash flow.
69 It is also alleged that ANZFS was aware of the fact that there was no incentive for the defendants to manage or reduce costs by investigating the availability of staff in Perth, or to undertake travel when it was only strictly necessary; and that it was financially more advantageous for the defendants to maintain all revenue for professional fees within PPB Advisory and pass on the expenses of that travel to the company including the professional fees charged for travelling time. Mr Oswal also alleged that ANZFS knew that the company was solvent and able to generate profits on a monthly basis which meant that it was able to service the secured debt and repay it.
70 The defendants contend that the terms of the inquiry do not extend to consideration of the question of the knowledge of the ANZ bank and ANZFS of the company's affairs at the time of the appointment of the defendants as receiver and managers. For this reason, it is said, para 104 and para 106 should be struck out.
71 It is true that the terms of the inquiry do not specifically refer to the knowledge of the appointor of the defendants at the time of the appointment. However, the ambit of the inquiry does include the question of the propriety of the defendants in accepting an appointment by the ANZ bank and ANZFS apparently on the basis that the defendants would be entitled to pass on to the company the additional travel costs and related expenses inherent in undertaking a receivership in respect of a solvent and profitable company in a remote part of Western Australia using partners and professional staff of PPB Advisory based in Melbourne.
72 In my view, whilst the focus of the inquiry is not upon the knowledge of the ANZ bank and ANZFS before and at the time of the appointment of the defendants, the extent of that knowledge in respect of the matters alleged before and at the time of the appointment is, at least arguably, part of the factual matrix which is encompassed by the scope of that head of the inquiry.
73 Accordingly, I am not able to conclude that the ANZ bank's and ANZFS's knowledge of the matters referred to is so obviously outside the scope of the inquiry as to render para 104 and para 106 liable to be struck out.
74 Accordingly, para 104 and para 106 of the statements of facts and contentions will not be struck out.
inaccuracies in the form 524
75 In para 45 of the statement of facts and contentions, Mr Oswal contends that the amount declared in the third Form 524 (completed in the last six weeks of the receivership) in respect of the defendants' expenses for the 13.5 months of the receivership, was not an accurate representation of their expenses; and far understated the true extent of the expenses incurred by them. It is also alleged that the defendants caused the company to pay their expenses directly (rather than by way of reimbursement), and that the defendants did not record these payments in their expenses when reporting to ASIC. Further, it is alleged that the defendants mischaracterised many items as the company's expenses rather than the receivership's expenses.
76 In para 66 and para 67 of the statement of facts and contentions, Mr Oswal contends that the time spent on preparing the second and third Form 524s was excessive, and, notwithstanding the time spent, there were still a number of inaccuracies in characterisation of the expenses.
77 The defendants complained that the manner in which the defendants recorded their expenses in the second and third Form 524s was outside of the scope of the inquiry. That contention cannot be wholly accepted. The scope of the inquiry is sufficiently wide to cover the manner in which travel expenses and expenses relating to the last six weeks of the receivership, were characterised and/or recorded. Mr Oswal will, therefore, be required to particularise those expenses relating to the last six weeks of the receivership and the travel expenses, if any, which he contends were not properly characterised and/or recorded. However, paras 45, 66 and 67 of the statement of facts and contentions will not be struck out.
78 I will hear the parties in relation to the terms of the orders and directions foreshadowed in these reasons.
I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.
Associate:
Dated: 24 December 2014
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MZZMQ v Minister for Immigration and Border Protection [2015] FCA 557
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FEDERAL COURT OF AUSTRALIA
MZZMQ v Minister for Immigration and Border Protection [2015] FCA 557
Citation: MZZMQ v Minister for Immigration and Border Protection [2015] FCA 557
Appeal from: Application for Extension of Time and Leave to Appeal: MZZMQ v Minister for Immigration & Anor [2013] FCCA 1742
Parties: MZZMQ v MINISTER FOR IMMIGRATION AND BORDER PROTECTION and REFUGEE REVIEW TRIBUNAL
File number: VID 777 of 2014
Judge: KATZMANN J
Date of judgment: 5 June 2015
Catchwords: MIGRATION — protection visa — whether error in test applied or question asked in applying Migration Act 1958 (Cth) s 91R(2)(a) — whether Tribunal erroneously applied a qualitative assessment of the threat to the applicant's liberty for the purpose of determining whether the persecution he feared involved serious harm— reliance on WZAPN v Minister for Immigration and Border Protection [2014] FCA 947 — whether appropriate to reserve judgment until High Court decision in WZAPN handed down
Legislation: Evidence Act 1995 (Cth) ss 75, 76
Federal Court of Australia Act 1976 (Cth) s 24(1A)
Federal Court Rules 2011 (Cth) r 35.13
Migration Act 1958 (Cth) ss 65, 91R, 474, 496
Cases cited: Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225
Applicant S v Minister for Immigration and Multicultural Affairs (2004) 217 CLR 387
BZAFM v Minister for Immigration and Border Protection [2015] FCAFC 41
Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293
Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
Grabovsky v Secretary, Department of Social Services [2015] FCA 244
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Immigration and Multicultural Affairs v Israelian (2001) 206 CLR 323
Plaintiff S157 v The Commonwealth of Australia (2003) 211 CLR 476
SZTEQ v Minister for Immigration and Border Protection [2015] FCAFC 39
SZTEQ v Minister for Immigration and Border Protection [2015] FCAFC 39
SZTIB v Minister for Immigration and Border Protection [2015] FCAFC 40
WZAPN v Minister for Immigration and Border Protection [2014] FCA 947
Date of hearing: 21 May 2015
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 52
Counsel for the Applicant: Mr P Bodisco
Solicitor for the Applicant: Thomas McLoughlin Solicitor
Counsel for the First Respondent: Mr G Johnson
Solicitor for the First Respondent: Sparke Helmore
Solicitor for the Second Respondent: The Second Respondent filed a submitting notice
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION VID 777 of 2014
BETWEEN: MZZMQ
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: KATZMANN J
DATE OF ORDER: 5 June 2015
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application for an extension of time to seek leave to appeal be dismissed.
2. The applicant pay the first respondent's costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION VID 777 of 2014
BETWEEN: MZZMQ
Applicant
AND: MINISTER FOR IMMIGRATION AND BORDER PROTECTION
First Respondent
REFUGEE REVIEW TRIBUNAL
Second Respondent
JUDGE: KATZMANN J
DATE: 5 june 2015
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 On 19 December 2014 the applicant applied for an extension of time to seek leave to appeal from a decision of the Federal Circuit Court published over 12 months earlier, based, in substance, on a point of law which was never raised in that court and which a Full Court of this Court has held in no fewer than three decisions this year is without merit. The application is made on the hypothesis that the High Court will likely decide in an appeal in an unrelated matter that the point is a good one.
Background
2 The applicant is an ethnic Tamil who claims to fear harm in Sri Lanka, his country of nationality. He applied to the Minister for Immigration and Border Protection for a protection visa but his application was refused by the Minister's delegate. The Refugee Review Tribunal conducted a review of his application on the merits but affirmed the delegate's decision. The applicant then applied to the Federal Circuit Court for judicial review of the Tribunal's decision.
3 That application was listed for hearing at 9.30 am on 19 September 2013. The applicant did not appear when the matter was called on some 15 minutes later and the primary judge acceded to the Minister's request that his Honour make orders dismissing the application for non-attendance and requiring the applicant to pay the Minister's costs.
4 The applicant turned up at about 10:10 am and the court was reconvened. The primary judge treated him as having applied for the orders to be set aside under r 16.05 of the Federal Circuit Court Rules 2001 (Cth). After hearing from the applicant his Honour reserved his decision. On 8 November he dismissed the application with reasons.
The application in this Court
5 The primary judge's decision was interlocutory: Federal Court of Australia Act 1976 (Cth), s 24(1A). This means that if the applicant wished to appeal it he needed leave. He had 14 days within which to file an application for leave: Federal Court Rules 2011 (Cth), r 35.13. He made no such application. Over a year later, however, on 19 December 2014, he applied for an extension of time to seek leave to appeal. On the day that application was listed for hearing before me, he requested an adjournment. The reason for the adjournment application was that the High Court has reserved its judgment in an appeal from the decision in WZAPN v Minister for Immigration and Border Protection [2014] FCA 947 ("WZAPN") upon which his proposed appeal rests. The applicant's position is that if the Minister's appeal is unsuccessful, that will enhance his prospects of success in the appeal he wishes to bring.
6 The adjournment application was opposed but ultimately only faintly pressed, as the applicant acknowledged that, in order to consider whether it was in the interests of justice to grant his adjournment application, the Court would need to hear argument on his substantive application. In these circumstances he appeared to be content to have the Court hear the case but reserve its judgment until after the High Court published its decision. I indicated that I would decide whether that was appropriate after I heard the argument.
7 Having heard the argument, I am not persuaded that there is any utility in reserving judgment until after the High Court decision is known. To some extent, that is because the applicant's explanation for the delay is barely acceptable. For the most part, however, it is because I am satisfied that there is an independent basis for the Tribunal's decision, which is not the subject of the proposed appeal, so that the decision in the High Court appeal would not affect the outcome of the application in this case.
The relevant legislative provisions
8 Under the Migration Act 1958 (Cth) the Minister is required to grant a visa if the visa applicant satisfies certain criteria imposed by the Act and Regulations. Otherwise, the Minister must refuse to do so. See s 65. The Minister may delegate any of his powers under the Act: Migration Act, s 496.
9 The principal criteria for the grant of a protection visa are set out in s 36 of the Act. For present purposes it is sufficient to refer to the criterion in s 36(2)(a), commonly referred to as the refugee criterion. At the time the Tribunal made its decision, s 36(2) provided that a criterion for a protection visa is that the applicant for the visa is:
a non-citizen in Australia in respect of whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol.
10 The Refugees Convention is the abbreviated term for the Convention Relating to the Status of Refugees, opened for signature 28 July 1951, 289 UTS 150 (entered into force 22 April 1954) and the Refugees Protocol refers to the Protocol Relating to the Status of Refugees, opened for signature 31 January 1967, 606 UTS 267 (entered into force 4 October 1967). I will refer to them together as "the Convention".
11 In effect, s 36(2)(a) incorporated into the Act as a criterion for the grant of a protection visa the terms of Art 1A(2) of the Convention: SZTEQ v Minister for Immigration and Border Protection [2015] FCAFC 39 at [51]. Put another way, one of the criteria for the grant of a protection visa is that the applicant be a refugee within the meaning of the Convention. Article 1A(2) defines a "refugee" for the purposes of the Convention as "any person who…owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of the country …"
12 At the relevant time, s 91R of the Migration Act excluded the application of Art 1A(2) "in relation to persecution for one or more of the reasons mentioned in the Article" unless:
(a) the reason or reasons is or are the essential and significant reason or reasons;
(b) the persecution involves serious harm to the applicant; and
(c) the persecution involves systematic and discriminatory conduct.
13 Section 91R(2) provided a non-exhaustive definition of "serious harm" for the purposes of s 91R(1)(b). It stated:
(2) Without limiting what is serious harm for the purposes of paragraph (1)(b), the following are instances of serious harm for the purposes of that paragraph:
(a) a threat to the person's life or liberty;
(b) significant physical harassment of the person;
(c) significant physical ill-treatment of the person;
(d) significant economic hardship that threatens the person's capacity to subsist;
(e) denial of access to basic services, where the denial threatens the person's capacity to subsist;
(f) denial of capacity to earn a livelihood of any kind, where the denial threatens the person's capacity to subsist.
(Original emphasis.)
14 It is paragraph 91R(2)(a) – "a threat to the person's life or liberty" – which is relevant to the proposed appeal.
The applicant's claim
15 The applicant claimed to fear harm from Sri Lankan authorities and from a Sinhalese moneylender, to whom his father was indebted.
16 The applicant claimed that in September 2009, after his father had been beaten up, he disappeared, and that thereafter the moneylender pursued his mother, threatening her that if the debt were not discharged in full the applicant would have to work to clear it. The applicant said that the moneylender has since come to the family home several times looking for him. He said his mother was scared the moneylender would harm him and advised him to stay away.
17 The applicant claimed that the suspicious disappearance of his father aroused the concern of the authorities and was being investigated by the Criminal Investigation Division (CID). He said that he was approached by CID officers twice in 2009 and 2011 and that he heard he will be the subject of further interrogations if he returns to Sri Lanka, no matter where in the country he may be.
18 The applicant said that he fled the country illegally and this, too, will put him at risk of harm if he were to return.
19 His claims were characterised by his representative and treated by the Tribunal as having a well-founded fear of persecution for the reasons of:
(a) his ethnicity as a Tamil;
(b) his actual/imputed political opinion as a perceived sympathiser/supporter of the LTTE (the Liberation Tigers of Tamil Eelam or Tamil Tigers) or someone perceived as holding views in opposition to the current Sri Lankan government; and
(c) his membership of a particular social group of failed asylum seekers.
20 The Tribunal made a number of adverse credit and other findings which underscored its decision to reject the first two claims. For present purposes they are irrelevant. It is the third claim only which is relevant to the application. The material parts of the Tribunal's decision appear in [55]-[60] of its decision:
55 I accept the applicant left Sri Lankan by boat and without a passport in breach of the Immigration & Emigration Act (I & E Act). I accept that if he returns to Sri Lanka he will be charged under the I & E Act for offences relating to his illegal departure. In my view, the provisions of the Sri Lankan I&E Act that deal with irregular departure from that country, are not expressed in terms that are discriminatory on their face or disclose a discriminatory intent. As I discussed with the applicant at the hearing, the I & E Act appears to be a law of general application and there is no information before me suggesting discriminatory enforcement of these laws or particularly harsh punishment of a particular cohort of returnees.
56. I accept that, as a consequence of breaching the I & E Act the applicant will be detained on remand on a short period of time (in the vicinity of four days) before being released on bail. I have considered independent media reports that indicate that returnees from Australia have been remanded in detention in Negombo prison for four days before being released on bail. A Sri Lankan lawyer quoted by Doherty and Hall indicates that people in the applicant's position are likely to face a fine of between 50, 000 to 100, 000 Sri Lankan rupees. Advice from DFAT in October 2012 also indicates people intercepted on people smuggling voyages are not given a custodial sentence but issued with a fine and Magistrates are able to use their own discretion in determining the amount of the fine (for example, DFAT reported that in Negombo the Magistrate has been handing out fines between 10, 00 to 100, 000 LKR to act as a deterrent).
57. I consider that the weight of country information indicates that the ultimate punishment for a person such as the applicant who has breached the I & E Act by departing Sri Lanka illegally (by boat and without a passport), notwithstanding that the law itself expresses the punishment to be a prison sentence from 1 to 5 years and a fine of 50,000 to 200,000 Sri Lankan Rupees, is most likely to be a fine and not a custodial sentence. After considering all the information before me, I accept that it is likely the applicant will face a fine of between 50 000 and 100 000 Sri Lankan rupees. On the country information before me, I am not satisfied that there is a real chance that the applicant will be detained in the Sri Lanka prison system for a prolonged period of time.
58. I am not satisfied that the information available reveals the law or processes regarding returnees who are considered to have departed Sri Lanka illegally to be anything other than laws of general application. There is no information before me suggesting discriminatory enforcement of these laws or particularly harsh punishment of a particular cohort of returnees.
59. On the evidence before me, I am satisfied that any penalty or fine that the applicant may be given for illegally departing Sri Lanka, would be for a breach of a law of general application and would not operate in a discriminatory way for a Convention reason or be enforced selectively for a Convention reason. Further, having accepted that the applicant will be subject to a brief period of detention as a result of the application of law of general application, I am not satisfied on the evidence and information before me that, as a consequence of the imposition of penalties for illegal departure, the applicant will face serious harm as a consequence of having departed Sri Lanka illegally.
60. I conclude that on the applicant's return to Sri Lanka, even if he experienced short-term imprisonment on remand prior to applying for bail or a fine as a result of being charged and/or being found guilty under the I&E Act, this does not amount to persecution for a Convention reason because it is the result of enforcement of a generally applicable law. Based on the country information before me and my assessment of the applicant's evidence, I do not accept there is a real chance he will be subjected to harsher punishment for a Convention reason or otherwise seriously harmed whilst detained on remand.
(Emphasis added.)
21 The emphasised passages indicate that the Tribunal considered that there was no real chance that the applicant would suffer serious harm within the meaning of s 91R(2) if he were taken into custody because there was no real chance that he would be detained for any prolonged period of time (perhaps four days). The Tribunal did not find that there was no real chance of imprisonment. Indeed, the Tribunal accepted that the appellant would be "subject to a brief period of detention".
22 For completeness I would add that the Tribunal also considered whether or not the applicant met the complementary protection criterion contained in s 36(2)(aa) of the Act and found that he did not.
The application to the Federal Circuit Court
23 The application for judicial review filed in the Federal Circuit Court contained two grounds, pleading that the Tribunal's decision:
a. is affected by an error of law; and
b. takes into account irrelevant considerations.
24 No particulars were given and no submissions filed. It seems that up until around the time the application was made to this Court, the applicant had not instructed a lawyer.
25 When the applicant appeared before the primary judge he was asked to identify the error of law referred to in the first ground and the irrelevant considerations raised by the second. According to the primary judge's reasons, the error of law was that "the Tribunal had found that if he was returned home, there would be no problems and this was not true". Again, according to the primary judge's reasons, the applicant said that he was unaware of any irrelevant considerations. In these circumstances, it is scarcely surprising that his Honour dismissed the application. The error the applicant identified was not an error of law. If it was an error, it was an error in fact-finding which on no account could amount to a jurisdictional error, the only basis upon which the primary judge was able to grant relief: Migration Act 1958 (Cth), s 474; Plaintiff S157 v The Commonwealth of Australia (2003) 211 CLR 476.
26 The primary judge considered the applicant's explanation for his late arrival in court and appears to have accepted it, albeit with some reservations. His Honour then turned to consider the substantive application. He noted that the Tribunal's reasons were "essentially entirely against the applicant", that all possible bases on which the applicant's case might be put were considered, that the Tribunal's findings were made in part in the light of country information, and that the Tribunal had made "serious adverse credit findings against the applicant". He said that on a fair reading of the Tribunal's reasons he could discern no error which would give rise to a likely successful application for judicial review and the supposed error of law amounted in essence to an assertion that the Tribunal reached the wrong conclusion. His Honour continued:
Findings of fact and conclusions of this sort are quintessentially matters for the Tribunal and while it is understandable that the applicant does not like the decision, this does not mean that it gives rise to jurisdictional error. In the light of the apparent weakness of the applicant's case and the articulation of any grounds that might give rise to any likelihood of success I decline to exercise my discretion to set aside the judgment and orders made. Accordingly, the oral application will be dismissed.
The application to this Court
27 The sole ground upon which the applicant seeks an extension of time to seek leave to appeal is that his application to the Federal Circuit Court and the primary judge's decision pre-dated the decision of this Court in WZAPN in which North J held that, in contrast to the other paragraphs of s 91R(2) of the Act, the threat to a person's life or liberty with which subpara (a) of the Act was concerned did not call for any qualitative assessment, so that a threat to deprive a person of his or her liberty, no matter how transitory or inconsequential the deprivation of liberty might be, will suffice for that purpose.
28 Filed with the application was a draft notice of appeal. It contained one ground:
His Honour erred in failing to discern legal error in circumstances where the second respondent applied the wrong test pursuant to section 91R(2)(a) of the Migration Act 1958 (Cth) and/or asked itself the wrong question.
Particulars
By undergoing a qualitative assessment of the nature and degree of the harm experienced by the applicant when being remanded into custody by the authorities at the airport, the Tribunal failed to apply the reasoning of His Honour North J in WZAPN v Minister for Immigration and Border Protection & Anor [2014] FCA 947 at [30] and [45].
29 The affidavit supporting the application was affirmed, not by the applicant, but by his solicitor, Thomas McLoughlin, on the applicant's behalf. It was not read.
30 On the eve of the hearing, the applicant filed another affidavit. This affidavit was affirmed by Ian Rintoul, a community worker and refugee advocate, who described himself as the applicant's agent, although he did not purport to be a registered migration agent.
31 Most of this affidavit was inadmissible, replete as it was with both unsourced and therefore inadmissible first- and second-hand hearsay (see Evidence Act 1995 (Cth), s 75) and opinion which offended the opinion rule in s 76 of the Evidence Act and which did not fall within any of the exceptions. Although I invited the applicant's counsel, Mr Bodisco, to call Mr Rintoul, as he was present in court, he declined to do so and did not press most of the affidavit. What remained were the following paragraphs:
2. My occupation is community worker / refugee advocate. I have worked full time in this role for 16 years mainly with a group called Refugee Action Coalition based in Sydney with contacts throughout Australia. This work involves close liaison with refugee and asylum seekers and their supporters here and in other cities around Australia, including visiting detainees and advocating for them to government and the Australian community in various media.
3. I first became aware of the [applicant] about 4 December 2014 through a Tamil speaking community worked called Arasa Kanthan who is in his mid 50ies and a trusted refugee advocate based in Melbourne.
5. …
(k) I reviewed the RRT Decision in December 2014 and contacted barrister Shane Prince in Sydney as co-convenor for Labor for Refugees, and expert in refugee law, for advice as to whether there was a legal basis for [the applicant] seeking an appeal to the Federal Court of Australia;
(l) Shane Prince referred me to solicitor Thomas McLoughlin and counsel Paul Bodisco who are known by me to act pro bono in refugee matters in Sydney;
…
(n) I gave instruction to solicitor Thomas McLoughlin for [the applicant] in late December 2014 to file an appeal for [the applicant] in this FCA Case pursuant to the ground of appeal raised by North J in the WZAPN Decision; and
(o) I understand that the appeal was filed a short time later.
32 The parties also agreed on the following facts:
1. The applicant speaks very limited English and communicates in the Tamil language.
2. The applicant has no family and few supports he can turn to for help in obtaining advice.
3. The applicant had a registered migration agent during his RRT hearing in January 2013 through the government sponsored IAAAS scheme but that stopped after the hearing that January.
4. The applicant has been held by the Department of Immigration & Border in Melbourne and most recently Perth since November 2014.
The principles applying to an application for extension of time for leave to appeal
33 In Grabovsky v Secretary, Department of Social Services [2015] FCA 244 at [21]-[23], I summarised the principles that apply to an application for extension of time. While the context is different, the principles are not. It is convenient to reproduce that summary here:
21 A discretion to extend time is conferred on a court in order to "do justice between the parties": Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30. The Court's discretion to grant an extension of time to file a notice of appeal is very broad. There are no conditions upon its exercise contained in the Rules but, as with any power of the Court, the power to order whether or not an extension of time should be granted must be exercised in the way which best promotes the overarching purpose of its civil procedure provisions, namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: see Federal Court of Australia Act 1976 (Cth) ("FCA Act"), subs 37M(1) and (3). That purpose includes a number of objectives set out in s 37M(2) of the Act. As Mortimer J explained in Mladenov v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2014] FCA 12 at [26]:
To extend time in an appeal which has no realistic prospects is to involve the court and the parties, and many public resources, in a process which is not quick, inexpensive or efficient. Unless there are strong countervailing circumstances, it is unlikely to facilitate the just resolution of a dispute to allow matter, not commenced within the time the law requires, to proceed to a full hearing on a claim that has no realistic prospects of success.
22 There are also a number of considerations developed by the case law which guide the exercise of any discretion to extend time to appeal or review a decision. They were summarised by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9…
23 On the question of the merits, it is inappropriate to carry out a detailed analysis, although an obvious weakness in the applicant's case tells against the exercise of the discretion: see ActewAGL Distribution v Australian Energy Regulator (2011) 195 FCR 142 at [111] and the authorities referred to there.
34 The matters guiding the exercise of the discretion to extend time to appeal to which Wilcox J referred in Hunter Valley Developments Pty Ltd v Cohen include the explanation for the delay, any prejudice a respondent might suffer because of the delay, and the merits of the proposed appeal. The extent of the delay is also a relevant consideration.
35 In general, leave to appeal will not be granted unless the decision of the primary judge is attended by sufficient doubt to warrant its reconsideration on appeal and substantial injustice would result if leave were refused, supposing the decision below to be wrong: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397.
The application for extension of time
36 It is not suggested that the Minister is prejudiced by the delay. The real problem, as I indicated earlier, relates to the merits of the proposed appeal, to which I will come shortly. But it is not the applicant's only problem.
37 First, the delay is lengthy. And this not a case where the time limit has been missed through oversight.
38 Second, the applicant's explanation is unsatisfactory. He, himself, has chosen to remain silent. His case depends entirely on the limited evidence given by Mr Rintoul and the agreed facts.
39 There is no evidence about when the applicant became aware of the primary judge's decision and what he did at that time. I accept, of course, that he speaks very limited English, has no family and few supports to whom he could have turned for help. But there is no evidence about what approaches, if any, he made to those few supports. It is not an explanation that he is currently in immigration detention, because he was not detained until a year after the decision was published. Indeed, it was only after he was taken into detention that he received legal advice and, then, only because the lawyers found him, not because he sought them out.
40 Nevertheless, until the publication of the judgment in WZAPN, there would have been no apparent reason why he might have thought he had any prospect of overturning the decision of the primary judge. For this reason the delay until 3 September 2014 may be put to one side. It is, in effect, explained. But the three-month delay between then and 4 December 2014 when Mr Rintoul became involved is entirely unexplained. While I would not regard it as fatal to the application, this is a circumstance which weighs against the making of the order.
The applicant's argument
41 The applicant's written submissions were directed only to his foreshadowed adjournment application. The oral argument was based on North J's reasoning in WZAPN and ignored three Full Court judgments published on 24 March 2015: SZTEQ v Minister for Immigration and Border Protection [2015] FCAFC 39 ("SZTEQ"), SZTIB v Minister for Immigration and Border Protection [2015] FCAFC 40 ("SZTIB") and BZAFM v Minister for Immigration and Border Protection [2015] FCAFC 41 ("BZAFM").
42 As Mr Bodisco conceded, the argument the applicant wishes to put if his application is granted is substantially the same as the argument which was put and rejected in those three judgments.
43 In SZTEQ at [46], SZTIB at [44] and BZAFM at [41] the Full Court (Robertson, Griffiths and Mortimer JJ) said:
In our opinion, on its proper construction, s 91R does not forbid a qualitative assessment of claimed detention or imprisonment with a view to establishing whether or not it rises to the level of "serious harm" so as to constitute persecution, if the detention or imprisonment is for a Convention reason and the other aspects of s 91R are satisfied.
44 Mr Bodisco declined the Court's invitation to point to any error in their Honours' reasons. Rather, he submitted that there were conflicting Full Court decisions and this was a matter which weighed in his favour on his application.
45 Two points should be made here. First, it is disingenuous to categorise the decision of North J on the one hand and those of the three Full Courts on the other as conflicting Full Court decisions. In the three judgments published in March this year, the Full Court held that WZAPN was wrongly decided. Secondly, in the absence of any argument to suggest that the Full Court might have erred, I am unable to discern any basis upon which it could be said that the applicant would have an arguable case on appeal.
46 In any event, I am not persuaded that, if the Minister's appeal in WZAPN is dismissed and the High Court were to uphold North J's interpretation of s 91R(2)(a), it would make any material difference in this case. That is because, even if the period of detention the Tribunal considered the applicant would face on his return to Sri Lanka amounted to serious harm for the purpose of s 91R(1)(b), the Tribunal would still have affirmed the delegate's decision, for the requirements in s 91R are cumulative and the Tribunal was not satisfied that the persecution the applicant feared involved discriminatory conduct as required by s 91R(1)(c). That conclusion necessarily follows from the Tribunal's findings at [55]-[60] (extracted above at [20]) and also from the paragraphs of the Tribunal's reasons that followed. It is most clearly evident from the Tribunal's statement at [60] to the effect that short-term imprisonment on remand (or a fine) would not amount to persecution for a Convention reason "because it is the result of enforcement of a generally applicable law". Earlier, at [58] the Tribunal referred to the absence of information to suggest the discriminatory enforcement of the laws.
47 Mr Bodisco submitted, however, that there was an "intermingling of the issues" – in effect, that the Tribunal had allowed the question of whether the persecution might involve serious harm to intrude into its consideration of whether the persecution also involves systematic and discriminatory conduct. This submission was based on the Tribunal's statement at [58] that "[t]here is no information before me suggesting discriminatory enforcement of these laws or particularly harsh punishment of a particular cohort of returnees".
48 I am not persuaded that the Tribunal's view of what may constitute serious harm affected its conclusion that the persecution the applicant feared did not involve discriminatory conduct. To reach that conclusion it would be necessary, at the very least, to engage in the kind of analysis forbidden by Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272 that is to say, to scrutinise the reasons of an administrative decision-maker in order "to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed". On an application for judicial review, "looseness of language" or "unhappy phrasing" are not matters for concern.
49 Mr Bodisco also submitted that "the Tribunal misdirected itself on whether the different treatment involved offends the standards of civil societies which seek to meet the calls of common humanity". This contention picked up on what Gleeson CJ, Gaudron, Gummow and Hayne JJ said in Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293 ("Chen") at [29]:
Whether the different treatment of different individuals or groups is appropriate or adapted to achieving some legitimate government object depends on the different treatment involved and, ultimately, whether it offends the standards of civil societies which seek to meet the calls of common humanity.
50 North J referred to this test in WZAPN at [48] in the context of some obiter remarks about High Court authorities which hold that conduct undertaken pursuant to a law of general application do not amount to persecution if the law is "appropriate and adapted to achieving some legitimate object of the country concerned": see Applicant S v Minister for Immigration and Multicultural Affairs (2004) 217 CLR 387 at [43] (Gleeson CJ, Gummow and Kirby JJ) and Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 258 (McHugh J).
51 The Tribunal's conclusion that the punishment the applicant would face on his return to Sri Lanka would result from a law of general application necessarily involves the consequence that the punishment would not be discriminatory and so would not constitute persecution: Minister for Immigration and Multicultural Affairs v Israelian (2001) 206 CLR 323 (heard together with Minister for Immigration and Multicultural Affairs v Yusuf) at [55] (Gaudron J), at [97] (McHugh, Gummow and Hayne JJ). In Applicant S Gleeson CJ, Gummow and Kirby JJ accepted that a law of general application can result in discriminatory treatment, for example, because of the way it is implemented or enforced. Here, however, the Tribunal did not find that the relevant law would or could result in discriminatory treatment, whether by reason of its implementation or enforcement or in some other way. More importantly, perhaps, save for the submission that the Tribunal's consideration of "serious harm" infected it, the applicant did not challenge the Tribunal's finding that the punishment the applicant would face on his return to Sri Lanka would result from a law of general application (for example, on the basis that the Tribunal failed to consider whether the treatment in question is "appropriate and adapted to achieving some legitimate object of [Sri Lanka]": see Applicant S at [43] per Gaudron J). It is true that Mr Bodisco did seem to be getting close when he picked up some of the language in Chen. It was not entirely clear, however, what his point was. But even if this were the purport of the submissions, albeit that they fell short, the proposed ground of appeal does not raise this as an issue.
Conclusion
52 For these reasons, notwithstanding the pending appeal in WZAPN, the application for an extension of time to seek leave to appeal the decision of the Federal Circuit Court should be dismissed. The applicant should pay the Minister's costs.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.
Associate:
Dated: 5 June 2015
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FEDERAL COURT OF AUSTRALIA
Lawendy v General Practice Recognition Appeal Committee [2000] FCA 946
JUDICIAL REVIEW – Vocational Regulations Appeal Committee – medical practitioners past training and experience outside Australia – eligibility for vocational register – extension of time for AD(JR) Act review – discretion – blamelessness of claimant and responsibility of solicitor – substantive merits of application conceded
HEALTH LAW – general practitioners – refusal of application for registration on vocational register – criteria for vocational registration – requirement of specified time spent in general practice – whether overseas experience relevant
Administrative Decisions (Judicial Review) Act 1977 (Cth) s 16
Reid v Vocational Registration Appeal Committee (1997) 73 FCR 43 followed
Tan v Vocational Registration Appeal Committee (1996) 71 FCR 405 followed
Milad v Vocational Registration Appeal Committee (1999) 92 FCR 549 followed
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348 applied
Sophron v The Nominal Defendant (1957) 96 CLR 469 at 474 applied
Kumar v Minister for Immigration and Multicultural Affairs [2000] FCA 243 mentioned
RAFAT LAWENDY v GENERAL PRACTICE RECOGNITION APPEAL
COMMITTEE & ANOR
NO S 11 of 2000
HEEREY J
4 JULY 2000
ADELAIDE
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY S 11 of 2000
BETWEEN: RAFAT LAWENDY
Applicant
AND: GENERAL PRACTICE RECOGNITION APPEAL COMMITTEE and ANOTHER
Respondents
JUDGE: HEEREY J
DATE OF ORDER: 4 JULY 2000
WHERE MADE: ADELAIDE
THE COURT ORDERS THAT:
1. The time for the applicant to bring an application for review of the decision of the Vocational Registration Appeal Committee made on 31 March 1995 be extended to 22 February 2000.
2. The application be allowed.
3. The said decision be set aside and the application of the applicant for vocational registration be remitted to the first respondent for consideration according to law.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY S 11 of 2000
BETWEEN: RAFAT LAWENDY
Applicant
AND: GENERAL PRACTICE RECOGNITION APPEAL COMMITTEE and ANOTHER
Respondents
JUDGE: HEEREY J
DATE: 4 JULY 2000
PLACE: ADELAIDE
REASONS FOR JUDGMENT
1 The applicant seeks an order for review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the AD(JR) Act). The application has a number of unusual features. The order sought to be reviewed was made as long ago as 31 March 1995 and thus an extension of time under s 11(1)(c) is necessary. Moreover the substantive merits of the review application are conceded. The only contest has been as to whether the extension should be granted.
2 The applicant is a medical practitioner who obtained his qualifications in Cairo in 1978 and came to Australia in December 1985. After supervised practice in a number of hospitals in New South Wales he passed the Australian Medical Council examinations and was registered as a medical practitioner in that State in 1992.
3 On 28 November 1994 he applied to the Vocational Registration Eligibility Committee for general practice vocational registration (VR). His application was refused and was reviewed automatically by the Vocational Regulation Appeal Committee (the Committee).
4 On 31 March 1995 the Committee refused his application. In essence it did so because it considered that the applicant did not have sufficient general practice experience. By a letter of that date the Committee wrote to the applicant saying, amongst other things:
"The committee specifically found that you did not meet criterion 4 (ie, you have not been in general practice as defined for at least two sessions a week for at least five years by 1 January 1995) as you had insufficient general practice experience. The committee is unable to assess Egyptian experience and recommends that you complete the Fellowship [of the Royal Australian College of General Practitioners]."
5 The applicant says, and I accept, that until he received legal advice from his solicitors in July 1999 he was not aware that he had any grounds for seeking review by this Court, nor that there was any limited twenty-eight day period in which to do so. He says also that because of his cultural background prior to coming to Australia he was used to a regime where authorities were more strict and one did not question their decisions. He deposed:
"When I received the Letter of Rejection I understood it to have come from an eminent authority and as such, I did not question the same. I accepted the assertion that I did not qualify for Vocational Registration as absolute. It never occurred to me that it might be possible to challenge the decision of such an esteemed organisation as I had assumed it had absolute authority over granting Vocational Registration."
6 However, other medical practitioners who were more attuned to their legal rights commenced litigation challenging similar decisions of the Committee and were successful. On 21 February 1997 O'Loughlin J handed down his decision in Reid v Vocational Registration Appeal Committee (1997) 73 FCR 43. His Honour held, following an earlier decision of Carr J in Tan v Vocational Registration Appeal Committee (1996) 71 FCR 405, that the Committee was obliged to have regard to an applicant's past training and experience both inside and outside Australia: 73 FCR at 53.
7 In about July 1997 the applicant was told by a colleague, Dr Fernando, that the Committee had been replaced by a new committee (the first respondent) which was reconsidering applications for VR by doctors who had been initially rejected because their overseas experience was not taken into account. At this time the first respondent was promoting by way of press release in medical journals the lodging of appeals by doctors who might be eligible in the light of the Reid decision. For example, in the Australian Doctor of 4 July 1997 an article appeared under the heading, "Non-VR GPs offered Quick Fix" referring to the Reid case and reporting a comment by a member of the first respondent, Dr Joe Kosterich, in these terms:
"GPREC member Dr Joe Kosterich said no move was planned by the HIC [Health Insurance Commission] to publicise the decision. Instead, GP representatives on the committee had been asked to spread the word. 'If you lose a court case you don't want sing it from the roof tops', he said. 'The previous committee got it wrong … It's a little bit of egg-on-face for the HIC, obviously'. A HIC spokesman was unable to comment before Australian Doctor went to press. However, Dr Kosterich said although not all GPs who have been refused would be suitable for VR, he expected several hundred would be in a position to re-apply."
Later in the Australian Doctor of 25 July 1997 it was said:
"GPs can apply to the HIC for a reconsideration of their case if they lost an appeal that was lodged with the appeals committee before 24 December 1996."
8 However, a sea change took place. Further legal advice was taken and in the Australian Doctor of 29 August 1997 under the heading "HIC Reneges On VR Review Undertaking", it was said:
"The HIC has performed a backflip over eligibility for the vocational register – a move one doctor predicts will prompt a flood of lawsuits against the commission. In a letter to Australian Doctor the HIC indicated that in the light of fresh legal advice it would renege on its previous undertaking to review the case of any doctor who had applied for vocational registration and had their appeal rejected before 24 December, 1996."
9 To return to the case of the applicant, he forwarded a letter to the first respondent on 28 July 1997. The letter stated inter alia:
"I feel that my overseas experience in general practice could be considered alongside my local experience."
10 He enclosed a curriculum vitae. On 1 September 1997 the Health Insurance Commission wrote to the applicant, referring to the previously mentioned letter, and stating amongst other things:
"The Appeal Committee has received advice from eminent senior counsel that the Committee cannot, as a matter of law, give further consideration to your request. The substance of that advice is that the Committee, in relation to matters previously heard and determined by it and/or its predecessor, the Vocational Registration Appeal Committee had, and has, no power to reconsider appeals.
In view of this advice, the Health Insurance Commission has had no option other than to instruct the Committee's Secretariat not to supply papers to the Appeal Committee in cases concerning doctors requesting a review of their appeals where the matter has previously been considered by the Appeal Committee and dismissed.
This means, in your case, that there is currently no live application before the HIC or the Committee which it is able to consider. Should you wish to reapply for vocational registration at any time you are, of course, at liberty to do so.
I should point out, however, that the only avenue for vocational registration after 24 December 1996, is being awarded the Fellowship by the Royal Australian College of General Practitioners."
11 The applicant understood that letter to be absolute in its terms. It made no mention to review under the AD(JR) Act. As a consequence he did not pursue the matter. He said amongst other things that he was very sensitive about the fact that he was an overseas doctor and was "concerned not to create a fuss".
12 In July 1999, however, he read an article in the Medical Observer, another weekly medical journal. The issue dated 23 July 1999 (although apparently in circulation a few days earlier) contained a reference to the decision of the Full Court of the Federal Court handed down on 6 July 1999 in Milad v Vocational Registration Appeal Committee (1999) 92 FCR 549 which, according to the article, "reconfirmed the right of 50 doctors to challenge refusal of vocational registration". In that case the Full Court held that an order could be made under the AD(JR) Act remitting a matter to the first respondent notwithstanding that the matter had been the subject of a decision by the Committee, which had ceased to exist.
13 The applicant obtained the phone number of the Adelaide solicitors for Dr Milad and telephoned them on 20 July 1999. He spoke to Mr Anthony Allen who said he would post a pro forma questionnaire to the applicant to complete and return. The applicant received the questionnaire, completed it and returned it to Mr Allen's firm where, according to a date stamp, it was received on 27 July 1999. But the completed questionnaire was misfiled in Mr Allen's office.
14 Mr Allen's firm had acted for Dr Reid and fourteen other applicants. Of these fifteen applicants, fourteen were granted review by this Court and were subsequently granted VR by the first respondent. Subsequent to publicity concerning those cases a further fifty medical practitioners who had been denied VR in comparable circumstances instructed Mr Allen's firm to file applications for review in the Federal Court. The leading case in that group of cases was Milad. The last of the applications in that group was filed in the Court by Mr Allen's firm in about September 1998.
15 Rather than proceed to a full hearing, as occurred with the Reid cases, the respondents consented to extensions of time being granted to all applicants in which to seek review and consent orders. Those orders were made by O'Loughlin J on 9 December 1999 referring forty-four members of the Milad group back to the first respondent for reconsideration of the applications for VR. The first respondent convened to reconsider such applications on 26 February 2000 and 41 members of the group were duly granted VR.
16 It was only on 20 January 2000, in the course of sorting out papers in the conclusion of those matters, that Mr Allen discovered the present applicant's questionnaire. He had not seen it before but it bore his office's date stamp of 27 July 1999. Immediately upon reading the questionnaire it was apparent to Mr Allen that an application for review should have been filed with the applicant so that he could have joined in with the Milad group. Had Mr Allen read the questionnaire at any time prior to the making of the consent orders by O'Loughlin J he would have immediately caused an application to be filed on behalf of the applicant on the basis that the applicant's relevant circumstances were comparable with those of applicants in the Milad group.
17 On 24 January 2000 Mr Allen wrote to the Australian Government Solicitor seeking consent orders. On 9 February 2000 the Australian Government Solicitor replied, indicating that consent would not be forthcoming. The present application was filed on 22 February 2000.
18 The general principles to be considered in an application for extension of time for AD(JR) Act applications are not in dispute. The case that has been referred to very frequently is the decision of Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348.
19 A number of factors influence me in coming to the conclusion that this is an appropriate case to exercise my discretion in favour of the applicant. Probably the most important is the fact that the merits of the substantive application are admitted. Of course this does not mean that the respondents admit that the applicant should be entitled to VR. That is a factual issue which will have to go back to the first respondent; the merits of that question are not a matter for this Court to decide in any event. All this Court can do is to decide whether there has been a legal error infecting the decision complained of. It is not disputed that there has been, so I am not concerned with what is usually a major question in an application for an extension of time namely, the prospects of success on the substantive case.
20 Then there is the factor of what must be accepted as the negligence of the solicitor in misfiling the applicant's questionnaire. This is relevant, but it is neither a cure-all for the applicant, nor is it a case of him being fatally bound by the negligence of his solicitor. As the High Court said in a similar context in Sophron v The Nominal Defendant (1957) 96 CLR 469 at 474, the blamelessness of the claimant and the responsibility of his solicitor are very material. The effect of those factors will depend on the particular circumstances of the case.
21 Questions of the negligence of solicitors in allowing limitation periods to elapse usually arise in the context of common law claim for damages for death or personal injuries. In modern times solicitors are insured and there is a ready and effective remedy for such a plaintiff by way of action for negligence against the solicitor. The measure of damages will be the value of the action lost, usually a matter capable of quantification in money terms. When we are concerned, however, with an administrative decision and not merely whether that decision should have been made but whether a particular factor should have been taken into account, it is by no means clear that there would be a practically effective remedy against the solicitor.
22 Counsel for the respondents very properly put before the Court arguments as to the public interest. While she conceded that there was no prejudice in the forensic sense of missing witnesses, fading recollections etc, she did argue that there was a public interest in bringing finality and in particular giving effect to the more rigorous VR scheme which came into effect at the beginning of 1997.
23 However, those arguments, valid in themselves, nevertheless need to be considered in the light of the very unusual history of the matter where the respondents consented to a large number of applications being allowed out of time and where, as I have mentioned, the great bulk of those were subsequently successful on the merits before the first respondent. This is a regrettable situation where there has been some fundamental administrative law error which has affected a great number of medical practitioners and no doubt, amongst other things, resulted in a lot of public expense. I do not think considerations of administrative finality and neatness should in the end outweigh the merits of this particular applicant's case.
24 I should say that I have not ignored other authorities which counsel for the respondent relied on, and in particular the decision in Kumar v Minister for Immigration and Multicultural Affairs (2000) FCA 243, but if there is one thing the authorities do make clear, it is that ultimately each case is a discretionary decision depending on its merits, and on the merits of this case I think the application should be granted.
25 After debate between counsel it was agreed that no order for costs should be made.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.
Associate:
Dated: 12 July 2000
Counsel for the Applicant: Mr S W Tilmouth QC and Mr R Armour
Solicitor for the Applicant: Armour & Allen
Counsel for the Respondent: Ms S J Maharaj
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 4 July 2000
Date of Judgment: 4 July 2000
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Australian Education Union v Yooralla [2019] FCA 1511
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2024-09-13T22:51:37.064138+10:00
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FEDERAL COURT OF AUSTRALIA
Australian Education Union v Yooralla [2019] FCA 1511
Appeal from: Australian Education Union v Yooralla [2018] FCCA 2758
File number: VID 1344 of 2018
Judge: STEWARD J
Date of judgment: 17 September 2019
Catchwords: INDUSTRIAL LAW – construction of awards – pre-modern award – whether employee was an "instructor" under the Disability Services Award (Victoria) 1999 or an "attendant carer" under the Attendant Care - Victoria Award 2004 – modern award – whether employee was a Level 2 or Level 3 social and community services employee under the Social, Community, Home Care and Disability Services Industry Award 2010
Legislation: Fair Work Act 2009 (Cth)
Cases cited: Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241
Choppair Helicopters Pty Ltd v Bobridge [2018] FCA 325
Construction, Forestry, Mining and Energy Union v Anglo Coal (Callide Management) Pty Ltd [2015] FCA 696
Maribyrnong City Council v Australian Municipal, Administrative, Clerical and Services Union [2019] FCA 773
Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67
Transport Workers' Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148; (2014) 245 IR 449
Date of hearing: 17 July 2019
Date of last submissions: 25 July 2019
Registry: Victoria
Division: Fair Work Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 60
Counsel for the Appellant: Mr M Irving, Q.C. with Ms F Knowles
Solicitor for the Appellant: Mr M McIver of the Australian Education Union
Counsel for the Respondent: Mr M G Rinaldi
Solicitor for the Respondent: DLA Piper
ORDERS
VID 1344 of 2018
BETWEEN: AUSTRALIAN EDUCATION UNION
Appellant
AND: YOORALLA
Respondent
JUDGE: STEWARD J
DATE OF ORDER: 17 SEPTEMBER 2019
THE COURT ORDERS THAT:
1. Within 14 days the parties are to file orders by agreement giving effect to the reasons for judgment or, if no agreement is reached, submissions of no more than four pages in length as to the form of final relief to be ordered.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
STEWARD J:
1 This is an appeal from a decision of the Federal Circuit Court dismissing the Australian Education Union's (the "AEU") application for declaratory and ancillary relief. The AEU claims that one of its members, a Ms Legg, has been underpaid in contravention of the Fair Work Act 2009 (Cth) by reason of the application of the wrong industry awards. Ms Legg had been an employee of Yooralla, a provider of disability services. She had worked at the "Naroo Day Service" at Naroo Street, Balwyn (the "Naroo Centre"). What she did there is not disputed but is nonetheless important for the disposition of this appeal. That is because the parties are in disagreement about the correct characterisation of her services at the Naroo Centre in the context of various industry awards which applied during Ms Legg's period of employment.
2 The AEU contended below: (i) that Ms Legg was an "instructor" under the Disability Services Award (Victoria) 1999 (the "Disability Award") for the purposes of an application of Ms Legg's Transitional Minimum Wage; and (ii) that she was a "Level 3" employee for the purposes of the applicable modern award, namely, the Social, Community, Home Care and Disability Services Industry Award 2010 (the "Modern Award"), which applied from 1 January 2010.
3 Yooralla disagreed. In her contract of employment, Ms Legg had agreed to serve as a "Disability Support Worker" and to be paid as an "attendant carer", Grade 2, under the Attendant Care – Victoria Award 2004 (the "Carer Award"). This was the award Yooralla said was applicable in determining Ms Legg's Transitional Minimum Wage. Thereafter, it was submitted, she was a "Level 2" employee under the Modern Award.
4 The learned primary judge dismissed the AEU's application. His Honour found that Ms Legg had not been underpaid. For the reasons given below, and with the greatest of respect, I have found that the learned primary judge erred in considering Ms Legg's Transitional Minimal Wage, and in his Honour's consideration of the Modern Award. However, I nonetheless agree for other reasons that Ms Legg should be categorised as a "Level 2" employee for the purposes of that Modern Award.
Facts
5 The learned primary judge summarised the primary facts as follows at [19] and [23]-[30]:
19. On or about 28 October 2013 Ms Legg applied to Yooralla for employment in the role of "disability support worker 2" and on 3 December 2013 she was employed in that role. Her contract of employment provided that she was a disability support worker classified as an attendant carer award grade 2 year one. As mentioned above, it was common cause between the parties that Yooralla provided disability services including the provision of personal care and lifestyle support to persons with a disability in a community or residential setting including respite care and day services. One of those services was Naroo Day Service ("Naroo"). Persons who attended Naroo were called "clients" in this proceeding. They had varying degrees of disability and varying degrees of ability. The day service now known as Naroo was previously owned by Eastern Disability Access and Resource ("EDAR") and operated by Yooralla.
….
23. On and from July 2014 Ms Legg reported to her supervisor, Sonia Marie Faulkner, Yooralla's programme manager.
24. Ms Legg gave evidence that at any given time she had responsibility for between four and six of Yooralla's clients. She said her duties that she was required to and in fact performed included ‒
a) training people with an intellectual, physical or sensory disability;
b) developing and maintaining and supporting individual training programs, in a variety of settings;
c) preparing and maintaining client and service documentation;
d) conducting client lifestyle programmes; and
e) administrative duties.
25. Ms Legg gave evidence that she did not usually assist people with a disability to perform day-to-day activities that a person without a disability would do for himself or herself, including eating, bathing, picking up items and so on.
26. Ms Legg said that person centred planning, as it was called at Naroo, involved the development of programmes, tailored to the specific needs and disabilities of Yooralla's clients on an individual basis. It focused on the specific goals each client sought to achieve. Ms Legg gave evidence that person centred planning was a key aspect of her role. She said she prepared various documents, individual versions of which were kept in folders for each client and on a regular basis Ms Legg and Ms Faulkner reviewed the content page to ensure each client was supported in the planned manner. The documents that Ms Legg prepared were identified by her as ‒
a) "client specific dictionaries";
b) "my lifestyle plan";
c) "lifestyle plan action plan"; and
d) "client support plan".
27. Ms Legg said she prepared individual weekly plans for each of the clients in consultation with Ms Faulkner. Ms Legg said she prepared progress notes and graph documents for each client. She also prepared programme outlines with specific client information concerning each client. The programmes Yooralla offered to its clients at Naroo included bowling, pamphlet collation, pamphlet delivery, cooking, swimming, disco, scrapbooking, iPad operation and café outings.
28. Ms Legg gave evidence that she took two programmes each day. She said that typically she ‒
a) informed clients where they were to keep food and medication;
b) assisted clients having lunch;
c) where another colleague was available, Ms Legg took half hour breaks;
d) kept records of clients who took medication at lunch;
e) assisted clients to use toilets prior to commencing the programme held after lunch; and
f) completed progress notes and assessments during the break.
29. On a monthly basis Ms Legg communicated with Ms Faulkner on feedback given about the services provided at Naroo. Ms Legg also prepared interim progress reports in respect of clients after evaluating each client's progress during each of the four terms during which Naroo was in operation.
30. According to Ms Faulkner, Ms Legg performed her duties to a high standard.
6 These findings of fact were not disputed before me. It is necessary, however, to consider the evidence in a little more detail. Ms Legg's description of her activities at the Naroo Centre was not challenged, although she was cross-examined about her employment by Mr Rinaldi of Counsel for Yooralla.
7 Ms Legg, who holds bachelor degrees in Applied Science (Physical Education) and in Occupational Therapy, usually started her day at the Naroo Centre at around 8 am. She was subject to the supervision of a "Service Manager". She worked with six employees who provided services to around 17 clients affected by a range of intellectual (and sometimes physical) disabilities. The clients arrived around 8.45 am. It would take an hour for them to settle in. They would be told to put their food away in the fridge (or, if an outing was planned for that day, to put it in their bags), to lock their medication away, and to go to the toilet (if needed). The day's planned activities would be discussed. These may sound like banal matters; but they may not be for a person affected by an intellectual disability. The clients would then participate in two programs: one in the morning (from about 9.45 am to noon), and one in the afternoon (from about 1 pm to 2.30 pm). Each program would be carried out by a Yooralla employee such as Ms Legg. I shall return to describe these. Lunch typically took place at around noon. Ms Legg would assist the clients to have lunch. She might heat up a meal, cut up food where this was needed, or assist those clients experiencing difficulty with using their hands. She also helped those who needed assistance to go to the toilet. She would record the medication taken. Save for the participation in the programs, the AEU did not dispute that these types of activities should be characterised as personal care and not as instructing. But they were, it was submitted, incidental to the essential role performed by Ms Legg, which was carrying out the programs. After completion of the second program, from about 2.30 pm to 3.30 pm, taxis would start to arrive to collect the clients. No client lived at Naroo Street. Ms Legg prepared and kept records concerning her clients' participation in the programs. She worked on these at lunchtime (for 30 minutes) and after the clients had left for the day.
8 Ms Legg prepared written plans for each of her clients for use in the programs. In that respect, one of the documents she would consider was called "My Lifestyle Plan". An example of one was in evidence. Amongst other things, it described what was important to the client, including key people in the client's life, and what the client did and did not like. Based on this document, and following consultation with the client and her or his advocate, Ms Legg would then prepare a "Lifestyle Plan Action Plan" ("Action Plan"). An example of one of these was before me. The first page of it described the client and then set out what she considered to be her best attributes, the matters important to her, and how she communicated. It recorded the following:
I use simple verbal language to communicate, however sometimes what I say does not always indicate what I would like to express. Alternatively I will communicate using pointing, gestures, facial expressions and sometimes using objects. I will understand and respond to simple sentences when being spoken to.
9 On the next page a desired goal was identified. This was then broken down into columns which addressed the "goal broken into chunks", what needed to happen to achieve the goal, the person responsible for achieving it, a timeline, and "outcome measurements". On this occasion, the goal identified was "[t]o further my practice and skills with my wallet and money handling". In the second column, the following was recorded:
Advise [client] firstly on the task she needs to undertake and then give her space to perform it before advising or putting prompts in place.
10 Another goal appeared on another page. It was "[t]o further increase and maintain my strength, flexibility and fitness for better health management". This was to be achieved by walking three laps in a pool with a water noodle. The plan recorded how Ms Legg was to achieve that outcome. At the end of the Action Plan, there was a space for Ms Legg to record the client's progress and to record suggestions for further support. For example, the following was recorded:
[The client] has performed well in the delivery program over the past 6 months. On occasions she has been able to complete it independently, but mostly she has required a gesture to ensure 100% completion.
11 In order to provide services to her clients, Ms Legg would also consult a "Client Support Plan" prepared for each client and updated from time to time. This set out, amongst other things, certain medical and behavioural details about the client.
12 At the end of the fourth term in each year, employees at the Naroo Centre, including Ms Legg, would plan the types of programs to be offered in the coming year. Before me was a document describing the programs to be offered in "Term 1 2017". The programs covered the delivery of activities in fields such as sport, work, recreation and health.
13 Ms Legg would meet with her supervisor, Ms Faulkner, to discuss the programs that she proposed should be allocated to her clients. Timetables would be prepared together with the Action Plans. Outlines for each program would also be prepared setting out the activities to be done and logistical information that needed to be taken into account.
14 During term, Ms Legg would also prepare progress notes for each client and program. She would handwrite notes of what occurred for each client on each day. An example of these was before me which I have reviewed. It recorded, in brief terms, the activities undertaken. It included comments such as "has had a good week this week reaching some goals set out".
15 Prior to term commencing, Ms Legg also prepared for each client an "Interim Progress Report". One of these was before me and it recorded the following goals (reproduced verbatim):
Goals that [the client] participates in are as follows, please refer to accompanying documentation for further information.
When arriving or leaving the disco venue, I will look for cars when crossing the road or entering the car park by looking both left and right before attempting to cross with 100% accuracy over 3 consecutive weeks.
When provided with an iPad I will use my finger in the screen in order to unlock or draw on the iPad with 80% accuracy over 3 consecutive weeks.
When ingredients are set up for me in the kitchen I will independently put my ingredients on the pizza base with 100% accuracy over 3 consecutive weeks.
When given the ipad and it is set up ready to take photo's I will learn how to push the shutter button on the ipad to take a photo with 100% accuracy over 3 consecutive weeks.
During the art program I will make myself a hot drink with help only with the hot water with 100% accuracy over 3 consecutive weeks.
When provided with my own brush I will independently pick up my own brush and brush my hair with 100% accuracy over 3 consecutive weeks.
16 This report contained a long table of "progress notes" handwritten by Ms Legg for the period 28 September 2015 to 21 December 2015 in relation to the task of learning how to take photographs using an iPad. The first entry reads as follows:
[The client] understood that she needed to tap the ipad to take the photo, however had trouble finding the button so required finger guiding.
17 There are then 12 further entries recording the client's progress. As an indication of the importance of the challenge faced by this client, the task of taking photos was not achieved notwithstanding months of training. Ms Legg recorded:
[The client] had a few times throughout the term where she was able to take a photo with a verbal cue of "press the white button." However it seemed as though [the client] would get a little disorientated with her surroundings and required more of a physical finger guiding assistance to ensure that she was taking a photo.
18 Each attempt at taking photos was graded by Ms Legg from 0 to 5 and then recorded in the following graph:
19 The observations made by Ms Legg in her various reports were detailed and nuanced. They well demonstrate the high seriousness and commitment required to assist a person with an intellectual disability to perform everyday tasks with accuracy and dignity. They also reveal a clear and professional dedication to the task of teaching essential daily tasks to clients of the Naroo Centre. Like any teacher, Ms Legg graded each client's performance. The grades were recorded and analysed. Progress was often slow. Clients relapsed from time to time.
20 I would characterise Ms Legg's participation in the programs as teaching or instructing. That characterisation is in no way diminished by the fact that the tasks that were set would be easy for some of us to achieve. The fact remains they were not easy for many of Ms Legg's clients.
21 There was some debate before me concerning the task of teaching a client to use a seatbelt. Ms Legg was cross-examined about this. It was put to her that this was not "teaching". This was denied. Ms Legg explained that it might take years for a client to learn this task but that with "time and patience" this task could be learned. Yooralla submitted that if the clients learned a skill "along the way" during their participation in an Action Plan, it would not follow that the plans were training programs. To make good that proposition, the following questions were asked:
These are activities, would you agree, for the enjoyment of the people who come to the centre, for them to get something out of life, but they're not training programs, are they?---They're activities, but it doesn't mean that they aren't learning within these activities.
And I understand what you mean, they might learn simple things such as putting on a seatbelt. They might learn to do freestyle, maybe, if they didn't already, but that learning is part of the activity. It's not part of a training program. You'd accept that?---I disagree.
Well, you just agreed with me a moment ago that there wasn't a swimming training program, so all I'm saying to you, if they learn a skill along the way, then that's implementing client skills and activities programs. That's not, itself, a training program, is it?---No.
The learned primary judge addressed this task in a key section of his reasons for rejecting the proposition that Ms Legg's activities should be characterised as teaching or training. At [36]-[39], his Honour said:
36. In ordinary parlance, the verb "to train" is commonly understood to involve the task of teaching a particular skill or type of behaviour through sustained practice and instruction. As an adjective, the word means "develop and improve (mental or physical faculty) through instructional practice."
37. Ms Legg gave evidence she did not train clients to take their medication. Next, she was asked about the activity she undertook involving a client and the affixing of his or her seatbelt. She said showing a person how [to put on] their seatbelt could potentially be regarded as part of their learning and it would be part of the training programme because for her the client has learnt a new thing and that person was achieving goals as an adjunct to daily living.
38. On that analysis, any activity undertaken by Ms Legg leading in some way to the client learning a new thing or achieving goals of daily living was "training". That is to give the word "to train" an extremely wide meeting and it ignored the aspect of the sustained practise and instruction that the verb ordinarily connotes. Further, for the purpose of the decided cases, especially City of Wanneroo v Holmes and Joyce v Christoffersen, the principal aspect of the work, not an incidental adjunct to it, is an important feature. Training was not the principal aspect of the work. She asserted that 40% of her time was allocated to client training and support and that an additional 20% of her time was allocated to preparing client focused documentation, thereby rendering 60% of the time devoted to some aspect or other related training.
39. I disagree.
(Footnote omitted.)
22 I make two observations at this point:
(1) first, the characterisation of Ms Legg's activities does not depend on the answers she gave in the witness box about whether she considered she was teaching or instructing at the Naroo Centre. In that respect, some of the affidavit material filed below contained conclusionary language about this issue. I have given no weight to such "evidence"; and
(2) secondly, I respectfully consider that the learned primary judge, in the passages set out above, may have failed to appreciate that this was not a case of providing activities per se from which a skill might be obtained "along the way". The evidence I have examined shows that the purpose of each program was to identify a skill or skills to be learned, to record the method of learning that skill within a defined framework, to record a client's progress in using that method and finally to assess that progress and determine whether or not the skill had been acquired at the end of the program. In my view, all of the programs in aggregate constituted a sustained course of training of multiple skills. And each program of itself comprised a sustained set of training activities with respect to a particular skill. The nature of the skills that were taught focused upon achieving an ability to pursue everyday life independently and successfully.
The Competing Awards
23 Ms Legg's rate of pay consisted of two parts: (i) the Transitional Minimum Wage; and (ii) the Equal Remuneration Payment. I will address these parts seriatim.
Transitional Minimum Wage
24 It was not in dispute that Ms Legg's Transitional Minimum Wage depended upon whether she was an "instructor" under the Disability Award or an "attendant carer" under the Carer Award (the parties referred to each of these as a "pre-modern award").
The Disability Award
25 The Disability Award binds members of the AEU. It was also accepted that it bound Yooralla. It applied to the following "industry":
the industry means the occupations of Instructors, Program Directors, Assistant Program Directors, Supervisors, Assistant Supervisors, Teachers, Teacher's Assistants and Employment Officers, howsoever called, who are engaged in the performance of all work in or in connection with or incidental to the industries and/or industrial pursuits of disability services education.
26 The AEU relied upon cl 6.7.1 of the Disability Award:
An Instructor means an Instructor as outlined in 21.1 of this award. In this regard, qualifications as outlined in 21.2 and experience as outlined in 21.3 shall be the determining factors.
It was accepted that cl 21.1 did not define the word "instructor" in any way. This was an oversight. I was nonetheless invited by the AEU to give meaning and effect to that word by a consideration of cll 21.2 and 21.3. These contained the "determining factors" in deciding whether Ms Legg was an "instructor" for the purposes of the Disability Award. Yooralla did not submit that the failure to expressly define the term "instructor" in cl 21.1 was necessarily fatal to the AEU's case. It appeared to accept that I should endeavour to give some meaning to that word for the purposes of this appeal.
27 Clauses 21.2 and 21.3 were relevantly in the following terms:
21.2 Qualifications
…
An Instructor in an Adult Unit shall receive the rate of pay according to the range for which the Instructor is entitled after taking into consideration both qualifications and experience. Recognised qualifications are those set out in the schedules below.
…
21.2.1(f) Tertiary qualification – Degree level
B Applied Science (DT)
B Occ. Therapy (overseas)
…
21.3 Experience
21.3.1 An Instructor with no recognised qualification shall be allocated to the salary subdivision range 1-10, commencing at subdivision 1. Upon the production of documentary evidence indicating attainment of knowledge and skill components relevant to the position and specific to the job specification or centre's program needs, an Instructor shall be awarded a higher commencement subdivision, eg.:
• an Instructor with one year experience is to commence on subdivision 2;
• an Instructor with two years' experience is to commence on subdivision 3, etc.
21.3.2 For the purposes of this award applicable experience is defined as experience relevant to the education and/or training of persons with an intellectual disability.
…
28 The AEU contended that I should read the letters "DT" after "B Applied Science" to refer to Diploma of Teaching. I was also invited to effectively ignore the word "overseas" after "B Occ. Therapy". By so doing I should conclude, it was said, that Ms Legg held degrees of a kind that the Disability Award contemplated might be held by an "instructor". The AEU also relied upon cl 23 and its reference to time "spent in preparation and evaluation" in addition to "client attendance". It was said this reflected what Ms Legg did.
29 Clause 21.1 lists a series of salaries for different "instructors subdivisions". The subdivisions were identified by a number which did not appear to be defined separately. Presumably, participants in the industry know what these subdivisions are. No party raised as an issue before me which "instructors subdivision" in cl 21.1 Ms Legg might fall within, assuming her to be an "instructor".
The Carer Award
30 The Carer Award also bound Ms Legg (assuming her to be an "attendant carer") and Yooralla. It applied to all persons employed in the "attendant care industry". That term would appear not to have been defined. However, the term "Attendant carer" was defined in cl 4.2 as follows:
4.2 Attendant carer means a person who provides assistance, in a non-institutional setting (including a home or workplace), to a person with a disability as a means to enable that person to achieve maximum personal independence within the community.
4.2.1 Attendant carers provide assistance to a person with a disability with every day tasks that a person without a disability would be doing for themselves and may include the following personal activities:
• lifting;
• showering;
• toileting;
• grooming;
• meal assistance;
• meal preparation;
• exercise;
• domestic responsibilities;
• recreation;
• personal development;
• communication;
• mobility;
• personal administration;
• shopping; and
• other independent living skills.
4.2.2 The employer will require an attendant carer to take direction from the consumer or the consumer's representative.
4.3 Attendant carer grade 1 means a person who is not required to have previous experience or training.
4.4 Attendant carer grade 2 means a person working as an attendant carer with a minimum of one year's experience who provides assistance to persons with complex support needs where a more advanced level of skill is required beyond that required by an Attendant carer grade 1.
4.5 Attendant carer grade 3 means a person working as an attendant carer who is appointed as such and who is proficient in all aspects of Attendant care work and is required to supervise the work of other attendant carers.
The Equal Remuneration Payment
31 The second part of Ms Legg's pay was the "Equal Remuneration Payment". This is an amount equal to a percentage of Ms Legg's rate of pay under the Modern Award. The dispute between the parties is whether she should be characterised as a "Social and community services employee level 2" or a "Social and community services employee level 3". I note parenthetically that the application of the Modern Award to Ms Legg was initially in dispute but this point was not ultimately pressed by Yooralla.
32 It is regrettably necessary to set out the applicable clauses in the Modern Award in full. Schedule B.2 addresses the position of a Level 2 employee as follows:
Social and community services employee level 2
B.2.1 Characteristics of the level
(a) A person employed as a Social and community services employee level 2 will work under general guidance within clearly defined guidelines and undertake a range of activities requiring the application of acquired skills and knowledge.
(b) General features at this level consist of performing functions which are defined by established routines, methods, standards and procedures with limited scope to exercise initiative in applying work practices and procedures. Assistance will be readily available. Employees may be responsible for a minor function and/or may contribute specific knowledge and/or specific skills to the work of the organisation. In addition, employees may be required to assist senior workers with specific projects.
(c) Employees will be expected to have an understanding of work procedures relevant to their work area and may provide assistance to lower classified employees or volunteers concerning established procedures to meet the objectives of a minor function.
(d) Employees will be responsible for managing time, planning and organising their own work and may be required to oversee and/or guide the work of a limited number of lower classified employees or volunteers. Employees at this level could be required to resolve minor work procedural issues in the relevant work area within established constraints.
(e) Employees who have completed an appropriate certificate and are required to undertake work related to that certificate will be appointed to this level. Where the appropriate certificate is a level 4 certificate the minimum rate of pay will be pay point 2.
(f) Employees who have completed an appropriate diploma and are required to undertake work related to the diploma will commence at the second pay point of this level and will advance after 12 full-time equivalent months' satisfactory service.
B.2.2 Responsibilities
A position at this level may include some of the following:
(a) undertake a range of activities requiring the application of established work procedures and may exercise limited initiative and/or judgment within clearly established procedures and/or guidelines;
(b) achieve outcomes which are clearly defined;
(c) respond to enquiries;
(d) assist senior employees with special projects;
(e) prepare cash payment summaries, banking reports and bank statements, post journals to ledger etc. and apply purchasing and inventory control requirements;
(f) perform elementary tasks within a community service program requiring knowledge of established work practices and procedures relevant to the work area;
(g) provide secretarial support requiring the exercise of sound judgment, initiative, confidentiality and sensitivity in the performance of work;
(h) perform tasks of a sensitive nature including the provision of more than routine information, the receiving and accounting for moneys and assistance to clients;
(i) assist in calculating and maintaining wage and salary records;
(j) assist with administrative functions;
(k) implementing client skills and activities programmes under limited supervision either individually or as part of a team as part of the delivery of disability services;
(l) supervising or providing a wide range of personal care services to residents under limited supervision either individually or as part of a team as part of the delivery of disability services;
(m) assisting in the development or implementation of resident care plans or the planning, cooking or preparation of the full range of meals under limited supervision either individually or as part of a team as part of the delivery of disability services;
(n) possessing an appropriate qualification (as identified by the employer) at the level of certificate 4 or above and supervising the work of others (including work allocation, rostering and providing guidance) as part of the delivery of disability services as described above or in subclause B.1.2.
B.2.3 Requirements of the position
Some or all of the following are needed to perform work at this level:
(a) Skills, knowledge, experience, qualification and/or training
(i) basic skills in oral and written communication with clients and other members of the public;
(ii) knowledge of established work practices and procedures relevant to the workplace;
(iii) knowledge of policies relating to the workplace;
(iv) application of techniques relevant to the workplace;
(v) developing knowledge of statutory requirements relevant to the workplace;
(vi) understanding of basic computing concepts.
(b) Prerequisites
(i) an appropriate certificate relevant to the work required to be performed;
(ii) will have attained previous experience in a relevant industry, service or an equivalent level of expertise and experience to undertake the range of activities required;
(iii) appropriate on-the-job training and relevant experience; or
(iv) entry point for a diploma without experience.
(c) Organisational relationships
(i) work under regular supervision except where this level of supervision is not required by the nature of responsibilities under B.2.2 being undertaken;
(ii) provide limited guidance to a limited number of lower classified employees.
(d) Extent of authority
(i) work outcomes are monitored;
(ii) have freedom to act within established guidelines;
(iii) solutions to problems may require the exercise of limited judgment, with guidance to be found in procedures, precedents and guidelines. Assistance will be available when problems occur.
33 Schedule B.3 addresses the position of a Level 3 employee in these terms:
Social and community services employee level 3
B.3.1 Characteristics of this level
(a) A person employed as a Social and community services employee level 3 will work under general direction in the application of procedures, methods and guidelines which are well established.
(b) General features of this level involve solving problems of limited difficulty using knowledge, judgment and work organisational skills acquired through qualifications and/or previous work experience. Assistance is available from senior employees. Employees may receive instruction on the broader aspects of the work. In addition, employees may provide assistance to lower classified employees.
(c) Positions at this level allow employees the scope for exercising initiative in the application of established work procedures and may require the employee to establish goals/objectives and outcomes for their own particular work program or project.
(d) At this level, employees may be required to supervise lower classified staff or volunteers in their day-to-day work. Employees with supervisory responsibilities may undertake some complex operational work and may undertake planning and co-ordination of activities within a clearly defined area of the organisation including managing the day-to-day operations of a group of residential facility for persons with a disability.
(e) Employees will be responsible for managing and planning their own work and that of subordinate staff or volunteers and may be required to deal with formal disciplinary issues within the work area.
(f) Those with supervisory responsibilities should have a basic knowledge of the principles of human resource management and be able to assist subordinate staff or volunteers with on-the-job training. They may be required to supervise more than one component of the work program of the organisation.
(g) Graduates with a three year degree that undertake work related to the responsibilities under this level will commence at no lower than pay point 3. Graduates with a four year degree that undertake work related to the responsibilities under this level will commence at no lower than pay point 4.
B.3.2 Responsibilities
To contribute to the operational objectives of the work area, a position at this level may include some of the following:
(a) undertake responsibility for various activities in a specialised area;
(b) exercise responsibility for a function within the organisation;
(c) allow the scope for exercising initiative in the application of established work procedures;
(d) assist in a range of functions and/or contribute to interpretation of matters for which there are no clearly established practices and procedures although such activity would not be the sole responsibility of such an employee within the workplace;
(e) provide secretarial and/or administrative support requiring a high degree of judgment, initiative, confidentiality and sensitivity in the performance of work;
(f) assist with or provide a range of records management services, however the responsibility for the records management service would not rest with the employee;
(g) proficient in the operation of the computer to enable modification and/or correction of computer software systems or packages and/or identification problems. This level could include systems administrators in small to medium-sized organisations whose responsibility includes the security/integrity of the system;
(h) apply computing programming knowledge and skills in systems development, maintenance and implementation under direction of a senior employee;
(i) supervise a limited number of lower classified employees or volunteers;
(j) allow the scope for exercising initiative in the application of established work procedures;
(k) deliver single stream training programs;
(l) co-ordinate elementary service programs;
(m) provide assistance to senior employees;
(n) where prime responsibility lies in a specialised field, employees at this level would undertake at least some of the following:
(i) undertake some minor phase of a broad or more complex assignment;
(ii) perform duties of a specialised nature;
(iii) provide a range of information services;
(iv) plan and co-ordinate elementary community-based projects or programs;
(v) perform moderately complex functions including social planning, demographic analysis, survey design and analysis.
(o) in the delivery of disability services as described in subclauses B.1.2 or B.2.2, taking overall responsibility for the personal care of residents; training, co-ordinating and supervising other employees and scheduling work programmes; and assisting in liaison and co-ordination with other services and programmes.
B.3.3 Requirements of the job
Some or all of the following are needed to perform work at this level:
(a) Skills, knowledge, experience, qualifications and/or training
(i) thorough knowledge of work activities performed within the workplace;
(ii) sound knowledge of procedural/operational methods of the workplace;
(iii) may utilise limited professional or specialised knowledge;
(iv) working knowledge of statutory requirements relevant to the workplace;
(v) ability to apply computing concepts.
(b) Prerequisites
(i) entry level for graduates with a relevant three year degree that undertake work related to the responsibilities under this level-pay point 3;
(ii) entry level for graduates with a relevant four year degree that undertake work related to the responsibilities under this level-pay point 4;
(iii) associate diploma with relevant experience; or
(iv) relevant certificate with relevant experience, or experience attained through previous appointments, services and/or study of an equivalent level of expertise and/or experience to undertake the range of activities required.
(c) Organisational relationships
(i) graduates work under direct supervision;
(ii) works under general supervision except where this level of supervision is not required by the nature of the responsibilities under B.3.2 being undertaken;
(iii) operate as member of a team;
(iv) supervision of other employees.
(d) Extent of authority
(i) graduates receive instructions on the broader aspects of the work;
(ii) freedom to act within defined established practices;
(iii) problems can usually be solved by reference to procedures, documented methods and instructions. Assistance is available when problems occur.
Principles of Construction
34 There was no dispute about the applicable principles of construction. They were helpfully summarised at para 4 of the AEU's written submissions which state as follows:
Disputes about the issues in this appeal commonly concern two matters: which award applies and which classification within an award applies? So it is here. The law governing those issues is settled. The text, context and purpose of the provisions of an industrial instrument determine its legal meaning. A narrow and strict construction is inapt: a broad and beneficial construction is appropriate. A comparison and evaluation between the different awards and the different classifications is required. The primary judge was required to ascertain the 'major and substantial employment' of Ms Legg. This test is determined both qualitatively and quantitatively. The quality, nature or particular character of the person's work are relevant considerations, as is the amount of time she spent on different tasks. In determining these issues, the language of the relevant industrial instrument is always central.
(Footnotes omitted.)
Citing Maribyrnong City Council v Australian Municipal, Administrative, Clerical and Services Union [2019] FCA 773 at [39]-[42] per Wheelahan J; Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16]; Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 246-247 [2] per Gleeson CJ and McHugh J; 270-271 [96] per Kirby J; Choppair Helicopters Pty Ltd v Bobridge [2018] FCA 325 at [64]-[71] per Bromberg J.
35 Senior Counsel for the AEU also relied upon the decision of the Full Court of this Court in Transport Workers' Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148; (2014) 245 IR 449. He did so because the terms of the Disability Award and the Carer Award appear potentially to overlap. A similar potential overlap exists in the language used to describe Level 2 and Level 3 positions in the Modern Award. In that respect, and on one view, Ms Legg appeared to undertake activities which, at least in part, fell within both the pre-modern awards, and within the descriptions of both the Level 2 and 3 positions in the Modern Award. This may be the inevitable outcome of adopting generalised language to the particular circumstances of a given person's employment. In Coles Supermarkets Australia there were also two competing awards. The Full Court said at [34]:
When the primary judge turned to examine the question of whether Transport Worker Grade 2 or Retail Employee Level 1 was the more appropriate award classification his Honour was influenced by the fact that the latter classification appeared to be a more comprehensive match with the work of [Customer Service Agents] than the former.
Thus, it was said, one determined which award applied by seeing which is the "more comprehensive match with the work" that was carried out. That requires one to ascertain the "major and substantial employment" of the employee.
36 The AEU also relied upon the decision of Logan J in Construction, Forestry, Mining and Energy Union v Anglo Coal (Callide Management) Pty Ltd [2015] FCA 696, which I have found to be of assistance. At [38]-[39] his Honour said:
More recently, in Logan v Otis Elevator Company Pty Ltd [1997] IRCA 200 at 68-73 (Logan v Otis Elevator) Moore J collected and discussed many of the plethora of cases in which courts or the industrial commission have had to confront the phenomenon of an employee whose position required the undertaking of multiple duties only some of which were mentioned in a particular classification in an industrial instrument or, as the case may be, were disparately stated in different industrial instruments. Like Moore J in that case, I consider that a [judgment] given by Sheldon J in Ware v O'Donnell Griffin (Television Services) Pty Ltd [1971] AR (NSW) 18 offers assistance. Also like Moore J, I do not consider that the observations made by Sheldon J are to be confined just to a case where it is necessary to choose as between which of two industrial instruments applies to particular employment. That circumstance merely provided the context in which observations of pervasive relevance came to be made by Sheldon J. What Sheldon J observed was this (as set out in Logan v Otis Elevator at 68):
The finding of the Chief Industrial Magistrate raises two questions: Firstly, whether this is a case to be determined on the principle of major and substantial employment; and, secondly, if it is, whether the evidence justified his finding as to what the major and substantial employment of the complainant was.
It seems to me that this is clearly a case to which this principle is applicable. This principle is almost as old as industrial arbitration and it makes a practical approach to determining the application of awards where duties are of a mixed character and contain elements which have taken alone would be covered by more than one award. This is not an appropriate occasion on which to discuss the method by which this test should be applied except to say that it is not merely a matter of quantifying the time spent on the various elements of work performed by a complainant; the quality of the different types of work done is also a relevant consideration.
A pithy way of putting the same proposition is that both quality and quantity are relevant when it comes to employee classification, subject always to the language employed in the particular industrial instrument.
The Decision Below
37 I have already set out the key part of the reasons of the learned primary judge. In essence, his Honour decided that Ms Legg performed the work of an "attendant carer" in respect of which some training was involved but that this training was not "the mainstay or even a substantial part of her work" (at [41]). The fact that she held an academic degree was said to be not "determinative nor even useful" in ascertaining the "principal purpose of her work" (at [34]).
38 His Honour also observed that the "[t]he activities identified in paragraph 48 of Ms Legg's submissions dated 4 December 2017 did little to illuminate the precise nature of the activity involved and so it was not possible to say whether or not any of those activities involved "training" or "instructing" even though phrases such as "delivery of training", "client training" and "maintaining individual training" were used" (at [35]). I do not know what was said at para 48 of the AEU's submissions below. Before me, however, there was sufficient evidence to enable me to determine whether the "major and substantial employment" was that of being an "instructor" or an "attendant carer".
39 His Honour also appeared to conflate the application of the pre-modern awards and the Modern Award. It was said that the issue concerning the characterisation of Ms Legg's activities as that of "attendant carer" or "instructor" governed not only the application of the pre-modern awards but also his Honour's application of the Modern Award. That is evident in the reasoning below at [32]. That conflation may have arisen because of the way the case was presented to the learned primary judge. Certainly before me, Counsel did their best to distil the issues between them in the simplest form possible. However, an examination of the language used in the Modern Award makes it abundantly plain that the resolution as to whether Ms Legg was a Level 2 or Level 3 employee could not solely turn upon characterising her as an "attendant carer" or "instructor".
Grounds of Appeal
40 The AEU's notice of appeal disclosed the following grounds of appeal:
1. The learned primary judge misunderstood and/or misapplied the test to be applied in determining the appropriate award classifications under which Ms Legg fell.
2. The learned primary judge erred in finding that for the purposes of clause 5.3(b) of the Equal Remuneration Order, the transitional minimum wage instrument was the pay and classification scale derived from the Attendant Care – Victoria Award 1995 (Attendant Care Award) instead of from the Disability Services Award (Vic) 1999 (Disability Services Award).
3. The learned primary judge erred in finding that the training and associated work carried out by Ms Legg was not a major or substantial or principal aspect of Ms Legg's employment.
4. The learned primary judge erred in his construction of the Common Rule Declaration – Victoria in the Disability Services Award by finding that Ms Legg was not an employee in the industry, as defined in clause 1.4 of the Declaration, who performed work of a kind that would have been covered by the Disability Services Award as set out at clause 1.2 of the Declaration.
5. The learned primary judge erred in finding that for the purposes of the Equal Remuneration Order, the relevant classification for Ms Legg in the Social, Community, Home Care and Disability Services Industry Award 2010 (Modern Award) was Level 2 rather than Level 3.
6. The learned primary judge erred in finding that Ms Legg did not conduct training within the meaning of the Level 3 classification.
7. The learned primary judge erred in applying an incorrect construction of Schedule B of the Modern Award to the facts:
a. by not undertaking a comparative analysis between a Schedule B.2 social and community services employee Level 2 and a Schedule B.3 social and community services employee Level 3; and/or
b. by failing to take into account Ms Legg's responsibilities in allowing the scope for exercising initiative in the application of established work procedures, assisting with or providing range of records management services and/or providing assistance to senior and/or providing assistance to senior employees as set out in Schedule B.3.2 of the Modern Award
8. The learned primary judge erred in finding that Ms Legg was properly classified under Level 2 rather than level 3 of the Modern Award.
9. The learned primary judge erred in finding that Ms Legg's four year degree was irrelevant to her level of classification or pay point in the Modern Award.
10. The learned primary judge erred by failing to find that the Respondent contravened section 305 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay Ms Legg the minimum hourly rates for ordinary hours worked in contravention of clause 5.5 of the Equal Remuneration Order.
11. The learned primary judge erred by failing to find that the Respondent contravened section 305 of the FW Act by failing to pay Ms Legg the minimum hourly rates for public holiday hours in contravention of clause 5.5 of the Equal Remuneration Order.
12. The learned primary judge erred by failing to find that the Respondent contravened section 44 of the FW Act by failing to pay Ms Legg the minimum hourly rates for annual leave taken in contravention of section 90(1) of the FW Act.
13. The learned primary judge erred by failing to find that the Respondent contravened section 45 of the FW Act by failing to pay Ms Legg the minimum hourly rates for annual leave loading in contravention of clause 31.3(a) of the Modern Award.
14. The learned primary judge erred by failing to find that the Respondent contravened section 44 of the FW Act by failing to pay Ms Legg the minimum hourly rates for personal leave taken in contravention of section 99 of the FW Act.
15. The learned primary judge erred by failing to find that the Respondent contravened section 45 of the FW Act by failing to advise Ms Legg of her classification under the Modern Award on commencement of her employment in contravention of clause 13.2 of the Modern Award.
Grounds 11 and 15 were abandoned by the AEU.
41 As I understood it, and owing to the guidance of Counsel before me, this impressive list of appeal grounds was to be resolved by determining which pre-modern award applied to Ms Legg, and by determining whether she should be a Level 3 instead of a Level 2 employee for the purposes of the Modern Award.
Disposition
(a) The Pre-Modern Awards
42 The nub of the AEU's submission, as presented by Mr Irving, Q.C. and his learned junior Ms Knowles, is that the difference between instructing and caring boils down to the proposition that instructing involves learning whereas the essential attribute of a carer is to provide help. In that respect, it was submitted that teaching involves setting a goal or a learning outcome, and then a process of improvement. It is a transformative process. I respectfully agree with that submission.
43 Mr Irving supported his submission with reliance upon cll 21.2 and 21.3 of the Disability Award. I have not been much influenced by the reliance upon cl 21.2, which sets out a long list of eligible qualifications. It was not clear to me that the two degrees identified by the AEU in that list (set out above) were the same as those held by Ms Legg, although I am prepared to assume that they were (Yooralla did not press the point). However, the other qualifications listed in that clause were so numerous (over 100 are identified) and so varied as to be of little assistance in ascertaining the meaning of the word "instructor". They included various bachelor degrees in a range of disciplines such as Arts, Science and Home Economics; trade qualifications such as that of a plumber, a cabinet maker, a chef, a panel beater etc.; and the achievement of diplomas in fields as various as Horticulture Science and in Art and Fashion. The sheer number and variety of eligible qualifications do render it probable that the degrees held by Ms Legg were appropriate qualifications for the purposes of cl 21.2. However, not much can otherwise be inferred from the list of qualifications in that clause that might inform the meaning of the word "instructor" as it appears in the Disability Award. In that respect, Yooralla emphasised that, in relation to Ms Legg's experience, cl 21.3.2 required that it be relevant to the training or education of persons with an intellectual disability. It was not clear that Ms Legg's degrees were of this nature. But in my view that is of no moment because her qualifications, in any event, probably fell within those recognised by cl 21.2.
44 Mr Rinaldi of Counsel said that the question before the Court was finely balanced. But he emphasised the language of the Carer Award. It categorised as an "attendant carer" a person who assists in a non-institutional setting a "person with a disability as a means to enable that person to achieve maximum personal independence within the community" (cl 4.2). That, Mr Rinaldi submitted, is precisely what Ms Legg was doing with her programs and Action Plans. Each Action Plan was directed at securing "maximum independence within the community" for each client. I accept that characterisation. He then also emphasised the language of cl 4.2.1 and its reference to a carer providing "assistance to a person with a disability with [everyday] tasks that a person without a disability would be doing for themselves". The personal activities thereafter listed included activities that were of a kind that were similar to the "goals" sought to be achieved in the Action Plan, such as "exercise", "shopping" and "domestic responsibilities".
45 I agree with Mr Rinaldi that the matter is finely balanced. It also appears to me that there is potential for overlap between the Carer Award and the Disability Award. Both awards, at least in part, are directed at individuals providing services to people with a disability. How the two awards are to be read together remained unclear. The context in which each was made also remained uncertain.
46 As I have already mentioned, the Disability Award does not define the term "instructor". In order to give meaning to that word, I have considered the context in which it appears, including those clauses relied upon by the AEU. I have not found this context to be helpful other than to note that an "instructor" is juxtaposed in the Disability Award against "Assistant Supervisors", "Supervisors", a "teacher", a "teacher's assistant" and an "untrained teacher". The first three terms are not defined in the award but a "determining factor" for each is said to be specified "qualifications". The difference between an "instructor" and a "teacher" appears in the award to turn upon the qualifications held by the employee. The qualifications specified for a "teacher" are much narrower than those listed for an "instructor". As already mentioned, the list of qualifications in cl 21.2 was of little or no assistance. I am nonetheless prepared to accept that an "instructor" is relevantly a person who is engaged in the training or teaching of a person with a disability, in the sense submitted by the AEU.
47 In that respect, I do not think that the learned primary judge erred when, at [36], he described the meaning of the verb "to train". His Honour said that this verb "is commonly understood to involve the task of teaching a particular skill or type of behaviour through sustained practice and instruction". In my view, that is also an apt description of what an "instructor" does, and what is meant by that word in the Disability Award.
48 However, I respectfully do agree with the AEU that the learned primary judge misapplied the term "instructor" to the evidence and, in particular, in deciding that instruction or training was not the major or principal aspect of Ms Legg's employment. His Honour thus erred in deciding that the Carer Award applied to Ms Legg. On balance, and again with great respect, I do not think that the Carer Award applies to Ms Legg. The key phrase in the definition of "Attendant carer" is "provides assistance". The essential quality of the work of a carer is to assist. They assist with the performance of those "everyday tasks" which are ordinarily encountered by a person with a disability. This includes showering, lifting, grooming, recreation and other "personal activities". Ms Legg did not do this. She did not assist her clients to perform these tasks, save in an incidental way. Rather, Ms Legg was teaching her clients how to undertake these tasks, without assistance, and independently. To use the example of taking photos with an iPad, I am amply satisfied that Ms Legg was not assisting her client to take actual photos with such a device; rather, she was teaching her client how to take such photos in a self-sufficient and effective way. I am also satisfied that the teaching of these skills was the essential reason why clients attended the Naroo Centre. The personal care also provided by Ms Legg to her clients, such as meal preparation, was, in my view, incidental to the core task of teaching undertaken by Ms Legg and her colleagues. Clients did not attend the Naroo Centre to secure those services; they attended for the programs offered. It is true that the language of the Carer Award suggests that the supply of assistance might enhance a person's ability to achieve "maximum personal independence". But that is as a consequence of the assistance so provided. In contrast, the essential purpose and function of the programs was not assistance but teaching. Learned skills were not a by-product of what occurred, but the central concern.
49 For these reasons, in my view, and with respect to Mr Rinaldi, Ms Legg's salary was governed by the Disability Award and not by the Carer Award. It was common ground that if I so found, the fact that her contract specified that her remuneration would be determined by reference to the Carer Award was of no moment.
(b) The Modern Award
50 The AEU submitted that the learned primary judge was mistakenly of the view that to be a "Level 3" employee, Ms Legg had to be a trainer or instructor. The language used in Sch B.3 did not support that approach. I respectfully agree with that submission. The AEU submitted that subcl B.3.2 identified 15 responsibilities and it was sufficient if Ms Legg's employment satisfied one or more of these. It contended that her employment answered the description of five named responsibilities. The AEU's written submissions thus state:
(a) Ms Legg's work allowed scope for exercising initiative in the application of established work procedures. Her role involved the development of and contribution to one of those procedures called 'person centred planning'.
(b) Ms Legg assisted with or provided a range of records management services. She prepared a variety of documents in accordance with the 'person centred planning' approach.
(c) Ms Legg provided assistance to senior employees. She reported to Sonia [Faulkner], Yooralla's programme manager. Ms Legg prepared individual weekly plans in consultation with Ms Faulkner: they reviewed relevant documents to ensure each client was supported in the planned manner. According to Ms Faulkner, Ms Legg performed her duties to a high standard.
(d) In the delivery of disability services as described in Level 2 (relevantly, the extent to which Ms Legg implemented client skills and activities programmes), Ms Legg assisted in liaison and coordination with other services and programmes.
(e) Ms Legg delivered single stream training programmes, that is, programmes for individual people, in this case a client. These individual programmes were tailored and delivered by her. They involved Ms Legg teaching clients to complete activities and goals and assessing the extent to which clients had achieved their goals throughout the day.
(Footnotes omitted.)
51 I was assured that the foregoing submission was made to the learned primary judge but his Honour made no findings about it. Once again, the reasons below may well reflect the way the case was presented, and in particular, what was emphasised by Counsel in a somewhat complex case. Nonetheless, I must now consider the submission as put by the AEU. It submitted that Ms Legg's employment satisfied the following subparas of subcl B.3.2:
(a) Subpara (c) which refers to "exercising initiative";
(b) Subpara (f) which refers to providing assistance with "records management services";
(c) Subpara (k) which refers to the delivery of "single stream training programs";
(d) Subpara (m) which refers to providing assistance "to senior employees"; and
(e) Subpara (o) which refers to the "delivery of disability services".
52 Mr Irving submitted that I should not read subcl B.3.2 as requiring a search for which responsibility was the "best fit" with Ms Legg's employment. He contended that a person's "major and substantial employment" may meet a number of descriptors within subcl B.3.2.
53 There are great difficulties in determining whether a person's employment should fall within the highly generalised language of Sch B.2 or Sch B.3. One can see that, in general terms, Sch B.3 deploys language directed at activities which involve more responsibility and seniority than those mentioned in Sch B.2. The Modern Award appears to be capable, in that sense, of working in the abstract. But applying the generalised language to a person's actual employment is another matter. For example subcl B.2.2(d) refers to a person who assists "senior employees with special projects". Such a person is to be categorised as "Level 2". However, a "Level 3" job will also be one with responsibility, to use the language of subcl B.3.2(m), for providing "assistance to senior employees".
54 I respectfully disagree with the submissions of the AEU. That is because an examination of the descriptors of Levels 1, 2 and 3 responsibilities reveals that the provision of disability services is expressly addressed at each level. For convenience, the more specific language is as follows:
(1) For Level 1 it is: "resident contact and interaction including attending to their personal care or undertaking generic domestic duties under direct or routine supervision and either individually or as part of a team as part of the delivery of disability services" (subcl B.1.2(g)). It is also: "preparation of the full range of domestic duties including cleaning and food service, assistance to residents in carrying out personal care tasks under general supervision either individually or as part of a team as part of the delivery of disability services" (subcl B.1.2(h));
(2) For Level 2 it is: "implementing client skills and activities programmes under limited supervision either individually or as part of a team as part of the delivery of disability services" (subcl B.2.2(k)). It is also: "supervising or providing a wide range of personal care services to residents under limited supervision either individually or as part of a team as part of the delivery of disability services" (subcl B.2.2(l)); "assisting in the development or implementation of resident care plans or the planning, cooking or preparation of the full range of meals under limited supervision either individually or as part of a team as part of the delivery of disability services" (subcl B.2.2(m)); "possessing an appropriate qualification (as identified by the employer) at the level of certificate 4 or above and supervising the work of others (including work allocation, rostering and providing guidance) as part of the delivery of disability services as described above or in subclause B.1.2" (subcl B.2.2(n)).
(3) For Level 3 it is: "in the delivery of disability services as described in subclauses B.1.2 or B.2.2, taking overall responsibility for the personal care of residents; training, co-ordinating and supervising other employees and scheduling work programmes; and assisting in liaison and co-ordination with other services and programmes" (subcl B.3.2(o)).
55 The specific way in which the provision of different types of disability services across Levels 1, 2 and 3 is expressed suggests that I should apply that language to determine Ms Legg's categorisation as a person supplying such services, rather than by reference to the more general language invoked by the AEU (for example, their reliance upon the category for providing assistance to senior employees). In my view, the Modern Award should not be read to permit generalised descriptors to govern a person's categorisation in the disability services industry in the face of specific paragraphs dealing with that industry.
56 The history of the Modern Award supports that conclusion. When originally made in 2010, the Modern Award contained a separate definition of the "disability services sector" and addressed the position of employees in that sector distinctively from those in the "social and community services sector". Persons supplying disability services did not fall within Sch B of the Modern Award (as they do now) but in a different Sch E (now repealed) from that which now appears. That schedule categorised employees in the disability services sector into five levels. Level 3 included the duty of "implementing client skills and activities programs" (language which may now be found in Sch B.2). Level 5 included the duty of "taking overall responsibility for the provision of personal care to residents" (language which may now be found in Sch B.3).
57 On 26 March 2010, the Full Bench of Fair Work Australia made orders (following its decision in [2010] FWAFB 2024) for the Modern Award to be amended. It had received submissions that argued that distinguishing between the disability services sector and the social and community services sector did not reflect the reality that many employers provide a combination of services. Fair Work Australia agreed with this. It was decided to delete Sch E, to amend the definition of "social and community services sector" in the Modern Award to include the provision of disability services, and to transfer the five disability services sector levels into Levels 1, 2 and 3 of Sch B. The highest former Level 5 effectively became a part of Level 3 of Sch B. There is nothing in the reasons of Fair Work Australia which suggests that disability service workers were not in principle to remain categorised in accordance with those specific categories relating to the supply of disability services, as now expressed in Levels 1, 2 and 3 of Sch B, rather than by reference to the more general descriptors found in those levels.
58 In my view, read in context, Ms Legg's "major and substantial employment" falls within the descriptor for the provision of disability services in Level 2. Her activities did not meet the description of "taking overall responsibility" in the delivery of disability services as described in subcll B.1.2 and B.2.2. It was not suggested that Ms Legg ran the Naroo Centre or supervised the other employees. Rather, she reported to Ms Faulkner. In contrast, I have little doubt that Ms Legg's "major and substantial employment" comprised the implementation of "skills and activities programmes under limited supervision … as part of the delivery of disability services", to use the language of cl B.2.2(k) (the other disability services paragraphs in Level 2 are inapplicable). This is what she did with her development and implementation of specific Action Plans for individual clients. It follows that Ms Legg's employment should be categorised as "Level 2" for the purposes of the Modern Award.
59 That conclusion is supported by the fact that a Level 3 categorisation appears to be limited to those working in the disability services sector who previously merited the highest Level 5 categorisation (in the former Sch E). In my view, Ms Legg's employment did not fall within former Level 5 or current Level 3.
60 Both the AEU and Yooralla have had some measure of success before me. In those circumstances, I will give the parties 14 days within which either to file final orders by agreement or submissions of no greater than four pages in length concerning the form of final relief.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Steward.
Associate:
Dated: 17 September 2019
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Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208
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2024-09-13T22:51:37.705814+10:00
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FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208
File number: VID 126 of 2018
Judge: BEACH J
Date of judgment: 26 February 2020
Catchwords: CORPORATIONS – offer of derivative products – contracts for difference – margin foreign exchange contracts – offering to retail investors in Australia – financial product advice – financial services – personal product advice – general product advice – scope and application of ss 766B (1) to (4) of the Corporations Act 2001 (Cth) – obligation to act in best interests of client – scope and application of s 961B – obligation to provide advice appropriate to the client – application of s 961G – obligation to avoid conflict of interest – application of s 961J – warning concerning general advice – application of s 949A – Australian financial services licence – scope and application of s 912A(1) – failure to supervise authorised representatives – application of s 961L – agency – application of s 961K – misleading or deceptive conduct – misrepresentations – s 1041H of Corporations Act and ss 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth) – statutory unconscionable conduct – scope and application of s 12CB of the ASIC Act – individual instances of unconscionable conduct – various contraventions established
Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12BB, 12CA, 12CB, 12CC, 12DA, 12DB
Corporations Act 2001 (Cth) ss 760A, 761D, 761G, 763A, 764A, 766B, 766C, 910A, 911A, 911B, 912A, 915C, 916B, 916F, 923C, 941A, 946A, 949A, 961, 961B, 961D, 961E, 961G, 961J, 961K, 961L, 961Q, 1013A, 1015C, 1041H, 1311, 1317E
Cases cited: Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544
Australian Securities and Investments Commission v AGM Markets Pty Ltd (2018) 129 ACSR 335; [2018] FCA 1119
Australian Securities and Investments Commission v Camelot Derivatives Pty Ltd (in liq) (2012) 88 ACSR 206
Australian Securities and Investments Commission v Kobelt (2019) 368 ALR 1
Australian Securities and Investments Commission v One Tech Media Ltd [2020] FCA 46
Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147
Australian Securities and Investments Commission v Westpac Securities Administration Ltd (2019) 373 ALR 455
Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392
Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525
Thorne v Kennedy (2017) 263 CLR 85
Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 362 ALR 66
Date of hearing: 1, 2, 7 and 11 October 2019
Date of last submissions: 24 October 2019
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 535
Counsel for the Applicant: Mr JP Moore QC and Mr T Chalke
Solicitor for the Applicant: Norton Rose Fulbright
Counsel for the First Defendant: The First Defendant did not appear
Counsel for the Third Defendant: Mr MGR Gronow QC, Ms L Collaris and Mr A Christopherson
Solicitor for the Third Defendant: Piper Alderman
Counsel for the Fifth Defendant: Mr JL Evans QC and Mr P Miller
Solicitor for the Fifth Defendant: O'Loughlin Westhoff
Counsel for the Sixth Defendant: The Sixth Defendant did not appear
ORDERS
VID 126 of 2018
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Applicant
AND: AGM MARKETS PTY LTD (ACN 158 706 766) (IN LIQUIDATION)
First Defendant
OT MARKETS PTY LTD (ACN 621 714 181) (IN LIQUIDATION)
Third Defendant
OZIFIN TECH PTY LTD (ACN 618 038 396) (IN LIQUIDATION) (and another named in the Schedule)
Fifth Defendant
JUDGE: BEACH J
DATE OF ORDER: 26 FEBRUARY 2020
THE COURT ORDERS THAT:
1. Within 21 days of the date of these orders, each party file and serve proposed minutes of orders and short submissions (limited to 3 pages each) to give effect to these reasons.
2. Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BEACH J:
1 The present proceeding concerns the activities of the first defendant (AGM), the third defendant (OT) and the fifth defendant (Ozifin) and the promotion of derivative instruments. From the latter part of 2017 until the middle of 2018, each of the three defendants operated separate businesses in Australia that offered over-the-counter (OTC) derivative products being contracts for difference (CFDs) including margin foreign exchange contracts (FX contracts) to retail investors in Australia. They provided retail investors an online platform on which to invest in those products and also provided financial product advice to them by telephone and email (the financial services). That advice was provided by account managers (AMs) who were engaged on behalf of the defendants, but who were based overseas. The AMs engaged on behalf of AGM were based in Israel. The AMs engaged on behalf of OT were based in Cyprus and later the Philippines. And the AMs engaged on behalf of Ozifin were based in Cyprus.
2 ASIC alleges that by the interactions between the AMs and those retail investors, each of the defendants contravened various provisions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). And it has sought against each defendant, inter-alia:
(a) declarations of contravention;
(b) orders that the defendants:
(i) pay pecuniary penalties to the Commonwealth; and
(ii) make payments to those retail investors being their clients who suffered losses arising from the contraventions by way of non-party redress; and
(c) orders that the defendants be wound up on the just and equitable ground.
3 The trial before me proceeded on the issue of liability only. Moreover, and as I will explain later, it is now not necessary to make any orders concerning the imposition of any external administration.
4 The specific allegations that ASIC maintains against the three defendants can be separated into two broad categories of contraventions.
5 The first set of contraventions are said to arise from the interactions between AMs engaged by or on behalf of each of the three defendants and 17 investors on whose affidavit evidence ASIC has relied (witness investors) and 24 additional investors (additional investors); in relation to the latter, ASIC has relied on the transcripts of conversations between AMs and the additional investors. The witness investors are:
(a) four investors who were clients of AGM's "Alphatrade" business;
(b) six investors who were clients of OT's "OT Capital" business; and
(c) seven investors who were clients of Ozifin's "TradeFinancial" business.
6 ASIC's case concerning these contraventions is that each defendant with respect to their relevant investors:
(a) provided personal advice within the meaning of s 766B(3) of the Corporations Act to each of those investors when they were not licensed or otherwise entitled to do so;
(b) made representations to those investors about the operation of and risks associated with the CFDs and FX contracts that were false, misleading or deceptive; and
(c) engaged in conduct in relation to each witness investor as well as additional investors that was, in all the circumstances, unconscionable in contravention of s 12CB of the ASIC Act.
7 ASIC also says that the AMs who provided the personal advice to each of the investors failed to take the steps that a reasonable person in the situation of those AMs would have taken to ensure that they acted in the best interests of the investors and did so when it would not have been reasonable to conclude that the advice was appropriate to each such investor.
8 In addition, ASIC says that the conduct by OT and Ozifin that constituted such contraventions was conduct undertaken on behalf of AGM. Further, ASIC says that AGM was knowingly involved in the contraventions by OT and Ozifin that arose from the said conduct.
9 Further, it is said that each of the defendants contravened other provisions of the Corporations Act that applied to their provision of the financial services. In particular, it is said that if the advice statements identified in ASIC's further amended points of claim (FAPOC) each constituted financial product advice, but did not constitute personal financial advice and therefore constituted general advice, then at no stage did any of the defendants provide a general advice warning as required by s 949A(2).
10 Further, it is said that the defendants each engaged in a system of conduct or pattern of behaviour that was in all the circumstances unconscionable.
11 The second set of contraventions concern what I would describe as compliance contraventions. ASIC says that AGM as the holder of an Australian Financial Services Licence (AFSL) failed to take the steps necessary to ensure that the financial services provided by OT and Ozifin as its authorised representatives and the AMs engaged by or on behalf of the defendants were provided in accordance with the requirements of the financial services laws. ASIC says that AGM's compliance systems and their implementation were insufficient to meet its obligations to properly supervise the conduct of its representatives. It is said that the scale of the misconduct revealed by the AMs' interactions with the investors establishes the insufficiency of AGM's compliance systems.
12 Now as I have already said, ASIC has relied on 17 affidavits relating to the conduct of the defendants towards the 17 witness investors including transcripts of telephone calls and emails between the witness investors and the AMs. ASIC has also relied on further documentary evidence of communications between those investors and the AMs, including extracts from the defendants' customer relationship management databases. In addition, ASIC has also relied on the transcripts of conversations between AMs engaged by or on behalf of the defendants and 24 additional investors. Of those additional investors, 11 were clients of AGM, eight were clients of OT, four were clients of Ozifin and one was a client of both OT and Ozifin.
13 Further, ASIC has relied on the evidence of two former employees of IBD Marketing Inc (IBD). IBD was engaged by OT to provide introductory and customer services, and what have been described as "retention" services. In particular, Mr Bryan Cecilio was employed by IBD during the relevant period, first in a role described by OT as an "opening agent", and later as an AM in a department described by IBD as "retention". Mr Cecilio provided evidence of the operation of AM services by IBD on behalf of OT and by extension AGM. He said that the purposes pursued by the AMs engaged by IBD were to maximise the deposits that clients made to their OT trading accounts, and to have the clients of OT open multiple CFD and/or FX contract positions. Mr Cecilio's evidence was that those purposes were communicated to the AMs engaged by IBD in training conducted by IBD, and by the team leaders and senior AMs to whom the AMs engaged by IBD on behalf of OT were subordinate. The other employee witness was Mr Carlos Nabata, who was employed by IBD in customer service.
14 In addition, ASIC has also relied on two expert reports of Mr John Blundell, an expert in the derivatives in question. Mr Blundell provided evidence regarding the operation of the CFDs and FX contracts that were issued to the clients of the defendants. He also gave evidence that the AMs who provided what ASIC says was personal advice to a sample of the witness investors did not take all steps that they ought to have taken to ensure that they acted in the best interests of those clients; further, they provided advice that it was not reasonable to conclude was appropriate to those clients. Further, he gave evidence of the steps that AGM ought to have taken but did not take to ensure that its representatives complied with the requirements of the Corporations Act and the ASIC Act.
15 In summary, I have largely accepted ASIC's case. But in order to explain why I have done so, it is necessary to descend into the detail of the defendants' activities to give them their proper characterisation. Further, in assessing their consequences I have only needed to resort to the applicable statutory language construed in context. No resort to meta-themes has been necessary. Any commercial judge tempted to engage in overly nuanced intellectualisation in this area should heed what Francis Bacon warned about philosophers: "their discourses are as the stars, which give little light because they are so high." But "delusive exactness", to use Oliver Wendell Holmes' robust phrase, is also to be avoided.
Factual Background
16 Let me begin with the defendants and the structure of their operations.
(a) Structural and operational aspects
17 From 2 October 2012 until 31 December 2018, AGM was the holder of an AFSL. The AFSL permitted AGM to:
(a) provide general financial product advice in derivatives and foreign exchange products, but not personal advice;
(b) deal in derivatives and foreign exchange products; and
(c) make a market in derivatives and foreign exchange products to wholesale and retail clients.
18 On 5 November 2018, ASIC made a decision to cancel the AFSL pursuant to s 915C(1) of the Corporations Act, although the cancellation only took effect on 31 December 2018. The stay of the cancellation was intended to allow the continued operation of AGM's dispute resolution process and any compensation arrangements, and to allow clients with existing positions to close them.
19 Until 16 April 2018, each of OT and Ozifin was a corporate authorised representative of AGM. OT was a party to a corporate authorised representative agreement (CAR agreement) with AGM dated 18 September 2017. AGM cancelled OT's authorisation on 16 April 2018. Ozifin was a party to a CAR agreement with AGM dated 13 June 2017. AGM cancelled Ozifin's authorisation on 16 April 2018.
20 The defendants provided financial services to retail investors in Australia: (a) in the case of AGM, under the business name "Alpha Trade"; (b) in the case of OT, under the business name "OT Capital"; and (c) in the case of Ozifin, under the business name "TradeFinancial".
21 As I have indicated, each of the defendants operated businesses dealing in financial products, being FX contracts and CFDs. They provided advice to retail clients in Australia in relation to those products.
22 A CFD is an agreement to exchange, at the closing of the contract, the difference between the opening and closing price of the underlying asset, multiplied by the number of units of that asset detailed in the contract. A CFD essentially allows a person to bet on whether the value of the underlying asset will increase or decrease over time. An FX contract is a form of CFD that allows a person to take a position on the change in value over time of one currency relative to another.
23 The precise terms of the contract that represents a CFD or FX contract are determined by the disclosure documents provided by the issuer of the product. Nevertheless, under both CFDs and FX contracts, investors are exposed to movements in the value of the underlying asset, without having to purchase the asset itself. CFDs and FX contracts are highly leveraged. They require the investor initially to pay only a fraction of the price of the value of the underlying asset or currency to open the position. The investor is exposed, however, to the total of the movement in the price of the underlying asset or currency. Whilst those products can thereby be used to magnify profits relative to the initial investment, they have a commensurate potential to magnify losses.
24 As I have indicated, AGM carried on the business of dealing in FX contracts and CFDs pursuant to its AFSL. OT and Ozifin carried on the business of dealing in FX contracts and CFDs pursuant to the CAR agreements. The defendants dealt in FX contracts and CFDs because they issued those products to their clients, and because they arranged for a person including each of the investors to acquire those products.
25 There is an issue in this proceeding as to which of the defendants issued the FX contracts and CFDs to the clients of OT and Ozifin, and in particular whether OT and Ozifin issued those products to their clients on OT's and Ozifin's own behalf or on behalf of AGM. To some extent, the question of which entity issued the CFDs offered to clients of OT and Ozifin is resolved by considering the terms of the relevant product disclosure statements (PDSs) and their terms and conditions, as well as the terms of the CAR agreements between AGM and OT, and AGM and Ozifin. On the evidence I am prepared to accept the following.
26 From at least 22 December 2016 until ASIC cancelled its AFSL, AGM, under its Alpha Trade business name, issued CFDs and FX contracts to retail clients in Australia pursuant to a PDS and account terms and conditions dated 22 December 2016.
27 From sometime in October 2017 until 16 April 2018, when AGM cancelled the CAR agreement with it, OT operated a business of issuing CFDs and FX contracts to retail clients in Australia under its OT Capital business name and pursuant to:
(a) PDSs dated October 2017 (the first OT PDS) and December 2017 (the second OT PDS); and
(b) account terms dated 9 October 2017 (the first OT terms) and 22 December 2017 (the second OT terms).
28 Now according to the first OT PDS and first OT terms, OT issued the FX contracts and CFDs to the clients of OT. But according to the second OT PDS and second OT terms, AGM issued those products to the clients of OT. I am prepared to accept the reality of that division.
29 From sometime in October 2017 until 16 April 2018, when AGM cancelled the CAR agreement with it, Ozifin operated a business of issuing CFDs and FX contracts to retail clients in Australia under its TradeFinancial business name and pursuant to:
(a) PDSs dated October 2017 (the first Ozifin PDS) and November 2017 (the second Ozifin PDS); and
(b) two sets of undated account terms (the first Ozifin terms and the second Ozifin terms).
30 Now whilst there is some internal inconsistency in the documents and so some uncertainty, according to the first Ozifin PDS and first Ozifin terms, Ozifin purported to issue the FX contracts and CFDs to the clients of Ozifin. But according to the second Ozifin PDS and second Ozifin terms, AGM issued those products. Again I am prepared to accept the reality of that division.
31 Now it is questionable whether I treat the arrangements for issuing as if they were formally reflected in the documents or whether I treat all CFDs and FX contracts as having been issued by AGM whether directly or on its behalf by Ozifin and OT. I note that on one view and given the AFSL authorisation, it would seem that only AGM had the right to issue. But I will proceed on the basis that the documents reflected the true position such that each of AGM, OT and Ozifin can from time to time be taken to have issued CFDs and FX contracts.
32 Let me deal with another matter. The terms of the CAR agreements determine the proportion of the revenue generated by positions opened by the clients of OT and Ozifin to which AGM was entitled, and that to which OT or Ozifin were entitled. By the OT CAR agreement, AGM was entitled to between 5% and 7% of the monthly "Client P&L" generated by OT. By the Ozifin CAR agreement, AGM was entitled to 7% of the monthly "CAR Client P&L" generated by Ozifin.
33 Now neither of the CAR agreements defined the term "Client P&L". But in my view, the term "Client P&L" should be understood to mean the total of client funds deposited and lost via trading, net of any profits realised by clients from their trading.
34 Further, whilst the CAR agreements do not say so explicitly, OT and Ozifin were each entitled by the terms of their respective CAR agreements to so much of the Client P&L to which AGM was not entitled.
35 In the result:
(a) OT was entitled to between 93% and 95% of the monthly Client P&L from positions opened by its clients; and
(b) Ozifin was entitled to 93% of the monthly Client P&L from positions opened by its clients.
36 In summary, until December 2017 and November 2017 respectively, OT and Ozifin, and after those dates, AGM, issued the CFDs and FX contracts to, and was therefore the counterparty to the contracts with, the clients of OT and Ozifin respectively.
37 Further, at all relevant times:
(a) AGM was entitled to between 5% and 7% of the revenue generated by reason of clients of OT and Ozifin experiencing crystallised losses; and
(b) OT and Ozifin were entitled to the balance of the revenue so generated.
38 Further, AGM was the counterparty to CFDs and FX contracts issued to clients of its 'Alphatrade' business. Therefore, and subject to the steps undertaken by AGM to hedge positions opened by its clients, AGM generated revenue when its clients suffered losses on positions that they had opened.
39 Further, I should make another point. On the evidence, I am not clear as to whether the defendants gave the PDSs and other disclosure documents published by the defendants to their clients as required by s 1015C in the case of the PDSs, and as required by s 941A in the case of the financial services guide. But they were nevertheless available on the relevant defendants' websites. Further, I am prepared to accept that as a matter of contract, they governed the issue of CFDs and FX contracts to clients.
40 Let me now further elaborate on some specific matters.
41 First, let me say something about trading platforms.
42 Each of AGM, OT and Ozifin provided a web-based trading platform that clients used to open and close margin FX contracts and CFD positions. AGM, OT and Ozifin used various means to attract clients, including web sites and advertising on the internet and social media.
43 After making an initial deposit with the relevant company, clients were contacted by an AM engaged on behalf of the relevant defendant.
44 Each of Ozifin, OT and AGM offered their clients "bonuses" in the form of an increase to the balance of the client's account. The increase in the clients' account balance effected by the bonuses improved the client's margin position, and could therefore be used to avoid having to close existing positions that had moved against a client or could be used to open additional and/or larger positions. AMs engaged by Ozifin and/or AGM represented to clients that the AM could arrange for a bonus to be paid to the client's account. But the terms upon which Ozifin and AGM offered those bonuses meant that clients could not withdraw the bonus funds until they had opened a certain number of positions or a certain period of time had elapsed.
45 AMs engaged by OT and Ozifin were based in overseas call centres. As I have said, in the case of OT the AMs were based in Cyprus and the Philippines. In the case of Ozifin they were based in Cyprus.
46 People working in those overseas call centres contacted retail clients in Australia. In addition to assisting clients to download trading software and to operate that software, call centre staff provided financial product advice to retail clients in Australia in relation to FX contracts and CFDs, including giving personal advice. Further, they encouraged or persuaded retail clients to deposit further funds into the trading accounts that they had established with the relevant company. Further, in some instances, they encouraged the clients to provide remote access to the client's computer, and asked the client to open their online banking system so that the AM could assess the funds available to retail clients.
47 As I say, each of the defendants provided to their clients an online trading platform that those clients used to open, monitor and close CFDs and FX contracts, and by which the clients could monitor the balance, equity, margin and free margin in their accounts. AGM clients used the MetaTrader 4 platform, which could be used to open and close CFD or FX contract positions. OT clients also used the MetaTrader 4 platform, which included for each product on the platform a candle chart. Ozifin's trading platform was on the TradeFinancial website. The TradeFinancial website included a feature whereby Trading Central signals would appear in a message that scrolled across the top of the website.
48 Second, AGM and OT used software to view and access clients' computers. Indeed, they instructed clients to download that software during early discussions with them. The software, typically a program called TeamViewer, allowed the defendants' representatives to view the client's computer screen remotely, and move a cursor around on each client's screen. For AGM, it was also used to control clients' computers.
49 The defendants used this software not only to view what clients were doing on the trading platforms, but also to:
(a) view the clients' personal financial information on their online banking accounts and use that information to persuade clients to deposit more funds with the defendant;
(b) direct the client to effect transfers of funds from the client's online banking system to the client's trading account; and
(c) direct clients as to what CFD and FX contracts to open, and how to open those positions.
50 Third, AGM engaged Falcon IC&T Limited (Falcon) to provide financial services to customers of AGM. The AMs who spoke with retail clients of AGM in Australia were engaged by or on behalf of Falcon.
51 Now AGM has sought to avoid responsibility for any conduct that amounts to a contravention undertaken by an AM engaged by Falcon. It says that its agreement with Falcon prohibited Falcon from giving personal advice or otherwise acting contrary to law. So, according to AGM, if AMs engaged by Falcon did give personal advice or otherwise acted contrary to law when dealing with AGM's customers, AGM cannot be made liable for that misconduct. But in my view any mere prohibition in the agreement between AGM and Falcon against conduct that may contravene the law does not of itself relieve AGM of responsibility for conduct undertaken on AGM's behalf by Falcon.
52 Fourth, on 1 November 2017, OT entered into an agreement with IBD by which IBD agreed to provide "marketing" services to OT. But regardless of the specific services described in that agreement, AMs engaged by IBD provided financial services to clients of OT. Indeed, in my view OT appointed IBD to provide, inter-alia, account management and customer relations services to customers of OT. Moreover, the evidence of the interactions between AMs engaged by IBD in the Philippines and the customers of OT reveals that those AMs provided financial product advice to clients in Australia, including personal advice. Indeed, it would seem from the evidence before me that the conduct of the AMs engaged by IBD, and who contacted clients of OT in Australia, was calculated to increase the quantum of deposits that clients of OT made to their OT trading accounts.
53 Fifth, let me say something briefly at this point concerning AGM's compliance systems.
54 AGM, OT and Ozifin purported to provide financial services to their clients in Australia pursuant to AGM's AFSL. As the holder of the AFSL, AGM was required to meet the general obligations set out in s 912A of the Corporations Act. Those obligations included ensuring that the financial services covered by that licence were provided efficiently, honestly and fairly (s 912A(1)(a)), and an obligation on the part of AGM to take reasonable steps to ensure that its representatives complied with the financial services laws (s 912A(1)(ca)). Indeed, it was a condition of the AFSL that AGM establish and maintain compliance measures that ensured, as far as was reasonably practicable, that AGM complied with the provisions of the financial services laws. Now in what purported to be compliance with that obligation, AGM had in place a written compliance plan, and various associated documents. Further, apart from providing various policy documents to OT and Ozifin, AGM took some steps to discharge its compliance obligations. Various employees of AGM were tasked with listening to recordings of between 5 and 10 calls each week between AMs engaged by or on behalf of each defendant, and the clients of those defendants. Further, from January 2018, AGM prepared daily compliance reports, and sent some correspondence to Ozifin regarding a limited number of deficiencies that the compliance officers identified in the calls between the AMs and clients. Further, some of the deficiencies identified by the compliance officers engaged by AGM related to the description provided to clients of the risks associated with investment in the relevant products.
55 I would say now, although I will return to this later, that AGM's compliance systems and their implementation were insufficient to satisfy its statutory obligations under s 912A.
56 Let me now say something further about derivatives and how they operated in the present context.
(b) Operation of derivatives
57 When a client opened any position in a CFD or FX contract, all of the funds in that client's account were exposed to adverse price movements in the referenced underlying asset. The loss was not limited to the initial margin payment that the client made to open the position. In addition, the risk was also not limited solely to the amount the client had deposited. A client could lose more than they deposited.
58 A client's trading account could enter a negative balance when one or more of the client's open positions moved quickly against them. If the price of the underlying reference asset was rising or falling rapidly, the relevant defendant may not have been able to close the positions quickly enough. This was because in rapidly moving markets, prices moved quickly and could often 'gap' up or down, which was where prices could jump from one level to the next, for example from $10 down to $9, and miss the price levels in between. The price at which the position was closed may have used up all of the margin posted against the position and then some or all of the available funds that were also deposited in the account. This could then place the account into a negative balance. The client would normally then be obliged to cover any negative balance on the account by making further deposits.
59 The CFD and FX contracts provided by the defendants were leveraged products. Only a small proportion of the value of the underlying asset needed to be paid to gain exposure to that asset. For example, a leverage of 1:100 means that for every $1 used to open a position, the client will have a $100 exposure to that asset. If the client wanted to have $1000 exposure to the asset, then they would pay (or post as margin) $10 to open the position.
60 In the present case, the client was required to hold a minimum amount of margin available as a deposit within the trading account to maintain the position that they had opened. The margin was posted against the open position to ensure any fluctuations in price, particularly negative fluctuations, could be met by the funds posted as margin. How much needed to be maintained depended upon the underlying asset and the terms of the entity providing the product.
61 The following description sets out a short sequence of events that could occur when a client opened a losing CFD position:
(a) Assume a client opened a trading account.
(b) The client then placed an opening CFD trade.
(c) The position moved against the client, which started to reduce the amount of available margin in the account.
(d) The position continued to move against the client. Assume the available funds were now below the 100% required margin level to maintain the position. The client could then either close the position and accept the loss, or put additional funds into the account to increase the amount of available margin in the account to keep the position open.
(e) Assume the client deposited additional funds, but the position moved quickly against the client again. The margin level may then have reached the trigger point for a margin call to be made (e.g. 80% of the required margin level).
(f) The entity could then make a margin call and move to close the position, liquidating the loss for the client.
(g) Indeed, the position could have moved so quickly against the client that by the time the margin call was made, all of the available funds in the account could have been used and the account could then have a negative balance.
62 The process of making a margin call is designed to limit the potential losses of clients to those funds deposited in the account. However, in fast moving markets the losses may have accumulated so quickly that the account moves in to a negative balance. As I say, the price movement against the client positions first erodes the margin posted, then moves on to use up any other funds in the account and finally could move into a negative position if the position is not closed in time.
63 Now by depositing extra funds, the client may be able to maintain the open positions for longer if the prices move against them. The client will have a larger amount of available margin to cover any losses on the positions. But the provision of extra funds does not change the risk being taken by the client to hold that position. If the client 'tops up' their account due to a low margin level, the client is also placing those additional funds at risk against the open position(s). There is no reduction in the level of risk taken by the client. If anything the risk has become greater as a larger amount of funds have been put at stake.
64 Let me turn to the position of the issuer.
65 An issuer of CFD and FX contracts may earn revenue by one of four means, namely, spreads, commissions, fees and by not completely hedging the clients' open positions but managing the issuer's risk on a 'B book' strategy.
66 First, an issuer can earn revenue using the spreads that it offers for its products. For example, if a price is provided by a liquidity provider to buy/sell BHP shares at 20.00/20.03, the issuer could adjust this price to 19.99/20.04 for its clients. The issuer will therefore make money from the extra cents provided when widening the spread of the price to the clients.
67 Second, an issuer can earn revenue from commissions or a one-off charge per transaction. For example, some issuers may charge $5 per transaction commission on each individual equity CFD position taken.
68 Third, an issuer can also earn revenue from the various fees and charges it can impose on clients for general account maintenance. For AGM, such fees and charges included roll-over fees (the charge for carrying positions overnight), finance charges and withdrawal fees.
69 Fourth, an issuer can also earn revenue from its hedging strategy. As was explained in the evidence, there are two types of strategies, namely, an A Book strategy and a B Book strategy. The A book strategy hedges exactly all of its client open positions. This may be done by hedging each and every position, or by aggregating all client positions in an asset, netting down and then hedging the net position. A B Book strategy involves placing some or all client positions into a separate ledger and then either hedging all or part of those clients' positions. Now it may be the case that the B Book is naturally balanced, and little hedging is required to manage the risk to the issuer. The issuer may intentionally not hedge the positions or only hedge positions when certain risk tolerances have been met. A naturally balanced B Book is where all of the long (buy) positions aggregated together, match all of the short (sold) positions aggregated together; for this scenario the buy positions roughly match the sell positions of the clients.
70 There are three possible combinations when using these strategies; a sole A Book strategy, a sole B Book strategy or a combined A and B Book strategy.
71 A sole A Book strategy will automatically hedge all of its clients' open positions and represent, to a certain degree, a risk-free strategy for the issuer regarding client exposure to market fluctuations.
72 A sole B Book strategy does not automatically hedge its clients' open positions. It places all positions into the B Book and then decisions are made by the issuer on how to best manage those positions, by either hedging or not depending upon its risk appetite. If it does not hedge the open positions, then the issuer will have direct exposure to market price fluctuations. When this is the case, if the clients' positions earn money then the issuer will lose funds, but if the client loses then the issuer gains funds.
73 A combination A and B Book strategy uses both methods to varying degrees. An issuer may automatically hedge the positions of clients that it deems to be high risk and as such place those positions into its A Book. But for other clients it could place positions into its B Book and actively manage the risk of that exposure to market fluctuations. Further, it may be that certain stipulated risk levels are put in place to prevent the issuer from being too exposed to the market, e.g. only 10% of the B Book is allowed to be unhedged, with the rest being hedged.
74 On the evidence before me it would seem that AGM utilised a combined A and B Book strategy. As I have said, this would allow AGM to fully hedge certain client positions in its A Book, and partially hedge other client positions in its B Book. Those client positions that remained unhedged would cause a loss to AGM should the client make a profit on the position; alternatively, should a client have lost on an unhedged position, then AGM would have generated revenue from it.
75 It follows from what I have said that if AGM did not hedge any of its open client positions, then it would be 100% exposed to fluctuations in market prices but in the opposite direction to its clients. If prices moved in favour of the clients, this would be at a cost to AGM, and vice versa. Clearly, this would be a high-risk strategy for any CFD and FX contract issuer to undertake to be completely unhedged including with no natural hedge.
76 Now the terms upon which AGM, OT and Ozifin dealt in CFDs and FX contracts provided that each was entitled to hedge client transactions by opening a similar transaction in the name of the relevant defendant with a hedge counterparty. Moreover, in the case of OT and Ozifin, funds deposited by clients could be used for that purpose.
77 Now the terms and conditions on which AGM, OT and Ozifin provided financial services did not provide for clients to pay any form of commission. That being the case, AGM, OT and Ozifin were able to generate revenue in two ways.
78 First, if the relevant entity did not hedge positions opened by clients, they could generate revenue by the position moving against the client. This was because in the present case the relevant defendant was the counterparty to the positions opened by their clients.
79 Second, if the relevant entity did hedge positions opened by clients, they could generate revenue on the spread between the position opened by the client and the hedge position opened by the relevant defendant.
80 But despite all of this, clients of AGM, OT and Ozifin were often told that it was only if the client made money that AGM, OT and Ozifin also made money or that the income of AGM, OT and Ozifin depended on the volume of trades placed by the clients.
(c) Events in the course of these proceedings
81 Let me now say something about the present proceedings.
82 On 9 February 2018, ASIC filed an originating process seeking ex parte orders freezing certain bank accounts of AGM, OT and Ozifin, and restraining travel by directors of AGM and OT.
83 On 12 February 2018 at an ex parte hearing, I made orders:
(a) freezing funds standing to the credit of two Commonwealth Bank of Australia accounts held by AGM being an OT client money account held by AGM and an Ozifin client money account held by AGM; and
(b) imposing travel restrictions on the then second defendant Mr Yossef Ashkenazi, at that time a director and the CEO of AGM, and the then fourth defendant Mr Guy Stein, at that time a director of OT.
84 On 20 February 2018 in respect of AGM and OT and on 23 February 2018 in respect of Ozifin, I made orders varying the terms of the freezing orders with respect to the use of funds from the said accounts.
85 On 7 March 2018, ASIC filed an interlocutory process seeking the appointment of a receiver and manager to each of AGM, OT and Ozifin. This interlocutory process was later amended to include an application for the appointment of a provisional liquidator. I subsequently declined to make such orders (see Australian Securities and Investments Commission v AGM Markets Pty Ltd (2018) 129 ACSR 335; [2018] FCA 1119).
86 On 3 April 2018, Mr Paul Tsangaris became a director of AGM and Mr Ashkenazi ceased as a director of AGM. By that time Falcon had ceased to provide call centre services to the Alphatrade business operated by AGM. At around the same time, Mr Tsangaris became the CEO of AGM. Whilst Mr Ashkenazi did not at that time formally resign as CEO, he did not have any functional role as CEO after Mr Tsangaris's appointment.
87 Later, ASIC filed and served an amended originating process which sought orders that each of AGM, OT and Ozifin be wound up on the "just and equitable" ground.
88 It is not necessary beyond this point to detail the further procedural steps that were taken up to trial.
89 As at the date of trial at which, I might add, AGM did not appear:
(a) the current sole director of AGM was Gary Tseytlin; and
(b) Yogi Wealth Pty Ltd was the sole shareholder of AGM.
90 As at the date of trial:
(a) the current sole director of OT was Guy Stein; and
(b) X.O Milestones Holdings Ltd (X.O) based in London, United Kingdom was the sole shareholder.
91 On 27 September 2019, pursuant to s 436A of the Corporations Act, Mr Mathew Gollant of Courtney Jones & Associates was appointed as voluntary administrator to OT. The voluntary administrator was represented before me at trial.
92 As at the date of trial:
(a) the current sole director of Ozifin was Brendan Gunn; and
(b) Corfenix Limited based in Hong Kong was the sole shareholder of Ozifin.
93 On 29 September 2019, the sole shareholder of Ozifin resolved to appoint Richard Albarran, Brent Kijurina and Richard Lawrence of Hall Chadwick as liquidators of Ozifin. These liquidators were represented before me at trial.
94 At trial, ASIC sought orders seeking to have the one set of liquidators appointed to all three defendants. ASIC was concerned that there were a number of "behind the scenes" connections between AGM, OT and Ozifin. ASIC was concerned to ensure that there was a thorough investigation into the affairs of the defendants and their respective officers. ASIC anticipated that investigations would need to be conducted to determine:
(a) whether there had been any breaches of directors' duties;
(b) whether there were any voidable transactions that could be recovered; and
(c) whether the funds paid by current or former clients of some or all of the defendants were held on constructive trust for those clients.
95 ASIC sought orders to the effect that John Ross Lindholm and George Georges of KPMG, both official and registered liquidators, be appointed to each of AGM, OT and Ozifin.
96 I did not accede to this application for the reasons I gave orally at the hearing; it is unnecessary to detail these reasons at this point. Rather, I made the following orders which had the effect of imposing liquidation on each of AGM, OT and Ozifin, but with separate sets of liquidators:
1. Pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth), AGM Markets Pty Ltd be wound up.
2. Pursuant to s 472(1) of the Corporations Act, John Ross Lindholm and George Georges, official liquidators, be appointed as joint and several liquidators of AGM Markets Pty Ltd.
3. Pursuant to s 447A of the Corporations Act and s90-15 of the Insolvency Practice Schedule (Corporations), the administration of OT Markets Pty Ltd (administrator appointed) end forthwith.
4. Pursuant to s 461(1)(k) of the Corporations Act, OT Markets Pty Ltd be wound up.
5. Pursuant to s 472(1) of the Corporations Act, Matthew Gollant, an official liquidator, be appointed liquidator of OT Markets Pty Ltd.
6. Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), the voluntary liquidation of Ozifin Tech Pty Ltd (in liquidation) is terminated.
7. Pursuant to s 461(1)(k) of the Corporations Act, Ozifin Tech Pty Ltd be wound up.
8. Pursuant to s 472(1) of the Corporations Act, Richard Albarran, Brent Kijurina and Richard Lawrence, each an official liquidator, be appointed as joint and several liquidators of Ozifin Tech Pty Ltd.
9. ASIC be granted leave to proceed in proceeding VID126/2018 in accordance with s 471B of the Corporations Act.
97 I should say that I have taken steps designed to ensure that there is co-operation between the different sets of liquidators in terms of information flows and investigations, costs being efficiently incurred, and trust questions and any conflicts questions between the different sets of interests being first made the subject of applications for advice or directions from this Court, with notice to ASIC. I should also note that on 17 February 2020 I discharged various freezing orders.
98 Let me now turn to ASIC's case and deal with the first set of contraventions.
INVESTOR CONTRAVENTIONS
99 The conduct that ASIC says gives rise to the investor contraventions arises from interactions between AMs of each of the defendants and each of the investors including what the AMs said to the investors.
100 There is apparently no dispute between the parties that the AMs said to the investors the things that have been summarised by ASIC, with some exceptions. Instead, determination of whether those things amount to the contraventions alleged by ASIC depends on the characterisation of what was said by the AMs to those clients.
101 There are, relevantly, four categories of contraventions.
102 First, it is said that the defendants, by the AMs, gave or directed personal advice to the investors within the meaning of s 766B(3) of the Corporations Act. The statements that constituted such advice can be divided into statements made to each of the investors to the effect that those clients should:
(a) take CFD or FX contract positions, whether by making statements to the effect that the clients should open, close or maintain:
(i) specific positions identified by the AMs (position statements); or
(ii) positions in accordance with indicators that were sourced from, in the case of:
A. AGM and OT, a third party website known as Investing.com; and
B. Ozifin, a third party organisation known as Trading Central, (signal provider statements);
(b) deposit further funds to their trading account (deposit statement); or
(c) adopt a particular trading strategy (trading strategy statement).
103 I will refer to the position statements, signal provider statements, deposit statements and trading strategy statements collectively as advice statements.
104 ASIC says that the investors made investments in CFDs and FX contracts on the basis of the advice provided to them by the AMs and that such advice was personal advice. It says that the AMs knew sufficient details of the investors' resources, needs and objectives to engender a reasonable expectation that those matters would be taken into account. But none of the defendants were licensed to give personal advice. Further, ASIC says that even if the advice was merely general advice, the AMs failed to give the statutorily mandated warning each time the advice was given. The warning was not given by the AMs at all during any telephone call. Further, the fine print disclosure in some documents and emails sent to the clients was insufficient, so ASIC says, to meet the statutory requirement to give the warning each time advice was given.
105 Second, ASIC says that the AMs who made the advice statements:
(a) were providers of personal advice to the investors constituted by each of those statements within the meaning of s 961(2);
(b) failed to take the steps necessary to ensure that the advice that they provided to the investors was in each of the investor's best interest, in contravention of s 961B; and
(c) provided advice to the investors that it was not reasonable to conclude was appropriate to those clients, in contravention of s 961G.
106 Moreover, it is said that the AMs who made the advice statements did so as representatives of AGM within the meaning of s 910A. Accordingly, it is said that AGM contravened s 961K.
107 Third, ASIC says that the AMs made statements to various investors that constituted representations concerning:
(a) in the case of AGM and Ozifin, the relative risk of investing in the products offered by the defendants compared with an equivalent investment in equities (equities risk representation);
(b) the risks associated with depositing additional funds to the clients' trading accounts (money risk representation);
(c) in the case of Ozifin, the veracity of positions recommended to a client as being based on indicators (analysis representation);
(d) the circumstances in which the defendants would earn revenue from positions opened by the client (revenue representation);
(e) the prospect of earning particular profits from trading (profit representation);
(f) the operation of the accounts opened by the clients (client account representation);
(g) the formulation by the AMs of investment plans for investors (plan representation); and
(h) the prospect that positions that had moved against a client would recover (loss recovery representation).
108 ASIC says that each of these representations (investment representations) was a representation as to future matters, and there was no reasonable basis for such investment representations.
109 It is said that the investment representations were false, misleading or deceptive, because the financial products and financial services offered by the defendants operated in a manner contrary to those representations.
110 Further, ASIC says that the defendants made representations to their clients regarding:
(a) in the case of AGM and OT, where the AMs engaged by the defendants were located (location representation); and
(b) in the case of OT and Ozifin, the regulation of those entities (regulation representation),
which ASIC says were misleading or deceptive.
111 Further, ASIC says that by making the advice statements, the defendants represented to their clients that:
(a) it was in the clients' best interests to invest in the products recommended by the AMs (best interests representation);
(b) the advice provided to the investors was appropriate for those investors (appropriate advice representation); and
(c) the defendants were entitled to or approved to provide personal advice to those clients (personal advice representation).
112 It is said in relation to the best interests representations, appropriate advice representations and personal advice representations that those representations were implied and were misleading because the AMs did not do all things required to act in the best interests of those clients, the advice provided by the AMs was not appropriate to those clients, and the defendants, by making the advice statements, provided personal advice when they were not entitled to do so.
113 Fourth, ASIC says that the defendants engaged in unconscionable conduct towards the witness investors and four of the additional investors by reason of the vulnerability of each of those clients, the defendants engaging in misleading or deceptive conduct or making false or misleading representations, and the defendants engaging in other forms of unfair conduct towards those defendants. It also puts a system of conduct case that I will detail later. ASIC says that the derivative financial products the AMs persuaded the witness investors to acquire, and make greater and greater payments towards, were highly complex and risky. It says that the witness investors were plainly not suited to such investments. That was so both in terms of the witness investors' lack of investment experience, being either none, or very limited, and in no case in relation to CFDs or FX contracts, and financial resources which were very limited, which the AMs knew. Moreover, the level of risk to which the witness investors were exposed was not explained at all by the AMs. Instead, the AMs persuaded the witness investors to invest more and more money, on the basis of representations that were either demonstrably misleading or untrue.
(a) Personal advice – the evidence
114 Now ASIC's case depends on the proper characterisation of the various statements that the AMs made to the investors. But in context, there are several characteristics of the interactions between the AMs and the investors that bore common characteristics, and which are relevant to the allegation that the AMs gave personal advice to the clients.
115 From the evidence before me, the following common features can be distilled.
116 Each of the witness investors was introduced to the defendants by clicking on a web based advertisement, which in the case of clients of OT was often an advertisement concerning Bitcoin, or responding to a text message or email, or otherwise coming to the relevant defendant's website after conducting a search for investment opportunities.
117 The advertisements, particularly those which led the witness investors to OT, would typically ask the investors to enter certain personal information. After they had entered the information, they were contacted by a representative of the defendant, by telephone or email, and then steps were taken to set up their trading account with the relevant defendant.
118 After the trading account had been set up, the witness investors were then contacted by an AM engaged on behalf of the relevant defendant, who typically:
(a) in the case of AMs engaged by or on behalf of AGM and OT, asked the client to download TeamViewer, or equivalent software, that allowed the AM to connect to and remotely view the witness investor's computer screen;
(b) made enquiries of the investor's financial situation including by asking the client to open their online banking whilst the AM was connected to the client's computer by TeamViewer or an equivalent program; and
(c) advised the client to deposit funds to their trading account or, if the client had deposited funds at the time that they had registered, advised the client to deposit further funds.
119 Following that process, the AM would contact the witness investors frequently by telephone and email.
120 The evidence of Mr Cecilio, an AM engaged by IBD and who was allocated to clients of OT, was to the effect that:
(a) the goal of AMs engaged by OT was to increase the deposits that clients of OT made to their OT trading accounts, and to encourage the clients to open multiple positions and thereby increase the prospects of clients losing money;
(b) that goal was advanced by IBD in part by giving AMs cash incentives if they were able to secure deposits from clients;
(c) the purpose of asking clients of OT to open their online banking whilst connected to TeamViewer was so that the AM could determine the amount of money that a client had, so that the AMs "could encourage them to deposit that money into their [OT] trading account".
121 ASIC says that by making each statement summarised or otherwise identified in annexures to its FAPOC, the AMs provided financial product advice that was personal advice within the meaning of s 766B(3) to the investor to whom that statement was made.
122 Now ASIC alleges that the many hundreds of statements on which it relies each constituted the separate provision of financial product advice. But the similarities between the statements in each category justify them conveniently being considered together.
123 Now clearly CFDs and FX contracts are derivatives within the meaning of s 761D and therefore financial products (s 764A(1)(c)). Further, there is little doubt that the relevant investors of AGM, OT and Ozifin were each retail clients (s 761G). Accordingly, the real issues that I need to consider are the following.
124 First, did the advice statements constitute a recommendation or statement of opinion to the investors to whom it was made within the meaning of s 766B(1)?
125 Second, were the advice statements:
(a) intended to influence the investor in deciding whether to:
(i) in the case of the position statements or signal provider statements, take a particular CFD or FX contract position?;
(ii) in the case of the deposit statements, deposit further funds to the clients' trading account?; or
(iii) in the case of the trading strategy statements, adopt a particular trading strategy?; or
(b) could reasonably be regarded as being intended to have such an influence?
126 Third, did the personal matters about each investor that they revealed to the relevant AM constitute one or more of that investor's objectives, financial situation or needs within the meaning of s 766B(3)?
127 Fourth, were some or all of those advice statements provided in circumstances where:
(a) it could be inferred that the AM who made the particular advice statement considered one or more of the investor's objectives, financial situation or needs?; or
(b) a reasonable person might expect the AM to have considered one or more of the investor's objectives, financial situation or needs?
128 In summary, in my view an affirmative answer should be given to each of these questions.
129 As I have said, ASIC has helpfully prepared a detailed summary of the statements made by the AMs that ASIC says constituted the provision of personal advice, including by reference to those parts of the transcripts of the conversations between the AMs and the investors in which those statements appear. Save for some matters that I will address later, that summary is accurate, subject to some transcription errors that I have corrected. Let me discuss in some detail what the evidence reveals.
Position statements and signal provider statements
130 The conduct of the AMs that constituted the position statements and signal provider statements was commonly characterised by the AM providing advice to open a particular position. Typically the AM would either identify a currency pair or affirm the client's selection of a currency pair. In the case of the signal provider statements, such conduct occurred by reference to information from a third party information provider. In the case of AGM and OT, that information provider was commonly the free website "Investing.com". In the case of Ozifin, the third party information provider was "Trading Central". The AM described to the client the volume of the position that they should open, or commented on the volume that that client had suggested.
131 In instances in which the AMs gave advice to leave open or close a position, that conduct was typically characterised by the AMs mentioning a particular open position after either identifying it themselves or being directed to it by the client, and saying what the client should do in relation to that position, being either to leave open or close.
132 In my view the advice statements considered in all the circumstances of the relationship between the various AMs and the investors, amounted to an implicit, and often explicit, recommendation that the investors adopt a particular course. That conclusion, and the conclusion that the recommendations were intended to influence the investors to adopt that course, is clear from statements made by the AMs to the investors. The statements of the sort set out in the evidence show that the AMs guided or directed the investors in their trading with the relevant defendant, suggested to the client that following the guidance would increase the prospects that the investors would generate a profit, and in the case of the signal provider statements recommended that the investors use the third party signal provider to further those aims.
133 The evidence shows that there were at least 677 position statements made, comprising 133 statements to 10 clients of AGM, 132 statements to 14 clients of OT and 412 statements to 11 clients of Ozifin. Before proceeding further to detail some of the evidence, I should note that I have sought to anonymise particular investors/clients by using only the relevant entity's acronym and a number; for example, AGM5 is investor no. 5 who dealt directly with AGM and its AMs; the numbers assigned merely reflect ASIC's ascription, with the actual persons identified in the evidence.
134 Examples of the position statements are as follows:
(a) to investor AGM5: "Now, don't be stressed from the minus, it's a normal fluctuation, but if I was you, I'd add more money to be able to hold those fluctuations, okay?"
(b) to investor OT10:
Account Manager: "We can actually start opening now. Click 'Okay'. Perfect. Now click here. Perfect. Click 'Okay'. Okay. Perfect. So, here US Dollar is going up. Right click. New order. Perfect. So, here the US Dollar is going up, it means that the Great British Pound is going down now. Okay. So, what will be the position; sell or buy?"
Investor OT10: "Sell."
Account Manager: "Perfect. Click it. Click 'Okay'. Click 'Okay'. Perfect. Here. Right click. New Order. Perfect. So, same as GBP, US Dollar is going up. Perfect. Click 'Okay'. Now here, US Dollar versus Japanese Yen. The US Dollar is our major currency, it's going up. Right click. New order. Perfect. Perfect."
(c) to investor OF4:
Account Manager: "Okay. Okay. We've got Euro/USD, from Trading Central, the sell position…."
Investor OF4: "Yeah. I just leave everything at 50,000 - am I trading in units, or - - -"
Account Manager: "Well, most of my clients will do it from 500,000."
…
Investor OF4: "So, I've got the 500,000, and did you say it was sell?"
Account Manager: "Yes. Yours - USD from Trading Central at the sell position."
Investor OF4: "Okay. Done."
Account Manager: "Okay. USD/JPY from Trading Central at the buy position."
…
Account Manager: "Okay. USD/JPY, sell position from Trading Central."
Investor OF4: "Yes. Yes."
Account Manager: "And, I've got British Pound - - -"
Investor OF4: "Yes."
Account Manager: "- - - British Bound [sic] vs JPY - - -"
Investor OF4: "Yes."
Account Manager: "- - - that's also a sell position from Trading Central."
Investor OF4: "Done."
Account Manager: "I'm going to refresh. Okay. So, you have three positions open?"
Investor OF4: "Yep."
135 Further, the evidence shows that there were at least 314 signal provider statements made, comprising 40 statements to 10 clients of AGM, 44 statements to 9 clients of OT and 230 statements to 11 clients of Ozifin.
136 Examples of the signal provider statements are as follows:
(a) to investor AGM5 in relation to a NZD/CHF position: "The trend is a down trend. It's 100 percent a down trend. … It is a strong, this is a investing.com recommendation, a strong sell."
(b) to investor OT7 (in relation to an AUD/USD position):
Account Manager: "Go to investing.com. I'll help you to open trades. … Go to the technical summary … What exactly do you see is it buy or sell."
Investor OT7: "It says 'strong buy'. Strong Buy."
Account Manager: "Okay. Now, go back to the MetaTrader and look for AUD/USD. … You can open up to 100 volumes."
Investor OT7: "100?"
Account Manager: "Exactly."
Investor OT7: "Wow. A lot on the run."
Account Manager: "Exactly. … We can do it gradually. I want you to do it on the small volume but it doesn't work, you can see that all the trades you opened is not working. ... Okay. Now, don't be afraid, you can open up the 100 volumes."
Investor OT7: "Okay."
Account Manager: "As I have told you, I have analysed it properly for you before I tell you information. All right. Now, go ahead if you want to trade for AUD USD. Are you buyer, or you sell?"
Investor OT7: "It says to buy."
Account Manager: "Okay. Buy by the market. Have you already clicked, 'Buy by the market'?"
Investor OT7: "Yeah. Yeah. Processing at the moment. Okay. Now it's gone through."
(c) to investor OF4:
"I'm passing you these trades from trading central
USD/JPY SELL
GBP/JPY BUY
GBP/USD BUY".
Deposit Statements
137 Further, the evidence discloses that the AMs made statements to the investors in telephone calls that amounted to a recommendation or statement of opinion that those clients should deposit more money to their trading accounts. In almost every instance in which the AMs made a deposit statement, the AMs described to the investors the reasons why the client should follow the course suggested by the AMs. Those reasons generally included:
(a) to avoid the need for investors to close existing positions;
(b) to remove or reduce the risk that the investors would lose money; or
(c) to increase the investors' free margin to allow them to open additional positions.
138 It is apparent on the face of these deposit statements that they amounted to a recommendation or statement of opinion and were intended to influence the investors to deposit further money to their trading account.
139 Moreover, the operation of the investors' trading accounts, and the use to which the money in those accounts could be put, meant that the statements were made in relation to the financial products or financial services offered by the defendants. The expression "in relation to" in s 766B(1)(a) is to be construed broadly. It is enough that there is some apparent connection or relationship between the recommendation that the investor deposit further funds, and the financial products in which the AM otherwise recommended that he invest in. The deposit of funds to an investor's trading account was a necessary step to the investor opening any CFD or FX contract position or, in some cases, leaving open existing positions. Further, because any funds that a client did invest were exposed to adverse movements in the client's open positions, by depositing further funds the client was effectively investing further funds in those positions. That was particularly the case if the funds were deposited at a time when the client had an actual margin exposure.
140 The evidence shows that there were at least 276 deposit statements made, comprising 83 statements to 14 clients of AGM, 95 statements to 15 clients of OT and 98 statements to 12 clients of Ozifin.
141 Examples of the deposit statements are as follows:
(a) to investor AGM1: "Now, I know you hate it and I hate it too, but I think it's going to be the best for you to add more money into the account."
(b) to investor OT12:
Account Manager: "So you need to maintain 100 per cent level for you to wait for the market to correct itself, okay?"
Investor OT12: "All right."
Account Manager: "By doing that, okay, you need to have - oh - you need to deposit more - a little bit more, okay?"
(c) to investor OF4 (after telling investor OF4 that Amazon was launching in Australia):
Account Manager: "I was thinking for you, I had a proposal if we do something for Friday. Well, actually today, invest in Amazon. This is what I'm getting from Trading Central also, I'm readying myself too, a lot of articles here. And, everything is positive about Amazon. So, what you can do is invest on the Friday, leave it there and then maybe next week withdraw the funds…"
Investor OF4: "… Yeah. Yeah."
Account Manager: "Okay. But, what's available? What can you do? And, I don't want to give you a – I don't want to give you a bonus runner because there's currently conditions on that … but, with the stock Amazon what are you thinking? How much more can you invest on that?"
Investor OF4: "You want more funds?"
Account Manager: "Do you have any – can you do anything or - - -"
Investor OF4: "No. Well, no."
Trading Strategy Statements
142 The trading strategy statements were an explicit or implicit recommendation that the investors should adopt a particular trading strategy. Of the various strategies identified in the evidence, the strategies of most significance recommended by the AMs were that the investors should:
(a) leave open positions that had moved adversely to a client, and particularly those in relation to which the client had suffered an unrealised loss, with the intention of waiting (in reality, hoping) for them to turn positive;
(b) close positions that had achieved a small profit;
(c) open multiple positions simultaneously, which referenced various currency pairs;
(d) adopt some variation of the "Martingale strategy", which involved:
(i) identifying a position that had moved against the investor;
(ii) opening an equivalent position, with twice the volume of the original position; and
(iii) when both the positions moved to the benefit of the client, closing both at the point where the loss on the first position was set off or exceeded by the profit on the second position.
143 Now it is evident that the trading strategy statements amounted to recommendations. They were plainly intended to influence the investors to make a decision in relation to the products offered by the defendants.
144 The evidence establishes that at least 224 trading strategy statements were made, comprising 84 statements to 10 clients of AGM, 87 statements to 12 clients of OT and 53 statements to 11 clients of Ozifin.
145 Examples of the trading strategy statements are as follows:
(a) to investor AGM5, the AM made a recommendation or provided statements of opinion to the effect that she should adopt a strategy of opening multiple positions:
"But you know what you can do, because you are working um, just before you're going to sleep or when you're coming back from work just set up like five, six different trades, do take profit and leave … the computer, leave it."
"I would have opened… five different trade at for example 0.50 and then I would take … set up sum, take profit on maybe $200 which means going to take a long … time to get there, a very long time."
"But if for example I have five trades look, I would have done it even with 10. You have a space of making 10 trades of 0.50. … And then for example you have five closing on a plus and five closing on a minus it's still going to be on more gain than a loss."
"[Y]ou can do a stop-loss and take profit calculated and this is going to be at least a third higher than the, the profit is going to be at least a third higher than the minus."
"[L]et's say that one is going to be on a profit of let's say even 150 and then other one going to be on a minus of 75 and you're going to do on each one of them plus 150 and every trade going to be, going to close on a minus of 75 and every trade going to close on a plus of 150 you would find yourself um, like, even if half going to be good and half going to be wrong you're still going to be on more profit than loss."
"[I]n the end the worst chances that can be is 50/50. Why? Because you have a buy and a sell."
"[G]aining seven trades out of 10 it would be, like it's going to be amazing. So you have, going to have a lot of profit. And then it's setting up every time so you can do maybe um, 200 profit and maybe 125 loss."
"[I]f you're setting up take profit and stop-loss just take the profit is going to be much higher than, not much but like at least a third higher than the stop-loss."
(b) to investor OT6:
Account Manager: "And then when there's a big event we can easily predict what will happen to the market because what, what, what will happen to the market. If you know what will happen, you can easily make profit okay?"
Investor OT6: "Right."
Account Manager: "Of course when we know what will happen we're going to trade with the maximum volume and, and support that."
(c) to investor OF4:
Account Manager: "To release the bonus as well, it's - how do I say it? Because - let me see here your account. I need to refresh it. Because you want to do more trading volume and open up bigger positions to accumulate the turnover - okay. You have 26 - 25,000 available margin with the 38,000 - - -"
Investor OF4: "Yeah. Well, I can close - well, tomorrow - I'll have a look 'cause I want to get through tonight with Amazon 'cause it's gone up over the weekend. Tomorrow what if I close some of those Amazon positions so that I've got more margin available to do the Forex trading?"
Account Manager: "That's what I was going to say. Why you don't close everything. We can open up big positions. It's totally up to you but if you – that's what I was trying to say. And then- - -"
Investor OF4: "Okay."
Account Manager: "- - - put 10,000 - - -"
Investor OF4: "Yep."
Account Manager: "Make the deposit of ten, open up Amazon – strictly Amazon – and then target in the next week, two weeks, see it go up potentially and then withdraw from your cash balance and use the other 130 to accumulate points and hopefully in the next month, two months you can also – that's also withdraw-able if you release it."
(b) Personal advice – principles and application
146 Section 766B(1) to (4) provided at the relevant time as follows:
766B Meaning of financial product advice
(1) For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:
(a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
(b) could reasonably be regarded as being intended to have such an influence.
(1A) However, subject to subsection (1B), the provision or giving of an exempt document or statement does not constitute the provision of financial product advice.
(1B) Subsection (1A) does not apply for the purpose of determining whether a recommendation or statement of opinion made by an outside expert, or a report of such a recommendation or statement of opinion, that is included in an exempt document or statement is financial product advice provided by the outside expert.
(2) There are 2 types of financial product advice: personal advice and general advice.
(3) For the purposes of this Chapter, personal advice is financial product advice that is given or directed to a person (including by electronic means) in circumstances where:
(a) the provider of the advice has considered one or more of the person's objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or
(b) a reasonable person might expect the provider to have considered one or more of those matters.
(4) For the purposes of this Chapter, general advice is financial product advice that is not personal advice.
147 Section 766B(1) defines financial product advice as a recommendation or a statement of opinion or a report of either of those things that:
(a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in such a product or class of products; or
(b) could reasonably be regarded as being intended to have such an influence.
148 Section 766B(2) states that there are two types of financial product advice: personal advice and general advice.
149 Section 766B(3) defines personal advice as financial product advice that is given or directed to a person in circumstances where:
(a) the provider of the advice has considered one or more of the person's objectives, financial situation and needs; or
(b) a reasonable person might expect the provider to have considered one or more of those matters.
150 General financial product advice is defined negatively (s 766B(4)). It is financial advice that is not personal financial advice.
151 Section 766B forms part of a legislative scheme that sets out a range of requirements for the holder of an AFSL. It has as its broad purpose the protection of consumers of financial services.
152 More generally, Chapter 7 draws a distinction between the statutory regulation of those who provide general advice on the one hand, and personal advice on the other.
153 Division 2 of Part 7.7 establishes minimum disclosure obligations on providers of financial product advice, whether general advice or personal advice, when financial services are being provided to "retail clients" as defined in s 761G. In the present case there is no doubt that the investors were retail clients.
154 Division 3 of Part 7.7 provides for additional obligations on those who provide personal advice, including:
(a) to provide a statement of advice to the client (s 946A);
(b) to act in the best interests of the client (s 961B(1));
(c) that the advice provided must be appropriate to the client (s 961G); and
(d) that the provider of personal advice must address conflicts of interest by giving priority to the client's interests when giving advice (s 961J).
155 Further, a provider of general advice only who provides general advice to retail clients must warn the client, at the same time as providing the advice and by the same means as the advice is provided, that the advice has been prepared without taking account of the client's objectives, financial situation or needs, and because that is the case that the client should consider the appropriateness of the advice having regard to those same considerations (s 949A). Further, an authorised representative of an AFSL holder who provides oral general advice can meet its obligations under s 949A by providing the modified warning stipulated in ASIC Corporations (General Advice Warning) Instrument 2015/540, namely, an oral warning that the advice is general advice and the advice may not be appropriate for the client.
156 Putting aside the personal advice question, I would say now that if the defendants provided only general advice to clients, then the defendants contravened s 949A. If only general advice was given, there were hundreds of s 949A contraventions.
157 At this point, let me elaborate further on the proper construction of the personal advice definition.
158 There are relevantly two sub-sections of s 766B to be interpreted in the context of this case:
(a) first, s 766B(1), which determines the circumstances in which a person will be taken to be providing "advice"; and
(b) second, s 766B(3), which determines the circumstances in which such advice will be personal advice.
159 Three questions emerge in the present case. First, did each advice statement made by the AMs amount to a recommendation or statement of opinion, or a report of either of those things? Second, was that recommendation, statement or report intended to influence the investors to invest in, dispose of, or retain an investment in, a particular financial product, or class of financial products (in this case, CFDs and FX contracts), or could the recommendation, statement or report reasonably be regarded as being intended to have such an influence? Third, in providing the advice, did the advisor actually take account of one or more of the person's objectives, financial situation or needs or might a reasonable person have expected the advisor to have taken account of one or more of those matters?
160 Now in order to amount to advice, the statement made must amount to a recommendation or statement of opinion, or a report of either of those things. And the recommendation or statement of opinion must either have been intended to influence the client to make a decision in relation to a financial product or reasonably be regarded as being intended to have such an influence.
161 That dichotomy therefore encompasses both circumstances in which the provider subjectively intended to have such an influence, or in which, objectively, the statements the provider made "could reasonably be regarded as being intended to have such an influence." The existence of those alternatives supports the notion of a broad reading of the provisions, consistent with their protective purpose. The statutory context in which it appears, and the protective purpose of Chapter 7 as a whole, also supports a broad interpretation of the terms "recommendation" and "statement of opinion" in s 766B.
162 Accordingly, those phrases are capable of accommodating not just recommendations or statements of opinion that are explicit or direct, but those that are implicit, such as where information or other material is presented to a client in a form implying that the presenter favours or commends a particular course of action without saying so in terms, or information or other material is presented in a form that implies that the presenter's view is that the contemplated course of action is likely to be beneficial to the client.
163 Now by the terms of s 766B(1), financial product advice may take the form of a recommendation or a statement of opinion, or a report of either of those things. The reference to a report appears as an alternative to the first two forms that the advice might take. It does not limit those forms, and in particular does not suggest the need for any particular formality in the provision of the subject advice. On the contrary, the words "a report of either of those things" expressly capture the circumstances of this case. The "signals" provided by websites such as Investing.com were, plainly, statements of opinion based on the dubious notion that past trends in the price of a financial product could reliably predict future movements. The AMs reported to their clients those statements of opinion. In any event, the AMs frequently made their own recommendations that the client should follow the "signals".
164 Let me now say something about the Full Federal Court decision of Australian Securities and Investments Commission v Westpac Securities Administration Ltd (2019) 373 ALR 455.
165 In the statutory context, as Jagot J said (at [216]), a "recommendation" or "statement of opinion", which are concepts of broad amplitude, necessarily involve something that is capable of influencing a person about a product. And this can be discerned from the whole or any part of the communication (at [217]). Moreover, "[a] statement of opinion is simply a statement of a view" (at [240]). Further, such a statement can be express or implied, and can include "matter that is not written but conveys a message". Similarly, a recommendation can be express or implied. Moreover, the concepts of "recommendation" or "statement of opinion" are not mutually exclusive. The latter may be the basis of the former, and the former may imply the latter (at [18] per Allsop CJ). But the latter need not be accompanied by or imply the former. As O'Bryan J said (at [336]), "opinion" means "the expression of a belief, view, estimation or judgment"; and such an expression does not need to be accompanied by a recommendation in the sense of commending a course of action. Further, there is no super-added "advice" component to "recommendation" or "statement of opinion". Satisfaction of either limb of s 766B(1) is taken to be "financial product advice" (at [333] and [334] per O'Bryan J).
166 Now the first limb of s 766B(3) defines "personal advice" in terms of financial product advice that is given or directed to a person in circumstances where the provider of the advice has considered one or more of the person's objectives, financial situations and needs.
167 Let me address several of these concepts.
168 First, as to the phrase "in circumstances where", I prefer what Jagot J said (at [242]) in terms of intrinsic causal connection to the following effect:
If read in isolation the phrase "in circumstances where", as the primary judge found, does not naturally connote a causal connection between the person's objectives, financial situation and needs and the financial product advice that is given or directed to the person. When the statutory text is considered as a whole, however, the need for some such causal connection becomes apparent. Read in context it is apparent, in my view, that personal advice is financial product advice which is connected to the consideration of one or more of the person's objectives, financial situation and needs. The connecting words "in circumstances where" are capable of conveying the causal connection required. If it were otherwise, and the financial product advice could be entirely disconnected from the consideration of the person's objectives, financial situation and needs, then the relevant object of the provision, ensuring that personal advice does in fact consider one or more of those matters, would be defeated. To the same end, the express statutory object of Ch 7 of promoting "confident and informed decision making by consumers of financial products and services" would not be facilitated.
169 I accept that O'Bryan J placed a different emphasis on the relevant phrase (at [361] to [364]) but on this aspect in my view context is everything. Moreover, I do not accept that the construct in the way Jagot J has used it imposes any external notion of causality. To the contrary, her notion is necessarily implicit in the context in which the phrase is being used.
170 Second, as to the word "considered" and its cognate present tense, in context its usual or ordinary meaning of pay attention to, have regard to, view, think about with attention or scrutinise applies (at [25] and [26] per Allsop CJ and at [373] per O'Bryan J).
171 But one must be careful not to inject any further let alone more stringent degree of consideration. As Jagot J said (at [247]), "[i]t is not necessary to go further to analyse the extent, degree or quality of the consideration; any taking into account of the identified matter will suffice". And as O'Bryan J said (at [375]), to superimpose the notion of an active process of evaluating runs the danger of requiring a higher level of consideration than the text read in context mandates. I agree.
172 Third, let me say something about the phrase "one or more of the person's objectives, financial situation and needs". Plainly "person's" is to be applied distributively across the rest of the phrase. That is not in doubt. What follows in the phrase only derives from the context of the possessive "person's" in each case. As to the words "one or more", that is referring to one or more of:
(a) the person's objectives, understood as an end towards which efforts are directed;
(b) the person's financial situation, understood as a state of affairs or combination of circumstances; and
(c) the person's needs, understood as a case in which some necessity or want exists.
173 So construed, it should be plain from the use of "one or more" that one does not have to have all of (a) to (c) together. The use of "and" does not mandate the use of all (at [250] per Jagot J, and at [369] per O'Bryan J). If only one of (a) to (c) has been considered, that would be sufficient to meet the definition. Further, there is no statutory warrant to superimpose the requirement of "as a whole" to any of (a) to (c) or to all of (a) to (c) (at [371] per O'Bryan J).
174 Let me now address the second limb of s 766B(3) being that personal advice is taken to be financial product advice that is given or directed to a person in circumstances where "a reasonable person might expect the provider to have considered one or more of those matters."
175 First, the phraseology "in circumstances where", "considered" and "one or more of those matters" under the second limb can be similarly construed as I have discussed for the first limb.
176 Second, as to the concept of "a reasonable person might expect", let me make a few observations.
177 The language is might expect, which is a lower standard than would have expected. So, as Jagot J points out, the "standard is one of reasonable possibility not reasonable probability" (at [267]).
178 But whose perspective or expectation is being referred to? As has been explained by the Full Court, it is "a reasonable person in the position of the person to whom the financial product advice is given or directed" (at [260] and [264] per Jagot J and at [377] and [378] per O'Bryan J).
179 That being the case, I agree with what O'Bryan J said at [380]:
It follows that the expectations of the reasonable person in para (b) (being a reasonable person standing in the shoes of the recipient of the advice) will be informed by the interactions between the provider and the recipient. However, the expectations will not be limited to those matters. The expectations of a reasonable person standing in the shoes of the recipient of the advice will also be informed by other facts that are likely to be known by such a person, but which did not form part of the express interactions between the provider and the recipient.
180 But it follows from this perspective that matters that could not have been known to a reasonable person in the position of the person to whom the financial product advice was given or directed would not be taken into account.
181 Finally, in the context of financial products being promoted to retail investors, the standard of the reasonable person should be that of the ordinary person who is not necessarily university educated and does not have any particular experience or expertise in the financial sphere generally or complex derivatives in particular.
182 Now OT and Ozifin have argued concerning the first limb in s 766B(3)(a) that there is no evidence that the relevant AM in fact considered the investor's objectives, financial situation and needs. They say that the availability to the AM of information about the investor's objectives, financial situation or needs does not prove that the AM considered these matters. The AM did not say that they took into account any of the investors' objectives, financial situation and needs. In general, the AMs were passing on trading signals to the investors, and explained this to the investor. Each investor also signed a document regarding the trading signals that they received. And in this respect, trading signals were generic, untailored and provided to all those who had access to them. But I reject such arguments. They take a too narrow view of the evidence.
183 Further, it is said that the AMs did not intellectually engage in reflecting upon the clients' positions. So much is apparent from the common advice repeated throughout the investor witnesses' evidence that the investor witnesses could or should take trading signals from generic websites such as Investing.com. Those generic website trading signals were not tailored or responsive to investors' individual circumstances. But again, this is taking a too narrow view of the evidence and the ambit of the first limb.
184 Further, in relation to the second limb of s 766B(3)(b), OT and Ozifin say that a reasonable person would know that the AM was not acting as a financial adviser in the traditional sense, but was merely passing on trading signals to the investor. A reasonable person would know that the trading signals were derived from third party websites, and the relevant AM had told the investor this. Indeed a reasonable person may also consider that the AM was merely communicating the information from the signal provider, without any 'recommendation' or 'statement of opinion'. They say that although the investors provided some information about themselves to the AMs, the AMs never said that they were taking this information into account, or that they were taking the investors' personal circumstances into account. Further, Ozifin says that there is no evidence that Ozifin had any ability to view or interact with the client's computer screen remotely. Moreover, each of them say that a reasonable person would expect the investor to have read their PDSs, where they ticked a box that confirmed they had read it. It is said that the relevant PDS stated that neither AGM nor Ozifin/OT was authorised to provide, and would not provide to the client, any personal financial advice. Further, it is said that a reasonable person might also know that the AMs were making similar recommendations to everyone, so that the recommendations were not tailored to the individual investor's specific situation.
185 But again, this is all an artificially narrow view of the evidence and what occurred.
186 In my view it was reasonable to expect the AMs engaged by the defendants to take account of one or more of a client's objectives, financial situation or needs in providing financial advice given:
(a) that the AMs sought, or were in fact in possession of, information regarding the client's objectives, financial position, or needs;
(b) the circumstances in which advice was provided, and in particular that advice was provided to retail clients in one-on-one telephone calls;
(c) the nature of the financial product in relation to which the advice was provided; and
(d) the substance of the financial advice, and in particular that the advice was to do specific things, such as to open a specific FX contract or CFD position, leave that position open, close it, or to deposit more funds in a trading account.
187 Further, OT and Ozifin say that to the extent that there were instances where personal advice was given to the investors, these should be limited to statements 'in relation to the particular financial products' (see s 766B(1)), that is, the FX contracts or CFDs in which the investors invested, and not statements that were not related to the particular financial products. They say that statements made in respect of depositing funds into an account (i.e. the deposit statements) or adopting a trading strategy other than in relation to a particular financial product (i.e. the trading strategy statements) do not fall within the scope of s 766B(1) and therefore do not engage s 766B(3). I disagree. No such narrow view is warranted.
188 Generally speaking I reject the submissions advanced by OT and Ozifin.
189 In summary, in the case of each investor, both the subjective and objective limbs of s 766B(3) have been established such that the recommendations and statements of opinion provided by the AMs constituted personal advice.
190 First, by reason of enquiries made by the AMs of the investors, the AMs sought and were provided information that revealed important aspects of the investors' objective, financial situation and needs.
191 Second, the AMs were aware at all times of the balance, equity and free margin of the investors' trading accounts.
192 Third, the AMs sought to assure or reassure the investors that the AMs would guide or assist the investors in their trading, and in some instances said to the clients that the AMs had determined or would determine a "plan" or "portfolio" for the client.
193 Fourth, and relatedly, AMs maintained ongoing relationships with the investors, which were maintained over multiple phone calls and emails. They were far from one-off sales calls.
194 Fifth, in none of the phone calls did the AMs provide a general advice warning.
195 Sixth, the AMs presented each recommendation in terms and in a manner that conveyed the impression that the recommendation was an uncontroversial course of action to take.
196 In summary I am satisfied that each of the advice statements constituted financial product advice which was personal advice.
(c) Best interests and appropriate advice obligations
197 Section 961B(1) requires that a provider of personal advice must act in the best interests of the client in relation to that advice. Section 961G(1) requires that a provider of advice must only provide advice to the client if it would be reasonable to conclude that the advice is appropriate to the client, had the provider satisfied the duty under s 961B to act in the best interests of the client.
198 Sections 961(1), 961B(1) and (2), 961C and 961D provide as follows:
961 Application of this Division
(1) This Division applies in relation to the provision of personal advice (the advice) to a person (the client) as a retail client.
961B Provider must act in the best interests of the client
(1) The provider must act in the best interests of the client in relation to the advice.
(2) The provider satisfies the duty in subsection (1), if the provider proves that the provider has done each of the following:
(a) identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions;
(b) identified:
(i) the subject matter of the advice that has been sought by the client (whether explicitly or implicitly); and
(ii) the objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought on that subject matter (the client's relevant circumstances);
(c) where it was reasonably apparent that information relating to the client's relevant circumstances was incomplete or inaccurate, made reasonable inquiries to obtain complete and accurate information;
(d) assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice;
(e) if, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a financial product:
(i) conducted a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter; and
(ii) assessed the information gathered in the investigation;
(f) based all judgements in advising the client on the client's relevant circumstances;
(g) taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client's relevant circumstances.
…
961C When is something reasonably apparent?
Something is reasonably apparent if it would be apparent to a person with a reasonable level of expertise in the subject matter of the advice that has been sought by the client, were that person exercising care and objectively assessing the information given to the provider by the client.
961D What is a reasonable investigation?
(1) A reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered relevant to advice on the subject matter sought by the client does not require an investigation into every financial product available.
(2) However, if the client requests the provider to consider a specified financial product, a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered relevant to advice on the subject matter sought by the client includes an investigation into that financial product.
199 Section 961G provides:
961G Resulting advice must be appropriate to the client
The provider must only provide the advice to the client if it would be reasonable to conclude that the advice is appropriate to the client, had the provider satisfied the duty under section 961B to act in the best interests of the client.
200 Now in my view the provider of personal advice is the individual who is to provide the advice, even if that individual is a representative of a financial services licensee and is to provide the advice on behalf of that licensee.
201 In my view in summary, the evidence shows that by reason of the conduct constituting each of the investor contraventions, the providers of the financial product advice that formed the basis of that conduct contravened ss 961B(1) and 961G.
202 Further, AGM contravened s 961K(2) in respect of such conduct engaged in by the people who were employees, agents or otherwise engaged by Falcon or IBD Marketing.
203 Because each of the advice statements constituted personal advice within the meaning of s 766B(3):
(a) the providers of that advice, namely, the AMs were required to take all steps necessary to ensure that they acted in the best interests of the recipient of that advice; and
(b) the AMs could only provide the advice constituted by the advice statements if it was reasonable to conclude that the resulting advice was appropriate to the recipient.
204 The AMs who made the advice statements to each of the clients were the providers of the advice to those people for the purposes of s 961(2). The alleged contraventions of the best interests obligations and appropriate advice obligations by the various AMs, as representatives of AGM, provide the foundation that AGM itself contravened s 961K by reason of the AMs' contraventions, and that AGM contravened s 961L by failing to take reasonable steps to ensure compliance by the AMs with s 961B and s 961G.
205 As the AMs made the advice statements in their capacity as representatives of AGM and by making the advice statements, the AMs contravened the best interests obligation or appropriate advice obligations. It follows that AGM contravened s961K. I will discuss s 961L later.
206 Now OT and Ozifin submit that Division 2 of Part 7.7A of the Corporations Act only applies in relation to the conscious or intentional provision of personal advice to a person as a retail client. OT and Ozifin contend that when the content of the obligations in those provisions is considered, it is apparent that they apply only to the conscious or intentional provision of personal advice, and not to a person who provides personal advice unwittingly. It is said that this is because the giving of personal advice by a person who was only licensed to give general advice is dealt with separately in other provisions of the Corporations Act. The provision of financial services such as personal advice which is not covered by an AFSL is a contravention of s 911A(1). In addition, a failure to comply with the conditions of an AFSL is a contravention of s 912A(1)(b), which gives ASIC power to suspend or cancel the AFSL.
207 They say that the Explanatory Memorandum to the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 makes it clear that Part 7.7A was intended to regulate the "financial advice industry". Part 7.7A was inserted in 2012 to replace the former Division 3 of Part 7.7 of the Corporations Act which was, in turn, introduced to regulate licensees (and authorised representatives) that were licensed to provide personal advice. So much is clear from the Explanatory Memorandum to the Financial Services Reform Bill 2001, which noted that where the providing entity's licence or authorisation does not cover the provision of advice, it would be obliged to decline to give the advice.
208 Further, they say that another indication that the relevant statutory obligations were not intended to catch situations where persons who provided general advice may have unwittingly strayed into personal advice also, is the reference in several of the provisions in Division 2 of Part 7.7A to advice "sought by the client": ss 961B(2)(b)(i), 961B(3), 961C, 961D(1), 961D(2), 961E, 961J(2)(b) and 961J(3). It is said that Division 2 of Part 7.7A of the Act is only engaged where personal advice is sought by the client.
209 In the present case, they say that a significant number of the statements said to have been made by AMs to clients were unsolicited, and therefore fell outside the scope of those provisions.
210 Accordingly, they say that the provisions in Division 2 of Part 7.7A do not apply to OT or Ozifin, the authorised representatives of AGM which had been licensed to provide only general advice.
211 In my view, these arguments are misconceived and in essence seek to re-write the clear terms of the statutory provisions. As I have said, personal advice was in fact given. That being the case, Division 2 of Part 7.7A was triggered (s 961(1)).
212 Further, OT and Ozifin say that if there have been contraventions of ss 961B or 961G, then they ought not be liable for two reasons.
213 First, the obligations in Division 2 of Part 7.7A are placed on a "provider", who is the "individual" (s 961(2)). In this case, so the argument goes, the "provider" would be the relevant AM. Therefore, neither Ozifin nor OT was a "provider". Now s 961Q(1) provides that an authorised representative contravenes that section if the authorised representative contravenes s 961B or s 961G. But in the present case the authorised representatives are corporations and not individuals; accordingly, so the argument goes, they cannot have breached s 961B or s 961G. And s 961Q(1) does not provide that an authorised representative contravenes that section if a representative of the authorised representative contravenes ss 961B or 961G. Now this is a narrow reading of the statutory provisions. Unfortunately, as a matter purely of textual construction it would seem to have some merit to it. But I do not consider that this could possibly have been intended.
214 Now the difficulty is in the language of s 961(2). The provider is taken to be the individual who provided the advice. And normally, as a matter of statutory interpretation, the reference to individual is a reference to a natural person; one is not in context dealing with the single/group type distinction. Moreover, other parts of s 961 distinguish between "individual" and "person". So assume that for the moment. Then the AM of OT or Ozifin (as the case may be) was the relevant individual and therefore the provider. And it is that AM who then had obligations under s 961B and s 961G, which I have found were breached. But where then does liability attach to OT or Ozifin (as the case may be) as the principal of such an AM? Strictly, s 961Q(1) does not assist.
215 Section 961Q(1) provides:
An authorised representative of a financial services licensee contravenes this section if the authorised representative contravenes section 961B, 961G, 961H or 961J.
216 Of course, OT and Ozifin are authorised representatives. But if the AM is the individual and therefore the provider and has breached s 961B or s 961G, that is the AM's breach, not OT's or Ozifin's contravention. Section 961Q(1) has no work to do. Section 961Q(1) would only have work to do where an authorised representative was a natural person and also the individual/provider. Moreover, there is nothing express in s 961Q(1) which would attribute the AM's breach to the authorised representative.
217 But all of this seems absurd. What then is the solution? One solution is to read "individual" in s 961(2) as not confined to a natural person. But there are difficulties with this approach. Another approach is to use a provision such as s 769B as a legislative poly-filler; s 769B(7) is not relevant on this argument because I am not seeking to attribute liability to the AFSL holder (AGM) but rather the authorised representative (OT or Ozifin). So, utilising s 769B, the AM's conduct and state of mind may be attributed to OT or Ozifin (as the case may be). And by that route, the AM's conduct becomes OT's or Ozifin's contravention. And by that route, harmony is produced with s 961Q(1). This solution does the least damage to the statutory language. I will adopt it. Accordingly OT's and Ozifin's first argument is rejected.
218 Second, OT and Ozifin say that insofar as AMs failed to act in the best interests of clients (s 961B(1)) and/or provided advice when it was not reasonable to conclude that the advice was in the best interests of the recipients of that advice (s 961G):
(a) AGM provided Ozifin and OT with information or instructions about the requirements to be complied with in relation to the giving of personal advice, including but not limited to the provision of the Client Sales Guidelines (the Guidelines), a document prepared by and provided by AGM;
(b) any failure by the AMs of Ozifin or OT to comply with ss 961B(1) and/or 961G occurred because they were acting in reliance on AGM's information or instructions; and
(c) their reliance on AGM's information or instructions was reasonable in circumstances where AGM had provided the Guidelines to assist them in conducting their businesses in accordance with the law and AGM had represented to them that AGM understood the law and would provide relevant supervision and training.
219 As such, OT and Ozifin say that in accordance with s 961Q(2), they are not liable for any contravention of s 961B(1) and/or s 961G. But I reject these assertions, at the least because I am not satisfied on the evidence that limbs (b) and (c) of the s 961Q(2) defence have been made good.
220 Let me now discuss the evidence in more detail.
Best Interests Obligation
221 Now the best interests obligation is concerned with the process or procedure involved in providing advice. It is an obligation concerned with process questions, rather than justifying the quality of the advice by retrospective testing against financial outcomes, as the relevant extrinsic material expressed it. Mr Blundell provided a list of eight general steps that he considered an advisor providing personal advice in relation to CFDs and FX contracts ought to have taken in order to discharge the best interest obligation. I accept that evidence.
222 First, the AMs should have undertaken a thorough examination of the client's current financial situation. This should have included details of all income, savings, assets and debts. This is so that the AM could build a picture of the client's current financial capabilities when trading in CFD and FX contracts. For example, the needs and objectives of a client with $20,000 in disposable funds are very different to those holding $1 million in funds. A client with $1 million in funds would be able to take more risk and absorb greater losses, whilst those with a lot less funds would need to be more risk averse and any significant losses would restrict their trading capabilities, due to the margin requirements for trading, to a greater degree than those with more funds.
223 Second, the AM should also have gained a clear understanding of the client's objectives. Did the client seek a slow steady income stream, were they looking for short term gains or did they want to hedge existing positions held? It was important that the AM clearly understood the client's objectives so that the advice provided could be tailored to each individual client's needs. The intention was for the AM to build a picture of the client's trading capabilities, including whether the products offered by the provider and the risk of those products were appropriate for the client or if the client had needs beyond the products provided by the entity.
224 Third, the AMs should have ascertained the type of products the client wished to invest in. Whilst the AMs were providing CFDs and FX contracts, there were many different types according to the underlying asset of the contract. For example, did the client wish to trade in cryptocurrency CFDs, USD FX contracts or CFDs over equities? The AM should have understood whether the client only wanted to trade these types of products and advised the client according to the client's wishes. An AM could recommend other types of product but had to have a reason for doing so based upon conversations with the client and an understanding of the client's objectives. The client had to also be informed of the reasons why the AM believed an alternative product would suit the client's needs. The AM had to be clear that the products being offered to the client were appropriate to that client and their needs and objectives.
225 Fourth, the AM ought to have informed the client whether the advice that they were providing was based on incomplete information regarding the client's financial situation and objectives. The AM should have advised the client of why the information was incomplete and informed the client of the risks involved in acting on the incomplete advice. This would have allowed the client to make their own informed decision on whether to follow the advice provided.
226 Fifth, the AMs were also required to provide a Statement of Advice (SOA) when, or shortly after, they provided advice to the client. The SOA should have clearly set out all of the details noted above, such as the client's financial situation, objectives and the reasons for the advisor recommending the product that they were. This would have allowed the client to clearly see the reasons why they had been directed to a certain product by the AM.
227 Sixth, the AMs should have educated the clients on the products they were being advised to use. The client should have understood how the product worked, how it could make money for them and equally how they could lose money. It was important for CFDs and FX contracts that the client understood that they could lose more than the funds they had deposited in their account should markets move against them quickly. The AMs should have educated the clients to trade in a responsible manner and not put at risk more funds than they could reasonably lose. The client ought to have been aware of the concepts involved with CFDs and FX contracts trading, particularly leverage, margin and the process of margin calls. The client should have understood when to take profits but also when to liquidate losses to limit risk.
228 Seventh, the AMs should have ensured that the clients understood all the risks involved with the products they were trading and should also have ensured that the clients were aware of the risk management features available to them, such as stop loss orders, prior to the clients placing a trade.
229 Eighth, the AMs should also have advised the client that the CFDs and FX contracts that they were being recommended were leveraged and as such highly risky products. The clients should have been made aware that, depending on the leverage offered, every dollar they put at risk when placing a trade represented several times that amount, which meant that whilst any profits were multiplied by that amount, so too were losses. This meant that a client could lose more than they deposited should losses accumulate quickly. It should have been clearly stated to the client that losses could exceed the amount of funds they had deposited.
230 Now specifically in relation to a sample of the investors, Mr Blundell concluded that the providers of the advice to those clients did not take the general steps identified by him as being necessary to discharge the best interests obligation.
231 He also identified further bases for that conclusion specific to each investor. In the case of those sample investors, Mr Blundell concluded from the details of each investor's financial situation that they provided to the AMs that the investors:
(a) wished only to put a limited percentage or a set amount of their overall funds at risk; and/or
(b) had a low risk appetite.
232 On those bases, Mr Blundell concluded that, to discharge the best interests obligations, the AMs ought to have taken certain specific steps that they did not take. Because of the high degree of commonality in the circumstances of the sample investors and the balance of the investors, I am prepared to conclude that the AMs contravened the best interests obligation in relation to the balance of the investors.
Appropriate Advice Obligation
233 Mr Blundell concluded that the AMs each provided advice to the sample investors that was not appropriate to them. As with his conclusions concerning the best interests obligation, there is a commonality of reasoning behind Mr Blundell's conclusion with regard to the contravention of the appropriate advice obligation.
234 With regard to each of the sample investors, Mr Blundell expressed the opinion, which I accept, that the following trading strategies were not appropriate for clients who he identified as having investment objectives that did not align with such strategies embodied in the following advice.
235 The first inappropriate strategy was advice to invest in FX contracts or CFDs at all, because those products were high risk, short term investments that did not meet the clients' stated investment objectives.
236 The second inappropriate strategy was advice to leave open negative positions, which was not a strategy appropriate to an investor with limited available funds and therefore a limited ability to maintain the margin necessary to keep those positions open for the days, weeks or even months before the negative positions in leveraged CFDs and FX contracts might return to positive.
237 The third inappropriate strategy was advice to open multiple positions, which was counter intuitive to the strategy of maintaining losing positions. In particular, if a client wished to keep losing positions open a client needed to maintain the minimum level of free margin in their account, adding funds as required. But opening new positions used up some of the available free margin to maintain the new positions.
238 The fourth inappropriate strategy was advice to adopt what I described earlier as a Martingale strategy, which Mr Blundell described as effectively "doubling down" on a losing position, with the expectation that once the position moved in the client's favour, any losses on the first position would more quickly be offset by profits on the second position. As with the strategy of leaving negative positions open, the Martingale strategy required an investor to hold a large amount of funds that they could use to maintain open positions. It was also only suitable for those with a high-risk appetite.
239 The fifth inappropriate strategy was advice to deposit more funds, which Mr Blundell considered inappropriate particularly when used in combination with the advised strategies of running with losses and taking profits, which he considered would lead to the client losing funds in a short period of time.
240 The sixth inappropriate strategy was advice to use trading signals, which were the source of the signal provider statements. Mr Blundell considered that the use of those signals was inappropriate because the signals:
(a) were generic, and had not been tailored to the client's needs;
(b) related to products, namely, FX contracts and CFDs that Mr Blundell concluded were not appropriate to those clients; and
(c) were overly simplistic as they merely recommended a buy or sell position depending on the direction of the signal.
241 The seventh inappropriate strategy was advice to increase the volume of trading that the investor conducted with the incentive to gain further bonuses from the entity and reach a higher level of status on the trading platform. But that strategy was not appropriate for any investor who had stated that they wanted to put only a small amount of funds at risk and invest over the long term.
242 In my view each of those strategies was not appropriate advice for the relevant clients. Again, because of the high degree of commonality between the conduct of the AMs towards the sample investors, and that towards the balance of the investors, in my view it is reasonable to extrapolate Mr Blundell's conclusion to all investors. The personal financial advice the AMs provided to the balance of the investors was not appropriate to those investors.
243 In my view, in summary, ASIC has made out the contraventions of ss 961B and 961G as alleged.
(d) Failure to give general advice warning
244 ASIC says that in the event that I am satisfied that the advice statements each constitute the provision of financial product advice but do not constitute the giving of personal financial advice, then by the operation of s 766B(4), that advice was general advice. And if that advice was general advice, then s 949A comes into play and s 949A(2) was accordingly contravened by each of AGM, OT and Ozifin.
245 Section 949A provides:
949A General advice provided to retail client—obligation to warn client that advice does not take account of client's objectives, financial situation or needs
(1) This section applies in relation to the provision of general advice if:
(a) the advice is provided:
(i) by a financial services licensee (the providing entity); or
(ii) by an authorised representative (the providing entity) of a financial services licensee, or of 2 or more financial services licensees; and
(b) the advice is provided to a person (the client) as a retail client; and
(c) the advice is not provided in circumstances specified in regulations made for the purposes of this paragraph.
(2) The providing entity must, in accordance with subsection (3), warn the client that:
(a) the advice has been prepared without taking account of the client's objectives, financial situation or needs; and
(b) because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client's objectives, financial situation and needs; and
(c) if the advice relates to the acquisition, or possible acquisition, of a particular financial product—the client should:
(i) if the product is not a CGS depository interest—obtain a Product Disclosure Statement (see Division 2 of Part 7.9) relating to the product and consider the Statement before making any decision about whether to acquire the product; or
(ii) if the product is a CGS depository interest—obtain each information statement (see Division 5C of Part 7.9) for the class of CGS depository interests that includes the product and consider the statement before making any decision about whether to acquire the product.
(3) The warning must be given to the client at the same time as the advice is provided and by the same means as the advice is provided.
(4) In any proceedings against an authorised representative of a financial services licensee for an offence based on subsection (1), it is a defence if:
(a) the licensee had provided the authorised representative with information or instructions about the requirements to be complied with in relation to the giving of personal advice; and
(b) the representative's failure to comply with subsection (1) occurred because the representative was acting in reliance on that information or those instructions; and
(c) the representative's reliance on that information or those instructions was reasonable.
(5) A financial services licensee must take reasonable steps to ensure that an authorised representative of the licensee complies with subsection (2).
246 The evidence shows that the defendants did not provide the general advice warning to the investors required by s 949A(2). That is so even with the "modification" set out in ASIC's Regulatory Guide 244 and ASIC Corporations (General Advice Warning) Instrument 2015/540, which required only that the defendants say to their clients, at the time of providing the advice and by the same means as the advice is provided, that the advice is general advice and may not be appropriate to its clients.
247 ASIC says, which I accept, that if the AMs did give general advice to the investors, AGM, Ozifin and OT contravened s 949A(2) in failing to warn the investors that the advice had been prepared without taking account of the investors' objectives, financial situation or needs, and that the client should consider the appropriateness of the advice before acting on it.
248 Now Ozifin and OT say that to the extent it is held that the AMs did not provide a general advice warning to clients in accordance with s 949A(2), they rely on the defence in s 949A(4). They say that AGM provided them with information or instructions about the requirements to be complied with in relation to the giving of personal advice, including but not limited to the provision of the Guidelines. Further, they say that any failure by their AMs to comply with s 949A(1) occurred because they were acting in reliance on AGM's information or instructions. Further, they say that their reliance on AGM's information or instructions was reasonable in circumstances where AGM had provided the Guidelines to assist them in conducting their businesses in accordance with the law and AGM had represented to them that AGM understood the law and would provide relevant supervision and training.
249 Now s 949A(4) begins with the words 'In any proceedings against an authorised representative of a financial services licensee for an offence based on subsection (1)…'. But in my view this defence applies even though this is not a criminal proceeding. The Explanatory Memorandum to the Financial Services Reform Bill 2001 (Cth) relevantly stated:
12.60 Where general advice is provided to a retail client, no SoA is required. However, at the time of giving the general advice and by the same means as the general advice is given, the providing entity must warn the client that the advice has been prepared without taking account of the client's objectives, situation and needs and the client should therefore consider the appropriateness of the advice to their situation before acting on the advice (proposed section 949A).
12.61 Warnings must accompany all general advice regardless of the medium used to provide that advice. For contraventions of this provision, the general approach described below has been taken, so that authorised representatives have a defence available to them with a corresponding duty on licensees to ensure that authorised representatives comply.
250 Further, the Revised Explanatory Memorandum ([12.62] and [12.63]) contained similar paragraphs.
251 In my view the words "for an offence" were inserted into the legislation in error, further compounding the erroneous reference to 'subsection (1)' (instead of subsection (2)). The defence can apply to civil penalty proceedings concerning a contravention of sub-section (2).
252 But assuming that the defence under s 949A(4) can apply to OT and Ozifin in relation to the present proceedings, I am not satisfied on the evidence that elements (b) and (c) of the s 949A(4) defence have been made good.
(e) Miscellaneous matters relating to the provision of advice
253 Let me address briefly some other matters.
254 First, AGM admits that it did not provide statements of advice to the clients to whom advice statements were made, but denies that by failing to do so it contravened s 946A(1). Presumably that denial rests on the basis that the advice statements did not constitute personal advice. But in my view the advice statements made by AGM constituted personal advice, and by failing to provide statements of advice each time it made an advice statement, it contravened s 946A(1).
255 Second, OT appointed IBD to provided financial services on its behalf without the written approval of AGM. OT thereby contravened s 916B. Now OT asserts that it did not authorise IBD to provide financial services on its behalf and Mr Ashkenazi was aware of the appointment of IBD and consented to that appointment, including by providing training to IBD employees. But in my view OT did appoint IBD to provide financial services on its behalf, and OT therefore contravened s 916B.
256 Third, AMs engaged by Ozifin stated to its clients that they were "financial advisers". Now Ozifin says that the AMs so described themselves at the request of Mr Ashkenazi. In support of that allegation, Ozifin points only to the hearsay statements of its officer Omer Hen in an email to Michelle Zhao of AGM well after the fact. That, of course, is no defence. In my view Ozifin contravened s 923C(1).
(f) False, Misleading or Deceptive Conduct
257 ASIC's case is that the AMs made three categories of representations to clients of the defendants that were false, misleading or deceptive.
258 First, it is said that the AMs made a number of express representations regarding the operation of the financial services offered by the defendants, each of which was a representation as to a future matter, for which there were no reasonable grounds (investment representations).
259 Second, it is said that the AMs engaged by the defendants made a number of additional express representations. It is said that in the case of AMs engaged by AGM and OT, it was represented that they were located in Melbourne. Further, it is said that in the case of AMs engaged by or on behalf of OT and Ozifin, representations were made regarding the licensing of those entities.
260 Third, it is said that by making the advice statements, the defendants made implied representations that:
(a) it was in the clients' best interests to invest in derivatives generally or the particular derivatives recommended by the AMs (best interests representations);
(b) the financial product advice that formed the subject of each advice statement was appropriate to the client (appropriate advice representations); and
(c) the defendants were entitled or otherwise approved to provide personal advice (personal advice representations).
261 I have set out in other cases the relevant principles concerning misleading or deceptive conduct and misrepresentation and I do not need to repeat them; see, for example, Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147 at [2256] to [2327] and the cases there cited.
Express Investment Representations
262 Let me begin with the equities risk representations
263 In my view the evidence discloses that AMs engaged by AGM and Ozifin made representations to clients AGM1, AGM2 and AGM12 and client OF12 respectively to the effect that by reducing their investment in equities and increasing their investment in the derivative products offered by AGM and Ozifin, those clients would reduce their exposure to risk.
264 Those representations were false, misleading or deceptive. All other things being equal, investments in CFDs or FX contracts carry a greater risk to capital than an equivalent investment in equities. The terms upon which the products offered by AGM and Ozifin operated were determined by the disclosure documents published by the defendants. The PDSs available on the websites of both AGM and Ozifin each stated that investment in CFDs and FX contracts carried with it the risk of losses that exceeded the initial margin payments made by the clients. By contrast, it is in the nature of equities that an investor's liability is limited to the amount that the investor pays to purchase the equity save for the rare case of partly paid shares.
265 There were at least six equities risk representations made in total, comprising 5 representations to 3 clients of AGM and 1 representation to a client of Ozifin.
266 Examples of the equities risk representations are as follows:
(a) to investor AGM1 (in relation to what the AM described as increased volatility in the equities market):
"It's bad news but it also can be good news okay? People making huge amount of money in this type of volatility in the market Why? Because people are cashing out their stocks Okay? They're cashing out their stocks and they are buying dollars instead, because dollar is the most stable currency. So the dollar is really climbing up, and you can see… it on this trade of the USD versus the Swiss francs. Right?"
(b) to investor OF12:
Investor OF12: "I can't see why I can't change it from currency to something like that for a couple of weeks."
AM: "… I will tell you why. If you will change to stocks the risk over there right now it's too high. Because if - like I told you just now, Amazon made $60 gain on after it lost $200 it made a $60 in one day, people went like crazy to buy Amazon and then the next day it lost $58. What's the point in that, you're risking money for [inaudible]."
267 As to the analysis representations, an AM engaged by Ozifin made representations to Investor OF3 that various FX contract positions that he recommended the investor should open on 12 January 2018 were consistent with information that the AM had received from Trading Central. In fact, they were not. Trading Central was actually forecasting movements in the opposite direction. Investor OF3 ended up losing $292,626.52 on those trades, representing all of the money that he had invested of approximately $225,000 and a portion of the "bonus money" that had been attributed to his account.
268 Those representations were false, misleading or deceptive because Trading Central published no analysis that was consistent with the 12 January positions. Ms Vanessa Macris, an officer of ASIC, conducted a search of Trading Central for technical analysis for the 12 January positions. The searches that Ms Macris conducted reveal that the technical analysis published by Trading Central was not consistent with the analysis representations.
269 As to the money risk representations, AMs engaged by or on behalf of each of the defendants made representations to the investors regarding the risk to which funds deposited by clients to their trading accounts would be exposed. There are the following three categories of money risk representations:
(a) first, that by increasing the amount of money in a client's trading account, the client would reduce the level of risk to which they were exposed;
(b) second, that the risk associated with depositing additional funds to a client's trading account would carry an equivalent risk to holding money in a client's bank account; and
(c) third, that only those funds in a client's trading account that the client used to make an initial margin payment to open a CFD or FX contract position would be exposed to adverse movements in the price of that product.
270 Those representations were false, misleading or deceptive. By putting further funds into the trading account, the clients did not reduce their risk of loss. On the contrary, there was a greater risk of a larger loss than that to which the client was already exposed. And it was not true to say that, by investing only a certain percentage of the balance of a client's trading account, only that percentage was at risk of being lost. The opposite was true. Much more could be lost through a margin trade than the initial amount invested. The entire balance of the account, and more, was at risk of loss.
271 When a client opened a position in a CFD or FX contract, all of the funds in that client's account were exposed to adverse price movements in the referenced assets. That followed from the characteristics of the products offered by the defendants, and the terms on which those products were offered.
272 In addition, if the position moved quickly against the client, the relevant defendant may not have been able to margin close the position quickly enough before the client's account entered a negative balance.
273 When a client opened a position, they were required to make an initial margin payment. The terms upon which the defendants offered the CFDs and FX contracts meant that, were a position to move against a client, the funds in the client's account apart from those used to make the initial margin payment might be exposed to the adverse movement, and the client might be required to make a further margin payment. Additionally, the defendants were each entitled to close out positions that had moved against the client.
274 By depositing further funds to their trading accounts, the clients to whom the money risk representations were made would be able to maintain open positions because their available margin would increase. But by depositing further funds the clients would not reduce the risk being taken by the client to hold the position. Rather, by depositing further funds to their account, the clients would simply be placing those additional funds at risk against the open position.
275 The evidence shows that there were at least 86 money risk representations made in total, comprising 16 representations to 8 clients of AGM, 31 representations to 11 clients of OT and 39 representations to 10 clients of Ozifin.
276 Examples of the money risk representations are as follows:
(a) to investor AGM3:
AM: "it's very important for me to tell you - Alpha Trade is a licensed company, okay? It's exactly like your bank. Over here when you put the money, when you invest money, the money is sitting in a trust account in Commonwealth Bank, okay?"
Investor AGM3: "I have a Commonwealth Bank Account."
AM: "Perfect, perfect. So this is the bank that work with us, okay? This is the bank that work with us. And the money is sitting in the trust account in Commonwealth."
(b) to investor OT7: "If you want to withdraw the money, you will be able to get it right away. Now, as I have told you, every day that you open a trade, it doesn't mean that you are going to use everything. Correct? ... That's the reason why you are exposing like, for example, 50 percent or 70 percent of your money in the market, is that 30 percent is just sitting in your account so that just in case you need the money you can withdraw."
(c) to investor OF4: "Your money is not at risk until you start trading. So, let's say we put $1 trade, that's what's at risk."
277 As to the revenue representations, AMs engaged by or on behalf of the defendants made representations to various clients to the effect that the defendants would generate revenue, or the AMs would earn income, when the client made money. Those statements were false, misleading or deceptive, both with regard to the circumstances in which the defendants generated revenue, and those in which AMs earned income.
278 First, in the case of revenue earned by the defendants, each of AGM, OT and Ozifin made money when the investors lost. That is because:
(a) with the possible exception of a short period at the end of 2017, AGM was the issuer of the CFD and FX contract positions opened by clients of AGM, OT or Ozifin;
(b) OT and Ozifin were entitled to most of the net revenue (Client P&L) generated by AGM, as the counterparty to the position, from positions opened by clients of OT and Ozifin. AGM was entitled to the balance, and therefore generated revenue from positions opened by clients of OT and Ozifin which resulted in clients suffering a loss;
(c) by reason of the matters in (b), the profits to which OT and Ozifin were entitled were not affected by whether or not AGM, as the counterparty to the positions, hedged those positions;
(d) AGM separated its clients between the A Book and B Book. At least some of the positions opened by the five clients who were allocated to the A Book were hedged with an external counterparty. Positions opened by clients allocated to the B Book were not hedged;
(e) none of the investors were allocated to the A Book except for at least some trades for investor AGM10, and so none of the positions opened by those clients was externally hedged.
279 Now AGM has said that trades that were recorded in its B Book, which were not individually hedged, might nevertheless be internally hedged against opposite positions held by other clients. But there is no evidence that this in fact took place. The level of profit earned by AGM, and the level of losses suffered by AGM's clients suggests there was minimal, if any, internal hedging.
280 Second, in the case of the income earned by the AMs, the evidence of Mr Cecilio was that AMs engaged by IBD on behalf of OT were paid a base salary, plus cash incentives based on the quantum of deposits that clients of OT made to their trading accounts. Further, whilst there is no evidence of the basis on which AMs engaged by Falcon were compensated, the Falcon Agreement stated that during the period prior to ASIC cancelling the AGM AFSL, Falcon was paid a flat monthly fee of US$6,000, and US$7,000 per employee.
281 In those circumstances the general propositions that whenever a client made money the relevant defendant would make money or that the client's success would be the defendant's success or the AMs' success, were false.
282 The evidence shows that there were at least 35 revenue representations made in total, comprising 3 representations to 2 clients of AGM, 16 representations to 9 clients of OT and 16 representations to 6 clients of Ozifin.
283 Examples of the revenue representations are as follows:
(a) to investor AGM5: "With all of my heart you're helping me as well. You need to understand whenever you're making money I'm making money as well."
(b) to investor OT7: "I just want you to know that if you are making dollars, I will be making my own dollars too."
(c) to investor OF1:
AM: "I understand that, Mr [Investor], it's normal. But at the end of the day, as I said, it's - basically your success reflects my success and basically if you benefit, the company benefits, I benefit, so we all working - I wouldn't say a circle, but as I said previously, a triangle."
Investor OF1: "… my life is in your hands now, or will be."
AM: "And my life is in your hands, Mr [Investor], because we depend upon each other right now."
284 As to the profit representations, the defendants made various representations to their clients regarding the profits that clients were likely to or might reasonably expect to generate from their trading. Those statements were false, misleading or deceptive. Each was a representation as to a future matter, and there was no reasonable basis for the representation.
285 Circumstances involving investor OT7 are instructive of the misleading nature of these representations. In an early call with "Max Morris", his AM at OT, Morris said that his "plan" for investor OT7 was to deposit between $40,000 and $50,000, and from that deposit earn:
(a) "potentially … at least 15,000 a month, 15 to 20,000 a month";
(b) "at least like 10,000 to 15,000 a day"; and
(c) "potentially make every week … at least 15,000."
286 As a result of his trading, investor OT7 deposited and lost approximately $97,000.
287 In addition, in relation to the clients of OT to whom profit representations were made, I am able to infer from the evidence of Mr Cecilio that the purpose advanced by AMs engaged by IBD was to maximise deposits made by clients of OT, and have those clients open multiple positions, in order to maximise client losses.
288 The evidence shows that there were at least 46 profit representations made in total, comprising 3 representations to 2 clients of AGM, 21 representations to 7 clients of OT and 22 representations to 8 clients of Ozifin.
289 Examples of the profit representations are as follows:
(a) to investor AGM1: "I just want to give you a chance to recover before Thursday because on Thursday the potential of the event we have can make you a profit of $26,000 the minus that you've got over there. And I'm not exaggerating. Okay? Let me show you. Can I show you the potential that I'm talking about? The event that I want you to trade on? I already explain to you about the earnings season, right?"
(b) to investor OT7: "So my point is, [Investor], if you are going to start with 50,000, you will have an income, potentially from that you will generate is at least like - for a single day you can make at least like 10,000 to 15,000 a day, because of the good movement of the market. And that's the beauty about trading. 'Cause the profits that you will be making is the sky's the limit. There is no certain limit that you can make... The bigger the capital, the better the assets, because it will help you to maximise all your assets."
(c) to investor OF5's aunt: "Personally, I deal with no more than thirty (30) clients in my portfolio of average investment of 25 000 AUD. My aim is to help each client benefit from their accounts on a weekly basis with a possible success ratio of 25%-65%. Smaller accounts have a smaller potential of around 10% but each client is able to set their own parameters regardless of their ability and availability."
290 There were no reasonable grounds for making those profit predictions, even if expressed as possibilities.
291 As to the client account representations, the defendants made representations to their clients that money that the clients deposited to their trading accounts:
(a) would be held in the client accounts, and that the relevant defendant would not be able to access those accounts;
(b) further, would be able to be withdrawn by the clients in the same manner as money held in their bank accounts.
292 Those statements were false, misleading or deceptive. Each of the statements is contrary to the terms and conditions upon which the defendants offered financial services, which they published on their websites.
293 First, such terms stated that the defendants were entitled to withdraw from the client accounts any amount necessary to meet any liability owed to it by the client. Those liabilities would have included any amounts that the clients of those defendants lost to the defendants by reason of their trading.
294 Second, the terms stated that clients would or might be required to submit identification documents and close all positions that the client had open before a withdrawal could be made.
295 It is apparent that those matters were things that the clients would not have had to do to make a withdrawal from a bank account.
296 As with the money risk representations, it is the terms upon which the defendants offered the products that meant that representations that the AMs made about their operation were false, misleading or deceptive. Whilst the information that belies the representations was published by the defendants in documents available on their websites, the availability of that information self-evidently does not overcome the otherwise misleading nature of the statements made by the AMs.
297 None of the investors was an experienced investor, and none was acting with the assistance of professional advice. In addition, there is no evidence that the AMs or any other representative of the defendants directed the investors to such terms published by the defendants.
298 In those circumstances, the fact that the information was published in documents on the websites maintained by the defendants is of little significance to whether or not the client account representations were false, misleading or deceptive.
299 The evidence shows that there were at least 25 client account representations made in total, comprising 5 representations to 2 clients of AGM, 12 representations to 8 clients of OT and 8 representations to 6 clients of Ozifin.
300 Examples of the client account representations are as follows:
(a) to investor AGM10: "after this, if you need some money, you just can withdraw."
(b) to investor OT6: "So I want you to remember ah - I want you to understand this, [Investor]. This OT Capital is just like your bank account, okay? This is your second bank account."
(c) to investor OF5's aunt: "All funds are kept in a segregated account with Commonwealth Bank in Australia where you have access to the funds in your trading account at all times."
301 As to the plan representations, AMs engaged by OT and Ozifin made representations to clients that they would develop a "plan" for the clients designed to improve the client's financial position, and provide financial product advice that was consistent with that plan.
302 Those statements were false, misleading or deceptive. As with the other investment representations, they were representations as to future matters for which there was no proper basis. On the contrary, the purpose of the AMs engaged by or on behalf of OT and Ozifin was to increase the value of deposits that their clients made to their trading accounts, and to open multiple positions, risking maximising losses.
303 That conclusion is supported in the case of OT by the evidence of Mr Cecilio that the express purpose that AMs engaged by IBD were told to advance was to increase the quantum of deposits made by their clients, and to have those clients open multiple positions. Further, that conclusion is supported in the case of all defendants, by the provision of advice to their clients to adopt trading strategies that were not appropriate to those clients.
304 The evidence shows that there were at least 32 plan representations made in total, comprising:
(a) 19 representations to 6 clients of OT; and
(b) 13 representations to 5 clients of Ozifin.
305 Examples of the plan representations are as follows:
(a) to investor OT12, when asking about where investor OT12 was standing financially, the AM said:
"so I can make strategies, plans on your account. Personalise it… so I can make plans and advise what to give you the best asset on the market that can help you potentially gain profit in the financial market… so I can give you some advices … so I can have a strategy or permeate strategies for you. Personalise it… this is for you for me to make a personalised strategies on your account. Make it – help for you to potentially gain more profit."
(b) to investor OF10:
"we do need to have a conversation of law so you understand what I do as a financial adviser. What I can do for you. I need you to tell me what – what your goals are, what your financial situation is and then together we're going to make a financial plan ah based on that. A financial plan so we can help you maximise whatever investment you make and keep the risk at a minimum, all right?"
306 At the least, the defendants offered no evidence to establish any reasonable grounds for the making of these future representations. But expressing the matter more strongly, the only "personalised" advice that the AMs intended to give or in fact gave to clients was directed towards extracting as much money from the clients as possible.
307 As to the loss recovery representations, there was no reasonable basis for the representations made by AMs engaged on behalf of OT that positions that had moved against a client represented only "temporary" losses. Whilst some negative positions that clients of OT had open moved back to a positive position, I am satisfied that this occurred simply by chance. The evidence of Mr Cecilio is that he and other AMs engaged by IBD undertook no meaningful analysis in determining which positions to recommend to their clients, and had no particular insight to the operations of the currency markets. The loss recovery representations were a manifestation of the purpose being pursued by the AMs engaged by IBD, namely to have clients deposit additional funds, and for the AMs to put in place strategies to increase the prospect of the clients losing those funds.
308 The evidence shows that there were at least 18 loss recovery representations made in total, comprising 18 representations to 8 clients of OT.
309 An example of the loss recovery representation made to investor OT6 is as follows: "Don't be afraid. Just don't close those negative positions. They will turn into positives no matter what, okay?" The deception inherent in that misrepresentation is well apparent.
Additional Express Representations
310 In addition to the investment representations, which were each representations as to future matters, the defendants made two further categories of express representations:
311 First, in the case of each defendant, it was represented that AMs engaged by or on behalf of the defendants were located in Australia.
312 Second, in the case of OT, it was represented that it was licensed by ASIC. Further, in the case of Ozifin, it was represented that it was one of only four or one of the largest entities that was entitled to provide financial advice in relation to derivatives in Australia, and that an Australian authority recorded calls made by AMs with clients in Australia.
313 Each of those representations was false. The AMs engaged by the defendants were based overseas. Further, OT was not licensed by ASIC. Further, Ozifin admits that it was not one of only four, or one of the largest, entities that was entitled to provide financial advice in relation to derivatives in Australia. Further, ASIC, which is the only Australian regulator that it could possibly be suggested might have recorded such calls, did not record calls between AMs engaged by Ozifin and its clients.
314 The evidence shows that there were at least 10 location representations made in total, comprising 1 representation to a client of AGM and 9 representations to 7 clients of OT.
315 Examples of the location representations are as follows:
(a) Investor AGM10 was told by her AM, during her first call with him, that he was based in Melbourne (and it was not until much later that she discovered he was based in Israel);
(b) In relation to investor OT12:
Investor OT12: "So, you're ringing me from Melbourne, are you?"
AM: "Yes, Sir."
316 The evidence shows that there were at least 15 regulation representations made in total, comprising 4 representations to 3 clients of OT and 11 representations to 6 clients of Ozifin.
317 Examples of the regulation representations are as follows:
(a) to investor OT1: "If you click on "About Us" then click on "Regulation". Okay. You will see in here that you're really dealing with a regulated company, right, or with a license company under ASIC and you will see in there our licence number, okay, our regulations and about ASIC, okay…"
(b) to investor OF4: "We are one of four companies fully licensed under ASIC, if you've heard about ASIC."
Implied Representations
318 Further, in my view, on each occasion that an AM made an advice statement, in context they impliedly represented to the client that:
(a) the AM, by providing the financial product advice in that statement, had done all things that it was reasonable for them to have done to ensure that they were acting in the best interests of the client;
(b) they considered that the financial product advice constituted by each advice statement was reasonably appropriate to the client; and
(c) the defendants were entitled or approved to provide personal advice to those clients.
319 The representations in (a) and (b) are to be inferred from two matters. First, the AMs asked their clients for and were provided with information regarding the clients' objectives, financial situation or needs, and in addition to the plan representations, made statements to clients to the effect that the AMs would guide or assist the investors in reaching their goals, which carry the implication that the AMs would provide advice to the investors that would or was likely to advance their financial interests. Second, they are to be inferred from the circumstances in which the AMs made each of the advice statements, and on the basis of the matters set out earlier that the reasonable person might have expected the AMs to have considered one or more of the client's objectives, financial situation or needs.
320 Now the falsity of the representations in (a) and (b) depends, of course, on the foundation that personal advice was given. But that foundation is established in the evidence as I have previously explained.
321 The representation in (c) arises from the reasonable assumption that a company providing financial services in Australia would comply with the laws regulating the conduct of that business and the specific statements made to various investors regarding the regulation of the defendants. Its falsity is established from the uncontested fact that none of the defendants were so licensed or authorised to provide personal advice.
322 Further, the making of each of the advice statements that I have previously identified and the equities risk representations constituted the making of the best interests representations.
323 Further, the making of each of the advice statements also constituted the making of the appropriate advice representations.
324 Further, the making of each of the advice statements and the equities risk representations and/or those statements and representations to the extent they were best interests representations and 9 further statements set out in the FAPOC, constituted the making of the personal advice representations.
Shark Tank Representations
325 The shark tank representations were made on the internet. ASIC alleged the following:
27. In or about February 2018, OT published, or caused to publish, on the internet, in such a way as to make it available to be viewed by members of the public in Australia an advertisement that:
(a) was an advertisement for a product titled "Bitcoin Trader" (Bitcoin Ad);
(b) was styled as a news article with the heading "The Biggest Deal in Shark Tank History, That Can make you rich in just 7 days (seriously)";
(c) purports to recount an episode of the Channel 10 television program Shark Tank in which two people attempted to sell a business idea for a "bitcoin trading platform" to the venture capitalists that host the program (who are described for the purposes of the program as "the Sharks");
(d) attributes to:
(i) the Sharks various positive comments about Bitcoin Trader, including their experiences using Bitcoin Trader:
(ii) Steve Baxter, one of the Sharks, the statement that he was prepared to invest $2.5 million for 20% of the "company" Bitcoin Trader; and
(iii) the authors of the purported article their experience of using Bitcoin Trader, including that "the platform charges a commission of 2% on profits a user generates and you need to make a deposit of $250 to get started. That money will be your initial investment, which the trading software uses to trade";
(e) included what purported to be testimonials for Bitcoin Trader from:
(i) cast members of Shark Tank; and
(ii) people who were purported to have used Bitcoin Trader;
(f) stated that Bitcoin Trader:
(i) was an automated Bitcoin trading platform;
(ii) traded Bitcoin by the application of an automated trading algorithm;
(g) included instructions for how to invest in Bitcoin Trader, which included:
(i) a "screenshot" of a webpage which is branded with an OT logo; and
(ii) instructions as to how deposit funds to an OT Trading Account;
(h) stated that by opening an OT Trading Account:
(i) Bitcoin Trader would buy or sell interests in Bitcoin for the client; and
(ii) would not be purchasing CFDs or FX Contracts that referenced Bitcoin.
(together, separately or in any combination, Shark Tank Representations).
28. Bitcoin Trader:
(a) had never featured on the Australian series Shark Tank;
(b) had never been the subject of the testimonials by the participants in Shark Tank;
(c) had never been the subject of testimonials from those people represented in the Bitcoin Ad as current or former users of Bitcoin Trader;
(d) was not a product that OT offered clients in Australia; and/or
(e) did not include any explanation that an OT Trading Account allowed clients to open positions in CFDs and FX Contracts.
326 It also alleged that:
[B]y making the Shark Tank Representations, OT, further or in the alternative AGM, made false or misleading representations:
(i) that purported to be a testimonial by a person relating to the financial services that it provided, in contravention of section 12DB(1 )(c) of the ASIC Act; and
(ii) concerning:
(A) a testimonial; further or in the alternative
(B) a representation that purports to be a testimonial,
relating to the financial services that it provided, in contravention of section 12DB(1)(d) of the ASIC Act.
327 The evidence established the following. In February 2018, an OT investor clicked a banner advertisement for Bitcoin trading that was on a news website to which he received a link each day. When he clicked on that banner ad, the investor was directed to an advertisement for a product called 'Bitcoin Trader'. The Bitcoin Trader ad was styled as a news article with the headline "The Biggest Deal in Shark Tank History, That Can Make YOU Rich In Just 7 Days! (Seriously)". It purported to recount an episode of the Channel 10 television program Shark Tank in which two people attempted to sell a business idea for a "bitcoin trading platform" to the venture capitalists that host the show, who are described for the purposes of the show as "the Sharks". It attributed to the Sharks various positive comments about Bitcoin Trader, including their experiences using Bitcoin Trader, and stated that Steve Baxter, one of the Sharks, invested $2.5 million for 20% of the "company" Bitcoin Trader. It set out various comments attributed to the authors of the purported article about their experience of using Bitcoin Trader, including that "the platform charges a commission of 2% on profits a user generates and you need to make a deposit of $250 to get started. That money will be your initial investment, which the trading software uses to trade". It recounted the experience of the authors of the purported article using Bitcoin Trader, including their use of the "withdraw funds" function. It included what apparently purport to be testimonials from other people who had used Bitcoin Trader, and describe earning significant profits from that use. And it gave instructions for how to invest in Bitcoin Trader, which included what appears to be a "screenshot" of a webpage which is branded with an OT logo in the banner.
328 Now the OT investor was interested in trading in Bitcoin. He clicked on a link under the section 'Try Bitcoin Trader for Yourself' at the end of the Bitcoin Trader ad and subsequently paid $500 from his credit card to OT. Once the account was opened, the investor realised it was not what he expected and it did not appear as though Bitcoin could be traded. He submitted a withdrawal request for his deposit, after which he was contacted by a person who identified themselves as an AM at OT. The investor was told his withdrawal would take 7 to 10 business days. He later received his withdrawn funds.
329 Endemol Shine Australia, the production company of Shark Tank, confirmed that:
(a) the Australian series of Shark Tank has never had an episode relating to Bitcoin Trader, nor has any Bitcoin platform been one of the businesses pitched to the panel of Sharks;
(b) the Sharks never made the comments attributed to them in the article, and none of them have ever heard of OT;
(c) Mr Baxter told Endemol Shine that he has never invested in Bitcoin Trader and has never heard of OT; and
(d) the executive producer did not recognise the two men in the still picture under the headline of the article, who apparently purport to be the promoters of Bitcoin Trader, and that the background in that picture does not match the colour or set design of Shark Tank.
330 Further, this part of the case is also established by the admissions by AGM and OT in their defences and responses to notices to admit that the Bitcoin ad was in the form alleged and that OT published or caused to be published the Bitcoin ad on the internet. Further, it is also established by the deeming effect of s 12DB(1A) of the ASIC Act.
331 Now Ozifin accepts that I have sufficient evidence upon which to make findings of misleading or deceptive conduct in respect to investors OF1 to OF12. But there are aspects that it does not concede.
332 In respect to the allegations of misleading or deceptive conduct that are not conceded, Ozifin says as follows:
(a) Investor OF1: In respect to the alleged revenue representations made to OF1, some of the content of the statements do not support the pleaded representation. In respect to the alleged profit representation made to OF1, the content of the statement does not support the pleaded representation. In respect to the alleged plan representation made to OF1, the content of the statement does not support the pleaded representation.
(b) Investor OF4: In respect to the alleged money risk representation made to OF4, the content of the statement does not support the pleaded representation.
(c) Investor OF5: In respect to the alleged regulation representation made to OF5, the content of the statement does not support the pleaded representation.
(d) Investor OF7: In respect to the alleged money risk representation made to OF7, the content of the statement does not support the pleaded representation.
(e) Investor OF8: In respect to the alleged revenue representation made to OF8, the content of the statement does not support the pleaded representation. In respect to the alleged plan representation made to OF8, the content of the statement does not support the pleaded representation. In respect to the alleged regulation representation made to OF8, the content of the statement does not support the pleaded representation.
(f) Investor OF9: In respect to the alleged money risk representation made to OF9, the content of the statement does not support the pleaded representation. In respect to the alleged revenue representations made to OF9, the content of the statement does not support the pleaded representation. In respect to the alleged profit representation made to OF9, the content of the statement does not support the pleaded representation. In respect to the alleged plan representation made to OF9, the content of the statement does not support the pleaded representation. In respect to the alleged regulation representation made to OF9, the content of the statement does not support aspects of the pleading.
(g) Investor OF10: In respect to the alleged revenue representation made to OF10, the content of the statement does not support the pleaded representation. In respect to the alleged plan representation made to OF10, the content of the statement does not support the pleaded representation.
(h) Investor OF12: In respect to the alleged equities risk representation made to OF12, the content of the statement does not support the pleaded representation. In respect to the alleged money risk representation made to OF12, the content of the statement does not support the pleaded representation. In respect to aspects of the alleged revenue representation made to OF12, the content of the statement does not support the pleaded representation. And in respect to the alleged plan representations made to OF12, the content of the statement does not support the pleaded representation.
333 Further, Ozifin submits that neither the equities risk representation (if made to investor OF12) nor the money risk representations should be considered to have been representations as to future matters. The contents of the relevant statements described as the money risk representations represented statements as to the terms on which monies in trading accounts of investors OF1 to OF12 were held.
334 Further, as to the best interests representations and appropriate advice representations which ASIC says are to be implied by the making of the advice statements by Ozifin's agents to investors OF1 to OF12, Ozifin says that ASIC did not call any evidence regarding the general operation of Ozifin's call centres in Cyprus and Israel, and appears to rely on inferences to be drawn from the transcripts relating to dealings between the AMs of Ozifin and investors OF1 to OF12, and similarities of business practices between AGM, OT and Ozifin.
335 Further, Ozifin says that the giving of advice by one person to another does not ordinarily involve more than the expression of an opinion by the advice giver that the advice represents their true opinion. The advice statements were just that, the giving of advice by Ozifin's AMs to investors OF1 to OF12 regarding what steps the specific investor should take with regard to the taking of positions, and the depositing of money. The advice statements at their highest involved the expression of an opinion on the part of Ozifin's AMs to the specific investor that the advice giver considers that it is in the interests of the recipient to act on the advice. The advice statements do not involve a representation that it is in the best interests of the recipient to take the advice. This would be to elevate a statement of opinion to a guarantee of an outcome if the advice is followed.
336 Further, Ozifin goes on to say that nor does the recommendation that a position be taken constitute a representation that the taking of any position, or even the recommended position is in the individual investor's best interests. It is said that this is a bootstraps argument. In essence, it seeks to say that because Ozifin knew something about an individual investor's financial circumstances, the giving of advice regarding the taking of a position or making a deposit thereby conveyed an additional representation that investing was in the individual investor's best interests or appropriate to their circumstances, which was not otherwise present in the giving of advice. At most, any such representation could still only be a statement of an opinion on the part of the advice giver.
337 Further, Ozifin says that in any event, if the statements relied on conveyed the implied representations pleaded, they conveyed, in the case of the best interests representations, a representation that it was in the individual client's best interest to invest in derivatives including the derivatives recommended by the relevant AM. In the case of the appropriate advice representations, they conveyed a representation that the financial product advice was appropriate to the client. These are not representations as to future matters. Rather, they are representations of a present state of affairs. It follows that in order for ASIC to show the representations were misleading, ASIC must prove that the investment was not in the individual client's best interests. In the case of some investors, Ozifin says that this may be conceded. But it is not proved only by showing that the investor lost money on trades undertaken by that investor.
338 Further, Ozifin says that the statements relied on to support the personal advice representations do not convey generally the representation as pleaded, as a matter of implication. Further, insofar as the personal advice representations are said to be inferred from the giving of personal advice as pleaded, it says that the advice statements did not constitute personal advice.
339 Largely speaking I would reject Ozifin's contentions and OT's position to the extent that it also adopted any of these arguments.
340 Ozifin's submissions raised three matters:
(a) first, various of the investment representations were not established;
(b) second, the equities risk representations and money risk representations were not representations as to future matters; and
(c) third, by making the advice statements, the AMs did not make the best interests representations, appropriate advice representations or personal advice representations.
341 Now ASIC has conveniently provided me with a table that sets out each of the investment representations that Ozifin says are not supported and ASIC's response. In my view ASIC's case is well made out on the evidence. Further, there are three matters that arise in relation to those representations.
342 First, Ozifin says that none of the statements relied on by ASIC as constituting the plan representations support the representations pleaded in relation to Ozifin. Now Ozifin has apparently adopted this position because the FAPOC does not include a representation that Ozifin would create an investment plan for the client. But on 20 September 2019, ASIC wrote to the then solicitors for Ozifin and informed them that the relevant words: "create an investment plan for clients of Ozifin" had been inadvertently omitted from the relevant plea and then corrected its pleading. Moreover, Ozifin did not raise any issue with this correction when it was identified. The amended paragraph gives rise to two separate representations, namely, that the AM would create an investment plan, and separately that the trading signals provided to the client would be consistent with that plan. The inclusion of the omitted words cures Ozifin's criticism.
343 Second, as noted in the table, in several cases it may be debatable whether particular statements constituted the precise representation alleged. But the statements plainly gave rise to other, closely-related, misrepresentations.
344 Third, as to representations as to future matters, Ozifin says that the equities risk and money risk representations were not representations as to future matters. But Ozifin's characterisation of those representations should not be accepted. Now Ozifin asserts that the statements alleged to be money risk representations represented statements as to the terms on which monies in trading accounts of investors OF1 to OF12 were held. But I do not completely accept this. Each of the statements alleged to be equities risk and money risk representations relate to what would happen if an investor invested their money in CFDs and/or an Ozifin trading account, rather than equities or a bank account. The equities risk representations were about relative risk if one invested money in CFDs or FX contracts, which, given the nature of those markets, was a statement about the future behaviour of those markets. That conclusion is not altered even if the statement can also be said to relate to a present fact, such as the extant terms on which Ozifin offered CFDs or FX contracts.
345 Further, as to the implied representations, Ozifin says that by making each of the advice statements, Ozifin did not also make the implied representations. With regard to the best interests representations and appropriate advice representations, Ozifin says the implied representations do not arise. It says that this is because the advice statements can rise no higher than a statement that the opinion embodied in each statement represented the AM's true opinion. But there are several responses.
346 First, that submission relates only to the advice statements. But ASIC's case is that the best interests representations were also implied by the equities risk representations, which I have accepted.
347 Second, the fact that the various statements may have conveyed a representation about the AM's opinion does not mean that the statements did not also convey the best interests representations and appropriate advice representations.
348 Third, in seeking to confine the representations in that way, Ozifin ignores the regulatory context within which each of the advice statements was made. The advice statements constituted the provision of personal advice to each of the clients to whom those statements were made. Because that is the case, before making the statement that constitutes that advice, the provider of the advice was required to:
(a) have taken all those steps that would reasonably be regarded as necessary to determine whether the advice was in the client's best interests; and
(b) assuming that the provider had taken the steps in (a), only provide the advice to the client if it were reasonable to conclude the advice was appropriate to the client.
349 The reasonable recipient of financial product advice is entitled to assume that the provider of that advice has complied with the applicable legislative and other regulatory requirements. In the case of each of the advice statements those regulatory requirements included the best interests obligations and appropriate advice obligation.
350 I am satisfied that the AMs who made the advice statements to investors OF1 to OF12, who were the providers of the advice within the meaning of s 961B(2) of the Corporations Act, failed to comply with the best interests obligations and appropriate advice obligations. This proposition is supported by the expert opinion of Mr Blundell, who expressed the opinion that the AMs engaged by Ozifin who provided financial product advice to investor OF4 contravened each of those obligations. The conclusions reached by Mr Blundell in relation to investor OF4 can equally be applied to the balance of the Ozifin investors to whom Ozifin made advice statements.
351 Further, ASIC does not say that the characterisation of the advice statements as personal advice arises from the simple receipt by Ozifin's AMs of some information regarding the investors' financial circumstances. Whilst that is a relevant consideration, account must be taken of all of the circumstances in which the advice statements were made, including the statements set out in each of the summaries for each of the Ozifin investors provided to me. Those statements and summaries show that AMs engaged by Ozifin:
(a) said to the investors that they would guide or direct the investors in their trading, including by making the plan representations;
(b) suggested that, by following that guidance, investors would increase the prospects of generating a profit; and
(c) in the case of the signal provider statements, recommended that the investors use signals provided by Trading Central to advance those aims.
352 Further, the regulatory context within which the advice statements were made meant that the advice statements conveyed the additional representation that the providers had, in effect, complied with their obligations in s 961B and s 961G of the Corporations Act.
353 Now the best interests representations and appropriate advice representations are not representations as to future matters. But I am satisfied that the AMs failed to discharge the best interests obligation and appropriate advice obligation. Now Ozifin apparently concedes that point in relation to all investors save for investors OF3, OF4, OF6, OF10 and OF11. With regard to investor OF4, Mr Blundell addressed the question of whether the AMs engaged by Ozifin discharged the best interests obligation and appropriate advice obligation when providing advice to her. And the basis for Mr Blundell's opinion in relation to investor OF4 is equally applicable to the balance of the investors in relation to whom Ozifin does not concede the inappropriateness of the advice statements. Further, in respect of investor OF3, Ozifin has admitted the contraventions in relation to the analysis representation, which involved a failure to discharge the best interests obligation and appropriate advice obligation.
354 Further, with regard to the personal advice representations, ASIC does not rely only on the making of the regulation representations as the basis of the implied representation, as appears to be suggested by Ozifin. The implication that Ozifin was lawfully entitled to provide personal advice arises from all the circumstances in which Ozifin made the advice statements. In particular, the reasonable person in the circumstances of the Ozifin investors was entitled to assume that in making the advice statements, Ozifin had complied with the laws regulating the provision of that advice. That assumption, and the representation that induced it, were both false.
355 For the above reasons, I largely reject Ozifin's criticisms of ASIC's case on these aspects.
Summary
356 In summary, the making of each of the representations referred to above constituted conduct that was misleading, deceptive or likely to mislead or deceive in contravention of s 1041H of the Corporations Act and/or s 12DA(1) of the ASIC Act and/or the making of false or misleading representations in contravention of s 12DB(1) of the ASIC Act. Further, many of the representations, being the investment representations (other than the analysis representation), were representations as to future matters, and deemed to be misleading pursuant to s 12BB of the ASIC Act. They, and the balance of the representations, were also false, misleading or deceptive or likely to mislead or deceive.
(g) Unconscionable conduct
357 It is convenient to first deal with some legal principles, then address the individual cases of unconscionable conduct, and finally then deal with ASIC's case on systemic conduct.
Some legal principles
358 At this point it is convenient to set out some workable propositions that I have distilled from the case law concerning statutory unconscionability. I have endeavoured to keep citations to a minimum as my goal is to separate out some structural elements from the meta-themes. Let me start with the statutory text.
359 Section 12CB of the ASIC Act provides:
(1) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of financial services to a person (other than a listed public company);or
(b) the acquisition or possible acquisition of financial services from a person (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
…
(3) For the purpose of determining whether a person has contravened subsection (1):
(a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.
(4) It is the intention of the Parliament that:
(a) this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and
(b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and
(c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of:
(i) the terms of the contract; and
(ii) the manner in which and the extent to which the contract is carried out;
and is not limited to consideration of the circumstances relating to formation of the contract.
…
360 Section 12CC(1) provides:
(1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 12CB in connection with the supply or possible supply of financial services to a person (the service recipient), the court may have regard to:
(a) the relative strengths of the bargaining positions of the supplier and the service recipient; and
(b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and
(c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and
(e) the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and
(f) the extent to which the supplier's conduct towards the service recipient was consistent with the supplier's conduct in similar transactions between the supplier and other like service recipients; and
(g) if the supplier is a corporation—the requirements of any applicable industry code (see subsection (3)); and
(h) the requirements of any other industry code (see subsection (3)), if the service recipient acted on the reasonable belief that the supplier would comply with that code; and
(i) the extent to which the supplier unreasonably failed to disclose to the service recipient:
(i) any intended conduct of the supplier that might affect the interests of the service recipient; and
(ii) any risks to the service recipient arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and
(j) if there is a contract between the supplier and the service recipient for the supply of the financial services:
(i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and
(ii) the terms and conditions of the contract; and
(iii) the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and
(iv) any conduct that the supplier or the service recipient engaged in, in connection with their commercial relationship, after they entered into the contract; and
(k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and
(l) the extent to which the supplier and the service recipient acted in good faith.
361 It is appropriate to make some observations concerning ss 12CB and 12CC.
362 First, one is referring to a statutory standard rather than invoking the alchemy of equity. The context of s 12CB makes this clear; s 12CA deals with unconscionable conduct within equity's embrace. Further, both the lens "in all the circumstances" (s 12CB(1)) and the non-exhaustive list of matters to which the Court may have regard (s 12CC(1) in this case) indicate that neither the boundaries nor content of the equitable doctrine are defining or limiting features. Nevertheless, equitable doctrine provides some background against which the statutory concept may be appreciated, albeit that the statutory concept is less restrictive (Australian Securities and Investments Commission v Kobelt (2019) 368 ALR 1 at [279] and [295] per Edelman J).
363 Second, the evaluation of the conduct in all the circumstances requires "close consideration of the facts" (Thorne v Kennedy (2017) 263 CLR 85 at [41], citing Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at [14]). Now such an observation was made when applying the equitable doctrine, and is particularly apposite in that context when considering the parties' relationship, one party's relative special disadvantage vis-à-vis another, whether situational or constitutional, and the conduct said to constitute the unconscientious taking advantage thereof. Necessarily such matters are fact specific. But equally, if not more so, such close consideration of the facts is necessary in the context of s 12CB (Kobelt at [150] and [151] per Nettle and Gordon JJ). And s 12CC elaborates on the factual matters and circumstances that are to be considered.
364 Further, assessing whether conduct in all the circumstances is to be characterised as unconscionable involves an evaluative judgment. Moreover, to say that unconscionability is to be assessed in all the circumstances is to deny the legitimacy of an atomistic approach which takes each of the factors in s 12CC(1) and considers them only separately.
365 Third, one cannot simply align the statutory concept of unconscionable with something not done in good conscience in the sense in which equity has so treated the matter. It is clear from s 12CB and the factors that may be taken into account under s 12CC(1) that one is dealing with a broader notion. But reference to intellectual ideas of customary morality and societal values without further delineation and ready identification may be at too high a level of abstraction to be an objective touchstone. Further, such general themes may distract attention from the values that need to be considered, namely the values explicitly or implicitly enshrined in the text, context and purpose of the ASIC Act, the Corporations Act and any other relevant statutory framework applicable to the activities in issue. But in identifying and applying those values, and indeed in considering the relevant matters under s 12CC(1) applicable to the particular case, societal or community values may also be implicitly satisfied. For example, in considering conduct affecting a particular sub-group, for example an indigenous community, the application of each relevant matter under s 12CC(1) may take into account and may need to be tailored to the characteristics of that sub-group and the alleged contravener's interaction therewith, consistent implicitly with community standards. But if unconscionable conduct is found, it will not be because of some characterisation of it as being against community values without more. Rather, it will be so characterised as being against the statutory construct informed by the values that I have identified and which I will partly expand upon in a moment, as applied to the characteristics and conduct of the participants involved in the commerce in question.
366 Fourth, let me say something on the question of "conscience". In the context of equity, Kakavas explained the matter by reference to the appellant's submissions in that case in the following terms (at [15] and [16]):
In advancing a claim based on the principle expounded by Mason J in Amadio, the appellant relies upon the standards of personal conduct compendiously described as the conscience of equity. According to Pomeroy's Treatise on Equity Jurisprudence:
"the 'conscience' which is an element of the equitable jurisdiction came to be regarded, and has so continued to the present day, as a metaphorical term, designating the common standard of civil right and expediency combined, based upon general principles and limited by established doctrines, to which the court appeals, and by which it tests the conduct and rights of suitors, - a juridical and not a personal conscience."
The conscience spoken of here is a construct of values and standards against which the conduct of "suitors" - not only defendants - is to be judged.
(My emphasis, citations omitted.)
367 As I said in Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544 at [239], in the present context dealing with the element of "conscience" in statutory unconscionability, the "construct of values and standards" is extended beyond the boundaries and content of what equity would normally embrace. The metaphorical term of "conscience" in the present context has an enhanced dimension. Moreover, it is not just a juridical conscience to use Pomeroy's description. It is a statutorily created or recognised conscience with its construct of values and standards informed by the explicit and implicit values enshrined in the text, context and purpose of the ASIC Act and the Corporations Act. It is a "statutory norm of conscience" (Kobelt at [47] per Kiefel CJ and Bell J). And if that be the case, the qualifying epithet "good" in the phrase "good conscience" is otiose. The relevant conduct is either against the statutory construct of conscience or it is not; the qualifier of "good" in opposition to "bad" may have made sense when dealing with a moralistic version of conscience that had that implicit duality, but it is misconceived to suggest that the statutory construct so requires. Now any description of values even within the statutory construct of conscience will have attendant imprecision in terms of their boundaries and content. But it would be an exaggeration to say that they are so indeterminate as to be little more than a pretext to facilitate condemning conduct that is disapproved of simply on moral grounds.
368 As Gageler J explained in Kobelt at [87]:
The correct perspective is that s 12CB operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of the court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standing in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances.
369 As Nettle and Gordon JJ said in Kobelt at [153]:
[At] least in the Australian statutory context, what is involved is an evaluation of business behaviour (conduct in trade or commerce) in light of the values and norms recognised by the statute.
370 Fifth, in terms of any requirement to demonstrate "moral obloquy" or "a high level of moral obloquy", the use of such labels is a gloss on the statutory text. As has been explained in numerous authorities in this area, the statutory language should not simply be restated by substituting words or a phrase that Parliament did not choose. At most, the statutory concept of unconscionable may accommodate a flavour of moral obloquy in the sense that it means more than "unjust", "unfair" or "unreasonable" (Kobelt at [118] per Keane J), but it is to divert the relevant normative inquiry to specifically seek to identify its existence or to clothe the relevant conduct with such a conclusory label.
371 Sixth, as may be distilled from Allsop CJ's discussion in Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at [259] to [306]:
(a) fairness and equality are values and conceptions underpinning s 12CC(1)(a), (b), (d) to (f) and (i) to (k); more particularly, s 12CC(1)(a), (j)(i) and (k) recognise asymmetry of power;
(b) a lack of understanding or ignorance of a party is the conception underpinning s 12CC(1)(c);
(c) the risk and worth of the bargain are the conceptions underpinning s 12CC(1)(e) and (i); a broader and related although not explicit concept is the question of asymmetry of information; and
(d) good faith and fair dealing are values and conceptions underpinning s 12CC(1)(l).
372 Seventh and more generally, although honesty and fairness in dealing with consumers is relevant including acting without deception, it is wrong to say that unfair conduct in and of itself amounts to unconscionable conduct. After all, s 12CB regulates commerce where acting to one's "own advantage is an omnipresent feature of legitimate commerce" (Kobelt at [117] per Keane J). But establishing unfair conduct may be a step along the way to showing unconscionable conduct if it ultimately amounts to an illegitimate exploitation of a person's vulnerability and therefore amounts to an unjustifiable pursuit of self interest. It is also wrong to say that because hardship may be caused to a consumer by conduct, such an actual or likely consequence in and of itself establishes that the conduct was unconscionable. But again, establishing actual or likely hardship may be a step along the way to showing unconscionable conduct, although it is not a necessary condition.
373 Eighth, statutory unconscionability does not require only focusing on the alleged wrong doer's or its officers' or employees' state of mind, whether actual intention or knowledge or what it ought to have known. It is a broader objective evaluation of behaviour including the causes and reasons for such behaviour and its effect or likely effect. But the subjective state of mind of the alleged contravener whether actual or constructive is relevant to the broader sense. Although I am concerned with a normative notion of conscience, the boundaries and content of which are informed by the explicit and implicit values previously identified, state of mind is relevant.
374 Ninth, industry practice is a relevant consideration. To the extent that this is formalised in an industry or other code, express recognition is given thereto in s 12CC(1)(g) and (h). But acting consistently or otherwise with industry practice has broader relevance to the unconscionability question as Keane J explained in Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 at [290]:
The appellants seek to stigmatise as unconscionable or unfair or unjust an activity in the marketplace in which nothing materially distinguishes the situation and conduct of either Mr Paciocco or ANZ from any of the other participants in that activity. It may be said that ANZ and its competitors have dealt "unconscionably" or "unfairly" or "unjustly" with all of their customers in that, in a careless or partisan use of language, all banks may be said to do so as a matter of course. But to argue that conduct by one participant in a market, which is an unremarkable example of conduct engaged in by all participants in that market, is unconscionable, or unjust or unfair, in breach of the statutory norms, without any suggestion that the market itself is unlawfully skewed, is something of a stretch…
375 Of course that was a different context, but it demonstrates that the standards, norms and practices of the relevant sector are relevant to the assessment of statutory unconscionability albeit not confined thereby. But I should also stress that conduct consistent therewith does not necessarily entail that such conduct is not unconscionable.
376 Tenth, the boundaries and content of any applicable statutory regime beyond the ASIC Act and the Corporations Act is also important context within which to assess statutory unconscionability.
377 Eleventh, it is not necessary to show that a person is under a disadvantage or that any particular person has been disadvantaged by conduct (s 12CB(4)(b)). But in any event, a person is not treated as being in a position of substantial disadvantage merely because there is an inequality of bargaining power. And in any event as Keane J said (Paciocco at [293]) on the ultimate question:
While a disparity in bargaining power may be necessary to attract the operation of the provision, the mere existence of the disparity is not sufficient to do so. The existence of a disparity in bargaining power, which is an all-pervading feature of a capitalist economy, does not establish that the party which enjoys the superior power acts unconscionably by exercising it.
378 Twelfth, in terms of the technical operation of s 12CC(1), it is necessary to consider each of the non-exhaustive list of matters set out in s 12CC(1) if relevant. The word "may" in s 12CC(1) is conditional rather than permissive. If any matter in the list is potentially relevant to the conduct under consideration, it must be considered. Further, it is inappropriate to focus on one or more of the applicable matters listed in s 12CC(1) to the exclusion or unjustifiable expense of others.
379 Thirteenth and more generally, it is important to note that the conduct which attracts the operation of the statutory provision is assumed to be of sufficient seriousness such as to potentially warrant the imposition of a pecuniary penalty. That perspective is not irrelevant to the construction and application of ss 12CB and 12CC(1).
380 Let me now elaborate in more detail on s 12CB (4)(b) which states:
This section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and
381 First, a distinction is made between a "system of conduct" and a "pattern of behaviour". I will return to this in a moment.
382 Second, it is made plain that to establish statutory unconscionability it is not necessary to identify a particular individual as being disadvantaged by the relevant conduct.
383 As Keane J explained (Kobelt at [121] and [122]):
Next, it is necessary to observe that sub-s (4)(b) of s 12CB does not mean that it is not an essential characteristic of unconscionable conduct within the meaning of the statute that it involve a calculated taking advantage of a weakness or vulnerability on the part of victims of the conduct in order to obtain for the stronger party a benefit not otherwise obtainable. Under the general law, the absence of such a calculated taking advantage means that the conduct in question cannot be said to be exploitative.122 Sub-section (4)(b), in dispensing with the need for proof of disadvantage to any particular individual, allows a system of conduct or pattern of behaviour to be found to be unconscionable within the meaning of the statute even though the extent of the disadvantage cannot be quantified in the case of any individual. Understood in this way, sub-s (4)(b) is consistent with the requirement implicit in the notion of unconscionability that the impugned conduct effect a disadvantage upon its victims.
The declaration in sub-s (4)(b) is a manifestation of Parliament's intention that the purpose of s 12CB is to establish a statutory norm of conduct, rather than simply to provide an avenue of relief for victims of individual transactions.
(Citations omitted.)
384 Let me return to what is meant by a "system of conduct" and "pattern of behaviour" without the need to go through the authorities in any detail, most of which have been summarised in Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 362 ALR 66 at [104] to [153]; a more recent example concerning binary options trading is Australian Securities and Investments Commission v One Tech Media Ltd [2020] FCA 46, particularly at [78] and [79].
385 For my part, it is important not to confuse what is embraced, on the one hand, by the concepts of "system of conduct" and "pattern of behaviour", and on the other hand the mode of proof of such concepts.
386 Let me start with the relatively easier concept of "pattern of behaviour" although its proof may be problematic. Given that the context is unconscionable conduct, the reference to behaviour is looking at the external manifestation of behaviour and whether it can be characterised as a pattern. This appears to be what the Full Court meant in Unique at [104] in referring to "the external observation of events". But to be clear, in context the meaning of pattern is most usefully expressed as "a regular and intelligible form or sequence discernible in certain actions or situations" (Oxford English Dictionary, meaning 11(b)). So there has to be both repetition and external discernibility.
387 How is a pattern of behaviour to be proved? Clearly, two or more instances of identical or similar behaviour may be sufficient to infer and discern a pattern. Moreover, the more the number of instances the stronger the induction, ceteris paribus. How many instances will support the induction of a pattern depends upon the context. Numerous like instances with no counter-examples would clearly be sufficient to display a pattern. By numerous, I am referring not just to the absolute number of instances but also that number relative to the total pool of external interactions with investors/members of the public. What if there are counter-examples? A pattern may still exist, notwithstanding the exceptions. But the greater the number of exceptions, the even greater the number of conforming instances that may be required if a conclusion of a pattern is to be supportable. What if there are no counter-examples, but only a small number of like instances referable to the total pool? There may be no clear answer as to whether one should or could discern a pattern. It will depend upon the context including how robust the individual judge may be in being prepared to make the extrapolation. A judge may be prepared to so extrapolate based upon a small number of instances where the following two related conditions are satisfied. First, there is evidence that the instances are not anomalies but are natural and likely consequences of the respondent's conduct or system(s), that is, representative; of course the purity of random sampling may fortify this. Second, there is no evidence that the respondent's conduct or system(s) was designed not to produce but to avoid such instances. But it must be said that, ceteris paribus, the greater the individual differences of the instances, being differences that have real significance to the characterisation of unconscionability, the greater the number of instances that may be required to justify the extrapolation (Unique at [135], [136] and [153]).
388 Further, it would be an error to treat the concept of "pattern" as applying to a respondent's conduct as being binary, that is, as being either a pattern or no pattern. Some parts of its conduct may manifest a pattern, other parts not. A "pattern of behaviour" may be sufficiently found in relation to a part. This may be so where the respondent's conduct is divisible between different regions, between different parts of the respondent's operations, between different personnel where there is decentralised management or between different categories of investors or consumers. But the divisions must be naturally and forensically discernible from how the respondent was structured and operated at the relevant time rather than super-imposed artificially and retrospectively from a regulator's or litigator's perspective.
389 Let me turn to the other concept of "system of conduct". I should say something about "system". In the present context, "system" connotes something designed or intended in its structure; contrastingly, a pattern may be manifested without any design or intentional input. Further, "system" is usually saying something about the internal structure, for example, internal working, of whatever it is that has produced or reflects the conduct. It cannot just mean numerous instances or a pattern of external behaviour. Otherwise the former part of the phrase "system of conduct or pattern of behaviour" would collapse into the latter.
390 But a "system of conduct" could produce a "pattern of behaviour". Relatedly, evidence of a "pattern of behaviour" could enable you to infer a "system of conduct" in some cases.
391 Now "system" also connotes an organised and connected group or set of things that can be thought of as a complex whole. The gist is organisation and connection. But there is an ambiguity in the present context. Does "system of conduct" mean that each element of individual conduct is directly connected in a structured and intended way one to the other? Or does "system of conduct" focus on the system as being the underlying internal structure or method of procedure, organisation or administration of the respondent, which internal structure or method then produces the conduct such that the conduct is indirectly connected one to the other through the underlying system?
392 I am inclined to the view that "system of conduct" encompasses both concepts. But if the latter concept, one does not necessarily need to invoke concepts such as justifiable sampling or representativeness of individual instances as I have discussed concerning patterns. But if the former concept, then the discussion concerning patterns that may be identified from sampling or representativeness of individual instances may have some application to "system of conduct" in the sense that one may require sufficient instances of individual conduct before one can conclude that they are directly connected in a structured and intended way one to the other.
393 Enough of these concepts. Let me turn to some facts.
Specific investors and specific instances
394 ASIC contends that the defendants engaged in conduct that was, in all the circumstances of the 21 investors identified by ASIC, unconscionable. The 21 investors consist of 4 AGM clients, 8 OT clients and 9 Ozifin clients.
395 There is a degree of overlap between ASIC's case regarding the provision of unlicensed personal advice, what ASIC says were false, misleading or deceptive representations made to the investors, and what ASIC says was unconscionable conduct by the defendants towards those clients. But a finding of unconscionability does not depend on a finding of unlicensed personal advice or misleading conduct, although the grounds for concluding that the defendants acted unconscionably are strengthened by such matters.
396 There are six concepts that in my view support ASIC's contention of unconscionable conduct on the part of the defendants towards the 21 investors.
397 First, each of the investors was at a disadvantage in the relevant sense due to their lack of understanding of the operation of the complex products offered by the defendants and the risks associated therewith. None of those investors had any experience in trading derivatives generally, or CFDs or FX contracts in particular. Their inexperience and lack of understanding of the trades they were being encouraged to undertake, and the risks involved in that trading, was evident to the defendants' AMs.
398 Further, the investors had relatively low levels of income and other financial resources. Further, several of those clients deposited practically all of the funds that they had available to their trading accounts. After they had done so, AMs continued to pressure those clients to deposit further funds. Further, a number of investors to whom the defendants administered a client questionnaire were unable to answer the questions in that questionnaire regarding the operation of the products offered by the defendants. Clearly, the products offered by the defendants were not appropriate to many of the investors considering their inexperience.
399 Second, there was an inadequate explanation provided by the AMs of the risk of investing in the products offered by the defendants. An adequate explanation of the operation of the products, and the risks associated with them, was a necessary step for the providers of advice to take in order to discharge the best interests obligation.
400 There was no adequate explanation of the risks involved in investments in CFDs and FX contracts. The products that the AMs were advising the clients to invest in were highly leveraged, risky derivatives. In circumstances where the investors were inexperienced investors, with evident low risk profiles, the risk statements made by the AMs were inadequate. They did not adequately reveal the true risk to the clients' capital.
401 Third, there were false, misleading or deceptive comments made regarding the operation of the products that they advised the investors to invest in. In particular, the money risk representations, which were false or misleading statements regarding the risk to which the clients were exposed by depositing further funds to their trading accounts, also constituted or contributed towards unconscionable conduct.
402 Fourth, the defendants each engaged in unfair conduct towards the investors. Common themes include the following matters. AMs applied pressure to the investors to invest further money to their trading accounts when those clients either expressed a reluctance to do so, or said that they had no further funds to invest. Further, the AMs recommended trading strategies to the investors that were not appropriate to clients with the objectives and risk profile of the investors. They included strategies that were calculated to result in the clients losing all of the funds deposited with the defendants, particularly by quickly closing any profitable trades, but leaving losing trades to run on the suggested basis that the market would "correct itself".
403 Fifth, OT and Ozifin placed unreasonable impediments on various investors seeking to withdraw money from their trading accounts. In the case of OT and Ozifin, the terms required clients of those defendants to close all open positions before they were able to withdraw money from their trading accounts.
404 Further, in the case of Ozifin, those impediments included a policy that required the clients to whom it provided "bonus funds" to undertake an extremely high volume of trading before the client was entitled to withdraw those bonus funds or any associated profits, which were often impossible to isolate from any profits made with the clients' own money. For example, in the case of investor OF4, who was a client of Ozifin, the AM engaged by Ozifin offered her, and she accepted, a number of bonuses in the course of her trading with Ozifin. It was a condition of those bonus funds that she was required to conduct trading of a certain volume in order to withdraw those funds. By 31 January 2018, investor OF4 had engaged in repeated trading in order to withdraw the funds and she had reached the required number of transactions to withdraw the funds. But despite having done so, and having a trading account balance of approximately $110,000, she was told by the AM that she could not withdraw funds until she had closed all her open positions, which included profitable CFD positions.
405 Sixth, the defendants failed to comply with guidelines published by ASIC for providers of CFDs and FX contracts which set out guidelines for improved disclosure and advertising regarding those products. Those guidelines included various benchmarks for disclosure to the clients of the issuers of OTC CFDs and FX contracts. One stipulated benchmark stated that an issuer should maintain and apply a written client qualification policy that:
(a) set out the minimum qualification criteria that prospective investors would need to demonstrate they met before the issuer would agree to open an account on their behalf; and
(b) outlined the process the issuer had in place to ensure that prospective investors who did not meet the qualification criteria were not able to open an account and trade in CFDs.
406 Further, each of the defendants' own documents refer to the importance, in appropriate circumstances, of assessing clients' knowledge of CFD and FX contract complexities. AGM and OT stated in the relevant PDSs that they maintained a client qualification policy, and that any client that did not meet the predetermined criteria would have the opportunity to gain knowledge from the defendant and retake the assessment.
407 Now in the second Ozifin PDS, Ozifin stated that it did not prevent a potential client from trading "based on its knowledge and experience" on the basis that, because it did not "provide any personal advice, [it was not] responsible to determine the appropriateness of any client". But even if that were true, it was inappropriate for Ozifin to provide investors with general advice, which might influence a client to trade in CFDs or FX contracts, where the client was to the knowledge of the advice provider unsuited to that form of speculative investment. In any event Ozifin did provide personal financial advice to the investors. And consistent with what appears in the second Ozifin PDS, there is no evidence that Ozifin conducted any assessment of the appropriateness of CFDs and FX contracts to the investors who were its clients.
408 Further, neither AGM nor OT made any adequate assessment of the appropriateness of the financial products that they offered to those of the investors who were their clients. The only investor in relation to whom there is any evidence that AGM conducted any sort of assessment is investor AGM5. That assessment was conducted by the AM administering a written "Knowledge Assessment", which investor AGM5 clearly could not answer accurately, despite significant prompting by the AM.
409 Now AMs engaged on behalf of OT administered knowledge assessments to those of the investors who were its clients. The AMs administered those questionnaires:
(a) only once the investor had been trading for some time;
(b) by providing the investor with the answers to the questionnaire, either directly or with examples that could only lead the investor to the correct answer; and
(c) by reason of the matters in (a) and (b), in a manner that undermined the purpose of administering the questionnaire.
410 Mr Cecilio's evidence is that he was told by senior AMs engaged on behalf of OT that he should tell any client to whom he administered an OT knowledge assessment, and who had any investing experience in any asset, that they should mark themselves as "experienced" so as not to have to complete the knowledge assessment before they were able to start trading, and to provide clients with the answers to the questions in the knowledge assessment.
411 Generally, the approach of each defendant to assessing the investors as clients was indiscriminate. And it was not an approach that could possibly have been effective in determining whether any particular person was appropriate to take on as a client. In my view because of the highly leveraged and complex nature of the products offered by the defendants, the failure to adopt and apply the said benchmark is an important factor that supports the conclusion that the conduct of each of the defendants towards the investors was unconscionable.
412 In my view, ASIC has made out its case of statutory unconscionability concerning the specific investors. Let me now turn to the system of conduct case.
System of conduct
413 In my view, on the evidence each of the defendants also engaged in a system of conduct or pattern of behaviour that was in all the circumstances unconscionable.
414 Let me make some general points concerning the features of the system. I will deal with some specific aspects later.
415 First, it can be inferred that the approach adopted by AMs engaged by the three defendants was consistent, both as between the clients of individual defendants and across clients of all defendants. That inference arises from Mr Ashkenazi's responsibility for training AMs engaged by OT and Ozifin.
416 The content of the training given to AMs engaged on behalf of OT included, inter-alia, OT's training with regard to sales guidelines and giving general advice and AGM's client sales guidelines, which are replicated in an equivalent document produced by OT. AGM also provided Ozifin with AGM's sales guidelines, and apparently expected compliance by Ozifin with those guidelines.
417 Now I infer that in the course of the training of AMs, Mr Ashkenazi related his understanding of the difference between general financial product advice and personal financial advice. But Mr Ashkenazi did not have a proper understanding of that distinction. In particular, he apparently considered that financial product advice would not be considered personal advice unless the person providing that advice in fact took account of the person's objectives, financial situation or needs. Further, he considered that the signal provider statements could not be considered personal financial advice, because the putative provider of that advice was simply passing on information from another source, and it was therefore not advice being provided by that person. Further, AGM was concerned in November 2017, not that AMs engaged by Ozifin were making signal provider statements, but that they were not providing the source of that information. Thus, AGM apparently considered that, as long as the source of the "signal" was noted, there was no personal advice. That is incorrect.
418 Further support for the inference that AMs engaged in consistent conduct arises from the following matters. The AGM sales guidelines describe a series of phrases under the heading "Use the words like", that are consistent with phrases used by AMs when talking with the investors. Further, in October 2017 OT sought from AGM, and was provided, approval to use a call script, which Mr Cecilio says he was provided as part of his training with OT in October and November 2017, and that included the following phrase for use by AMs:
After you activate your account ________, OT Capital will provide you a Personal Account Manager who will provide you useful tools, such as "Technical and Fundamental Analysis, also how to apply the "Risk Management" to your account. The Senior Account Manager will also guide you in the Financial Market to minimize the Risk and maximize the Potential of Generating Profit. Okay?
(emphasis added).
419 The advice statements made by the AMs to the OT investors represent precisely the guidance contemplated by that script. This also supports the conclusion that the advice statements constituted personal financial advice.
420 Let me elaborate further on the training and compliance which was in the main run by AGM for all defendants. In this regard:
(a) Mr Ashkenazi trained OT's service providers in:
(i) the Philippines on 27 and 28 September 2017;
(ii) Israel on 2 and 3 October 2017; and
(iii) Cyprus on 4 and 5 October 2017.
(b) From in or about November 2017, Mr Ashkenazi was responsible for and provided training to AMs engaged by or for AGM, OT and Ozifin, and compliance staff engaged by AGM.
(c) Further, Mr Ashkenazi described his training of the conversion and retention agents engaged by or on behalf of OT and Ozifin. Mr Ashkenazi's training included an "instruction" that representatives were to direct clients to information from third party websites, that would not constitute personal advice.
(d) After identifying that AMs engaged by Ozifin were not identifying the source of the third-party information provided to clients, which Mr Ashkenazi and AGM apparently considered was determinative of whether or not the comments constituted personal advice, Mr Ashkenazi arranged "remedial training" for those AMs. I infer that the content of that training was consistent with Mr Ashkenazi's inadequate understanding of the difference between personal and general advice.
(e) AGM provided OT with a description of the topics that Mr Ashkenazi would cover in training OT representatives.
(f) AGM approved a client sales pitch for use by OT staff.
421 Second, in the case of OT, the purpose advanced by the AMs and senior AMs engaged by IBD was to increase the amounts that clients deposited to their trading accounts, and to have the clients open multiple positions. By doing those things, the clients were exposed to an increased risk of greater losses than if they had not deposited that money.
422 Because OT did not hedge positions opened by its clients, which is unsurprising, given AGM was the counterparty to those positions, OT and AGM earned revenue when a client closed a negative position. In such circumstances it is open to me to infer that the purpose advanced by those engaged by IBD, and therefore on behalf of OT and AGM as its principal, was for clients to lose money, and that it was a purpose advanced in relation to a material number of its clients.
423 Further, the high degree of commonality in the conduct undertaken by the defendants entails that similar inferences are open in relation to the conduct towards the clients of AGM and Ozifin.
424 Third, in the case of the clients of AGM and OT, I infer that the AMs used software that provided remote view access to clients' computers to determine how much money a client could deposit, and therefore to advance the purpose of having the client deposit the maximum funds available to them. Mr Cecilio said that he used remote access software to advance both aspects of OT's purpose, namely, to have clients increase deposits to their trading account, and to open multiple positions.
425 Fourth, various aspects of the system put in place by the defendants were generic. The defendants sought out any retail client who was willing to deposit money. The defendants were apparently indiscriminate in determining to whom they were willing to provide a trading account.
426 Fifth, each of the various themes that emerge from the evidence of the interactions between the AMs and the 21 investors is probative of the unconscionability of the system of conduct and pattern of behaviour engaged in by the defendants. Such a number of investors may be relatively small compared to the total pool, but I am satisfied that they are representative. In this respect, there are no real counter-examples. Moreover, the systems put in place seem to have been designed to identify and interact with investors in the way exemplified by the specific instances. No significant doubt exists in my mind about the appropriateness of the extrapolation.
427 Let me now deal with some more detailed matters concerning the features of the system.
428 There were many similarities in business practices and in key documents for each of the defendants. These similarities give rise to a strong inference that the mode of operations originated from the same source. The similarities included the following matters.
429 First, the AGM and OT sales scripts. Both contain:
(a) reference to "rebuttals";
(b) references to being regulated by ASIC, and based in Australia (in particular: "Alpha Trade is an Australian based company, located in Melbourne, Victoria."; "OT Capital is an Australian based company located in Melbourne.");
(c) references to making "profit out of" or "profit from";
(d) references to an investor needing to "take advantage"; and
(e) statements encouraging AMs to use investors' names throughout the call.
430 Second, the use by AMs of stage names or "screen names" at least by OT and Ozifin, of which AGM had knowledge, including the following matters:
(a) Mr Cecilio gave evidence that: "We were also told to choose a screen name to use when talking to clients. We were told to use a screen name so that the clients would not know we were foreigners. Nathalie said if we used our Filipino name, clients would not believe we were licensed brokers".
(b) OT staff and client lists refer to "stage names" of various employees.
(c) An AGM email refers to the "stage names" of three Ozifin AMs, and refers to legal advice Ozifin had received about "stage names".
(d) Ozifin's AMs told clients that their stage names were their real names.
(e) Various AGM employees acknowledged in their s19 examinations that stage names were being used.
431 Third, there were similarities as to the use of various phrases consistently by AMs across the defendants. I have set out below examples of phrases used by the defendants. The example phrases are particularly distinctive. It is unlikely that each defendant's AMs happened to start using the phrase without common training. Further, they show how the AMs explicitly sought to and did win the trust of vulnerable investors. In this regard:
(a) AMs told investors to "hold my hand", "take my hand", and used other related phrases.
(b) AMs referred to themselves as a "friend" of the investor.
(c) AMs referred to investors needing to "ride the waves" of the market (or words to that effect), including "holding their breath" as a wave passes.
(d) AMs referred to transferring money from an investor's bank account into their trading account as putting "money from the left pocket to right pocket", "one pocket to the other pocket", and other similar phrases. In this regard:
(i) AGM: investor AGM4:
• The AM said to Investor AGM4: "So if you transfer right now from your right pocket to your left pocket nothing happen. If originally I have 5,000 in my right pocket – it's the bank - and I take from my right pocket and put in my left pocket of my trouser, how much money I have?" Investor AGM4 replied "You have 5,000." The AM responded "Correct. This is what I try to explain you one hour."
(ii) OT: investor OT7 (and also investor OT6, investor OT13, investor OT12):
• The AM said to Investor OT7, "Anyway you're not paying anything. All right? The money that you will be putting is still your money, this is just more or less you're putting like your money from your left pocket to your right pocket, okay?"
(iii) Ozifin: investor OF5's aunt (and also investor OF3, investor OF8, investor OF4, investor OF7 (on at least two calls)):
• The AM said to Investor OF5's aunt: "That is very important and the clients are the only ones - strict regulations, very strict regulation, they're the only ones who can access their own funds transferring to into their ah trading account and transferring out of the trading account. Left pocket right pocket ah policy um always and it's very, very strict."
(e) Investors were told that the loss they were experiencing was only "temporary". In this regard:
(i) OT: investor OT4 (4 calls), investor OT3 (4 calls), investor OT8 (2 calls) (also investor OT10 (2 calls), investor OT12 (3 calls), investor OT9 (2 calls)):
• The AM told Investor OT4: "The negative that you're seeing here is just a temporary loss. What does it mean? It means the market can go down and can recover. That's always what happened in the financial market. The market always goes up and down, okay?"
• An AM told Investor OT3: "This is only a temporary loss…"
• An AM told Investor OT8: "It doesn't mean that this is negative, it's a proper loss. No. It's just a temporary loss, meaning to say you're just waiting the market to correct itself."
(ii) Ozifin: investor OF12:
• An AM said to Investor OF12: "…the situation in the market it's only temporary but you have enough liquidity in order to survive that which is amazing. So other people would give up way earlier than you but you have a good amount in your account, you have a good potential in your account. It's only temporary what's happening with market and it is possible to be in a positive situation right now in your account."
(f) Investors were told that they should make a deposit, but it would only be "temporary". In this regard:
(i) AGM: investor AGM1 (3 calls), investor AGM5:
• The AM said to Investor AGM1: "If I were you, I will make another transfer tomorrow of another 20 that you can work with. It's up to you. You don't have to. Anyhow, it's temporary as I said last time. Like, whenever you're going to go out of the mess you're going to withdraw it."
• The AM told Investor AGM5: "If it was me, I would tell you at least $5,000 to $10,000. And, I know it sounds much. Okay? But, it's only for you to have the equity to attack. And, I'm telling you, it's a temporary money. It's something temporary. The second you want it out, it's out. But, at least we're going to make - like, you're finished your cause of taking those minuses out."
(ii) OT: investor OT1, investor OT12 (2 calls), investor OT9 (5 calls):
• The AM encouraged Investor OT1 to deposit funds and said "We're only going to – we're all you… we're only going to use it temporary…" He then said "Let's transfer this one in that account for temporary, to put or to place the margin level on about 100 per cent, okay?"
• The AM told Investor OT12: "…I want you to understand, [Investor], as only a temporary investment that you're going to put in here because the first thing that you're going to do – I'm going to ask you once the situation is fixed or once the situation is stable is to withdraw those funds back into your account or put it back into your allocated funds."
• The AM told Investor OT9: "Like, why - like we keep telling you, you've got to safeguard your account by putting in more funds. And, then once, okay, you see that you're already - the trade, okay, are already going your way then, okay, you can already withdraw your funds. Remember you have the full control of your money. And, it could be just temporary…" The AM reiterated by saying "What you can better do right now is to safeguard your account by putting in more funds. At least temporarily, then once this trades already went your way then, okay, you can withdraw your funds. Anyway, you have full control of your money, like we keep telling you, we are a regulated company."
(g) References to "analyst(s)". In this regard:
(i) AGM: investor AGM3 (also investor AGM12, investor AGM15):
• The AM said to Investor AGM3: "I mean tomorrow, only tomorrow we'll be contacting you and then as from tomorrow you speak with the analyst, with the experienced ARM."
The AGM "Guidelines for Client Sales & Marketing" and "Client Sales Guidelines" both suggest using words like "according to the analyst."
(ii) OT: investor OT2 (also investor OT3 and investor OT7):
• The AM said to Investor OT2: "Actually, I don't know. People say – okay, the analyst says that this Bitcoin will reach half a million dollars. Okay."
(iii) Ozifin: investor OF1, investor OF2, investor OF10 (7 calls), investor OF5 (2 calls), investor OF5's aunt (also investor OF4 (5 calls), investor OF8 (3 calls), investor OF12 (3 calls)):
• The AM said to Investor OF1 (after Investor OF1 complains about the quality of signals given by Ozifin): "Regarding the – the session with the analyst he has – he has nothing --- to do with, ah, Trading Central, he's one of the in-house analyst basically that does in-housing, he doesn't actually do – but what he's excellent at is teaching people regarding trading strategies…"
• The AM said to Investor OF2: "I am going to create a new strategy. I'm going to speak with the analysts of the department. I'm going to give you the latest technology, the latest information by Trading Central. Okay. We are going to focus on quality over quantity."
• The AM said to Investor OF10: "Hello, Mr [Investor]. My name is [AM], I'm the market analyst here for TradeFinancial…"
• The AM said to Investor OF5's aunt: "…I explain to him ah, as I do every single one of my clients, don't do a single thing unless it is provided ah under your understandment [sic] okay? And of course through the right facility because he have a licenced financial analyst here ah in order to help the client ah with the direction okay, with the right possible direction."
(h) AMs referred to working "together" with investors, to their "relationship", and to themselves as "partners" or a "team".
(i) AMs regularly referred to investors needing to "cooperate". In this regard:
(i) OT: investor OT6 (4 calls), investor OT8 (2 calls), investor OT15 (3 calls) (also investor OT10, investor OT14):
• The AM said to Investor OT6: "…I want you to do it with me, okay? Then I'm going to call you once you got home, okay, but promise me you going to cooperate with me properly? You don't touch - - - anything yet, then wait for me, okay?"
• The AM said to Investor OT6: "You will be needing liquidity, okay, to sustain all the positions that you have, okay? … All you need to do is to cooperate okay, and that's going to be fine."
• The AM said to Investor OT8: "I want you, okay, to cooperate with me so I can help you. Very fast and very easy… You only have to do – is just to listen to me carefully and follow me."
• The AM said to Investor OT15: "You're not sure?" Investor OT15 responded: "I don't feel comfortable." The AM said: "Because - yeah. I know. Because right now I'm showing it to you but you don't want to cooperate with me. You don't want to do it."
• The AM said to Investor OT15: "I want you to open trades today, okay, because every minute here is money. Okay? We are giving you more time, okay, so just cooperate with us, sir. If you don't want to open trades in the market, we cannot do anything."
(ii) Ozifin: investor OF3, investor OF8, investor OF9 (also investor OF11):
• The AM said to Investor OF3: "…if we're speaking about 20, 25,000 in profits, [Investor], you understand that we're speaking about a different level of trading and this is the kind cooperation we're having with me and Theo cooperating on this level, okay?"
• Investor OF8 told the AM "I have to pay bills today." The AM responded: "I promise you, by next week, once you fix the situation you can withdraw the money that you want to, that you need to, not afraid to pay your bills. Okay, so that everything here will be fixed. I'm asking for your cooperation right now?"
• The AM said to Investor OF9: "And that 15,000 it means that you have me locked, so I will explain things every day here again and again and again and again because I know that we going to have a brilliant cooperation, okay, for the future, all right?"
(j) AMs regularly made "promises" to investors. In this regard:
(i) AGM: investor AGM3:
• The AM said to Investor AGM3: "As I promise, you will be guided by one of our experienced account relationship managers."
(ii) OT: investor OT7 (also investor OT1 (2 calls), investor OT4 (2 calls), investor OT6 (3 calls), investor OT8, investor OT2, investor OT12 (3 calls)):
• The AM told Investor OT7: "I promise you, by next week, once you fix the situation you can withdraw the money that you want to, that you need to, not afraid to pay your bills."
(iii) Ozifin: investor OF3 (2 calls), investor OF2, investor OF7 (2 calls) (also investor OF5 (2 calls), investor OF12 (2 calls)):
• The AM told Investor OF2: "So right now I am in a position to tell you that I am ready to welcome you to the work from home program, okay? And I'm giving you my promise, and I give - I will promise you my full support. I guarantee you my services and I can guarantee you that you will never work alone here. I will take you and I will explain you everything."
• The AM said to Investor OF7: "I am making you no promises. The only promise that I'm making is that I'm going to dedicate a lot of my time and my efforts plus some of my leverage with the company, plus I will sacrifice some of my personal time, time that I make my money, my [inaudible] to try and work with you, [Investor], and try and get the account back on track. … I am promising you that I am going to do my best and you're going to be getting my time and my connections in the company to try and assist this account."
• The AM told Investor OF3 after there was a downward movement in his positions: "If there is something I can promise you on a personal level, there is - okay, I mean, if it comes down to that, there is leverage on the account. I will request basically, even if it was, for example, the trading halt and if it was losing calculated of the margin that day, I will try get something back for you, okay."
(k) AMs referred to investors obtaining "extra income". In this regard:
(i) Mr Cecilio gave evidence that OT AMs were told to say "extra income" instead of "extra information" from the OT script.
(ii) Investor calls:
• AGM: Investor AGM4 (asked "what actually motivated you to activate your account and to do an online trading? Was it that you want to make an extra income for yourself?")
• OT: Investor OT10 (The AM asked Investor OT10, "Oh, retired, I see. I see, so you're looking for uh, an option for you to have an extra income or you just want to try the Bitcoin sir?")
(l) The defendants all referred to "segregated" accounts. In this regard:
(i) For each of AGM, OT and Ozifin the term "segregated account" was used in the terms documents. Further, there were the following verbal communications to this effect.
(ii) OT:
• Mr Cecilio gave evidence that he would say things like - "It's still your money and you can withdraw it anytime you want. You don't have anything to worry about because we have a segregated account in the Commonwealth Bank. No one can touch your money and you can withdraw the money any time that you want."
• Calls with investors: Investor OT7, Investor OT10, Investor OT8
o The AM said to Investor OT7: "So it – it's a segregated account, trust account, that no one from our company or from the bank can touch the money, but only you. So this is why I would like to open a new savings account from Commonwealth Bank… All right? At any given moment that you need the money, you will be able to withdraw the money. It takes 24 hours."
o The AM said to Investor OT8, "This is what we call the segregated account, meaning to say whatever funds that you drop in us, this is transferred directly on the trust account that we have from the Comm Bank. Meaning to say, no one can touch your money, no one can use it, not the OT, not the Comm Bank, but only you as the owner. In that way, if there's a bankruptcy that will happen, your money is safe with you."
(iii) Ozifin:
• Email: Investor OF5's aunt
o "All funds are kept in a segregated account with Commonwealth Bank in Australia where you have access to the funds in your trading account at all times."
• Calls with investors: Investor OF1, Investor OF3, Investor OF10, Investor OF12 (two calls), Investor OF9 (two calls), Investor OF7
o The AM said to Investor OF1: "When you make the transfer, because obviously every client has his own separate account, (indistinct) segregated account for your own security so basically I will need to give you your CID so it will come directly to your account."
(m) AMs told investors that the market, or a certain price, would "correct itself", "corrects itself" and/or that the "market is doing a correction". In this regard:
(i) Mr Cecilio gave evidence that he was trained to say this:
"We were told in the second training and by our senior account managers to tell clients to leave negative positions open. Once a client had opened positions and those positions had gone negative, I would say to the client that if they closed those negatives positions, they would lose the money and that they should leave those positions open because "the market will correct itself". We were told to say things like: "the market is volatile", "whatever goes down goes up and whatever goes up comes down" and "the market will correct itself". I learned the phrase "the market will correct itself" during the Second Training, and from senior account managers. The goal of leaving open a negative position was for the client to lose their money."
(ii) AGM investor calls: investor AGM2 (2 calls) (also investor AGM10):
• The AM told Investor AGM2: "Some of the minuses will return to a profit because the market is doing a correction, and because the investing.com have, potentially, very reliable information… Sometimes the market manipulators, okay, the big banks and the big, commercial companies try to manipulate the market. But there is a limit of how much you can do it. This is why if you let it run, tomorrow the market will be strong and possibility for you to have a correction."
(iii) OT investor calls: investor OT6 (6 calls), investor OT7 (3 calls), investor OT12 (38 calls), investor OT4 (2 calls), investor OT9 (3 calls), investor OT8 (8 calls), investor OT3 (7 calls), investor OT10 (6 calls), investor OT1, investor OT13 (2 calls)
(iv) Ozifin investor calls: investor OF8 (also investor OF12 (1 email, 1 call)):
• The AM told Investor OF8: "Let me know if the plan is to speak and trade tomorrow and the market is now correcting itself and our trades which is great."
432 Fourth, as many of the above statements reveal, AMs were trained in and used tactics to gain investors' trust and engender a false sense of security.
433 Fifth, AMs told or implied to investors that the AMs (and their associated entities) were "experienced" or "experts". But they were plainly not. In this regard:
(a) Mr Cecilio gave evidence on this, including the following:
• "We were told to convey that we were experts, knowledgeable at accounts, and would help them make money in the financial markets. We were told to tell clients this so they would not think they were dealing with a newbie."
• "This training was refresher training about how to get more deposits and use rebuttals. Cullen also told us to say things like "I have been working as an account manager for 6 years now" to make clients think that we were experts."
• "We were told that we should find events on investing.com and read them to the client, but pretend that we were not reading so the client would think we were experts."
• "When dealing with a new client, the aim of the first call was to give the client the impression that I am an expert and that I will help them to become an independent financial trader. I would tell the client that I would guide them in the financial market by saying things like "I am trained and have been trading for some time", "I have been an account manager for six years", "I help a lot of clients that are first timers and they become independent traders", "I will make a portfolio or plan for you" and "In the future you won't need me because you will be able to make profit on your own." When I said these things I did not actually intend to make a portfolio or a plan for the client, or to teach clients to become independent traders. This was a technique to build a relationship with the client."
(b) AlphaTrade webcapture: "After all, our instructors are expert teachers as well as expert traders."; "expert adviser".
(c) AGM script:
"[Name], like explained to you before, here at Alpha Trade, there will be someone to assist you during your trading journey. Your own personal Senior Account Manager, who is very knowledgeable in the Financial Market… Our Experienced Senior Account Managers have many many years of experience and they will share what they know with you so that you can take advantage of it and in turn make profits for *yourself*"
(d) AGM calls: investor AGM4 (2 calls) (also investor AGM3, investor AGM5):
• The AM said to Investor AGM4: "I really hope you will be able to make a very good profit with the help of the experienced manager. Okay… you will have one of our best experienced manager. They will call you."
(e) OT client calls: investor OT12 (2 calls), investor OT8, investor OT10 (also investor OT2, investor OT6):
• The AM said to Investor OT12: "[H]onestly your 250 Australian dollars or US dollars is [too] risky. My years of experience on - as an account manager 250 is too risky… Okay. Why did I tell you that? Because, the market might kick you out anytime the volatility changes."
• The AM to Investor OT8, after she had lost a lot of money: "I have a more - yes, I have more experience than [another OT Capital AM]. I know all of the events, okay? … I know everything. I know all of the events in the market … I will going to make a schedule in here and call you, okay, on Monday because I have an - - - appointment with Warren Buffet, if you know Warren Buffett? … [b]ecause he invest - - - 41 million here and I am the senior account manager which was holding his account. Okay? … And then, we are – we invest in Apple shares and he already earn 31 million."
• The AM said to Investor OT10: "Yeah. But I am the one who actually knows everything about the financial market. Now you follow me."
(f) OF client calls: investor OF1 (3 calls), investor OF7 (2 calls) (also investor OF2 (2 calls), investor OF12, investor OF10):
• The AM said to Investor OF7: "I was in a big audit firm for six years. I'm also a chartered accountant. So, moving out of the audit firm, because - to be honest with you, I wasn't really helping anybody but myself there. I moved to the financial industry the past eight years or so. And, it's been a blessing… the real drive for me, to be honest with you, is helping people. And that's exactly what I do with my clients, regardless of experience, background. That's why I said in the – that's why I was [inaudible] enthusiastic when you said that you don't have experience in this."
• The AM said to Investor OF1: "He's [the analyst] going to be calling you and showing you everything he knows which is quite a lot. He – he's a certified – he'll tell you all his certifications… He actually trained most - - - of our newbies, basically in terms of understanding Forex a couple of years ago. So you understand he's – he's up there."
434 It is also clear from the evidence that many of the investors considered the AMs to be experts in CFDs, FX contracts and operational and risk factors associated therewith.
435 Sixth, AMs emphasised that the relevant company was based in Australia, to make it seem more trustworthy. Further, AMs emphasised that the relevant company was regulated, in order to foster trust.
436 Seventh, AMs emphasised to investors that their money was safe, including by saying that "no one can touch" their money and similar phrases. In this regard:
(a) Mr Cecilio gave evidence that to get high deposits, he would say things like:
"It's still your money and you can withdraw it anytime you want. You don't have anything to worry about because we have a segregated account in the Commonwealth Bank. No one can touch your money and you can withdraw the money any time that you want."
(b) OT: the phrase (or similar) was said to each of investor OT8, investor OT3, investor OT9:
• An AM said to Investor OT9: "One thing that you feel comfortable here in our company, it's because the money that you will going to deposit, or the money that you will going to transfer on your trading account, it will not go directly with our company. It means we are not the one who will going to handle your money. Okay? It will go directly with a trust account that we have in Commonwealth Bank. It means [Investor] that it's a segregated account by the client, so it means no one can touch your money, no one can get your money, only you, because you are the boss of your account. While you're doing the education, while you're waiting for your senior account manager, the money, it will stay on the trust account. And, say for example you're confident enough to trade, you're confident enough to trade, or you're already doing the trading, but it's that time that you will going to use the money that you're about to transfer on your trading account that will stay on the trust account in Commonwealth Bank. That's how our company works with our valued clients, because we wanted to make sure that each and every – yes. We want to make sure that we're working clean, because we are under the regulation of ASIC." Investor OT9 replied, "I'm very happy with that."
437 Eighth, AMs often asked investors to "trust" them, implied that an investor should trust them, or asked an investor whether or not they trusted them:
(a) AGM: investor AGM13 (also investor AGM5, investor AGM11):
• An AM said to Investor AGM13: "If you trust me why you not depositing another 10,000, [Investor]?"
(b) OT: investor OT11 (2 calls), investor OT6 (on three calls), investor OT12 (17 calls) (also investor OT1, investor OT3 (2 calls), investor OT8 (2 calls)):
• AMs said to Investor OT6, on two occasions: "I've got your back".
• An AM said to Investor OT11: "[Y]ou need to understand that first of all, if you will not trust me, you will lose money by not making money."
• An AM to Investor OT12: "Just trust me on this one, okay." Investor OT12 responded, "Well, I have so far haven't I?" The AM replied, "Yes, I know you trust me, that's why I'm here. I'm trying to help you out."
(c) Ozifin: investor OF3 (4 calls), investor OF2 (3 calls) (also investor OF1, investor OF12 (2 calls), investor OF9, investor OF4):
• An AM to Investor OF3: "[Y]ou're going to understand that I am a person to trust. Because my trust can correspond, correlate, to money. Okay?"
• An AM to Investor OF2: "Thank you - thank you for trusting me. Thank you. But I want you to trust also the company. As I said, we are trading under regulation. So, you already receive the money back into your account…"
(d) Additionally, a number of OT AMs asked investors to give them "one percent" of their trust, sometimes, in order that they could "earn" the other "99 percent", usually in instances where investors had expressed uncertainty or a lack of trust in the AM. This was said to investor OT7 and investor OT8 (also investor OT15 (2 calls), investor OT12 (4 calls)):
• An AM said to Investor OT7: "Who told you that you are gonna lose that money that you are gonna transfer? No one. That's why you're making money, because we are doing excellent because all I'm asking for you is give me 1 percent of your trust with this big event. I'll show you how impressive it is."
• An AM said to Investor OT8: "I mean, our trust is not about asked, you need to work on it for you to get the trust of other people. But, one thing that I will be asking, just only give like 1 percent of your trust, then let me work on the remaining percent, and show you, prove it to you, what you can do on it. Okay?"
438 Further, the fact that many investors showed their bank details to their AMs reveals that the clients trusted them, and also that they were in a position of vulnerability.
439 Ninth, the purpose of the defendants in encouraging deposits and trades is well apparent having regard to the following matters.
440 Mr Cecilio gave evidence that:
(a) "[An OT Capital operational manager] told me that our goal in cold leads was to have the people that we called sign up for a trading account and make a deposit. Our target in cold leads was four deposits of a minimum of AUD250. We encouraged clients to deposit more than that."
(b) "They said that we would be wasting our time if we were talking to a client when it is not about getting a deposit."
(c) "In hot leads, we also had to reach 5 to 12 deposits in one month otherwise we would be sent back to cold leads. The minimum number kept moving up."
(d) "Around the room there were at least three television screens. The screens would show the names of the 5 to 10 [AMs] who had got the most deposits during the shift, ranked according to their total deposits. The screen would update during the day when new deposits were made. The bigger the total deposits that were made, the bigger the [AM's] name would appear on the screen. During the shift, [an OT Capital senior AM] would also shout about big deposits on the floor when a name came onto the screen. He would say something like "good job" and "more deposits!""
(e) "In the huddle, our team leader would tell us things like events in the market that we should use to get client deposits, which I discuss below. During the huddle, [an OT Capital senior AM] would yell "kill your customers". I understood this to mean that we should get them to deposit more with the intention that they would lose their money on the trading."
(f) "It was clear to me from this training and guidance that the main goal of our conversations with clients was to get them to deposit as much money as possible into their trading accounts and to open as many positions as possible. I was told this during training and it was frequently repeated by the senior account managers and team leaders."
(g) "The goal of seeing the client's bank account was to work out how much money they had, so that we could encourage them to deposit that money into their trading account."
(h) "I would tell them about an event I had found on the internet and use that event to persuade the client to deposit money into their trading account so they could participate in the event. I did not understand the events or how they affected the financial market. I was only mentioning the events to the clients as a reason why they should deposit money."
(i) "The goal of leaving open a negative position was for the client to lose their money."
(j) "I was not told directly that one of our purposes was to get the client to lose their money. But I concluded that from my experience as an AM and from the instructions that I have described ... Also, [an OT Capital senior AM] and the other senior [AMs] and team leaders said that a client should be "killed". I was often told by the senior account managers about the clients: "You kill them or someone else will kill them"."
441 Further, it is apparent from the relevant incentives as elaborated on below.
442 Further, it is apparent from the evidence of Mr Blundell, who said that the effect of the "strategies" the clients were given was that they were highly likely to lose their money, as they did.
443 Further, each of the defendants encouraged inexperienced, vulnerable investors with a relatively small amount of funds available to trade in high volumes. In this regard:
(a) OT investors, like investor OT7, started trading in very high volumes almost immediately; so too did investor OT8, investor OT1, investor OT6, investor OT10, investor OT15, and investor OT14.
(b) The following investors traded in volumes of 5 or more:
(xxviii) AGM: investor AGM2 (using personal and superfund accounts), investor AGM8, investor AGM7, investor AGM3, investor AGM10, investor AGM1.
(xxix) OT: investor OT7, investor OT8, investor OT1, investor OT6, investor OT10, investor OT15, investor OT14, investor OT11 (AUD account), investor OT9 (USD account), investor OT12, investor OT13, investor OT2.
(xxx) Ozifin: investor OF9, investor OF3, investor OF1, investor OF11, investor OF2, investor OF8, investor OF12, investor OF4.
444 Further, the commissions and incentives paid to AMs to encourage deposits placed them in a situation of direct conflict with clients. In this regard:
(a) In respect of AGM, Mr Ashkenazi agreed that commissions were paid to Falcon employees.
(b) In respect of OT, the commissions were based on the number and amount of deposits their clients made. Mr Cecilio said:
(xxxi) "I applied because a friend told me IBD Marketing was hiring and that the salary was quite big compared to other call centres that I had worked in."
(xxxii) "While I was an account manager I was given a salary of about 25,000 pesos per month, including overtime. I also received incentive payments on the 20th of each month for the month before. The incentive payments applied once we reached deposits for the month of US$10,000. For every US dollar deposited by our clients over that amount, we would get roughly half that amount in pesos. For example, if our clients deposited US$50,000, we would receive 25,000 pesos as an incentive payment. Incentives were paid in cash."
(xxxiii) "As part of the incentives for teams to reach their deposit targets, there were "power hours". During power hours, any account manager who reached total client deposits of US$10,000 within three hours would get 10,000 pesos cash. Each week there would be 5 to 10 power hours."
445 Generally, as a result of this system of conduct and pattern of behaviour, in less than a year, Australian investors lost millions of dollars. As at 1 September 2018, OT clients had lost over AUD 18 million. In the period in and after October 2017, Ozifin clients had lost over AUD 11 million. From October 2017 to 18 September 2018, AGM clients had lost over AUD 1 million.
446 In my view, ASIC has made out its case on this aspect. But Ozifin has challenged ASIC's system of conduct case. It says that none of the features of the system pleaded by ASIC constitute an allegation that the clients of Ozifin suffered any vulnerability or disadvantage, other than the individual examples of vulnerability or disadvantage that are described elsewhere, whether to the knowledge of Ozifin or otherwise. It also makes some other points.
447 First, it says that it is notable that the nature of the investment representations made to each of investors OF1 to OF12 varies. In this regard, it says that it is difficult to see how even in respect of investors OF1 to OF12 and treating them as a class that the evidence of the making of the specific investment representations made to a specific investor evidences a system of conduct or pattern of behaviour on the part of Ozifin given the variety and disparity of the individual representations made. In any event, it says that it is not known whether the investment representations were made to any of the other relevant clients. For that reason, it says that there is no basis to make a finding that the specific investment representations found to be made to individual investors evidence a feature of a system of conduct or pattern of behaviour in respect of a class of individuals which include the other relevant clients.
448 Second, as to the feature that Ozifin engaged with inexperienced, vulnerable investors with a relatively small amount of funds available to trade in high volumes, it says that it is not immediately apparent that the allegation of inexperience, or possession of only a small amount of funds, would amount to a relevant disadvantage of the sort contemplated in the authorities. It says that inexperience and possession of only a small amount of funds would not, of themselves, amount to a relevant disadvantage.
449 Third, in respect of each of the investors in respect of whom ASIC alleges individual unconscionable conduct on the part of Ozifin being investors OF1 to OF5, OF8 to OF10 and OF12, it is conceded that each of them suffered from a relevant vulnerability or disadvantage, although the precise nature and circumstances of each of those investors varied from case to case. But it says that even among investors OF1 to OF5, OF8 to OF10 and OF12 it is difficult to discern a common vulnerability.
450 Fourth, it says that I do not have any direct evidence whatsoever in respect of the other relevant clients. It says that it is not explained how or why any of investors OF1 to OF12 are indirectly representative of, or indicative of, a system of conduct or pattern of behaviour by which Ozifin engaged with vulnerable investors nor the nature of the vulnerability. Further, it says that if ASIC seeks to rely on Ozifin's dealings with any of investors OF1 to OF12 for a tendency purpose, then ASIC should have served a tendency notice in accordance with s 97 of the Evidence Act 1995 (Cth) which ASIC did not do.
451 Fifth, it says that ASIC has had the benefit of the transcripts of all calls between the relevant clients and Ozifin. Accordingly it says that investors OF1 to OF12 may represent the totality of the investors that ASIC was able to identify who displayed a relevant vulnerability, and who communicated that vulnerability to Ozifin. Further, it says that ASIC has only adduced evidence of conduct of Ozifin in relation to 12 investors out of more than 5,300 investors. And ASIC has not sought to explain why it chose those 12 investors to give evidence. It says that I am in no position to infer that the 12 investors chosen are in any way representative of the other investors with Ozifin.
452 Sixth, it says that to the extent that ASIC refers to similarities in business practices and in key documents for each of the defendants, such evidence is tendency evidence and unusual tendency evidence at that, in that it appears that it is being said that Ozifin had a tendency to behave in a particular way by reference to the conduct of AGM and OT who behaved in a particular way. It says that in order to be able to rely on evidence in this way, ASIC was required to give notice under s 97 of the Evidence Act. Further and in any case, it says that the evidence of the use of scripts by AGM and OT does not lead to a finding either that Ozifin employed such scripts, nor as to the content of those scripts, if scripts were used.
453 Seventh, it says that there is no probative evidence to establish that the relevant clients, as a class, suffered from a relevant disadvantage. In particular, there is no evidence of any scripts used by any Ozifin AMs (or other employees) in dealing with the relevant clients. Nor is there any evidence from any AM (or other employee) engaged by Ozifin to deal with the relevant clients. In those circumstances, it says that the features alleged by ASIC are insufficient to support a finding that Ozifin employed an unconscionable system in respect to all relevant clients. Accordingly it says that ASIC's systems case against Ozifin must fail.
454 I would reject Ozifin's submissions.
455 First, Ozifin submits that the evidence adduced by ASIC does not establish a system of conduct, on the basis that I am in no position to infer that the 12 Ozifin investors chosen by ASIC were in any way representative of the balance or a not-insignificant proportion of Ozifin's other investors. In that respect, it points to ASIC's failure to adduce evidence of the basis upon which those 12 investors were chosen. But in my view such an exercise is not necessary in a case such as this where ASIC does not rely on any particular attribute of the people to whom the system of conduct was directed. The targeting of disadvantaged people does not form part of the system of conduct which ASIC alleges. Indeed, the evidence establishes that AGM, OT and Ozifin were entirely undiscriminating as to who they accepted as their clients. That lack of discrimination was itself an aspect of the system of conduct engaged in that was in all the circumstances unconscionable.
456 Second, Ozifin says that given that ASIC has had the benefit of the transcripts of all calls between the relevant clients and Ozifin, investors OF1 to OF12 may represent the totality of the investors that ASIC was able to identify who displayed a relevant vulnerability, and who communicated that vulnerability to Ozifin. But first, there is no evidence in support of the assertion that ASIC has had the benefit of the transcripts of all calls between the relevant clients and Ozifin. Apparently it has not. Further, whilst ASIC has had access to a large proportion of the recordings of calls between Ozifin and the relevant clients, the process of extracting and transcribing all the calls to which it has had access would have been unreasonably costly and time consuming. Only a limited number of calls were therefore transcribed by ASIC.
457 Third, the evidence adduced by ASIC has not been adduced as tendency evidence as such.
458 Fourth, Ozifin says that none of the features of the system alleged by ASIC constitute an allegation that the clients of Ozifin suffered any vulnerability or disadvantage. But ASIC is not required to establish that the clients of Ozifin, or any of them, suffered from any special disadvantage. So much is made express by s 12CB(4)(a) of the ASIC Act. ASIC is not required to establish that any investor suffered from a special disadvantage, although in other cases ASIC may have suggested or conceded as much. It is not the case that ASIC is required to establish that an identified person or class of people suffered from a special disadvantage which meant that they were incapable of making a judgment as to their own best interests and unfair or unconscientious advantage was taken of the opportunity created by that disadvantage. Moreover, in my view, none of the decisions cited by Ozifin support the proposition that ASIC must, in order to establish that the pleaded system of conduct was unconscionable, identify a person to whom the system of conduct was directed and who suffered any vulnerability or disadvantage. Of course, in other cases ASIC may have sought to so prove. But the statute does not so dictate in all cases.
459 Finally, OT has made similar points which I would also reject.
460 In summary, ASIC has made out its system of conduct case and pattern of behaviour case against each of AGM, OT and Ozifin. The necessary extrapolation from the sample set of investors is well justified. The underlying systems and approach used by each defendant had common elements across all defendants and had common features across investors of and for each particular defendant.
(h) Liability of AGM for conduct of OT and Ozifin
461 In my view the conduct undertaken by OT and Ozifin that constitutes the investor contraventions that I have discussed earlier can also be considered to be conduct undertaken by those defendants on behalf of AGM. But I would not accept ASIC's case that AGM was knowingly involved in, or aided, abetted, counselled or procured, the investor contraventions by OT and Ozifin.
462 Let me address the agency question.
Agency allegations
463 Sections 769B(1)(a) and (b) of the Corporations Act and s 12GH(2)(a) and (b) of the ASIC Act establish the relevant agency. Those provisions provide that conduct engaged in by an agent of a body corporate within the scope of the person's actual or apparent authority or by any other person with the consent or agreement (whether express or implied) of a director or employee of the body, whether the giving of the consent or agreement is within the scope of the actual or apparent authority of the director, is taken for the purposes of the provisions of Chapter 7 of the Corporations Act and Part 2, Division 2 of the ASIC Act, to have been engaged in also by the body corporate. Both limbs of those deeming provisions are applicable. OT and Ozifin when engaging in the conduct that gave rise to the investor contraventions were acting as agents of AGM and within their apparent authority.
464 Now a relationship said to give rise to an agency must be considered and characterised in its commercial context. Whilst the relationship here is one established by contract, the question whether a particular relationship is one of agency, and in particular whether the parties have consented to such a relationship, is to be determined objectively. Moreover, it is not determinative of the question that the parties to the relevant agreement said to give rise to the relationship of agency have so described it, or indeed whether they have sought to disclaim it.
465 Consideration must be given to the scope of the actual or apparent authority granted to the agent. AGM denies responsibility for any personal financial advice given by AMs engaged by or on behalf of Falcon, OT or Ozifin on the basis that AGM did not authorise such conduct.
466 Now mere prohibition of misconduct does not relieve the principal of responsibility. Further, in determining whether a particular act falls within the authority of an agent, it is not necessary that the particular act should have been authorised.
467 Further, whether the particular act of the agent fell within the scope of its actual or apparent authority depends on whether the principal put the agent in the principal's place to do a class of acts in the principal's absence. The consequences of that characterisation are that the agent is necessarily left to determine, according to the circumstances that arise, when an act of that class is to be done, and is trusted to determine the manner in which it is to be done. And the principal is therefore answerable for the wrong of the agent, provided that act was done, not from any caprice of the agent, but in the course of the agency.
468 In Australasian Brokerage Ltd v Australian and New Zealand Banking Corporation Limited (1934) 52 CLR 430 at 451 to 452 per Dixon, Evatt and McTiernan JJ, the High Court cited with approval the well known advice of the Privy Council (Mackay v Commercial Bank of New Brunswick (1874) LR 5 PC 394 at 410):
It is seldom possible to prove that the fraudulent act complained of was committed by the express authority of the principal, or that he gave his agent general authority to commit wrongs or frauds. Indeed it may be generally assumed that, in mercantile transactions, principals do not authorize their agents to act wrongfully, and consequently that frauds are beyond 'the scope of the agent's authority' in the narrowest sense of which the expression admits. But so narrow a sense would have the effect of enabling principals largely to avail themselves of the frauds of their agents, without suffering losses or incurring liabilities on account of them, and would be opposed as much to justice as to authority. A wider construction has been put upon the words. Principals have been held liable for frauds when it has not been proved that they authorised the particular fraud complained of or gave a general authority to commit frauds…
469 Accordingly, expressions such as "acting within the scope of an agency" should be construed liberally. And more particularly is that so in the context of investor protection legislation that renders it sufficient that the act complained of falls within the agent's apparent authority.
470 Further, whether an agent is determined to be acting within its apparent authority is to be determined from the perspective of the third party who engages with that agent.
471 In my view, when undertaking the conduct that constituted the investor contraventions, OT and Ozifin were acting as the agents of AGM within the meaning of s 769B(1)(a) and (b) of the Corporations Act and s 12GH(2)(a) and (b) of the ASIC Act.
472 In summary, it seems well apparent to me that:
(a) AGM and OT and Ozifin who were authorised representatives consented to an agency relationship;
(b) AGM had provided authority to them to act on its behalf; and
(c) the conduct of OT and Ozifin that constituted the investor contraventions was within the actual or apparent authority of AGM.
473 First, each of the CAR agreements stated explicitly that AGM was appointing OT and Ozifin as its authorised representatives pursuant to s 916A. Section 916A(1) states that a financial services licensee, which AGM was at the time that it entered the CAR agreements, may give a person a written notice "authorising the person, for the purposes of [Chapter 7 of the Corporations Act], to provide a specific financial service or services on behalf of the licensee." (emphasis added.)
474 The CAR agreements constituted notices appointing OT and Ozifin for the purposes of s916A(1). In order to be effective, those notices are to be construed as appointing them to provide financial services on behalf of AGM. Were it otherwise, those notices would be of no effect, and OT and Ozifin would not have been entitled to provide any financial services in Australia. Once appointed, the entitlement of OT and Ozifin to provide financial services in Australia arose under s 911B(1)(b).
475 Second, apart from a brief period following the execution of the CAR agreements, the CFDs and FX contracts issued to the clients of OT and Ozifin were issued by AGM. This is apparent from consideration of the PDSs that were available on the websites of OT and Ozifin, which in addition to identifying AGM as the issuer of the products, identified OT and Ozifin as representatives of the AGM.
476 Third, both the conduct of OT and Ozifin and the consistent terms of the PDSs published by OT and Ozifin entail that the statements in the CAR agreements that those agreements did not give rise to an agency relationship should be given little weight. They did not reflect the reality or substance of the relationship.
477 Generally, the conduct of OT and Ozifin that gave rise to the investor contraventions was conduct that occurred within the scope of the authority afforded to OT and Ozifin by AGM. Properly understood, the class of acts that AGM was putting OT and Ozifin in a position to undertake was the act of dealing in financial products on behalf of AGM, and the giving of financial product advice in relation to those products.
478 Moreover, the conduct that constituted the investor contraventions was within the actual authority of OT and Ozifin. Alternatively, the conduct occurred within their apparent authority.
479 In my view there is little doubt that ASIC's agency case is made out.
Knowing involvement allegations
480 It is necessary to establish actual and not constructive knowledge of the essential elements of the relevant contravention. But actual knowledge can be inferred in circumstances where the combination of suspicious circumstances and a failure to make enquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. But whether such an inference is open will depend on the circumstances in which the person failed to make the necessary enquiries. That includes consideration of whether the person, by reason of their position, or the system in which they operated had some responsibility for the supervision of those undertaking the contravening conduct or had some form of reporting obligation or to answer enquiries regarding that conduct.
481 On balance I am not prepared to infer that AGM had actual knowledge of the essential elements of each of the investor contraventions.
482 Now ASIC has submitted that in the case of conduct by the AMs engaged by Ozifin, AGM was aware as early as 15 November 2017 from its review of several conversations between AMs engaged by Ozifin and its clients that those AMs:
(a) failed to provide any balance in the conversations with clients between risk warning and potential profit;
(b) were suggesting trading and advising clients to close trades; and
(c) were dealing with clients of Ozifin who did not understand the operation of the products in relation to which the AMs were providing advice.
483 The limited remedial action that AGM apparently took having become aware particularly of some of the conduct concerning trading was to insist that Ozifin AMs should state that the information provided to the client was coming from Trading Central, and that the AM was going to tell the client what was in that report. AGM apparently considered that by providing that disclaimer, Ozifin would not be providing personal advice. But that view, communicated to Ozifin, reflected a misunderstanding of the difference between general and personal advice.
484 Further, by February 2018, compliance officers engaged by AGM had expressed concerns to Ozifin that its AMs did not provide sufficient balance in their conversations as they barely mentioned risks when they talked to clients unless clients asked about risk.
485 ASIC says that despite those concerns, there is no evidence that AGM increased the number of Ozifin calls that it monitored, or that it took any additional steps to determine whether Ozifin continued to engage in the conduct about which AGM had previously identified, and expressed concern.
486 Now in the circumstances, I am prepared to infer that the review by AGM of a limited number of telephone calls made by Ozifin AMs made AGM aware to some extent of the misconduct of those managers. Moreover, AGM's review must have raised suspicions as to the misconduct, yet it made the decision not to make inquiries to remove those suspicions despite having an obligation to ensure that its representatives complied with the financial services laws. But I do not consider that in such circumstances, AGM had actual knowledge of the constituent elements of the investor contraventions referable to Ozifin's conduct. I have also reached the same conclusion in respect of OT's conduct.
Compliance Contraventions
487 ASIC says that AGM failed to take the steps necessary to discharge its obligations under s 912A(1)(a) to do all things necessary to ensure that the financial services it provided under its AFSL were provided efficiently, honestly and fairly, and under various other provisions of ss 912A(1) and 961L to do those things necessary to properly supervise its representatives, which included both Ozifin and OT and the AMs engaged by AGM, Ozifin and OT.
488 ASIC has made out its case on this aspect. In my view the evidence discloses the following.
489 First, the training provided to AMs was inadequate, including in relation to the operation of CFDs and FX contracts. Whilst there was apparently some initial effort on the part of AGM to ensure that AMs engaged on behalf of OT and Ozifin received the sort of training that Mr Blundell identified would have been adequate, there is no evidence that:
(a) AMs engaged on behalf of OT or Ozifin received any such training; or
(b) AGM took any steps to follow up its initial admonition that such training should occur.
490 Second, AGM ought to have ensured that the AMs engaged by or on behalf of OT and Ozifin had no, or limited access to personal information of their clients, so as to reduce the prospect of providing personal financial advice.
491 Third, AGM ought to have reviewed at least 2% of the calls made by AMs to clients of AGM, OT and Ozifin. Now there is no direct evidence of the total number of telephone calls made to clients of AGM, OT and Ozifin in the period that they were operating, but I can be satisfied that it was a very substantial volume.
492 But in any event, the conduct of AGM's AMs, and its earlier defence of this proceeding, reveals that AGM did not regard the conduct its AMs engaged in to have involved any misconduct. Therefore, even if an employee or officer of AGM had listened to every call made by its representatives, it would likely have done nothing in response to their misconduct. Indeed, so much is evident from the response of AGM's compliance staff to the early conduct of Ozifin's AMs. AGM expressed no concern that Ozifin AMs were passing on and recommending "signals" to their clients, but simply that they were not identifying the source of those "reports". That approach manifests the deficiencies in AGM's compliance system, and in particular the training provided to the compliance staff tasked with listening to the calls made by AMs.
493 Fourth, AGM outsourced to the AMs certain key functions for providing financial product advice to AGM clients. But the responsibility for ensuring that the advice was provided in a fair, honest and efficient manner remained with AGM. AGM could outsource the function but not its responsibility under its AFSL. Moreover, prior to the provision of any services by Ozifin, OT or the AMs on AGM's behalf, AGM should have undertaken due diligence on all of the entities that provided the AMs. The due diligence should have confirmed that Ozifin and OT and all of the AMs had sufficient resources to provide the outsourced functions, had the requisite knowledge of Australian financial services laws and understood the obligations they were being given as a representative of an AFSL holder. AGM should have been confident that OT, Ozifin and all AMs could have provided the services fairly, honestly and efficiently, in accordance with AGM's obligations under its AFSL, prior to any services being provided.
494 AGM should have ensured that prior to any services being provided by the AMs, adequate training had been undertaken by all AMs. AGM should have ensured the training was completed to meet the obligations of its AFSL. The AMs should have completed relevant training courses for the provision of general advice to retail clients. At a minimum, OT, Ozifin and all AMs should have completed a course regarding their general obligations for providing financial product advice and a course regarding the provision of derivative products. If they were also providing advice on FX products, then a course regarding FX ought to have been completed. AGM should have ensured that OT, Ozifin and all AMs had completed the courses prior to engaging them to provide services to AGM clients.
495 Fifth, AGM should have had in place a system for monitoring the activities of Ozifin, OT, all AMs, Falcon and IBD, when providing financial product advice. As I have indicated, this system should have included the regular monitoring and review of telephone conversations, emails, chat messages and any other communications between the AMs and the clients.
496 Sixth, AGM should have established processes for the escalation by Ozifin, OT and the AMs to AGM of any possible breaches of the law, or if circumstances arose where the services were not being provided in a fair, honest and efficient manner. The processes should have clearly stated to whom within AGM issues should have been escalated by Ozifin, OT, Falcon and IBD. The processes should then have stated to whom at such entities AGM should have gone in order to rectify any issues in a timely manner. The various agreements between AGM, Ozifin, OT, Falcon and IBD providing the AMs should have clearly detailed a process for the AMs to be instructed to stop providing services on behalf of AGM should a matter have arisen where the AMs were not providing advice in a fair, efficient and honest manner.
497 Seventh, AGM should have reviewed all marketing material that was being distributed by the said entities on their behalf to ensure that there was no false or misleading information contained within the material. Further, there should have been a clear process in place to ensure that all marketing material distributed by Ozifin, OT, Falcon and IBD was passed to AGM for compliance review and approval.
498 Further, the compliance departments of AGM and Ozifin, OT, Falcon and IBD should have ensured that they had a close working relationship. Regular meetings across all entities should have ensured the timely sharing of information and the timely ability to rectify any issues regarding the provision of the financial advice.
499 Eighth, steps should have been taken by AGM to ensure that there was not, by reason of the terms upon which Falcon was engaged to provide account management services to the clients of AGM and the people engaged by or on behalf of IBD were compensated, a conflict of interest that arose in relation to the activities of the AMs engaged by Falcon and/or IBD on behalf of AGM in the provision of the financial services on behalf of AGM.
500 Prior to the commencement of services by Falcon and IBD, AGM should have thoroughly reviewed the terms of the agreement(s) regarding the services, such as the remuneration to be paid by AGM. It should also have reviewed the employment contracts signed by the AMs acting on their behalf. As part of the due diligence process, AGM should have requested to see the conflicts of interest registers of Falcon and IBD to ensure they existed and had been completed.
501 Further, a key conflict of interest that arose when AMs were providing advice related to the remuneration the AMs received. If an AM was to be remunerated on the basis of how much money a client deposited, how many trades they placed or how often they traded, this could give rise to a conflict of interest. The AM could be encouraging the client to engage in greater activity than the client would have normally wanted to, with the AM knowing that he would earn more money as a result. A review of the AM contracts by AGM would have highlighted this.
502 Further, AGM should have had access to the personal trading account statements of all AMs, and any proprietary trading accounts held by Falcon, IBD, Ozifin and OT. These statements should then have been reviewed against client trades to ensure that no-one was placing trades ahead of a client, namely, "front-running", and that the accounts were being managed appropriately.
503 Further, the terms of various agreements regarding the services to be provided should have been reviewed to ensure that there were no terms that prioritised the interests of Falcon and IBD ahead of clients. For example, it would have been in the interests of Falcon and IBD to have the clients trade more or deposit a certain amount of money to receive additional benefits from AGM.
504 In summary, in my view the evidence reveals numerous systemic deficiencies in the operations of AGM, Ozifin and OT which separately or cumulatively well justify ASIC's case of a breach by AGM of s 912A(1).
505 Now in reaching this conclusion I have applied the following principles concerning s 912A(1)(a) elucidated in Australian Securities and Investments Commission v Camelot Derivatives Pty Ltd (in liq) (2012) 88 ACSR 206 at [69] per Foster J which I restated in Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147 at [2347] to [2350].
506 First, the words "efficiently, honestly and fairly" are to be read as a compendious indication requiring a licensee to go about their duties efficiently having regard to the dictates of honesty and fairness, honestly having regard to the dictates of efficiency and fairness, and fairly having regard to the dictates of efficiency and honesty.
507 Second, the words "efficiently, honestly and fairly" connote a requirement of competence in providing advice and in complying with relevant statutory obligations. They also connote an element not just of even handedness in dealing with clients but a less readily defined concept of sound ethical values and judgment in matters relevant to a client's affairs. I have emphasised here the notion of connotation rather than denotation to make the obvious point that the boundaries and content of the phrase or its various elements are incapable of clear or exhaustive definition.
508 Third, the word "efficient" refers to a person who performs his duties efficiently, meaning the person is adequate in performance, produces the desired effect, is capable, competent and adequate. Inefficiency may be established by demonstrating that the performance of a licensee's functions falls short of the reasonable standard of performance by a dealer that the public is entitled to expect.
509 Fourth, it is not necessary to establish dishonesty in the criminal sense. The word "honestly" may comprehend conduct which is not criminal but which is morally wrong in a commercial sense.
510 Fifth, the word "honestly" when used in conjunction with the word "fairly" tends to give the flavour of a person who not only is not dishonest, but also a person who is ethically sound.
511 These observations are consistent with the express object of Ch 7 of the Corporations Act set out in s 760A as follows:
The main object of this Chapter is to promote:
(a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and
(b) fairness, honesty and professionalism by those who provide financial services; and
(c) fair, orderly and transparent markets for financial products; and
(d) the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities.
512 Further, it is also not in doubt that a contravention of the "efficiently, honestly and fairly" standard does not require a contravention or breach of a separately existing legal duty or obligation, whether statutory, fiduciary, common law or otherwise. The statutory standard itself is the source of the obligation.
513 On the question of the proper construction of s 912A(1)(a), my attention has been drawn to various observations made by the Full Court in Australian Securities and Investments Commission v Westpac Securities Administration Ltd that I discussed earlier in the context of financial product advice. But several points should be noted.
514 First, before the trial judge, Westpac did not question the statements of principle propounded by ASIC which in essence applied the principles discussed by Foster J.
515 Second, ASIC's three appeal grounds in that matter rather concerned s 766B(3); ASIC's notice of appeal was tendered before me in order to properly identify the s 766B(3) points that had been raised and that I have discussed earlier in my reasons. Further, to the extent that s 912A(1)(a) was raised by Westpac on any cross-appeal, as I say the parties' positions on construction seem to have been in substance as before the trial judge.
516 Third, some members of the Full Court queried whether the phrase "efficiently, honestly and fairly" should be read compendiously (O'Bryan J at [422] to [426]). But as this was not decided by at least a majority, I am bound to apply the single judge decisions unless I consider them to be plainly wrong, which I do not.
517 Fourth, Allsop CJ said (at [172]):
Words such as "efficiently", "honestly" and "fairly" and a composite or compendious phrase or expression such as "efficiently, honestly and fairly" do not admit of comprehensive definition. Certainly a degree of articulation of instances or examples of conduct failing to satisfy the phrase will be helpful and of guidance, as will an articulation or description of the norms involved.
518 With respect, I agree with that statement. He then went on to say (at [173]):
The provision is part of the statute's legislative policy to require social and commercial norms or standards of behaviour to be adhered to. The rule in the section is directed to a social and commercial norm, expressed as an abstraction, but nevertheless an abstraction to be directed to the "infinite variety of human conduct revealed by the evidence in one case after another." (See Gummow WMC, "The Common Law and Statute" in Change and Continuity: Statute, Equity and Federalism (Oxford University Press, 1999) at 18–19.)
519 Now neither Jagot J nor O'Bryan J went so far. With respect, I prefer to view s 912A(1)(a) as enshrining a statutory norm to be read conformably with s 760A and the other provisions of the Corporations Act and the ASIC Act, of course to be applied to an infinite variety of corporate delinquency and self-interested commerciality. But to say this is not to deny that it may implicitly pick up some aspects of what some might identify as social and commercial norms, although reasonable minds might differ as to where to ground such an otherwise free-floating concept.
520 Let me say something about "fairly". Judges applying s 912A(1)(a) have usually not sought to define "fairly" except to explain its structural setting in the composite phrase. This is unsurprising. And of course no dictionary definition could be adequate for the task given the intrinsic circularity with such definitions. For example, take the Macquarie Dictionary definition. First, the concept of "free from injustice" is question begging and conclusionary. It adds little to elucidate "fairly". Second, the phase "that which is legitimately sought, pursued, done, given etc." is also question begging. No content is given to what is legitimate. There is irremediable circularity unless legitimacy simply incorporates other statutory or common law/equitable normative standards of behaviour. Third, the phrase "proper under the rules" is also devoid of content unless "proper" means "in compliance with". Fourth, if one construes "fair" to include "free from dishonesty", then this all just suggests that the phrase "efficiently, honestly and fairly" should be read compendiously.
521 Could you convincingly define "fairly" by what it lacks? To say that fairly means free from bias, free from dishonesty, etc, is to stipulate necessary negative conditions. And to do so may give you some boundary conditions. But no positive conditions are stipulated. No content is given, let alone sufficient conditions. But to stipulate negative conditions may not be unhelpful.
522 Should "fairly" only be viewed from the perspective of an investor, borrower or other person interacting with the licensee? No. Fairness is to be judged having regard to the interests of both parties. Other statutory provisions may be designed to tilt the scales, but not s 912A(1)(a) and the statutory composite norm it enshrines. Disproportionate emphasis should not be given to what is the third part of a composite phrase in a manner which creates unsatisfactory asymmetry in favour of those with whom the licensee deals. This section is not a back door into an "act in the [best] interests of" obligation. Other specific provisions of the Act nicely fulfil that role. There is nothing to indicate that s 912A(1)(a) was to have that bias.
523 Finally, it ought not to be forgotten that s 912A(1)(a) is principally a licensee disciplinary command such that a breach thereof might sound in revocation of the AFSL, conditions being imposed on the AFSL or a pecuniary penalty being imposed. But that context gives rise to three points.
524 First, in such a context one would expect that the normative standard would be suitably vague and flexible. This is common when dealing with the stipulated standard of behaviour expected of licensees or regulated persons in a wide variety of contexts. But that does not invite conceptual inflation.
525 Second, one is looking at the licensee's behaviour more generally rather than with regard to any one person. After all, s 912A(1)(a) is expressed:
(1) A financial services licensee must:
(a) do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; …
526 The language is in the generality of "the financial services covered by the licence".
527 Third, and relatedly, one is not at all concerned to ascertain the boundaries and content of a cause of action or an element thereof sounding in damages in favour of an individual (cf claims for misleading or deceptive conduct or statutory unconscionability).
528 In summary, in my view it is not justifiable to take one word from a composite phrase, artificially elevate its significance and read it in a manner asymmetrically in favour of an investor.
529 As I say, on the evidence which I have set out earlier, AGM contravened s 912A(1)(a).
530 Further, in my view ASIC has made out its case against AGM concerning the other compliance contraventions dealing with s 912A(1) and s 961L as it concerns the conduct of the AMs, OT and Ozifin.
Conclusion
531 I am satisfied that the defendants engaged in each of the contraventions alleged by ASIC that I have identified in these reasons. I propose to make the declarations sought by ASIC in relation to each of those contraventions.
532 First, the questions raised by the declarations are real and not hypothetical or theoretical. Further, each of the proposed declarations discloses the basis upon which the conduct of the defendants has contravened the relevant provisions of the Corporations Act and the ASIC Act.
533 Second, ASIC had a real interest in raising the questions that are to be the subject of the declarations. As a public regulator, it is in the interests of ASIC to seek the declarations. The declarations will serve to record my disapproval of the contravening conduct and should also assist in achieving the necessary general deterrence.
534 Third, at least two of the defendants have been proper contradictors.
535 I will hear further from the parties as to the precise form of the declarations and on the balance of relief including on penalties and non-party compensation orders.
I certify that the preceding five hundred and thirty-five (535) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.
Associate:
Dated: 26 February 2020
SCHEDULE OF PARTIES
VID 126 of 2018
Defendants
Sixth Defendant: AUTHENTICATE PTY LTD (ACN 600 573 233)
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federal_court_of_australia:fca/single/1998/1998fca1782
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decision
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1998-12-15 00:00:00
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Vichlenkova, Diane v Minister for Immigration & Multicultural Affairs [1998] FCA 1782
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1998/1998fca1782
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2024-09-13T22:51:38.759898+10:00
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FEDERAL COURT OF AUSTRALIA
IMMIGRATION – application for judicial review of Refugee Review Tribunal - Tribunal disbelieved applicant's account - applicant provided incredibly inconsistent information - no realistic explanation of contradiction except disbelief - futility of court's intervention - possibility of actual bias - possibility of impermissible inference
Bhiuyan v Minister for Immigration and Multicultural Affairs (Federal Court of Australia, Wilcox J, 14 October 1998), referred to
DIANE VICHLENKOVA v MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
NG 1082 of 1998
MADGWICK J
15 DECEMBER 1998
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG 1082 of 1998
BETWEEN: DIANE VICHLENKOVA
Applicant
AND: Minister for Immigration and Multicultural Affairs
Respondent
JUDGE: MADGWICK
DATE: 15 DECEMBER 1998
PLACE: SYDNEY
SHORT MINUTES OF ORDER
THE COURT ORDERS THAT:
1. The application for review will be dismissed.
2. The applicant is to pay the respondent's costs.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NG 1082 of 1998
BETWEEN: DIANE VICHLENKOVA
Applicant
AND: Minister for Immigration and Multicultural Affairs
Respondent
JUDGE: MADGWICK
DATE: 15 DECEMBER 1998
PLACE: SYDNEY
REASONS FOR JUDGMENT
(revised from transcript)
HIS HONOUR: In this matter the applicant seeks judicial review of a decision by the Refugee Review Tribunal ("the Tribunal") not to interfere with a decision by a delegate of the Minister for Immigration and Multicultural Affairs that she was not entitled to a protection visa, for the reason that she was not a refugee within the meaning of the relevant Convention.
The applicant is a woman in her early twenties whose maternal grandmother was of Chechen nationality and ethnicity and of the Muslim faith. The applicant's claim was that, following the outbreak of the civil war waged by President Yeltsin against the Chechen people in Chechenya, and the prominence of some Chechen persons in the Russian underworld, the part-Chechen ancestry of the applicant, her brother and her mother had become known to malign Russian racists. These racists had, among other things, she claimed, attacked and beaten her mother, caused the family to receive threatening letters, ransacked the family home, inscribed anti-Chechen slogans in and about their home and finally attacked her, knocking her unconscious. When she awoke the words "Chechen bitch" were written on her long coat. She also claimed that she had been dismissed from her employment as a school teacher of English on account of her perceived Chechen background.
The Tribunal disbelieved the applicant. Crucially the Tribunal member pointed to the fact that the applicant's identificatory documents all showed her nationality to be Russian. The Tribunal regarded it as quite far fetched to believe that anyone would consider her or members of her family to be Chechen, as opposed to Russian or Tartar, particularly since all her official papers showed that she was nothing other than Russian.
The second and, with respect to the Tribunal, much stronger reason for rejecting the applicant's claim, is the fact that she had stated in the interview, held by the department, that her own fiancee (with whom she had been friendly for an extended period, and in fact later married) had no idea that she had any Chechen ancestry. Yet, in contradistinction to this, she was able to state that complete strangers were able to ascertain this fact. The Tribunal member commented:
"The Tribunal finds this implausible and does not accept the applicant's explanation [presumably given in evidence before the Tribunal - nobody put the transcript in evidence before me] that there are official lists of those Chechen."
The startling significance of that apparent contradiction becomes even clearer when the chronology put forward by the applicant is considered. The attacks on her family she says began in November 1995 with an attack upon her mother, and continued until "December 1996". She married her fiancee on 10 December 1996 and had known him for about 18 months. If the attacks on the applicant and her family occurred for any reason, they must have been of devastating concern and significance to her. If they occurred for reasons perceived by the family as being to do with the family's supposed Chechen links, then that factor must have been so singular and indeed so difficult to conceal amongst members of her nuclear family, that it defies human comprehension that her fiancé would not have become aware either of the family's background or of the supposed belief of the supposed attackers.
There is, as conceded by counsel for the applicant, no possible realistic explanation for this contradiction, except that, in relation to these quite crucial matters, the applicant is not to be believed. The strength of this reasoning, furnishes, in my opinion, an exceptional instance of the futility of the court intervening, assuming that reviewable grounds for intervening might otherwise be shown.
It seems to me that there might well be grounds which, looked at alone, may justify the court in intervening. For example, in response to the applicant's claim that she was of "Caucasian" appearance and that this would aid her identification as a person who might be of Chechen descent, the Tribunal member took it upon himself to observe that:
"The applicant looks similar to any other Russian person - and is not of the physical profile as mentioned in the information cited above (being dark skinned young males) who are commonly imputed to be Chechen and against who[m] a great deal of discrimination may be suffered at the hands of Russians generally."
If the Tribunal member was applying any expertise he had as to the appearance of Russian people (and this would be something of a novel field for such expertise) he was at the very least obliged, in my opinion, to raise this suggestion with the applicant and give her the chance to respond to it. If he had some fixed view about what Russian people generally looked like, questions might arise of the possibility of actual bias.
There are other instances where, at least arguably, the Tribunal member committed the logically fallacious and legally impermissible exercise of disbelieving an assertion by the applicant that event X occurred and then proceeding, in the absence of any other evidence, to find affirmatively that event X had in fact not occurred. That is but an instance of drawing an inference which the material before the Tribunal furnished no basis for drawing: see Bhiuyan v Minister for Immigration and Multicultural Affairs (Federal Court of Australia, Wilcox J, 14 October 1998).
It is not necessary to consider these matters further or even to finality because, to my mind, it really does defy reason to suppose that there could be any result of further consideration of the matter by the Tribunal other than rejection of the applicant's claims.
Accordingly, the application for review will be dismissed and the applicant is to pay the respondent's costs.
I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick
Associate:
Dated: 15 December 1998
Counsel for the Applicant: K Duncombe
Counsel for the Respondent: A Nanson
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 15 December 1998
Date of Judgment: 15 December 1998
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federal_court_of_australia:tribunals/acompt/2006/2006acompt0009
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2006-11-24 00:00:00
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Nestle Australia Ltd [2006] ACompT 9
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/tribunals/acompt/2006/2006acompt0009
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2024-09-13T22:51:43.123475+10:00
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AUSTRALIAN COMPETITION TRIBUNAL
Nestlé Australia Ltd [2006] ACompT 9
RE: APPLICATION BY NESTLÉ AUSTRALIA LTD PURSUANT TO SECTION 101A FOR REVIEW OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION NOTICE UNDER SECTION 93(3) REGARDING NESTLÉ AUSTRALIA LTD'S EXCLUSIVE DEALING NOTIFICATION N31488
BY: NESTLÉ AUSTRALIA LTD
FILE NO 7 OF 2006
gyles J (deputy president)
24 NOVEMBER 2006
SYDNEY
IN THE AUSTRALIAN COMPETITION TRIBUNAL FILE NO 7 OF 2006
RE: APPLICATION BY NESTLÉ AUSTRALIA LTD PURSUANT TO SECTION 101A FOR REVIEW OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION NOTICE UNDER SECTION 93(3) REGARDING NESTLÉ AUSTRALIA LTD'S EXCLUSIVE DEALING NOTIFICATION N31488
BY: NESTLÉ AUSTRALIA LTD
Applicant
the tribunal: GYLEs J (deputy president)
DATE OF ORDER: 24 NOVEMBER 2006
WHERE MADE: SYDNEY
THE TRIBUNAL DECIDES THAT:
The application to widen the confidentiality regime is refused.
IN THE AUSTRALIAN COMPETITION TRIBUNAL FILE NO 7 OF 2006
RE: APPLICATION BY NESTLÉ AUSTRALIA LTD PURSUANT TO SECTION 101A FOR REVIEW OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION NOTICE UNDER SECTION 93(3) REGARDING NESTLÉ AUSTRALIA LTD'S EXCLUSIVE DEALING NOTIFICATION N31488
BY: NESTLÉ AUSTRALIA LTD
Applicant
the TRIBUNAL: gyles J (deputy president)
DATE: 24 NOVEMBER 2006
PLACE: SYDNEY
REASONS FOR DECISION
1 The matter for decision this afternoon relates to the confidentiality of material emanating from ALDI. It is put on behalf of Nestlé that the regime which is applicable at the moment is too restrictive. First, in relation to some documents, even the lawyers have only seen a redacted version and it is submitted that there should be no such masking of the contents of documents. Secondly, it is said that in relation to other documents, or to a group of documents at least, that the redacted versions should be made available more widely within Nestle than simply to lawyers.
2 The particular focus of the application is upon the identity of the supplier or suppliers of the relevant imported product being sold by ALDI. There can be no doubt that that is highly sensitive information, the disclosure of which would have a significant impact upon commercial realities. Whether or not it would, as counsel for ALDI submits, make the proceedings moot, may or may not be correct, but it would undoubtedly have very significant commercial consequences. That is not a result which is to be risked unless I am satisfied that the information is critical to the case.
3 It needs to be borne in mind that Nestlé has chosen to bring the proceedings and, as the applicant, it has to establish its case. The Tribunal has to be very astute to ensure that its processes are not utilised in a way which has commercial ramifications and disadvantages which are not the proper result of such a proceeding. In saying that, I am not suggesting that there was any such purpose, but I underline the sensitivity of the topic.
4 First, as to whether the information has sufficient relevance to found the application for widening of access, it is not quite clear to me at the moment precisely how this information is to be utilised, and in particular, it is not at all clear to me how this information relates to the grounds in paragraph 3 of the application to the Tribunal. Counsel for Nestlé has gone to some trouble to identify issues arising out of the Statements of Facts, Issues and Contentions, and has taken me to a number of documents. Having done that, I am unpersuaded at the moment that the information as to the source of supply is of such critical relevance to justify the risks to which I have referred.
5 It may be that as the matter unfolds the relevance will become clearer to me than it is at the moment, or it may be that it will become clear to me that it has no real relevance at all. In either event the procedure can be moulded to meet the situation. In saying this, I am not encouraging continuing interlocutory applications, but with a matter of this kind, on the one hand, the applicant is entitled to pursue its case with as much information as it can marshal but, on the other hand, there are very powerful commercial interests at stake, which also have an effect upon the Australian consumer one way or the other.
6 The fact that the Australian Competition and Consumer Commission joins with ALDI has, I think, no greater force than to indicate the intellectual strength of the argument. The mere fact that the regulator has put that view does not mean it is entitled to extra weight on the scales. The significance that I can attach to it is that it has facilitated a better understanding of the relevance of the material at the moment. It has assisted me in reaching the point that I cannot be satisfied of the critical nature of the information and therefore, in my opinion, both limbs of the application fail at the moment.
7 I should also add that so far as the redaction of material from external lawyers is concerned, I am not persuaded of the view that all material needs to be provided to lawyers. The main thing is to decide whether it is relevant and if so whether it is critically relevant, and if so whether it should be produced. In my time in the law, the whole process of masking material and giving it to lawyers has developed. It is of relatively recent origin and I think it can cause severe problems. For example, it is impossible, in a sense, to forget things one knows and a lawyer may have conflicting confidentiality undertakings in case A, case B, and case C. Now of course, if it gets to the point that you simply cannot do your duty, you have got to get out of the case. Suffice to say that there are great problems associated with allowing lawyers to see material which the client cannot.
8 I also do not underrate what Mr Moore said about the possibility of mistaken disclosure by lawyers. I have been in cases where people on both sides of cases have inadvertently produced material which should not have been produced, sometimes to the Court and sometimes to each other. I have also been in cases where confidential matters have been mentioned in open court, sometimes by the judge and, in fact, I may even have done it myself on one or more occasions. It imposes a great constraint upon the conduct of litigation. Now, that is not to say that an argument cannot be made for it, because there are some things so critical to the strategy of a case that, without knowing them, it is difficult for the lawyers to have any sort of ability to run it. However, I do not think that a case has been established for it in this instance.
I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Decision herein of Gyles J (Deputy President).
Associate:
Dated: 30 November 2006
Counsel for the Applicant: Mr PJ Brereton
Solicitors for the Applicant: Mallesons Stephen Jaques
Counsel for the ALDI Stores: Mr CA Moore
Solicitors for the ALDI Stores: Baker & McKenzie
Counsel for the ACCC: Mr S White SC, Ms R Higgins
Solicitors for the ACCC: Australian Government Solicitor
Counsel for Woolworths: Mr MA Jones
Solicitors for Woolworths: Clayton Utz
Date of Hearing: 24 November 2006
Date of Decision: 24 November 2006
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federal_court_of_australia:fca/single/1999/1999fca0066
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1999-02-05 00:00:00
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Graham v Repatriation Commission [1999] FCA 66
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1999/1999fca0066
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2024-09-13T22:51:43.197960+10:00
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FEDERAL COURT OF AUSTRALIA
Graham v Repatriation Commission [1999] FCA 66
VETERANS' AFFAIRS – Service pension – Definition of "allotted for duty" – Application of transitional provisions.
WORDS AND PHRASES – "Allotted for duty".
Defence Service Homes Act 1918 (Cth), s 4(2).
Veterans' Entitlements Act 1986 (Cth), ss 5B(2), 7A(1).
Veterans' Affairs Legislation Amendment Act 1990 (Cth), s 93(1), Schedule 2.
Veterans' Entitlements Amendment Act 1991 (Cth).
Veterans' Entitlements (Rewrite) Transition Act 1991 (Cth), Schedule 4.
Repatriation Commission v Doessel (1990) 95 ALR 704, cited.
Repatriation Commission v Davis (1990) 94 ALR 621, cited.
GRAHAM v REPATRIATION COMMISSION
NG 1017 OF 1998
JUDGE: SACKVILLE J
DATE: 5 FEBRUARY 1999
PLACE: SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
DISTRICT REGISTRY NG 1017 OF 1998
BETWEEN: ERNEST WILLIAM GRAHAM
Applicant
AND: REPATRIATION COMMISSION
Respondent
JUDGE: SACKVILLE J
DATE: 5 FEBRUARY 1999
PLACE: SYDNEY
THE COURT ORDERS THAT:
1. The time for the applicant to file and serve a notice of appeal from the decision of the Administrative Appeals Tribunal given on 2 July 1998 be extended until 5 February 1999.
2. The applicant be given leave to file in Court a notice of appeal in the form handed up by counsel for the applicant.
3. The decision of the Administrative Appeals Tribunal be set aside.
4. The whole matter be remitted to the Administrative Appeals Tribunal to be heard and determined according to law.
5. Subject to any proper objections, the Administrative Appeals Tribunal should hear such further evidence presented by the parties as is relevant to the matter to be determined.
6. The respondent pay the applicant's costs of and incidental to the application, including the application for extension of time.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
DISTRICT REGISTRY NG 1017 OF 1998
BETWEEN: ERNEST WILLIAM GRAHAM
Applicant
AND: REPATRIATION COMMISSION
Respondent
JUDGE: SACKVILLE J
DATE: 5 FEBRUARY 1999
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 The applicant seeks an order extending time to file and serve a notice of appeal from a decision of the Administrative Appeals Tribunal ("AAT"), given on 2 July 1998. The AAT affirmed a decision of the Repatriation Commission, made on 9 December 1996, which determined that the applicant was not eligible for a service pension, since he had not rendered "qualifying service" as defined by s 7A(1) of the Veterans' Entitlements Act 1986 (Cth) ("VE Act"). The applicant, who was unrepresented before the AAT, filed his application for extension of time on 28 September 1996. He prepared the application without the benefit of legal representation.
2 Since then, fortunately, the applicant has obtained legal representation. Mr Smith of counsel has appeared in these proceedings on his behalf. On 28 January 1999, Mr Smith filed written submissions in support of the application for an extension of time. Those submissions canvassed the substantive issues that the applicant wished to raise, should an extension of time be granted. The submissions also attached a notice of appeal for filing in the event of such an extension of time.
3 Mr Green, who appeared for the Commission, fairly took the position that if the applicant's substantive arguments had merit, an extension of time should be granted and that the Court should address the arguments directed to whether the decision of the AAT should be set aside.
4 It was common ground that the applicant had served on HMAS Tobruk during the period 2 July 1955 to 8 July 1955. This period of operational service was in the Malayan Strategic Reserve. The AAT rejected the applicant's claim, at least in part, because it formed the view that the applicant had not been "allotted for duty" in the relevant area and thus had not rendered "qualifying service" as that expression is defined in s 7A(1)(a)(iii) of the VE Act.
5 The definition of "allotted for duty" had been amended by Schedule 2 of the Veterans' Affairs Legislation Amendment Act 1990 (Cth) ("VALA Act"), subsequent to the decisions of this Court in Repatriation Commission v Doessel (1990) 95 ALR 704 (FC) and Repatriation Commission v Davis (1990) 94 ALR 621 (French J). These decisions held that the phrase "allotted for duty" (then contained in s 5(12) of the VE Act) was to be determined by reference to the "ordinary meaning" of the words, so that any person who was posted for service in an operational area could be regarded as "allotted for duty" in that area. The amendments introduced by the VALA Act restricted the definition of "allotted for duty" to veterans who could produce a written instrument, issued by the Defence Force, stating that they, or their unit, had been allotted for duty in an operational area.
6 Subsequent to the enactment of the VALA Act, the Veterans' Entitlements Amendment Act 1991 (Cth) and the Veterans' Entitlements (Rewrite) Transition Act 1991 (Cth) ("Transition Act") were enacted. As a result, the definition of "allotted for duty" was included in s 5B(2) of the VE Act and was in the same form as the restricted definition introduced by the VALA Act.
7 In the present case, the AAT held that, as the applicant had lodged his application in 1996 (after the VALA Act and the Transition Act came into force), his claim was to be determined under the restrictive definition of "allotted for duty" contained in s 5B(2) of the VE Act. The AAT held that, since the applicant could not produce the required instrument, he was unable to satisfy the definition.
8 The principal argument put by Mr Smith in his written submissions was that the definition of "allotted for duty" in s 5B(2) of the VE Act did not apply to the applicant. This was said to be because the applicant had the benefit of a transitional provision now contained in s 93(1) of the VALA Act (as amended by Schedule 4 to the Transition Act). Section 93(1), in its current form, provides as follows:
"93(1) If:
(a) a person has made a claim under the Veterans' Entitlement Act, 1986 or an application under the Defence Service Homes Act, 1918; and
(b) the claim or application was granted on or before 8 November 1990 on the basis that the person was allotted for duty in an operational area or was a member of a unit of the Defence Force that was allotted for duty in an operational area;
subsection 5B(2) of the Veterans Entitlements Act 1986 applies in relation to the person as if the amendments made by s 19 of the Veterans' Entitlements (Rewrite) Transition Act 1991 (as it relates to subsection 5B(2)) had not been made."
9 Mr Smith's submission was that the applicant had applied for and received benefits under the Defence Service Homes Act 1918 (Cth) ("DSH Act") in 1959 and that his application under the DSH Act had been granted on the basis that he had been allotted for duty in an operational area. The DSH Act (then known as the War Service Homes Act),at the relevant time, defined "Australian soldier" in s 4(2) as including personnel serving in war-like operations in or in connection with Malaya after 28 June 1950, provided
"that person was allotted for duty in an operational area in connexion with those operations."
Eligibility was conditional upon an applicant satisfying the definition of "Australian soldier". In 1959, there was no definition of the term "allotted for duty". Thus, the question of whether a person was "allotted for duty" fell to be determined in accordance with the ordinary meaning of those words and not in conformity with a more restrictive definition such as that now found in s 5B(2) of the VE Act.
10 In the course of oral argument, Mr Green, on behalf of the Commission, accepted that the AAT had not adverted in its reasons to the terms of s 93(1) of the VALA Act. He also accepted that the Commission's representative had failed to appreciate the significance of s 93(1) for the decision the AAT was required to make and thus did not invite the AAT to make findings of fact relevant to that aspect of the case. It should be noted that the unrepresented applicant, who faced the extraordinarily difficult task of finding his way through complex transitional provisions contained in a series of enactments, had specifically referred to s 93(1) in his submissions to the AAT. Indeed, a copy of the relevant provisions was before the AAT. He argued, with considerable tenacity, that his entitlement under the DSH Act necessarily meant that, by virtue of transitional provisions in the legislation, he was entitled to a pension under the VE Act.
11 Mr Green accepted that the AAT had erred in law by failing to consider whether the applicant was relieved from satisfying the restrictive definition of "allotted for duty", by virtue of the transitional provisions in s 93(1) of the VALA Act. He also conceded that, although the AAT had not made any factual findings relevant to the application of s 93(1), there was material that might have led the AAT to conclude that the applicant had satisfied the terms of s 93(1). Of course, he made no concession that the AAT was bound to reach such a conclusion.
12 In these circumstances, Mr Green stated that the Commission would consent to the matter being remitted to the AAT, on the basis that the AAT should consider only the question whether the applicant had satisfied the terms of s 93(1) of the VALA Act. However, Mr Green also frankly said that he could not oppose a wider order, directing that the whole of the matter be remitted to the AAT to be heard and determined according to law. Mr Smith submitted that the latter was the appropriate course.
13 In my view, it is clearly appropriate that the whole matter be remitted to the AAT. The AAT will then be able to consider not only whether the applicant satisfies the terms of s 93(1) of the VALA Act, but also any alternative arguments that might be put by the applicant or on his behalf in support of his claim to a service pension. These will include any arguments the applicant wishes to put relating to the effect of the instrument issued under s 6D of the VE Act (extracted at p 110 of the Relevant Documents). In my view, the appropriate course is that the AAT should consider, subject to any proper objections, any further evidence that the parties wish to adduce that is relevant to the matter requiring determination: see Administrative Appeals Tribunal Act 1975 (Cth), s 44(5).
14 I should point out that the oral submissions of counsel revealed that there may be an unresolved question of construction relating to s 93(1)(b) of the VALA Act. Mr Smith contended that the applicant satisfies s 93(1) of the VALA Act by reason of the fact that his application under the DSH Act had been granted. Under the terms of the DSH Act, the applicant could not have succeeded unless he were found to have been "allotted for duty in an operational area" in 1955. It did not matter whether the determination under the DSH Act was correct or not; even if the determination were incorrect, the application was "granted on the basis that the [applicant] was allotted for duty in an operational area". For his part, Mr Green suggested that the grant of the application under the DSH Act was not determinative of whether the applicant satisfied the terms of s 93(1). The question was whether, in truth, the applicant had been "allotted for duty in an operational area" and the answer to this question could not be foreclosed by any determination made under the DSH Act. Neither party invited me to decide this question of construction, in the absence of findings of fact relating to the circumstances in which the application served in or near Malaya in 1955 and to the basis on which his application under the DSH Act succeeded.
15 It follows from what I have said that the time for the filing of the appeal should be extended. On the appeal, the decision of the AAT should be set aside and the whole matter should be remitted for hearing and determination according to law. The AAT should receive any further relevant evidence on which the parties wish to rely.
16 The final issue is costs. In my view, the Commission should pay the applicant's costs. The applicant specifically adverted to the significance of s 93(1) of the VALA Act in his submissions to the AAT. For entirely understandable reasons, he was not able to develop his submissions in the way a skilled lawyer might have done. Nonetheless, it should have been apparent to the Commission's representative that s 93(1) of the VALA Act required consideration by the AAT if it were to address the applicant's case fully.
17 It is not the function of this Court to make a costs order designed to express disapproval of the manner in which the AAT proceedings were conducted. However, the course of the proceedings demonstrates that it should have been apparent to the Commission from the documents prepared by the applicant to support his application for an extension of time, that the proposed appeal raised the issue of whether the AAT erred by failing to consider the significance of s 93(1) of the VALA Act. The costs of the litigation would have been avoided if the Commission had adopted at that stage the stance it ultimately took at the hearing.
18 The orders that should be made are as follows:
1. Extend the time for the applicant to file and serve a notice of appeal from the decision of the AAT given on 2 July 1998 until 5 February 1999.
2. Give leave to the applicant to file in Court a notice of appeal in the form handed up by counsel for the applicant.
3. Set aside the decision of the AAT.
4. Remit the whole matter to the AAT to be heard and determined according to law.
5. Direct that, subject to any proper objections, the AAT should hear such further evidence presented by the parties as is relevant to the matter to be determined.
6. Order the Commission to pay the applicant's costs of and incidental to the application, including the application for extension of time.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.
Associate:
Dated: 5 February 1999.
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1995-03-10 00:00:00
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Ram, K. v The Minister for Immigration & Ethnic Affairs & Anor [1995] FCA 111
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1995/1995fca0111
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2024-09-13T22:51:43.468617+10:00
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CATCHWORDS
Immigration Law - judicial review - application for refugee status - whether well-founded fear of being persecuted for reason of membership of a particular social group - whether those targeted by extortionists as people perceived to be able to pay constitute a particular social group.
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Migration Act 1958 (Cth)
United Nations Convention relating to the Status of Refugees 1951
Protocol relating to the Status of Refugees 1967
Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 379
Morato v Minister for Immigration, Local Government and Ethnic Affairs (1992) 111 ALR 417
Re Attorney-General of Canada and Ward: United Nations High Commissioner for Refugees et al., Interveners (1990) 67 DLR (4th) 1
Minister for Immigration and Ethnic Affairs v Respondent A and ors, as yet unreported, Sackville J, 6 December 1994
Kashayev v Minister for Immigration and Ethnic Affairs and anor (1994) 122 ALR 503 at 508
Randhawa v The Minister for Immigration Local Government and Ethnic Affairs (1994) 124 ALR 265
Matter No. SG 36 of 1994
KULDIP RAM v THE MINISTER FOR IMMIGRATION AND ETHNIC AFFAIRS and REFUGEE REVIEW TRIBUNAL
VON DOUSSA J
ADELAIDE
10 MARCH 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIAN DISTRICT REGISTRY )
)
GENERAL DIVISION ) No. SG 36 of 1994
BETWEEN:
KULDIP RAM
Applicant
AND:
THE MINISTER FOR
IMMIGRATION AND ETHNIC
AFFAIRS and REFUGEE
REVIEW TRIBUNAL
Respondents
MINUTES OF ORDER
JUDGE MAKING ORDER : VON DOUSSA J.
WHERE MADE : ADELAIDE
DATE OF ORDER : 10 MARCH 1995
THE COURT ORDERS THAT:
1. The application for an order of review be dismissed.
2. The applicant pay the respondents' costs of the application.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIAN DISTRICT REGISTRY )
)
GENERAL DIVISION ) No. SG 36 of 1994
BETWEEN:
KULDIP RAM
Applicant
AND:
THE MINISTER FOR
IMMIGRATION AND ETHNIC
AFFAIRS and REFUGEE
REVIEW TRIBUNAL
Respondents
REASONS FOR JUDGMENT
Coram: von Doussa J.
Place: Adelaide
Date : 10 March 1995
This is an application for an order of review brought under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") with respect to a decision of the Refugee Review Tribunal published on 12 April 1994 which affirmed the decisions of a delegate of the Minister for Immigration and Ethnic Affairs that the applicant is not a refugee in terms of the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 ("the Convention") as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967 ("the Protocol") and that his application for a Domestic Protection (Temporary) Entry Permit ("DPTEP") be refused.
Article 1A(2) of the Convention, as amended by the Protocol, provides that the term "refugee" shall apply to any person who:
"...owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it."
It is a prescribed criterion under the Migration Regulations for the grant of a DPTEP that the applicant has been determined to have refugee status (Migration Regulations, Schedule 2, Item 784.731). It followed therefore from the decision that the applicant is not a refugee that the permit application had to fail. The issue before the Refugee Review Tribunal was whether the applicant came within the Convention definition of "refugee" which was, at that time, incorporated into the Migration Act 1958 (Cth), s.4(1). Before this Court the applicant contends that the Tribunal erred in finding that he was not a refugee.
As certain of the submissions made on the applicant's behalf sought to canvass in detail the evidence which was before the Tribunal, and to question conclusions of fact which the Tribunal made based on that evidence, and the weight given to those conclusions, it is important to note at the outset the limited scope of judicial review. The jurisdiction of this Court under the ADJR Act is not to conduct a review of a decision on the "merits". The jurisdiction is essentially confined to correcting errors of laws which are shown to have occurred in the making of the decision under review. It is appropriate to repeat the often cited passage from the judgment of Mason J in Minister for Aboriginal Affairs v Peko Wallsend Ltd (1985) 162 CLR 24 at 41:
"...in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power...I say 'generally' because both principle and authority indicate that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is 'manifestly unreasonable'. This ground of review was considered by Lord Greene M.R. in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230, 233-234 in which his Lordship said that it would only be made out if it were shown that the decision was so unreasonable that no reasonable person could have come to it."
The applicant is an Indian national and a Sikh by religion who entered Australia on 20 November 1992 as a visitor. On 17 December 1992 he applied for refugee status. This was refused on 17 May 1993. On 27 August 1993 he lodged a further application for refugee status and an application for a DPTEP. These were refused on 20 October 1993 and the applicant then applied for review to the Tribunal.
The applicant was born on 13 June 1956, and grew up, in the Punjab. He married, and has two children. His level of formal education was apparently only elementary and he has no particular skills or training. However from 1977 to 1987 he worked as a contract labourer in Saudi Arabia. He returned to his home with savings of about 100,000 rupees. He gave evidence to the Tribunal that it was generally well known in his village that he had returned with a considerable sum of money which, he claimed, made him a member of a particular social group within the meaning of the Convention definition of "refugee". That social group was variously designated by the applicant as "those who are perceived to have returned from abroad with money", or "rich Sikhs", or simply "the rich".
The applicant described to the Tribunal his perception of the political, religious and ethnic violence which existed in the Punjab from his return in 1987 until his flight to Australia. He explained that the Sikh people were demanding the formation of a separate State, Khalistan. Sikh extremist groups and opposing Hindu groups used violence and the police sometimes posed as extremists. There was continuing civil conflict, and human rights abuses he said were commonplace. So too was extortion of those with money. He said it was "standard practice" in Punjab villages that "government people" would come and extort money from people, and "everyone knows all attacks are generated by the police" and that the extortion demands were politically motivated. Other statements made by the applicant either in his applications for refugee status, or in supporting statements, were less dogmatic, saying that sometimes extortionists would come dressed in police uniforms, at other times their identity could not be determined, and that some of the extortion activities were carried out by extremists or criminals.
The applicant alleged that in 1988 during the night he and his family were visited by men, who he described as "extremists or criminals" wearing disguising cloths around their heads, who demanded money from him. He handed over what he had with him. The men said they would come back for more, and would kill him if he did not hand it over. He said he was terrified. He did not report the event to the police or seek their protection "because it may have been them who were the criminals". He went into hiding. In one statement he said that the "extremists/bandits" did come back looking for him. He was terrified for his own safety and that of his family. Eventually with the help of a friend he made his way to New Delhi. The friend obtained a visitors' visa for him to come to Australia.
The applicant before the Tribunal, but not in statements supporting earlier applications, said that he also had "close affiliation" with the Sikh Youth Federation of All India ("SYFAI"). He was not a registered member but gave it financial support. As a Sikh and a Punjabi he supported the establishment of Khalistan, but he was a "covert member" of SYFAI. He had kept his support hidden "for fear of vilification by supporters of the current regime, etc."
In rejecting the applications for refugee status and a DPTEP on 21 October 1993 the primary decision-maker, without considering in detail whether the applicant had a well founded fear of being persecuted found that the fears which he alleged from the extremists or criminals were not based on a Convention reason, but could fairly be characterised as being of a common criminal nature. The primary decision-maker also found that the applicant could relocate within India to escape the particular conditions that prevailed in the Punjab (cf Randhawa v The Minister for Immigration, Local Government and Ethnic Affairs (1994) 124 ALR 265.)
The Tribunal referred to the discussion concerning the meaning of a "well-founded fear of being persecuted" in Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 379. The Tribunal correctly noted that the term had both a subjective and an objective requirement; subjectively the applicant must actually be in fear and objectively the fear must be based in reality. The Tribunal also noted that a fear of being persecuted is well-founded if there is a "real chance" that the applicant will be persecuted if he or she is returned to the country of nationality (Chan at 389, 398, 407, 429).
The Tribunal on the material before it accepted that the applicant, being outside the country of his nationality, had a subjective fear of persecution should he be returned.
The first of the grounds on which an order of review is sought in the further and better particulars of the application is that the Tribunal erred in finding that the applicant's fear "was not objectively reasonable, i.e. there was no real chance of persecution occurring".
On the question whether the fear held by the applicant was based in reality the Tribunal first considered his claim based on persecution because of his membership of the SYAFI. The Tribunal accepted his claim that he had a "close affiliation" with that organisation but that he had kept his support hidden. However the Tribunal held that it would "give no weight to it because the applicant makes no claims of any active political involvement or that any adverse consequences have flown from his support of the organisation". Counsel for the applicant criticises the Tribunal's failure to give weight to the applicant's membership of the SYAFI as being manifestly unreasonable, because, it is argued, the Tribunal should have inferred that a reason for the extortion threats alleged by the applicant was his affiliation with the SYAFI. If, as the applicant says, he was not a registered member of SYAFI, and kept his support for it hidden, it is not readily apparent why this inference should be drawn. His evidence and the submissions made on his behalf suggest no likely reason why such an inference would arise. As the Tribunal noted, the applicant has made no claim of active political involvement or that adverse consequences to him have resulted because of his affiliation. The decision to give no weight to the applicant's membership of SYFAI was in essence a matter for the Tribunal based on the facts of the case. It was a decision open on the evidence, and it is not one that involves an error of law such that the jurisdiction of this Court to interfere is attracted.
The Tribunal then went on to consider whether the applicant's fear was based in reality on reasons of religion and membership of a particular social group. The Tribunal canvassed in detail markedly different versions given at different times by the applicant of the extortion incident alleged to have happened in 1988. There is no need to rehearse those stories but it is hardly surprising that the Tribunal said it held serious doubts about the applicant's claims. Nevertheless the Tribunal accepted that the applicant had returned to India from Saudi Arabia with a considerable amount of money, and, giving the applicant the benefit of the doubt that the differences in his stories were merely the product of confusion, accepted that he had been the victim of an extortion demand that caused him to be afraid and to go into hiding. The Tribunal distilled the following assertions from the applicant's statement and evidence (and it is not suggested that the summary was other than fair and accurate):
". The applicant fears returning to the Punjab because of the generally dangerous situation which exists there.
. While he does not know exactly who the extortionists were, the police were a law unto themselves and it was standard practice in Punjabi villages for police to extort money and to make people disappear.
. There were two kinds of extortion: by criminals and by political activists. The extortion was used purely as a cover-up and was in reality a threat because of his covert political support. Extortion only happens to Sikhs so it is politically motivated. He is targeted as a member of a particular social group, Sikhs returning from working abroad. A friend who had returned to the Punjab with money after working abroad was found dead and he fears a similar fate."
The Tribunal referred to reports in 1992 and 1993 from the United States Department of State, from Amnesty International, from the Australian High Commission in New Delhi and from the Research Directorate, Immigration and Refugee Board of Canada. On the basis of this material and the evidence from the witnesses including the applicant who gave evidence before the Tribunal, the Tribunal held that, at least at the time when the applicant was in the Punjab, "there were certain risks involved in living" there. Some of the risks were plainly not due to persecution for Convention reasons, e.g. the risk of a bomb exploding in a public transport bus. Risks of that kind were common to the whole population. The Tribunal accepted that there was also a high level of violence and abuse of human rights. The Tribunal found that the applicant had "good reason" for his distrust of the police whose generally violent culture had been well documented by Amnesty International.
The Tribunal continued:
"However, the applicant has produced no evidence to link the extortion demands made on him with the police, relying instead on statements such as 'everyone knows all attacks are generated by the police'.
Irrespective of whether or not the extortionists were policemen, the applicant has not satisfied me that the extortion was anything other than a criminal act, or that he was targeted for any reason other than he was known to have money. Significantly, in neither of the above versions of the extortion demands does he suggest that the extortionists have any motive for the extortion apart from the fact that he was seen as having money. In his original application he concedes the possibility of the extortion demand being a plain criminal act by referring to the extortionists as 'extremists or criminals' and 'extremists/criminals'. I have already found that there is no objective basis to any fear the applicant may have because of his covert support for the SYFAI. I do not, therefore, accept the claim that the extortion was used purely as a cover-up and was in reality a threat because of his covert political support."
The Tribunal therefore rejected the suggestion implicit in parts of the applicant's statements and evidence that he had a well-founded fear of persecution for reasons of political opinion.
The Tribunal then proceeded to consider whether the applicant had a well-founded fear of persecution for reasons of membership of a particular social group. It noted that the evidence supported a finding that extortionists in the Punjab targeted anyone from whom money could be extorted and did not focus solely on those who had returned from overseas. The Tribunal cited, by way of example, from advice received from the Australian High Commission in New Delhi (Department of Foreign Affairs and Trade cable O.ND84486 of 6 July 1992):
"Indian government figures indicate that at any one time there are up to two million Indians working overseas. Sikhs are inordinately represented in this figure as a percentage of their community's size.
Indians do not have to travel abroad to be counted among those who have money at their disposal. Newspaper reports from Punjab indicate extortion from established businessmen heading up well-known companies at national, state and local levels. There is presumably a village level also, with local pharmacists being popular targets. Many Punjabis receive remittances from abroad anyway, which make them comparatively well-off.
By contrast, there are no media reports of recently-returned Sikhs being the subject of extortion because they have travelled and hence have some money. Informants were bemused by this suggestion. Such a claim may generally be discounted."
The Tribunal found that extortion activities, whether by political extremists or others, were not directed solely at
those returning from overseas and held that they were directed at anyone from whom the extortionists believed they could extract money. The Tribunal held that the targets of extortion in the Punjab did not constitute a particular social group and said:
"In this case the targets of extortion in the Punjab are diverse and in no way form a 'cognisable' group. They share no 'common social characteristics' other than the fact that they are seen as capable of making payments. I therefore find that the harm feared by the applicant is not a fear that arises from his membership of a particular social group."
On the allegation that the applicant had a well-founded fear of persecution for reasons of religion the Tribunal held:
"The applicant also claims persecution on the basis of his Sikh religion. He states that extortion only happens to Sikhs so it is politically motivated. However, I am not satisfied that the applicant has produced evidence to suggest that he was the victim of extortion for any other reason than the fact that he had money. I find, therefore, that any harm feared by him, is not for reason of religion, and it is not 'politically motivated'.
The Tribunal summed up its findings with the conclusion "that the applicant's fear is not one for reason of any of the grounds in the Convention" and therefore that he was not a refugee. The applicant's contention that the Tribunal erred in finding that his "fear was not objectively reasonable" misunderstands the reasons of the Tribunal. It is implicit in the Tribunal's discussion of the reasons advanced by the applicant for his fear of persecution that the Tribunal has accepted that there was an objective base for the applicant's fear, but the Tribunal has held that the reason for that fear was not a Convention reason. Rather it was a fear based on the general civil disorder in the Punjab, on the violent culture of the police, and on the risk of extortion from extremists or criminals who might target anyone in the community whom they believed had money.
The second ground on which review is sought contends that the Tribunal erred in failing to hold that the applicant's well-founded fear of persecution was not for a Convention reason. Oral argument included grounds not covered by the further and better particulars of the application, but counsel for the respondents has taken no point on that account. It was contended that the Tribunal erred in not giving weight to the applicant's membership of SYFAI so as to find that political opinion was a reason for the applicant's fear of persecution. I have already dealt with that submission. Counsel also contended that the Tribunal erred in holding that the applicant had produced no evidence to link the extortion demands made on him with the police. It was contended that the Tribunal placed too high an onus of proof on the applicant. The Court was referred to paragraphs 201 to 204 of the "Handbook on Procedures and Criteria for Determining Refugee Status" published by the Office of the United Nations High Commission for Refugees (Reedited, Geneva, January 1992). The handbook was referred to by Mason CJ in Chan at 392 as a practical guide for the use of those who are required to determine whether or not a person is a refugee. Paragraphs 203 and 204 provide:
"203. After the applicant has made a genuine effort to substantiate his story there may still be a lack of evidence for some of his statements. As explained above (paragraph 196), it is hardly possible for a refugee to 'prove' every part of his case and, indeed, if this were a requirement the majority of refugees would not be recognized. It is therefore frequently necessary to give the applicant the benefit of the doubt.
204. The benefit of the doubt should, however, only be given when all available evidence has been obtained and checked and when the examiner is satisfied as to the applicant's general credibility. The applicant's statements must be coherent and plausible, and must not run counter to generally known facts."
The Tribunal had earlier given the benefit of the doubt in accordance with notions of fairness and justice reflected in these paragraphs to the applicant when considering his stories about the 1988 incident. There is no reason to think that the Tribunal departed from these notions when making its finding about the police. The problem which the applicant faced was that his statements and evidence failed to lay any coherent or plausible base for the assertion that the extortion incident and threats were linked with the police. On the contrary his first applications and early statements laid the blame on extremists and criminals. When the Tribunal sought to explore the basis for the applicant's later assertion that the police were involved the applicant advanced the implausible statement "everyone knows all attacks are generated by the police". That generality was not supported by the various reports on the situation in the Punjab which the Tribunal considered. In the end there was nothing which could justify as a reasonable possibility the generality asserted by the applicant, so no question arose of giving him the benefit of a doubt about which one of a number of plausible possibilities was the case. In my opinion the Tribunal did not fall into error in this respect.
The second ground for review, as pleaded in the further and better particulars, is:
"The Respondent having found that the Applicant was the victim of extortion demand which caused him to be afraid and to go into hiding and that political extremists and others have held rich Sikh businessmen for ransom, erred in concluding that as such rich Sikh persons do not constitute a social group, the harm feared by the Applicant does not arise from his membership of a particular social group and therefore he is not a refugee on convention grounds."
This ground puts an unwarranted gloss on the findings of the Tribunal. It assumes that the Tribunal accepted the applicant's assertion that extortion only happens to Sikhs and that, by implication, membership of the Sikh religion is one of the characteristics of the alleged particular social group, the other characteristic being wealth. Initially the applicant sought to identify a particular social group which had a third characteristic, namely that members of the group had returned from overseas, but that characteristic is no longer advanced. The finding of the Tribunal however was that extortionists in Punjab whoever they might be, targeted anyone from whom they believed money could be extorted. It was against this finding that the Tribunal held that the targets of extortion in the Punjab did not constitute a "particular social group" because they were diverse, without "common social characteristics" other than the fact that they are seen as capable of making payments, and did not constitute a cognisable group.
The grounds for an order of review pleaded in the application do not challenge the finding that the target group of the extortionists in the Punjab at the relevant times comprised anyone from whom the extortionists believed they could extract money. Moreover, the evidence and other material before the Tribunal, at least insofar as it has been made known to this Court, gives no reason to question this finding of fact. The finding was not only open, it emerged as the highly probable situation from all the material before the Tribunal. The real question which arises for consideration, although it is not precisely identified in the application, is whether the applicant's well-founded fear of being persecuted because he was perceived to be someone capable of making payments was a fear for reason of "membership of a particular social group".
The Tribunal, in finding that the targets of extortion in the Punjab did not constitute a particular social group relied in particular on passages from the judgment of Lockhart J in Morato v Minister for Immigration, Local Government and Ethnic Affairs (1992) 111 ALR 417 at 432.
In Morato the applicant for refugee status had given evidence in Australia against a member of a well-known family from his country of nationality involved in the trafficking of narcotics. He said he feared retribution if he were to be returned to that country. It was accepted that he had a well-founded fear. The social group of which he claimed membership was people who have "turned Queen's evidence". The Full Court of the Federal Court, affirming the decision of a single judge, held that he was not a member of a "particular social group". Black CJ, with whom French J agreed, in reference to the Convention definition of "refugee" said at 420:
"Each element of the definition must be considered. A critical element in the present case is that the fear of persecution relied upon must be a fear for reasons of membership of a particular social group. It is not enough to establish only that persecution is feared by reason of some act that a person has done, or is perceived to have done, and that others who have done an act of the same nature are also likely to be persecuted for that reason. The primary focus of this part of the definition is upon an aspect of what a person is - a member of a particular social group - rather than upon what a person has done or does."
and later at 421-422:
"...it is necessary to examine the characteristics of the supposed group to see whether, on any sensible view of the expression, those who are said to constitute it can be said to be members of a particular social group - a group that has to be sufficiently cognisable as to have something that may sensibly be identified as membership.
There are no doubt many persons in the world who, being involved in criminal activities themselves, have assisted the police and have turned Queen's evidence. But to assume the existence of such people must also be to assume that they have acted in this way for a wide variety of reasons, in a wide variety of circumstances and with a wide variety of consequences for themselves and for others. It is also to assume that these people exhibit an almost limitless diversity in their personal characteristics and in their interaction with society. In truth, the only thing that they may be said to have in common is, by definition, that they have acted on an occasion or occasions in a particular way with respect to the enforcement of the criminal law.
To say that all such people are members of a particular social group would be to make the definition of refugee so wide in this respect as to be almost meaningless and as to have no necessary connection with the humanitarian objectives that select a particular category of persons, refugees, as deserving of special consideration by the international community...
It may be doubted whether such an aggregation of persons could be called 'a group' within the usual meaning of that word as applied to people but, in any event, the Convention definition does not refer merely to membership of a group; it refers to membership of a particular social group. The word 'social' is an essential part of the definition and cannot be ignored as mere surplusage. At the very least, a particular social group connotes a cognisable group in a society, and cognisable to the extent that there may be a well-founded fear of persecution by reason of membership of such a group."
Lockhart J considered decisions of the Courts of the United States and Canada, and legal writings concerning the meaning of a "particular social group". One of the cases to which he referred was Re Attorney-General of Canada and Ward (1990) 67 DLR (4th) 1, a decision of the Federal Court of Appeal of Canada. Lockhart J expressed the following conclusions at 431-432:
"'Social' is a word of wide import. The Oxford English Dictionary states as one of its definitions 'pertaining, relating, or due to...society as a natural or ordinary condition of human life'. This is a helpful guide for present purposes. In my opinion the words 'social group' signify a cognisable or recognisable group within a society, a group that has some real common element. Although a voluntary association of persons may fall within the definition, it is not a requirement that there be such an association to constitute a social group within the definition of 'refugee'...
The word 'particular' does not narrow the scope or meaning of the expression 'particular social group'. Rather it indicates that there must be an identifiable social group to which one can point and say that there is a particular social group.
The interpretation of the expression 'particular social group' calls for no narrow definition, since it is an expression designed to accommodate a wide variety of groups of various descriptions in many countries of the world which, human behaviour being as it is, will necessarily change from time to time. The expression is a flexible one intended to apply whenever persecution is found directed at a group or section of a society that is not necessarily persecuted for racial, religious, national or political reasons. Social groups may have interests in common as diverse as education, morality and sexual preference. Examples include the nobility, land owners, lawyers, novelists, farmers, members of a linguistic or other minority, even members of some associations, clubs or societies. The Handbook provides some assistance because it states that a social group 'normally comprises persons of similar background, habits or social status'. This emphasises the need for some common or binding element of persons to constitute them as a recognisable or cognisable group. The social group referred to in the Convention and Protocol is intended to encompass groups of people who share common social characteristics and might be the target of persecution but who do not fit into classifications of race, religion or political opinion.
In my opinion for a person to be a member of a 'particular social group' within the meaning of the Convention and Protocol what is required is that he or she belongs to or is identified with a recognisable or cognisable group within a society that shares some interest or experience in common. I do not think it wise, necessary or desirable to further define the expression."
When the Full Court delivered judgment in Morato an appeal from the decision of the Federal Court of Appeal in Re Attorney-General of Canada and Ward to the Supreme Court of Canada was awaiting hearing. The decision of the Supreme Court of Canada was delivered on 30 June 1993: see Re Attorney-General of Canada and Ward; United Nations High Commissioner for Refugees et al., Interveners (1993) 103 DLR (4th) 1. The applicant for refugee status, Ward, was a resident of Northern Ireland and considered therefore as a national both of the United Kingdom and the Republic of Ireland. He was a member of the Irish National Liberation Army. While a member of that organisation he assisted hostages to escape. For this conduct he was sentenced to death by the organisation for insubordination but managed to escape before the sentence was carried out. He travelled to Canada on an Irish passport and there sought refugee status. The Canadian Immigration Appeal Board held that he was a Convention refugee under the Immigration Act 1976 (Canada) which in substance adopts the definition of "refugee" in the Convention and Protocol.
The Federal Court of Appeal, by a majority, reversed that decision. The majority considered that for a well-founded fear of persecution to arise from membership of a group it was necessary for the activities of the group to be "activities perceived to be a possible danger of some kind to the government". Ward had failed to prove the State's complicity in his persecution: his fear arose not from reprisals from the established government of the country of his residence but from an organisation that sought to overthrow that government. The appeal to the Supreme Court of Canada was allowed. It was held that state complicity in the persecution is not a prerequisite to a valid refugee claim. The definition extended to situations in which the state is not an accomplice in persecution, but is unable to protect its citizens. This conclusion is in accord with the observations of McHugh J in Chan at 430. The State of Ireland admitted its inability to protect Ward, and in the circumstance Ward had established a well-founded fear of persecution which the Court held arose for reason of his political opinion - a ground not argued in the Federal Court of Appeal.
In the present case the Tribunal has implicitly accepted that the police in the Punjab provided no adequate protection against the extortion activities of extremists and criminals, and the contrary was not argued before this Court.
On the question of membership of a "particular social group" La Forest J, delivering the judgment of the four members of the Court who participated, said at 33-34:
"The meaning assigned to 'particular social group' in the Act should take into account the general underlying themes of the defence of human rights and anti-discrimination that form the basis for the international refugee protection initiative. The tests proposed in Mayers v Canada (Minister of Employment and Immigration) (1992) 97 DLR (4th) 729, Cheung v Canada (Minister of Employment and Immigration) (1993) 102 DLR (4th) 214 and Matter of Acosta (United States Board of Immigration Appeals, Interim Decision 2986, 919850 WL 56042 (BIA)), provide a good working rule to achieve this result. They identify three possible categories:
(1) groups defined by an innate or unchangeable characteristic;
(2) groups whose members voluntarily associate for reasons so fundamental to their human dignity that they should not be forced to forsake the association; and
(3) groups associated by a former voluntary status, unalterable due to its historical permanence.
The first category would embrace individuals fearing persecution on such bases as gender, linguistic background and sexual orientation, while the second would encompass, for example, human rights activists. The third branch is included more because of historical intentions, although it is also relevant to the anti-discrimination influences, in that one's past is an immutable part of the person."
Applying this test to the facts at pp37-38, the Supreme Court held that the Irish National Liberation Army members did not constitute a "particular social group".
In Minister for Immigration and Ethnic Affairs v Respondent A and Ors, (as yet unreported, Sackville J, 6 December 1994), Sackville J observed that the approval by the Supreme Court of the decision of the Federal Court of Appeal in Cheung suggests that the three criteria articulated by La Forest J do not exhaust the categories of "particular social groups" for the purpose of the Convention. Sackville J
considered whether the concept of a "particular social group" was confined to groups comprising members with an "associational interest". He held that it was not. (at 15,41) Further, his Honour held: (at 42-43)
"...a number of people having characteristics in common (even without any associational interest) are capable of constituting a particular social group. Whether or not they do so is likely to depend not only upon the nature of the characteristics the individuals have in common, but upon the extent to which the society to which they belong recognises those characteristics as creating an identifiable social group. The mere fact that a person fears persecution by reason of a characteristic that he or she has in common with another person who also fears persecution, does not establish that the two are members of a particular social group. Morato itself illustrates this proposition, as does Kashayev v Minister for Immigration and Ethnic Affairs and Anor (1994) 122 ALR 503.
The tests stated in these decisions would support the conclusion that, depending on all the circumstances, the attribute of wealth could constitute an interest in common sufficient to tie together a member of people as a "particular social group". The attribute is a characteristic arising from what the person is (or has) rather than from what the person has done or does: cf Black CJ in Morato, at 420. The attribute of wealth, like that of land ownership, is not something that a person should be forced to forsake. Whether in a particular case the attribute of wealth is alone a sufficient characteristic to define a particular social group will depend on whether in the circumstances that attribute connotes a cognisable group in a society which has something that may be sensibly identified as membership: Morato at 421 per Black CJ and at 432 per Lockhart J.
In the present case the evidence does not indicate association of any kind by the applicant with other members of the group he seeks to identify. Although an "associational interest" is not essential to the concept of a particular social group, evidence of association may be an important factor in establishing the existence of an identifiable group. Further, there is no suggestion in the evidence that the society to which the applicant belonged recognised the characteristic of wealth as alone creating an identifiable group. It would be an exceptional case where the attribute of wealth alone could fulfil the above tests without there being further evidence of association or common interest arising out of the attribute of wealth.
In the absence of any other evidence of association or common interest the stumbling block for the applicant in the present case is the vagueness and uncertainty of a group comprising all those people who the extremists and criminal extortionists perceive to be able to pay. That is a group without any meaningful delimitation. For example the group would include all those subject to potential threat no matter what the amount demanded. On the evidence the demands could be for any amount; and a low demand could well be targeted at a person of modest means - or even at a person with virtually no means but access to the money of another which could be obtained to meet the demand. As the level of potential demands is indeterminate, so is the range of potential victims. Moreover, the potential victims of extortion threats will include not only those who have money or the ability to obtain it, but also those who are wrongly perceived to be able to pay. There is no reason to think that the extortionists would have the means or the will to verify in advance the chosen victim's capacity to pay: rumour would suffice. It is not apparent why the potential targets of the extortionists in the Punjab would be any fewer in number than the potential targets of criminals engaging in other more common forms of crime against property like theft or robbery.
The group alleged is an extraordinarily wide one. The group is much wider and more diverse than the suggested group of people who have turned Queen's evidence which Black CJ in Morato said would make the definition of refugee so wide in the relevant respect as to be almost meaningless and as to have no necessary connection with the humanitarian objectives that select a particular category of persons as deserving of special consideration by the international community.
In my opinion the range of people suggested by the applicant as constituting the particular social group of which he claims membership has no sufficiently identifying characteristic or common element to constitute them members of a cognisable or recognisable group within the Punjab. In my opinion the Tribunal correctly concluded that the applicant did not have a well-founded fear of being persecuted for reason of membership of a particular social group.
The third and final ground for seeking an order of review which was pressed on the applicant's behalf alleged error by the Tribunal in concluding that the situation in Punjab had improved since the applicant had left to the degree that "the possibility of the applicant suffering for reasons that are outside the protection of the Convention are greatly reduced". It was contended that this finding disregarded the seriousness of the situation at the time when the applicant left the Punjab and disregarded the evidence adduced by the applicant about the present situation. It was said that the Tribunal erred in not taking as the starting point of its deliberations the situation described by the applicant. It is unnecessary to consider whether the Tribunal erred in this way, as the passage in the reasons for decision to which the submission relates did not form any operative part of the reasoning leading to the decision that the applicant is not a refugee. The passages in question concerned the continuing level of risk associated with reasons that are outside the Convention, and form no more than an aside, probably to offer a measure of reassurance to the applicant.
The further and better particulars of the grounds of the application in paragraph 4 contended that the Tribunal should have held that the applicant was a refugee on "cumulative grounds". This paragraph was not pressed in argument, and had no hope of success in the face of positive findings that there was no Convention reason for the applicant's fear, unless one or more of those findings were shown to be tainted with error. That is not the case.
Although one of the grounds on which refugee status was found not to exist by the primary decision-maker was that the applicant could relocate within India to escape the threats which he feared in the Punjab, that was not an issue considered by the Tribunal, and did not form part of its decision.
In my opinion the application should be dismissed.
I certify that this and the 24
preceding pages are a true
copy of the Reasons for
Judgment of Justice von Doussa
Associate:
Dated:
Counsel for the applicant : Mr G Patel
Solicitors for the applicant : Messrs Patel & Co.
Counsel for the respondents : Ms S Maharaj
Solicitors for the respondents : Australian Government
Solicitor
Date of hearing : 26 August 1994
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Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1013
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FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1013
File number: QUD 445 of 2019
Judge: ALLSOP CJ
Date of judgment: 17 July 2020
Catchwords: EVIDENCE – legal professional privilege – waiver – whether privilege over certain documents waived by way of disclosure in prior correspondence – whether privilege over certain documents impliedly waived – no waiver found
Legislation: Federal Court Rules 2011 (Cth), rr 20.16, 20.17, 20.22
Cases cited: Adelaide Steamship Co Ltd v Spalvins [1998] FCA 144; 81 FCR 360
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd [1996] NSWSC 7; 40 NSWLR 12
Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237; 140 FCR 101
Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; 151 FCR 341
Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; 72 NSWLR 236
Macquarie Bank Limited v Arup Pty Limited [2016] FCAFC 117
Mann v Carnell [1999] HCA 66; 201 CLR 1
Viterra Malt Pty Ltd v Cargill Australia Ltd [2018] VSCA 118; 58 VR 333
Date of hearing: 25 June 2020
Registry: Queensland
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 43
Counsel for the Plaintiff: Mr S Couper QC with Mr S Seefeld
Solicitor for the Plaintiff: Australian Government Solicitor
Counsel for the Defendant: Dr M J Collins QC with Ms C van Proctor
Solicitor for the Defendant: Ashurst Australia
ORDERS
QUD 445 of 2019
BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
Plaintiff
AND: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522
Defendant
JUDGE: ALLSOP CJ
DATE OF ORDER: 17 July 2020
THE COURT ORDERS THAT:
1. Subject to Orders 2–4 below, on or before 10 August 2020 or such other date as agreed between the parties, the defendant give discovery in accordance with rr 20.16 and 20.17 of the Federal Court Rules 2011 (Cth) (the Rules) of:
(a) documents which record the contents of the 2011 Communication, as defined in the statement of agreed facts filed on 19 May 2020 (SOAF); and
(b) documents which record or reveal the passing-on of the substance of the 2011 Communication between employees of ANZ between 1 July 2011 and 23 February 2016.
2. Subject to further order, in accordance with r 20.17 of the Rules, the discovery take place by identification in a list of:
(a) each document in the defendant's control sufficiently to identify the particular document;
(b) each document that has been, but is no longer in the defendant's control, a statement of when the document was last in the defendant's control and what became of it; and
(c) each document in the defendant's control for which legal professional privilege is claimed.
3. Such list be verified by an affidavit of the solicitor on the record, such affidavit to include such facts as are necessary to substantiate any claim for legal professional privilege relied upon under Order 2(c), and otherwise in accordance with r 20.22 of the Rules.
4. The application insofar as it seeks production of the documents described in paras 1.1 and 1.2 of the interlocutory application dated 29 May 2020 be dismissed.
5. The parties be heard as to costs of the application at the next case management hearing.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ALLSOP CJ:
1 This is an interlocutory application brought by the plaintiff (ASIC) that the defendant (ANZ) give discovery in accordance with r 20.16 of the Federal Court Rules 2011 (Cth) of certain documents over which legal professional privilege is claimed by ANZ.
2 There has been no formal discovery in the proceedings. The application is in substance that certain documents are no longer the subject of legal professional privilege. The parties have prepared the application with clarity and economy. There are two bases for ASIC's claim that the relevant documents are no longer privileged (it being implicit that it is accepted that at least the central document was originally privileged): first, that ANZ has disclosed to ASIC in correspondence dated 5 September 2018 the substance of the legal advice over which privilege is claimed; and, secondly, that by reason of the issues raised in the proceeding ANZ has impliedly waived the privilege. To use (inadequate) shorthand: disclosure and issue waiver. The question is by reference to common law principles, not the Evidence Act 1995 (Cth).
3 The case concerns the conduct of ANZ in connection with the charging of fees to customers, allegedly without contractual foundation. The first two paragraphs of ASIC's concise statement (CS) contain the factual essence of the allegations: From August 2003 to 23 February 2016 ANZ is said to have charged fees in connection with periodical payments by customers that it was not entitled to charge. ANZ first became aware, it was said, that there was a risk that it was not entitled to charge these fees in July 2011. But it is said that ANZ continued to charge the fees thereafter, not raising the issue with customers until 23 September 2015, and not beginning to make remediation payments until August 2016.
4 The fees that are said to have been charged without contractual authority are those made in respect of periodical payments between ANZ accounts of the same customer. The relevant (allegedly unauthorised) fees are described in paras 6–9 of ASIC's CS as for:
(a) scheduled payments between two accounts both in the customer's own name, one account being with ANZ and the other with another financial institution;
(b) scheduled payments in the case of business customers between two ANZ accounts both in the customer's own name; and
(c) a non-payment fee if the customer authorised a periodical payment and that payment was not made because there were insufficient funds, in respect of unsuccessful scheduled payments between two accounts in the customer's own name, whether both were ANZ accounts or one was with another financial institution.
5 The fees in (a) and (b) above are referred to as Same Name PP Transaction Fees, and those in (c) above as Same Name PPNP Fees. Together they are referred to as Same Name PP Fees.
6 Paragraphs 12–16 of the CS under the heading: "ANZ is warned that its conduct may be unlawful", are in the following terms:
12. In or about May or June 2010, ANZ instructed Blake Dawson (now Ashurst) to conduct a review of its terms and conditions in the context of the "exception fees" class action proceedings (Paciocco and Anor v Australia and New Zealand Banking Group Ltd (Paciocco) and Andrews v Australia and New Zealand Banking Group Ltd) (Review). The Review was primarily in the context of the class action. However, Blake Dawson also provided information on other aspects of ANZ's contractual documentation which were not directly relevant to the allegations in those proceedings.
13. In July 2011, ANZ received information from Blake Dawson which "touched upon" the question of whether ANZ was entitled to charge the Same Name PPNP Fees, and "indicated" that ANZ should investigate its entitlement to charge these fees (the 2011 Information). The 2011 Information was initially provided orally during the course of two telephone calls on 11 July 2011 and 14 July 2011, and was subsequently reduced to writing on 18 July 2011 in a document described as a "wrinkle list". A further version of the "wrinkle list" was provided to ANZ by Blake Dawson on 12 October 2011.
14. The 2011 Information was communicated to a number of ANZ employees including the following senior employees: (i) on 18 July 2011, Mr Guy Gaudion (General Counsel, Dispute Resolution) and Ms Sonya Kilkenny (Head of Legal, Dispute Resolution); (ii) on 20 January 2012, Ms Felicity Worland (Head of Legal, Retail Products); and (iii) on 27 March 2012, Ms Julie Toop (Acting General Counsel, Australia).
15. By no later than 18 July 2011, ANZ knew that the imposition of the Same Name PPNP Fees was, or was at risk of being, unlawful. ANZ had considered amending its standard terms to deal with the issue between January 2012 and January 2013 but did not ultimately make the amendments. Furthermore, ANZ did not take any steps to disclose the existence of a possible issue in relation to the fee to ASIC until 31 January 2014, and did not cease charging the fee. The conduct ceased due to ANZ's amendment of its standard terms which did not become effective for all customers until 23 February 2016. Remediation payments were not made until August 2016.
16. The standard terms defined Periodical Payment for the purpose of the PP Transaction Fee in the same terms as it was defined for the purpose of the PPNP Fee. Accordingly, by no later than 18 July 2011, ANZ ought to have known that the charging of Same Name PP Transaction Fees was, or was at risk of being, unlawful. However, ANZ did not disclose the existence of a possible issue in relation to this fee to ASIC until 23 September 2015, and did not cease charging the fee. The conduct ceased due to ANZ's amendment of its standard terms which did not become effective for all customers until 23 February 2016. Remediation payments were not made until August 2016.
7 ANZ later came to write to ASIC in February 2014 to report an "issue" in relation to charging Same Name PPNP Fees. It did so after the issue was raised in the Paciocco class action proceedings and after admissions had been made in those proceedings by ANZ. This notification was by letter which stated that it had "recently been asserted" that ANZ had charged Same Name PPNP fees without authority. There was no disclosure about ANZ becoming aware of the issue in 2011.
8 ASIC claims, amongst other things, that ANZ charged Same Name PP Fees when it knew that the charging of those fees was without contractual authority or when it knew that charging them was at risk of being unlawful.
9 Relevant to this part of the case is the information from Blake Dawson, the so-called 2011 Information referred to in para 13 of the CS.
10 The concise statement in response (CSR) gives some more context. The Blake Dawson communication in 2011 arose out of work that it did in the Andrews class action against ANZ. Paragraph 10 of the CSR is as follows:
In the context of the Andrews proceeding, ANZ's solicitors, Blake Dawson (as they were then known), reviewed ANZ's terms and conditions documents and, in July 2011, generated a document referred to as a "wrinkle list" which touched upon the question of whether ANZ was entitled to charge PPNP Fees relating to periodical payments between accounts in the same name (Same Name PPNP Fees). At that time, the challenge to PPNP Fees in the Andrews proceeding did not relate specifically to Same Name PPNP Fees, or ANZ's contractual entitlement to charge them.
11 The Paciocco class action, commenced in March 2013, did raise (in December of that year) the question of contractual authority to charge Same Name PPNP Fees.
12 A decision was made in early 2014 to remediate customers as set out in para 17 of the CSR:
In early 2014, ANZ decided to remediate customers who had incurred Same Name PPNP Fees and, subsequently, PPT Fees relating to periodical payments between accounts in the same name (Same Name PPT Fees) (together, Same Name PP Fees). It was determined in about July 2015 that customers affected were to be remediated for Same Name PP Fees incurred over the period from 1 January 2008. ASIC was informed of the approach ANZ proposed to adopt. ANZ did not have a "Limited Remediation Policy", or any formal policy regarding the period over which it would make payments to customers in remediation programs (remediation period). The remediation period was determined by reference to the particular circumstances of the case. ANZ does not agree with the allegations in [23] of the Concise Statement. The timing of ANZ informing customers about its remediation program was not dictated by the reasons stated in [30] of the Concise Statement.
13 Paragraph 19 of the CSR set out ANZ's position as follows:
Customers who had requested ANZ to make periodical payments, but who had insufficient funds in their account to meet the payment request, continued to incur Same Name PPNP Fees up to (and after) 23 February 2016. Customers also continued to incur Same Name PPT Fees. ANZ continued to charge Same Name PP Fees to that date in circumstances where: (a) ANZ was entitled to charge Same Name PP Fees or, in any event, had a reasonable basis for doing so; (b) in light of the remediation decision that had been taken, fees incurred prior to 23 February 2016 were to be refunded to affected customers, together with an amount to reflect the time value of money; (c) the amendment to the terms and conditions was delayed; and (d) there were IT constraints involved in stopping customers from incurring just Same Name PP Fees and not other PP Fees relating to payments to the account of other people/businesses.
(Emphasis added.)
14 At para 24 of the CSR ANZ set out its entitlement to charge the fees, in the following terms:
Further, and in any event, ANZ was contractually entitled to charge Same Name PP Fees:
(a) ANZ's account fees and charges booklets for retail and business customers stated the amount of the fees for periodical payments at all relevant times, and did not limit such fees to periodical payments between an ANZ account and an account of another person or business. Further, the Business Fees and Charges Booklet expressly contemplated that the periodical payment arrangements which might be subject to fees included payments to accounts in the same name.
(b) ANZ's "Consumer Lending Terms and Conditions", which governed cases where customers had consumer loan accounts with ANZ, expressly provided that one option for repaying principal and interest on a customer's loan was by "periodical payment" from the customer's nominated ANZ account (which, in the context of consumer loans, are often an account in that customer's name).
(c) While it is true, as ASIC alleges, that the terms and conditions documents for retail and business customers contained a description of periodical payments as payments made "to the account of another person or business", ANZ submits that this did not define periodical payments. The proper construction of the terms and conditions documents is that the words "periodical payments" refer to recurring automated payments debited at a particular frequency (that is, periodically), from an ANZ customer's account to another account, whether ANZ or non-ANZ.
(d) In cases where customers signed periodical payment authorisation forms in the form executed by Mr and Mrs Andrews (see [15] above), this was expressly acknowledged by their agreeing that ANZ could charge fees in respect of the periodical payment arrangement which they instructed ANZ to establish.
(e) In other cases, where customers signed authorisation forms which did not deal with the charging of fees, by signing the form the customer acknowledged that the payment arrangement established was a "periodical payment" for the purpose of their contractual relationship with ANZ.
15 In answer to the matters asserted by ASIC and summarised at [8] above, ANZ stated the following in paras 30–34 of the CSR:
30. First claim. The first of ASIC's unconscionable conduct claims relates to the charging of Same Name PP Fees between 26 July 2013 and 23 September 2015. ASIC puts the claim in four different ways:
(a) ANZ knew that the charging of Same Name PP Fees was unlawful and:
(i) knew that it was highly unlikely that ANZ would be able to remediate all affected customers; or
(ii) had reason to believe that it was highly unlikely that ANZ would be able to remediate all affected customers; or
(b) ANZ knew that the charging of Same Name PP Fees was at risk of being unlawful and:
(i) knew that it was highly unlikely that ANZ would be able to remediate all affected customers; or
(ii) had reason to believe that it was highly unlikely that ANZ would be able to remediate all affected customers.
31. ANZ does not accept these allegations.
32. While some ANZ staff had been sent a copy of the wrinkle list (see [9] [sic: [10]] above), ANZ denies ASIC's allegation that ANZ knew the charging of the Same Name PP Fees was "unlawful", including after the issue was raised in December 2013 during the trial of the Paciocco proceeding.
33. While ANZ agrees that it received information from Blake Dawson which touched upon the question of whether ANZ was entitled to charge Same Name PP Fees, it is unclear whether ASIC alleges that ANZ staff who received that information also knew or had reason to believe, from 26 July 2013, that it was highly unlikely that ANZ would be able to remediate all affected customers who incurred Same Name PP Fees between 26 July 2013 and 23 September 2015. ASIC's case relies on the aggregation of different knowledge, or states of mind, across staff within ANZ, to attribute a single state of knowledge, or state of mind, to ANZ. That case is not supported by ASIC's Concise Statement.
34. ANZ also relies on the circumstances referred to in [19] above, in further answer to the whole of ASIC's first claim of unconscionable conduct.
(Footnote omitted.)
16 It is to be noted that in these paragraphs and para 19 of the CSR, ANZ denies that it acted unconscionably, but does not assert any state of mind.
17 The parties have filed an agreed statement of facts (Document A) which states the following at paras 2 and 36–39:
2. The parties' agreement on the facts set out in this document:
2.1. is for the purpose of this proceeding only and does not constitute any agreed fact beyond this proceeding; and
2.2. does not constitute any waiver by either party of any client legal privilege that otherwise subsists in a communication or other document that is referred to in this document.
…
36. In July 2011, in the context of the Review, ANZ received a communication from Blake Dawson which touched upon the question of whether ANZ was entitled to charge the Same Name PPNP Fees (the 2011 Communication). In summary, an issue identified in the 2011 Communication related (relevantly) to whether ANZ was entitled to charge Same Name PPNP Fees when the Savings and Transaction Terms and Conditions Documents contained a statement that a periodical payment was a payment "to the account of another person or business".
37. The 2011 Communication was:
37.1. initially provided orally during the course of two telephone calls on 11 July 2011 and 14 July 2011; and
37.2. subsequently communicated in writing on 18 July 2011 in a document described as a "wrinkle list".
38. A further version of the "wrinkle list" was provided to ANZ by Blake Dawson on 12 October 2011.
39. On various dates between 11 July 2011 and at least 3 December 2013, a number of ANZ employees in the project team for the exception fees litigation, ANZ Legal, and the Deposits and Home Loans team participated in discussions and/or received written communications which made some reference to the 2011 Communication and/or whether there was a possible issue, risk or ambiguity in the contractual terms in relation to ANZ's ability to charge fees in relation to regular automated payments in circumstances where the payment was not a payment "to the account of another person or business".
18 The parties have also filed a document setting out the facts in dispute (Document C) which includes the following disputed assertions of fact made by ASIC about the communication of 2011:
3. From 11 July 2011, on the dates set out in the table in Appendix A to this document, at least the ANZ employees indentified [sic] in that table became aware (by reason of the communication described in the table) that there was a possible, issue, risk or ambiguity in the contractual terms in relation to ANZ's ability to charge Same Name PP Fees (the PP Fees Issue).
4. As to the 2011 Communication:
4.1. The issue in relation to the charging by ANZ of PPNP Fees which was identified in the 2011 Communication was that ANZ had charged PPNP fees in relation to failed regular automated payments between two accounts in the same name when the definition of "periodical payment" in the relevant Savings and Transaction Terms and Conditions Documents captured only payments made to the account of another person or business.
4.2. As part of the 2011 Communication, Blake Dawson indicated to ANZ that ANZ should go and investigate its entitlement to charge the Same Name PPNP Fees.
5. The Savings and Transaction Terms and Conditions Documents defined "periodical payment" for the purposes of the PP Transaction Fee in the same terms as it was defined for the purposes of the PPNP Fee.
6. By no later than 18 July 2011, as a result of the communication of the 2011 Communication, ANZ knew or ought to have known that the charging of Same Name PP Fees by ANZ to its customers was unlawful.
7. Alternatively, by no later than 18 July 2011 as a result of the communication of the 2011 Communication, ANZ knew, at the least, that there was a real risk that the charging of Same Name PP Fees by ANZ to its customers was unlawful.
8. Despite knowledge of the existence of the risk, ANZ took no step to determine whether the charging of Same Name PP Fees to its customers was unlawful before 3 December 2013.
9. Between January 2012 and January 2013, ANZ gave consideration to amending its relevant standard terms and conditions concerning Same Name PP Fees, but decided to make no amendments for reasons which ANZ declines to disclose, claiming legal professional privilege.
10. Alternatively, as a result of:
10.1. the 'Additional Points of Claim" document in the Paciocco proceeding being served on ANZ on 3 December 2013; or
10.2. alternatively, the Court, on 5 February 2014, publishing its judgment in Paciocco v Australia and New Zealand Banking Group Limited (2014) 309 ALR 249,
by no later than 3 December 2013, or alternatively 5 February 2014, ANZ knew or ought to have known that the charging of the Same Name PP Fees by ANZ to its customers was unlawful.
19 The privileged communications (by way of advice) were (two oral and one written) communications on 11, 14 and 18 July 2011: see paras 36–37 of Document A above.
20 The first basis of the asserted waiver is a letter of 5 September 2018 which it was submitted by ASIC disclosed "the substance or effect of the advice."
21 The letter of 5 September 2018 is to be understood in its context. On 14 February 2014 the General Manager, Deposits & Mortgages and the Head of Compliance (Mr Shaw) wrote to ASIC stating the following:
ANZ wishes to notify the Australian Securities and Investments Commission (ASIC) of an issue involving the charging of ANZ's Periodical Payment Non-Payment (PPNP) fee in a particular circumstance.
Relevant background
A 'periodical payment' is described in ANZ's Saving and Transaction Products – Terms and Conditions as:
" ... a payment that you have instructed us to pay from your ANZ account to the account of another person or business by providing your account number and branch number (BSB)." (our emphasis)
Further, the PPNP fee is charged:
"... if you have authorised a periodical payment that we cannot pay from your account because there are insufficient cleared funds available in your account".
In certain cases, where a customer has requested ANZ to make scheduled payments to another account held by that customer, ANZ has had a practice of charging a PPNP fee if the account to be debited did not hold sufficient funds at the relevant time. It has recently been asserted, however, that ANZ does not have a contractual right to charge a PPNP in this circumstance because the payment is not being made to the account of 'another person or business'.
This issue impacts our retail deposit accounts and we are currently assessing whether the same issue arises in relation to our commercial deposit accounts.
Identification of the issue
The issue was identified following a review of ANZ's terms and conditions in the context of the exception fee class action.
Transactions Impacted
The amount of the PPNP fee for retail customers is currently $6 but was higher in previous years.
ANZ is not yet in a position to provide any guidance on the potential financial impact to customers. ANZ will need to undertake further investigation of the matter in order to determine this.
Rectification and Next Steps
To rectify this issue for new and existing customers, ANZ is investigating the exact circumstances in which the PPNP fee is charged across all channels for retail and commercial customers.
In addition to correcting the contractual / system issue, ANZ will also undertake a separate but parallel piece of work to remediate impacted accounts as required.
We will keep you advised of our progress with regard to these matters and would be pleased to meet with you in person if that would assist you.
22 The letter of 14 February 2014 is not asserted to have disclosed any legal advice.
23 By August 2016, there was communication between ASIC and ANZ about the issue of the fees and their remediation. On 16 August 2016, Ms Tam (of ASIC) emailed ANZ's Head of Compliance, Mr Shaw, asking for certain information. Two days later Mr Shaw provided details of the affected accounts. On 19 August 2016, Ms Tam asked Mr Shaw how and when ANZ identified the matter. Mr Shaw responded:
The issue was identified and reported to ASIC in February 2014 following a review of ANZ's terms and conditions.
24 This explanation was wrong or potentially misleading to the extent that it implied that the review took place in 2014.
25 Two years later on 5 September 2018 the now Head of Compliance Ms Edelman wrote to ASIC. The relevant parts of the letter were as follows:
I refer to the above matter and to our telephone discussion on 31 August 2018. As mentioned, ANZ is now writing to you to confirm the matters discussed during that conversation.
PPNP remediation
On 14 February 2014, ANZ wrote to ASIC informing it of an issue in relation to when ANZ charged certain Periodical Payment Non-Payment (PPNP) fees.
In summary, the issue related to ANZ having charged PPNP fees in relation to failed periodical payments between two accounts in the same name (same name PPNP fees) when the definition of "periodical payment" in the relevant Terms and Conditions captured only payments made to the account of another person or business.
This letter stated that the issue was identified following a review of ANZ's terms and conditions in the context of the exception fees class action. This class action, which for technical reasons consisted of two closed class proceedings (the Andrews and Paciocco proceedings) involved allegations that several ANZ fees, including the PPNP fee, were penalties or contravened various statutory provisions.
Following the letter to ASIC in February 2014, ANZ made remediation payments to customers in around August 2016. Our remediation:
• Generally covered same name PPNP fees charged between 1 January 2008 and 23 February 2016; and
• Involved the payment of $28.8 million to around 400,000 business and retail accounts.
During the course of the remediation, our technical team concluded that there was a limitation on the data available in respect of a particular type of periodical payment, known as a Direct Loan Payment, between 1 January 2008 and 30 April 2009, which meant that they could not identify customers who were affected by the issue. As a result, customers who were charged same name PPNP fees in relation to Direct Loan Payments during this period were not remediated.
[There was then discussion of a 2017 class action.]
Additional matters
As discussed, as a result of more recent work on the class action, we have identified two matters.
Firstly, we have identified that further data is available which may allow us to overcome the data limitation encountered in the original remediation program. In principle, this data should now enable us to remediate Direct Loan Payment customers who were charged same name PPNP fees between 1 January 2008 and 30 April 2009. Subject to validating whether this is possible, we intend to remediate these customers, as far as possible, on the same basis as in the original remediation program. We will keep you informed of our progress in relation to this.
Secondly, in the context of responding to a request for information for the purposes of ASIC's media release about the remediation, Mark Shaw (a now former employee of ANZ) sent an email to Monika Tam of ASIC on 19 August 2016 that stated as follows:
The issue was identified and reported to ASIC in February 2014 following a review of ANZ's terms and conditions.
We now consider that this statement was partly in error. While ANZ did report to ASIC in February 2014 after a review of its terms, there had been advice provided to ANZ by external lawyers in 2011, in the context of the exception fees class action, which touched on this issue. The advice was only known to a limited group of people within ANZ and having made inquiries with Mr Shaw, we understand that:
• He was not aware of this advice; and
• The date he referred to in his email regarding the time of identification was simply a mistake.
ANZ maintains privilege in the advice but considers that it is necessary to inform ASIC of its existence in order to correct the statement in Mr Shaw's email. ANZ apologises for this error.
As noted above, we will keep ASIC informed about progress of the additional remediation work we intend to undertake. We are also happy to provide any further information you may like about the class action and any settlement approval.
26 The question is whether, in this letter, there has been a disclosure of the substance of Blake Dawson's advice in 2011.
27 The distinctions drawn in this area are fine. The disclosure of the substance or gist or conclusion of legal advice will render a waiver: Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237; 140 FCR 101 at 119 [65]–[66]; and the authorities there cited, especially Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd [1996] NSWSC 7; 40 NSWLR 12 at 17–19 and Adelaide Steamship Co Ltd v Spalvins [1998] FCA 144; 81 FCR 360 at 366–367 read with 376–377.
28 The fineness of the distinctions can be seen in Ampolex. There, statements in a Part B disclosure document at p 58 (set out in 40 NSWLR at 14) were as follows:
Ampolex's views as to the likely outcome of the Convertible Note litigation.
The views set out below have regard to the pleadings, the evidence available to Ampolex and the advice of the barristers and the solicitors engaged by Ampolex for the purposes of the litigation, as at 1 May 1996. Ampolex considers that:
(a) it is likely that Ampolex will be successful in establishing the conversion ratio for the Convertible Notes as one Ordinary Share for each Convertible Note and, if so, it is unlikely that there would be any further substantial claim against Ampolex in respect of the conversion ratio of the Convertible Notes by any Convertible Noteholder not party to the litigation;
(b) it is unlikely that there will be any substantial effect on Ampolex resulting from the cross-claims made in the litigation; and
(c) if Ampolex is unsuccessful in establishing the ratio for the Convertible Notes as one Ordinary Share for each Convertible Note it has a strong claim against Mallesons for damages for professional negligence in respect of any loss it may suffer arising out of issues raised in the present proceedings, subject to the cross-claim by Mallesons against Ampolex for contributory negligence."
29 Justice Rolfe concluded that there was no waiver from these statements, saying at 40 NSWLR 17–18:
At the conclusion of the submissions, which lasted for about one hearing day on the 20th and 21st days of the hearing, I said:
"In this matter, although not without some hesitation, I have come to the conclusion that p 58 of the Pt B statement, exhibit 4 and 6D 94, does not constitute a disclosure of the substance of the evidence, that is, the legal advice of the barristers and the solicitors engaged by Ampolex for the purposes of the litigation."
I now give my reasons for coming to this conclusion. In my view, on a fair reading of what appears at 58 of exhibit 4 and 6D 94 in the context of all the other material in it, the words are a statement of Ampolex's view of the likely outcome of the litigation and they are not a statement of either the substance or effect of the advice. Those seeking disclosure point, of course, to the fact that the view is based, inter alia, on the advice. I do not think it could be suggested that the advice did not play a part in the formation of Ampolex's view. However, the question is whether the statement of Ampolex's view, albeit based on the material to which Ampolex refers, is a disclosure of Ampolex's view or a disclosure of the material on which that view was based. Section 122(2) of the Evidence Act 1995 requires a disclosure of the substance of the legal advice. I do not regard the statement of Ampolex's view as constituting a disclosure of the legal advice. It may be that in forming its opinion Ampolex has misconstrued or misunderstood the advice. However that may be, the statement does not rise above a statement of Ampolex's view and it does not purport to state the advice, or its substance or effect and, therefore, it does not amount to a disclosure of the advice. In my opinion what appears at p 58 can be contrasted with what appears on p ii. Those words I have held amount to a waiver of the privilege in that they disclose the substance of the legal advice, viz, that the correct ratio is 1:1.
30 There was waiver, however, in another part of the Part B statement that was set out by Rolfe J at 40 NSWLR 15:
There is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position.
31 The fineness of the distinctions involved is apparent: there is a waiver if one states: "I have legal advice. Its substance is." But there is no waiver if a party says what he or she believes and legal advice may be seen to be relevant to it. One must state the substance or gist or conclusion of the advice.
32 The letter of 5 September 2018 does not disclose the substance of advice. The context of the letter was the potentially misleading statement in 2014. The 14 February 2014 letter refers to the recent assertion (made in the Paciocco class action) that ANZ did not have a contractual right to charge Same Name PPNP Fees; and that the issue was identified in a review of terms in that context. The 5 September 2018 letter repeated on the first page the nature of the issue; and on the second page corrected the earlier letter by saying that 2011 legal advice "touched on" the issue in connection with the earlier (Andrews) class action, thereby identifying the subject matter of the advice.
33 There is no disclosure waiver.
34 The second way ASIC puts the waiver is that by advancing a positive case about its state of mind about the fees ANZ had waived privilege in the 2011 advice.
35 To succeed in this assertion ASIC must prove something more than a joinder of issue on an assertion that ANZ knew that it had no basis to charge or knew that it was a risk that there was no basis to charge; rather, to state the matter shortly: the content of the communication must have been put in issue by the holder of the privilege: Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; 151 FCR 341 at 359 [61]; Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; 72 NSWLR 236 at 252 [48]; Macquarie Bank Limited v Arup Pty Limited [2016] FCAFC 117 at [34]–[41]; Viterra Malt Pty Ltd v Cargill Australia Ltd [2018] VSCA 118; 58 VR 333 at 344–350 [46]–[70]; and Mann v Carnell [1999] HCA 66; 201 CLR 1.
36 The question is one of understanding ANZ's case: Has it effectively put its state of mind in issue such that it could be said to be inconsistent to seek to maintain the confidentiality of the privilege? The principle was expressed by the Full Court in Rio Tinto 151 FCR at 359 [61] as follows:
Both before and after Mann, the governing principle required a fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence. In DSE at [58], Allsop J put the matter somewhat more descriptively, saying waiver arises when:
the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication.
(Emphasis in original.)
37 Whether there has been a waiver is to be assessed by reference to the CSR and how the case is being presented. I have set out the relevant parts of the CSR: paras 19, 24 and 30–34.
38 At no point in these paragraphs does ANZ assert that it believed or knew anything. It asserts that it was contractually entitled to charge the fees or that it had a reasonable basis for doing so. This looks, at least in terms of express language, to the objective facts to say there was objectively a correct or reasonable basis for charging the fees, not to ANZ's belief and that such belief was founded on those matters.
39 The submissions of ASIC are that the 2011 advice exists; it is known to be relevant to the issue of the entitlement to charge fees; and it is relevant to the question whether ANZ could properly have held the view that there was a reasonable basis for it to charge the fees. So, it was argued, for ANZ to conduct a case that it had a reasonable basis is inconsistent with the maintenance of the privilege and its confidentiality.
40 The difficulty with the submissions of ASIC (though ultimately it may be ANZ's difficulty in the case) is that ANZ does not assert that it held the view that it could charge the fees or that it had the view that there was a reasonable basis for charging Same Name PP Fees; rather only that it was entitled to charge the fees, or "in any event", it had a reasonable basis for charging the fees.
41 The difficulty for ANZ, however, is that the defence has an air of unreality or meaninglessness about it. Either it was contractually entitled to charge the fees or not. If not ("in any event" in para 19 of the CSR) what possible "reasonable basis" could there be as to the fact of entitlement to charge? Unless, of course, what is really meant is that ANZ can be reasonably excused, because it thought that it was entitled to charge the fees. This would appear (at the moment) to be a pleading or case management point, not a waiver point.
42 Dr Collins, senior counsel for ANZ, insisted that no such case as last mentioned was asserted. In that circumstance, the nature of the issue in para 19 (read with para 34) of the CSR perhaps needs to be elaborated. In other words, the carefully crafted words of para 19: "in any event [ANZ] had a reasonable basis for [charging Same Name PP Fees]" even if there were no contractual authority, should be illuminated. It is said not to mean ANZ believed that it had a reasonable basis for thinking it could charge the fees; but only that objectively there was a reasonable basis to charge the fees, even if there was no contractual basis. How that is relevant to any exculpation is difficult to understand. It may be that this issue needs to be drawn out by way of pleading aspects of the case. For now, on the question of waiver, I am not prepared to conclude that ANZ has relevantly put the contents of the communication into issue in the sense discussed in the authorities. The documents, however, should be collected, and be discovered under an affidavit (properly founding the privilege) of the responsible partner of the instructing solicitors, so that should this issue arise again, in particular in the course of proceedings, the documents can be produced with despatch.
43 I will hear the parties on costs at the next case management hearing. My inclination is to reserve the question of costs.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop.
Associate:
Dated: 17 July 2020
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federal_court_of_australia:fca/single/1987/1987FCA0783
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decision
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commonwealth
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federal_court_of_australia
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application/pdf
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1987-12-23 00:00:00
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Aussie Protection Inc & Anor v Hy Way Sunvisors (Sales) Pty Ltd [1987] FCA 783
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1987/1987FCA0783.pdf
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2024-09-13T22:51:43.685763+10:00
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JUDGMENT No. TO Qik
CATCHWORDS
Practice and Procedure- motion for security for costs -
discretionary nature - applicant ordinarily resident
outside Australia - principles applicable.
Federal Court of Australia Act 1976 s. 56° sO D
Judiciary Act 1903 s. 79, 80. an ~ "7%
Companies (N.S.W.) Code 1981 s. 533(1)
DATE: 23 December 1987
CORAM: GUMMOW J.
PLACE: Sydney.
Aussie Protection Inc. & Anor. V Hy-Way Sunvisors (sales)
Pty. Ltd.
IN THE FEDERAL COURT OF AUSTRALIA)
NEW SOUTH WALES DISTRICT REGISTRY)
GENERAL DIVISION ) NO. G.576 of 1987
BETWEEN: AUSSIE PROTECTION
INCORPORATED
First Applicant
SIMON WESTBROOK SKEET
Second Applicant
AND: HY-WAY SUNVISORS (SALES)
PTY. LIMITED
First Respondent
LARRY SHEIL
Second Respondent
CORAM: GUMMOW J.
DATE: 23 DECEMBER 1987
PLACE: SYDNEY Se é 7
By
mM A By K
INUTES OF ORDER ON "s mn 4
Ca
THE COURT ORDERS THAT: TT Ie
(1) The Applicants provide security for costs in the
amount of $12,500, such security to be in a form
agreed between the solicitors for the parties and
failing such agreement, in a form acceptable to the
Registrar.
(2) The proceedings be stayed until the Applicants have
complied with Order (1).
(3) The parties have liberty to apply on seven (7) days
written notice.
(4) Costs of the motion be costs in the substantive
application.
NOTE: Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA)
NEW SOUTH WALES DISTRICT REGISTRY)
GENERAL DIVISION ) NO. G.576 of 1987
BETWEEN: AUSSIE PROTECTION
INCORPORATED
First Applicant
SIMON WESTBROOK SKEET
Second Applicant
AND: HY-WAY SUNVISORS (SALES)
PTY. LIMITED
First Respondent
LARRY SHEIL
Second Respondent
CORAM: GUMMOW J.
DATE: 23 DECEMBER 1987
PLACE: SYDNEY
EX TEMPORE REASONS FOR JUDGMENT
HIS HONOUR:
These proceedings were commenced by Application and
statement of claim filed 16 November 1987. The first
respondent is a company incorporated in New South Wales, and
the second respondent, Mr. Sheil, is a New South Wales
resident. The first applicant is a corporation which is shown
as incorporated under the laws of the State of Maryland in the
United States of America. The second applicant, Mr. Skeet, is
resident in Maryland and is the President and a shareholder of
the first applicant.
2.
The applicants plead their case as one of
contravention of s.52 of the Trade Practices Act 1974 ("TP
Act"). They claim damages of which broad particulars are
given. They also seek injunctive relief.
An injunction is sought restraining the respondents
from appointing any person other than the second applicant to
distribute the product ""Weathershield" in Northern and Central
America. An injunction is also sought against the appointment
of any person other than the second applicant to distribute the
product "Threadrite" in all areas of the world, with the
exception of Australia, New Zealand, the South Pacific Islands
and South East Asia.
By motion filed 4 December 1987, the respondents seek
an order that the applicants provide security for costs in the
proceedings. They also seek an order that until such security
is provided, the proceedings be stayed. On 10 December 1987,
the Court gave directions for the filing of affidavits, and
stood the motion over for hearing on 18 December 1987.
0.28 r.3 (1) (a) of the Federal Court Rules provides
that where, in any proceeding, it appears to the Court on the
application of a respondent that an applicant is ordinarily
resident outside Australia, the Court may order that applicant
to give such security as the Court thinks fit for the costs of
the respondent of and incidental to the proceeding. More
generally, s.56 of the Federal Court of Australia Act 1976
provides that the Court may order a plaintiff in a proceeding
in the Court to give security for the payment of costs that may
be awarded against him and that the security shall be of such
amount, and given at such time and in such manner and form, as
the Court directs.
3.
In this case, the Court is exercising jurisdiction
within the State of New South Wales. Sub-s. 533 (1) of the
Companies (N.S.W.) Code provides as follows:
Where a corporation is a plaintiff in any
action or other legal proceeding, the court
having jurisdiction in the matter may, if it
appears by credible testimony that there is
reason to believe that the corporation will
be unable to pay the costs of the defendant
if successful in his defence, require
sufficient security to be given for those
costs and stay all proceedings until the
security is given.
In such a case as this, it has been held that by virtue of s.79
of the Judiciary Act 1903, this provision of the New South
Wales law is made applicable in this Court: Cameron's Unit
Services Pty. Ltd. v Kevin R. Whelpton & Associates (Australia)
Pty. Ltd. (1986) 13 FCR 46 at 48-49.
However, s.533 would, on the present motion, deal only
with the position of the first applicant and the respondents
put their case primarily on the footing that security should be
provided by the applicants as persons ordinarily resident
outside Australia.
It is necessary first to outline the nature of the
case as it presently appears from the materials that have been
filed.
The first respondent, Hy-way Sunvisors (Sales) Pty.
Ltd., and the second applicant are parties to two agreements
each dated 1 April 1987. The first agreement (the
Weathershield Agreement) recites that EGR Plastics & Signs of
Salisbury in the State of Queensland manufactures
weathershields for use on trucks and vans. These
weathershields are defined as "the Product". It is further
4.
recited that EGR Plastics & Signs has granted to the first
respondent the right to market and sell the Product in
Australia and Northern and Central America, and that, with the
consent of EGR Plastics & Signs, the first respondent has
agreed to grant to the second applicant the exclusive right to
market and sell the Product in Northern and Central America.
This is defined as "the Territory". The exclusive right 1s
then granted by clause 1, and in clause 2 it 1s provided as
follows:
Except as herein expressly provided, during
the term of this Agreement Hy-way shall not
market sell or distribute the Product for
sale in the Territory. Skeet hereby agrees
that during the term of this Agreement it
[sic] will not market sell or distribute the
Product other than in the Territory.
Clause 3 provides for an indefinite term of the agreement,
subject to, inter alia, termination by six months' notice in
writing by either party served at any time upon the other.
In the second agreement (the Threadrite Agreement) it
is recited that the first respondent has granted to Mr. Skeet
the exclusive right to market and sell Threadrite (which is
defined as "the Product") "in all areas except Australia, New
Zealand and the South Pacific Islands and SE Asia (/'The
Territory' )". The exclusive right is then granted by clause
1, and clauses 2 and 3 are along the same lines as those
clauses in the Weathershield Agreement.
The applicants allege in their statement of claim that
certain representations were made in the course of negotiations
between Mr. Skeet and Mr. Sheil leading up to the entry into
the two agreements of 1 April 1987. The applicants also allege
that in reliance upon these representations, Mr. Skeet moved
5.
from Australia to the United States, incurred expense, and
caused the incorporation of the first applicant for the purpose
of carrying on business as his subcontractor. It is alleged
that, contrary to the representations said to have been made,
the first respondent "was not capable of conferring any
exclusive right to market and sell Weathershields or Threadrite
and did not itself possess the exclusive right to market and
sell those products" in respect of the Territories specified in
the agreements.
In addition to questions as to the interpretation of
the agreements, it is apparent from affidavits that have been
filed by deponents who include Mr. Skeet and Mr. Sheil that
there will be areas of dispute as to the content of various
conversations preceding entry into the agreements.
The evidence also reveals that proceedings against
Aussie Protection Inc. and Mr. Skeet have been instituted in
the Circuit Court for Harford County in the State of Maryland
by a Maryland corporation, DRS Enterprises Ltd. and a Mr.
Sturgill who appears to be the President and sole shareholder
of DRS Enterprises Ltd. A writ of summons in these proceedings
was issued on 10 September 1987 and was accompanied by a
Complaint, being a pleading of fourteen paragraphs. In the
Complaint, it is alleged that contrary to the statements in an
agreement dated 8 June 1987, between Mr. Skeet and Mr.
Sturgill, Mr. Skeet did not have the exclusive rights to market
in Northern and Central America the product known as a
Weathershield or Weatherguard manufactured in Australia by EGR
Plastics & Signs. It is alleged that since May 1985, Wade
Automotive Products of Salt Lake City, Utah has been an
authorised importer of the Weatherguards in question.
6.
I approach the question of whether any, and if so
what, security for costs should be ordered at this stage on the
footing that the material to which I have referred indicates
that the applicants have a serious case to be tried. I express
no view as to the likely outcome in respect of the factual
disputes indicated by the evidence as it now stands. There
was, quite properly, no cross-examination at this stage of
either Mr. Skeet, Mr. Sheil or the other deponents.
Barton v Minister for Foreign Affairs (1984) 2 FCR
463, is authority as to the discretionary character of the
power (pursuant to s.56 of the Federal Court of Australia Act
1976 and 0.28 r.3 (1) (a) of the Federal Court Rules) to order
provision of security for costs where applicants are ordinarily
resident outside Australia; and that discretion is to be
exercised by enquiring how, on the whole, justice will best be
served.
The historical basis for requiring a plaintiff from
outside the jurisdiction to give security, was that to enforce
a judgment in his favour the defendant would have to take his
chances under the procedures of the foreign country where the
plaintiff resided.
There is no evidence in the present case as to the
procedures of the State of Maryland and I am invited to assume
those procedures to follow the common law as understood in this
country (see Standard Bank of Canada v Wildey (1919) 19 SR
(NSW) 384 at 388, but compare the Judiciary Act 1903, s.80,
which directs attention to the common law of England, although
nothing in this case turns on the distinction: Adams v Eta
Foods Ltd. (Federal Court, 6/11/87, unrep)).
7.
I put to one side the position with equitable relief,
as to which see R.W. White, "Enforcement of Foreign Judgments
in Equity", (1982) 9 Syd. Law Rev. 630; Pound, "The Progress of
the Law, 1918-1919: Equity", (1919-20) 33 Harv. L. Rev. 420 at
423-5. The respondents in the present case are seeking by
their motion to protect their position as to costs under an
anticipated judgment in their favour. At common law, where a
judgment in debt or for a sum of damages is obtained in a
foreign court, the cause of action on which the judgment was
obtained does not merge in that judgment. Thereafter, the
successful party can either relitigate in the local
jurisdiction his original cause of action, or he can bring an
action in the local jurisdiction upon the foreign judgment.
Thus, in general, there are two avenues open in the local
jurisdiction to the successful party. The second avenue, an
action brought on the foreign judgment, has the character of an
implied contract to pay on the part of the party against whom
the judgment has been recovered; the action is in debt or
assumpsit: In_re Flynn Dec'd (No. 2) [1969] 2 Ch 403 at
412-413, Delfino v Trevis (No. 2) [1963] NSWR 194. In the
present case, it is not the first but the second avenue that
would be pursued by the respondents. This is because they
postulate an order in their favour, not upon an anterior cause
of action, such as a cross-claim in contract or tort, but
purely for their costs of resisting the proceedings brought
against then.
No doubt, it was to remedy these procedural
complexities in the common law that the modern statutory
systems of reciprocal foreign judgment registration were
8.
devised. However, as I have said, there is no indication that
such a system exists in Maryland in respect of judgments of
this Court, and in respect of which the respondents in the
present case might avail themselves.
Accordingly, these procedural considerations indicate
a significant factor in favour of the respondents in seeking
provision of security.
I must also consider whether the effect of an order
for security will or will be likely to bring the proceedings to
a premature end, because of lack of means of the applicants to
comply with the order. This is of particular concern where, as
here, jurisdiction is invoked in respect of alleged
contraventions of Part v of the TP Act, bearing in mind the
public interest in such matters: Drumdurno Pty. Ltd. v Braham
(1982) 64 FLR 227 at 236, Cameron's Unit Services Pty. Ltd. v
Kevin R. Whelpton & Associates Pty. Ltd. (1986) 13 FCR 46 at
52. The position of the applicants to resist the application
for security for costs would also be strengthened if the
applicants' financial difficulties were shown to stem from the
very transactions, the subject of the proceedings: Cameron's
Unit Services Pty. Ltd. v Kevin R. Whelpton & Associates Pty.
Ltd. (supra) at 52.
I should also add that this is not a case in which the
second applicant (Mr. Skeet) has sheltered behind the corporate
veil of the first applicant (if indeed there be such a veil
under Maryland corporation law). However, as counsel for the
respondents emphasised, this is a case where, given the
identity of the parties to the alleged representations and to
the contracts, it was perhaps inevitable that the second
applicant be a party, not merely his company.
9.
I should say something further concerning the question
of the alleged impecuniosity. The direct evidence put before
the Court by the applicants appears in para. 13 of Mr. Skeet's
affidavit. This reads as follows:
Neither Aussie Protection Inc. nor I have
any significant assets. We have a combined
debt of $15,000.00. Because of the action
against us by Sturgill and the doubts which
have arisen about our business reputation
and viability consequent upon that action,
we are not able to trade. We cannot furnish
security for the respondent's [sic] costs.
Para. 13 contains various assertions. I have already
referred to the litigation in Maryland instituted by Mr.
Sturgill and his company. Para. 13 falls far short of the
detail required to give weight to the applicants' resistance to
the motion on the ground both that the result of ordering
security would be or be likely to terminate the proceedings,
and that the impecuniosity of the applicants is the consequence
of the conduct of the respondents of which the complaint is
made.
In my view, in the whole of the circumstances I have
mentioned, justice would best be served by making an order for
provision of security. Such order should provide for security
in respect of the period up to the completion of interlocutory
steps, reserving liberty to apply in relation to the position
thereafter.
I turn to consider the quantum of an order for
security to be made at this stage. In their motion, the
respondents seek an order for security in the sum of $20,000.
The solicitor having carriage of the matter for the respondents
gave evidence, which is not challenged, as to the steps
10.
involved in preparing the matter for hearing. He indicates in
his affidavit that the party/party costs recoverable by the
respondents should they be successful at the hearing would, in
his opinion, be not less than $20,000.
In respect of the interlocutory steps in this matter,
which are necessary to prepare the case so that it is ready to
be set down for hearing, I propose to order that the applicants
provide security for costs in the amount of $12,500. Such
security is to be in a form agreed between the solicitors for
the parties and, failing such agreement, it is to be in a form
acceptable to the Registrar. I would grant liberty to apply to
seek further security in respect of the prosecution of the case
after it has been made ready to be set down for hearing. I
will also order that the proceedings be stayed until such
security has been provided. The costs of the present motion
should be costs in the substantive application.
I certify this and the
preceding 9 pages to be a
true copy of the Reasons for
Judgment of his Honour Mr.
Justice Gummow.
Associate: Mah po,
Date: 23 December 1987
as
11.
Counsel for the Applicants
on the Motion:
Solicitors for the Applicants
on the Motion:
Counsel for the Respondents
to the Motion:
Solicitors for the Respondents
to the Motion:
Date of hearing:
Date of judgment:
Mr. K.E. Lindgren
Norton Smith & Co.
Mr. M.B. Smith
Duncan Barron & Co.
18 December 1987
23 December 1987
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Egglishaw v Australian Crime Commission [2010] FCAFC 82
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FEDERAL COURT OF AUSTRALIA
Egglishaw v Australian Crime Commission [2010] FCAFC 82
Citation: Egglishaw v Australian Crime Commission [2010] FCAFC 82
Appeal from: Egglishaw v Australian Crime Commission (No 3) [2009] FCA 1027
Parties: PHILIP JEPSON EGGLISHAW v THE AUSTRALIAN CRIME COMMISSION
File number: SAD 154 of 2009
Judges: SPENDER, EMMETT AND JACOBSON JJ
Date of judgment: 8 July 2010
Catchwords: ADMINISTRATIVE LAW – challenge to summons issued under s 28(1) of the Australian Crime Commission Act 2002 (Cth) and subsequent examination – whether the summons was invalid because it stated that appellant was to appear before "an" examiner and not "the" examiner – whether failure to attach to the summons a variation to the determination of the ACC Board meant that the requirements of s 28(2) were not met.
Held: appeal dismissed – the use of "an examiner" does not invalidate the summons – the determination attached to the summons met the requirements of s 28(2).
ADMINISTRATIVE LAW – challenge to a notice to produce issued under s 29 of the Australian Crime Commission Act 2002 (Cth) and production of things pursuant to the notice – whether the notice was invalid because it failed to specify person to whom production was to be made – whether production was unlawful because they were not produced to the relevant person – meaning of "produce" – whether the notice was invalid because it called for production of things "forthwith".
Held: appeal dismissed – the notice, read as a whole, makes clear that the things were to be produced to the Examiner – the word "produce" in s 29(1) does not require the receiver to take actual physical possession – "forthwith" was not an unreasonable time to require production.
Legislation: Australian Crime Commission Act 2002 (Cth) ss 7C, 28, 29, 57
Administrative Decision (Judicial Review) Act 1977 (Cth)
Crimes Act 1914 (Cth) s 3E
Judiciary Act 1903 (Cth) s 39B
Cases cited: A1 v National Crime Authority (1996) 67 FCR 464 considered
A.B. Pty Limited v Australian Crime Commission [2009] FCA 119 cited
Australian Crime Commission v NTD8 [2009] FCAFC 86 cited
C Incorporated v Australian Crime Commission [2010] FCAFC 4 cited
Epstein and Morton v WorkCover SA [2003] SASC 231 considered
Evans v Button (1988) 81 ALR 61 considered
FH Faulding & Co Ltd v Commissioner of Taxation (1994) 54 FCR 75 considered
Ganke v Deputy Commissioner of Taxation (1975) 25 FLR 98 cited
George v Rockett (1990) 170 CLR 104 cited
Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 considered
Date of hearing: 15 February 2010
Place: Sydney (heard in Adelaide)
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 101
Counsel for the Appellant: Mr M Abbott QC with Mr A Thomas
Solicitor for the Appellant: Francis Abourisk Lightowlers
Counsel for the Respondent: Ms S Maharaj QC with Mr R Prince
Solicitor for the Respondent: Australian Government Solicitor
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 154 of 2009
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: PHILIP JEPSON EGGLISHAW
Appellant
AND: THE AUSTRALIAN CRIME COMMISSION
Respondent
JUDGES: SPENDER, EMMETT AND JACOBSON JJ
DATE OF ORDER: 8 JULY 2010
WHERE MADE: SYDNEY (HEARD IN ADELAIDE)
THE COURT ORDERS THAT:
1. The appeal is dismissed.
2. The appellant pay the costs of the appeal of the respondent.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 154 of 2009
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: PHILIP JEPSON EGGLISHAW
Appellant
AND: THE AUSTRALIAN CRIME COMMISSION
Respondent
JUDGES: SPENDER, EMMETT AND JACOBSON JJ
DATE: 8 JULY 2010
PLACE: SYDNEY (HEARD IN ADELAIDE)
REASONS FOR JUDGMENT
1 This is an appeal from the judgment of Besanko J on 14 September 2009: Egglishaw v Australian Crime Commission (No 3) [2009] FCA 1027.
2 Besanko J dismissed an application by Mr Philip Jepson Egglishaw (the appellant) under s 39B of the Judiciary Act 1903 (Cth) for declarations in respect of a summons issued to the appellant pursuant to s 28(1) of the Australian Crime Commission Act 2002 (Cth) (the Act) and a notice to produce issued under s 29 of the Act. The appellant sought declarations that both the summons and the notice were invalid, and that the examination conducted pursuant to the summons and the production of documents and things purportedly pursuant to the notice to produce were unlawful.
BACKGROUND
3 On 27 January 2004, an Examiner under the Act, Mr T Sage, issued a summons to the appellant pursuant to s 28(1) of the Act. Attached to the summons were the following documents: a copy of the "Australian Crime Commission Special Investigation Authorisation and Determination (Money Laundering and Tax Fraud) 2003" (the 2003 authorisation and determination) marked Annexure A; a schedule of documents and other things to be produced by the appellant marked Annexure B; and a statement of rights and obligations under s 29B of the Act and explanatory notes marked Annexure C.
4 The 2003 authorisation and determination was made by the Board of the Australian Crime Commission at a meeting of the Board on 13 May 2003. The authorisation and determination was expressed to be valid until 31 May 2004. On 15 May 2003, the Chair of the Board signed a copy of the authorisation and determination, mistakenly asserting that it was made by resolution of the Board on 15 May 2003.
5 On 4 December 2003, the authorisation and determination was varied by a resolution of the Board. This varying determination was called the "Australian Crime Commission – Operations and Investigations (Participants) Determination 2003" (the 2003 variation). In the 2003 authorisation and determination, the classes of persons to participate in the investigation were specified in Schedule 2 of the document. This was varied by the 2003 variation to make changes to the classes of persons who were to participate in the special investigation.
6 Section 6 of the 2003 authorisation and determination provided:
Classes of persons to participate in an investigation
Pursuant to paragraph 7C(1)(e) of the Act, the classes of persons to participate in the investigation mentioned in Schedule 1 are those mentioned in Schedule 2.
7 Schedule 2 provided:
Schedule 2 Classes of persons
1 The CEO.
2 Members of staff of the ACC authorised in writing by the CEO or by a delegate of the CEO.
3 Officers and members of staff, authorised in writing by the head of the agency, of the following agencies:
(a) each agency of which a Board member is head (other than the CEO) in his or her capacity as a Board member;
(b) the Australian Taxation Office;
(c) AUSTRAC;
(d) the Department of Immigration and Multicultural and Indigenous Affairs;
(e) the New South Wales Crime Commission;
(f) the Queensland Crime and Misconduct Commission.
8 Section 4 of the 2003 variation provided:
Classes of persons to participate in operation
(1) For paragraph 7C(1)(c) of the Act, the classes of persons to participate in the intelligence operation, or the investigation into a federally relevant criminal activity, to which an Instrument mentioned in Schedule 1 applies are the classes mentioned in Schedule 2.
(2) For the avoidance of doubt, a provision in an Instrument mentioned in Schedule 1 that specifies the classes of persons to participate in the operation or investigation to which the Instrument relates is revoked and replaced by this Determination.
(Emphasis added).
9 Schedule 1 includes, as the second Instrument in a list of nine, "Australian Crime Commission Special Investigation Authorisation and Determination (Money Laundering and Tax Fraud) 2003", that is the 2003 authorisation and determination.
10 Schedule 2, in the classes of persons who participate in the intelligence operation or the investigation into a federally relevant criminal activity, includes:
2 Each person who is:
(a) a member of the staff of the ACC; and
(b) identified in writing by the CEO, or a delegate of the CEO, as a person whose duties include providing services in relation to ACC operations and investigations.
3 Each person who is:
(a) an officer or member of the staff of any of the following agencies:
(i) an agency of which a Board member is head (other than the CEO) in his or her capacity as a Board member;
(ii) the Australian Taxation Office:
(iii) AUSTRAC:
(iv) the Department of Immigration and Multicultural and Indigenous Affairs;
(v) the New South Wales Crime Commission;
(vi) the Queensland Crime and Misconduct Commissioner; and
(b) identified in writing by the head of that agency, or a delegate of that head, as a person whose duties include providing services in relation to ACC operations and investigations.
11 The change to the classes of persons who were to participate in the special investigation had no material significance in relation to the persons involved in this special investigation.
12 It is common ground between the parties that the 2003 variation did not accompany the summons issued to the appellant on 27 January 2004.
13 Relevantly, the summons directed to the appellant contained the following:
Pursuant to sub-section 28(1) of the Australian Crime Commission Act 2002, you are required:
a) to attend at Level 2, 383 Latrobe Street, Melbourne on 17 February 2003 at 10.00am before an Examiner at an examination to be held for the purposes of the abovementioned special investigation to give evidence in relation to…
(Emphasis in the original)
14 The summons was signed by Mr Sage, over the printed word "Examiner".
15 At the time the summons was issued on 27 January 2004, and at all later relevant times, s 28 of the Act was as follows:
28 Power to summon witnesses and take evidence
(1) An examiner may summon a person to appear before the examiner at an examination to give evidence and to produce such documents or other things (if any) as are referred to in the summons.
(1A) Before issuing a summons under subsection (1), the examiner must be satisfied that it is reasonable in all the circumstances to do so. The examiner must also record in writing the reasons for the issue of the summons.
(2) A summons under subsection (1) requiring a person to appear before an examiner at an examination must be accompanied by a copy of the determination of the Board that the intelligence operation is a special operation or that the investigation into matters relating to federally relevant criminal activity is a special investigation.
(3) A summons under subsection (1) requiring a person to appear before an examiner at an examination shall, unless the examiner issuing the summons is satisfied that, in the particular circumstances of the special ACC operation/investigation to which the examination relates, it would prejudice the effectiveness of the special ACC operation/investigation for the summons to do so, set out, so far as is reasonably practicable, the general nature of the matters in relation to which the examiner intends to question the person, but nothing in this subsection prevents the examiner from questioning the person in relation to any matter that relates to a special ACC operation/investigation.
(4) The examiner who is holding an examination may require a person appearing at the examination to produce a document or other thing.
(5) An examiner may, at an examination, take evidence on oath or affirmation and for that purpose:
(a) the examiner may require a person appearing at the examination to give evidence either to take an oath or to make an affirmation in a form approved by the examiner; and
(b) the examiner, or a person who is an authorised person in relation to the ACC, may administer an oath or affirmation to a person so appearing at the examination.
(6) In this section, a reference to a person who is an authorised person in relation to the ACC is a reference to a person authorised in writing, or a person included in a class of persons authorised in writing, for the purposes of this section by the CEO.
(7) The powers conferred by this section are not exercisable except for the purposes of a special ACC operation/investigation.
16 The examination of the appellant commenced on 17 February 2004 before Mr Sage, and continued on 19 February 2004 and on subsequent days.
17 On 19 February 2004, a notice to produce was issued by the Examiner, Mr Sage, and served on the appellant by an officer of the Commission, Mr Ian Andrew, in the presence of the appellant's counsel, Mr David Galbally QC, and his solicitor, Mr Michael Carr. Attached to the notice were a schedule of documents and other things to be produced by the appellant, and a statement of rights and obligations under s 29B of the Act.
18 The notice to produce contained the following:
Pursuant to sub-section 29(1) of the Australian Crime Commission Act 2002, you are required:
a) to attend at Level 2, 383 Latrobe Street, Melbourne before David Hellings, a member of the staff of the Australian Crime Commission, forthwith; and
b) produce the documents and things described in the Schedule annexed to this notice as Annexure A, being documents and things that are relevant to the said special investigation.
(Emphasis in the original)
19 On 14 February 2004, several days prior to the issue of the notice to produce, members of the Commission had searched the appellant's hotel room with a search warrant issued pursuant to s 3E of the Crimes Act 1914 (Cth). There is no challenge in these proceedings to the validity of the search warrant, or the seizure of things pursuant to it. During the search of the hotel suite, a notebook computer was located, and taken away. A Member of the Commission made forensic image DVDs of the hard disk drive of the notebook computer. A forensic computer examiner, Mr Freestone, conducted various keyword searches of the forensic image DVDs. These searches were the only access to the content of the forensic images by any member of the staff of the ACC. Members of the Commission suspected that the content of the DVDs was relevant to the special investigation.
20 On 19 February 2004, during a break in the appellant's examination, in the waiting room next to the examination room, the Investigative Team Leader, Mr Andrew, gave the appellant the forensic image DVDs. He then served the notice to produce on the appellant. Upon being served the notice to produce, the appellant conferred with his counsel and then handed over the forensic image DVDs.
21 Mr Hellings gave evidence, which Besanko J accepted, that he was present in the waiting room when the appellant handed over the DVDs to Mr Andrew. There was no evidence that the DVDs were handed over to Mr Hellings. Also present were the appellant, Mr Galbally QC, Mr Carr, Mr Andrew and Mr Martin Taylor, a Commission lawyer. The evidence of Mr Hellings, and the findings of Justice Besanko in this regard, have not been challenged in this appeal.
THE APPEAL
22 The Notice of Appeal contains five grounds:
1. His Honour erred in holding, at [47], that, in so far as the summons issued to the Appellant:
(a) did not refer to "the examiner" as was required by sec. 28 of the Australian Crime Commission Act 2002 ("the Act");
(b) instead, referred to "an examiner"
the error or misstatement did not invalidate the summons.
2. His Honour erred:
(a) in holding (at [35] to [37] that the failure of the Examiner to attach to the summons the 2003 variation to the Determination (which did accompany the summons) was irrelevant;
(b) in failing to find that the terms of sec. 28(2) of the Act were mandatory and, by reason of the Examiner's failure to attach to the summons the 2003 variation, had not been complied with.
3. His Honour erred in holding, at [78], that the Notice to Produce issued to the Appellant by Mr Hellings (Hellings) was valid in circumstances where it failed to specify, in accordance with sec. 29 of the Act, that the documents and things referred to therein were to be produced to Hellings.
4. His Honour erred in holding, at [80], that documents or things referred to in the Notice to Produce were produced to Hellings in accordance with s 29(1) of the Act in circumstances where his Honour found that although Hellings was in the room, he did not serve the notice to produce and he did not physically receive the documents or things.
5. His Honour erred in holding (at [89]) that, in circumstances where the examiner required the documents or things referred to in the Notice to Produce to be produced "forthwith":
(a) "forthwith" was a reasonable time in the circumstances; and
(b) the examiner's requirement was a valid requirement.
23 The paragraph references are to the paragraphs in the reasons for judgment of Besanko J.
24 The first two grounds of appeal relate to alleged deficiencies in the summons which are said to invalidate the summons pursuant to s 28 of the Act. The third and fourth grounds of appeal relate to alleged deficiencies in the notice to produce pursuant to s 29 of the Act. The final ground of appeal deals with what is said to be the requirement in the notice to produce that the documents or things be produced "forthwith".
The summons – Grounds 1 and 2
25 The appellant argued that the learned trial judge erred in finding that, in referring to "an examiner", instead of "the examiner" as required by s 28(1) of the Act, the summons was not invalid. Further, the appellant submitted that his Honour erred in failing to find that the terms of s 28(2) of the Act were mandatory and that the Examiner's failure to attach to the summons the 2003 variation rendered the summons invalid.
26 In regards to the first ground of appeal, the primary judge found that an error or misstatement on the summons in referring to "an examiner", rather than "the examiner", did not invalidate the summons. His Honour found that on the face of section, the examiner's power to summon a person is the power to summon a person to appear before that examiner. Although his Honour found that there was no obvious reason why the power should be so limited, his Honour found that even if the section is so limited, a reference to "an examiner" in the summons did not invalidate the summons. The primary judge found that in this case, the examiner who issued the summons was the examiner who conducted the examination of the appellant, and that there had been no unauthorised excess of power.
27 There are two stages of an inquiry to determine whether the words "an examiner" invalidates the summons and the subsequent examination. First, it is necessary to establish that the use of "an examiner" is a breach of the requirements of s 28(1). Further, it must be demonstrated that there is a legislative intention to invalidate any act which fails to comply with the condition in s 28(1), such that the use of "an examiner" rather than "the examiner" meant that the Examiner had no power to issue the summons: Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 (Project Blue Sky), at 388-389.
28 The appellant submits that Project Blue Sky has no application because the use of "an examiner":
… is not a mere slip or error. It is, in fact, a fault of the summons which takes the summons outside the ambit of section 28 … it's not a question of error; it's a question of whether there's any power to issue a summons in the terms in which it was issued.
29 The appellant submits that the only power given to an Examiner under s 28(1) was a power to summon a person to appear before the same Examiner who issued the summons. Therefore, the Examiner had no power to issue a summons requiring appearance before "an Examiner": the summons was therefore ultra vires.
30 As support for this construction, the appellant, in written submissions, points to the Explanatory Memoranda and Revised Explanatory Memoranda for the Australian Crime Commission Establishment Bill 2002, the Explanatory Memorandum to the Australian Crime Commission Amendment Bill 2007 and the Second Reading Speeches in both the Senate and the House of Representatives in relation to the amendment of s 28 in 2007, which only prospectively removed the requirement of "the Examiner" and replaced it with "an Examiner".
31 The error of reasoning that the appellant claims on the part of the primary judge is his Honour's conclusion that, because in this case the Examiner who issued the summons made the summons returnable before himself, the reference to "an Examiner" did not invalidate the summons. The appellant submits that the fact that the summons was issued by the Examiner and was returnable before him was an irrelevant consideration because the relevant question is whether there was a power to issue the summons in the terms in which it was issued.
32 The appellant argues that even if Project Blue Sky applied, the error invalidated the summons. The appellant cited the decision in Epstein and Morton v WorkCover SA [2003] SASC 231, where Besanko J in that case:
… suggested that there were a number of considerations which would invalidate the regulation, notwithstanding … the application of Blue Sky.
33 In Epstein and Morton, Besanko J found that there were four factors which enabled him to discern whether there was "a legislative purpose to invalidate any act that fails to comply with the condition". Those factors were: the use of imperative language in the section; the significant subject matter of the power in the section; the importance of the body who exercises the power; and that the question of whether the requirements of the Act have been met is capable of being determined relatively easily. The appellant submits that these considerations apply to the present legislation and therefore, if Project Blue Sky does apply, the summons was invalid for those reasons.
34 Section 28(1) of the Act gives the Examiner the power to summon a person. The conditions on the exercise of that power are that the person is summoned to: a) appear before the examiner; b) (appear) at an examination; and c) to give evidence and to produce such documents or other things etcetera.
35 We reject the argument that the summons was beyond power. The failure to follow a condition on the exercise of a power is the kind of failure with which Project Blue Sky deals.
36 In Project Blue Sky, the key principle (at 388-389) is that:
An act done in breach of a condition regulating the exercise of the statutory power is not necessarily invalid and of no effect. Whether it is depends on whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition.
37 In our judgment, Project Blue Sky applies. The High Court in that case said (at 389) that the existence of the purpose to invalidate any act which doesn't comply with a condition is to be determined by:
… reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. … The cases show various factors that have proved decisive in various contexts …
38 And continuing (at 390):
… 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.'
39 Hence there is no exhaustible list of considerations for determining the existence of the relevant purpose. In Epstein and Morton, Besanko J found that the relevant considerations for determining the purpose of the legislation were the four he identified. (They are among the factors which may be decisive in this case).
40 The respondent submits that "there is no particular reason" why s 28 of the Act ought to be read as having conditions with which failure to comply results in invalidity of the act. This is especially so, it was said, because, as the primary judge stated in his judgment, "another examiner could acquaint himself with the material and conduct the examination."
41 In our judgment, the error in referring to "an" examiner did not invalidate the summons. Whether or not the person summoned could just as easily appear before another examiner is not the issue in this matter. Section 28(1) in its application terms clearly directed that the person summoned is to appear before the examiner who issued the summons. On its face, the summons did not so direct.
42 The second enquiry to be made is whether there is a legislative intent to invalidate any act which breaches that condition. The considerations for determining this question are outlined above.
43 With regard to the language of the relevant provision, we accept the respondent's submission that the provision on its ordinary meaning does not reveal an intention to create an inviolable restraint on the exercise of the statutory power. We reject the appellant's submission that the section uses imperative language. Certainly, the requirement at issue in Epstein and Morton was imperative – it used the words:
"[t]he regulation … cannot be made unless …"
44 However, the language of s 28(1) does not have that imperative quality. With regard to the language of the relevant provision, there appears to be no reason to suggest that the use of "an examiner" invalidates the summons.
45 The second ground of appeal is that the learned trial judge erred in failing to find that the terms of s 28(2) of the Act were mandatory and, by reason of the Examiner's failure to attach to the summons the 2003 variation, had not been complied with.
46 It is common ground that the 2003 variation did not accompany the summons. The issue is whether the 2003 authorisation and determination, without the variation, was a copy of the determination within the meaning of s 28(2) of the Act, set out above.
47 The determination of the Board that an investigation is special was made pursuant to s 7C(1)(d), (3) and (4) of the Act as follows:
7C Functions of the Board
(1) The Board has the following functions:
…
(d) to determine, in writing, whether such an operation is a special operation or whether such an investigation is a special investigation;
…
Special investigation
(3) The Board may determine, in writing, than an investigation into matters relating to federally relevant criminal activity is a special investigation. Before doing so, it must consider whether ordinary police methods of investigation into the matters are likely to be effective.
Further details
(4) A determination under subsection … (3) must:
(a) describe the general nature of the circumstances or allegations constituting the federally relevant criminal activity; and
(b) state that the serious and organised crime is, or the serious and organised crimes are or include, an offence or offences against a law of the Commonwealth, a law of a Territory or a law of a State but need not specify the particular offence or offences; and
(c) set out the purpose of the operation or investigation.
48 The primary judge held that, for the purposes of this section, the specification of classes of persons to participate in the investigation was not an essential part of the determination, because s 28(2) refers to the "determination … that the intelligence operation is a special operation or that the investigation into matters relating to federally relevant criminal activity is a special investigation".
49 His Honour found that those matters were covered by the determination supplied with the summons of 27 January 2004 and that they were unaffected by the 2003 variation. His Honour found that the appellant was given notice of those matters and there was no evidence that he was misled by that part of the authorisation and determination which addressed the class or classes of persons who were to participate in the special investigation.
50 The primary judge referred to the decision of Merkel J in A1 v National Crime Authority (1996) 67 FCR 464, which concerned a similar provision in the National Crime Authority Act 1984. Merkel J said (at 480):
The purpose of the requirement is to enable a witness summoned to ascertain the existence, source and extent of the authority and power of the NCA to require his or her
a) attendance at the hearing;
b) answers under compulsion at the hearing to questions considered by the NCA to be relevant to the special investigation.
…In my view the notice of reference must enable the NCA and the witness to ascertain, albeit in a general way, the limits of the authority of the NCA to conduct the investigation and also to determine, or at least form a view as to, whether the matters being inquired into at the hearing are relevant or capable of being considered to be relevant to the investigation.
51 The primary judge drew support from this decision to conclude that the specification of class or classes of persons to participate in the investigation is not an essential part of the examination.
52 In our opinion, the appellant's submission that his Honour erred in doing so should be rejected.
53 Contrary to his Honour's conclusion, the appellant argued that the determination of the class or classes of persons to participate in the investigation is a significant part of the determination that the investigation is special.
54 The Court is satisfied, however, that in amending the class or classes of persons, the 2003 variation did not affect the determination that "the investigation into matters relating to federally relevant criminal activity is a special investigation" within the meaning of s 28(2). Having regard to the language of s 28(2) and to the purpose of the provision, we do not find that a recipient of the summons could be misled about the special nature of the investigation or other essential matters relevant to the determination because of the omission of the 2003 variation.
55 It is important to recognise that the only effect of the 2003 variation is to replace the provision specifying the classes of person to participate in the investigation in the 2003 authorisation and determination.
56 The Court rejects the appellant's second ground of appeal.
The notice to produce – Grounds 3 and 4
57 The appellant's third and fourth grounds of appeal relate to the notice to produce which was issued on 19 February 2004. The appellant relies on these grounds cumulatively to demonstrate the invalidity of the notice to produce and that the subsequent production of documents was unlawful.
58 The notice to produce was issued pursuant to s 29 of the Act, which at the time read as follows:
29 Power to obtain documents
(1) An examiner may, by notice in writing served on a person, require the person:
(a) to attend, at a time and place specified in the notice, before a person specified in the notice, being the examiner or a member of the staff of the ACC; and
(b) to produce at that time and place to the person so specified a document or thing specified in the notice, being a document or thing that is relevant to a special ACC operation/investigation.
(1A) Before issuing a notice under subsection (1), the examiner must be satisfied that it is reasonable in all the circumstances to do so. The examiner must also record in writing the reasons for the issue of the summons.
(2) A notice may be issued under this section in relation to a special ACC operation/investigation, whether or not an examination before an examiner is being held for the purposes of the operation or investigation.
(3) A person shall not refuse or fail to comply with a notice served on him or her under this section.
(3A) A person who contravenes subsection (3) is guilty of an indictable offence that, subject to this section, is punishable, upon conviction, by a fine not exceeding 200 penalty units or imprisonment for a period not exceeding 5 years.
(3B) Notwithstanding that an offence against subsection (3) is an indictable offence that, subject to this section, is punishable, upon conviction, by a fine not exceeding 200 penalty units or imprisonment for a period not exceeding 5 years.
(3C) Where, in accordance with subsection (3B), a court of summary jurisdiction convicts a person of an offence against subsection (3), the penalty that the court may impose is a fine not exceeding 20 penalty units or imprisonment for a period not exceeding 1 year.
(4) Subsections 30(3) to (5) and (9) apply in relation to a person who is required to produce a document or thing by a notice served on him or her under this section in the same manner as they apply in relation to a person who is required to produce a document or thing at an examination before an examiner.
59 The third of the appellant's grounds of appeal is that the learned trial judge erred in holding that the notice to produce was valid in circumstance where it failed to specify, in accordance with s 29 of the Act, that the documents or things referred to therein were to be produced to Mr Hellings.
60 The learned trial judge found that when the notice to produce was read as a whole and in a sensible fashion, it was clear that the notice to produce required production to Mr Hellings and that the requirement was clear having regard to the terms of the notice. Thus his Honour found that the notice to produce was in accordance with the terms of s 29(1) of the Act.
61 There is no prescribed form for a notice to produce.
62 The essential terms required for the notice to accord with s 29(1) are accurately set out in the appellant's written submissions: there is no question that the notice must state that the specified person is to attend before an Examiner (or member of staff of the ACC) and produce at the same time and place to the same Examiner (or staff member) documents or things specified in the notice.
63 On the face of the notice to produce, it is apparent that the document meant that the appellant was required to produce at a time and place the specified documents and things to Mr Hellings. In our view, that is the logical and consistent way to interpret the document. The appellant drew the Court's attention to Mr Hellings' evidence that he did not think that the notice meant that the appellant was required to produce the documents or things to Mr Hellings. However, it is not a question of what Mr Hellings intended the document to say, or thought the document said, but rather what the document said.
64 We reject the appellant's third ground of appeal.
65 The fourth ground of appeal is that the learned trial judge erred in holding that the documents or things referred to in the notice to produce were produced to Mr Hellings in accordance with s 29(1) of the Act, in circumstances where Mr Hellings did not serve the notice to produce and did not physically receive the documents or things. This issue turns on the definition of "produce".
66 His Honour considered Evans v Button (1988) 81 ALR 61, which examined the range of meanings the word "produce" could have. His Honour referred particularly to the comments of Mahoney JA (with whom Priestley and McHugh JJA agreed) (at 66-67) that:
The learned trial judge considered cases in which the meaning of "produce"
in particular contexts had been examined. He concluded, in my opinion correctly, that the word is one "that has not got an exact legal meaning but requires an interpretation to be put upon it in the statute in which it occurs"
(Hanfstaengl v American Tobacco Co [1895] 1 QB 347 at 355); and he saw the
decision of the Court of Criminal Appeal in R v Amenores [1980] 2 NSWLR
34 at 37 as indicating that, in the present section, the word is used in its "ordinary grammatical meaning". In s 234(e) the legislature has used the phrase 'produced delivered or furnished to'. I do not think that the juxtaposition of these three terms should be seen as indicating an intention that each of them has a meaning separate and distinct from the other in the sense that they do not overlap. It may be, as his Honour was inclined to think, that "produced" ordinarily means that the one person is presenting a document to the other whilst they are in each other's presence. If this be so, then the purpose of "delivered or furnished to" was, inter alia, to indicate that what was in contemplation in s 234(e) was not so limited and that the legislature was looking to a wide class of communication of the document to the relevant officer.
67 Having considered these comments, the primary judge found that the physical presence of the person to whom documents or things are to be produced is probably necessary, but that the person to whom the documents or things are to be produced need not take actual physical possession of the documents or things. His Honour gave examples of documents or things that may be placed on a table or, if produced in large quantities, may be in cartons which are immediately taken away by members of the Commission.
68 His Honour therefore found that the production which took place on 19 February 2004 was in accordance with the notice to produce and s 29(1) of the Act. His Honour found that it was immaterial that the person serving the notice was not Mr Hellings, as there is no statutory requirement that the person serving the notice had to be the person specified in the notice.
69 The word "produce" is to be given its ordinary grammatical meaning and is to be considered in the context of the statute. The Oxford Dictionary defines "produce" as meaning:
To bring forward, bring forth or out; to bring into view, to present to view or notice, to offer for inspection or consideration, exhibit.
70 There is no indication in that definition that there should be a direct physical transfer from the person directed to produce tothe recipient of the production.
71 Furthermore, having regard to the objects, purposes and terms of s 29, there appears to be no reason to construe "produce" as meaning that the documents or things must be received into the hands of the person named in the notice.
72 In addition, the operational realities required to realise the purpose of the statute would suggest, as the primary judge found, that there are situations where many cartons of documents would be produced and then taken by ACC staff without any physical handling by the Examiner, or an officer of the ACC.
73 The appellant submits that the principle of strict compliance with statutory conditions, which is applicable to search warrants, applies to notices under s 29 by analogy. The appellant refers to the statement in George v Rockett (1990) 170 CLR 104 (at 111) that:
… the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature's concern to give a measure of protection to these interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation.
74 The Court is satisfied that "to produce" does not impose a statutory condition that Mr Hellings is to receive, in his own hands, the documents or things produced under s 29.
75 It was open to the primary judge to conclude that the two DVDs were produced to Mr Hellings. Therefore, the question of strict compliance in that sense is not one that needs to be addressed.
Ground 5 – "Forthwith"
76 The final ground of appeal raised by the appellant is that the learned trial judge erred in holding that, in circumstances where the examiner required the documents or things referred to in the Notice to Produce to be produced "forthwith", "forthwith" was a reasonable time in the circumstances, and the examiner's requirement was a valid requirement.
77 It should be noted that the "Notice to Attend and Produce to the Australian Crime Commission" by Mr Sage, the Examiner, was in the following terms:
Pursuant to sub-section 29(1) of the Australian Crime Commission Act 2002, you are required:
(a) to attend at Level 2, 383 Latrobe Street, Melbournebefore David Hellings, a member of the staff of the Australian Crime Commission, forthwith; and
(b) produce the documents and things described in the Schedule annexed to this notice as Annexure A, being documents and things that are relevant to the said special investigation.
(Emphasis in original)
78 Annexure A was in these terms:
SCHEDULE
Documents and things to be produced by you:
A. All documents and records, including electronically stored and computer generated documents and records, in your custody, possession and/or control relating to:
1. Any persons, companies, trusts or other entities resident in Australia involved in or utilising the professional services of Strachans and Strachan & Co.
2. Any persons, companies, trusts or other entities involved in facilitating the transfer of monies into and out of Australia that utilise the professional services of Strachans and Strachan & Co.
for the period from 1 January 1998 to the date of this Notice.
B. The following documents and things in your custody, possession and/or control:
1. Dvd disks marked – "Reference: 1799A – Duxford, Contents, Archive Copy of 20GB Toshiba HDD from Toshiba Tecra 8200 Notebook PC" being a copy of your personal business Toshiba laptop computer (PC) hard drive seized pursuant to a section 3E of the Commonwealth Crime Act 1914 Search warrant executed at 1105 am on Saturday the 14th day of February 2004.
79 In terms, the notice required the appellant to attend at the nominated place before the specified person "forthwith": the timing of the production of the things in Annexure A was left open ended. It may be accepted, notwithstanding the infelicity of expression, that the notice called for the production of all of these things "forthwith". It may be that a requirement to produce the documents and things in Part A of Annexure A "forthwith" was not a reasonable time, and to that extent there was no requirement to produce those documents. The appellant is not charged with failing to produce those documents.
80 The appellant did produce the 2 DVDs referred to in Part B of Annexure A. His complaint is that he should not have been required to, because the obligation to produce the DVDs "forthwith" was not a reasonable time.
81 The primary judge considered the decision in A.B. Pty Limited v Australian Crime Commission [2009] FCA 119, where Flick J considered a number of factors which indicate whether the period of time allowed for production in a notice issued under s 29 is reasonable. His Honour also referred to the decision in Ganke v Deputy Commissioner of Taxation (1975) 25 FLR 98.
82 His Honour found that, as the decision in A.B. Pty Limited demonstrates, the decision of the examiner as to the time in which documents or things must be produced is examinable. However, the primary judge was satisfied that "forthwith" was a reasonable time in the circumstances of the case, or at least that the appellant had not established that an Examiner could not reasonably take the view that it was a reasonable time. His Honour pointed to the fact that the documents or things in issue (being the 2 DVDs) were in the possession of the ACC on 19 February 2004, that the appellant was present for an examination on that day, and that he was accompanied by counsel. His Honour highlighted that the appellant did not need time in which to locate the documents or things he in fact produced, and that he had the opportunity to obtain "on the spot" legal advice. For these reasons, his Honour found that "forthwith" was a reasonable time to specify in the notice to produce.
83 The appellant makes three arguments regarding the requirement that the documents and things specified in the notice to produce be produced "forthwith". First, the appellant submits that "forthwith" does not comply with the requirements of s 29 because it is not a measure of time appropriate to the Act. Secondly, the appellant argues that it is unreasonable to issue a notice requiring production "forthwith" of the documents in Schedule A of the notice. Finally, the appellant submits that "forthwith" can never be a time specified in a notice under s 29, because it could never give the citizen the opportunity of exercising the limited rights which the citizen is given.
84 The first argument was raised by the appellant in oral submissions. In response to an inquiry from the bench, counsel for the appellant said as follows:
Mr Abbott: … I say it's not a measure of time that's appropriate to this Act. That's the first point.
Jacobson J: The first point is it's got to say 10.03am.
Mr Abbott: Yes. Yes.
85 There is no statutory requirement in the Act which requires that a notice under s29 specify a time for production, rather than require production "forthwith". The appellant gave authority to support a strict construction of s 29: AB Proprietary Limited v Australian Crime Commission & Sage [2009] FCA 119; Australian Crime Commission v NTD8 [2009] FCAFC 86; C Incorporated v Australian Crime Commission [2010] FCAFC 4.
86 However, as Cooper J observed in a different context in FH Faulding & Co Ltd v Commissioner of Taxation (1994) 54 FCR 75 (at 126):
Provided that the pre-conditions for the use of power are satisfied and that the power is used… to discharge the statutory duty… no other limitations beyond those required by the Act or the general body of administrative law ought to be applied to the exercise of power. …
87 We are satisfied that there is no statutory requirement in s 29 that the time given in a notice be a specified time, rather than "forthwith".
88 The appellant's second argument was that it is unreasonable to issue a notice requiring production "forthwith" of the documents in Schedule A of the notice.
89 The appellant argues that, on the face of the notice, "forthwith" is an unreasonable time in which to produce these documents due to the extent of the records required.
90 However, there was no evidence led at trial that the appellant could not produce these documents "forthwith". The documents in Part A of Annexure A may not have existed, or these documents may well have been contained on the forensic DVDs. There is no evidence one way or the other. It cannot be concluded on the face of the notice that production of the documents specified in Schedule A "forthwith" was impossible. In the absence of evidence to support that proposition, the Court rejects the appellant's argument in this regard.
91 The appellant submits that "forthwith" can never be a time specified in a notice under s 29 because it could never give the citizen the opportunity of exercising the limited rights which the citizen is given. These rights are identified by counsel for the appellant as: a right to the opportunity to assess whether the documents sought are in fact relevant to a special ACC investigation; a right to obtain legal advice; and the right to consider the exercise of s 57 of the Act, which applies the Administrative Decision (Judicial Review) Act 1977 (Cth) (the AD(JR) Act). The appellant submits that the requirement that documents be produced "forthwith" does not allow a citizen the time to pursue those rights.
92 The appellant draws the first right, the right to assess whether the documents sought are in fact relevant to a special ACC investigation, from the requirement in s 29 that the documents produced be relevant to the special investigation. We do not accept that the words used in s 29 give rise to a right of the kind proposed. Indeed, even if such a right exists, neither the appellant nor his counsel made any objection at the examination on 19 February 2004 to the notice to produce on the ground that the DVDs were not relevant, or that Mr Egglishaw wished to discover whether they were relevant. Therefore, even if this right exists under s 29, the appellant chose not to exercise it.
93 We accept that, in regards to a s 29 notice, legal professional privilege is not abrogated by the Act. We accept that the appellant had a right to legal counsel. Mr Egglishaw exercised that right on 19 February 2004 when he conferred with his Queen's Counsel. It cannot be argued that a notice to produce "forthwith" will never allow a citizen the opportunity to obtain legal advice, when clearly in this case that is precisely what occurred.
94 The final right identified, that which arises under s 57 of the Act applying the AD(JR) Act, could also have been exercised by the appellant at the time the notice was served. He was accompanied by counsel who could have advised Mr Egglishaw not to produce the documents or things, and instead pursue s 57. The appellant was given time to confer with counsel despite the requirement of "forthwith"; there was no objection raised concerning the time for production, nor any request for more time to consider the appellant's position. That Mr Egglishaw did not exercise his rights under the Act does not mean that the requirement of producing "forthwith" made the exercise of those rights impossible. The Court is not persuaded that this is the case.
95 Finally, the appellant sought to raise an argument in oral submissions that the production of the DVDs under the s 29 notice was an abuse of power. No such ground was identified in the notice of appeal or in the appellant's written submissions. No such ground was identified in the original pleadings at trial. Despite the plainest of inquiries from the Bench as to whether the appellant wished to seek to amend, or add to, the grounds in the Notice of Appeal, no such application was ever made.
96 However, counsel for the appellant pursued an argument that the production of the DVDs was instead beyond power. This is because the ACC could not have known that the DVDs contained material relevant to a special ACC investigation.
97 The notice to produce clearly states that the appellant must produce the document and things in the Schedule "being documents and things that are relevant to the said special investigation". The appellant was required only to produce those things which were relevant. The fact is that the appellant, accepting that the DVDs were copies of the hard drive of his notebook computer, produced the discs. There was no evidence the contents of his computer were unknown to him. He produced the discs pursuant to a notice that required documents or things relevant to a special investigation the subject of the determination of the Board of the ACC on 13 May 2003. The appellant had been provided with a copy of that determination days earlier. There is no evidence that there was any doubt on the appellant's part as to the contents of the discs or their relevance to the investigation.
98 In these circumstances, it was not beyond power for the Commission to require production of the documents and things specified in the notice, even if it be the case that officers of the Commission merely suspected that the contents of the discs were relevant. That the appellant produced the 2 DVDs bears on whether they were "relevant to the special investigation".
99 The notice to produce issued on 19 February 2004 was valid.
100 For the above reasons, all of the grounds of appeal which the appellant sought to argue fail
101 The appeal is dismissed, with costs.
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 Justices Spender, Emmett and Jacobson.
Associate:
Dated: 8 July 2010
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Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd [2021] FCA 483
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Federal Court of Australia
Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd [2021] FCA 483
File number(s): VID 329 of 2020
Judgment of: ANDERSON J
Date of judgment: 13 May 2021
Catchwords: CORPORATIONS – application for declarations as to ownership of vehicle – vehicle subject to finance from third party intervener – company defaults under finance agreement – company in liquidation – liquidator purported to disclaim vehicle under s 568(1)(d) of the Corporations Act 2001 (Cth) – liquidator obtains warrant to seize property of the company – liquidator seizes vehicle which was the subject of the purported disclaimer – third party intervener accepts that its registration of security interest in respect of the vehicle was defective under the Personal Property Securities Act 2009 (Cth) (PPSA) – third party intervener accepts that, by reason of s 267(2) of the PPSA, it no longer has a security interest in the vehicle
CORPORATIONS – whether liquidators' notice of disclaimer was a nullity – whether vehicle answers description in s 568(1)(d) of the Corporations Act 2001 (Cth), being property of the company that consists of property that may give rise to a liability to pay money or some other onerous obligation – vehicle was not property that may give rise to a liability to pay money or some other onerous obligation – liquidators' notice of disclaimer was a nullity and of no effect
HIGH COURT AND FEDERAL COURT – declaratory relief – power to award declaratory relief – discretion to award declaratory relief – whether conduct of liquidators in seizing the vehicle after liquidators purported to issue notice of disclaimer ensures liquidators should be denied declaratory relief sought – no discretionary considerations which warrant refusing the declaratory relief sought by the liquidators
Legislation: Corporations Act 2001 (Cth), ss 530C, 568, 568B, 568D, 568E
Personal Property Securities Act 2009 (Cth), ss 12, 19, 21, 153, 164, 165, 267, 268
Personal Property Securities Regulations 2010 (Cth), cl 1.5
Federal Court Rules 2011 (Cth), r 9.12
Cases cited: Bredenkamp v Gas Sensing Technology [2017] FCA 1065
Clarence City Council v Commonwealth of Australia [2020] FCAFC 134
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Global Television Pty Ltd v Sportsvision Australia Pty Ltd (in liq) (2000) 35 ACSR 484
In the Matter of Black Opal IP Pty Limited ACN 151 765 356 (subject to Deed Of Company Arrangement) [2013] NSWSC 1225
In the matter of Blue Sennar Air Pty Ltd (in liq); In the matter of Eye Plantain Pty Ltd (in liq) [2016] NSWSC 772
In the matter of Maiden Civil (P&E) Pty Ltd [2013] NSWSC 852
In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21
In the matter of Production Printing (Aust) Pty Ltd (in liquidation) [2017] NSWSC 505
JN Taylor Holdings Ltd (in Liq) v Bond (1993) 59 SASR 432
Longley v Chief Executive, Department of Environment and Heritage Protection [2018] 3 Qd R 459
Re Middle Harbour Investments Ltd (in liq) (No 2) [1977] 2 NSWLR 652
Re Willmott Forests Ltd [2012] VSC 29
Sims v TXU Electricity Ltd (2005) 53 ACSR 295
Steinhardt v Trenfield & Park as liquidators of Wealth Base South Coolum Pty Ltd (in liq) [2015] QSC 237
Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (in liq) (2013) 251 CLR 592
Dr James O'Donovan, Personal Property Securities Law in Australia (Thomson Reuters, 2019)
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 182
Date of hearing: 15 October 2020 and 27 April 2021
Counsel for the Plaintiffs: Mr Jonathan Evans QC and Mr Mark Black
Solicitor for the Plaintiffs: Aitken Partners
Counsel for the Intervener: Mr Peter Wallis QC and Mr Andrew Burnett
Solicitor for the Intervener: Thomson Geer
Counsel for the Defendant: Mr Eugene Romaniuk SC and Mr Dean-Lloyd Dell-Monte
Solicitor for the Defendant: Martin Street Lawyers
ORDERS
VID 329 of 2020
IN THE MATTER OF ROSE GUERIN AND PARTNERS PTY LTD (IN LIQUIDATION)
BETWEEN: RICHARD TRYGVE ROHRT AND STEPHEN DIXON IN THEIR CAPACITIES AS JOINT AND SEVERAL LIQUIDATORS OF ROSE GUERIN AND PARTNERS PTY LTD (IN LIQUIDATION)
Plaintiff
AND: PRINCES SQUARE W24NY PTY LTD AS TRUSTEE FOR THE ROSE GUERIN AND PARTNERS TRUST
Defendant
BMW AUSTRALIA FINANCE LIMITED
Intervener
order made by: ANDERSON J
DATE OF ORDER: 13 May 2021
THE COURT DECLARES THAT:
1. In respect of the Ferrari with registration number DGB38B and VIN number ZFF82WND000221763 (Ferrari):
(a) the Personal Property Securities Register (PPSR) registration by BMW Australia Finance Limited (BMW) dated 26 June 2018 and numbered 201806260092112 (PPSR Registration) was defective pursuant to s 164(1)(b) of the Personal Property Securities Act 2009 (Cth) (PPSA);
(b) further or alternatively, the PPSR Registration was defective pursuant to s 164(1)(a) of the PPSA; and
(c) BMW's security interest in the Ferrari vested in Rose Guerin and Partners Pty Ltd (Company) as trustee of the Rose Guerin and Partners Trust immediately before the Plaintiffs were appointed as administrator of the Company pursuant to s 267 of the PPSA.
2. The purported disclaimer pursuant to s 568(1)(d) of the Corporations Act 2001 (Cth) dated 11 February 2020 by the Plaintiffs was ineffective.
THE COURT ORDERS THAT:
1. The Intervener, BMW, will pay the plaintiffs' costs of and incidental to this application, to be taxed if not agreed.
2. Within 14 days of the date of this judgment, the plaintiffs and BMW are to confer and provide any further proposed orders which are considered necessary to give effect to this judgment.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ANDERSON J:
Introduction
1 By this application, the plaintiffs (liquidators) seek declaratory relief regarding a 2017 Ferrari GTC4 Lusso vehicle (Ferrari) under [7] and [8] of the liquidators' amended originating process dated 8 July 2020 (amended originating process). On 30 July 2020, pursuant to r 9.12 of the Federal Court Rules 2011 (Cth), the Court granted leave for BMW Australia Finance Ltd (BMW) to intervene for the limited purpose of being heard in respect of those claims.
2 On 27 May 2020, the Ferrari was seized during the execution of a warrant issued on 21 May 2020 by Moshinsky J pursuant to s 530C of the Corporations Act 2001 (Cth) (Corporations Act). That warrant permitted the liquidators to seize books, records and property of Rose Guerin and Partners Pty Ltd (in liquidation) (Company) as trustee for the Rose Guerin and Partners Trust (Trading Trust).
3 The liquidators, by their amended originating process, seek the following relief in [7] and [8] of the amended originating process:
Ferrari Application
7. Declarations in respect of the Ferrari … that:
a. the Personal Property Securities Register (PPSR) registration by [BMW] … dated 26 June 2018 and numbered 201806260092112 (PPSR Registration) was defective pursuant to section 164(1)(b) of the Personal Property Securities Act 2009 (Cth) (PPSA);
b. further or alternatively, the PPSR Registration was defective pursuant to section 164(1)(a) of the PPSA; and
c. [BMW]'s security interest in the Ferrari vested in the Company as trustee of the [Trading] Trust immediately before the Plaintiffs were appointed as administrator of the Company pursuant to section 267 of the PPSA.
8. Further or alternatively:
a. a declaration that the disclaimer pursuant to section 568 of the Corporations Act dated 11 February 2020 by the Plaintiffs (Disclaimer) was ineffective; and
b. further or alternatively, an order pursuant to section 568E of the Corporations Act setting aside the Disclaimer.
4 For the reasons that follow, I will grant the declaratory relief sought by the liquidators in [7(a)], [7(b)] and [7(c)] and [8(a)] of the amended originating process.
Evidence
5 The liquidators have filed the following affidavits of:
(1) Richard Trygve Rohrt dated 19 May 2020 (unsworn) (first Rohrt affidavit).
(2) Richard Trygve Rohrt dated 24 June 2020 (unsworn) (second Rohrt affidavit).
(3) Richard Trygve Rohrt dated 15 July 2020 (unsworn) (third Rohrt affidavit).
(4) Richard Trygve Rohrt dated 21 August 2020 (unsworn) (fourth Rohrt affidavit).
(5) Richard Trygve Rohrt dated 11 September 2020 (unsworn) (fifth Rohrt affidavit).
(6) Richard Trygve Rohrt dated 14 October 2020 (unsworn) (sixth Rohrt affidavit).
(7) Richard Trygve Rohrt dated 15 October 2020 (unsworn) (seventh Rohrt affidavit).
(8) Richard Trygve Rohrt dated 20 November 2020 (unsworn) (eighth Rohrt affidavit).
(9) Richard Trygve Rohrt sworn 21 April 2021 (ninth Rohrt affidavit).
6 As a result of COVID-19, the first Rohrt affidavit to the eighth Rohrt affidavit were unsworn or not affirmed. At the hearing of this proceeding on 27 April 2021, I directed that the liquidators file sworn or affirmed versions of these affidavits. On 28 April 2021, one of the liquidators, Mr Richard Rohrt, filed a further sworn affidavit (tenth Rohrt affidavit). In the tenth Rohrt affidavit, Mr Rohrt confirmed that, at the time of filing each of the first Rohrt affidavit to the eighth Rohrt affidavit, the matters Mr Rohrt deposed to in those affidavits were true and correct at the time the affidavits were filed in an unsworn form. Mr Rohrt deposed that, unless Mr Rohrt corrected a matter in a subsequent affidavit, the contents of those affidavits are true and correct.
7 BMW relies upon an affidavit of Matthew James Vennard sworn 20 August 2020.
RELEVANT Procedural Chronology
8 The liquidators filed written submissions dated 11 September 2020. BMW filed written submissions dated 2 October 2020.
9 The application came on for hearing on 15 October 2020. Mr Mark Black of counsel appeared on behalf of the liquidators. Mr Wallis QC appeared with Mr Andrew Burnett of counsel for BMW.
10 After hearing the parties' submissions at the hearing on 15 October 2020, I formed the view that a number of matters which arose for consideration on the application had not been adequately addressed by the parties. For this reason, I directed the parties to file supplementary submissions. Pursuant to that direction, BMW filed supplementary submissions dated 29 October 2020 and the liquidators filed supplementary submissions dated 30 October 2020. The application was listed for a further hearing.
11 That hearing was scheduled for 24 November 2020. However, the Court was not able to hear the proceeding on that date, and the matter was adjourned to 27 April 2021 so that the parties could address the Court on the parties' supplementary submissions.
12 The matter came on for hearing on 27 April 2021. At that hearing, Jonathan Evans QC appeared with Mr Mark Black of counsel for the liquidators, and Peter Wallis QC appeared with Mr Andrew Burnett of counsel for BMW.
13 At the hearing on 27 April 2021, BMW made an important concession. Having reflected on the liquidators' supplementary submissions dated 30 October 2020, BMW conceded that:
(1) by reason of the operation of s 267(2) of the Personal Property Securities Act 2009 (Cth) (PPSA), BMW no longer has a security interest in the Ferrari;
(2) at the time of the liquidators' purported disclaimer (which I will set out in more detail below), the Ferrari was an unencumbered asset of the Company and BMW was an unsecured creditor of the Company; and
(3) as a result (as to the ongoing contractual obligations of the Company to make periodical repayments to BMW) there was not a relevant liability to pay money associated with the Ferrari for the purposes of s 568(1)(d) of the Corporations Act.
14 However, BMW did not concede that the Ferrari did not give rise to an "onerous obligation" of the Company for the purposes of s 568(1)(d).
15 The significance of that concession will become clearer after some factual background is appreciated. I turn now to set out that background.
Factual Background
The agreement concerning the Ferrari
16 On 11 May 2012, the Company was incorporated. Rosemarie Brenda Guerin was appointed the sole director and secretary. Ms Guerin is also the sole shareholder, holding 1,200 ordinary shares.
17 The Ferrari referred to above was subject to a chattel mortgage agreement entered into on 22 June 2018 between BMW and the Company as trustee for the Trading Trust, for a loan of $620,325 with a chattel mortgage over the Ferrari. The loan was to be repaid to BMW by the Company by way of sixty consecutive monthly instalments of $6,588.75 and one final monthly instalment of $225,000.
18 From 27 July 2018 to 26 November 2019, the Company paid BMW monthly instalments of $6,588.75.
The Company defaults under the agreement
19 In or around November 2019, the Company failed to pay instalments due under its agreement with BMW. The instalments which were not paid totalled $13,180. On 11 November 2019, BMW issued to the Company a "Notice of Intention to Repossess". Pursuant to this "Notice of Intention to Repossess", the Company was required to pay the arrears of $13,180 by 18 November 2019. The Company did not do so.
20 On or around 12 December 2019, the Company submitted to BMW a "request for hardship".
21 On 18 December 2019, the request for hardship was approved. The Company's agreement with BMW was varied. The repayments from December 2019 to February 2020 were reduced to $3,295 and the term of the agreement was extended by 3 months.
The Company proceeds to administration and then liquidation
22 On 19 December 2019, Mr Richard Rohrt and Mr Stephen Dixon were appointed as administrators of the Company pursuant to s 436C of the Corporations Act. The secured creditor who appointed the administrators was Fundit Limited trading as "Banjo Loans".
23 On 5 February 2020, one of the administrators, Mr Rohrt, caused a meeting of the creditors of the Company and Trading Trust to be convened pursuant to s 439A of the Corporations Act to consider the Administrators' Report and the future of the Company. On that day, the creditors resolved that the Company should be wound up, and the administrators were appointed joint and several liquidators.
24 On or around 5 February 2020, BMW became aware that the Company had been placed in liquidation.
25 As at 10 February 2020, the amount owing to BMW by the Company was $465,633.73.
26 On 10 February 2020, the liquidators contacted BMW by telephone. The liquidators informed BMW of the liquidators' appointment as liquidators of the Company. The liquidators stated to BMW that BMW should proceed with mercantile agent activity "once the [v]ehicle ha[d] been disclaimed" by the liquidators.
The notice of disclaimer
27 On 11 February 2020, BMW received an email from the liquidators' firm. That email attached a letter from the liquidators and a "Notice of disclaimer of onerous property" (notice of disclaimer). The email dated 11 February 2020 stated:
Please find attached our letter attaching the Notice of Disclaimer for your attention.
I advise that we have recorded [BMW] as a partly secured creditor of the Company. Please update us once you have realised the motor vehicle and provide us with the balance sum owing, which will then form an unsecured claim against the Company.
28 The letter dated 11 February 2020 referred to in this email stated:
I refer to [the liquidator and BMW's] recent telephone discussion regarding the above matter.
I have conducted a review of [BMW's] security and have formed a view that there is unlikely to be any equity in respect of the Company's motor vehicle financed by your company, namely, the 2017 Ferrari GTC4LUS F151 bearing registration number DGB38B ("the Motor Vehicle").
I advise that I have never been in possession of the Motor Vehicle since the commencement of my appointment as Joint and Several Administrator. Please contact the Director of the Company and the Guarantor of the Motor Vehicle financing facility, Ms Rosemarie Guerin, and liaise with her directly with respect to repossession of the Motor Vehicle.
Please find enclosed a duly lodged Notice of Disclaimer of Onerous Property (Form 525) in respect of the Motor Vehicle for your attention.
29 The "Notice of disclaimer of onerous property" contained the following "declaration":
I, as liquidator of the company, for the purposes of paragraph 568A(1), give notice that I disclaim the property described in the schedule.
The property is property of the company and consists of:
property that may give rise to liability to pay money or some other onerous obligation[.]
The schedule of disclaimed property is:
set out below
2017 Ferrari GTC4LUS F151 Bearing Registration No. DGB38B financed under a Chattel Mortgage Agreement (Application No. 2625096) dated 22 June 2018 with BMW Australia Finance Limited[.]
(Bold text in the original.)
30 The "Notice of disclaimer of onerous property" was "authenticated" by one of the liquidators, Mr Rohrt, and was dated 11 February 2020. The liquidators had formed the view "that the finance associated with the Ferrari was likely to be significantly in excess" of its value: fifth Rohrt affidavit, [5].
BMW takes steps to recover the Ferrari
31 On 13 February 2020, BMW contacted the director of the Company, Ms Rosemary Guerin. BMW informed Ms Guerin that it may commence collections activities. By way of several emails, Ms Guerin informed BMW that she was attempting to obtain refinancing. BMW placed recovery action on hold pending any such refinance.
The liquidators obtain a warrant to seize property of the Company
32 On 19 May 2020, the liquidators filed with this Court an ex parte application. The liquidators sought (among other orders) an order that, pursuant to s 530C of the Corporations Act, a warrant be issued to the liquidators to seize the books and records of the Company. The warrant sought by the liquidators included the following authorisation:
YOU ARE HEREBY AUTHORISED, with such assistance as is reasonably necessary from members of the Australian Federal Police and New South Wales Police, to search for and seize all property and books of the Company, coming within the definition of those words in section 9 of the Corporations Act 2001, which are in the possession of ROSE GUERIN AND PARTNERS PTY LTD (IN LIQUIDATION) ACN 158 304 584 and to hold possession of such property and books of the Company seized under this warrant until otherwise directed by order of this Court.
(Bold and capitalised text in the original.)
33 The affidavit evidence discloses that the warrant was obtained pursuant to an ex parte application before Moshinsky J on 21 May 2020. On 21 May 2020, this Court issued a warrant for search and seizure (Warrant) which was substantially similar to the terms set out above. The liquidators did not take any step prior to seizing the Ferrari on 27 May 2020 to set aside the disclaimer, or to inform the Australian Securities and Investments Commission (ASIC) or BMW that the liquidators regarded the disclaimer as ineffective. The liquidators did not seek BMW's consent to the liquidators seizing the Ferrari.
34 The first Rohrt affidavit makes no reference to the notice of disclaimer dated 11 February 2020 lodged with ASIC and given to BMW, which indicated that the Ferrari was disclaimed by the liquidators under the Corporations Act on the basis that the Ferrari "may give rise to liability to pay money or some other onerous obligation".
35 It appears from Mr Rohrt's first affidavit that Moshinsky J, on the hearing of the ex parte application on 21 May 2020, was not informed of the existence of the Ferrari nor that the liquidators had on 11 February 2020 served a notice of disclaimer under the Corporations Act. Mr Black of counsel, who appeared for the liquidators on the ex parte application and at the hearing of this matter on 15 October 2020, confirmed that Moshinsky J was not informed of the notice of disclaimer or, it appears, of the existence of the Ferrari.
The execution of the Warrant
36 On 27 May 2020, the then Company's solicitors sent an email to the liquidators' solicitors (27 May 2020 Email). It relevantly stated:
I formally advise that I act for Rose Guerin and Partners Pty Ltd.
Without prejudice to the proposition [that] the warrant served [on 27 May 2020] has no validity and from our discussions that your client, [the liquidators,] undertakes that the vehicle:
1. is safe and securely held in the premises of the Australian Federal Police ("AFP");
2. is not to be removed from the AFP carpark;
3. will not be depose [sic] (sell, charge or encumbered) of prior to 10 June 2020 (when the matter is listed before the court);
4. keys will not be removed from the AFP possession.
We appreciate the undertaking provided on behalf of your client. [Sic.]
37 On 28 May 2020, the Warrant was executed at the premises of the Company. In attendance at the execution of the Warrant were:
(1) Mr Rohrt and a Ms Helen Forster of the liquidators' firm;
(2) two solicitors from Aitken Partners, who act for the liquidators in this proceeding;
(3) a representative of Australian Forensics & Investigations Pty Ltd;
(4) a locksmith; and
(5) three members of the Australian Federal Police.
38 The second Rohrt affidavit records that when the Warrant was executed:
[Mr Rohrt] caused [the] Ferrari … to be seized. An agreement was reached with the Director [ie Ms Guerin] which is set out in an email from her lawyer … dated 27 May 2020.
39 The email referred to here appears to be the 27 May 2020 Email.
40 An affidavit of a Recoveries Manager employed by BMW, Mr Matthew James Vennard, sworn 20 August 2020, records that the liquidators did not, at any time prior to 27 May 2020, notify BMW that they intended to seize the Ferrari.
41 On 9 June 2020, BMW received a telephone call from Ms Guerin. Among other things, Ms Guerin indicated to BMW that she was seeking to refinance the Ferrari. Ms Guerin, however, expressed concern that she would not obtain possession of the vehicle even if it was refinanced. BMW informed Ms Guerin that such a concern was misplaced, given the liquidators had disclaimed the Ferrari.
Correspondence between the liquidators and BMW
42 On 10 June 2020, the liquidators' solicitors wrote to BMW and stated (among other things):
… We have been instructed to advise you that our clients have taken possession of the Ferrari in the circumstances described below, and to require that you release your security interest as registered on the Personal Property Securities Register (PPSR).
…
On 27 May 2020, our clients executed the Warrant at the offices of the Company. On the basis of what follows below, we are instructed to advise you that the Ferrari was seized by our clients on the basis that they have formed a view the Ferrari is property of the Company in circumstances where your registration on the PPSR is defective.
[The liquidators' solicitors set out how the relevant PPSR registration was said to be defective.]
As a result of the defective registration, section 267 of the PPSA provides that upon an administrator or liquidator being appointed, any unperfected security interest held by a secured party vests in the grantor the moment immediately prior to insolvency event. Therefore, on 19 December 2019, [BMW]'s security interest vested in the Company and [BMW] ceased to be secured.
…
We note that our client purported to serve a disclaimer of the finance obligations and property on 11 February 2020. Having regard to the above, in our view, there was nothing to disclaim given there was no onerous property or obligation within the meaning of section 568(1) of the [Corporations Act] …
43 On 22 June 2020, BMW's solicitors responded to the liquidators' solicitors' letter of 10 June 2020 and stated (among other things):
There is no occasion for your clients to withdraw its disclaimer based on the matters set out in your letter. The position remains that the [v]ehicle was subject to a burdensome financial obligation under the [relevant] [a]greement which your clients sensibly disclaimed.
…
Our client relied on the disclaimer and did not seek to enforce its rights under the [a]greement against the Company …
In the event your clients seek leave to proceed with their proposed application to set aside the disclaimer, then our client wishes to be heard in opposition to the application …
44 On 2 July 2020, the liquidators' solicitors wrote to BMW and stated (among other things):
In order to ensure that our client appropriately seeks relief and/or orders with respect to the Ferrari which are necessary to put before the Court, we note that your letter of 22 June 2020 did not provide any response to the matters we raised in our letter concerning the PPSR, particularly the issues concerning your clients [sic] defective registration and the consequence of the same (i.e. the vesting of any security interest in the Company). Can our client take it that your client does not dispute the same and therefore, the only issue your client seeks to agitate concerns the disclaimer (that is, the matters raised in your letter)?
45 On 3 July 2020, BMW's solicitors wrote to the liquidators' solicitors and stated (among other things):
… The issues concerning defective registration are overtaken by the disclaimer issues as set out in our letter dated 22 June 2020. We have not received a response to this letter.
We observe that your clients have now taken possession of the vehicle which would appear to be beyond the scope of their powers given the disclaimer. Please identify the legal basis for your clients to take possession of the vehicle.
Our client demands that your clients take all necessary steps to enable our client to take possession of the vehicle. As you would be aware, our client has a lawful entitlement under the rights and powers set out in clause 15 of the contract dated 22 June 2018. Our client reserves the right to rely on this letter on the question of damages for conversion.
46 On 15 July 2020, the liquidators' solicitors wrote to BMW's solicitors and stated (among other things):
… Our clients do not accept that the disclaimer issues set out in your letter of 22 June 2020 overtake the issues concerning the defective registration. As such, we repeat our request that you confirm your client does not dispute the fact that the registration was defective.
Our clients maintain the position we have previously set out. For the avoidance of doubt, that is that the disclaimer is either ineffective by reason of the vesting of the security interest, or able to be set aside. We further confirm that the legal basis for our clients to take possession of the Ferrari is pursuant to section 267 of the Personal Property Securities Act 2009 (Cth) (PPSA), given that your clients [sic] unperfected security interest vested in the Company on 19 December 2019, upon our clients appointment as administrators of the Company.
The liquidators' seizure of the Ferrari
47 The fifth Rohrt affidavit and the sixth Rohrt affidavit set out certain matters concerning the liquidators' seizure of the Ferrari. I return to those matters in more detail later in these reasons.
48 For present purposes, I note that [6] of the second Rohrt affidavit states that "[o]n 28 May 2020 … the Warrant was executed" (emphasis added). However, the sixth Rohrt affidavit states that Mr Rohrt "did not turn [his] mind to the issue of the disclaimer or the Ferrari until after the Ferrari had been located on the day the Warrant was executed, being 27 May 2020" (emphasis added).
49 As a consequence, there appears to be inconsistent evidence as to when the Warrant was in fact executed. While it would appear that not much turns on that factual matter, the 27 May 2020 Email (referred to above) indicates that the liquidators were, as at 27 May 2020, in possession of the Ferrari. To the extent it is necessary, I will proceed on the basis that the Warrant was executed on 27 May 2020.
Was BMW's registration defective?
Liquidators' submissions on defective registration on the Personal Property Securities Register
50 The liquidators submit that the registration by BMW of its security interest against the Ferrari was defective either because there was a defect mentioned in s 165 of the PPSA or because it was seriously misleading within the meaning of s 164(1)(a) of the PPSA. As a consequence, the liquidators submit that, pursuant to s 267 of the PPSA, any security interest held by BMW vested in the Company at the time the Company was placed into administration on 19 December 2019. Those submissions proceed in the following way.
51 Section 164 of the PPSA provides:
(1) A registration with security interest that describes particular collateral is ineffective because of a defect in the register if, and only if, there exists:
(a) a seriously misleading defect in any data relating to the registration, other than a defect of a kind prescribed by the regulations; or
(b) a defect mentioned in section 165.
(2) In order to establish that a defect is seriously misleading, it is not necessary to prove that any person was actually misled by it.
52 The liquidators primarily rely on s 164(1)(b) which provides four circumstances in which a defect in the registration can be established. Those four defects are found in s 165 of the PPSA and the plaintiff relies on subsection (d) which provides:
For the purposes of paragraph 164(1)(b), a defect in registration that describes particular collateral exists at a particular time if any of the following circumstances exist:
…
(d) in any case – circumstances in relation to the data related to the registration that are prescribed by the regulations.
53 Section 153 of the PPSA sets out the data required to be provided in a financing statement registered on the PPSR. Item 2 of the table in s 153 of the PPSA provides that the following data is required in relation to a grantor:
Whichever of the following is applicable:
(a) if the collateral is consumer property, and is required by the regulations to be described by serial number—no grantor's details;
(b) if the collateral is consumer property, and is not required by the regulations to be described by serial number—the grantor's name and date of birth, as evidenced in accordance with the regulations, and no other details;
(c) in any other case—the grantor's details as prescribed by the regulations.
54 Clause 1.5(1) of Schedule 1 of the Personal Property Securities Regulations 2010 (Cth) (PPS Regulations) applies if the secured party or grantor is "a body corporate that is a trustee of a trust that ... has an ABN … and … does not have an ARSN", or if the secured party or grantor is "any other trustee of a trust".
55 Clause 1.5 of the PPS Regulations provides a table concerning data required in circumstances where the grantor (or secured party) is a trustee as follows:
Item Trustee Details Source
1 Trustee of a trust for which details have been included on the transitional register, for a migrated security interest Trustee details, as recorded on the transitional register Transitional register
2 Trustee of a trust that holds or has an interest in collateral in the course of, or for, an enterprise that has been allocated an ABN ABN Australian Business Register
3 Trustee of any other trust Trustee details mentioned in paragraph (3)(a) Source mentioned in paragraphs 3(a)
56 The chattel mortgage makes clear that the Company purchased the vehicle in its capacity as trustee of the Trading Trust. As a consequence, the Company, in its capacity as a trustee, is the grantor.
57 The liquidators submit that, as a consequence, in accordance with item 2 of the table in clause 1.5 of Schedule 1 of the PPS Regulations, the security interest ought to have been registered against the Australian Business Number (ABN) associated with the Trading Trust and not the Australian Company Number (ACN) of the Company. However, a relevant search of the register shows that BMW in fact registered its security interest using the grantor's (ie the Company's) ACN.
58 The liquidators rely on Brereton J's analysis in In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21; 93 NSWLR 611 (OneSteel). In OneSteel, his Honour considered a circumstance where the PPSA and the PPS Regulations required that a financing statement was to include the grantor's ACN, but the secured party had in fact used the ABN. In that particular instance, the ABN in fact incorporated the ACN but included two additional digits. Notwithstanding, his Honour found that this was a defect for the purposes of s 164(1)(b).
59 The liquidators submit that, while his Honour was concerned with a different defect set out in s 165, the rationale for strict compliance is applicable to the current case. His Honour noted that s 170 limits searches of the PPSR to those authorised by ss 171 and 172 and stated at [28]:
That means that a search of the register by reference to grantor's details other than those required to be included under s 153 is not authorised or contemplated, and thus in respect of a grantor which is a body corporate and is not a trustee of a trust that has an ABN, only a search by reference to the ACN is authorised.
60 Brereton J went on to summarise the consequence of this at [31]:
A search will only return details of what has been registered. A search by ABN will not return registrations against the ACN, and a search by ACN will not return registrations against the ABN. A search of the PPS register using only the ACN as a parameter – which pursuant to s 171(1)(a) is the only authorised search – would not reveal the original registrations.
61 The liquidators submit that, given the Personal Property Securities Register (PPSR) cannot be searched in accordance with the requirements of the PPSA in respect of more than one grantor identifier at one time, it follows that a search of the Trading Trust's ABN did not, and would not, reveal the BMW security interest. The liquidators submit that, in those circumstances, it must follow that there is a defect in the registration for the purposes of s 164(1)(b).
62 Alternatively, the liquidators submit that the registration was in any event seriously misleading for the purposes of s 164(1)(a) of the PPSA. This, the liquidators submit, provides an alternate ground on which the liquidators can show that BMW's registration was defective.
63 The liquidators submit that Brereton J in OneSteel reached the conclusion that the defect under s 164(1)(b) was sufficient to give rise to a misleading event for the purposes of s 164(1)(a) of the PPSA. The fact that an authorised search under the PPSA would not enable a user to discover the registration was sufficient to conclude that the use of the wrong identifier was seriously misleading.
64 The liquidators also point to Brereton J's observation that s 164(2) did not require proof that anyone had actually been misled. At [40], Brereton J stated:
It does not avail Alleasing that the administrators, apparently using a B2G interface, discovered the original registrations; it is unnecessary, for a defect to be misleading, to establish that anyone was in fact actually misled. It is the capacity or potential to mislead that is crucial. Here, the defect was such that searchers using one of the two authorised modes of search would not discover the registration. The circumstance that a searcher using one of the authorised means of search would not discover the registration renders the defect misleading, and seriously so – even if, as is suggested, most searchers (the evidence indicates 80%) use B2G platforms which, in the way that has been described, would reveal it.
65 In the circumstances, the liquidators submit that the BMW security interest was seriously misleading and therefore defective pursuant to s 164(1)(a).
BMW's submissions on registration on the PPSR
66 BMW by its submissions conceded that the registration of its security interest in the Ferrari was defective as the registration was made against the Company's ACN rather than the ABN as required by item 2 of cl 1.5 of Schedule 1 of the PPS Regulations.
67 BMW's initial and supplementary submissions focussed on the consequences which follow from BMW having an unperfected security interest in respect of the Ferrari.
Consideration
68 For the reasons submitted by the liquidators, BMW was, in my view, correct to concede that the registration of its security interest in the Ferrari was defective as the registration was made against the Company's ACN rather than the ABN as required by item 2 of cl 1.5 of Schedule 1 of the PPS Regulations.
THE CONSEQUENCES OF THE DEFECTIVE REGISTRATION
69 It is necessary, then, to consider the consequence of the defective registration by BMW of its security interest under the chattel mortgage.
Liquidators' submissions
70 The liquidators' supplementary submissions can be summarised as follows.
71 The liquidators submit that the decisions in Onesteel and In the matter of Production Printing (Aust) Pty Ltd (in liquidation) [2017] NSWSC 505 (Production Printing) should be followed. The liquidators submit that the effect of a defective registration of a security interest (which is capable of perfection by registration under the PPSA), where the company in question goes into voluntary administration, was determined in Onesteel and Production Printing, after various arguments to the contrary were rejected by the respective judges hearing those cases.
72 The liquidators submit that the consequence of those decisions is this: the security interest vests in the company upon the date that the company goes into administration: citing Onesteel at [42] and [84]; Production Printing at [41]. The liquidators also referred to statements by Brereton J in In the matter of Maiden Civil (P&E) Pty Ltd [2013] NSWSC 852; 277 FLR 337 (Maiden Civil) regarding the meaning of the words "security interest vesting in the grantor" under s 267(2) of the PPSA (to which I will come).
BMW's submissions
73 As I have indicated above, BMW made written submissions which did not accept that the relevant "security interest" had "vested" in the Company. However, at the hearing of this matter on 27 April 2021, BMW conceded that, by reason of the operation of s 267(2) of the PPSA, BMW no longer has a security interest in the Ferrari. BMW conceded that, at the time of the liquidators' purported disclaimer (to which I will come), the Ferrari was an unencumbered asset of the Company and BMW was an unsecured creditor of the Company. In these circumstances, I have not set out BMW's various submissions concerning s 267(2) of the PPSA.
74 I turn to consider the application of s 267 of the PPSA to the facts of this case.
Consideration
75 BMW's concession was a proper one to have made, and the liquidators' submissions should be accepted for the following reasons.
Section 267 of the PPSA
76 Section 267(1) of the PPSA relevantly provides:
(1) This section applies if:
(a) any of the following events occurs:
…
(ii) an administrator of a company or a body corporate is appointed (whether under section 436A, 436B or 436C of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise);
… ; and
(b) a security interest granted by the body corporate, company or bankrupt is unperfected at whichever of the following times applies:
(i) in the case of a company or body corporate that is being wound up—when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day (whether under section 513A or 513B of the Corporations Act 2001, under either section as applied by force of a law of a State or Territory, or otherwise);
(ii) in the case of a company or a body corporate to which subparagraph (a)(ii) or (iii) applies—when, on a day, the event occurs by virtue of which the day is the section 513C day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise);
77 Because the registration of BMW's security interest was defective (as set out above), BMW's security interest was "unperfected". That is consistent with the concept of "perfection" addressed in s 21 of the PPSA, which provides:
21 Perfection—main rule
(1) A security interest in particular collateral is perfected if:
(a) the security interest is temporarily perfected, or otherwise perfected, by force of this Act; or
(b) all of the following apply:
(i) the security interest is attached to the collateral;
(ii) the security interest is enforceable against a third party;
(iii) subsection (2) applies.
(2) This subsection applies if:
(a) for any collateral, a registration is effective with respect to the collateral; or
(b) for any collateral, the secured party has possession of the collateral (other than possession as a result of seizure or repossession); or
(c) for the following kinds of collateral, the secured party has control of the collateral:
(i) an ADI account;
(ii) an intermediated security;
(iii) an investment instrument;
(iv) a negotiable instrument that is not evidenced by a certificate;
(v) a right evidenced by a letter of credit that states that the letter of credit must be presented on claiming payment or requiring the performance of an obligation;
(vi) satellites and other space objects.
Note: For what constitutes possession and control of collateral, see Part 2.3.
(3) A security interest may be perfected regardless of the order in which attachment and any step mentioned in subsection (2) occur.
(4) A single registration may perfect one or more security interests.
78 Section 19 of the PPSA makes provision for matters relating to the concept of "attachment" under the PPSA.
79 There is no suggestion that BMW's "security interest" was "temporarily perfected" or "otherwise perfected … by force of" the PPSA. There is no suggestion that BMW's security interest satisfied s 21(1)(b). There is also no suggestion that BMW's security interest can satisfy s 21(2) (as required by s 21(1) (b) (iii)). Indeed, BMW has conceded that its registration on the PPSR was not effective and, as a result, BMW cannot satisfy s 21(2)(a) of the PPSA (being the requirement that, "for any collateral, a registration is effective with respect to the collateral"). As a consequence, BMW has rightly accepted that its security interest was "unperfected" for the purposes of s 267(1)(b).
80 The consequence of a triggering event under s 267(1)(a) is set out in s 267(2) which relevantly provides:
Security interest vested in grantor
(2) The security interest held by the secured party vests in the grantor immediately before the event mentioned in [s 267]1(a) occurs.
81 Section 268 of the PPSA sets out circumstances in which s 267(2) does not apply. Neither party contended that s 268 applies in this case.
Application of s 267 of the PPSA
82 On 19 December 2019, the plaintiffs were appointed as administrators of the Company under s 436C of the Corporation Act. As a consequence, a defined event occurred under s 267(1)(a) of the PPSA.
83 BMW has correctly conceded, and I have found, that BMW's security interest was unperfected as the registration of that security interest on the PPSR was made against the Company's ACN rather than against the ABN associated with the Trading Trust.
84 The date at which the security interest is taken to have been unperfected is the date of the commencement of the administration of the Company, being 19 December 2019: PPSA, s 267(1)(b)(ii).
85 As a consequence of the operation of ss 267(1) and (2) of the PPSA, BMW's unperfected security interest "vest[ed] in the grantor", namely the Company, "immediately before" the date of the commencement of the administration of the Company, being 19 December 2019.
86 This in turn raises an issue as to the meaning of "security interest" and the scope of and effect of what has vested in the Company.
The meaning of a "security interest"
87 A "security interest" is relevantly defined in s 12 of the PPSA as follows:
(1) A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).
…
(2) For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation:
(a) …
(b) …
(c) a chattel mortgage …
(Bold, italicised text in the original.)
88 A "grantor" is defined in the PPSA to include:
… a person who has the interest in the personal property to which a security interest is attached (whether or not the person owes payment or performance of an obligation secured by the security interest) …
89 The meaning and effect of "the security interest vest[ed] in the grantor" under s 267(2) of the PPSA was explained by Brereton J in Maiden Civil where his Honour stated:
34. … the [relevant] General Security Deed was [an] agreement by which an interest in personal property that secures payment or performance of an obligation was created; it was a "security agreement", and the interest it created in favour of [Fast Financial Solutions Pty Ltd (Fast)] was a "security interest", within the meaning of PPSA. Pursuant to s 19(2), Fast's security interest attached to the [relevant equipment] when it gave value for its security interest by advancing the funds referred to in the [relevant] Loan Agreement and General Security Deed. Once Fast's security interest had attached to the [relevant equipment], it was enforceable against [Maiden Civil (P&E) Pty Ltd (Maiden)], … pursuant to s 19(1) [of the PPSA].
…
70. … [Section] 267(2) … provides that any security interest granted by a corporation that is unperfected at the commencement of its administration or winding up vests in the corporation …
71. Section 267 of the Australian PPSA differs [from the position in Canada], in that, rather than merely rendering the unperfected security interest ineffective against the grantor's trustee in bankruptcy or liquidator, it vests the interest in the grantor.
72. The consequence, in the present case, is that upon the commencement of the administration and/or winding up of Maiden, [Queensland Excavation Services Pty Ltd (QES)]'s unperfected security interests in the [relevant equipment] vested in Maiden …The practical effect is that QES's security interest is extinguished; QES has no further interest in the Caterpillars; and Maiden holds them subject only to the perfected security interest of Fast.
(Emphasis added.)
The "security interest" in this proceeding
90 In the present case, there is no party in the equivalent position to Fast Financial Solutions Pty Ltd in Maiden Civil. That is, there is no third party with a claim to the Ferrari that takes priority to the Company's claim as a result of BMW's security interest vesting in the Company. Rather, the two relevant parties are BMW and the Company.
91 There was a promise by the Company to repay BMW by way of sixty consecutive monthly instalments of $6,588.75. There was a provision in the agreement between BMW and the Company which stated:
The [Company] assigns to [BMW] all of its interest in the Mortgaged Property [ie the Ferrari]. [BMW] will hold that interest as security for the payment of the Money Secured and for the performance by the [Company] of the [Company]'s obligations under this Agreement.
92 The "Money Secured" was defined in the agreement as:
… all money that the [Company] is or may at any time be liable (actually, prospectively or contingently) to pay to [BMW] under or in connection with this Agreement (including without limitation the Total Amount Payable, fees, costs, charges, duties, expenses or indemnity) …
93 There was also a reassignment of the security interest back to the mortgagor after the mortgagor's debt had been repaid. Clause 23 provided that:
[BMW] must, upon giving a final discharge, reassign all of [BMW's] estate and interest in the Mortgaged Property to the [Company].
The effect of s 267 of the PPSA on BMW's unperfected security interest
94 In my view, BMW's chattel mortgage was a security interest for the purpose of s 12(2)(c) of the PPSA. BMW's chattel mortgage was unperfected at the date of the commencement of the administration of the Company on 19 December 2019. In my opinion, the effect of ss 267(1) and (2) is that, from 19 December 2019, the Company held BMW's "interest in" the relevant personal property, comprising the Ferrari, as its unencumbered asset free of BMW's security interest. This is so for the following reasons.
95 Jowitt's Dictionary of English Law (5th edition) provides the following definition of "vest":
… When a person becomes entitled to a right, estate, etc., it is said to vest in him … "Vest" is used specially to denote a transfer by or under an Act of Parliament. Thus, the property of a bankrupt vests in the trustee (Insolvency Act 1986 [(UK)] s.306): that is, the property is transferred to the trustee in the same way as if the bankrupt had executed a conveyance of it.
96 That is a definition which accords with the use of "vest" in s 267(2). In light of that meaning, the practical effect of the operation of s 267 of the PPSA (sometimes referred to as "the vesting rule") is that the unperfected security interest is transferred to the Company and the party with the unperfected security interest has no further secured interest in the property which was the collateral for the security interest. A party, such as BMW in this case, who fails to perfect its security interest before a triggering event in s 267(1) – in this case, the administration of the Company – will forfeit the benefit of its security interest and be relegated to the position of an unsecured creditor with a right to prove in the grantor company's insolvency: see Dr James O'Donovan, Personal Property Securities Law in Australia (Thomson Reuters, 2019) at [25.1900] citing (among other authorities) Maiden Civil and In the Matter of Black Opal IP Pty Limited ACN 151 765 356 (subject to Deed Of Company Arrangement) [2013] NSWSC 1225.
97 The potentially "harsh" consequences of the vesting rule under s 267 were referred to by Black J in Production Printing at [41] where, in circumstances where the security interest was not perfected and the security interest vested under s 267, Black J observed:
… the vesting provision under s 267 of the PPSA applies, because [the relevant party's] security interest was not temporarily effective and was not perfected on the section 513C day, namely 22 July 2016, and that security interest was vested in PPA under s 267(2) of the Corporations Act. That may be a harsh and possibly unreasonable result in the relevant circumstances, but, for the reasons noted above, that result cannot be avoided under the present legislative regime by reliance on temporary effectiveness under s 166 of the PPSA.
98 The impact of the vesting rule under s 267 of the PPSA was also considered by Barker J in Bredenkamp v Gas Sensing Technology [2017] FCA 1065 (Bredenkamp), where Barker J observed:
OPERATION OF THE PPSA
7. It may generally be said that, under the PPSA, the rights of the parties to a transaction that falls within the meaning of "security interest" in s 12 are explicitly not dependent on either the form of the transaction or upon common law notions of title. Rather, the PPSA provides a completely new regime for determination of priorities to collateral following an insolvency event.
8. The general position under the PPSA is that an unperfected security interest is subordinated to the interest of:
(1) a person who has perfected a security interest or is entitled to priority under the PPSA; and
(2) the grantor of a security interest to which an external controller has been appointed following a relevant insolvency event, such as an administrator or liquidator.
9. Prior to the introduction of the PPSA, an administrator appointed under the Corporations Act 2001 (Cth) traditionally stepped into the shoes of the relevant person or entity he or she was appointed to, and acquired no higher right in that person's or entity's property than that person or entity enjoyed. The PPSA has changed that position. The PPSA confers certain rights in addition to those held by the person or entity, and is directed at ranking those interests.
10. Accordingly, the PPSA replaces the traditional ranking of interests according to who is the true owner and who is the ostensible owner through possession or other rights in that property. In that respect, the PPSA has effected far reaching changes to the law. In Forge Group Power Pty Ltd (in liq) (receivers and mangers appointed) v General Electric International Inc (2016) 305 FLR 101; [2016] NSWSC 52 Hammerschlag J said, at [5], that the PPSA "introduced an innovative (some might say, revolutionary) new national code for determining priorities between parties holding security interests in personal property".
11. The extent to which its provisions prove this observation has been the subject of much discussion in the legal literature and publications considering the operation of the PPSA since its commencement, but not often in decided cases in the Courts – as is revealed below.
12. By virtue of the deeming provisions under s 267(2) of the PPSA, upon the appointment of a controller to a grantor under s 267(1), the grantor may have rights superior to those enjoyed by the grantor prior to that appointment (see also s 588FL of the Corporations Act). Relevantly, an unperfected PPS lease may result in those goods being completely vested in the grantor, even though, prior to the appointment the grantor only had a possessory right in those goods. That vesting may be said to reflect a policy choice by the legislature, and needs to be borne in mind when considering the interaction of different provisions within the PPSA, as well as a claim by a putative legal owner of personal property following a vesting event (for example, as here, on the appointment of the administrator).
99 For the reasons given, by reason of s 267 of the PPSA, at least in the period from 19 December 2019 to 11 February 2020 (being the time when the relevant notice of disclaimer arose), the Company held BMW's interest in the relevant personal property, comprising the Ferrari, as its unencumbered asset free of BMW's security interest. The security interest held by BMW vested in the Company.
100 The question then becomes whether the liquidators' notice of disclaimer affected that position.
The Notice of Disclaimer
Section 568 of the Corporations Act
101 Section 568(1) of the Corporations Act provides:
(1) Subject to this section, a liquidator of a company may at any time, on the company's behalf, by signed writing disclaim property of the company that consists of:
(a) land burdened with onerous covenants; or
(b) shares; or
(c) property that is unsaleable or is not readily saleable; or
(d) property that may give rise to a liability to pay money or some other onerous obligation; or
(e) property where it is reasonable to expect that the costs, charges and expenses that would be incurred in realising the property would exceed the proceeds of realising the property; or
(f) a contract;
whether or not:
(g) except in the case of a contract—the liquidator has tried to sell the property, has taken possession of it or exercised an act of ownership in relation to it; or
(h) in the case of a contract—the company or the liquidator has tried to assign, or has exercised rights in relation to, the contract or any property to which it relates.
102 Section 568(1A) of the Corporations Act provides that a "liquidator cannot disclaim a contract (other than an unprofitable contract or a lease of land) except with the leave of the Court".
Liquidators' submissions to the effect that the notice of disclaimer was a nullity
103 The liquidators submit that a liquidator's right to disclaim onerous property arises under s 568 of the Corporations Act which sets out the six categories of property that may be disclaimed, namely the categories referred to in ss 568(1)(a)-(f) of the Corporations Act.
104 The liquidators submit that the purported disclaimer involves two types of property, namely the Ferrari itself and the chattel mortgage under which the Ferrari was financed, which is a contract. The applicable subsections of s 568 are therefore s 568(1)(d) in relation to the Ferrari and s 568(1)(f) in relation to the chattel mortgage.
105 The liquidators submit, in relation to the Ferrari, that it is an asset registered in the name of, and owned by, the Company. The liquidators contend that BMW does not have any claim to, or interest in, the Ferrari. The liquidators submit that, insofar as the Company is concerned, the Ferrari is an unencumbered asset and BMW is an unsecured creditor of the Company.
106 As a consequence, the liquidators submit that the purported disclaimer in relation to the Ferrari was, when it was purportedly made, and remains, a nullity. The liquidators submit that this follows because, at the time of the notice of disclaimer, the Ferrari was not "property that may give rise to a liability to pay money or some other onerous obligation" in accordance with s 568(1)(d).
107 The liquidators submit that, insofar as the chattel mortgage is concerned, given it is a contract, the provisions of s 568(1A) apply and the liquidators were required to seek leave of the Court to disclaim the contract unless the contract is, relevantly, an unprofitable contract: Corporations Act, s 596(1A).
108 The liquidators submit that the security interest (granted by the chattel mortgage with BMW) vested in the Company on the liquidators' appointment as joint and several administrators of the Company on 19 December 2019, with the result that BMW became an unsecured creditor.
109 The liquidators submit that it is well established that, where a liquidator, without leave of the Court, purports to disclaim an "unprofitable contract" that is later held to not, in fact, be unprofitable, the disclaimer is null and void due to the failure to obtain the Court's leave: citing In the matter of Blue Sennar Air Pty Ltd (in liq); In the matter of Eye Plantain Pty Ltd (in liq) [2016] NSWSC 772 (Blue Sennar Air) at [9] and [20]-[21].
110 The liquidators submit that, in circumstances where the Ferrari was not subject to any liability or other onerous obligation, the purported disclaimer is invalid and of no effect.
111 The liquidators submit that the critical question must be whether, as at the date of the purported disclaimer (ie 11 February 2020), the Ferrari (which was worth more than $300,000 and was unencumbered property of the Company) fell within the statutory description in s 568(1)(d), being "property that may give rise to a liability to pay money or some other onerous obligation".
112 The liquidators are not aware of any authority which has specifically interpreted that phrase. The liquidators made four relevant submissions in this respect.
113 First, the liquidators submit that the use of the words "some other onerous obligation" has the effect that the phrase "liability to pay money" should be considered as only involving a liability to pay money which was "onerous" itself, and not merely a liability to pay any amount of money, no matter how small. That is, in the liquidators' submission, the obligation should be "onerous".
114 Second, the liquidators submit that "onerous" is defined by the Oxford English Dictionary as meaning, in a legal context, "involving heavy obligations".
115 Third, the liquidators submit that the word "onerous" as used in s 568(1)(d) can be seen as being an obligation attached to the continued ownership of the property which might be the subject of the disclaimer.
116 Fourth, the liquidators submit that, to be "onerous" in that context, the liability to pay money would need to be such that it created a "heavy" obligation, either by virtue of the obligation being one which extended over a lengthy period of time (where a liquidation should be conducted as quickly as practicable) or by the value of the property which might be the subject of the disclaimer being potentially exceeded by the benefits to be derived from the retention of the property by the liquidators.
117 The liquidators submit that the principal purpose of the disclaimer provisions has been identified in a number of authorities as enabling a liquidator to relieve the company of obligations or liabilities which would prevent a prompt and efficient winding up of the affairs of a company: citing Re Willmott Forests Ltd [2012] VSC 29; 258 FLR 160 at [6]; and Re Middle Harbour Investments Ltd (in liq) (No 2) [1977] 2 NSWLR 652 (Re Middle Harbour) at 657.
118 The liquidators submit that, if these matters are properly taken in to account, the correct construction of the power conferred by s 568(1)(d) is only enlivened if two aspects exist in respect of the specific property which might be the subject of the disclaimer. First, a liability must exist which is associated with specific property. Second, such liability might be reasonably (objectively) considered by the liquidators to potentially exceed the benefits to be derived from the retention of the property by the liquidators.
119 The liquidators submit that, if it is accepted that BMW's chattel mortgage has vested in the Company, there can be no suggestion of the existence of any liability which necessarily attaches to the Ferrari, let alone an "onerous" one. The liquidator submits that the appointment of the administrators on 19 December 2019, and the vesting of BMW's security interest in the Company, had the immediate effect that the Ferrari no longer had any burdens attached to it. Rather, BMW was an unsecured creditor of the Company only.
120 The liquidators submit that, in these circumstances, the liquidators' decision to purportedly disclaim the Ferrari was of no effect.
The Liquidators' alternative submission that the disclaimer can be set aside
121 Alternatively, the liquidators submit that, if the disclaimer is held to have effect, the Court has the power to set aside a disclaimer pursuant to s 568E of the Corporations Act after it has taken effect.
122 The liquidators submit that, pursuant to s 568E(1), a person who has, or claims to have, an interest in disclaimed property may, with leave of the Court, apply for an order setting aside the disclaimer after it has taken effect. In this respect, as the registered owner of the Ferrari, the Company, through its liquidators, has, or claims to have, an interest in the Ferrari.
123 The liquidators submit that the leave required pursuant to s 568E(1) is to be granted only if the Court is satisfied that it is unreasonable in all the circumstances to expect the liquidators to have applied to set aside the disclaimer before it took effect: Corporations Act, s 568E(2).
124 The liquidators submit that, given their lack of knowledge of the complex issues relating to the PPSA registration at the time of the purported disclaimer, it is unreasonable to expect such an application to have been made within the 14 day time period. The liquidators submit that they were operating with limited information in relation to the operations of the Company and were required to make multiple decisions about the Company's affairs in a short space of time.
125 Section 568E(5) provides that:
… the Court may set aside a disclaimer only if satisfied that the disclaimer has caused, or would cause, to persons who have, or claim to have, interests in the property, prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer (and making any further orders) would cause to:
(a) the company's creditors; and
(b) persons who have changed their position in reliance on the disclaimer taking effect.
126 The liquidators submit that the statutory test in s 568E(5) requires two sets of comparisons to be made. In this case, the liquidators submit a comparison is required between the relative positions of the Company and its creditors as against the position of BMW, on the supposition that the disclaimer is effective or if it is set aside. The relevant prejudice will ordinarily manifest itself in financial disadvantage.
127 The liquidators submit that the significant prejudice to the Company and its creditors in this case is that, if the disclaimer is held to be effective, the external administration will be deprived of an asset worth approximately $314,760 which would (if the disclaimer is in fact set aside) be available for realisation and to form part of the pool of funds available to creditors.
128 The liquidators submit that there is no prejudice to BMW in setting aside the purported disclaimer because BMW's position remains the same notwithstanding the disclaimer being set aside as:
(1) any security interest that BMW held had already vested in the Company on 19 December 2019;
(2) BMW's position relative to the Company does not change because, either way, it is an unsecured creditor in the winding up. The liquidators submit that, arguably, setting aside the purported disclaimer would improve BMW's position because it would increase the funds available in the winding up to pay creditors;
(3) any reliance that BMW placed on the disclaimer is moot – they had already lost the benefit of the security interest as at 19 December 2019; and
(4) BMW retains its rights against the guarantor to the chattel mortgage agreement irrespective of the Court's decision to set aside the disclaimer.
BMW's submissions on the notice of disclaimer
129 BMW submits that an unprofitable contract is not a defined term in the Corporations Act but is commonly understood as a contract where the burden of liabilities exceeds the benefits of the contract, which will impede a liquidator's ability to realise the assets. The question whether a contract is unprofitable is one of fact: citing Blue Sennar Air, [11] and [12].
130 BMW submits that the purpose of a liquidator's power of disclaimer is usefully summarised in Longley v Chief Executive, Department of Environment and Heritage Protection [2018] 3 Qd R 459; 331 FLR 33; 124 ACSR 527 (Longley) by McMurdo JA, with whom Gotterson JA and Bond J agreed, which described the purpose of a liquidator's power of disclaimer by reference to previous authority in the following ways (at [52]):
(1) "the disclaimer of a company's rights automatically operates to release the company from its ongoing correlative liabilities": Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (in liq) [2013] HCA 51; 251 CLR 592 (Willmott Growers), [118] (Keane J in dissent);
(2) "to rid … the company … of burdensome financial obligations which might otherwise continue to the detriment of those interested in the administration; it is given to enable … the liquidator to advance the prompt, orderly and beneficial administration … of the winding up of its affairs": Re Middle Harbour, 657 (Bowen CJ in Eq);
(3) "to enable insolvency administrators to relieve themselves of ongoing liabilities which so prolong the administration and delay the dividend …": Global Television Pty Ltd v Sportsvision Australia Pty Ltd (in liq) (2000) 35 ACSR 484, 498 (Santow J) and cited in Sims v TXU Electricity Ltd (2005) 53 ACSR 295, [15]-[20] (Spigelman CJ, with Sheller JA and Brownie AJA agreeing).
131 BMW submits that the effect of a disclaimer is to terminate a Company's rights, interests, and, importantly, liabilities in respect of the disclaimed property: Corporations Act, s 568D(1). BMW submits that the power of disclaimer does not permit a liquidator to confine the effect of a disclaimer: citing Longley, [53].
132 BMW submits that the position remains that a liquidator can disclaim onerous contracts to maximise the surplus for creditors and expedite the winding up process. In these circumstances, BMW submits that the contract in this case was unprofitable for the Company and was disclaimed. As a result, BMW submits that the liquidators' disclaimer cannot be described as a nullity.
133 BMW referred to the statutory formulation in s 568(1)(d), being "property that may give rise to a liability to pay money or some other onerous obligation". BMW submits that there are plainly degrees of onerousness. BMW submits that there is no precise line at which an obligation would be characterised as onerous. BMW submits that there are different degrees of risk which would ensure that an obligation with respect to property may be onerous.
134 BMW submits that the fact that the liquidators are entitled to take into account all of the circumstances surrounding the relevant asset is demonstrated by the fact that the liquidator is not required to identify any reasons as to disclaiming the property on the ground of an onerous obligation. BMW submits that different liquidators may form different views as to when an obligation meets the criteria of being onerous and have different appetites for the risk which would entail an obligation meeting that criteria.
135 BMW submits that, while in the possession of the liquidators, the Ferrari required safe ongoing storage, weekly battery recharging and regular servicing. BMW submits that there was the potential for many matters to adversely affect the vehicle. BMW submits that there was a need to maintain insurance in respect of the Ferrari.
136 BMW submits that, in these circumstances, it cannot be said the obligations in respect of the Ferrari were not capable of being regarded by a liquidator as potentially onerous within the liquidator's broad discretion.
BMW's submissions on setting aside the disclaimer
137 BMW submits that, on a proper construction of s 568B of the Corporations Act, the "person" who may apply to set aside a disclaimer is a person other than the liquidator. BMW submits that this is demonstrated by s 568B(1)(a) of the Corporations Act, which sets a time limit for an application by reference to the time since "the liquidator gives to the person notice of the disclaimer".
138 BMW submits that the Court must be satisfied that it is unreasonable in all the circumstances to expect the person to have applied for an order setting aside the disclaimer before it took effect – that is, within 14 days after the liquidator lodges the notice of disclaimer: ss 568E(2) and 568B(1) of the Corporations Act.
139 BMW submits that the Court may only set aside a disclaimer if satisfied that the disclaimer has caused (or would cause) to persons who have (or claim to have) interests in the property, prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to: (a) a company's creditors; and (b) persons who have changed their position in reliance on the disclaimer taking effect: s 568E(5) of the Corporations Act.
140 BMW submits that the liquidators' application is a novel use of s 568E as the case law invariably involves a party affected by a disclaimer rather than a liquidator (eg a landlord seeking to oppose a liquidator disclaiming a lease entered into by a company): citing Steinhardt v Trenfield & Park as liquidators of Wealth Base South Coolum Pty Ltd (in liq) [2015] QSC 237.
CONSIDERATION OF NOTICE OF DISCLAIMER
141 To the extent the notice of disclaimer purported to disclaim the Ferrari, the notice of disclaimer was void, of no effect and is a nullity. That is because there was no disclaimer under s 568(1)(f) and the Ferrari was not "property that may give rise to a liability to pay money or some other onerous obligation" under s 568(1)(d). The reasons for that position are as follows.
There was no disclaimer under s 568(1)(f)
142 To briefly recall, the notice of disclaimer made on 11 February 2020 identified the disclaimed property as the Ferrari. The notice of disclaimer stated that it gave notice that the liquidators disclaim that property, that the "property is property of the [C]ompany" and that it "consists of property that may give rise to liability to pay money or some other onerous obligation". As a consequence, the notice sought to disclaim the property, being the Ferrari, pursuant to s 568(1)(d) of the Corporations Act.
143 To the extent BMW pressed its submissions that the liquidators disclaimed the contract between BMW and the Company pursuant to s 568(1)(f), those submissions should not be accepted. When proper regard is had to the text of the notice of disclaimer, it cannot be said that there was any disclaimer under s 568(1)(f) of the Corporations Act. Whether or not the contractual obligations referred to by BMW were disclaimed under s 568(1)(f) does not arise in this case. That is because the liquidators' notice of disclaimer plainly sought to rely on the power conferred by s 568(1)(d), not s 568(1)(f). Whether or not the power furnished by s 568(1)(f) was enlivened or exercised is not properly an issue in this proceeding.
The Ferrari was not "property that may give rise to a liability to pay money"
144 As to s 568(1)(d) of the Corporations Act, the following matters can be noted.
145 As stated above, BMW conceded at the hearing on 27 April 2021 that there was not a relevant liability to pay money associated with the property for the purposes of 568(1)(d) of the Corporations Act. That is, for the purposes of s 568(1)(d) of the Corporations Act, there was not "property that may give rise to a liability to pay money". That was a proper concession by BMW for the following reasons.
146 First, the text of s 568(1)(d) empowers a liquidator of a company, on the company's behalf, to disclaim "property that may give rise to a liability to pay money or some other onerous obligation".
147 Second, as addressed in detail earlier in these reasons, the Ferrari was not "property that may give rise to a liability to pay money". As at the vesting date, any personal obligation owed to BMW by the Company was no longer connected to, or secured by, the property (ie the Ferrari) because of BMW's unperfected security interest and the operation of the vesting rule in s 267 of the PPSA (referred to above). The appointment of the administrators on 19 December 2019, and the vesting of BMW's security interest in the Company, had the immediate effect that the Ferrari – as distinct from obligations owed by the Company – could not give rise to a liability to pay money. BMW was an unsecured creditor of the Company only.
148 In addition, in Willmott Growers, French CJ, Hayne and Kiefel JJ stated at [29] and [35]-[38]:
It will be recalled that s 568(1) gives the liquidator of a company power to disclaim "property of the company that consists of" any of six enumerated categories of property. Paragraphs (a) and (b) of s 568(1) refer to "land" and "shares"; paras (c), (d) and (e) refer to "property" of various kinds; and para (f) refers simply to "a contract".
…
Care must always be exercised in understanding how the word "property" is used in legal discourse. The word may be used in different senses and the very concept of "property" may be elusive. The Act's conferral of a power to "disclaim property" can be given legally sensible operation only by reading the reference in the chapeau to s 568(1) to "property of the company" as not confined to the object in respect of which the property rights exist. Rather, the reference to "property of the company" must be read as directing attention to the legal relationship which exists between the company and the object (whether that object is land, shares, a contract or some other object of property). That reading of the chapeau is consistent with the Act's definition of "property" as "any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includ[ing] a thing in action".
The breadth of the kinds of "property" with which s 568(1) deals both demonstrates and requires that no narrow meaning can be given to the legal relationships which are embraced by the word "property" whenever it is used in the provision. The word "property" should be understood as referring to the company's possession of any of a wide variety of legal rights against others in respect of some tangible or intangible object of property.
If land was the only object of property with which s 568(1) dealt, the nature and extent of the property rights which may be disclaimed might usefully have been elucidated by reference only to general land law and, in particular, doctrines of estates. But s 568(1) does not deal only with property in land. It deals with a company's "property" in, among other things, bilateral contracts. In that context, as well as in other contexts in which s 568(1) must operate, doctrines of estates cannot inform, let alone limit, the scope of the word "property".
Once it is understood, as it must be, that "property" in the chapeau to s 568(1) is a compendious description of legal relationships amounting to "ownership" of objects of property (both tangible and intangible), the reference in para (f) to "a contract" must be understood as identifying, as the disclaimer property, the rights and duties which arise under the contract. The contract is the source of those rights and duties.
(Emphasis in the original; citations omitted.)
149 It is also important to avoid conflating the "consequences of disclaimer" and "the ambit of the power to disclaim": Willmott Growers at [49] per French CJ, Hayne and Kiefel JJ.
150 In this respect, BMW's initial submissions referred to certain obligations in the agreement between BMW and the Company. By way of example, clause 5(a) of the agreement between BMW and the Company provides that "[t]he Borrower must … pay to [BMW] the Total Amount Payable by the Instalments at or before the times and in the manner specified in item 5 of the Schedule [to the relevant contract]" (emphasis added). Clause 5(b) provides that "[t]he Borrower must … pay to [BMW] on demand [certain amounts]" (emphasis added). Clause 11.1 provides that "[t]he Borrower must pay on demand all the reasonable costs and expenses of [BMW] relating to or in connection with [certain matters]" (emphasis added).
151 As the emphasised words show, those provisions are plainly personal obligations imposed on the "Borrower", being the Company. They are obligations to pay money. They are not directed towards the "legal relationship which exists between the company and the object": Willmott Growers at [35] per French CJ, Hayne and Kiefel JJ (emphasis added). Rather, they relate to the legal relationship between two persons, namely BMW and the Company. They do not relate to the legal relationship between BMW and the Ferrari. They should not be characterised as being responsive to the description in s 568(1)(d), being "property of the company that consists of … property that may give rise to a liability to pay money" (emphasis added). As a consequence, those obligations are not responsive to the liquidators' notice of disclaimer.
The Ferrari was not "property that may give rise to [an] other onerous obligation"
152 Finally, in light of the reasoning set out above, the question becomes whether the Ferrari was, in the context of s 568(1)(d), "property that may give rise to … some other onerous obligation". Put another way, immediately before the liquidators' notice of disclaimer arose, the question is whether the Ferrari was capable of answering that statutory criterion such that the Ferrari was capable of being disclaimed.
153 The answer to that question is that, at the time of the notice of disclaimer, the Ferrari did not answer that description. This is so for the following reasons.
"Other onerous obligation"
154 The parties were not aware of any authority which has interpreted the phrase "property that may give rise to … some other onerous obligation". In the context of s 568(1)(d), "some other onerous obligation" conveys an obligation that is separate or distinct from, or different or additional to, the other obligation described in s 568(1)(d), being a "a liability to pay money". The Oxford English Dictionary (Oxford University Press, March 2021) contains the following definition of "onerous": "[o]f the nature of a legal burden or obligation; … unreasonably burdensome, involving obligations which outweigh the possible benefits". Jowitt's Dictionary of English Law (5th edition) provides that "onerous" means:
A contract, lease, share or other right is said to be onerous when the obligations attaching to it counterbalance or exceed the advantage to be derived from it, either absolutely or with reference to the particular possessor.
155 In Re Middle Harbour, Bowen CJ in Eq interpreted the power to disclaim "any estate or interest in land which is burdened with onerous covenants": Re Middle Harbour, p 656. His Honour stated at p 659 that these words were "appropriate to cover land in respect of which there exist onerous covenants from which may arise financial liabilities constituting a burden on the land, in the sense that they may be enforced against the land".
156 Having regard to those matters, it should be noted that there was very limited argument concerning the ambit of the phrase "other onerous obligation" in s 568(1)(d) of the Corporations Act. In those circumstances, this judgment need not set out a comprehensive analysis of the concept. It is sufficient to state that the words "other onerous obligation" require an evaluation as to whether a relevant obligation answers the description of being "onerous" in the context of s 568(1)(d). In light of the limited argument on the meaning of that phrase, it would not be appropriate to set out a test that goes beyond the text of s 568(1)(d). It is sufficient to say that I accept the liquidators' submissions that an "onerous obligation" may include a requirement that imposes a sufficiently heavy burden. An "onerous obligation" may, in a number of circumstances, include requirements attached to property that outweigh or exceed the monetary or non-monetary benefits that could foreseeably be derived from the relevant property. An "onerous obligation" may also include property which has "financial liabilities" that can be "enforced against" the property: Re Middle Harbour, p 659.
Application to the facts
157 When the nature of the phrase "other onerous obligation" is appreciated, immediately before the notice of disclaimer, the Company's obligations in relation to the Ferrari should not be categorised as an "other onerous obligation" within the meaning of s 568(1)(d).
158 This is because, from 19 December 2019, by operation of the vesting rule in s 267 of the PPSA, BMW's unperfected security interest vested in the Company and the Company held the Ferrari as its unencumbered asset free from BMW's security interest. The notice of disclaimer was made by the liquidators on 11 February 2020 subsequent to the automatic vesting of the security interest on 19 December 2019 when the Company was placed into administration.
159 In these circumstances, as at the date of the notice of disclaimer (being 11 February 2020), rather than having financial burdens attached to it, the evidence discloses that the Ferrari had an estimated value, as at 20 August 2020, of $314,760, and I infer that the Ferrari would have had a similar value as at 11 February 2020. By reason of the operation of the vesting rule in s 267 of the PPSA, the Ferrari was an unencumbered asset of the Company which had a value in excess of $300,000. On any view, having possession of an unencumbered asset that has a value exceeding $300,000 is not an "onerous obligation". At the relevant time, there were no obvious burdens attached to it which would exceed the value of $300,000. There were also no liabilities which could be enforced against it.
160 As to BMW's submissions that there were ongoing storage, weekly battery recharging, regular servicing, and insurance requirements attached to the Ferrari which were "onerous obligations", I do not accept those submissions. I was not taken to any evidence as to what those obligations involved and why they would satisfy the statutory text of being "onerous". In light of the value of the Ferrari to the Company, I do not accept that these types of obligations outweighed that value such that they could be described as "onerous".
The notice of disclaimer was a nullity
161 In these circumstances, at the time of the notice of disclaimer, the power of the liquidators to disclaim property of the Company under s 568(1)(d) had not, in my view, been enlivened as the property, being the Ferrari, had, as at the notice of disclaimer, a value in excess of $300,000 and was not property that may give rise to a liability to pay money or some other onerous obligation.
162 For the reasons given, having regard to the liquidator's notice of disclaimer, the power to disclaim the Ferrari under s 568(1)(d) was not enlivened or exercised by that notice of disclaimer. The liquidators' purported exercise of the power under s 568(1)(d) was ineffective insofar as it sought to disclaim the Ferrari as at 11 February 2020 on the basis that, as stated in the liquidators' notice of disclaimer, the Ferrari was "property of the company that consists of … property that may give rise to a liability to pay money or some other onerous obligation". The purported notice of disclaimer was void, of no effect and is a nullity. That position is consistent with the finding of Brereton J in Blue Sennar Air at [21], where his Honour found that the "purported disclaimers" in that proceeding were "without effect" and were "nullities".
163 The result is that BMW has a "personal claim" against the Company in liquidation and remains "free to assert that right", but it does not have a proprietary claim in respect of the Ferrari: Willmott Growers at [71] per Gageler J.
The liquidators' alternative submission
164 In light of my finding that the notice of disclaimer dated 11 February 2020 is a nullity, there is no reason to deal with the alternative relief sought by the liquidators under [8(b)] of the amended originating process (that is, that the notice of disclaimer be set aside pursuant to s 568E of the Corporations Act).
DECLARATORY RELIEF
BMW's submissions
165 BMW submitted that the liquidators should be denied the declaratory relief which they seek on discretionary grounds.
166 BMW submits that on 27 May 2020 the liquidators, without taking any step to set aside the disclaimer, or to inform ASIC or BMW that it regarded the disclaimer as ineffective, or to seek the consent of BMW, seized the Ferrari. BMW submits that this seizure was made pursuant to an ex parte application for a warrant of search and seizure granted by Moshinsky J on 21 May 2020.
167 BMW submits that Mr Rohrt of the liquidators acknowledges that he was warned by an undisclosed staff member about the disclaimer at the time of the seizure, but says that he already formed the view that the disclaimer was ineffective when the Warrant was obtained. BMW contends that the disclaimer, or Mr Rohrt's opinion that the disclaimer was ineffective, was not disclosed to Moshinsky J as part of the ex parte application. BMW submits that the liquidators' solicitors did not seek to withdraw the disclaimer until some two weeks later on 10 June 2020.
168 BMW submits that the intrusive nature of a search and seizure application is a significant imposition on the rights of citizens and ought to be accompanied by a high standard of candour. BMW submits that the liquidators have not respected the intrusive powers granted to them by this Court and, if the liquidators held the view that the disclaimer was ineffective then they should have sought to set it aside before, or as part of, their application to Moshinsky J. BMW submits that, at the very least, the existence of the disclaimer should have been disclosed to Moshinsky J.
169 BMW submits that, in these circumstances, the liquidators should be denied the declaratory relief they seek. BMW submits that the liquidators have, on the basis of their own untested views as to their notice of disclaimer, acted inconsistently with their notice of disclaimer, and without having first taken proper steps to regularise the position or even inform the Court before seizing the Ferrari. BMW submits that such conduct should not be condoned by the Court.
Consideration
Principles
170 In Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, Gibbs J addressed the nature of declaratory relief. His Honour stated at 437-438:
It does … seem to me that the Scottish rules summarized by Lord Dunedin in Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd., should in general be satisfied before the discretion is exercised in favour of making a declaration:
"The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought."
Beyond that, however, little guidance can be given. As Lord Radcliffe said in Ibeneweka v. Egbuna:
"After all, it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restriction on the award of a declaration."
(Citations omitted.)
171 In JN Taylor Holdings Ltd (in Liq) v Bond (1993) 59 SASR 432 (JN Taylor), King CJ (with whom Prior and Perry JJ agreed) stated at 435-437:
Authoritative judicial statements make it clear that the jurisdiction to grant declaratory relief is very wide and that judicial pronouncements appearing to restrict the circumstances in which such relief will be granted relate to the sound exercise of the discretion rather than to jurisdiction: Ibeneweka v Egbuna [1964] 1 WLR 219 at 225; Forster v Jododex Australia Ply Ltd (1972) 127 CLR 421 esp per Gibbs J at 438; Salmar Holdings Pty Ltd v Hornsby Shire Council [1971] 1 NSWLR 192, per Mason JA at 201 … In Johnco Nominees Pty Ltd v Albury-Wodonga (NSW) Corporation (supra), Street CJ (at 53) repudiated the notion of jurisdictional cut-off points in relation to declaratory relief. Moffitt P said (at 57):
"The proper conclusion to be drawn concerning the power to make a declaration is that the jurisdiction (in the strict sense) to grant declaratory relief in a properly constituted action is very wide, so that no particular limitation can be pointed to …"
…
The proposition that there is no limit to the jurisdiction of the court to grant declaratory relief would be an incomplete and misleading statement of the true position unless there be added the further proposition that there are circumstances which are so contra-indicative to the exercise of the discretion in favour of the grant of declaratory relief that the existence of those circumstances would lead almost inevitably to the exercise of the discretion against the making of a declaration. Examples of such decisively contra-indicative circumstances can be found in the cases. A declaration will not be made except in matters "which have a real legal context, and to the determination of which the Court's procedure is apt": Johnco Nominees Pty Ltd v Albury-Wodonga (NSW) Corporation (supra) per Hutley JA at 61. There must be some person who has a true interest in opposing the declaration. The question raised must not be purely theoretical. There must not only be a party with a true interest in opposing the declaration, but the plaintiff must have a real interest in having the question determined: Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, per Lord Dunedin at 448. That interest may exist although the apprehended impact on the plaintiff may be no more than a future possibility: Hordern-Richmond Ltd v Duncan [1947] 1 KB 545. If, however, the determination of the question could not affect the plaintiff's legal rights or commercial or personal interests now or in the future, that is to say would "produce no foreseeable consequences for the parties" (Gardner v Dairy Industry Authority (1977) 52 ALJR 180 at 188, per Mason J), see generally Ainsworth v Criminal Justice Commission (supra) at 581-582, the declaration would almost certainly be refused.
172 The nature and power of declaratory relief was recently addressed in some detail by the Full Court in Clarence City Council v Commonwealth of Australia [2020] FCAFC 134; 382 ALR 273 (Jagot , Kerr and Anderson JJ) (Clarence). In Clarence, the Full Court stated at [62], [65] and [70]:
This Court's primary source of power is the [Federal Court of Australia Act 1976 (Cth) (FCA Act)]. Relevantly, to the extent that this Court is otherwise vested with jurisdiction (Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; 201 FCR 378 (MSY Technology) at [8]-[9] and [21] per Greenwood, Logan and Yates JJ), s 21 of the FCA Act empowers the Federal Court as follows:
21 Declarations of right
(1) The Court may, in civil proceedings in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.
(2) A suit is not open to objection on the ground that a declaratory order only is sought.
…
Section 23 of the FCA Act additionally confers upon the Federal Court broad powers to award relief to a party:
23 Making of orders and issue of writs
The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.
… [T]here remains a residual discretion as to whether or not relief should be granted in the circumstances of the particular case: Australian Conservation Foundation Inc v The Commonwealth [1980] HCA 53; 146 CLR 493 at 511 per Aickin J. It is established that this discretion is very wide: [JN Taylor] at 435-436 per King CJ, with Prior and Perry JJ agreeing. Indeed, Gibbs CJ expressed in Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421 at 437 that it was a discretion that was "neither possible nor desirable to fetter … by laying down rules as to the manner of its exercise".
173 The Court also observed at [189]:
The court's discretion to award declaratory relief is directed by the interests of justice. As expressed by Neuberger J (as his Lordship then was) in Financial Services Authority v Rourke [2001] EWHC 704 (Ch); [2002] CP Rep 14 at 18 (as quoted in Equity: Doctrines & Remedies at p 630):
… when considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are any other special reasons why or why not the court should grant the declaration.
(We agree with the view of the authors of Equity: Doctrines & Remedies (at p 630), though, that this statement should not be taken to exhaustively state the considerations relevant to the exercise of the court's discretion: ibid.)
Application to the facts of this case
174 Having regard to those principles, certain evidence of one of the liquidators, Mr Rohrt, should be noted. The fifth Rohrt affidavit records the following:
… on our appointment as liquidators of the Company, we had serious difficulties in obtaining books and records. On the basis of the information available to me at the time, I understood that the Ferrari was an asset of the Trading Trust and had an associated liability to [BMW]. I understood at that time based on the limited books and records I had available that the finance associated with the Ferrari was likely to be significantly in excess of the value of the Ferrari itself. I also did not have possession of the Ferrari.
I had also caused a search of the Personal Property Securities Register to be undertaken in relation to the Company. I noted that BMW had registered their security interest against the Ferrari. At the time, I did not turn my mind to the validity or otherwise of the registration nor did I seek advice as to its validity.
On the basis that I understood the liability secured against the Ferrari exceeded its value, and that there were ongoing obligations to make payments, on 11 February 2020 I signed the Notice of Disclaimer (Purported Disclaimer).
…
I am aware that under the provisions of the Corporations Act 2001 (Cth), a party seeking to set aside a disclaimer must do so within 14 days and otherwise leave of the Court is required.
I did not make the application within that period because following signing the Purported Disclaimer, I did not have any reason to re-consider the matter until when the Warrant was sought and obtained in this proceeding. At that time, having re-considered the PPS registration, I formed the view that the registration was defective. I did so on the basis that I noted the registration was against the Company's Australian Company Number and not the Australian Business Number allocated to the Trading Trust. On that basis, I formed the view that the security interest had actually vested in the Company the moment prior to it being placed into administration on 19 December 2019. Accordingly, I formed the view that the Ferrari was property I was entitled to seize pursuant to the Warrant issued by this Court.
During the execution of the Warrant on 27 May 2020, when I was informed that the Ferrari was located and I needed to provide instructions as to whether or not it should be seized, I was reminded by one of my staff that I had signed the Purported Disclaimer. Prior to seizing the Ferrari, I considered the Purported Disclaimer and formed the view that given the security interest had vested in the Company, the Purported Disclaimer was ineffective. I formed this view given that I considered I was not able to disclaim the chattel mortgage associated with the Ferrari pursuant to s 568(1)(d) of the Corporations Act 2001 given that there was no liability to pay money or some other onerous obligation attached to the Ferrari. Given that the security interest had vested in the Company, I formed the view that BMW were now an unsecured creditor.
Having formed those views, and following the seizure of the Ferrari, I instructed my lawyers to communicate these matters to both Ms Guerin and to BMW and to amend the Originating Process filed in these proceedings …
On the basis of the above, I verily believe that the Company and therefore Mr Dixon and I as liquidators have a claim to the Ferrari on the basis that the security interest vested in the Company, and therefore it is an asset capable of being realised for the purposes of the liquidation.
175 The sixth Rohrt affidavit records the following:
… I seek to clarify my evidence that "I did not have any reason to re-consider the matter until when the Warrant was sought and obtained in this proceeding."
After the Disclaimer had been signed on 11 February 2020 I did not turn my mind to the issue of the disclaimer or the Ferrari until after the Ferrari had been located on the day the Warrant was executed, being 27 May 2020. I did so only when I was considering whether I could seize the Ferrari and at that time I was reminded by a staff member that I had signed the Disclaimer as I depose to in [my] 11 September Affidavit.
To be clear, I had not reconsidered any issues relating to the Disclaimer at the time the matter came before Moshinsky J on 21 May 2020. It was only after the Ferrari was located on 27 May 2020, but before I formed the view that I could seize it, that I considered the question of whether the Disclaimer was effective or ineffective. As a result of that consideration I formed the view that [BMW]'s registration of the security interest under the Personal Property Securities Act was ineffective and therefore that security interest vested in the Company. This led me to the view that I was able to seize the Ferrari.
176 In light of this evidence (which was not challenged by BMW), I am satisfied that there are no discretionary considerations which warrant refusing the declaratory relief sought by the liquidators. This is so for the following reasons.
177 First, one of the liquidators, Mr Rohrt, has deposed to the circumstances in which he came to the view on 27 May 2020 that he could seize the Ferrari because BMW's security interest under the PPSA was ineffective and, as a result, the security interest had vested in the Company upon the Company being placed in administration on 19 December 2019. In short, Mr Rohrt deposes to not having turned his mind to issues relating to the notice of disclaimer (after having signed the notice on 11 February 2020) until executing the warrant on 27 May 2020 and locating the Ferrari on that day. Specifically, Mr Rohrt deposes to not considering any of the issues relating to the disclaimer on 21 May 2020, being the date the ex parte application was made before Moshinsky J.
178 Second, Mr Rohrt was not cross-examined and this affidavit evidence was unchallenged. Mr Rohrt's evidence should be accepted. BMW's attempts to impugn Mr Rohrt's conduct cannot, in those circumstances, provide a basis to deny the declarations sought by the liquidators.
179 As a consequence, I am satisfied that the matters deposed to by Mr Rohrt in his affidavits dated 11 September 2020 and 14 October 2020 provide a satisfactory explanation as to why the existence of the notice of disclaimer and the Ferrari were not matters which were raised before Moshinsky J at the hearing of the ex parte application for the Warrant on 21 May 2020. I am satisfied that there are no discretionary considerations which warrant refusing the declaratory relief sought by the liquidators.
DISPOSITION
180 For the reasons given, I will grant the declaratory relief sought by the liquidators in [7(a)], [7(b)] and [7(c)] and [8(a)] of the amended originating process dated 8 July 2020.
181 I will order that BMW pay the liquidators' costs of, and incidental to, this application.
182 I direct that the parties confer and forward to my Chambers for consideration any further proposed orders to give effect to these reasons for judgment.
I certify that the preceding one hundred and eighty-two (182) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anderson.
Associate:
Dated: 13 May 2021
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1996-12-06 00:00:00
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Myers, Allan James & Ors v Pioneer Concrete (Vic) Pty Ltd [1996] FCA 1073
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1996/1996fca1073
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2024-09-13T22:51:47.469876+10:00
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CATCHWORDS
CONTRACT - construction and interpretation - rent review clause - whether a review of rental payable under a lease was intended to occur at each rent review period - whether notice from the lessors was necessary to commence process of determination of new rent - what is the proper description of the rent to be applied - meaning to be attributed to "shall", "will" and "may" - consideration of the relevance of other clauses to determine the meaning of these words
AMP Society v National Mutual Life Association of Australasia Limited [1995] 1 NZLR 581
Finance Facilities Pty Limited v FCT (1971) 127 CLR 106
Julius v Lord Bishop of Oxford (1880) 5 App Cas 214
National Provident Fund v Shortland Securities Limited [1966] 1 NZLR 45
R & H Australia Pty Limited v Salta Constructions Pty Limited (1993) VConR 65,408
Ward v Williams (1955) 92 CLR 496
Allan James Myers, Jennifer Claire O'Callaghan and Neil John Young v Pioneer Concrete (Vic) Pty Ltd
No VG 260 of 1996
Lockhart, Whitlam and Kiefel JJ
6 December 1996
Sydney (Heard in Melbourne)
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
No VG 260 of 1996
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
ALLAN JAMES MYERS, JENNIFER CLAIRE O'CALLAGHAN and NEIL JOHN YOUNG
Appellants/Cross Respondents
AND:
PIONEER CONCRETE (VIC) PTY LTD
Respondent/Cross Appellant
JUDGE MAKING ORDER: Lockhart, Whitlam and Kiefel JJ
DATE OF ORDER: 6 December 1996
WHERE MADE: Sydney (Heard in Melbourne)
MINUTES OF ORDERS
THE COURT ORDERS THAT:
1. The appeal is allowed in part.
2. In lieu of the declaration numbered 3 made by the Honourable Justice Olney on 17 April 1996 it be declared that:
"The lessor is obliged to give a 'lessor's notice' in respect of each rent review date in the immediately preceding review period".
3. In lieu of the declaration numbered 5(ii) made by the Honourable Justice Olney on 17 April 1996 it be declared that:
"(ii) the rent for periods referred to in paragraph (d) of Special Condition 3 is the current open market rent determined by an independent valuer or the rent payable for the preceding 18 months' period, whichever is the greater".
4. The order for costs of the proceedings below be set aside.
5. The respondent, Pioneer Concrete (Vic) Pty Ltd, pay one half of the appellants' costs of the appeal to be taxed.
Note: Settlement and Entry of Orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA)
)
VICTORIA DISTRICT REGISTRY ) No. VG 260 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: ALLAN JAMES MYERS, JENNIFER CLAIRE O'CALLAGHAN and NEIL JOHN YOUNG
Appellants
AND: PIONEER CONCRETE (VIC) PTY LIMITED
Respondent
COURT: LOCKHART, WHITLAM and KIEFEL JJ
DATE: 6 December 1996
PLACE: Sydney
REASONS FOR JUDGMENT
LOCKHART J.
This case raises a short question of construction of a lease.
On 1 January 1990, Catchklin Pty Ltd ('Catchklin') agreed with Pioneer Concrete (Vic) Pty Limited (the respondent) to lease to it for a term of fifteen years, commencing on 1 January 1990, premises being the first floor of a building at 1183 Toorak Road, Hartwell, together with certain car-parking spaces.
In July 1990, the appellants purchased the premises from Catchklin and became entitled to the reversion.
The case concerns the provisions of the lease relating to the review of rent. The lease provides for payment of the rent of $402,826 per annum, subject to review as provided in special condition 3 of the lease. The lease provides that the rent is payable in advance by regular and consecutive monthly payments, each equal to one twelfth of the annual rent payable in each year of the lease. The lessee covenants to pay to the lessor during the term of the lease the rent stated in the schedule to the lease (clause 2(a)). Special condition 3 is the critical provision in the schedule; it there appears as follows:
'3. The rent shall be reviewed at the end of each eighteen months of the term hereby created and any renewal thereof ("Rent Review Date") the first of such reviews will take place eighteen months from the commencing date and the rent for each successive eighteen month period of the term and any renewal thereof shall be determined as follows:
(a) The lessor may at any time by noticing (sic) in writing ("the lessor's notice") fix the rent at an amount which in the lessor's opinion would be the current open market rent of the premises as at the rent review date but no less than the rental payable by the lessee for the immediately preceding review
period plus twelve point three two per centum (12.32%).
(b) The amount as fixed shall be the rent payable by the lessee for the next ensuing eighteen month period unless within fourteen (14) days of the lessor's notice the lessee notifies the lessor in writing that the lessee disputes the amount fixed by the lessor.
(c) If the lessee disputes the amount set out in the lessor's notice and if the parties after consultation, are unable to reach agreement as to the rent payable within thirty (30) days after the lessor's notice the current open market rent for the demised premises shall be determined by an independent valuer having not less than five (5) years experience in valuing suburban office space and not less than ten (10) years experience in commercial valuation and who shall be employed in a practice which is predominantly commercial in nature, such valuer to be appointed by the President for the time being of the Australian Institute of Valuers (Victorian Division) at the request of the lessor PROVIDED THAT:
(i) any determination by any such valuer shall be made as an expert and not as an arbitrator;
(ii)all costs incurred with the determination of the rent shall be
paid by the lessee and the lessor equally;
(iii) the lessor and the lessee shall have the opportunity to make written submissions to any such valuer, such written submission or submissions to be made within one (1) month of the appointment of any such valuer;
AND the rent payable hereunder shall be the amount determined by any such valuer as the current open market rental value. In any event such rent shall not be less than the rent payable for the immediately preceding eighteen (18) month review period PLUS an amount equal to twelve point three two per centum (12.32%) of the total rent payable for the immediately preceding eighteen (18) month review period subject to sub-clause (d) hereof.
(d) With respect to the rent reviews to take place on the following rent review dates:
(i) fifty four (54) months from the commencing date;
(ii)one hundred and eight (108) months from the commencing date;
(iii) one hundred and sixty two (162) months from the commencing date; and if the option to renew this lease pursuant to special condition 4 hereof is exercised by the lessee;
(iv)two hundred and sixteen (216) months from the commencing date;
the rental shall be the current open market rent as agreed between the parties and failing agreement as determined by an independent valuer at the current open market rental with no additional increases of 12.32%.
(e) For the purposes of this special condition (3) and special condition (4) the expression "current open market rental value" shall mean the current annual open market rental value of the demised premises based on a lease (exclusive of any incentives and allowances including but not limited to rent-free periods of occupancy) between a willing lessor and a willing lessee for the highest and best use to which the demised premises can be put including all car parking facilities and not necessarily the permitted use herein but taking to account of any goodwill attributable to the demised premises by reason of any trade or business carried on therein by the lessee but taking account of the naming rights (if any) of the demised premises granted to the lessee and in all other respects (except as to rent payable) on the terms covenants and conditions of this lease.
(f) Should the amount of the rent for any period not be so determined by the appropriate rent review date, the lessee
shall pending determination thereof pay rent at the rate specified in the lessor's notice referred to in special condition 3(a) hereof but subject to the revision thereof and upon the rent being determined hereunder any necessary adjustment of rent calculated from the rent review date shall be paid forthwith by the lessee to the lessor or reimbursed by the lessor to the lessee as the case may be.'
The rent was determined in accordance with sub-clauses (a), (b) and (c) of special condition 3, by the appellants giving a lessor's notice to the respondent, for the periods of eighteen months commencing on 1 July 1991 and on 1 January 1993. They did not give a lessor's notice or otherwise initiate a rent review concerning the eighteen-month period commencing on 1 July 1994, which was fifty-four months from the commencement date of the lease and therefore governed by sub-clause (d) of special condition 3.
By letter dated 21 October 1994 the respondent asserted that a rent review prescribed by special condition 3(d) was applicable at 1 July 1994 and that such review was to establish and institute the 'current open market' rent at that date. The respondent sought the appellants' agreement on the 'current open market' rent which they considered ought to apply to the eighteen-month period commencing on 1 July 1994. Correspondence
ensued between the parties in which the entitlement of the respondent to initiate the rent review was disputed by the appellants.
The learned primary Judge (Olney J.) found that the introductory words of special condition 3 were couched in imperative terms which left no doubt about the intention of the parties. His Honour referred to the fact that the rent shall be reviewed periodically, that the first review will take place at the time specified therein, and that the rent for the subsequent period shall be determined in the manner set out in the lease. His Honour said that, taken in isolation, the only conclusion open was that the initial words of special condition 3 indicated an intention that the rent must be reviewed every eighteen months and that the reviewed rent must be determined in accordance with sub-clauses (a) to (f) of special condition 3.
His Honour said that the opening words of special condition 3(a), namely 'The lessor may at any time by noticing (sic) in writing ... fix the rent', indicated that the lessor had a discretion as to when the notice was given; but he also said that they did not otherwise contradict or qualify the primary requirements of special condition 3 - that the rent shall be reviewed at the end of each eighteen-month period, and that the rent for each successive eighteen-month period after the initial
eighteen months shall be determined in accordance with sub-clauses (a) to (f). His Honour said the lease imposed an obligation on the lessor to give a lessor's notice to facilitate each review of rent for each successive eighteen-month period.
His Honour rejected the proposition that, if no notice were given, the rent remained unchanged (a view which he said both parties seemed to share).
His Honour held that in respect of the rent review period referred to in special condition 3(d) of the lease, the rent payable, in default of agreement, was simply the current open market rent determined by an independent valuer. This is the case because his Honour found that the concluding words of the final sentence of special condition 3(c), namely '... subject to sub-clause (d) hereof', qualified the whole of the final sentence of special condition 3(c).
The primary argument of counsel for the appellants was that the initiation of the rent review procedure at rent review dates was optional at the discretion of the lessor. The argument found its genesis in the word 'may' which appears in sub-clause (a) of special condition 3 of the lease.
The point was made on behalf of the appellants that it is common for rent determination clauses to be at the option of the lessor and that similar rent review clauses have been so construed. Reference was made to AMP Society v National Mutual Life Association of Australasia Limited [1995] 1 NZLR 581; National Provident Fund v Shortland Securities Limited [1996] 1 NZLR 45; and R & H Australia Pty Limited v Salta Constructions Pty Limited (1993) VConvR 65,408. It was submitted on behalf of the appellants that one way in which the rent may be determined in respect of each rent review date is for the lessor to decline to give a notice, in which case the rent for the review period will be the same rent as was paid for the immediately preceding eighteen-month period.
Counsel for the respondent adopted the primary Judge's reasoning except on one point, namely, his Honour's finding that the notice which the appellants were required to give can be given 'at any time'. Counsel submitted that the notice must be given before the expiration of a current eighteen-month period to apply for the ensuing eighteen-month period.
The judgments in the AMP Society, Shortland Securities and Salta Constructions cases are helpful, and so are certain of the other cases to which we were referred; but ultimately this case
must fall for determination according to the terms of the lease itself, as did the cases to which we were referred.
I propose first to construe the lease in this matter and then to turn to the authorities for assistance.
Special condition 3 is to some degree a cut-and-paste job and lacks felicity of expression. I do not say this critically; it is too easy to criticize drafting of documents when one has no idea of the circumstances in which the drafting occurred. But it is a relevant point when considering the proper construction to adopt.
I do not accept the argument of counsel for the appellants that special condition 3 must be construed on the basis that the lessor has a discretion whether or not to invoke the procedure for a review of rent at eighteen-month intervals; nor do I accept the related proposition that, if the lessor decides not to invoke the review procedure before a given period of eighteen months, the rent that applies is the rent payable during the preceding eighteen months.
Special condition 3 imposes upon the parties a compulsory regime of review of rent at the end of each eighteen months of the fifteen year term granted by the lease. This is made clear
by use of the imperative 'shall' in the first line, 'will' in the fifth line, and 'shall' in the eighth line of special condition 3. These opening provisions of the special condition, which govern sub-clauses (a), (b), (c), (d), (e) and (f) that follow it, must, in my opinion, be taken as evincing the intention of the parties to the lease that there shall be a review of rent at the end of each eighteen-month period. This conclusion is reinforced by the language of paragraph (d) (and perhaps of paragraph (f)). Paragraph (d) commences with the words 'With respect to the rent reviews to take place on the following rent review dates', at the intervals there stated, 'the rental shall be ...'. Certainly, the word 'may' in the first line of paragraph (a) is not used in the imperative sense as importing an obligation of the kind discussed in such cases as Julius v Lord Bishop of Oxford (1880) 5 App Cas 214; Ward v Williams (1955) 92 CLR 496; and Finance Facilities Pty Limited v Federal Commissioner of Taxation (1971) 127 CLR 106; it is used in its primary facultative sense, empowering the lessor to give notice in writing to fix the rent in accordance with paragraph (a). However, the discretion conferred by the use of the word 'may' does not refer to whether the notice is to be given at all; but to the time at which it is to be given. On this point, I respectfully differ from the primary Judge who held that a notice could be given by the lessor at any time. If his Honour meant that it could be given either before or after the
expiration of the current eighteen-month period of the lease, then I disagree. In my view it must be given before the expiration of the current eighteen-month term. Further, paragraph (a) does not mean that the lessor can decide not to give a notice at all (subject to paragraph (d) to which I shall refer later). The parties to the lease have assumed that there will be a review of rent at the end of each eighteen-month period. The lessor cannot, by simply refraining from giving a notice, prevent the review procedure set out in sub-clauses (a), (b), (c) and (d) taking place. If the lessor does decline to give a notice for whatever reason, then the lessee is entitled to seek relief from a court of competent jurisdiction, akin to a suit for specific performance, seeking orders that the lessor be required to give a notice in accordance with sub-clause (a), and, failing the lessor giving such notice, the court may appoint one of its officers to do the lessor's work for him - a decree familiar to courts of equitable jurisdiction.
Normally in the lease in question, the lessor by his notice will fix the rent for each eighteen-month period at an amount which in his opinion would be the 'current open market' rent of the premises as at the rent review date, but not less than the rent payable by the lessee for the immediately preceding review period (that is the period in which the notice is given) plus 12.32 per cent. The amount so fixed shall be the rent payable
by the lessee for the ensuing eighteen months, unless sub-clause (b) comes into play and the lessee disputes an amount fixed by the lessor and notifies the lessor in writing of that fact within fourteen days of the giving of the lessor's notice. The procedure by which an independent valuer fixes the amount of the rent would then be invoked under sub-clause (c). Importantly, the concluding lines of sub-clause (c) commencing with the word 'AND' apply only to sub-clause (c) itself, and not to the preceding paragraphs (a) and (b); that is the way sub-clause (c) is structured, and it is the obvious intent of the draftsman. Those final lines mean that when the valuer performs his exercise of determining the current open market rent, the figure so determined shall be the rent payable during the ensuing eighteen months, provided it is not less than the rent payable for the immediately preceding eighteen-month period plus an amount calculated as 12.32 per cent of the total rent payable for the immediately preceding eighteen-month period.
Sub-clause (d) presents some difficulty of construction. I interpret it as standing independently of sub-clauses (a) and (b) of special condition 3. For whatever reason, the parties have agreed that at fifty-four-month intervals during the currency of the term of the lease, rent is to be determined, not by notice from the lessor, but by the parties agreeing upon the current open market rent as at the rent review date, and failing
agreement, by independent valuation without the minimum prescribed by sub-clauses (a) and (c). Thus, at fifty-four- month intervals, rent due under the lease was envisaged to return to the unembellished yardstick of current open market rent - untied to the rent due during the preceding eighteen-month period, and to a regimental 12.32 per cent increase.
Sub-clause (f) does not apply to the case where sub-clause (d) operates because sub-clause (f) is predicated on the assumption that the lessor has given a notice under paragraph (a). Assuming the lessor gives a notice within the eighteen-month period then current, but the review procedure has not been completed until some time thereafter, sub-clause (f) operates to ensure that there is a later adjustment of the rent between the parties to be calculated according to the terms of sub-clause (f).
Similarly, if a rent review has taken place under sub-clause (d) and been completed after a fifty-four-month period has elapsed, I see no difficulty construing that sub-clause so that it will have a retrospective operation to take effect from the commencement of the relevant eighteen-month period. If the review process concludes later than the end of the eighteen-month period which precedes the review period, it seems to me
that, once the rent has been determined, it must take effect from the commencement of the relevant period of eighteen months.
I have read the cases to which we were referred by counsel. I see no point in dwelling on them at length because each of them turned on its own facts and, in particular, the terms of the relevant leases. The AMP Society case is a judgment of the Court of Appeal of New Zealand where their Honours, relying on the word 'may' where appearing in clause 3.06(a) of the lease, construed the relevant clause as conferring an overriding right on the lessor to have a review of the rent if it wished. But importantly, there was no introductory provision to the relevant clause of the kind which appears in special condition 3 of the lease presently before us, and which in my opinion is critical to its construction.
Likewise, in the other New Zealand case of Shortland Securities, clause 3 of the relevant document contained sub-clause 3.05(a) which used the word 'may' in relation to the lessor giving a notice in writing to the lessee setting out the amount which the lessor considered to be the current market rent of the premises at the relevant review date. Again, that case turned on the wording of the particular clause, which is different from the language of special condition 3 of the lease in this case.
Salta Constructions was a decision of Byrne J. of the Supreme Court of Victoria. It too turned on the language of the relevant clauses of the lease, in particular clause 8 (clause 8 is set out at 26-750 in the Victorian Conveyancing Reporter, separately from the report of the case itself; see the editorial comment on the Salta case at 65,408). The opening provision (clause 8.1 of the lease) stated as follows:
'The lessor may by notice in writing to the lessee fix the annual rent ...'
The lease in that case clearly supported the construction attributed to it by Byrne J., being that the lessee itself did not have a right to initiate a rental adjustment; the right lay solely with the lessor who had an option to set in train the adjustment procedure for rent, but no obligation to do so. Again the clauses in that lease were different from special condition 3 of in the lease here. See also New Zealand Post Limited v ASB Bank Limited [1995] 2 NZLR 508 at 510 and 512; and Weller v Akehurst [1981] 3 All ER 411.
I am therefore in substantial agreement with the conclusion reached by the primary Judge; but still, difficult questions arise concerning the proper orders to be made. The Court asked
counsel for each party to submit forms of order which they thought appropriate; but in my opinion neither form really reflects the orders that ought to be made.
I shall set out the orders made by the primary Judge, namely:
'THE COURT DECLARES THAT, on a proper construction of the lease of the premises situate at the First Floor, 1183 Toorak Road, Hartwell between Catchklin Pty Ltd and Pioneer Concrete (Vic) Pty Ltd made 1 January 1990 ("the lease"), the lease provides as follows:
1. The rent payable under the lease must be reviewed in respect of each successive 18 month period of the term or any renewal thereof.
2. The only method of reviewing the rent payable under the lease is by observing the procedure set out in paragraphs (a) to (f) of Special Condition 3.
3. The lessor is obliged to give a "lessor's notice" in respect of each rent review date but such notice may be given at any time.
4. If the lessee does not dispute the amount of rent fixed by the lessor in the lessor's notice, the rent payable for the next ensuing 18 month period is the amount fixed by the lessor.
5. If the lessee disputes the amount of rent set out in the lessor's notice, in the absence of agreement between the lessor and the lessee:
(i) the rent for each review period other than those referred to in paragraph (d) of Special Condition 3 is the current open market rent as determined by an independent valuer or the rent payable for the preceding 18 month period plus 12.32% thereof whichever is the greater;
(ii)the rent for the periods referred to in paragraph (d) of Special Condition 3 is the current open market rent determined by an independent valuer.
AND THE COURT ORDERS THAT the applicants pay the respondent's costs of the proceeding.'
I agree with the declarations made by the primary Judge and referred to in paragraphs 1 and 2; but I would vary the other declarations to read as follows:
'3. The lessor is obliged to give a "lessor's notice" in respect of each rent review date, but not the rent review dates specified in paragraph (d) of special condition 3, and any such notice given by the lessor may be given at any time during the currency of a period of 18 months of the term which immediately precedes the 18 month term for which the rent review process is invoked.
4. If the lessee does not dispute the amount of rent fixed by the lessor in the lessor's notice, the rent payable for the next ensuing 18 month period is the amount fixed by the lessor; but not with respect to a review period
referred to in paragraph (d) of special condition 3.
5. If the lessee disputes the amount of rent set out in the lessor's notice, in the absence of agreement between the lessor and the lessee, the rent for each review period other than those referred to in paragraph (d) of special condition 3 is the current open market rent as determined by an independent valuer or the rent payable for the preceding 18 month period plus 12.32% thereof whichever is the greater.
6. The rent for the periods referred to in paragraph (d) of Special Condition 3 is the current open market rent determined either by agreement between the parties or by an independent valuer.'
In case any difficulties arise in the course of working out or implementing the orders of the Court, I would remit the proceeding to the primary Judge or another judge of the Court for further consideration. Also, I would give general liberty to any party to apply to that judge on seven days notice in writing. Finally, I would defer the operation of the orders for a short time so that the parties may make submissions about them.
The appellants must pay the costs of the respondent of the appeal.
Otherwise I would dismiss the appeal.
I certify that this and the
preceding nineteen (19) pages
are a true copy of the reasons
for judgment of the Honourable
Justice Lockhart.
Associate
Dated: 6 December 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) VG 260 of 1996
)
GENERAL DIVISION )
On appeal from a Judge of the Federal Court of Australia
NEIL JOHN YOUNG,
ALAN JAMES MYERS and
JENNIFER CLAIR
O'CALLAGHAN
Appellants
PIONEER CONCRETE (VIC) PTY LTD
Respondent
Coram: Lockhart, Whitlam and Kiefel JJ
Place: Melbourne
Date: 6 December 1996
REASONS FOR JUDGMENT
Whitlam J
I agree with the judgment of Kiefel J and with the orders that her Honour proposes. I wish to add only a few comments of my own.
The terms of Special Condition (3) of the lease are set out in the judgment of
Kiefel J. In my opinion, the key to the correct construction of this poorly drafted condition lies in the phrase "with no additional increase of 12.32%" used in paragraph (d). That phrase must refer to the percentage increase specified, not just in paragraph (c), but also in paragraph (a). (The adjective "additional" would seem, strictly speaking, superfluous.) Paragraphs (a) and (c) provide for an increase that is to be calculated by reference to the rental payable for the review period immediately preceding the rent review date, not by reference to the current open market rent at such date. Paragraph (d) has, therefore, to operate in respect of the rental payable for such preceding period. Once that point is recognized, it becomes clear in the context that the phrase modifies the restriction on the amount set out in the lessor's notice under paragraph (a), as well as the minimum rent following a valuation prescribed by the last sentence of paragraph (c). The phrase "subject to sub-clause (d) hereof", which would appear to have been used out of an abundance of caution at the end of paragraph (c), could just as easily have been added at the end of paragraph (a).
The amount of rent payable under the lease for each successive period of 18 months will be determined in one of the following ways: the lessee's default in disputing the amount set out in the lessor's notice, the agreement of the parties, the valuation by the expert or the application of the minimum rent provision. If the last sentence of paragraph (c) had been placed in a separate paragraph, it might have been arguable that the minimum rent provision applies to determine the rent where a lessor's notice has not been given prior to the review date. However, placed where it is, the word "event" in the introductory phrase is apt merely to identify the result of the expert's valuation. There is accordingly no provision whereby the rent for the ensuing period is determined in the absence of a lessor's notice initiating the review process.
I certify the preceding 2 pages are a true copy of the reasons for judgment herein of the Hon. Justice A.P. Whitlam
Associate:
Date: 6 December 1996
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
No VG 260 of 1996
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
ALLAN JAMES MYERS, JENNIFER CLAIRE O'CALLAGHAN and NEIL JOHN YOUNG
Appellants/Cross Respondents
AND:
PIONEER CONCRETE (VIC) PTY LTD
Respondent/Cross Appellant
CORAM: Lockhart, Whitlam and Kiefel JJ
DATE: 6 December 1996
PLACE: Sydney (Heard in Melbourne)
REASONS FOR JUDGMENT
KIEFEL J:
This Appeal requires the resolution of the question, firstly, whether a review of rental payable under a lease was intended to occur at each rent review period and as part of that question, whether a notice is on each occasion required to be given by the lessor to commence the process of determination of the new rent, or whether the giving of notice and the undertaking of a review remains an option which may or may not be exercised by the lessor. It arises because of the use of words which appear to require a review ("shall be reviewed" and "will take place") which are followed, however, by a provision with respect to the giving of the notice which was expressed in discretionary terms ("may" ). His Honour (Justice Olney) resolved the question by concluding that the discretion there given was to be seen as limited to the time when notice could be given. A review of, and the fixing of rent for each period was,
in his Honour's view, otherwise required by the special condition in question.
The other question in this appeal is as to the proper description of the rent to be applied, and if necessary valued, with respect to rent reviews falling on specified dates. Although I have expressed it as a secondary question it has greater practical or financial implications for the parties.
The few relevant facts were not in dispute. On 1 January 1990 Catchklin Pty Ltd ("Catchklin") and the respondent executed a lease with respect to premises at Toorak Road, Hartwell. The form of the lease was the result of negotiations and each of the parties was represented by solicitors in them. In July 1990 the appellants purchased the premises from Catchklin.
By Clause 1 of the lease it was provided that the lessee was to hold the premises for the term referred to in the fourth part of the Schedule, namely 15 years, and "at the rental set forth in the Fourth Part of the Schedule hereto (subject to review as hereinafter provided)." The fourth part of the schedule provided for an annual rent "subject to review as stipulated in Special Condition 3 hereof Ľ". Special Condition 3 to this schedule was in the following terms:
"(3) The rent shall be reviewed at the end of each eighteen months of the Term hereby created and any renewal thereof ("Rent Review Date") the first of such reviews will take place eighteen months from the Commencing Date and the rent for each successive eighteen month period of the Term and any renewal thereof shall be determined as follows:-
(a) The Lessor may at any time by noticing (sic) in writing ("the Lessor's notice") fix the rent at an amount which in the Lessor's opinion would be the current open market rent of the premises as at the rent review date but no less than the rental payable by the Lessee for the immediately preceding review period plus twelve point three two per
centum (12.32%).
(b) The amount as fixed shall be the rent payable by the Lessee for the next ensuing eighteen month period unless within fourteen (14) days of the Lessor's notice the Lessee notifies the Lessor in writing that the Lessee disputes the amount fixed by the Lessor.
(c) If the Lessee disputes the amount set out in the Lessor's notice and if the parties after consultation, are unable to reach agreement as to the rent payable within thirty (30) days after the Lessor's notice the current open market rent for the Demised Premises shall be determined by an independent Valuer having not less than five (5) years experience in valuing suburban office space and not less than ten (10) years experience in commercial valuation and who shall be employed in a practice which is predominantly commercial in nature, such Valuer to be appointed by the President for the time being of the Australian Institute of Valuers (Victorian Division) at the request of the lessor PROVIDED THAT:-
i) any determination by any such Valuer shall be made as an expert and not as an arbitrator;
ii) all costs incurred with the determination of the rent shall be paid by the Lessee and the Lessor equally;
iii) the Lessor and the Lessee shall have the opportunity to make written submission or submissions to any such Valuer, such written submission or submissions to be made within one (1) month of the appointment of any such Valuer;
AND the rent payable hereunder shall be the amount determined by any such Valuer as the current open market rental value. In any event such rent shall not be less than the rent payable for the immediately preceding eighteen (18) month review period PLUS an amount equal to twelve point three two per centum (12.32%) of the total rent payable for the immediately preceding eighteen (18) month review period subject to sub-clause (d) hereof.
(d) With respect to the rent reviews to take place on the following Rent Review Dates:-
i) fifty four (54) months from the commencing date;
ii) one hundred and eight (108) months from the commencing date;
iii) one hundred and sixty two (162) months from the commencing date; and if the option to renew this Lease pursuant to Special Condition 4 hereof is exercised by the Lessee;
iv) two hundred and sixteen (216) months from the commencing date;
the rental shall be the current open market rent as agreed between the parties and failing agreement as determined by an independent valuer at the current open market rental with no additional increase of 12.32%.
(e) For the purposes of this Special Condition (3) and Special Condition (4) the expression "current open market rental value" shall mean the current annual open market rental value of the Demised Premises based on a lease (exclusive of any incentives and allowances including but not limited to rent-free periods of occupancy) between a willing lessor and a willing lessee for the highest and best use to which the Demised Premises can be put including all car parking facilities and not necessarily the permitted use herein but taking no account of any goodwill attributable to the Demised Premises by reason of any trade or business carried on therein by the Lessee but taking account of the naming rights (if any) of the Demised Premises granted to the Lessee and in all other respects (except as to rent payable) on the terms covenants and conditions of this Lease.
(f) Should the amount of the rent for any period not be so determined by the appropriate Rent Review Date, the Lessee shall pending determination thereof pay rent at the rate specified in the Lessor's notice referred to in Special Condition 3(a) hereof but subject to the revision thereof and upon the rent being determined hereunder any necessary adjustment of rent calculated from the Rent Review Date shall be paid forthwith by the Lessee to the Lessor or reimbursed by the Lessor to the Lessee as the case may be."
In respect of the 18 month periods commencing on 1 July 1991 and on 1 January 1993, the rent was determined in accordance with paragraphs (a) and (b) of Special Condition 3. His Honour observed that, on these occasions, the respondent did not dispute the amount set out in the lessor's notice. The appellants did not however give a notice or otherwise initiate a rent review in respect of the 18 month period commencing on 1 July 1994, which was the first of the rent review dates referred to in paragraph (d) of Special Condition (3). That provision required the rent for the following period to be calculated by reference to different criteria than that set out in the preceding paragraphs, although there remains a dispute as to just what that rent was to encompass.
In construing the provisions in the Special Condition with respect to the lessor's discretion, in the way described, his Honour reasoned that the words of obligation, "shall" and "will", ought be given their proper meaning and effect. And it may here be observed that the approach his Honour took also gave effect to the discretionary "may", although limiting its operation. To the contrary of this construction the appellants submitted that "may" is not given its ordinary meaning, and that it ought be taken as intended that the lessor have the full discretion as to whether to initiate the process. On this view of it the words which might be thought to require a review would need be read as a mere assumption on the part of those of the person who drafted the lease, that the lessor would do so on each occasion. Reliance was placed by the appellant upon the decision in Australian Mutual Provident Society v National Mutual Life Association of Australasia Ltd [1995] 1 NZLR 581, and cases following it, as providing authority for the view that "may" ought be given its ordinary meaning in circumstances similar to those here.
In the AMP case, the issue was whether the provision that the lessor "may give notice" in the rent review clause meant "shall give notice" because other provisions clearly assumed that a review would take place ("shall take place"). I infer however that it was the view of the New Zealand Court of Appeal that there was nothing which could be gleaned elsewhere from the provisions of that lease to suggest to the contrary, as provided, that the lessor have the right to set in train a procedure which might or might not result in an increase in rent and might indeed result in a reduction. And it seems to me that, operating as influential, was their Honours' view that valid reasons could be advanced for construing the provision either as obligatory or as permissive but that at least that which permitted the lessor to determine whether
to give a notice involved an acceptance of the risk that the rent would be fixed at less than that currently prevailing and, therefore, that it more closely approximated commercial reality (584). A similar approach is not however available here when regard is had to both the provisions which bear upon the matter.
Special Condition 3 of the lease here contains other indicators which tend to confirm, not deny, that a rent review was predicted, and intended, to occur. The initial assertion that rent "shall be reviewed" (and as to the first, that it "will take place") is confirmed by the terms of paragraphs (d) and (f). In paragraph (d), the reference to the particular rent review dates at 54, 108, 162 and 216 months from commencement are expressed in the context of a regime of reviews "with respect to the rent reviews to take place on the following rent review dates Ľ the rental shall be Ľ". Paragraph (f), which provides for the rent to be paid pending determination of the proper rent where it has not been calculated by the rent review date again appears to assume that there will, for each period, be such a determination. These provisions make it difficult to accept the proposition that, nevertheless, the words requiring a review at the commencement of the Special Condition ought be read down because a word imports some discretion in the lessor.
And it is necessary, I think, to view the discretion given in paragraph (a) in its context. By the conclusion stated by his Honour I understood this to be the approach taken. The discretion given is with respect to the giving of notice which is to commence the process of fixing the rent for the period. It is part of the mechanism by which that is achieved. It may be compared with the opening general statement, in the nature of the object of the special condition, that it is intended that
reviews be had. A view that paragraph (a) is concerned with when the notice ought be given, and what is contained in it, as part of a process enables one more readily to conclude that "may" was intended to govern the time when the lessor might give it. As I shall later refer, in this respect however I respectfully differ from his Honour's view that it might be at any time. But that is not presently relevant.
Although there are sufficient indications to the contrary of the appellants' argument, that they have an unqualified discretion as to whether a notice is given for any rent review period, there may have been a stronger argument in their favour had it been the case that the rent would only ever increase. That situation might introduce concepts of commercial reality which, as I have said, were to an extent influential in the AMP case. One might, in those circumstances, be able to conclude that it was to be a matter for the lessor whether to seek the increase.
It is clear enough, by reference to the last two parts of paragraph (c) commencing "AND the rent payable hereunder Ľ" that the rent is usually to be the current open market rental value, so long as it is not less than the sum made up of the rental which had been paid in the preceding 18 months together with 12.32% of the total rent payable over that period. But that leaves paragraph (d). The rental there described, the appellants submit, is as described in paragraph (c) and omits only the increase of 12.32% to the existing rent, despite no words referring to the rent paid in the preceding 18 months appearing in (d). It was then submitted for the lessors that paragraph (d) ought be seen to import what is contained in the three preceding paragraphs and, in this connexion, that it should be recognised that it utilises shorthand expressions to refer to what went before. This submission was in aid of the argument that the reference in (d) to rental "as determined by an independent valuer at the current open market rental with no additional increase of 12.32%" is to be taken to refer to the full description provided at the conclusion of paragraph (c), namely current open market rental which is however not less than that payable in the preceding 18 months. So understood paragraph (d) in this respect would simply operate to negate the additional increase of 12.32% but a minimum rental payable, that previously paid, would remain.
I have no difficulty with the view that the paragraphs following paragraph (a) to paragraph (c), and in particular paragraphs (d) and (f), were intended to refer back to the earlier paragraphs for some purposes. For example, the independent valuer referred to in paragraph (d) is no doubt the valuer more fully described in paragraph (c). And, it seems to me that it was likely intended that a notice was to be given by the lessor fixing a figure. This is reinforced by paragraph (f) which utilises the notice with respect to any period where rent has not been determined prior to the review date, as providing the rent payable in the interim. But if the description of rent in paragraph (d) differs from that in paragraph (c) the result, so far as concerns the notice, will be that the figure reflected in the lessor's opinion of rent in the notice will be calculated differently. One cannot assume by reference to the rent being included in the notice in paragraph (a) that that is what is referred to in paragraph (d). What it may do however is to reinforce the notion, to which I shall shortly refer, that the rent at all times save for the periods referred to in paragraph (d) is to be that described at the conclusion of paragraph (c) which, of course, accords with that description provided for in paragraph (a).
The resolution of what was intended to be the rent referred to in paragraph (d) depends, in my view, upon the connection between that paragraph and the description in the preceding paragraph. And this will be established by the words in the concluding part of paragraph (c). Submissions on the appeal focused upon these matters. In particular the words "subject to sub-clause (d) hereof" are likely to be critical because they create the direct link. The question is how they are to operate. Words such as "subject to" usually convey that what goes before is to be qualified by what follows. In that event the rent described in paragraph (c) might be seen as intended to be the rent for all periods save those specified in paragraph (d) and standing as qualified then by what is taken away from the description. That is to say, the relevant qualification of the rent described in paragraph (c) is provided by the negation of the percentage increase in the phrase in paragraph (d) "with no additional increase of 12.32%". Support for this approach is to be found in the words "in any event", appearing in paragraph (c) which convey the sense of a regime which is always to operate (as in "but at all times"). As I have said that then stands as qualified only by the concluding words "subject to sub-clause (d) hereof".
I have considered the opposing contention which might have the words 'subject to Ľ" read as creating an exception and not a qualification. If that were the case it might be argued that paragraph (d) takes effect not as interdependent with paragraph (c) but in its own terms. In that event the description it provided would not include any reference to rent previously payable expressed as a minimum. This would however deny effect to the usual meaning of the words "subject to Ľ" and to the preceding phrase "in any event". This latter view of the operation of the concluding last five words of paragraph (c), as creating an exception in what follows
in paragraph (d), was that favoured by his Honour. The matter is not free from difficulty. That approach however affords no meaning to the words "in any event" in paragraph (c) and, perhaps more importantly, treats the reference to the removal of the percentage increase in paragraph (d) ("with no additional increase of 12.32%") as mere surplusage. His Honour expressed the view that the construction contended for by the lessors had a similar result. But, with respect, that does not seem to be so. The construction advanced by them not only enables the two paragraphs to be read, and to operate together, it involves the use of all the words contained in them according to well accepted meanings. On ordinary principles of construction it is the approach which must be taken.
It follows from the conclusion I have reached as to the operation of paragraph (d) that the rental will never decrease. What may be taken as intended by the parties with respect to paragraph (d) is to provide some control mechanism on an ever-increasing rent. The question that then arises, according to my earlier observation, is whether the fact that the rental would never reduce affords reason to conclude that it was intended that the lessor have a complete discretion as to whether to give a notice requiring a review. It may be accepted the lessor will be most interested in any increase, to be achieved by setting the process in motion by the giving of notice. Were the language equivocal that may have operated as an important consideration. But the Special Condition not only describes a regime, as I have said, but the words used concerning the giving of notice are clearly obligatory and are stated on a number of occasions. In these circumstances it would not be appropriate to approach the question as to the parties' intention by reference to what might be thought to be the level of the their interest in a review. The words they have chosen to reflect that
intention ought be allowed to operate. Whilst I am, with respect, unable to agree with his Honour's construction of paragraph (d) I am in entire agreement that the lessor is obliged on each occasion to give a notice and that the words "shall" and "will" ought be given their proper meaning. However, as I have earlier referred, his Honour was also of the view that the word "may" imported a discretion as to when the lessor might give notice and that it might be at any time. I turn then to that question.
Paragraph (a) of Special Condition (3) speaks prospectively of the amount which the lessor considers will be the correct rent at the next rent review date, the opening words of the Condition having established that the rent review date falls every eighteen months. In that, and what follows, it may be seen as intended that the new rent be fixed or determined by that review date. The amount as fixed by the notice is to be rent payable in the next rent period of eighteen months ((b)). Quite short periods of time are provided in paragraphs (b) and (c) for notification of dispute and appointment of a valuer in the event of continued disagreement. That leaves of course the potential for some delay in the determination by the valuer. It is of some significance that paragraph (f) then provides that "should the amount of the rent for any period not be so determined by the appropriate rent review date Ľ" the lessee pays rent according to the lessor's notice. The rent paid is later adjusted if necessary. It follows, in my view, from a consideration of these provisions that the parties contemplated that the only matter which might not be complete by the rent review date was the valuation. At the least though it was determined as necessary that the lessor fix the rent, by notice, prior to the rent review date so that if there was dispute, and delay, in its final determination there could at least be none about the
rental to be paid in the interim.
I am in the result, unable with respect, to agree with his Honour that it was intended that the lessor could give notice at any time. For the reasons I have outlined it seems clear enough that the mechanism provided for rent review depended on a notice being given before the rent review date.
So far as concerns the declaration made by his Honour, as to the giving of notice, I would add to the first part of the declaration 3 namely "The lessor is obliged to give a 'lessor's notice' in respect of each rent review date" the words "in the immediately preceding review period." The declaration numbered 5(ii) ought read:
"(ii) the rent for the periods referred to in paragraph (d) of Special Condition 3 is the current open market rent determined by an independent valuer or the rent payable for the preceding 18 months' period, whichever is the greater".
So far as concerns costs, the appellant has been, in part, successful in its appeal. It failed with respect to the question whether the lessor was obliged to give a notice. The respondent, whilst having filed a notice of cross appeal based upon a different construction than that reached by his Honour, one which would permit the lessee to give such a notice, did not pursue this on the appeal. In argument, but not as a ground of cross appeal, it took the point that the lessor's notice ought not be given "at any time" as his Honour had determined. The respondent's case has been attended with some shifting of issues. In these circumstances I would propose that the order for costs below be set aside. The only order I would then make is on the appeal and that the respondent Pioneer Concrete (Vic) Pty Ltd, pay one-half of the appellant's costs of the appeal to be taxed.
I certify that this and the preceding twelve pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel.
Associate:
Date: 6 December 1996
Counsel for the applicant: KWT Hargrave QC and KJA Lyons
Solicitors for the applicant: Mahony, Galvin Rylah
Counsel for the respondent: R Conti QC and RM Garratt
Solicitors for the respondent: Cornwall Stodart
Date of Hearing: 8 October 1996
Place of Hearing: Melbourne
Place of Judgment: Sydney
Date of Judgment: 6 December 1996
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Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd [2021] FCA 1625
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca1625
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2024-09-13T22:51:48.374523+10:00
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Federal Court of Australia
Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd [2021] FCA 1625
File number: NSD 1065 of 2021
Judgment of: STEWART J
Date of judgment: 21 December 2021
Catchwords: CORPORATIONS – valuation of shares pursuant to an order made to purchase shares under s 233(1)(d) of the Corporations Act 2001 – where order for majority shareholder to purchase shares of minority shareholder made by consent – where no finding of oppression by majority shareholder – where shareholders' relationship has broken down – whether a minority discount on valuation should be applied
Legislation: Corporations Act 2001 (Cth) s 233
Cases cited: Re Abbey Leisure Ltd [1990] BCLC 342
Re Bird Precision Bellows Ltd [1984] Ch 419
Re Bird Precision Bellows Ltd [1986] Ch 658
Dynasty Pty Ltd v Coombs [1995] FCA 610; 59 FCR 122
Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd [2004] FCAFC 153; 204 ALR 136
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 26
Date of hearing: 20 December 2021
Counsel for the Plaintiff: M Karam and A Reid
Solicitor for the Plaintiff: Bartier Perry
Counsel for the First and Fifth Defendants: R Ross-Smith
Solicitor for the First and Fifth Defendants: DW Fox Tucker Lawyers
ORDERS
NSD 1065 of 2021
BETWEEN: BRIDGING CAPITAL HOLDINGS PTY LTD ACN 645 613 994
Plaintiff
AND: SELF DIRECTED SUPER FUNDS PTY LTD ACN 606 004 077
First Defendant
WHISBEE NOMINEES PTY LTD ACN 639 807 391
Second Defendant
EXELSUPER PTY LTD ACN 124 648 193 (and others named in the Schedule)
Third Defendant
order made by: STEWART J
DATE OF ORDER: 21 DECEMBER 2021
THE COURT ORDERS THAT:
Referee's report and valuation of the plaintiff's interests
1. Pursuant to r 28.67(1) of the Federal Court Rules 2011 (Cth), the report of the referee Mr Nicholas Navarra dated 8 December 2021 be adopted.
2. With reference to Order 1 of the orders made on 22 November 2021 and subject to any adjustment in value as provided for in Orders 8 – 12 below:
(a) the provisional value of the plaintiff's shares in the third defendant is $236,173; and
(b) the first and fifth defendants pay the amount of $236,173 to the plaintiff within 28 days of these orders.
3. With reference to Order 2 of the orders made on 22 November 2021 and subject to any adjustment in value as provided for in Orders 8 – 12 below:
(a) the provisional value of the plaintiff's shares in the fourth defendant is $46,066; and
(b) the fifth defendant pay the amount of $46,066 to the plaintiff within 28 days of these orders.
4. Upon the plaintiff receiving payment of the amount referred to in Order 2(b) above, the plaintiff provide to the first defendant an executed share transfer (in a registrable form) in respect of the plaintiff's shares in the third defendant.
5. Upon the plaintiff receiving payment of the amount referred to in Order 3(b) above, the plaintiff provide to the first defendant an executed share transfer (in a registrable form) in respect of the plaintiff's shares in the fourth defendant.
6. Prayers 4 – 11 of the plaintiff's amended originating process filed on 8 November 2021 be dismissed.
7. The plaintiff's notice to produce dated 3 November 2021 be set aside.
Costs of the proceeding and outstanding valuation issue
8. By 18 February 2022, the plaintiff file and serve:
(a) any written submissions (of no more than 5 pages) on the costs of the proceeding (the costs issue) and any evidence in support; and
(b) any written submissions (of no more than 5 pages) on any adjustment of the share values in orders 2 and 3 arising from the issues identified in sections 5.4.4 and 5.4.7 of the report of the referee Mr Nicholas Navarra dated 8 December 2021 regarding the operation of the indemnities provided under the Share Sale Agreement and consequential orders giving effect thereto (the indemnities issue), and any evidence in support.
9. By 11 March 2022, the first, second and fifth defendants file and serve:
(a) any written submissions (of no more than 5 pages) on the costs issue and any evidence in support; and
(b) any written submissions (of no more than 5 pages) on the indemnities issue and any evidence in support.
10. By 18 March 2022, the plaintiff file and serve:
(a) any written submissions (of no more than 2 pages) and evidence in reply on the costs issue; and
(b) any written submissions (of no more than 2 pages) and evidence in reply on the indemnities issue.
11. By 25 March 2022, the parties jointly provide to the Associate to Stewart J:
(a) a list of the evidential material to be relied on at the hearing referred to in Order 12; and
(b) the authorities to be relied on at the hearing referred to in Order 12, with each authority being a separate PDF word-searchable document.
12. The proceeding be listed for hearing at 10:15 am on 6 April 2021 for the determination of the costs issue and the indemnities issue.
AND THE COURT NOTES THAT:
13. Upon the plaintiff receiving payment of the amount referred to in Order 2(b) above, the parties have agreed that Mr Ari Ben Moses will provide written notice to the third defendant of his resignation as a director.
14. Upon the plaintiff receiving payment of the amount referred to in Order 3(b) above, the parties have agreed that Mr Ari Ben Moses will provide written notice to the fourth defendant of his resignation as a director.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
STEWART J:
1 By originating process dated 14 October 2021, the plaintiff, Bridging Capital Holdings Pty Ltd (BCH), applied for interlocutory orders pursuant to s 472(2) of the Corporations Act 2001 (Cth) that provisional liquidators be appointed to the third defendant, Exelsuper Pty Ltd, or, alternatively, orders pursuant to s 233(1) of the Corporations Act or s 57(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) for the appointment of receivers and managers to Exelsuper and ancillary relief. BCH also applied for final orders that Exelsuper be wound up pursuant to ss 461(1)(k) or 233(1)(a) of the Corporations Act, or alternatively orders that the first and/or second defendant (SDSF and Whisbee Nominees Pty Ltd respectively) purchase BCH's interests in Exelsuper.
2 On 20 October 2021, the proceeding was listed for interlocutory hearing on 8 November 2021 and orders were made for the exchange of further evidence and submissions in relation to the application for interlocutory relief.
3 In its written submissions for the interlocutory hearing filed on 4 November 2021, SDSF indicated that it was prepared to purchase BCH's shares in Exelsuper at their market value as a means of resolving the application for interlocutory relief. By 8 November 2021, it was also agreed between the parties that upon the joinder of the fourth and fifth defendants (Exelsuper Advice Pty Ltd and Mr Christopher Harris respectively), SDSF and Mr Harris would consent to orders being made for the purchase of BCH's shares in both Exelsuper and Exelsuper Advice at market value.
4 By way of background, Exelsuper operates a financial planning and self-managed superannuation administration business together with Exelsuper Advice, which holds an Australian Financial Services Licence. BCH, SDSF and Whisbee are the shareholders of Exelsuper. Mr Ari Ben Moses and Mr Harris are joint directors of Exelsuper. BCH and Mr Harris are the shareholders of Exelsuper Advice. Mr Moses and Mr Harris are also joint directors of Exelsuper Advice.
5 BCH acquired its shares in each of Exelsuper and Exelsuper Advice pursuant to the terms of a Share Sale Agreement entered into in March 2021. Its equity interest in Exelsuper amounts to 43.61%, and its equity interest in Exelsuper Advice amounts to 45%. Since that time, the relationship between the directors and shareholders of these entities has been strained, and Mr Moses complains that he has been deprived of complete access to the business records of Exelsuper and Exelsuper Advice, including financial records required to verify the nature of various payments from Exelsuper's bank accounts. It appears to be common ground that the directors and shareholders are at loggerheads and that the companies cannot survive unless there is a parting of ways.
6 Between 8 and 22 November 2021, the parties corresponded regarding the appropriate form of orders to implement the purchase of BCH's shares and determine their market value. On 22 November 2021, consent orders were made pursuant to s 233(1)(d) of the Corporations Act for the purchase of BCH's shares in Exelsuper and Exelsuper Advice by SDSF and/or Mr Harris and the question of the value to be applied to BCH's shareholdings was referred to a referee, Mr Nicholas Navarra, pursuant to r 28.61 of the Federal Court Rules 2011 (Cth).
7 It is to be noted that the questions determined for the referee to answer deliberately left open the resolution of a point of dispute between the parties, namely whether BCH's minority shareholding should be valued with or without a minority shareholding discount. The referee was required to determine the market value of the shares on alternative bases, i.e., with and without applying such a discount.
8 On 8 December 2021, Mr Navarra provided his written report. The report sets out, amongst other things, the following key conclusions reached by Mr Navarra in respect of the valuation of BCH's interests in Exelsuper and Exelsuper Advice.
9 First, Mr Navarra concluded that the market value of BCH's interest in Exelsuper, applying no minority discount, falls between $87,460 and $384,885, with a mid-point of $236,173. With a minority discount applied, the market value falls between $72,154 and $336,775, with a mid-point of $200,747. The difference between the mid-points is accordingly approximately $36,600.
10 Secondly, Mr Navarra concluded that the market value of BCH's interest in Exelsuper Advice, applying no minority discount, falls between $41,459 and $50,672, with a mid-point of $46,066. With a minority discount applied, the market value falls between $35,240 and $45,605, with a mid-point of $40,307. The difference between the mid-points is accordingly approximately $5,700.
11 The parties agree that the referee's report should be adopted by the Court, in whole, pursuant to s 54A(3) of the FCA Act and that the price to be paid by SDSF and Mr Harris for the purchase of BCH's interests in Exelsuper and Exelsuper Advice should reflect the mid-point of the value range determined by Mr Navarra. However, the following issues remain to be determined by the Court:
(1) whether or not the minority discounts calculated by Mr Navarra should be applied to the valuation figures; and
(2) whether or not the values found by Mr Navarra in relation to the value of BCH's interest in Exelsuper should be adjusted in light of the operation of certain indemnities contained in the Share Sale Agreement.
12 In respect of the latter issue, BCH submits that certain contested debts of Exelsuper to third parties are the subject of indemnities by SDSF to Exelsuper with the result that the debts, even if ultimately found to be valid and in whatever amount, are neutral with regard to the valuation of the company and should therefore not be taken into account in valuing the shares. SDSF and Mr Harris contest that those debts are covered by the indemnities, but submit that in any event this issue has already been taken into account by Mr Navarra in his valuation of the shares.
13 Given the difference between the parties and the time of year, the indemnities issue was not ripe for decision in the hearing yesterday. The parties are, however, agreed on a programme for the resolution of this issue to be determined at a hearing on 6 April 2022. Depending on how it is resolved, it may have no impact on the valuation of the shares, or it may result in a necessary adjustment to the share value which will have to be given effect to in an order for the payment of a sum of money, one way or the other.
14 In the meanwhile, the parties are agreed that there is significant urgency to the resolution of the share purchase so as to extricate BCH, the minority shareholder, from the companies and thereby remove any difficulties in the operation of the companies caused by the breakdown in the relationship between the shareholders. The parties are accordingly agreed that I should resolve the first issue (the minority discount issue) and make orders for the payment of the provisional share value and the transfer of the shares, and that any adjustments to that value can be made once the second issue has been resolved in April. The parties have not adduced any evidence on the minority discount issue other than the report of the referee.
15 BCH submits that it is not appropriate to apply any minority shareholding discount in circumstances where the order for the purchase of the plaintiff's interests has been made pursuant to s 233(1)(d) of the Corporations Act and following an application for such relief brought by the plaintiff on the basis of alleged oppressive conduct. In particular, BCH relies on Re Bird Precision Bellows Ltd [1984] Ch 419 which it says is materially on point and has been approved in Australia.
16 SDFS and Mr Harris submit that the minority discount they seek is only inappropriate where the Court orders a compulsory share purchase after a finding of oppression. Here, they agreed to the share purchase order so it is not a compulsory purchase order and there is no finding of oppression; any allegation by BCH as to oppressive conduct has been denied by them from the outset. They say that the underlying reasons for the breakdown in the relationship have not been determined, and will not be determined in this proceeding. Therefore, it should be accepted for the purpose of the valuation that the breakdown could have arisen equally from the conduct of either shareholding interest, and not necessarily from their conduct. They say that since it is a minority shareholding that they are purchasing, a minority shareholding discount should be applied.
17 In Bird Precision Bellows the minority shareholders complained of oppression. When the matter first came on for hearing, it was ordered by consent that the majority shareholders should jointly and severally purchase the shares in the company registered in the names of the petitioners "at such price as the court shall hereafter determine" (at 425). When the petition came on again for a determination of the appropriate purchase price, the first question which arose was whether the respondents, by consenting to the purchase order, had effectively admitted that they had been conducting the affairs of the company in a manner unfairly prejudicial to the minority interests. It was held that there was no such admission – the respondents had merely agreed to buy out the petitioners at a price to be determined by the court (at 426).
18 After surveying the authorities (at 427-430), Nourse J reasoned as follows (at 430):
I would expect that in a majority of cases where purchase orders are made under section 75 in relation to quasi-partnerships the vendor is unwilling in the sense that the sale has been forced upon him. Usually he will be a minority shareholder whose interests have been unfairly prejudiced by the manner in which the affairs of the company have been conducted by the majority. On the assumption that the unfair prejudice has made it no longer tolerable for him to retain his interest in the company, a sale of his shares will invariably be his only practical way out short of a winding up. In that kind of case it seems to me that it would not merely not be fair, but most unfair, that he should be bought out on the fictional basis applicable to a free election to sell his shares in accordance with the company's articles of association, or indeed on any other basis which involved a discounted price. In my judgment the correct course would be to fix the price pro rata according to the value of the shares as a whole and without any discount, as being the only fair method of compensating an unwilling vendor of the equivalent of a partnership share.
19 Nourse J then summarised the position as follows (at 431):
In summary, there is in my judgment no rule of universal application. On the other hand, there is a general rule in a case where the company is at the material time a quasi-partnership and the purchase order is made in respect of the shares of a quasi-partner. Although I have taken the case where there has in fact been unfairly prejudicial conduct on the part of the majority as being the state of affairs most likely to result in a purchase order, I am of the opinion that the same consequences ought usually to follow in a case like the present where there has been an agreement for the price to be determined by the court without any admission as to such conduct. It seems clear to me that, even without such conduct, that is, in general, the fair basis of valuation in a quasi-partnership case, and that it should be applied in this case unless the respondents have established that the petitioners acted in such a way as to deserve their exclusion from the company.
20 It is that passage, in particular, that BCH relies on in submitting that the present case is on all fours and the minority discount should not apply because, there being no evidence, it has not been established that BCH acted in such a way as to deserve its exclusion from the companies.
21 In Dynasty Pty Ltd v Coombs [1995] FCA 610; 59 FCR 122 at 146 per Spender, O'Loughlin and Branson JJ, the passage from Bird Precision Bellows quoted at [18] above was quoted with approval. It was also noted that the decision of Nourse J was upheld by the Court of Appeal in Re Bird Precision Bellows Ltd [1986] Ch 658, and although this was on the basis that this was a proper exercise of the judge's discretion, Oliver LJ made it clear (at 674B) that he would not himself have come to any other conclusion. Also, as Balcombe LJ noted in Re Abbey Leisure Ltd [1990] BCLC 342 at 350: the cases "show a general inclination towards a pro rata basis for valuation".
22 The legal principles governing the exercise of the discretion conferred by s 233 of the Corporations Act were identified in some detail in Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd [2004] FCAFC 153; 204 ALR 136 at [70]-[78] per Wilcox, Marshall and Jacobson JJ. They relevantly include (at [70]) that the authorities make it clear that once the discretion conferred by s 233 has been enlivened by a finding of oppression under s 232, the court has a wide discretion as to both the appropriate remedy and, if it orders the compulsory purchase of shares, as to the mode of valuation of the shares. Also (at [71]), if the court considers it is appropriate to make an order that the other members purchase the shares of the oppressed shareholder, its task is to fix a price that represents a fair value in all the circumstances. The passage from Bird Precision Bellows that had been quoted and approved in Dynasty was again cited with approval (at [78]).
23 Of course, the point made on behalf of SDSF and Mr Harris is that there has been no finding of oppression in the present case; thus, the principles identified in Martis Cork are inapplicable. SDSF and Mr Harris refer to a number of first instance Supreme Court decisions that consider the valuation of a minority shareholding in the exercise of the court's discretion under s 233, but none disapproves of the guiding approach identified by Nourse J in Bird Precision Bellows that in the case of a consensually ordered majority buyout of a minority shareholding in a quasi-partnership, a minority discount should not be applied unless it is established that the minority interests conducted themselves in such a way as to deserve their exclusion from the company.
24 I am required, in the exercise of my discretion, to arrive at a result which is just and equitable between the parties. With reference to what I have described as the guiding approach identified by Nourse J, but not applying it slavishly, I have come to the conclusion that the minority discount should not apply. Mr Moses, through BCH, purchased the shares in the two companies only very recently. He finds himself having to leave the companies because of the parties having fallen out. In view of the parties' agreement with regard to the sale of the shares, no blame is to be ascribed for that falling out. The result of that is that it is not established that Mr Moses, through BCH, is deserving of his exclusion from the companies. He should accordingly have the value of the shares without reference to the minority discount. That is to say, a pro rata valuation of the shares should be applied which will give them the same value, per share, as the shares already held by Mr Harris's interests. That is the most just and equitable outcome.
25 The value at which the shares must be purchased is accordingly:
(1) Exelsuper – $236,173; and
(2) Exelsuper Advice – $46,066.
26 The other orders were agreed by the parties.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.
Associate:
Dated: 21 December 2021
SCHEDULE OF PARTIES
NSD 1065 of 2021
Defendants
Fourth Defendant: EXELSUPER ADVICE PTY LTD
Fifth Defendant: CHRISTOPHER STEVEN HARRIS
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federal_court_of_australia:fca/single/1999/1999fca0873
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1999-05-13 00:00:00
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West Australian Newspapers Ltd v Aboriginal Nations Pty Ltd [1999] FCA 873
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/1999/1999fca0873
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2024-09-13T22:51:48.632019+10:00
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FEDERAL COURT OF AUSTRALIA
West Australian Newspapers Ltd v Aboriginal Nations Pty Ltd
[1999] FCA 873
DEFAMATION – capacity of publication to convey the imputations pleaded – application to strike out imputations – strike out order by Master reversed by Judge – whether leave to appeal should be granted
Supreme Court Rules (ACT) O 23 r 28, O 29 r 4, O 37 r 2
Decor Corporation Pty Limited v Dart Industries Inc (1991) 33 FCR 379 applied
WEST AUSTRALIAN NEWSPAPERS LIMITED V ABORIGINAL NATIONS PTY LTD
AG 122 OF 1998
MILES, HEEREY AND FINN JJ
13 MAY 1999
CANBERRA
IN THE FEDERAL COURT OF AUSTRALIA
CANBERRA DISTRICT REGISTRY AG 122 of 1998
BETWEEN: WEST AUSTRALIAN NEWSPAPERS LIMITED
(ACN 008 667 632)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
BETWEEN: JOHN FAIRFAX PUBLICATIONS PTY LIMITED
(ACN 003 357 720)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
JUDGES: MILES, HEEREY AND FINN JJ
DATE OF ORDER: 13 MAY 1999
WHERE MADE: CANBERRA
THE COURT ORDERS THAT:
1. The application for leave to appeal against the order of Higgins J made 23 November 1998 is dismissed.
2. The applicants pay the respondents' costs of the application, including reserved costs, such costs to be taxed and paid forthwith.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
CANBERRA DISTRICT REGISTRY AG 122 of 1998
BETWEEN: WEST AUSTRALIAN NEWSPAPERS LIMITED
(ACN 008 667 632)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
AG 123 of 1998
BETWEEN: JOHN FAIRFAX PUBLICATIONS PTY LIMITED
(ACN 003 357 720)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
JUDGES: MILES, HEEREY AND FINN JJ
DATE: 13 MAY 1999
PLACE: CANBERRA
REASONS FOR JUDGMENT
MILES J:
1 I agree with the judgment of Heerey J.
Associate:
Dated:
IN THE FEDERAL COURT OF AUSTRALIA
CANBERRA DISTRICT REGISTRY AG 122 of 1998
BETWEEN: WEST AUSTRALIAN NEWSPAPERS LIMITED
(ACN 008 667 632)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
AG 123 of 1998
BETWEEN: JOHN FAIRFAX PUBLICATIONS PTY LIMITED
(ACN 003 357 720)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
JUDGES: MILES, HEEREY AND FINN JJ
DATE: 13 MAY 1999
PLACE: CANBERRA
REASONS FOR JUDGMENT
HEEREY J:
2 This is an application for leave to appeal against a judgment of Higgins J of the Australian Capital Territory Supreme Court. His Honour allowed an appeal against the Master of the Supreme Court and rejected the present applicants' motion to strike out certain imputations pleaded in the respondent's statement of claim.
3 The respondent sues in respect of a publication on 14 September 1996 in the Sydney Morning Herald and a publication in substantially the same terms on the same day in the West Australian.
4 The article complained of alleges in substance that there had been an Australian Broadcasting Corporation internal investigation which had found a "conflict of interest" over the commissioning of a documentary film "More Than Legends", which had cost $300,000 to make. The article states that the Australian Federal Police had been called in by the ABC, and that the investigation was into the activities of two former senior employees of the ABC's Indigenous Program Department. Those employees are named as Mr Llew Cleaver and Mr Paul Fenech. Both are said to have resigned early the previous year to take other jobs before the investigation began. The article states, "As well as working together at the ABC, the two were part owners of a private business, Aboriginal Nations Pty Limited." The article goes on to say that in the following year that company, that is the present respondent, approached the government's film funding organisation, Australian Film Finance, for the money to make "More Than Legends". Proof of a pre-sale to a television station had to be available before a film could qualify for AFF funding. The article continues:
"Mr Cleaver and Mr Fenech went to their boss, the executive producer of the Indigenous Program Department, Mr Vaughan Hinton, and proposed that the ABC buy the rights to screen the documentary as part of the 'Blackout' series. The ABC eventually approved the purchase."
5 It is said that the AFF advanced $284,667 for the movie which was to be a co-production with the respondent and the ABC, and it is also said that when it was completed, the film was delivered to the ABC which paid the respondent $50,000 or $60,000 for the rights to screen it. The article states that Mr Hinton and Mr Hamlyn, another ABC officer, say that they were never told that Mr Cleaver and Mr Fenech had a financial interest in the respondent, which received the money and which, along with AFF, now owns the film. It reports that Mr Cleaver and Mr Fenech deny that there was any conflict of interest.
6 The statement of claim pleads certain imputations which are said to flow from the natural and ordinary meaning of the publication and also a true innuendo. The former are contained in par 5 (the Sydney Morning Herald publication) and in par 7 (the West Australian publication). They are not materially different. The imputations pleaded in par 5 are as follows:
"5. The first matter complained of in its natural and ordinary meaning contained the following imputations, each of which is defamatory of the Plaintiff:
(a) The Plaintiff had knowingly participated in the dishonest conduct of Messrs Cleaver and Fenech in concealing from the ABC the fact that they had a financial interest in the Plaintiff when the Plaintiff stood to gain financially from a proposed transaction between it and the ABC.
(b) The Plaintiff had knowingly participated in the conduct of Messrs Cleaver and Fenech in placing themselves in a position of conflict between their duty as employees of the ABC and their financial interests in the company in its dealings with the ABC.
(c) The Plaintiff had dishonestly profited from the documentary "More Than Legends".
(d) The Plaintiff had engaged in criminal conduct which was being investigated by the Australian Federal Police.
(e) The Plaintiff had behaved in such a manner as to warrant investigation by the Australian Federal Police to determine whether it had engaged in criminal conduct."
7 The true innuendo pleaded in paragraph 8 is as follows:
"8. Both the first matter complained of and the second matter complained of also contained the following imputation which is defamatory of the Plaintiff and which arises by reason of such of the facts and matters particularised below which are found to be within the knowledge of people to whom the matter complained of was published.
The Plaintiff engaged in a deception of members of the public in allowing itself to be used for the profit of individual shareholders and not for the benefit of the Aboriginal community whilst claiming that it was being conducted altruistically for the benefit of the Aboriginal community in general.
PARTICULARS
(a) At all material times the Plaintiff had conducted its affairs on the express basis that it was to be a non-profit organisation for the purposes, among others, of promoting an increased awareness of Aboriginal history and culture and developing film-making skills among Aboriginals, and with shareholders not entitled to any dividends;
(b) At a general meeting of the Plaintiff on 9 November 1994 it was resolved that the company would continue as a non-profit organisation with all shareholders not entitled to dividends;
(c) The matters set out in each of (a) and (b) were widely known in the film-making community and the film industry generally."
8 The Master acceded to the strike-out application, holding that the imputations 5(a) to 6(e) and the corresponding imputations in par 7 were not capable of arising from the matter complained of. The matter was then re-heard before Higgins J.
9 The strike-out application was brought under O 23 r 28 and O 29 r 4 of the Rules of the Supreme Court of the Australian Capital Territory. O 23 r 28 provides:
"A court may, at any stage of the proceedings, order to be struck out or amended any matter in any endorsement or pleading which is unnecessary or scandalous or may tend to prejudice, embarrass or delay the fair trial of the action, and may in any such case, if it or he thinks fit, order the costs of the application to be paid as between solicitor and client."
10 Order 29 r 4 provides:
"The court may order any pleading to be struck out on the ground that it discloses no reasonable cause of action or answer and in any such cause, or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the court may order the action to be stayed or dismissed or judgment to be entered accordingly as is just."
11 Higgins J referred to two leading authorities on the law relating to the capacity of published matter to convey defamatory meanings, Jones v Skelton [1963] 1 WLR 1362 at 1371 and Amalgamated Television Services Pty Limited v Marsden (1998) 43 NSWLR 158 at 167. After discussing the arguments as to the imputations alleged, his Honour said (at par 21):
"For present purposes it is enough to say that the matter complained of is open to the interpretation that imputations against the named part-owners are capable of arising also against the plaintiff. It is open to conclude that the imputations portray the named individuals as the operating force of the plaintiff, ie as its 'alter ego'".
12 This being an application for leave to appeal, it is necessary to apply the principles laid down by a Full Court of this Court in Decor Corporation Pty Limited v Dart Industries Inc (1991) 33 FCR 399. In essence those principles require a court to consider whether the order complained of is attended with sufficient doubt and whether substantial injustice would arise to the party seeking leave if leave were not granted. This being a matter of practice and procedure there is also the question whether it attracts the further layer of appellate restraint discussed by the High Court in Adam P. Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170. In that case the High Court citing with approval the well-known statement of Jordan CJ in Re The Will of F.B. Gilbert (1946) 46 NSWSR 318 at 323 and warned that a "tight rein" should be kept on such appeals.
13 Senior Counsel for the applicants argued that the order of Higgins J was not a discretionary one since it involved the question of the capacity of a publication to convey the defamatory meanings alleged, which is a question of law. However, the fact that the word "may" is used in both rules points to a conclusion that a discretionary power is conferred. It is not necessary to express any final conclusion as to this since my view would remain the same even if Higgins J's order were not discretionary in the strict sense. Certainly there is no doubt that it is a matter of practice and procedure.
14 I note that there have already been two determinations by judicial officers on this interlocutory dispute. The action commenced on 18 April 1997, that is more than two years ago, in respect of a publication in September 1996. There has not yet been a defence filed. The law of defamation should be able to provide a speedy vindication (or otherwise) of allegedly damaged reputation. The progress of this case, or rather the lack thereof, is a sad reflection on the extent to which the application of the law of defamation in Australia can fall short of that aim.
15 I consider that leave should not be granted. The decision of Higgins J does not effectively determine any rights of the parties. It is still open to the applicants to contend at trial that the publications do not convey the imputations alleged. Indeed, it would still be open to them to contend that the publications are not capable of conveying the imputations alleged. The decision of his Honour on the strike-out application would not in my view create any issue estoppel to prevent such an argument being raised.
16 By contrast, if the applicants had sought a binding determination of any legal question, they could have applied for a preliminary trial under O 37 r 2. This highlights an element of unfairness in the approach adopted by defendants in the present situation. A strike-out application is brought. If it fails, the defendant can still run the same argument at trial. If it succeeds, it may stop the plaintiff. Even if unsuccessful, such applications can wear down the plaintiff's resolve and financial resources. So defendants have nothing to lose in bringing such applications. I would not wish to see that potential unfairness compounded by the routine grant of leave to appeal should defendants' applications fail.
17 Moreover, it is conceded that the true innuendo will still go to trial. While undoubtedly this raises different issues, there will still be a substantial overlap with the issues raised by para 5 and 7, and in particular the relationship between Messrs Cleaver and Fenech and the respondent.
18 At most, the applicants' argument comes down to a contention that Higgins J incorrectly applied well settled principles. I have not entered on the merits of this dispute and express no view one way or the other. It is sufficient to say that, for the reasons I have already mentioned, leave should be refused.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Miles, Heerey and Finn JJ.
Associate:
Dated: 13 May 1999
IN THE FEDERAL COURT OF AUSTRALIA
CANBERRA DISTRICT REGISTRY AG 122 of 1998
BETWEEN: WEST AUSTRALIAN NEWSPAPERS LIMITED
(ACN 008 667 632)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
AG 123 of 1998
BETWEEN: JOHN FAIRFAX PUBLICATIONS PTY LIMITED
(ACN 003 357 720)
Applicant
and
ABORIGINAL NATIONS PTY LIMITED
(ACN 057 961 341)
Respondent
JUDGES: MILES, HEEREY AND FINN JJ
DATE: 13 MAY 1999
PLACE: CANBERRA
REASONS FOR JUDGMENT
FINN J:
19 I agree with the judgment of Heerey J and with the order proposed.
Associate:
Dated: 20 May 1999
Counsel for the Applicant: Mr W H Nicholas QC with Mr A Leopold
Solicitors for the Applicant: Freehill Hollingdale & Page
Counsel for the Respondent: Mr T Tobin QC with Mr P Gray
Solicitor for the Respondent: Snedden Hall & Gallop
Date of Hearing: 13 May 1999
Date of Judgment 13 May 1999
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Amway of Australia v Clifone Pty Ltd (No. 1) [2008] FCA 228
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2008/2008fca0228
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2024-09-13T22:51:48.746773+10:00
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FEDERAL COURT OF AUSTRALIA
Amway of Australia v Clifone Pty Ltd (No. 1) [2008] FCA 228
TRADE PRACTICES – misleading or deceptive conduct – representations made by independent business organisation or distributor in communications against international direct-selling business – application for substantive relief for alleged contraventions of s 52 – declaration and damages - Trade Practices Act 1974 (Cth) ss 52, 82, 87
CIVIL PROCEDURE – motions for contempt of interlocutory orders of the court – interlocutory orders to restrain independent business organisation or distributor from publishing statements against international direct-selling business – applicable principles as to contempt – whether wilful disobedience requires more than a deliberate act
Trade Practices Act 1974 (Cth) ss 52, 82, 87
Australian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 referred to
Lade & Co Pty Ltd v Black [2006] QCA 294referred to
Witham v Holloway (1995) 183 CLR 525cited
AMWAY OF AUSTRALIA AND ANTHONY WILLIAM GREIG v CLIFONE PTY LIMITED AND TREVOR RICHARD CHATHAM
NSD 1554 OF 2006
EDMONDS J
7 MARCH 2008
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1554 of 2006
BETWEEN: AMWAY OF AUSTRALIA
First Applicant
ANTHONY WILLIAM GREIG
Second Applicant
AND: CLIFONE PTY LIMITED
First Respondent
TREVOR RICHARD CHATHAM
Second Respondent
JUDGE: EDMONDS J
DATE OF ORDER: 7 MARCH 2008
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The applicants' motion dated and filed 29 August 2006 be dismissed.
2. The applicants' charges that the second respondent's email of 12 April 2007 breached Orders 5(e)(iv) and 5(b) of the Orders made by the Court on 16 August 2006 are proved, but otherwise the applicants' motion dated and filed 24 April 2007 be dismissed.
3. The respondents' motion dated 19 March 2007 and filed 21 March 2007 be upheld and, in consequence, Orders 5(b), (c), (d), (e) and (f) of the Orders made by the Court on 16 August 2006 be set aside, effective 20 June 2007.
4. The applicants' motion dated and filed 18 June 2007 be upheld and, in consequence, Order 5(a) of the Orders made by the Court on 16 August 2006 read, effective 20 June 2007:
'Using or disclosing any confidential information of the first applicant, including but not limited to the database and name details maintained at a2k.com.au and the email addresses of IBOs.'
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1554 of 2006
BETWEEN: AMWAY OF AUSTRALIA
First Applicant
ANTHONY WILLIAM GREIG
Second Applicant
AND: CLIFONE PTY LIMITED
First Respondent
TREVOR RICHARD CHATHAM
Second Respondent
JUDGE: EDMONDS J
DATE: 7 march 2008
PLACE: SYDNEY
REASONS FOR JUDGMENT
INTRODUCTION
1 These reasons relate to the orders I have made on motions brought by the applicants by:
(1) notice dated and filed 29 August 2006 ('the first motion'); and
(2) amended notice dated and filed 24 April 2007 ('the second motion'),
sometimes collectively called 'the contempt motions', for orders that the second respondent, Mr Trevor Chatham ('Mr Chatham'), be punished for contempt for alleged breaches of orders made by this Court on 16 August 2006 ('the Orders'); to the orders I have made on a motion brought by the respondents by notice dated 19 March 2007 and filed 21 March 2007 for the setting aside or variation of some of the Orders ('the respondents' motion'); and to the order I have made on a motion brought by the applicants by notice dated and filed (with leave) in Court 18 June 2007 for variation of one of the Orders ('the applicants' motion').
2 These motions were heard over five days from early April 2007 to the middle of June 2007. That came about because between the first day of the hearing, 4 April 2007, at the conclusion of which the first motion was part-heard and the second day of the hearing, 24 April 2007, the applicants had prepared and were ready to file notice of the second motion seeking orders for punishment of Mr Chatham for contempt for further alleged breaches of the Orders.
3 As indicated above, an amended notice of the second motion was filed on 24 April 2007 when the hearing of all motions was adjourned to 18, 19 and 20 June 2007. I ordered that the first applicant ('Amway') should pay the respondents' costs thrown away by the adjournment. At the adjourned hearing, I heard all motions sequentially with the respondents' motion for setting aside or variation of some of the Orders being heard first.
4 However, in these reasons, I propose to deal first with the contempt motions and then with the motions for setting aside or variation of some of the Orders.
BACKGROUND
5 The Orders made by the Court on 16 August 2006, by way of interlocutory relief, included the following:
'…
5. Until further order of the Court, and upon the applicants by their counsel giving the usual undertaking as to damages, order that each of the respondents be restrained, by themselves, their servants or agents, from:
(a) using or disclosing any confidential information of the first applicant, including the database and name details maintained at a2k.com.au;
(b) contacting any IBO in connection with the activities of the first or second applicants;
(c) directly or indirectly supplying, selling or promoting the products of another multilevel marketing company to any IBO;
(d) publishing in any manner, except to the respondents' named legal advisers for the purpose of receiving legal advice, the correspondence at pages 181-273 of exhibit "AWG1" to the affidavit of Anthony William Greig sworn 16 August 2006;
(e) publishing, whether via email, the world wide web, letter or otherwise, any statement that:
(i) The second applicant has committed perjury;
(ii) Peter Williams has accepted the second applicant's perjury as acceptable behaviour;
(iii) Any or all of the first applicant or the second applicant or Peter Williams or Mike Mohr believe that it is acceptable behaviour for an Amway employee to lie on oath;
(iv) Denigrates or disparages the first applicant or any of its employees;
(v) The chances of a person making substantial income from an Amway business are very remote;
(vi) A substantial income from an Amway business, even if achieved, is unlikely to be able to be maintained;
(vii) Amway acts capriciously to deprive business owners of their businesses or incomes.
or any statement to similar effect to any of the statements set out above.
(f) publishing, whether via email, the world wide web, letter or otherwise, any statement to the effect either of the applicants has engaged in criminal conduct.
6. In these orders, "IBO" means an Independent Business Owner contracted to the first applicant for the distribution of the first applicant's products.'
6 On the same day the applicants filed an application for substantive relief under ss 52, 82 and 87 of the Trade Practices Act 1974 (Cth) seeking similar orders and other relief, including a declaration and damages.
7 An affidavit sworn the same day by the second applicant, Mr Anthony Greig, General Counsel for Amway Australia, New Zealand and South Africa and a director of Amway ('Mr Greig') sets out background material going to the nature of the Amway business and the history of Amway's dispute with Mr Chatham, and the first respondent, Clifone Pty Limited ('Clifone'), of which Mr Chatham is a director and the principal shareholder. That material is not in dispute and I paraphrase it below.
Nature of Amway Business
8 Amway is a direct-selling business which originated in the United States but which operates globally in over 80 countries and territories. The Amway business plan is based around commissions from sales of Amway products and bonuses based on the level of these sales by Amway distributors, known as Independent Business Owners ('IBOs'), who have been recruited in that line of sponsorship. IBOs are not employees of Amway and are in effect distinct contracted businesses which purchase products from Amway and on-sell these products.
9 Amway commenced business in Australia in 1971. Amway is a retailer of health, beauty, home care and home living products. It is accepted that the following brief description of the Amway business given by the Full Court in Amway of Australia Pty Ltd v Commissioner of Taxation (1999) 99 ATC 4359 at [5] is substantially correct, with minor additions to accommodate for business changes implemented following the introduction of the Goods and Services Tax ('GST'):
'Amway sells a variety of products directly to the public through a network of individuals who sell as its agents on a commission basis. It sell products to its contractors by wholesale, it does not sell through its own shopping outlets. To the extent that it sells the same or equivalent merchandise as retail stores it can be said to be in competition with those stores. But of necessity, its cost structure is entirely different from such stores. It has none of the overhead costs associated with retail stores, but incurs other costs peculiar to its maintenance of a distributorship network.'
10 New distributors are recruited by existing Amway distributors. The existing distributors become the 'sponsors' of the new distributors. This system produces a chain of distributors in which a more senior distributor is described as 'upline' from the distributors so recruited (and from those recruited in turn down the chain). The recruits are known as 'downline' distributors from those 'upline'. As part of their agreement with Amway, the distributors are required to comply with certain rules of conduct.
11 The Amway distributors provide two forms of service to Amway: the selling and consequent ordering of Amway products at wholesale price; and the sponsoring of new distributors. Amway provides services such as training, product information, support and a 'money-back' satisfaction guarantee. Amway's income from products sales increases as each distributor increases its orders. The distributors increase their orders by increasing their own sales to consumers and by sponsoring new 'downline' distributors who will do likewise.
12 Amway IBOs are ranked in importance within the organisation (and with respect to bonuses and commission payments). These ranks are generally given the names of various gems and precious metals so that, for example, a 'Gold Producer' receives greater bonuses than a 'Silver Producer'.
13 Distributors earn points for sales at different rates according to the category of product. An IBO is eligible to become a Platinum IBO when they achieve a specified points value. As they increase their business, and meet the relevant qualification requirements (which includes both points and downline distributor groups), the Platinum IBO becomes eligible to reach higher levels such as 'Founders Platinum IBO', Sapphire, Emerald, Diamond and Executive Diamond.
14 Distributors may order products by telephone or mail sent to their 'upline' Platinum IBO. IBOs at all levels may also order products direct from Amway online via the internet. Platinum IBOs have the responsibility to train, supervise and foster their 'downline' IBOs with whom Amway may have little contact.
15 The distributors are free to build their own business, subject to certain standards required by Amway, but without minimum purchase requirements. Amway offers a range of rewards and incentives in order to encourage distributors to develop their business and thereby increase their purchase of Amway products.
16 One important aspect of the Amway business is the provision of support and mentorship amongst IBOs either on a one-to-one basis or by way of various meetings and conferences. The purpose of this support, motivation and mentorship is to allow successful IBOs to pass knowledge on to newer or less experienced IBOs. In particular, high-ranking IBOs with many IBOs in their 'downline' (a 'downline' means the IBOs who make up an IBOs group – including people they have personally sponsored and people those IBOs have sponsored) are respected by those in their 'downline'. This process is generally encouraged and serves the purpose of having new IBOs follow the business practices of successful IBOs to result in increased sales of products.
17 In particular, regular group meetings and 'Business Building Seminars' take place involving IBOs within particular 'lines of sponsorship' (i.e. IBOs within a particular 'downline' group). These meetings regularly include mentoring by high-ranking IBOs with more junior IBOs in their line of sponsorship.
18 Often in the course of dealing with 'downline' IBOs, higher-ranking IBOs will obtain a certain level of personal information in order to provide their 'downline' IBOs with business and personal advice to help them build a productive Amway business.
19 Amway seeks to promote its business by promoting the businesses of its distributors by fostering and maintaining the Platinum Distributors. Platinum Distributors enjoy certain privileges and assume certain responsibilities. Because Amway does not retail its products itself, the continuing success of the Amway business is dependent on the continuing success of distributors in both selling products and sponsoring new distributors.
Amway's Disputes with Mr Chatham/Clifone
20 Mr Chatham became an Amway distributor in July 1985. On 16 June 1989, he was substituted by Clifone as the distributor or IBO.
21 In or around 1998, a dispute arose between Mr Chatham and Amway over payments to Clifone of money in relation to the Amway 'Emerald Enhancement Program' ('EEP'). The dispute was reviewed by counsel but Clifone did not accept the findings of that review.
22 In early 2003, a separate dispute arose between Mr Chatham and Amway over Mr Chatham's promotion to other IBOs of a practice called 'Emotional Freedom Technique' ('EFT') including other religious instruction. Despite being directed to cease the use of EFT and overt religious references in the context of his Amway business, Mr Chatham apparently continued to use EFT in that context well into 2003.
23 A further dispute arose between Mr Chatham and Amway over the latter's exercise of its discretion not to award the 'Founder's Achievement Award' ('FAA') (which would have equated to payment in the sum of approximately $34,000) to Clifone for the year 2004.
24 Both the EFT issue and the FAA issue went to arbitration and a hearing was conducted over 14 – 16 March 2005. The arbitrator found in favour of Amway in respect of both issues.
25 Clifone was placed on probation until 31 May 2006 carrying with it a number of restrictions and limitations on its conduct and activities, with concomitant restrictions and limitations on Mr Chatham's conduct and activities. By letter dated 1 September 2005, Mr Chatham was informed that Clifone's probation had been extended until 31 December 2006.
26 From the time of the arbitrator's award, the relationship between Amway and Mr Chatham deteriorated into the depths of a tirade of threatening correspondence between Mr Chatham on the one hand and representatives of Amway and its parent corporation in the United States on the other. Indeed, some of the correspondence on Mr Chatham's part was nothing short of abusive and arguably defamatory. This correspondence is detailed at some length in Mr Greig's affidavit from paras 45 to 60 and I do not propose to refer to it otherwise than where it becomes necessary to do so in dealing with the charges of contempt considered below.
THE FIRST MOTION
27 The statement of charge annexed to the notice of the first motion charged that Mr Chatham had committed contempt of court in that he had breached the Orders in the manner specified in each and every one of the following charges:
(a) In alleged breach of Order 5(b), Mr Chatham at approximately 1.50 pm on 25 August 2006 sent an email to Mr Fred Kasparek (who is an IBO of Amway) in connection with the activities of Amway and Mr Greig ('the first charge').
(b) In alleged breach of Order 5(d), Mr Chatham at approximately 1.50 pm on 25 August 2006 sent an email to Mr Fred Kasparek which email published to Mr Kasparek a letter from Mr Greig to Mr Chatham dated 1 September 2005 which letter is page 229 to the affidavit of Mr Greig sworn 16 August 2006 ('the second charge').
(c) In alleged breach of Order 5(b), Mr Chatham at approximately 10.26 pm on 27 August 2006 sent an email to Mr Peter McKenna (who is an IBO of Amway) in connection with the activities of Amway ('the third charge').
(d) In alleged breach of Order 5(b), Mr Chatham at approximately 8.16 am on 28 August 2006 sent an email to twenty-five IBOs of Amway listed in the statement of charge in connection with the activities of Amway ('the fourth charge').
THE SECOND MOTION
28 The amended statement of charge annexed to the amended notice of the second motion charged that Mr Chatham had committed contempt of court in that he had allegedly breached the Orders in the manner specified in each and every one of the following charges:
Email of 21 March 2007
(a) On 21 March 2007, Mr Chatham published to Doug DeVos, Steve Van Andel, Tony Greig, Peter Williams and Jim Payne an electronic mail with an attached document (the email and the attachment being, collectively, 'the email of 21 March 2007').
(b) By publishing the email of 21 March 2007, Mr Chatham allegedly breached Order 5(e) in that:
(i) In alleged breach of Order 5(e)(i), Mr Chatham represented that Mr Greig had committed perjury, and alternatively made a statement to similar effect ('the fifth charge'); and
(ii) In alleged breach of Order 5(e)(iv), Mr Chatham denigrated or disparaged an employee of Amway, namely Mr Greig (the applicants rely on the emails as a whole, and in particular the paragraphs numbered 12 to 33 and 80 to 91 in the copy of the document annexed and marked 'A') ('the sixth charge').
(c) Further, and additionally, by publishing the email of 21 March 2007, Mr Chatham allegedly breached Order 5(f) in that in the email of 21 March 2007, Mr Chatham asserted that Mr Greig had engaged in criminal conduct (the applicants rely on the email as a whole, and in particular the paragraphs numbered 12 to 33 and 80 to 91 in the copy of the document annexed and marked 'A') ('the seventh charge').
Email of 28 March 2007
(d) On 28 March 2007, Mr Chatham published to Doug DeVos, Steve Van Andel, Tony Greig, Peter Williams and Jim Payne an electronic mail with an attached document (the email and the attachment being, collectively, 'the email of 28 March 2007').
(e) By publishing the email of 28 March 2007, Mr Chatham in alleged breach of Order 5(e)(iv) denigrated an employee of Amway, namely Mr Greig (the applicants rely on the email as a whole, and in particular the paragraphs numbered 24 in the copy of the document annexed and marked `B') ('the eighth charge').
Email of 2 April 2007
(f) On 2 April 2007, Mr Chatham published to Doug deVos, Steve Van Andel, Tony Greig, Peter Williams and Jim Payne an electronic mail with an attached document (the email and the attachment being, collectively, 'the email of 2 April 2007').
(g) By publishing the email of 2 April 2007, Mr Chatham in alleged breach of Order 5(e)(iv) denigrated or disparaged an employee of Amway namely Mr Greig (the applicants rely on the email as a whole, and in particular the paragraphs numbered 9, 11, 14, 16, 17 in the copy of the document annexed and marked 'C') ('the ninth charge').
(h) By publishing the email of 2 April 2007, Mr Chatham, in alleged breach of Order 5(e)(i) represented that Mr Greig had committed perjury, and alternatively made a statement to similar effect (the applicants rely on the email as a whole, and in particular the paragraphs numbered 10 to 13 in the copy of the document annexed and marked 'C') ('the tenth charge').
(i) By publishing the email of 2 April 2007, Mr Chatham, in alleged breach of Order 5(f) represented that Mr Greig had engaged in criminal conduct (the applicants rely on the email as a whole, and in particular the paragraphs numbered 10 to 13 in the copy of the document annexed and marked 'C') ('the eleventh charge') .
Email of 12 April 2007
(j) On 12 April 2007, Mr Chatham published an electronic mail with an attached document (the email and the attachment being, collectively, 'the email of 12 April 2007') to the following thirty-four email addresses:
[email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected];
(k) By publishing the email of 12 April 2007, Mr Chatham, in alleged breach of Order 5(e)(iv) denigrated or disparaged Amway (the applicants rely on the email as a whole, and in particular the paragraphs numbered 8, 11, 24, 25, 31, 34, 38, in the copy of the email annexed and marked 'D') ('the twelfth charge').
(l) By publishing the email of 12 April 2007, Mr Chatham in alleged breach of Order 5(b) contacted IBOs in connection with activities of Amway and/or Mr Greig (the applicants rely on the email as a whole, and in particular the paragraphs numbered 25, 34, 35 and 38 in the copy of the email annexed and marked 'D') ('the thirteenth charge').
THE LAW OF CONTEMPT
29 Initially there appeared to be substantial agreement between the applicants on the one hand and the respondents on the other as to the principles upon which the applicants' contempt motions should be decided. However, when the hearing resumed on 18 June 2007, they appeared to have parted company.
30 Both used as a starting point what was said in the joint judgment (Gibbs CJ, Mason, Wilson and Deane JJ) in Australian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 113 where, after commenting that lying behind punishment for a contempt, which involves wilful disobedience to a court order, is the very substantial purpose of disciplining the defendant and vindicating the authority of the court, their Honours said:
'It follows that a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional.'
31 The applicants submit that it is no answer to proceedings for contempt to say that there was no direct intention to disobey the order. It is enough that the relevant commission or omission was deliberate and not casual, accidental or unintentional. They find support for that in what was said by Jerrard JA in Lade & Co Pty Ltd v Black [2006] QCA 294 at [24]:
'Contempt is established by proof of a deliberate act or omission which breaches an order or undertaking. It is no defence that the party deliberately doing the act honestly believes, or was wrongly advised, that it would not be in breach of the order, if the act was deliberately done.'
And at [26]:
'I consider it follows that a deliberate act or omission which is in fact in breach of an order will constitute contempt, and to prove contempt it is necessary and sufficient to prove that much. There will be no contempt proved if the act or omission is "casual, accidental or unintentional".'
32 It is here where the respondents parted company. They submitted that the Court does not look to whether the act of publication itself was more than 'casual, accidental or unintentional'. These qualifications, they say, are placed upon the disobedience, not upon the 'commission or omission which is in breach'. In order to become contemptuous, Mr Chatham's disobedience to the Orders must have been more than 'casual, accidental or unintentional'. He may have published the material in breach of the Orders deliberately, but if the disobedience was merely 'casual, accidental or unintentional', then he is not guilty of contempt.
33 If by this argument, the respondents are saying that a deliberate act or omission which is in breach of a court order will not constitute contempt unless there is an intention to breach the court order, I cannot agree. The words 'casual, accidental or unintentional' do not introduce such an additional requirement. Viewed in the context of the extract from the joint judgment in Mudginberri cited at [30] above, the qualifications are not so much true exceptions to a deliberate act or omission; rather they are by way of contradiction to such an act or omission.
34 This is not to say that there can be contempt without disobedience. As Keane JA said in Lade at [63]:
'There must, of course, be actual disobedience. There cannot be disobedience if the alleged contemnor does not know of the order which he or she is alleged to have breached. Nor could there be disobedience where the breach of the order occurs by reason of circumstances outside the control of the alleged contemnor. But if the facts of the case enable one fairly to conclude that the alleged contemnor has disobeyed the order or undertaking then that is sufficient to constitute a contempt.'
35 In this context, his Honour's statement at [65] of the propositions he saw as having been established in relation to the general law of contempt by the reasons of the High Court in Mudginberri and in Witham v Holloway (1995) 183 CLR 525 at 530 – 534 per Brennan, Deane, Toohey and Gaudron JJ and 538 – 542 per McHugh J, is instructive:
'(a) disobedience of an order of the court, or of an undertaking to the court, is aptly described as a contempt of court; this is so regardless of whether the disobedience is attended by the contumacy previously thought necessary to attract the special description of "criminal contempt";
(b) the dichotomy previously recognised between civil contempt and criminal contempt was based, in part at least, on the different rationales which were understood to inform the different kinds of contempt: civil contempt was understood to be concerned with disciplining the party in breach in vindication of the private interests of the parties to civil litigation while criminal contempt was understood to be concerned with the punishment of the offender in vindication of the public interest in the due administration of justice, and, in particular, the maintenance of the authority of the courts;
(c) just as the historical differentiation between discipline and punishment and the vindication of the private interest and the public interest can no longer be sustained, so punishment by way of a fine or imprisonment as a remedy for contempt may be imposed where the disobedience of a court order is more than "casual, accidental or unintentional". It is now not essential to show that the disobedience is contumacious or defiant;
(d) because the sanction for any contempt is inevitably to some extent punitive, all contempts must be proved beyond reasonable doubt.'
36 In the present case, there is no issue that Mr Chatham knew of the Orders nor is there any issue that the acts alleged to be in breach of one or more of the Orders were deliberate acts on his part. That being so, the only issue is whether the relevant acts were in breach of the Orders referred to in the charges.
THE CHARGES
The First Charge
37 The first charge alleges breach of Order 5(b) – restraining the respondents from contacting any IBO in connection with the activities of Amway or Mr Greig – by Mr Chatham sending an email to Mr Fred Kasparek at approximately 1.50 pm on 25 August 2006. That email read:
'FredKasparek.
Amway IBO.
Dear Fred,
This email is to inform you that yesterday I had a lengthy meeting with my Barrister in Sydney and it is likely that you will be Subpoenaed to appear in the Federal Court in Sydney in an action initiated by Tony Greig and Amway of Australia..
On the 30 January 2006 I received an email from Mick Mullett which stated the following
6/6/05 @ 7pm met with Tony Greig and Graham Martin, venue was the Hilton hotel in Adelaide. There my wife Jenny and I were told the reason for Trevor's suspension was his continuing use of EFT and the complaints of two women.
Early December 2005 spoke via the phone with Tony Greig and the reason given for the Company continuing Trevor's suspension was for two alleged cases of sexual harassment.
Mick and Jenny Mullett. 30/1/06
It has been alleged to me by a number of people that you have been telling people that the reason for the extension of my probation was due to some form of sexual misconduct.
You are downline from Mick Mullett.
The letter I received from Tony Greig regarding the extension of my probation is reproduced in it entirety below.
Trevor Chatham,
Director
Clifone Pty Ltd
66 McGreggor Road
GISBORNE Victoria 3437 1 September 2005
Dear Trevor,
I refer to my letters and emails to you regarding the probation of your Independent Business. I refer particularly to my letter of 5 August 2005 noting your violation of the terms of your probation so far as they relate to your association with Independent Business Owners and your attempts to influence Amway business strategies.
I note the confirmation in your response of 12 August 2005 that you have contacted IBOs seeking to broadly influence Amway business strategies. This contact occurred in direct contravention of the company's direction (confirmed in your communication to your group in June 2005) that during the period of probation you should stand aside from the business and that you should not seek to communicate beyond a one on one basis with members of your personal group (please now see below for extension of terms in this regard).
As was foreshadowed in my letter to you of 5 August 2005 and given your demonstrated breaches of terms of your probation, the company has given serious consideration to further action which may be available to it.
It has now been resolved that the period of your probation should be extended until 31 December 2006, and further, that you should be directed that from 1 September 2005 you are not to counsel or otherwise provide leadership to any Amway IBO or otherwise discuss the Amway business or its policies or strategies with any IBO, whether the IBO is in your personal group or elsewhere in the Amway business.
The Rules of Conduct provide consequences for IBOs who fail to abide by the terms of probation; they include withdrawal of bonuses and extend, ultimately, to termination of an Independent Business.
It is our view that, given the ruling by the arbitrator the company has shown considerable restraint in its responses to date; this restraint has however not achieved the outcome which could reasonably be expected in these circumstances. Trevor, it has obviously taken many months for the company to arrive at a position where it has resolved that no further breach of the terms of your probation or the Rules of Conduct will be tolerated.
Yours Sincerely,
Amway of Australia
[Signed]
Tony Greig
General Counsel.
Yours sincerely,
Trevor Chatham'
38 The phrase 'the activities of Amway or Mr Greig' clearly refer to the business activities of Amway or the activities of Mr Greig, as an employee of Amway, engaged in that business. Mr Chatham admits that he sent the 25 August 2006 email to Mr Kasparek, however, neither on its face, nor in any relevant context relied on in the applicants' submissions, does it have anything to do with the business activities of Amway or the activities of Mr Greig as an employee of Amway, engaged in that business. It follows, in my view, that the sending of this email (including the attachment) by Mr Chatham does not constitute a breach of Order 5(b).
The Second Charge
39 This relates to the same communication but this time alleges breach of Order 5(d) – restraining the respondents from publishing in any manner, except to the respondents' named legal advisers for the purpose of receiving legal advice, the correspondence at pages 181 – 273 of 'Exhibit AWG1' to Mr Greig's affidavit – on the basis that Mr Greig's letter of 1 September 2005 (the attachment to Mr Chatham's email of 25 August 2006 to Mr Kasparek) was page 229 of the restrained correspondence (pages 181 – 273).
40 In the affidavit of 27 September 2007 Mr Chatham swore that:
'4. … I sent the email dated 25 August 2006 (which appears as annexure "A" to Mr Greig's affidavit) to Mr Kasparek to put an end to any rumour that may develop regarding sexually inappropriate behaviour and, additionally, to protect my position in the Family Court proceedings.
5. The letter that I extracted in my email to Mr Kasparek appears at page 161 of Mr Greig's affidavit sworn 16 August 2006.
6. I extracted the letter dated 1 September 2005 in order to show Mr Kasparek that I was not on probation, and that I was not being disciplined by Amway, for any sexual inappropriate behaviour, but for the reasons alleged in that letter, namely contacting Amway IBO's with a view to influencing Amway business strategies.
7. At the time that I extracted the letter appearing at page 161 of Mr Greig's affidavit, I was not aware that that letter also appeared at page 229 of the same affidavit.
8. I sent the email to Mr Kasparek, and extracted the letter appearing at page 161 of Mr Greig's affidavit, in the hope that it would put an end to the rumour that I was being disciplined by Amway for sexual impropriety.'
41 Having regard to the format of Mr Greig's letter to Mr Chatham of 1 September 2005 that is the attachment to Mr Chatham's email to Mr Kasparek of 25 August 2006, there is no doubt that what Mr Chatham published was the document at page 161 of Mr Greig's affidavit and not the document at page 229. It was submitted on behalf of the applicants that because the contents of both documents are the same, the difference in formatting is irrelevant. I would have readily accepted that submission if the document in question had only appeared at page 229, that is, within the range of restrained documents, or if the formatting of the published letter had corresponded with page 229. I am not satisfied that a breach has occurred in the circumstances where the letter (in a different format) also appears in a larger bundle of documents encompassing, but not confined to, the restrained documents and where the published letter is in a format consistent with the non-restrained version.
The Third Charge
42 The third charge alleges breach of Order 5(b) – restraining the respondents from contacting any IBO in connection with the activities of Amway – by Mr Chatham sending an email to Mr McKenna at approximately 10.26 pm on 27 August 2006. That email read:
'Peter McKenna
Chairman IBOAA
Amway Diamond.
Dear Peter,
This email is to inform you that it appears very likely you will be Subpoenaed to appear in the Federal Court in Sydney in an action initiated by Tony Greig and Amway of Australia.
Included in the material submitted by Amway is an affidavit sworn by you recently.
Full details of the impending Court Case, including the Orders already in place, are already available on the Internet at www.fedcourt.gov.au
www.mlmsurvivor.com is just one of many websites which seem to monitor Amway Court Cases. The anti-Amway websites seem to find Court cases very useful in gathering information which can be used to depict the truth about Amway.
My lawyers have stated to Amway that we wish to have a Mediation meeting to resolve the outstanding issues. If the issues are not resolved at the Arbitration meeting, we will immediately file a number of Cross Claims and the matter will proceed to the open Federal Court.
As the case unfolds more information will appear on the world wide web.
Paragraph 23 of Tom Avelsgaard's affidavit sworn and filed prior to the Arbitration hearing in 2005 states:
I believe that if the action being taken by Amway against Trevor Chatham, in restricting his right to free speech, becomes public knowledge Amway itself would cause irreparable harm to it's own reputation and as a consequence severely damage my business.
A full list of information required regarding your Australian Amway business will be forwarded later but will include:
Date you joined Amway.
Date you qualified at Platinum.
Date you qualified at Emerald
Date you qualified at Diamond
The year you last qualified at Diamond.
The number of 21 % in-country Qualifying legs you had in 2005-2006.
The number of people in your business that have ever qualified at the Emerald level.
The number of Australia IBO's in your business who qualified at Emerald in 2005-2006.
The number of people in your business that have ever qualified at the Diamond level.
The number of Australia IBO's in your business who qualified at Diamond in 2005-2006.
The maximum number of qualified Platinums or Directs you ever had at one time in your business and the year that this occurred.
The total number of Qualified Platinums in your entire business in 2005-2006. For the people that qualified at 21% Platinum or above in 2005-2006 the dates they joined Amway.
The number of Q12 Platinums in your entire business.
The total Amway bonuses received by you in 2005-2006 for your Australian business.
Information regarding the recommendation made by you on behalf of the IBOAA to Amway Corporation regarding the change to the starters kit cost last year.
Yours sincerely,
Trevor Chatham'
43 Mr Chatham admits that he sent the 27 August 2006 email to Mr McKenna. Moreover, there is no issue that Mr McKenna is an IBO of Amway. However, neither on its face, nor in any relevant contextrelied on in the applicants' submissions, does it have anything to do with the business activities of Amway. It follows, in my view, that the sending of this email and the attachment by Mr Chatham does not constitute a breach of Order 5(b).
The Fourth Charge
44 This relates to a communication sent to twenty-five IBOs in alleged breach of Order 5(b) – restraining the respondents from contacting any IBO in connection with the activities of Amway – by Mr Chatham sending an email to those IBOs at approximately 8.16 am on 28 August 2006. The email read:
'Dear Diamonds.
Full details of the impending Court Case, including the Orders already in place, are already available on the Internet at www.fedcourt.gov.au. It is just a matter of doing a search on the website for Amway of Australia.
www.mlmsurvivor.com is just one of many websites which seem to monitor Amway Court Cases. The anti-Amway websites seem to find Court cases very useful in gathering information which can be used to depict the truth about Amway.
Paragraph 23 of Tom Avelsgaard's affidavit sworn and filed prior to the Arbitration hearing in March 2005 states:
I believe that if the action being taken by Amway against Trevor Chatham, in restricting his right to free speech, becomes public knowledge Amway itself would cause irreparable harm to it's own reputation and as a consequence severely damage my business.
The only threat I have ever made to Amway is that I would reveal the truth.
If the matter between Amway and I is not resolved at the Mediation which my Lawyers have suggested, then I can foresee all of the truth being revealed by people under oath in the Federal Court in Sydney, and this information being posted on the Federal Court Website with numerous links to it from other sites.
As stated to you previously, I don't want to see anybody's business harmed including my own, but I have no control over the events that are now in place. I have been forced into a position whereby I will have to defend myself in the Public arena.
Yours sincerely
Trevor Chatham.'
45 Again, Mr Chatham admits that he sent the 28 August 2005 email to the IBOs referred to in this charge, however, again neither on its face, nor in any relevant context relied on in the applicants' submissions, does it have anything to do with the business activities of Amway. It follows, in my view, that the sending of this email and the attachment by Mr Chatham did not constitute a breach of Order 5(b).
The Fifth, Sixth and Seventh Charges
46 The fifth charge alleges breach of Order 5(e)(i) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that Mr Greig committed perjury or any statement to similar effect – by Mr Chatham publishing the email of 21 March 2007.
47 The sixth charge alleges alleged breach of Order 5(e)(iv) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that denigrates or disparages Amway or any of its employees or any statement to similar effect – by Mr Chatham publishing the email of 21 March 2007.
48 The seventh charge alleges breach of Order 5(f) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement to the effect of either Amway or Mr Greig has engaged in criminal conduct – by Mr Chatham publishing the email of 21 March 2007 he asserted that Mr Greig had engaged in criminal conduct.
49 The document annexed and marked 'A' to the amended statement of charge annexed to the amended notice of the second motion is the email of 21 March 2007. It reads:
1 '21 March 2007
2 Doug DeVos, and Steve Van Andel.
3 Cc Tony Greig, Peter Williams, Jim Payne.
4 Dear Doug and Steve,
5 In an email sent to Peter Williams on 27th August 2006, I informed Peter that if my Amway business was terminated I would not care about any negative publicity that may result, and I would present all the evidence that I have regarding Tony Grieg's statements on oath at the Arbitration hearing to the relevant authorities.
6 I also stated that I would reveal the truth regarding Amway and the likelihood of IBO's being able to build a successful business and then being able to maintain that business in a mature market.
7 I received a fax from Amway on the 1st September 2006 informing me that my Amway business had not been renewed.
8 Nothing that has occurred since 27th August 2006 has caused me to change my mind about Tony. In fact, many of the actions that have occurred since then have served to strengthen my resolve.
9 The matters between Amway, Tony and I have been dragging on long enough.
10 I now intend to see the relevant authorities in Sydney regarding Tony Greig's actions on the 5th April 2007.
11 I have been advised there is nothing in the current Court Orders stopping me from doing this.
12 I doubt whether you would have any possible comprehension of the loathing and hatred I personally feel towards Tony Greig and the two of you.
13 Tony, for what he has done personally, and to you two for condoning all of his actions having been made aware of them in detail by me. Despite espousing the values that your fathers built the Amway business on, you act in a manner that is in a direct violation of the Founders' Principles.
14 After my Amway business was not renewed, I received notification from IDA that they too would immediately stop paying me my Bonuses for the business tools that are purchased each month in my business. This meant that my income immediately dropped from around $600,000 per year, to zero. This to me means that there is about $12 million that my family and I will not receive over the next twenty years that I should have received.
15 Tony tried to withhold at least $50,000 of a $150,000 bonus that I had qualified for and was subsequently awarded to me at the Arbitration.
16 I had to pay half of Amway's legal costs of the Arbitration despite a letter from Tony stating very clearly that we would each pay our own legal fees.
17 Tony refused to allow me to exercise my basic human right to free speech regarding EFT even in the privacy of my own home.
18 Tony increased the length and terms of my probation for discussions I had with members of the IBOAA Board.
19 Tony threatened to terminate my business if I so much as even spoke to another member of my business regarding any aspect of the Amway business.
20 I have been told by the people involved that Tony phoned Tom Avelsgaard, Malcolm Sword, Ian McDermott and then Vaula McDermott trying to get someone to make a complaint against me regarding the EFT. He spoke to Vaula for nearly 2 hours. None made a complaint.
21 In his written affidavit submitted to the Arbitration Tony stated that a complaint had been made regarding the EFT at the Summer Conference by an IBO from Perth. Whilst on oath at the Arbitration Tony initially refused to name the IBO from Perth but said there were other senior pins who had also complained. When directed to answer by the Arbitrator Tony refused to answer. It was only after a short recess called by Tony's QC that Tony stated that Peter Shack, Tom Avelsgaard, and Vaula McDermott had all made complaints to him regarding-the EFT at conferences I had run.
22 Tom Avelsgaard and Peter Shack have since sworn affidavits stating they had not complained.
23 Vaula McDermott contacted me and told me that she had not complained about the EFT at all and that when told by Tony what he had said on oath, had insisted Tony retake the stand and state that she had not made a complaint.
24 Vaula has also informed me that what Tony said when he changed his story on oath was also a lie.
25 I believe Tony has finally told the truth in his affidavit filed with the Federal Court. In this affidavit Tony states that the concern about the EFT at the Summer Conference came from Kristen Cray, an Amway employee who attended the conference. I now have three affidavits which all clearly contradict Tony's evidence given at the Arbitration. They are affidavits of Peter Shack, Tom Avelsgaard and Tony Grieg himself.
26 I received a letter from your Sydney Lawyers that was stated to be written on behalf of both Mr Doug deVos and Mr Steve Van Andel, Amway and Alticor, stating that my business would be terminated if I reported Tony's actions to the relevant authorities.
27 My business was not renewed last year under a rule that did not exist when I joined Amway. IDA stopped paying me bonuses because I was no longer an IBO, and so now I have nothing left to lose.
28 I estimate that the income I would have received over the next 20 years from Amway and IDA would have been about $12 million based on the income I was receiving until my business was not renewed. I realize this is not much when compared with your $7 Billion annual turnover, but it was everything to my family and I.
29 Diamond Ian McDermott, an ex-Detective who apparently was convicted of perjury and subsequently spent time in prison as a result of his conviction, told me that when he overheard what his wife Vaula McDermott was told by Tony Greig about what Tony said on oath at the arbitration, he immediately formed the view that Tony had perjured himself.
30 Vaula told me that the reason she would not sign an affidavit regarding her conversations with Tony was simply because she felt the punishment for perjury was to severe and she did not want
31 Tony's family to have to go through what she had been through when Ian was sentenced for perjury.
32 Vaula has stated to me that she will tell the truth however, if asked questions on oath.
33 It was only that Vaula phoned me and told me that Tony had phoned her and told her what he had said that day at the arbitration that I became aware of what now appears to be Tony's numerous lies on oath at the Arbitration.
34 Personally, I believe Tony should suffer the appropriate consequences if it is found he has lied on oath. The emotional strain that my wife and I have been subjected to by Tony Greig's actions has been horrific and has taken a huge toll on my wife. She has been driven to the point of feeling suicidal on numerous occasions and has sought counselling, I believe that just like the family members of a murder victim, my family and I will feel much better knowing that justice has been done.
35 I also believe in the basic human right of free speech. As an IBO in Australia I did not have this right. This was confirmed at the Arbitration hearing. It was proven that under the Current Rules of Conduct, Amway Employees' directions override the United Nations Declaration of Human Rights.
36 I believe all IBO's and prospective IBO's worldwide should have access to the truth regarding the Amway business.
37 It seems to me that in a great many countries around the world IBO's and prospective IBO's are deliberately being lied to and deceived by both Amway employees, including the two of you, and senior IBO's.
38 I believe IBO's have a right to know all of the facts so that they can make a rational decision when they are deciding whether or not to try and build an Amway Business.
39 I was lucky enough to get into Amway in the mid 1980's and saw phenomena I growth, I achieved Diamond in 25 months, EDC in 49 months. I believe I had about 140 qualified Platinums in my organisation at one time. I qualified at least at the Diamond level for 20 years consecutively until my business was terminated. In the 1980's and early 1990's it was relatively easy to get people to look at the Amway business and to get people to join the Amway business.
40 The facts today are very different. Where as in the late 1980's we could sponsor about 1 in every 3 of 4 people who saw the Amway plan, now it about 1 in 30 to 40 people who see the Amway plan.
41 The facts are that even the IBO leaders who were able to build big businesses previously are not able to do so today. The facts clearly indicate that since about 1992 the vast majority of leaders cannot even maintain what they had built. Consequently the business is now just a small fraction of what it was.
42 One of the biggest deceptions used by IBO leaders is 'If I can do it, you can do it.' They then go on to talk about what they did years ago without telling IBO's that it is now much more difficult to sponsor people than it was when they achieved their highest Pin Level. It is obviously not true to state that 'If I could build a big business 12-20 years ago, you can do it today,' The facts clearly indicate otherwise.
43 The likelihood of people achieving success in the Amway business today are obviously much less than they were in the 1980's and early 1990's.
44 Another lie that is widely espoused by IBO Leaders is that "When you do the work, it stays done."
45 I will suggest people should contact [email protected] to find out the facts regarding the current numbers of Platinums, EBR's and Diamonds qualifying in Australia in 2005/2006.
46 It is my experience that at least 80% of the Diamonds in my organisation are no longer qualifying at even the Emerald level. They are still being promoted to the IBO's as Diamonds, but in fact only ever qualified at the Diamond level one time. I also believe this type of deliberate deception is occurring through out the Amway business.
47 Over the years I had about 21 Emeralds and Diamonds qualify downline from me. Today no more than 2 are qualifying for an Emerald Bonus.
48 IDA had about 30,000 attending FEC each year. Now it is down to about 4,000. A lot of IBO's will remember what it was like when reminded.
49 Another simple question that I believe all IBO's should ask Amway is how many people have ever qualified at the Platinum, Emerald, and Diamond level in the country in which they intend to operate, and how many qualified in 2005/2006.
50 Is it true that in the early 1990's there were about 1,000 qualified Platinums in Australia and today there are less than 300?
51 Is it true that in Australia there are now in excess of 1,000,000 people who are ex IBO's?
52 Is it true that today Australia, despite its drastic decline, actually has more qualified Platinums per head of population than North America?
53 Of the currently qualifying Platinums, how many have been in the business less than 6 years?
54 How many people have joined Amway in the last 6 years?
55 I believe that the answers to these questions will enable people to make rational decisions on building an Amway business today and will clearly indicate to them the likelihood of firstly being able to build a business, and secondly the likelihood of maintaining a business at a certain level.
56 It clearly is in the financial interests of ever IBO leader who built the business years ago when the business was growing rapidly and who is still receiving an income from the Business, to hide the facts regarding the business today from IBO's at the lower levels.
57 Some Amway produced literature is clearly very misleading and deceptive.
58 Brainwashing of IBO's using audio programs to be listened to daily, and regular attendance at seminars, is promoted strongly and practiced by many leaders in Amway. Apart from generating huge incomes from such programs, the Amway leaders know that if people do not submit themselves to the brainwashing program, they will not continue to spend thousands of dollars attempting to build the business.
59 I would suggest all IBO's take themselves off the brainwashing program for just two months during which time they get all the facts from Peter Williams and honestly evaluate the results they have achieved personally in the last couple of years.
60 It is widely stated by IBO's around the world that a definition of insanity is to continue doing the same thing but to expect a different result.
61 It seems to me that most intelligent people have already worked out that currently it is impossible to build a business, have stopped trying to build the business, and are now focused elsewhere. Some are still telling people it is possible to build a business because they are trying to maintain the income stream that they do [sic] have left.
62 The deceptions and lies continually espoused by the leaders are very subtle. That is why they are able to get away with them for so long with so many people.
63 The cost to the IBO of attempting to build a business is not just the cost of becoming an IBO. The major costs are in travel to do presentations, books, tapes/CD's, seminars, demonstration products etc. These costs traditionally are much greater than the income received from the Amway bonuses until an IBO achieves about the Platinum Level in the business. Today people are actively being encouraged to spend thousands and thousands of dollars with virtually no likelihood of achieving what is being promoted by both the IBO leadership and Amway. The simple reason that both the IBO leadership and Amway promote the business still despite the facts, are because they both make money as a result of the ISO's purchasing the business tools and Amway products.
64 Not only is the likelihood of achieving success much less today, but the rules have also been changed so that ISO's no longer have any security of owning their business. The rules now state that an ISO's business can now not be renewed, any bonuses already qualified for kept by Amway, the business then sold to another person, and Amway may keep the proceeds of the sale of the business, and there is no recourse that an IBO may take against Amway through Arbitration or the Courts.
65 This is precisely what happened to me. A total of about $119,000 in bonuses already earned by Clifone Pty Ltd, has now been kept by you. To me this is the same as the two of you stealing $119,000 from my family and I. I know you will just say that it was provided for in the current rules, but to my way of thinking you changed the rules so that the theft would be legal.
66 IDA has also changed the rules. I also feel what they have done is despicable.
67 In all of the seminars I have attended I have never heard the above rule changes discussed. Most IBO's do even know the changes have been made. The changed rules mean that no longer do IBO's our own their businesses despite the fact that they are called Independent Business Owners. This is another lie and deception.
68 It has amazed me the number of people that have thought that even though my business was not renewed, that I would still be receiving the bonuses for all the work I had put in over the last 20 years. It is amazing just how effective the brainwashing has been. IBO's worldwide deserve to be told the truth and not to be continually brainwashed with lies and deceptions.
69 I believe all IBO's world wide should have access to, and be made aware of all of the facts so that they can make rational decisions about their futures based on facts, not on a pack of lies, half truths, and deliberate deceptions as is currently occurring.
70 I was trained by Amway to handle the media. I was selected by Amway to be the IBO to be interviewed by one of the TV Current Affairs programs in 1994. Amway flew me to Sydney for the interview.
71 I was selected by Amway to represent all IBO's in a number of discussions with the Australian Tax Office in Adelaide.
72 Tony stated very clearly in a letter to me that my business would be terminated if I spoke to any IBO regarding the Amway business. This Letter, along with his previous actions, convinced me that it was just a matter of time before he would terminate my business. I knew from reading the rules that he did not even need a reason for doing so, he could simply fail to renew my business and that there was nothing I could do about it. This is what happened.
73 Just as Tony warned me, I have already warned Amway of my intentions.
74 This letter is just to notify you of the date on which I intend to commence the actions and to let you know of the hatred and animosity I feel towards you.
75 My goal has always been to help IBO's. The EFT helped many IBO's. The discussions I had with the IBOAA was in an attempt to help IBO's, the IBOAA Board actually made a recommendation to Amway based on the ideas I put forward. I will continue to help IBO's by revealing the truth.
76 I really don't know what impact revealing all of the truth regarding the two of you and your acceptance of Tony Greig's actions as appropriate, the facts regarding the likelihood of building a significant Amway business in a market in which Amway has been operating for a number of years to IBO's worldwide will have over the next 20 years.
77 I do know that it is stated that in "Built to Last" and "Good to Great" that it is essential that for a company to be truly successful it must be seen to maintain the Core Values. You have not preserved the core.
78 I don't know what effect the knowledge of your actions will have on IBO's and hence your total turnover and profitability over the next 20 years, but with a potential turnover such as you have, I guess it could be literally billions of dollars. I also realize that financially you guys will not miss it, no matter what the figure.
79 Proverbs 21:28 "A false witness shall perish. But the man who hears him will speak forever."
80 I know that you have had critics before, but I doubt any are as passionate and have the knowledge of the truth that I have.
81 Legal Opinion
The opinion I received from one of the independent lawyers I asked to look at the evidence regarding Tony's actions included the following:
82 However, putting aside the offence of perjury, there is another section of the Crimes Act which may be MORE relevant to the oral evidence given by Mr Greig in the arbitration proceedings. Section 330 of the Crimes Act provides as follows:
83 "A person who makes on oath any false statement knowing the statement to be false or not believing it to be true, if it is not perjury, is liable to imprisonment for 5 years."
84 This section is not limited to any "judicial proceeding" and, as such, appears to be applicable to the arbitration proceedings. In other words, a question of whether or not the arbitration in which you were involved amounts to a judicial proceeding is irrelevant.
85 Further, S.344 of the Crimes Act makes it clear that it is immaterial whether a statement of oath is given orally or in writing.
86 In our opinion, this is the appropriate charge covering the oral evidence given by Mr Greig.
87 During the course of the arbitration proceedings we note that you cross examined Mr Greig in relation to complaints from senior 'PINS'. He identified Peter Shack, Tom Avelsgaard and Val McDermott as persons who had made complaints. We note that you now have affidavits form Peter Shack and Thomas Gene Avelsgaard to the contrary. We note that Val McDermott has not sworn an affidavit but has informed you that she has not made any complaint and indeed informedMr Greig that she had no complaint about you or what you were doing.
88 We note further that at the arbitration hearing Mr Greig was recalled and stated that Val McDermott had not complained to Amway about you or your teaching methods. This certainly suggests that Mr Greig has been rather casual in relation to his evidence about that person.
89 In the above circumstances, it is arguable that Tony Greig has made false statements pursuant to Section 330 of the Crimes Act in relation to Shack, Avelsgaard and McDermott.
90 It would appear that any prosecution of Mr Greig does not have to proceed via the Director of Public Prosecutions and would simply be a police matter. We point out that in any such criminal prosecution, conviction depends upon the criminal standard of proof beyond a reasonable doubt. For the purposes of this advice we do not offer any opinion as to possible outcome of any such prosecution as we do not regard ourselves in possession of all of the relevant facts, not having interviewed the various witnesses, and not being aware of any defence that Mr Greig might seek to mount.
91 TONY GREIG AFFIDAVIT Sworn 16th August 2006 states
92 Paragraph 32 In January 2003, 1 was informed by Kirsten Cray, who was at the relevant time a Sales Manager of Amway, that she had been at a meeting of Amway IBO's at which it was reported to her that Mr Chatham was promoting to other IBOs a practice called 'Emotional Freedom Technique'. This was described as being a practice in which individuals would use a finger to tap their heads (and other parts of their bodies) with their fingers with the object of obtaining a positive state of mind. It was also reported that Mr Chatham was promoting Christian and Biblical messages, in conjunction with the 'tapping', as part of the promotion of EFT.
93 Paragraph 33 I subsequently wrote to Mr Chatham asking him to confirm whether or not he had been promoting EFT.
94 No mention is made in Tony's latest affidavit about having received complaints from any IBOs. It seems to me that Tony has finally told the truth.
95 A Current Affair.
Today Tonight.
60 Minutes.
Radio Talkback Programs.
Internet.
www.trevorchatham.com
96 I think that over the years to come it is possible you may gain a better understanding of the degree of hatred and loathing I currently have for each of you and for Tony,
97 I intend to continue to abide by any Court Orders that are in place.
98 Yours sincerely,
99 Trevor Chatham'
50 I am unable to identify in the email of 21 March 2007 any statement that Mr Greig committed perjury or any statement to similar effect. Paragraph 29 effectively states that: 'Diamond Ian McDermott … immediately formed the view that Tony had perjured himself', but this is not an assertion by Mr Chatham that Mr Greig committed perjury; nor is it an assertion to similar effect. Paragraph 33 contains the phrase '… what now appears to be Tony's numerous lies on oath at Arbitration', but that is not an assertion by Mr Chatham that Mr Greig committed perjury, nor is it an assertion to similar effect; on the contrary, it is an assertion that Mr Greig appears to have lied on oath at the Arbitration; it does not assert that he did in fact lie. For the same reasons, the statement at paragraph 89:
'In the above circumstances, it is arguable that Tony Greig has made false statements pursuant to Section 330 of the Crimes Act in relation to Shack, Avelsgaard and McDermott'
is not an assertion by Mr Chatham that Mr Greig has committed perjury nor is it an assertion to similar effect.
51 It follows, in my view, that the publication of the email of 21 March 2007 did not constitute a breach of Order 5(e)(i).
52 Order 5(e)(iv) is designed to restrain publication of any statement that has a certain effect; that denigrates or disparages Amway or any of its employees. The word 'denigrate' is defined in the Macquarie Dictionary to mean 'to sully; defame', while the word 'disparage' is defined in the same dictionary to mean 'to bring reproach or discredit upon; lower the estimation of'.
53 Whether or not a publication breached Order 5(e)(iv) can only by determined by assessment of the effect of the statements contained in the publication on the audience to whom it is published. The email of 21 March 2007 was published to Mr DeVos and Mr Van Andel, senior executive officers of Amway's parent corporation in the United States, Mr Greig and Messrs Peter Williams and Jim Payne. There was no or little evidence as to the status of Messrs Williams and Payne apart from the inference, based on their being copied in on a letter from Mr Mike Mohr, Vice President and General Counsel of Amway's United States corporation, to Mr Chatham of 22 November 2005, that they are senior executive officers of Amway. Be that as it may, there is certainly no evidence, nor would one expect there to be having regard to the origin of the abovementioned letter and the persons to whom it was copied, that any of the recipients, apart from Mr Chatham, was an IBO.
54 Moreover, all members of this audience had previously (i.e., before the email of 21 March 2007) been in receipt of communications either from or to Mr Chatham alleging or denying perjury on the part of Mr Greig and arguably denigrating or disparaging both Amway and Mr Greig or refuting the conduct alleged against Mr Greig. In those circumstances, I am not satisfied that any of the statements made by Mr Chatham in publishing the email of 21 March 2007 had the effect of denigrating or disparaging Amway or Mr Greig in the eyes of any member of the audience to which the email of 21 March 2007 was published.
55 No evidence was called from Mr DeVos, Mr Van Andel, Mr Williams or Mr Payne in support of this alleged breach and Mr Greig's evidence did not touch upon it.
56 It follows, in my view, that the publication of the email of 21 March 2007 did not constitute a breach of Order 5(e)(iv).
57 I am unable to identify in the email of 21 March 2007 any statement that either Amway or Mr Greig has engaged in criminal conduct or any statement to similar effect. For some of the reasons canvassed at [50] above in relation to paragraphs 29, 33 and 89 of the email of 21 March 2007 I am not satisfied that the email of 21 March 2007 constituted a breach of Order 5(f). None of the assertions made at paragraphs 57, 58, 67, 68 and 69 amount to an assertion that Amway engaged in criminal conduct.
The Eighth Charge
58 The eighth charge alleges breach of Order 5(e)(iv) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that denigrates or disparages Amway or any of its employees or any statement to similar effect – by Mr Chatham publishing the email of 28 March 2007.
59 The document annexed and marked 'B' to the amended statement of charge annexed to the amended notice of the second motion is the email of 28 March 2007. It reads:
1 '28thMarch 2007
2 Doug DeVos, and Steve Van Andel.
3 Cc Tony Greig, Peter Williams, Jim Payne .
4 Dear Doug and Steve,
5 I have been told by numerous US Diamonds that the "Holocaust" that occurred in the US Amway business back in 1983 was basically caused by two very specific events taking place. The events were a television program that depicted aspects of the Amway business in a negative fashion, and the "Directly Speaking Tape" sent out by Rich.
6 I was told that it was the honesty and integrity of the leadership that was cast into doubt by Rich that caused the biggest problem.
7 I remember reading a transcript of the Setzer Case in which Rich said whilst on oath that he was expecting about a 30% downturn in the business as a result of the "Directly Speaking" tape prior to sending it out, but it actually turned out to be much more, I think about 60% from memory.
8 I have been told by a number of US Diamonds that they actually lost 90% of their business during the "Holocaust".
9 Peter McKenna and others obviously believe the same thing could happen in Australia and other countries if the truth is revealed regarding the Amway business today.
10 Every night I lie awake thinking about all that Tony Greig has done and the $12 million that my family has been robbed of. That's just the way I see it.
11 I wanted to work with you guys but you came in and have tried to destroy my family and I. As far as I am concerned terminating my business was like declaring War on us. The first battles have been in the courts and I have just been in a defensive role.
12 Next Thursday, 5th April, I will actually fire my first offensive round. The war will then continue on numerous other battlefronts, primarily the media and the internet. The timing of the launching of these counter attacks will obviously just depend on the Court Orders that are in place at the time. They may be delayed for a little while but that will not really matter as by the time they are removed the results of the battle commenced next Thursday will be known and will just strengthen the firepower available for the media battles. IBO's not learning about the truth for another 12 months is still much better for the ISO's concerned than not hearing the truth ever.
13 The weapons I will be using in our war will simply consist of the truth and a series of questionsfor IBO's world wide to ask.
14 I could imagine that there could be links to videos on Utube of Doug deVos speaking at Las Vegas to Australian IBO's regarding owning their own business.
15 There could also be sections of the current Rules Of Conduct showing that Amway can simplychoose not to renew your business on the 31stAugust in any given year, keep any bonuses that are due to you that you have qualified for at that time, sell that business to somebody else and keep the money they receive from the sale of that business. The rules also clearly state that in this situation they have no possible way of taking action against the company. People could then decide for themselves how they feel about things, whether or not they have been lied to and mislead by both their upline and the Amway staff including Doug deVos.
16 Today's technology is simply amazing. All of these bits could be simply linked.
17 The goal of coarse is merely to help IBO's worldwide to understand the facts about Amway as it is today. It is not the same business opportunity today as it was years ago.
18 I don't want to see millions of IBO's worldwide wasting literally billions of dollars chasing a false vision of what is possible today. I believe that many IBO leaders are just motivated by greed and that is why they continually promote the brain washing tools, on which many make by far the majority of their income, and the Amway business. They do not tell people the truth regarding the rules of conduct and the likelihood of success today because they do not want people to know the truth.
19 My goal is, and always has been, to help the IBO's. I tried to help by teaching them EFT. Amway's expert witness said that according to the 150 testimonials EFT had helped them. For this I was put on probation. I tried to help them by getting the starters kit price reduced so thatit would be easier for them to sponsor others. For having discussions with members of the IBOAA regarding this issue my probation was extended and the terms of my probation tightened so that it was just a matter of time before my business was terminated. Now the only way I can help them is by fighting to reveal the truth about Amway and the likelihood of them being successful and maintaining a successful business.
20 I guess the first opportunity the media will have to pick up and report on this saga will be the Federal Court Contempt case on the 4th April. This obviously could just be the first of numerous stories.
21 Just like the Americans and the Australians felt that they had to help the people of Iraq, I feel that I have to help the majority of IBO's worldwide who are at the lower levels of the business and who are being brainwashed, not told the truth, and used to generate incomes for both the IBO leaders and Amway.
22 The war that you guys have started is only just beginning. I have no doubt that as in any war there will be many casualties. My family is already a casualty. We have been hurt severely emotionally, psychologically and financially, but not killed. I will continue to fight to save other innocent victims suffering the same fate that I have suffered and to enable the truth to be revealed so that IBO's everywhere can make rational decisions about how they wish to spend their time and their money.
23 www.amwayystats.com is just one of the weapons I will use to disseminate the truth. At the moment I am preparing to go on the offensive next week.
24 Over the years Tony Greig has done everything in his power to fuck me and many others.
25 My dad always said, "It is a long road that does not have a bend in it."
26 I believe the bend is rapidly approaching.
27 I believe God is in control.
28 Ps 18:32-34
It is God who arms me with strength for the battle, makes my way safe, teaches my hands to make war, and compensates me because of my innocence.
29 Yours faithfully,
30 Trevor Chatham'
60 For the reasons given in [52] – [56] above in relation to the sixth charge, the publication of the email of 28 March 2007 did not constitute a breach of Order 5(e)(iv)
The Ninth, Tenth and Eleventh Charges
61 The ninth charge alleges breach of Order 5(e)(iv) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that denigrates or disparages Amway or any of its employees or any statement to similar effect – by Mr Chatham publishing the email of 2 April 2007.
62 The tenth charge alleges breach of Order 5(e)(i) - restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that Mr Greig committed perjury or any statement to similar effect – by Mr Chatham publishing the email of 2 April 2007.
63 The eleventh charge alleges breach of Order 5(f) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement to the effect of either Amway or Mr Greig has engaged in criminal conduct – by Mr Chatham publishing the email of 2 April 2007 he asserted that Mr Greig had engaged in criminal conduct.
64 The document annexed and marked 'C' to the amended statement of charge annexed to the amended notice of the second motion is the email of 2 April 2007. It reads:
1 '2nd April 2007
2 Doug deVos, and Steve Van Andel.
3 Cc Tony Greig, Peter Williams, Jim Payne .
4 Dear Doug and Steve,
5 I personally believe Tony Greig is the most despicable person I have ever met and absolutely nothing would make me happier than to see him be sentenced to a term in prison.
6 For no other reason than just to get at me, he contacted the husband of a lady that I had had an affair with and persuaded both she and her husband to submit affidavits to the Arbitration. Full intimate details of the affair regarding her performing oral sex and her initiating having sex with me on two occasions were discussed in the open Arbitration proceedings.
7 He also got another woman to testify. She stated on oath in front of her husband that she had been having fantasies about having an affair before she ever met me and then after meeting me she started fantasizing about having an affair with me. We never had an affair except in her mind.
8 Years ago Amway was ordered by an Arbitrator to pay costs to Phil Ayoub, a very good friend of mine. Tony simply refused to pay the costs. I am sure Phil would also be happy to be interviewed by a TV presenter regarding this.
9 Tony bullied unmercifully both Diamond Peter Maddison and Diamond Stu Carseldine. Peter ended up resigning from Amway and Stu ended up suffering a massive stroke.
10 I am sure the above guys would also be celebrating the news if ever Tony was sentenced.
11 I guess Tony failed to tell Mr Thompson, his QC at the Arbitration, that it was actually information he had received from Kristen Cray regarding the EFT at the Summer Conference that he had acted on as stated in his latest affidavit. I am sure that if he had told Mr Thompson the truth at that time, Mr Thompson would not have instructed Tony to answer as he did. I am sure no lawyer would instruct his client to lie on oath.
12 I believe Tony knew exactly what he was doing at the Arbitration and that is why he refused to answer my question regarding who had complained about the EFT initially.
13 It will be interesting to see what others think when they also have the opportunity to view all the evidence.
14 I also realise that suicide is a possible option in the circumstances.
15 That will not prevent me revealing the truth in detail ultimately.
16 I believe most people would just conclude that he had obviously done something that he did not want to have to take responsibility [sic] for and could not bear to face the consequences of publically [sic].
17 For years Tony has used his position with Amway to bully people. All of his actions have been condoned by Peter Williams and in some cases, by the two of you.
18 You have both viewed all the evidence and have obviously considered his actions as appropriate for an Amway/Quixtar employee.
19 Yours faithfully,
20 Trevor Chatham'
65 For the reasons given in [52] – [56] above in relation to the sixth charge, the publication of the email of 2 April 2007 did not constitute a breach of Order 5(e)(iv).
66 I am unable to identify in the email of 2 April 2007 any statement that Mr Greig committed perjury or any statement to a similar effect. It follows, in my view, that the publication of the email of 2 April 2007 did not constitute a breach of Order 5(e)(i).
67 I am unable to identify in the email of 2 April 2007 any statement that Amway or Mr Greig engaged in criminal conduct or any statement to a similar effect. It follows, in my view, that the publication of the email of 2 April 2007 did not constitute a breach of Order 5(f).
The Twelfth and Thirteenth Charges
68 The twelfth charge alleges breach of Order 5(e)(iv) – restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that denigrates or disparages Amway or any of its employees or any statement to similar effect – by Mr Chatham publishing the email of 12 April 2007.
69 The thirteenth charge alleges breach of Order 5(b) – restraining the respondents from contacting IBOs in connection with activities of Amway and/or Mr Greig – by Mr Chatham publishing the email of 12 April 2007.
70 The email annexed and marked 'D' to the amended statement of charge annexed to the amended notice of the second motion is the email of 12 April 2007. It reads:
1 '12th April 2007.
2 Hi Guys.
3 I have had an incredible life over the last 22 years, 20 of which I qualified at the Diamond level. The cruise on the Enterprise V for having 9 in-country legs qualify at 21% for all 12 months in 1992/93 would have to have been one of the major highlights for me.
4 I noted most of you in August 2006 of my intentions if my income was ever stopped.
5 IDA Stopped Income.
6 In late September last year I was advised by IDA that they would no longer be paying me my normal monthly tool bonus amounting to about $25,000 each month. This has meant that I have had zero income since then.
7 It has been a huge shock to have to suddenly adjust from having an income of $500,000-$600,000 a year drop to zero.
8 When I phoned Tom about my IDA bonus he said something about it being better off in his and Steve's pocket and the likelihood of me taking legal action to recover my income from IDA was judged to be fairly remote. Tom said something about them having made a commercial decision. To me it just seemed to be a case of pure greed. "Lets steal it from him while he is down and can't fight back."
9 As you can probably imagine, this really pissed me off. I simply cannot put in to words the hatred and loathing I now have towards Tom and others. It is quite possible that over the years to come you will gain some understanding of the hatred I now feel.
10 The psychological and emotional trauma my wife and I have experienced has resulted in my wife feeling suicidal at times and has sought counseling,
11 Stop and think for a moment how you would feel if your total income that you were receiving as a result of spending 21 years building a huge investment was suddenly taken from you and the income that was still being generated, just given to somebody else.
12 I clearly now gain no financial reward from the business I built with Tom over 21 years. I have nothing left to lose.
13 I have no friends who are building the business today. I have many people who I thought were friends, but today I do not consider them friends, as many have stabbed me in the back.
14 War was Declared.
15 I considered War was declared on my family and I when 21 years of my life's work and the future income I would have received was stripped from me. As I see it, about $12 million in future income over the next 20 years, has been robbed from my family and I. This income, which is still being generated, is currently going to other people. There is currently about $400,000 in income that I would have received in the last 7 months that has now clearly gone to other people. Steve Jakubenko, Tom Avelsgaard and others.
16 Remember this whole thing started over my belief that I should be able to share a free self-help motivational technique, EFT, with people in the privacy of our own homes. I had agreed not to teach it at Seminars.
17 Up to date in this war I have only been involved in defensive actions, but that is about to change dramatically. I am now preparing to go on the offensive very soon.
18 I have applied to the Federal Court to have the Court Orders that currently prevent me from speaking freely and advising people of the truth, lifted. I believe this will occur soon.
19 Impending "Holocaust"
20 I then envision that we will experience a "'holocaust"' here in Australia similar to what occurred in 1983 in the US.
21 I believe similar events will occur in Australia as occurred in the US in 1983. My understanding was that the trigger for the "holocaust" in the US was simply a negative TV program and then the honesty and integrity of the leadership being questioned.
22 I think Bert Gulick told me that when the "holocaust" hit he had about 90% of his people that were attending his functions and on his tools program, stop participating. He said it took years to recover. Probably best to check with Bert exactly what happened.
23 Some groups were hit harder than others. I believe the business overall suffered a 60% decline.
24 Business now built on lies and deceptions.
25 I believe that the business has changed dramatically over time and is now based on lies, deceptions and only partial truth. Prospective IBOs and IBOs are simply not told the full story.
26 I believe many of you have already stated to others that me revealing the truth will have a devastating effect on the business.
27 Angie Somers – "terrified of the devastation unless we do what Trevor wants. All lines of sponsorship will be hurt."
28 Vaula McDermott –"terrified. Wanted Trevor to continue to receive bonuses."
29 Peter McKenna – "devastating action against the Amway business and ISO's will result if action is taken against Trevor Chatham. Will result in financial loss for a significant number of IBO's."
30 Glenda and Norman Leonard – "the truth being posted on the internet would be catastrophic. Is really fearful of the ramifications. The company should not underestimate the damage he can cause by revealing the truth."
31 I agree with the sentiments expressed by the various people above. I think simply revealing the truth will have a devastating effect today.
32 I intend to use TV programs like A Current Affair, Today Tonight, 60 Minutes and Radio talk back programs to not only expose the truth, but more importantly to promote a website www.amwaystats.com
33 This website will be very extensive and full of information that will allow people to make rational financial decisions based on true facts.
34 I remember when we had about 30,000 IBOs attending FEC in the early 1990s. To say to IBOs "If I could build a big business then, you can build a big business today" is very clearly misleading and deliberately deceptive. What IBOs are not being told today is the fact that in a mature market it is much more difficult to sponsor people.
35 During the 21 years that I was involved in the industry sponsoring rates have dropped from about 1 in 3 down to about 1 in 30 today.
36 People are certainly not being told that in a mature market it has proven impossible for virtually all IDA leaders to even maintain the numbers attending functions and on the audio brainwashing program. They are not being told the truth about the number of Leaders that are no longer qualifying, or the fact that many that are still masquerading as Leaders are not even qualifying at the level below their Pin level.
37 I look forward to being able to reveal the truth to all Australians about what has happened to me personally, and to our industry as a whole. I also believe the truth will help you and your people to understand why I have acted as I have.
38 Rule changes have meant that we no longer own our own business. If we did own our own business it would not be possible for the business to be simply taken from you, the income and bonuses that you had already qualified for not paid to you, the business could then be sold to someone else, and you receive none of the sale proceeds. To claim that we are business owners is nothing but a lie and will be readily seen to be so when the facts are explained to people.
39 Peace treaty or Holocaust?
40 I want you to know that I am prepared to agree to consent orders remaining in place to protect your business.
41 The whole notion of me being paid to "shut-up" about the truth and to just disappear quietly was not my idea in the first place, but I can see that it will have many advantages to the leaders of the business.
42 I believe Peter McKenna will be able to make enquiries and confirm for you that me being paid to shut-up was not my idea, and secondly that I have agreed to terms that will result in no "Holocaust" occurring. It is now simply a matter of a few dollars to make this all go away and for me to disappear quietly and never be heard from again.
43 As I see it, probably the best thing you could do to protect your financial interests is to do whatever you can to try and ensure that a peace treaty is negotiated. You are obviously going to need to contact the decision makers personally to express your view.
44 I can assure you that I believe the basic terms of the confidential agreement have already been agreed upon. The only point of disagreement now seems to be how many dollars I will receive under the agreement. Knowing the players involved, the annual turnover worldwide, the huge losses that could possibly occur, I am sure it is not really a money issue, I believe it is now simply an ego issue. The financial futures of the decision makers will not be affected in the slightest by the decision they make in this situation. "Holocaust" or "'Peace Treaty" will make no difference to them. I believe it will make a huge difference to you and to leaders all around the world though if the 'Holocaust' is not averted.
45 I want to point out that the idea and terms of the peace agreement was not my idea. I merely suggested a different dollar amount would be more appropriate than what was initially proposed.
46 As I see it, this war can be halted before you also become a casualty. It really is just a few dollars that is standing between a "peace agreement" on one hand, and a "holocaust" on the other.
47 I assure you the outcome from this situation will either be lose/lose or win/win. It will not be win/lose. I will not be the only loser. I have had everything taken from me and actually have nothing left to lose. There is no downside to me and my family in this situation.
48 Peter McKenna, has stated in an affidavit that he feels the actions that have been taken against me are appropriate. It will be interesting to see whether others will feel the same way when the orders are lifted and I am able to tell the whole truth, I very much doubt Peter knows the full story. I know I certainly have not told him everything that has happened and I am sure no body else would have told him everything.
49 Maxwell states that leadership is influence. If you really are leaders you will actually take action to influence the decision made by others and to protect your business. I would strongly suggest that you do not just allow Peter McKenna to express your views for you. Who knows what Peter will say?
50 I can assure you all that at this point you do not know the full story of what has happened to me over the last few years. I am currently prevented by a Federal Court Order from telling you the truth. If no peace agreement is reached, I believe the Court Orders will soon be lifted and I will then be able to share with you and all members of your group exactly what has happened to me.
51 I realize that making the truth public will not bring back the income that has been stolen from me, but like any husband whose wife was raped and murdered, I believe I will feel much better and be able to move on with my life when the truth is exposed and the perpetrators punished.
52 I am sorry you have become involved in this war, I warned you it could happen. Most of you did absolutely nothing about it.
53 I have evidence that clearly shows that some of you actually encouraged the outbreak of the war. John Hargreaves.
54 Tom's actions, which I believe were based solely on greed, simply ensured it would happen and strengthened my resolve.
55 I have left instructions that full details be published in the unlikely event of my untimely death.
56 I wish you well with your outside businesses. I can now see how vital it is to have numerous streams of income. I did not do this. My advice is don't make the same mistake I made.
57 I wish you all the best for the future.
58 Kind Regards,
59 Trevor Chatham.'
71 The email of 12 April 2007 was published to some thirty-four recipients at their email addresses. They are all IBOs. By publishing this email, it is said that Mr Chatham denigrated or disparaged Amway in alleged breach of Order 5(e)(iv). Reliance is placed on the email as a whole, and in particular paragraphs numbered 8, 11, 24, 25, 31, 34 and 38. For Mr Chatham it is said that nowhere in the email is 'Amway' mentioned; the complaints are directed against a company described as 'IDA'.
72 While it is true that there is no specific mention of 'Amway', it is also true that the references to 'IDA' are confined to paragraphs 5, 6 and 8. The references in the email to 'the business', in particular at paragraphs 24 to 38 inclusive, are clearly references to Amway's business and I am satisfied, having regard to the audience to which the email was published, that it would have the effect of denigrating or disparaging Amway in the eyes of that audience.
73 It follows, in my view, that there has been a breach of Order 5(e)(iv) by Mr Chatham, by the publication of the email of 12 April 2007.
74 I am also of the view that by publishing the email of 12 April 2007 Mr Chatham breached Order 5(b) by contacting IBOs in connection with the business activities of Amway.
CONCLUSIONS ON CONTEMPT MOTIONS
75 It follows from the foregoing that the first to the eleventh charges must be dismissed. I find that the twelfth and thirteenth charges are proved.
76 It is clear to me that Mr Chatham acted deliberately in publishing the email of 12 April 2007 and intentionally included in that email the statements which I have found to prove the twelfth and thirteenth charges. He may not have intended to breach Orders 5(b) and 5(e)(iv) by publishing the email of 12 April 2007; indeed I would infer that his failure to mention 'Amway' by name in the email indicates an attempt on his part to avoid any such breach. On the other hand, that failure does not warrant characterisation of the contempt as merely technical. I find that he intended to denigrate or disparage Amway and the way it currently conducts its business activities in the eyes of those to whom he published the email of 12 April 2007, but to do so in a way which did not breach Orders 5(b) and 5(e)(iv). The fact that he was prepared to take the risk of failing to avoid breaches of these orders is obviously a consideration which is relevant in deciding what is the appropriate penalty.
77 In this regard I did indicate to the parties that if it was necessary, I would hear them on punishment. That said, having regard to the nature of the contempt and the conduct involved, nothing but a pecuniary penalty would, in my view, be appropriate.
78 I also indicated that in those circumstances I would hear the parties on costs. The need to do this is more so by reason of my finding that eleven of the thirteen charges of contempt have not been proved.
THE RESPONDENTS' MOTION
79 The respondents' motion moved the Court for orders that Orders 5(b), 5(c), 5(d), 5(e) and 5(f) be set aside or, in the alternative, varied as the Court thinks fit. The applicants did not, correctly in my view, press for the retention of Orders 5(b) and 5(c) and they will be set aside. By the time of the hearing of the motion, Mr Chatham had ceased to be an IBO more than six months prior to the hearing.
80 I am also of the view that Orders 5(d), 5(e) and 5(f) should be set aside. They no longer, if they ever did, serve any utility in preserving the status quo; that aside, they are an impediment on Mr Chatham's freedom of speech whatever the repercussions may be as to how he exercises that right.
81 With the further effluxion of time since the hearing of the motion, the reasons for setting aside Orders 5(d), 5(e) and 5(f) are only made more compelling.
THE APPLICANTS MOTION
82 The applicants' motion to vary Order 5(a) so that it reads:
'using or disclosing any confidential information of the first applicant, including but not limited to, the database and name details maintained at a2k.com.au and the email addresses of IBOs'
should be acceded to in the face of the orders I propose in respect of the respondents' motion.
I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.
Associate:
Dated: 7 March 2008
Counsel for the Applicants: Mr T D Blackman SC and Mr C D Wood
Solicitor for the Applicants: Dibbs Abbott Stillman
Counsel for the Respondents: Mr M Lawson
Solicitor for the Respondents: Atkinson Vinden Heazlewoods
Date of Hearing: 4 and 24 April 2007
18, 19 and 20 June 2007
Date of Judgment 7 March 2008
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NAJK v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 163
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FEDERAL COURT OF AUSTRALIA
NAJK v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 163
MIGRATION – onus of proof – applicant must put material relied upon to support claim – procedural fairness – need to put critical issue to the applicant
Abebe v Commonwealth of Australia (1999) 197 CLR 510 referred to
Applicant WAEE v Minister for Immigration Multicultural and Indigenous Affairs (2003) 75 ALD 630 referred to
Commissioner for Australian Capital Territory Revenue v Alphaone (1993) 49 FCR 576 referred to
Htun v Minister (2001) ALR 244 referred to
Kalala v Minister for Immigration and Multicultural Affairs (2001) 114 FCR 212 referred to
Kioa v West (1985) 159 CLR 550 applied
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 referred to
Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 referred to
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 applied
Minister for Immigration and Multicultural Affairs v Rajalingam (1999) 93 FCR 220 referred to
Paul v Minister (2001) FCR 396 referred to
Pilbara Aboriginal Land Council v Minister for Immigration and Multicultural and Indigenous Affairs (2000) 103 FCR 539 referred to
Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicant S 154/2002 (2003) 77 ALJR 1909 applied
W148/00A v Minister for Immigration and Multicultural Affairs (2001) 185 ALR 703 referred to
WACO v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 171 applied
WAGO of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 194 ALR 676 referred to
NAJK v MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS
N1691 of 2003
JACOBSON J
2 MARCH 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY No N1691 of 2003
BETWEEN: NAJK
APPELLANT
AND: MINISTER FOR IMMIGRATION AND
MULTICULTURAL AND INDIGENOUS AFFAIRS
RESPONDENT
JUDGE: JACOBSON J
DATE OF ORDER: 2 MARCH 2004
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. the Application be dismissed
2. Appellant to pay Respondent's costs
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY No N1691 of 2003
BETWEEN: NAJK
APPELLANT
AND: MINISTER FOR IMMIGRATION AND
MULTICULTURAL AND INDIGENOUS AFFAIRS
RESPONDENT
JUDGE: JACOBSON J
DATE: 2 MARCH 2004
PLACE: SYDNEY
REASONS FOR JUDGMENT
Introduction
1 This is an appeal from a judgment of a Federal Magistrate dismissing an application for review of a decision of the Refugee Review Tribunal ("the RRT") handed down on 22 January 2003. The RRT's decision affirmed an earlier decision of a delegate of the Minister made on 8 November 1999 refusing to grant the appellant a protection visa.
2 The appellant is a citizen of Bangladesh. He claimed to have a well-founded fear of persecution on the ground that he had been an active member of the student wing of Jamaat-e-Islami ("JI") Party and that he had suffered at the hands of his political opponents in the Awami League ("AL") after the AL came to power in 1996.
3 The appellant claimed that he had received death threats from the AL and from the Communist Party which he said was linked to the AL. He also said that the AL brought false charges against him and that he had been imprisoned in Dhaka on false charges from December 1998 to June 1999.
4 The RRT dismissed the application on six main grounds. First, it was not satisfied that the appellant was in fact the person he claimed to be. Second, it was of the view that the evidence indicated that the appellant had used false identities for the purposes of international travel in a manner which was inconsistent with his claimed refugee status.
5 Third, the RRT concluded that the appellant's request for asylum was an afterthought because he had arrived in Australia on 30 July 1999 and then travelled to New Zealand before returning here and making his application for a protection visa.
6 Fourth, the RRT was not satisfied that the appellant had been an active member of the JI or that he had been targeted by the JI.
7 The fifth ground was that, in any event, the circumstances in Bangladesh had changed in 2001 when the AL lost power in the elections to the Bangladesh National Party.
8 The sixth ground was that the RRT found the appellant to be an unreliable witness and his claims were found to lack credibility.
9 The learned Federal Magistrate expressed the view, at [25] that the fifth ground, that is, the changed circumstances in Bangladesh, was the determinative factor in the RRT's decision. In his opinion, the RRT's finding on this ground was not affected by jurisdictional error. He was of the view that none of the other bases upon which the appellant sought to attack the RRT's decision affected the ultimate finding.
10 Notwithstanding this, the appellant attacked the Federal Magistrate's decision on seven separate grounds which I will deal with later in my reasons for judgment.
11 The Magistrate made one finding in the appellant's favour. He was of the view that the RRT had denied the appellant natural justice in relation to the question of whether a birth certificate put forward by the appellant was a genuine document. The RRT found that it was not. However, the Federal Magistrate held that even if the RRT had been satisfied that the birth certificate was genuine, it could not have affected its views about the changed circumstances in Bangladesh (see [20]-[21]).
12 The Minister has filed a Notice of Contention putting in issue the learned Magistrate's finding that there was a denial of natural justice on the genuineness of the birth certificate.
13 In order to determine the issues which arise on this appeal, it is necessary to consider in some detail the appellant's claims in support of his application for a protection visa, the evidence before the RRT on the identity issue, the reasons given by the RRT and the reasons of the Federal Magistrate.
The Protection Visa Application
14 The application was made on 15 September 1999. It gave the name of the person who applied for the visa as a person who I will describe by the initials "MSA". It said that he had been known by another name which I will again refer to by initials, namely "IH".
15 The application stated that the applicant's date of birth was 5 March 1979. If this was correct, he would have been 23 years old at the time when the RRT held an oral hearing in May 2002.
16 The applicant gave the addresses where he had lived in Bangladesh from 1989 to 1999. It stated that from January 1999 to June 1999 he had been in jail in Dhaka.
17 The application stated that the applicant left Bangladesh illegally on 30 June 1999 using a false passport with a visa for Malaysia. I will refer below to the evidence before the RRT about this passport.
18 The application form asked whether the applicant had his travel document with him. The answer to this question was that the applicant had lost it.
19 The application stated that the travel document which the applicant used to enter Australia did not belong to him. I will refer below to the evidence about the passport which contained a different identity from the identity referred to in the passport on which he left Bangladesh.
20 There was a statement lodged with the application. It described threats from AL thugs and from members of the CP. It said that those persons "had a great link" to the AL.
21 The statement said that the applicant's opponents in the AL filed a false case against him and that he was imprisoned on the false charge. It said that he was released from jail on 9 June 1999 and that at that time he understood that he could not save his life in Bangladesh.
22 The statement said that family members and others suggested to the applicant that he leave Bangladesh, that he obtained a false passport with a Malaysian visa and that the agent who provided him with the document substituted the applicant's photo for the photo of the original passport holder. He said this was the passport on which he left Bangladesh for Malaysia.
23 The statement then said that when the applicant was in Malaysia he stole his brother's passport and used it to come to Australia.
24 The statement said that when the applicant arrived in Australia (i.e. on 30 July 1999) he was invited by a friend to go to New Zealand and that he travelled there, returning to Australia about a week later on 5 August 1999.
25 The application was lodged with supporting material which included a document described as a birth certificate. The document was in English and purported to be on the letterhead of the Government of the People's Republic of Bangladesh, Office of the Sanitary Inspector and purported to be signed in December 1997 by a person holding that office.
26 The document stated that a person named MSA was born on 5 March 1979 and that he was personally known to the Inspector. It also said:-
"To the best of my knowledge he bears a good moral character. He did not take part any (sic) subversive of the state or of discipline.
I wish him all success in life."
27 The application was accompanied by a report from the New South Wales Police Service that MSA had reported the loss of his passport to the Maroubra Police.
The Evidence before the RRT on the Identity Question
28 Three passports were in evidence before the RRT. The first was in the name of a person who I will describe by the initials "SMR". This was the passport on which the applicant claimed to have departed from Bangladesh on 30 June 1999. It was issued in Kuala Lumpur on 30 May 1997 at a time when the applicant claimed to have been living in Bangladesh. It showed the passport holder's date of birth as 8 October 1969. That is to say, MSR's date of birth was ten years earlier than the date of birth which appeared on the protection visa application made in the name of MSA.
29 SMR's passport indicated that the holder had travelled from Malaysia on 12 May 1999 arriving in Bangladesh on 13 May 1999. This was at a time when the appellant claimed to have been in jail in Dhaka. It also contained a visa for travel to Thailand issued in Kuala Lumpur in April 1999.
30 The passport in the name of SMR contained a departure stamp showing that the holder had left Bangladesh on 30 June 1999 and an arrival stamp in Kuala Lumpur dated 1 July 1999.
31 The second passport was in the name of a person who I will describe by the initials "SJA". This was the passport on which the appellant claimed to have entered Australia. It is the passport which, according to the statement filed with his protection visa application, the appellant stole from his brother in Malaysia.
32 The passport was issued in New York on 1 February 1999. As with the passport in the name of MSR, this passport was issued at a time when the appellant claimed to have been in jail in Dhaka.
33 The date of birth on the passport in the name of SJA was 2 September 1967. That is to say the date of birth of SJA was 12 years earlier than the date of birth given on the protection visa application.
34 SJA's passport contained visas for travel in Asia and for travel to Australia and New Zealand all of which were issued in early 1999 when the appellant claimed to have been in jail in Dhaka.
35 The passport has an entry stamp showing the arrival at Sydney Airport on 30 July 1999, departure for New Zealand on 1 August 1999 and re-entry to Australia on 5 August 1999.
36 The third passport was in the name of MSA. The RRT stated that it did not have a full copy of this passport. It was issued in Dhaka on 28 July 1997, that is to say, nearly three weeks after the appellant claimed to have been released from prison.
37 The date of birth on the passports in the name of MSA is 5 March 1979 which corresponds with the date on the protection visa application. Although the copy of the passport is not complete, it bears no stamp recording entry to Australia.
38 MSA's passport bears a photo of a person with longer hair than the photos in the passports of SMR and SJA. Moreover, the photo shows a person with a moustache and a beard.
39 The RRT questioned the appellant about the three passports. He was asked about the passport in the name of SMR. He said that the passport was not his but that his relatives provided it for him after he was released from jail ie on 9 June 1999 and at that time his photograph was substituted for that of the original passport holder.
40 The appellant was asked how the photo on SMR's passport was changed and it was put to him that there was no evidence that the photo had been changed.
41 The appellant said in answer to the RRT's questions that the person who, according to the passport, had entered Bangladesh from Malaysia in May 1999 was not him. However, he said that he used the passport to leave Bangladesh after his photo had been substituted in June 1999.
42 The RRT member put it to the appellant that he was inclined to believe the visas were genuine and the photo on SMR's passport had not been changed.
43 The appellant told the RRT member that his true name was MSA and that he was known by the alias IH. He said that MSA was the name on his birth certificate. He said he used the name SMR to depart Bangladesh for Malaysia. He said he entered Australia on his brother's passport in the name SJA.
44 The RRT also asked him about some charge sheets which were said to be issued by the local police showing charges on various offences. At least one of the documents described the accused as a person who I will describe by the initials "MI" whose alias was shown as IH. He was asked why the documents used the name MI.
45 The transcript then records the following:-
"Interpreter: If you do not accept my … then of course you can send it for examination … find out more about it.
[RRT Member]: Question. Do you have any authentic documents that can convince me that you are someone other than this person in the passport?
[Appellant]: I am person, you know. …
[RRT Member]: I see that you parted your hair on a different side. .. Hold your head straight for a moment. Your hair's parted on a different side.
Interpreter: I had long hair at that time so I used to part it on the other side. ….
[RRT Member]: I'm just wondering if …, lower your head a bit – straight on top to us. It's close at least.
……..: No, that ---
[RRT Member]: Is that a real – is this a real moustache.
[Appellant]: Yes.
[RRT Member]: Okay. Sorry I had to ask.
[Appellant]: No, it's okay. …
[RRT Member]: Now, even if I accept that this is your real identity I have great difficulty with all these documents that say you're Imral, son of somebody else.
Interpreter: That was the nickname…
The evidence of the false charges
46 In his statement filed in support of the visa application, the appellant said that false charges had been brought against him. There was evidence apparently before the delegate, and hence before the RRT which had access to the file, of documents which purported to state the charges. The name of the person charged was MSA.
47 There was further evidence put before the RRT, which was not put to the delegate, which purported to establish the conviction. This was the document which described the accused as MI, alias IH. It was dated 3 April 2001.
The RRT's decision
48 The RRT referred to independent country information which described the Bangladesh National Party's accession to power in October 2001. The country information also stated that the JI had secured 17 seats in the new government.
49 The RRT observed that up to the time of the delegate's decision, the appellant's claims were predicated on the expectation that the AL would remain in power. However, the RRT observed that the independent country information showed that the JI was an active partner in the new Bangladesh National Party government and that it was actively exploiting its newfound position of influence.
50 The RRT referred to the passport in the name of SJA on which the appellant entered Australia. The RRT referred to the fact that the passport contained entries recording travel in Asia at a time when the appellant claimed to have been in jail. The RRT stated that the passport showed no signs of tampering and that it contained the appellant's own photo.
51 The RRT then referred to the passport in the name of SMR on which the appellant claimed to have departed from Bangladesh. The RRT observed that it could find no sign of tampering and that the passport had been seen by various officials during the holder's travels who had not detected any fraud.
52 The RRT stated that it had observed the appellant over a number of hours and that he looked much closer to 35 years of age than to the age of 23 recorded on the passport in the name of MSA.
53 The RRT then said that four significant factors called into question the genuineness of the birth certificate. These were that it was issued in 1997, it was in English, it went far outside the matters ordinarily included in such a document and, finally, it was issued by an officer of the Sanitary Inspector.
54 Before making a finding about the birth certificate the RRT dealt with the passport in the name of MSA. The RRT stated that the appellant had difficulty supporting the genuineness of the passport, which was unused, because he had obtained two other passports fraudulently. The RRT stated that the appellant has used those passports for purposes other than fleeing persecution.
55 The RRT then said that none of the documents submitted by the appellant to support his claim to be MSA was reliable. It said the birth certificate was "inherently absurd".
56 In stating its findings the RRT said it had difficulty in coming to a conclusion as to the appellant's identity. It said the stronger evidence was that he was SJA but that his case depended on the RRT accepting he was MSA. The RRT said it found all the documents purporting to establish his identity as MSA to be unreliable.
57 The RRT then said:-
"There is no doubt that the Applicant has obtained and used documentation sufficient to pass him off at different times as three different individuals. The Tribunal does not accept that he quickly obtained a passport belong to [SMR] and made his own through photograph substitution. The evidence does not support any other position than that he has been passing himself off as [SMR] for some time. The evidence in some of the Applicant's passports leads the Tribunal to the conclusion that he used false identities for a level of mobility and for purposes far beyond the mere seeking of protection in Australia in 1999. The Tribunal also concludes that asylum seeking was a mere afterthought on the Applicant's part, given that he came here and went to New Zealand and returned before doing anything about such an important issue."
58 The RRT went on to find that the appellant had not worked with the JI "from the inside" and that he was not a target of AL rivalry. It found that the documents stating the charges were fabricated.
59 The RRT then stated:-
"The Applicant failed to satisfy the Tribunal in any event that the prevailing political situation in Bangladesh would enable the AL to continue purging the ranks of the BNP or the JI. The independent evidence suggests that the JI is taking advantage of its newfound influence to do what the Al was doing to its enemies in the past. However, the Tribunal emphasises that it does not accept that the Applicant was ever a target of the Al."
60 The RRT found that the bulk of the appellant's claims were found to lack credibility and he was an unreliable witness.
The Federal Magistrate's Decision
61 The Federal Magistrate dealt with seven grounds of attack on the RRT's decision put to him by the appellant.
62 The first ground was that the RRT had ignored the appellant's claim to have been attacked by members of the Communist Party. The learned Magistrate dismissed this ground at [11] upon the basis that the RRT had considered all of the integers of the claim. He referred to Paul v Minister (2001) FCR 396 and Htun v Minister (2001) ALR 244. See more recently, Applicant WAEE v Minister for Immigration Multicultural and Indigenous Affairs (2003) 75 ALD 630 (French, Sackville and Hely JJ). The Federal Magistrate described the claim as a fear of persecution for political opinion and association. He observed that it was the appellant who contended that the AL and the Communist Party were linked.
63 The second ground was described as the faked documents issue. The Magistrate dismissed this claim at [13] upon the ground that it was a finding of fact which was open to the RRT.
64 The third ground was that the RRT's finding that the appellant had not worked for the JI from the inside was unsubstantiated. The Magistrate dismissed this at [15] on the basis that the finding was one of fact and that the Court was asked to read the decision in a way which was contrary to the principles stated in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259.
65 The fourth ground was an attack upon a number of findings of credibility which the appellant said led, unjustifiably, to the ultimate finding that he was an unreliable witness. The Magistrate dismissed this ground at [17] because he held that the RRT's findings were made on the basis of all the evidence before it.
66 The fifth ground was that the RRT misunderstood the evidence of the appellant's true identity. However, the Magistrate noted at [19] that the RRT used the evidence about the passports not to dispute the appellant's credibility but to support its finding that he did not have a subjective well-found fear of persecution.
67 Moreover, as the Magistrate stated at [19] if the RRT did make a mistake about the appellant's identity, it was not a mistake which led to jurisdictional error because the RRT considered all the integers of the claim.
68 The sixth ground was the birth certificate error. The Magistrate found at [21] that the RRT failed to accord the appellant natural justice. He said at [21]:-
"It is not a question of the Tribunal having evidence concerning the document which contradicted it and which was not shown to the applicant, rather the decision reveals a set of beliefs concerning the document which a reasonable person would not expect someone in the position of the applicant to suspect the Tribunal held.
…
It may well appear to such a person that the document goes way beyond the competence of what that person's experience of a birth certificate indicates. It may well appear (I think most importantly for this Tribunal) inconceivable that a birth certificate would be issued by a sanitary inspector. But to make those assumptions is to impose occidental norms upon an oriental culture. If the Tribunal thought that it was odd that a sanitary inspector should issue a birth certificate, why could it have not asked the applicant? The Tribunal may not have believed what the applicant responded but at least the applicant would have had an opportunity to persuade the Tribunal away from its view.In this case the applicant has indicated what he would have done if the Tribunal had shown these concerns and not kept them to itself to use as reasons for discounting the document. In this way the applicant has got over those hurdles referred to in Re Minister for Immigration; Ex parte Lam (2003) 77 ALJR 699 that is, he has been able to show what opportunity was lost."
69 The seventh ground was the changed circumstances finding. This was said in some way to be affected by errors of law made by the RRT. However, the Magistrate was of the view that this finding was not affected by jurisdictional error. He said at [25] that the denial of natural justice in relation to the birth certificate could not have affected the RRT's views on the changed circumstances in Bangladesh. He also said at [25]:-
"In addition, to my mind, none of the other issues canvassed by the applicant had any affect on this finding. As that in the end was the determinative factor in the Tribunal's decision I would not be inclined to give review on the basis of this jurisdictional error alone."
The arguments raised on the appeal
70 Some of these were a re-run of the arguments on which the appellant failed before the learned Federal Magistrate. I will deal with each of the arguments under the sub-headings set out below.
The changed circumstances finding
71 Mr Zipser put three submissions to me as to why this finding was affected by jurisdictional error. First, he said that the RRT failed to take into account that there was an existing conviction of life imprisonment and the RRT failed to consider what might happen to the appellant if he returns to Bangladesh.
72 Second, he submitted that even though the AL is no longer in power, this does not answer the appellant's claim that he fears persecution from the Communist Party.
73 Third, he submitted that the RRT had improperly placed an onus of proof on the appellant, that it adopted a balance of probabilities test and that it gave no consideration to whether there was a real chance the appellant would be persecuted.
74 Mr Zipser's first proposition, namely that the RRT failed to consider the impact of the existing conviction seems to me to run headlong into the finding that the appellant had fabricated the documents which purported to record his charges and convictions.
75 In any event, Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [68] – [69] (per McHugh, Gummow and Hayne JJ) is authority for the proposition that the RRT is not obliged to set out its findings on every piece of evidence. It is true that failure to make a finding on a material question of fact may reveal jurisdictional error. But here, the RRT plainly considered and rejected the appellant's claimed fear of persecution on the ground, inter alia, of the new political situation in Bangladesh. There was no jurisdictional error in this approach.
76 Mr Zipser's second proposition that the RRT failed to consider the appellant's claimed fear from the Communist Party cannot be sustained. As the learned Magistrate observed, the appellant's own evidence was that the Communist Party was linked with the AL.
77 The finding that the AL is no longer in a position to persecute its opponents leaves no room for an argument that the RRT should have dealt separately with the question of whether its former ally, the Communist Party, might persecute the appellant.
78 In my opinion, Mr Zipser's third proposition that the RRT placed an onus of proof on the appellant is not correct. It is true that an applicant does not carry an onus but he or she must put before the RRT material relied upon to support the claim; see Abebe v Commonwealth of Australia (1999) 197 CLR 510 at [187] per Gummow and Hayne JJ.
79 The RRT's finding that the appellant "failed to satisfy" it that the changed circumstances in Bangladesh would enable the AL to continue to persecute its opponents was consistent with this principle. To read the RRT's reasons in any other way would be to take an over-zealous approach.
80 Nor can it be said that the RRT ignored the rule that a well-founded fear is established if there is a real chance of persecution for a Convention ground; see Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 572-573; Kalala v Minister for Immigration and Multicultural Affairs (2001) 114 FCR 212 at [4] – [7]. Here, the RRT was of the view that there was no real chance.
81 Moreover, contrary to the appellant's submissions, there is no room for the application of the "what if I am wrong" test; see Minister for Immigration and Multicultural Affairs v Rajalingam (1999) 93 FCR 220 at [60] – [64] (per Sackville J); see also Kalala at [16] – [17]. Here, the RRT was in no doubt about its finding.
82 It follows in my view that the Federal Magistrate was correct in holding that the changed circumstances finding was not affected by jurisdictional error. He was also correct in his view that the changed circumstances finding was the determinative factor in the RRT's decision. This is sufficient to dispose of the appeal.
The Identity Error
83 Mr Zipser submitted that the RRT had misunderstood the evidence in relation to the appellant's identity. He pointed in particular to the finding that the "strongest evidence" supported the view that the appellant was SJA.
84 That finding may well be an error. But even if it is, the error is not to the point because the RRT said the appellant's case depended on acceptance of the fact that the appellant was MSA. As to this, the RRT found that the documentation which consisted of two other passports obtained by the appellant, on his own case, by fraudulent means, and a third passport which contained details that have no resemblance to the person who appeared before the RRT, was "highly unreliable".
85 In any event, as the Federal Magistrate observed, the RRT relied upon the evidence about the passports not to dispute the appellant's identity but to support a finding that he had used the passports in a way which was inconsistent with his claim to have a well-founded fear of persecution.
86 Mr J D Smith, counsel for the Minister, relied on the relevant passage in the RRT's decision to make good that point. I accept his submission and will deal with it further below.
87 I do not accept Mr Zipser's submission that the RRT made unwarranted assumptions about the passports which caused it to disregard the evidence thereby constituting a failure to consider the material before it; cf WAGO of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 194 ALR 676 at [54] (per Lee ad R D Nicholson JJ). Here it is plain that the RRT considered all of the evidence as to the different identities used by the appellant. In short, no jurisdictional error is disclosed.
88 Mr Zipser submitted that the RRT's finding that the documents relating to the appellant's criminal charges were fabricated was tainted by want of procedural fairness. He submitted that the RRT was bound to put its concerns about the documents to the witness. He relied on the decision of a Full Court (Lee, Hill and Carr JJ) in WACO v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 171.
89 In that case their Honours referred at [42] to the remarks of Callinan J in Abebe at [295] that an administrative tribunal undertakes an investigative function and is not obliged to put, as in an adversarial proceeding, each and every assertion of unreliability. However, their Honours said at [42] that a tribunal will have a duty to raise with an applicant the critical issues on which his or her application will depend.
90 Their Honours also said at [54]:
"Where the finding of fact made does not turn upon the credibility of the appellant and where there is nothing on the face of the documents themselves to alert the decision maker that they are forgeries it is likewise inherently unfair that the decision maker conclude that they are not genuine without affording the person affected by that conclusion the opportunity of dealing with it."
91 Here the appellant's own evidence was that he used false passports in false names to travel to Malaysia and to Australia and New Zealand. The references which I have given to the RRT's questions about the applicant's identity (see at [39] to [45]) could have left him in no doubt that this critical issue was raised with him.
92 In my opinion, the RRT having put the issue of identity fairly to the appellant, it was not bound to put to him the falsity of each and every document purporting to contain the charges and convictions. Those documents were purportedly addressed to MSA. There can be no doubt that the appellant was aware that his claim to be MSA was in issue. He can hardly be taken by surprise that the RRT found that he used false identities or that he fabricated documents relating to the criminal charges "as easily as he accumulated passports".
The "Communist Party" Error
93 Mr Zipser submitted that the RRT failed to deal with the appellant's claim that he had been the target of attacks by the Communist Party.
94 However, in view of what I said at [76] - [77], this issue does not arise.
The JI Error
95 Mr Zipser submitted that the RRT fell into jurisdictional error in coming to the view that the appellant was not a JI insider. This is an invitation to revisit the merits which must be rejected.
The Credibility Finding
96 Mr Zipser submitted that this finding was tainted by jurisdictional error because it depended on a number of intermediate factual findings all of which were themselves tenuous. Six intermediate findings were put forward. They included the finding that the appellant was not who he claimed to be and the finding about the fake birth certificate. He relied on the remarks of a Full Court in W148/00A v Minister for Immigration and Multicultural Affairs (2001) 185 ALR 703 at [19] (per Lee J) and at [68] per Tamberlin and R D Nicholson JJ.
97 Whether or not these submissions are an invitation to revisit the merits, it seems to me to be plain that the finding that the appellant was not MSA was not tenuous. He had travelled extensively using passports in other names. The RRT considered upon the basis of its personal observations of him that he was not the person whose photo and details appeared in MSA's passport. The suggestion that it was not open to the RRT to find that he was not MSA cannot be sustained.
The Birth Certificate Question
98 The Federal Magistrate found that the RRT had denied the appellant natural justice because its rejection of the birth certificate revealed beliefs which a reasonable person would not expect the RRT to hold.
99 However, it is well established that a decision maker is not obliged to expose his or her reasoning process for comment by the person affected; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicant S 154/2002 (2003) 77 ALJR 1909 at [54] per Gummow and Heydon JJ) and at [85] – [86] per Kirby J; see also Pilbara Aboriginal Land Council v Minister for Immigration and Multicultural and Indigenous Affairs (2000) 103 FCR 539 at [61] – [70] (per Merkel J); Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1993) 49 FCR 576 at 591 ("Alphaone") (per Northrop, Miles and French JJ).
100 The overriding consideration is that the decision maker must bring to an applicant's attention the critical factor on which the decision is likely to turn; Kioa v West (1985) 159 CLR 550 at 587 ("Kioa v West"); see also Pilbara Land Council at 557 and Alphaone at 591.
101 Also, the person affected is entitled to respond to an adverse conclusion drawn by a decision maker on material supplied by the person affected where the conclusion is not an obvious and natural evaluation of the material; Applicant S154 at [86]; Alphaone at 591; cf WACO at [54]. He or she should also be given an opportunity to respond where information personal to the applicant is obtained from another source and is likely to have an effect on the outcome; see Kioa v West at 587.
102 Subject to these considerations it is for the decision maker to decide whether to accept the material and the person affected cannot complain if it is not; Abebe at [187], Alphaone at 591.
103 Here, the appellant put forward the birth certificate. His attention was well and truly directed to the critical factor in the application that his identity was in issue. The RRT did this in its questions about the appellant's passports to which I have referred at [39] to [45] above. It is true that the RRT did not specifically advert to the birth certificate but it was unnecessary to do so because this was just another document which went to the appellant's identity.
104 The four factors on which the RRT relied to make its finding that the birth certificate was fabricated constituted the reasons for rejecting the document. I respectfully disagree with the learned Federal Magistrate's view that the RRT was required to put these factors to the appellant. To do so, it seems to me, would be to require it to put its own evaluation and reasoning to the appellant contrary to the authorities which I have stated.
105 The conclusion that the birth certificate is in the name of MSA was fabricated was an obvious and natural evaluation of the document in light of the content of the document and the other evidence about the appellant's identity. The observations of the Full Court in WACO do not lead to a contrary view.
106 It follows in my opinion that the Minister's notice of contention directed to this issue must be upheld.
107 Accordingly, it is not necessary to consider the appellant's submission that the Magistrate erred in finding that the denial of natural justice could not have produced a different result.
The Minister's submission as to the proper approach to the RRT's decision
108 Mr Smith submitted that it was unnecessary to consider the appellant's detailed criticisms of the decision because three findings of fact were made which disposed entirely of the claim.
109 The first was the finding that the appellant had used identities, which on his own case were false, to travel internationally for purposes other than to seek protection in Australia. I have set out the relevant passage from the RRT's decision at [57] above.
110 Mr Smith submitted that this was a finding that the appellant did not have a genuine fear of persecution. In my view, this submission is correct. Accordingly, this finding was sufficient to dispose of the application; Minister for Immigration and Ethnic Affairs v Guo.
111 The second finding on which Mr Smith relied was that the appellant sought asylum as "a mere afterthought" given that he travelled from Australia to New Zealand before making application for a protection visa. I have set out the passage at [57].
112 It is true that the delay between arrival in Australia on 30 July 1999 and the lodgement of the protection visa application on 15 September 1999 was only about six weeks. Nevertheless, in my opinion, the finding that asylum seeking was an afterthought was a further finding that the appellant did not have a subjective fear of persecution. It seems to me that this finding was open to the RRT.
113 The third finding on which Mr Smith relied was that the RRT was not satisfied that the appellant was a JI insider. This too was open as a finding of fact. Moreover, it overcame the necessity of the RRT to deal with the claimed fear of persecution at the hands of the Communist Party. It was a finding that he did not have a political profile. This made it unnecessary to deal with the specific claim that the appellant feared persecution on political grounds at the hands of the Communist Party; see Yusuf at [68] – [69].
Orders
114 It follows that I will order that the appeal be dismissed with costs.
I certify that the preceding one hundred and fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson
Associate:
Date: 2 March 2004
Counsel for the Applicant: B Zipser
Counsel for the Respondent: J Smith
Solicitor for the Respondent: Sparke Helmore
Date of Hearing: 18 February 2004
Date of Judgment: 2 March 2004
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Repatriation Commission v Knight [2012] FCAFC 83
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FEDERAL COURT OF AUSTRALIA
Repatriation Commission v Knight [2012] FCAFC 83
Citation: Repatriation Commission v Knight [2012] FCAFC 83
Appeal from: Knight v Repatriation Commission [2011] AATA 496
Parties: REPATRIATION COMMISSION v JACQUELINE KNIGHT
File number: NSD 1359 of 2011
Judges: FINN, GILMOUR & PERRAM JJ
Date of judgment: 6 June 2012
Catchwords: DEFENCE AND WAR – Veterans' entitlements – widow's pension claim – death of veteran from myocardial infarction following exposure to tobacco smoke in the Navy – application of Statement of Principles concerning Ischaemic Heart Disease (No 89 of 2007) to determine whether death was 'war-caused' – whether Tribunal considered connexion between service and death – whether Tribunal should instead have considered connexion between service and smoke exposure – whether Tribunal erroneously imposed a burden of proof – whether the last exposure to tobacco smoke during operational service must be within five years of the clinical onset of ischaemic heart disease in order for cl 6(i) of the Statement of Principles to be satisfied
ADMINISTRATIVE LAW – Administrative Appeals Tribunal – whether Tribunal took irrelevant considerations into account – whether Tribunal failed to make necessary findings – whether Tribunal failed to give reasons – whether the Court, having detected error in the reasoning of the Tribunal, may nonetheless dismiss the appeal on the basis that, despite the error, the Tribunal's decision was plainly correct
Legislation: Veterans' Entitlements Act 1986 (Cth) ss 13(1)(a), 41(1), 120, 120A, 196B(14)
Statement of Principles Concerning Ischaemic Heart Disease (No 89 of 2007) cll 5, 6(i)
Cases cited: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 cited
Hill v Repatriation Commission (2005) 218 ALR 251; [2005] FCAFC 23 followed
Knight v Repatriation Commission (2010) 52 AAR 547; [2010] FCA 1134 affirmed
Minister for Immigration and Ethnic Affairs v Wu Shang Liang (1996) 185 CLR 259 cited
Date of hearing: 17 February 2012
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 48
Counsel for the Applicant: RM Henderson
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the Respondent: M Vincent
Solicitor for the Respondent: Kemp & Co Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1359 of 2011
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: REPATRIATION COMMISSION
Applicant
AND: JACQUELINE KNIGHT
Respondent
JUDGES: FINN, GILMOUR & PERRAM JJ
DATE OF ORDER: 6 JUNE 2012
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the respondent's costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1359 of 2011
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: REPATRIATION COMMISSION
Applicant
AND: JACQUELINE KNIGHT
Respondent
JUDGES: FINN, GILMOUR & PERRAM JJ
DATE: 6 JUNE 2012
PLACE: SYDNEY
REASONS FOR JUDGMENT
The Court:
1 In this case the Administrative Appeals Tribunal decided that the respondent, Mrs Knight, should be granted a widow's pension because the death of her husband, Mr Knight, had been war-caused: Knight v Repatriation Commission [2011] AATA 496. The Repatriation Commission appeals to this Court from that determination.
2 Mr Knight died on 9 July 1998 then aged 51 from a myocardial infarction. The Tribunal below found that during operational service in the Royal Australian Navy in the Far East and Vietnam during 1964-1968 and thereafter during eligible defence service between 1972-1974 (also in the Navy), Mr Knight had served in enclosed spaces where he was exposed to visible environmental tobacco smoke. The Tribunal accepted the evidence of Commodore AHR Brecht (Retired) who estimated that during his operational service Mr Knight had been exposed to 1,112 hours of environmental tobacco smoke and a further 6,358 hours of exposure during other service on ships (part of which was eligible service). Mr Knight was at all times a non-smoker. The case, in short, was one of passive smoking.
3 Mr Knight had finished the relevant periods of service in 1974. In the period between that time and his death in 1998 he had continued, in various ways, to be exposed to environmental tobacco smoke. The Tribunal found, on the basis of the expert opinion of Dr Butler, that there had been a likely clinical onset of ischaemic heart disease in 1996 which was – and this should be emphasised for reasons which will become apparent later – within five years of his death in 1998.
4 The Tribunal was required to accede to Mrs Knight's application for a widow's pension if Mr Knight's death 'was war-caused': s 13(1)(a), Veterans' Entitlements Act 1986 (Cth) ('the Act'). By s 120(1) the Tribunal was required to conclude that Mr Knight's death was war-caused unless it was 'satisfied, beyond reasonable doubt, that there [was] no sufficient ground for making that determination'. Section 120(3) prescribed the circumstances in which the Tribunal could be satisfied beyond reasonable doubt that there was no sufficient ground for such a conclusion. These were that the Tribunal was of the opinion, after a consideration of all of the material before it, that that material did 'not raise a reasonable hypothesis connecting the…death with the circumstances of the particular service rendered by the person'. Which hypotheses of connexion are reasonable and which are not is precisely prescribed by s 120A(3) which provides that a hypothesis is reasonable if there is in force a delegated instrument known as a 'Statement of Principles' that 'upholds' the hypothesis.
5 The Act therefore required the Tribunal to ask whether the material before it raised a reasonable hypothesis connecting the veteran's service to his death and to answer that question by locating such a hypothesis, if possible, within a Statement of Principles which upheld it. Consistently with the meaning of the word 'hypothesis' this inquiry was not to involve the Tribunal in fact-finding about the material before it. Instead, the Tribunal was simply to examine that material to see if such a hypothesis might reasonably be drawn from it.
6 Mrs Knight's case was that the material before the Tribunal gave rise to a reasonable hypothesis connecting Mr Knight's death from ischaemic heart disease to his service and that such a hypothesis was supported by the 'Statement of Principles concerning Ischaemic Heart Disease' No 89 of 2007. The requirements of the Statement of Principles were twofold. First, cl 6 contained a list of many factors which were accepted by the Statement as being causes of ischaemic heart disease. One of these factors was (cl 6(i)):
being in an atmosphere with a visible tobacco smoke haze in an enclosed space for at least 1000 hours before the clinical onset of ischaemic heart disease, where the last exposure to that atmosphere did not occur more than five years before the clinical onset of ischaemic heart disease
In the interests of economy and clarity, we shall refer to this factor as 'exposure to tobacco smoke'.
7 Secondly, the mere occurrence of a factor was not sufficient. Clause 5 also required that the factor be related to the veteran's service ('Subject to clause 7, at least one of the factors set out in clause 6 must be related to the relevant service'). The concept of being 'related to service' was dealt with in s 196B(14) of the Act which provided that a factor contributing to death would be 'related to service' if, inter alia, 'it was contributed to in a material degree by, or was aggravated by, that service': s 196B(14)(d).
8 There were therefore two discrete issues at play when the Tribunal came to consider whether there was a reasonable hypothesis. The first was the determination of whether the material before the Tribunal pointed to the factor relied upon (i.e. exposure to tobacco smoke: cl 6(i)). The second was to ask whether the material also pointed to that factor having been contributed to in a material degree, or aggravated by, the veteran's service (that is, the question posed by cl 5 of the Statement and s 196B(14)(d)).
9 The Tribunal determined the first question favourably to Mrs Knight and expressed itself this way at [29]:
In the Tribunal's view, the facts raised by the Applicant point to Mr Knight being in an atmosphere with a visible tobacco smoke haze in an enclosed space for more than 1,000 hours during his operational service.
10 Given the evidence of Commodore Brecht this conclusion was unsurprising and, indeed, was not in dispute before the Tribunal. As to the second question the Tribunal reasoned this way at [38]:
However, with regard to s 196B(14)(d), in the Tribunal's view the facts raised do point to Mr Knight's operational service contributing in a material degree to his death as a result of ischaemic heart disease, noting, in particular, that he more than meets the threshold required by factor 6(i) of "being in an atmosphere with a visible tobacco smoke haze in an enclosed space for at least 1000 hours before the clinical onset of ischaemic heart disease". The Tribunal also notes that Mr Knight's exposure to visible tobacco smoke haze while on board ship was likely to have been for close to 24 hours a day, rather than for the working day during his employment in the Department of Defence or, while he was working as a bricklayer, usually for shorter intense periods undertaking interior work or meeting with others at the pub.
(Emphasis in original.)
11 The Repatriation Commission's appeal challenges this conclusion. The practical reasons why it might chose to do so are perhaps tolerably clear. Mr Knight's exposure by the Navy to tobacco smoke ended no later than 1974. The evidence before the Tribunal rather suggested that his subsequent history of employment had also placed him in smokey environments (as was very common in this country into the 1980's) and, viewed from this perspective, it is not difficult to understand the Repatriation Commission's concern that the role played by Mr Knight's service in the development of his ischaemic heart disease might not have been the dominant one.
12 That issue, however, is not one this Court is called upon to resolve. Instead the questions to be resolved are the Repatriation Commission's challenges to the lawfulness of the Tribunal's reasoning at [38] above. There were five such challenges. An unnotified sixth matter was pursued at the hearing.
First issue: erroneous consideration of connexion between service and death
13 The first challenge took issue with the first sentence of [38] (set out above at [10]). There is no doubt, as the Repatriation Commission correctly observed, that this sentence literally suggests that the Tribunal asked itself whether Mr Knight's service materially contributed to ischaemic heart disease. Nor is it to be doubted that this is not the inquiry required by s 196B(14)(d) which seeks to discern a connexion not between the service and the veteran's disease or death but instead between the service and the factor (here exposure to tobacco smoke). The Court has already held, in this very case, that it is an error to inquire into whether there is a connexion between service and death and that the statutory inquiry is whether there is a connexion between service and the posited factor: Knight v Repatriation Commission (2010) 52 AAR 547; [2010] FCA 1134 at [47] per Katzmann J. As Katzmann J explained in the earlier decision the difference can be critical. In this case it is the difference between asking (incorrectly) whether Mr Knight's service in the Navy contributed to his death and asking (correctly) whether his service in the Navy contributed to his exposure to tobacco smoke.
14 In our opinion, however, whilst it is true that the Tribunal did err in law in approaching the matter in this way this error is not material to the outcome of the case. For the reasons which follow, the Tribunal's factual finding that the veteran had been exposed to tobacco smoke during operational service determined the matter inevitably in Mrs Knight's favour.
15 The inquiry demanded by s 196B(14)(d) in relation to material contribution &c. is significantly different to the usual questions of that kind which arise in ordinary personal injury litigation. In most personal injury litigation contexts the question of material contribution will arise in a domain where what is sought to be discerned is some species of causative connexion between an ailment (which the claimant alleges he or she has) and an event or situation for which the claimant seeks compensation. A typical example of this kind of situation was afforded by the former s 4(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) which defined a 'disease' as an ailment 'that was contributed to in a material degree by the employee's employment by the Commonwealth'.
16 Section 196B(14) is quite different because its focus is on the connexion between the employment (that is, in this context the veteran's service) and the 'factor' specified in the relevant Statement. On occasions, this can generate confusion. That confusion can arise because of the conceptually malleable nature of a 'factor', its intermediate role in the elaborate apparatus of s 196B and because the ultimate causal questions posed by s 196B(14) do not seek to determine whether the operational service caused the death or disease. In many ways, this is a counterintuitive posture for the Act to adopt but it is an inevitable consequence of seeking to specify in advance, through the system of statements of principles, the outcome of various – often controversial – medical issues of causation. To give perhaps a simplistic example, if the relevant Statement specifies that exposure to Agent Orange is accepted to cause cancer then the issue is not, as it might be in ordinary personal injury litigation, whether the employment caused cancer, but rather whether the employment (i.e. service) caused exposure to Agent Orange. It is these intermediate events which are the 'factors' upon which the Act operates. It does so not only by way of specification though a Statement but also by way of causal inquiry under s 196B(14). By adopting that approach, complex as it is, the Act ensures that these at times controversial causation questions are determined in the same way in every case and without the need for the summoning of expert evidence on the issue in each hearing before the Tribunal.
17 Despite the centrality of the concept of a 'factor' to the operation of these provisions the Act does not define what a factor might be. It is true that by s 196B(2) a Statement of Principles is to set out 'the factors that must as a minimum exist' and also 'which of those factors must be related to service rendered by [the] person' but this does not take the matter very far.
18 Here then is the problem: the breadth of these requirements is such that a 'factor' may embrace not only a medical or psychological condition but may also include physical surroundings. The effect of that potential difference in the nature of factors redounds significantly when the inquiry is into whether the factor is related to service under s 196B(14). The present Statement shows this with some clarity. Some of the factors it specifies are diseases in themselves whilst others are situations or environments, such as exposure to tobacco smoke. On the disease front, cl 6(c) specifies as a factor 'being obese for at least five years before the clinical onset of ischaemic heart disease'. The Statement accepts the soundness of the posited link between obesity and ischaemic heart disease but what it requires (through cl 5) is that the obesity be connected to service. Put simply, did service contribute to obesity?
19 Where the factor specified is itself not a disease but a situation, a less subtle inquiry is called for. In this case the factor was exposure to tobacco smoke. The question raised by s 196B(14)(d) (through cl 5) becomes, in that context, whether the service contributed to the exposure to tobacco smoke.
20 The Tribunal's conclusion that Mr Knight's death was materially contributed to by his service is an example of the precise trap thrown up by s 196B(14)(d). The error was, in all likelihood, exacerbated by the Repatriation Commission's attempt in the Tribunal to define the expression 'contributed to in a material degree'. This was done by reference to a decision concerned with the definition of 'disease' in s 4(1) of the former Safety, Rehabilitation and Compensation Act which, as noted above, required a causal link between ailment and employment, and not, as in this Act, between factor and service. At [33] the Tribunal said this:
However, the principal basis on which [Mrs Knight] contends there is a connection to service is s 196B(14)(d). Miss Henderson noted that the words 'contributed to in a material degree' have not been defined in the context of the Act. However, in relation to the use of similar words in s 4(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth), she noted that in Comcare v Sahu-Khan (2007) 156 FCR 536, at 543, Finn J said that:
…
(i) "in a material degree" requires an evaluation of all relevant contributing factors for the purpose of asking whether the employee's employment did or did not contribute materially to the suffering of the ailment, etc, in question ("the threshold evaluation");
(ii) whether this will be so in a given case will be a matter of fact and degree.
(Emphasis added.)
21 It is not difficult to see, in the light of the emphasised words, how the Tribunal ended up seeking a link between service and disease rather than service and the relevant factor.
22 However, the demonstration that the Tribunal committed this error cannot assist the Repatriation Commission. The Tribunal found as fact that Mr Knight had been exposed to the requisite amount of tobacco smoke during his operational service. To the correct question of whether his operational service materially contributed to that exposure there could be only one answer in light of that finding and this was that it had.
23 In that circumstance, whilst accepting that the Tribunal did make an error, it could not be material in light of its factual findings. The Statement accepts that there is a link between ischaemic heart disease and being exposed to tobacco smoke. The Tribunal found that Mr Knight had been so exposed during his operational service. In effect, that was the end of the matter. In that circumstance, there would be no utility in remitting the matter to the Tribunal where the result would have to be the same: Hill v Repatriation Commission (2005) 218 ALR 251 at 267 [83]; [2005] FCAFC 23 at [83] per Wilcox, French and Weinberg JJ. Subject to the Repatriation Commission's remaining arguments, on the material before it the Tribunal's decision was plainly correct despite this error.
Second issue: irrelevant considerations
24 The Commission's second argument was that the Tribunal had taken into account an irrelevant consideration. This was its statement at [38] (set out above) that Mr Knight had been exposed to tobacco smoke for 'close to 24 hours a day'. We agree that this was not a relevant matter. The only issue for it was whether the material pointed to the veteran having been exposed to 1,000 hours or more of environmental tobacco smoke (which it did) and whether his service contributed to this. The quantum of the daily exposure was not relevant. Again, however, this makes no difference. The Tribunal's finding of fact that there had been 1,112 hours of exposure during operational service meant that the s 196B(14)(d) question could be answered only one way.
Third issue: findings on clause 6(i)
25 The third error relied upon by the Commission is that the Tribunal failed to make any findings relating to the second part of clause 6(i) (that is, the further requirement that 'the last exposure to [an atmosphere with a visible tobacco smoke haze] did not occur more than five years before the clinical onset of ischaemic heart disease'). We accept that the Tribunal did not expressly consider this issue in its discussion at [38] (set out above at [10]). However, the full context of the Tribunal's reasons shows that the Tribunal was well-aware of the need for the last exposure to occur within five years of 1996 when it concluded Mr Knight's ischaemic heart disease had its clinical onset. The reasons for this are four. First, the Tribunal expressly considered the issue of when the clinical onset took place and, at [13], accepted the evidence of Dr Butler that it had occurred in 1996. Secondly, it was plainly aware that this conclusion meant that it had to consider the issue of last exposure in the five years preceding 1996. So much flows from [28]:
Of particular importance in this case is whether the material before the Tribunal points to the factor(s) that must as a minimum exist to support the hypothesis being related to the person's service in accordance with s 196B(14). In this case, the relevant factor is factor (i) being in an atmosphere with a visible tobacco smoke haze in an enclosed space for at least 1,000 hours where, relevantly, the last exposure to that atmosphere occurred in the period 1991 to 1996.
26 Thirdly, the Tribunal recorded the Commission's explicit submission on this issue at [40]:
[Counsel for the Commission] noted that factor 6(i) gives particular emphasis to the last exposure to an atmosphere of visible tobacco smoke haze occurring within 5 years of the clinical onset of ischaemic heart disease.
27 Fourthly, in response to that submission the Tribunal plainly examined this issue. At [41] it said this:
The Tribunal is not satisfied that the Commission has disproved beyond reasonable doubt any of the facts raised in order to support the hypothesis. While it is certainly true that some 28 years passed between Mr Knight's operational service, which ended in 1968, and the clinical onset of his ischaemic heart disease in 1996, including, in particular, exposure to visible tobacco smoke haze over a long period while Mr Knight was working in the Department of Defence, the way in which factor 6(i) is to operate means this is not a barrier to liability under the Act. The Tribunal therefore concludes that Mr Knight's death was war-caused and the Commission is liable to pay a widow's pension to the Applicant pursuant to s 13(1) of the Act.
28 That statement needs to be read in the context of the evidence of the veteran's son and wife that the veteran had been continually exposed to environmental tobacco smoke throughout his life ([17]-[22]) and also the Tribunal's finding at [34]:
Mr Vincent contended that Mr Knight's death was contributed to in a material degree by being in an atmosphere with a visible tobacco smoke haze in an enclosed space for more than 1,000 hours during his operational service. Despite Mr Knight's healthy lifestyle, he has a long history of exposure to tobacco smoke which is effectively an unbroken continuum and a significant cumulative process. Miss Henderson submitted that it is implicit that the effect of exposure to tobacco smoke dissipates over time and, in this instance, Mr Knight's operational service should not be found to have made a material contribution to his death from ischaemic heart disease.
29 In those circumstances, the Repatriation Commission's submission in this Court that the Tribunal made no finding about this matter is simply not correct.
30 As a variant of this argument the Commission also submitted that the Tribunal had failed to give reasons for the same finding. We reject this argument too. The Tribunal not only found that the veteran had been exposed to environmental tobacco smoke within five years of the clinical onset of his ischaemic heart disease in 1996 but also, on a fair reading of its reasons, that it did so because it accepted the evidence of his wife and son about his lifelong exposure to environmental tobacco smoke.
Fourth issue: failure to give reasons
31 Next the Commission submitted that the Tribunal had failed to give any reasons for its conclusion that 'in Mr Knight's case, the SoP factor was "contributed to in a material degree by, or was aggravated by [operational] service"'. This, of course, was not the Tribunal's conclusion for, as the Commission correctly submitted in relation to its first argument, the Tribunal erroneously found a connexion between his service and his death when it should have inquired into the link between his service and his exposure to tobacco smoke.
32 There is, however, no utility in considering whether the Tribunal exacerbated that error by failing to give adequate reasons for its erroneous conclusion.
33 Had it asked itself the correct question – whether the veteran's service had contributed to a material degree to his exposure to tobacco smoke – its finding of fact that he had been exposed to 1,112 hours of such exposure during operational service would (as we have already observed) have permitted of only one answer. Consequently, regardless of the Tribunal's final process of reasoning the conclusion was inevitable.
Fifth issue: erroneous imposition of onus of proof
34 Paragraph [41] is set out above at [27]. The Commission submits that the first sentence shows that the Tribunal conceived that the Commission bore an onus of proof. It pointed to s 120(6) which provides relevantly that nothing in the Act shall be taken to impose upon the applicant for a pension or the Commission 'any onus of proving any matter that is, or might be, relevant to the determination of the claim or application'. Instead, the Tribunal was to determine that Mr Knight's death was war-caused 'unless it [was] satisfied, beyond reasonable doubt, that there [was] no sufficient ground for making that determination': s 120(1).
35 However, in at least two other parts of its reasons the Tribunal indicated that the relevant issue was whether it was so satisfied thereby correctly avoiding any notion involving a burden of proof. So at [15] the Tribunal recorded:
If there is such a reasonable hypothesis, the Tribunal must then (at step four of Deledio) consider, pursuant to s 120(1) of the Act, whether it is satisfied beyond reasonable doubt that "there is no sufficient ground" for making a determination that Mr Knight's death was war-caused.
36 And at [40] it said this:
Having formed the opinion that the hypothesis raised is a reasonable one, the Tribunal must then (at step four of Deledio) consider, pursuant to s 120(1) of the Act, whether it is satisfied beyond reasonable doubt that "there is no sufficient ground" for making a determination that Mr Knight's death was war-caused. Mr Vincent contended that there is no medical evidence discounting Mr Knight's operational service as a cause of his ischaemic heart disease. Miss Henderson submitted that the Tribunal should be satisfied beyond reasonable doubt in these terms because of the long period of time between the end of Mr Knight's operational service in November 1968 and the clinical onset of his ischaemic heart disease in 1996. She noted that factor 6(i) gives particular emphasis to the last exposure to an atmosphere of visible tobacco smoke haze occurring within 5 years of the clinical onset of ischaemic heart disease.
37 We do not think when the Tribunal's reasons are considered as a whole that this error was, in fact, made. In that regard it is important, particularly with a statute of the present complexity, to keep in mind the need to avoid reading the Tribunal's reasons with an eye attuned to the detection of error: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 per Neaves, French and Cooper JJ; Minister for Immigration and Ethnic Affairs v Wu Shang Liang (1996) 185 CLR 259 at 271-272 per Brennan CJ, Toohey, McHugh and Gummow JJ and 291 per Kirby J.
38 The facts undisputedly were that the veteran had been exposed to more than 1,000 hours of tobacco smoke. As the Tribunal put it (at [23]):
The Commission accepts that during his operational service and eligible defence service Mr Knight served in enclosed spaces where he was exposed to visible environmental tobacco smoke. The Commission also accepts the evidence of Commodore AHR Brecht (Retired) who, on 4 April 2008, estimated that Mr Knight had been exposed to a total exposure of 1,112 hours of environmental tobacco smoke during operational service and a further 6,358 hours exposure during other service on ships (part of which was eligible defence service) and 4,224 hours in shore establishments.
39 Given that fact, there was only one possible outcome of this issue, namely, that the Tribunal was satisfied of this undisputed fact.
Sixth issue: the second limb of cl 6(i)
40 The text of cl 6(i) is set out above at [6]. When Mrs Knight's application for a pension was rejected on the first occasion by the Tribunal it concluded that the second limb of cl 6(i) meant that Mr Knight had to suffer a clinical onset of ischaemic heart disease within five years of his last exposure to an atmosphere of visible tobacco smoke haze during operational service. Since his last exposure to such tobacco haze during operational service had been in 1974 and since he suffered a clinical onset of ischaemic heart disease in 1996 this led the Tribunal to conclude that Mr Knight's situation did not fall within cl 6(i): Knight v Repatriation Commission [2009] AATA 929. On appeal Katzmann J concluded that this was not the proper construction of the second limb of cl 6(i) and that all that was required was that the requisite exposure to visible tobacco smoke haze take place within five years of the clinical onset of ischaemic heart disease regardless of whether that exposure took place during operational service or not. Her Honour reasoned this way (Knight v Repatriation Commission (2010) 52 AAR 547; [2010] FCA 1134 at [58]-[59]):
58 Clause 6 is concerned with the aetiology of ischaemic heart disease, not its relationship to service. I accept the argument put by Mr Vincent, counsel for Mrs Knight, that the purpose of the qualification in the last clause of factor 6(i) was to incorporate a medical requirement for attribution of ischaemic heart disease to passive smoking, namely, the existence of a latency period of no more than five years from last exposure. But an applicant does not fit into the template of the SoP unless, in addition to meeting one of the factors in clause 6, at least one of the factors is related to operational service. That is what clause 5 provides. The SoP does not, therefore, "set out factors that connect ischaemic heart disease with relevant service". Rather, it sets out factors that the Repatriation Medical Authority recognises as potential causes of ischaemic heart disease. In other words, it sets out factors that can be connected with service. Whether or not a factor is connected with the relevant service is answered by applying s 196B(14) of the Act.
59 That conclusion is reinforced by an examination of other parts of clause 6 – other factors listed in the clause (of which there are 45 in total). For example, amongst the factors in clause 6 are:
(f) having dyslipidaemia [persistently abnormal lipid profile] before the clinical onset of ischaemic heart disease; or
…
(p) undergoing a course of therapeutic radiation involving the mediastinum or the chest wall region overlying the heart, before the clinical onset of ischaemic heart disease; or
(q) using a combined oral contraceptive pill for at least the 21 days before the clinical onset of ischaemic heart disease…
…
(s) using amphetamines or amphetamine-like compounds, within the 24 hours before the clinical onset of ischaemic heart disease;
(Emphasis in original.)
41 That matter was the subject of a question of law which was explicitly posed by Mrs Knight's notice of appeal before Katzmann J. This was Question Two in the appeal and it was as follows:
Does the meaning of:
'being in an atmosphere with a visible tobacco smoke haze in an enclosed space for at least 1,000 hours before the clinical onset of ischaemic heart disease, where the last exposure to that atmosphere did not occur more than five years before the clinical onset of ischaemic heart disease:
as those words appear in factor 6(i) of the Statement of Principles No 89 of 2007 concerning Ischaemic Heart Disease made under section 196B of the Act, require that that part of the exposure to visible tobacco smoke haze in an enclosed space which occurs within 5 years of the clinical onset of ischaemic heart disease, itself needs to be exposure which is connected to service rendered by a veteran.
42 Katzmann J answered this question 'No'. The Commission did not thereafter seek to appeal from her Honour's conclusions.
43 In her address to this Court, counsel for the Commission submitted that at the second hearing the Tribunal had failed to consider whether Mr Knight's exposure to tobacco haze in the five years preceding the onset of his ischaemic heart disease in 1996 was itself connected with service.
44 To embrace that proposition it would be necessary to conclude that the requirements of the second limb of cl 6(i) had themselves to be connected to service. This is, of course, the very matter which was determined adversely to the Commission by Katzmann J. As her Honour explained at [58] (above) the required connexion is with the factor, not its second limb. The contrary view encounters the conceptual difficulties explained by her Honour at [59].
45 When confronted with this difficulty the response of counsel was twofold. The first was to submit that the conclusions of Katzmann J had been an obiter dictum leaving this Court free to arrive at a different conclusion. The second was to confront directly her Honour's conclusion and to contend it to have been wrong.
46 Neither of these responses should be accepted. Her Honour's conclusion was not an obiter dictum – it was the very holding in the case – and, as shown above, the subject of an explicit answer to the second posited question of law. As to counsel's direct assault on the conclusion of Katzmann J, we would reject it as not being open. The issue of whether cl 6(i) requires that the exposure which occurs within five years of clinical onset be connected to service was resolved adversely to the Commission by Katzmann J. There was no appeal. That controversy has been quelled. There is, in effect, an issue estoppel between the parties on that question. Even if it were open to us to disinter that issue and to consider it afresh we would, in any event, respectfully agree with the conclusion reached by Katzmann J on this issue for the reasons given by her Honour.
47 There is, accordingly, no substance in this final argument.
Conclusion
48 The appeal must be dismissed with costs.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn, Gilmour and Perram.
Associate:
Dated: 6 June 2012
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Imperial Chemical Industries plc v Echo Tasmania Pty Limited [2007] FCA 1731
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FEDERAL COURT OF AUSTRALIA
Imperial Chemical Industries plc v Echo Tasmania Pty Limited [2007] FCA 1731
PRACTICE AND PROCEDURE – applications for discovery by prospective respondents
CORPORATIONS – requirements for the transfer of shares in proprietary companies under the Corporations Act
Held: orders for discovery should be made as sought
Federal Court Rules Order 15A r2, r6 and r10, Order 17 r1, Order 15 r2(2), r6, r11, r13 and r14, Form 22
Corporations Act 2001 (Cth) ss 9, 176, 761A, 1070A(1), 1071A, 1071B, 1073A, 1073D, 1073F, 1274B(2) and 1305
Corporations Regulations 2001 (Cth) 1.0.02 and 7.11.01
Environmental Management and Pollution Control Act 1994 (Tas)
Trade Practices Act 1974 (Cth)
Hall v The Nominal Defendant (1966) 117 CLR 423
Malouf v Malouf (1999) 86 FCR 134
Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1560
Cardale v Watkins (1820) V Maddock 18
Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 391
Hooper v Kirella Pty Ltd; Transfield Pty Ltd v Airservices Australia (1999) 96 FCR 1
St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147
John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679
Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728
Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216
Global Intertrade Pty Ltd v Adelaide Festival Centre Trust [1999] FCA 162
IMPERIAL CHEMICAL INDUSTRIES PLC v ECHO TASMANIA PTY LIMITED AND DELOITTE GROWTH SOLUTIONS PTY LIMITED
NSD 1321 OF 2007
GRAHAM J
13 NOVEMBER 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1321 OF 2007
BETWEEN: IMPERIAL CHEMICAL INDUSTRIES PLC
Applicant
AND: ECHO TASMANIA PTY LIMITED
First Respondent
DELOITTE GROWTH SOLUTIONS PTY LIMITED
Second Respondent
JUDGE: GRAHAM J
DATE OF ORDER: 13 NOVEMBER 2007
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The first respondent make discovery to the applicant of any document of the kind described in the following Schedule:
SCHEDULE A
1. The Deed of Appointment of Replacement Probity Auditor dated 27 March 2006 between the first and second respondents ('Replacement Probity Deed').
2. Each and every notification given to a person appointed as 'Probity Auditor' under the Deed Appointing Probity Auditor, between the first respondent and Ernst & Young, dated 1 October 2002 ('Probity Deed') as amended by the Replacement Probity Deed, in respect of any one or more of the events the subject of:
(a) the letter from the second respondent to Mr Julian Homer at the first respondent, dated 31 May 2006 and entitled 'Probity Audit Notice' ('May Probity Audit Notice'); and
(b) the letter from the second respondent to Mr Julian Homer at the first respondent, dated 1 November 2006 and entitled 'Probity Audit Notice' ('November Probity Audit Notice').
3. All documents and records of information provided to a Probity Auditor in relation to any one or more of those events.
4. All documents recording any instructions, information or documents given by the first respondent to any expert in relation to any one or more of those events.
5. All documents recording any and all communications between the first respondent and any expert in relation to any one or more of those events.
6. Each and every report, including any expert report, provided to the first respondent in respect of any one or more of those events.
7. All documents recording any and all communications between the first respondent and a Probity Auditor in relation to any one or more of those events.
8. Any other documents relating to the extent to which each event the subject of the May Probity Audit Notice and the November Probity Audit Notice was a "Payment Event" falling within clause 3.1 of the Probity Deed and not excluded by clause 3.2 of the Probity Deed.
9. All documents regarding:
(a) the transfer of shares in the first respondent from Christopher Ian James Hartley to Julian Charles Homer on 3 September 2003 which was notified to ASIC in the share transfer notification lodged with ASIC on 7 March 2005; and
(b) why that share transfer notification to ASIC was withdrawn,
excluding the first respondent's share register and documents lodged with ASIC.
10. All documents regarding the first respondent's verification processes for determiningwhether there had been a change in controlling shareholder of the first respondent prior to it making each of the June claim and the November claim.
2. Such discovery be made by the service of a verified list on the applicant within 28 days from the date of this Order.
3. The second respondent make discovery to the applicant of any document of the kind described in the following Schedule:
SCHEDULE B
1. The Replacement Probity Deed (as defined in Schedule A).
2. Documents recording communications with the second respondent in relation to it being retained to act as 'Probity Auditor'.
3. Documents recording any information provided to the second respondent, or any consideration given by the second respondent, in relation to the reason(s) why the role of probity auditor had been created.
4. Documents held by the second respondent relating to the extent to which it knew that the applicant may be liable to pay to Westpac Banking Corporation all or any part of sums paid by Westpac Banking Corporation to the first respondent.
5. Any copy of any one or more of the following documents:
(a) the Share Purchase Agreement between Australian Titanium Products Pty Ltd (ACN 009 553 995) ('ATP') and the first respondent, dated 1 October 2002;
(b) the Probity Deed (as defined in Schedule A);
(c) the Westpac Banker's Undertaking to the first respondent, dated 26 September 2002;
(d) the applicant's indemnity to Westpac Banking Corporation, dated 26 September 2002.
6. Each and every notification given to the second respondent in respect of any one or more of the events the subject of the May Probity Audit Notice (as defined in Schedule A) and the November Probity Audit Notice (as defined in Schedule A).
7. All documents and records of information given to the second respondent that relate to any one or more of the events the subject of the May Probity Audit Notice and the November Probity Audit Notice.
8. Documents relating to any consideration given by the second respondent to any such notification, documentation and information.
9. Documents relating to any review undertaken or consideration given by the second respondent of the probity of the first respondent's processes for validating the existence of a Payment Event as defined under clause 3.1 of the Probity Deed.
10. Documents relating to any consideration given by the second respondent to the report of any expert retained by the first respondent.
4. Such discovery be made by the service of a verified list on the applicant within 28 days from the date of this Order.
5. The applicant pay the costs of the respondents of making and serving their respective lists.
6. The applicant have liberty to apply on 5 days' notice for orders that the discovered documents be produced for inspection by the applicant, at times and places to be specified in the orders.
7. The respondents pay the applicant's costs of the application.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 1321 OF 2007
BETWEEN: IMPERIAL CHEMICAL INDUSTRIES PLC
Applicant
AND: ECHO TASMANIA PTY LIMITED
First Respondent
DELOITTE GROWTH SOLUTIONS PTY LIMITED
Second Respondent
JUDGE: GRAHAM J
DATE: 13 NOVEMBER 2007
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 By an Application filed 11 July 2007 the applicant, Imperial Chemical Industries plc, seeks discovery from two prospective respondents – Echo Tasmania Pty Limited ACN 101 733 591, the first respondent, and Deloitte Growth Solutions Pty Limited, the second respondent, in accordance with Order 15A rule 6 of the Federal Court Rules ('the Rules').
Order 15A rule 6
2 Order 15A of the Rules was inserted in 1988. It allows for discovery to identify a respondent, discovery from a prospective respondent, discovery from a non-party, inspection of discovered documents and inspection, measurement, photocopying, preservation, custody and detention of property, the taking of samples, carrying out of experiments etc. (cf. Order 17 rule 1 of the Rules in respect of inter-partes proceedings which have already been commenced).
3 Order 15A rule 2 ensures that a person providing discovery under Order 15A is not required to produce documents which, on the ground of privilege, the person could not be required to produce.
4 In relation to the inspection of documents discovered pursuant to an order made under Order 15A, Order 15A rule 10 provides:
'10 Division 2 of Order 15 shall, with any necessary modification, apply to the inspection of the documents referred to in a list of documents made and served in accordance with this Order as if the list were a list of documents as mentioned in Order 15 rule 2.'
5 Order 15 deals with discovery and inspection of documents in normal inter-partes proceedings. Division 2 of that Order deals with inspection and includes rules 10 – 14. Order 15 rules 11, 13 and 14 relevantly provide:
'11 (1) Where:
(a) it appears from a list of documents filed by a party under this Order that any document is in his possession, custody or power;
…
the Court may, subject to any question of privilege which may arise, order the party:
(d) to produce the document for inspection by any other party at a time and place specified in the order; or …
…
13 (1) The Court may, at any stage of any proceeding, order any party to produce to the Court any document in his possession, custody or power relating to any matter in question in the proceeding.
(2) Upon production of a document to the Court pursuant to an order under subrule (1), the Court may deal with the document in such manner as the Court thinks fit.
14 Where an application is made for an order under rule 11 for the production of any document for inspection by another party or for an order under rule 13 for the production of any document to the Court and a claim is made that the document is privileged from production or an objection to production is made on any other ground, the Court may inspect the document for the purpose of deciding the validity of the claim or objection.'
6 Order 15A rule 11 deals with costs in relation to an order that a prospective respondent make discovery to an applicant of documents, an order that a prospective additional respondent make discovery to an applicant of documents and an order that a third party make discovery to an applicant of documents. It provides as follows:
'11(1) The Court may make an order for the costs and expenses of the applicant, a party to the proceeding or a person against whom an order is made or sought, including the following:
(a) the costs of making and serving a list of documents;
(b) the costs of producing a document for inspection in accordance with rule 10;
(c) the costs of complying with an order made under Division 2 of Order 15;
(d) if the order made or sought was similar to a subpoena – expenses or compensation that would have been allowable under Order 27, rule 11 if the order was for a subpoena.
(2) The Court may make an order under this Order on condition that the applicant give security for the costs and expenses of the person against whom the order is made.'
7 The power of the Court to order discovery by a prospective respondent is to be found in Order 15A rule 6, which provides as follows:
'6 Where:
(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;
(b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and
(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision;
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).'
8 An order made on an application in proceedings preliminary to the bringing of an action, which does not preclude a further application to like effect being brought, is interlocutory (per Taylor J in Hall v The Nominal Defendant (1966) 117 CLR 423 ('Hall') at 440; see also per Owen J at 447).
9 It is not of the essence of an interlocutory order that it is one made in the course of a pending action or suit (per Taylor J in Hall at 440; see also per Owen J at 447).
10 An order made in the course of an action or suit which does not conclude the rights of the parties inter se, although it may conclude the fate of the particular application in which it is made, is interlocutory only (per Taylor J in Hall at 440; see also per Owen J at 447).
11 The character of proceedings such as an application under Order 15A rule 6 may be of more significance than the result for an applicant, in determining whether an order is interlocutory or not (per Windeyer J in Hall at 445).
12 An order made in an application under Order 15A rule 6 will be interlocutory, given that it will not preclude a further application (per Beaumont, Lee and Dowsett JJ in Malouf v Malouf (1999) 86 FCR 134 at 143; see also per Tamberlin J in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1560 at [10]-[20]).
13 It is inappropriate on an application such as that which is presently before the Court to make any findings of fact other than those that are proper in an interlocutory context.
14 Discovery against a prospective respondent is invasive. In Cardale v Watkins (1820) V Maddock 18, a case where a bill for discovery was sought but for no stated purpose, Vice Chancellor, Sir John Leach observed:
'a Court of Equity does not compel Discovery for the mere gratification of curiosity, but in aid of some other Proceeding either pending or intended, and … there must be Allegations to that effect.'
15 Order 15A rule 6 is directed to aiding an applicant who is having real difficulty, and reasonably so, in deciding whether to litigate because of a lack of key information, whether relating to its own case or to that of the proposed respondent, which is in the possession of the respondent. It requires evidence demonstrating that the applicant for relief is on the horns of a dilemma: whether to sue or not to sue (per Lindgren J in Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 391 ('Alphapharm') at [45]).
16 In relation to the power conferred on the court by Order 15A rule 6 of the Rules Wilcox, Sackville and Katz JJ held in Hooper v Kirella Pty Ltd; Transfield Pty Ltd v Airservices Australia (1999) 96 FCR 1 at [59] that the Court has the power to grant relief against a prospective respondent even though proceedings claiming substantive relief may never be instituted if the applicant has asserted a claim arising under a law of the Parliament and done so in proceedings instituted in the Court under the relevant rule (see also at [61]).
17 In his reasons for judgment in Alphapharm, Lindgren J made certain observations concerning Order 15A rule 6 at [41] as follows:
'1. Paragraphs 6 (a) and 6 (c) pose an objective test, the opening words "there is" in each paragraph signifying "there exists"; but the "insufficiency test" of para 6 (b) has both subjective and objective aspects.
2. Although I need not explore the subjective aspect fully, it seems clear that if the evidence went so far as to show that a particular applicant was already able to decide to commence a proceeding by, for example, showing that the applicant had in fact decided to do so, para 6 (b) would not be satisfied even though the information available satisfied the objective aspect of the insufficiency test referred to below.
3. The fact that a particular applicant genuinely feels unable, because of a lack of information, to decide to commence a proceeding does not, without more, satisfy para 6 (b); the objective aspect of the paragraph requires it to be shown as an objective fact that the applicant lacks "sufficient information to enable a decision to be made whether to commence a proceeding".
4. In my view, the objective aspect of para 6 (b) invokes a notion of "reasonable sufficiency", the question raised being whether it is reasonable that the applicant for an order be required to take its decision without having the information to become available from inspection of the document or documents of which discovery is sought.
5. If the insufficiency test is satisfied, a second question will arise, namely, whether the Court's discretion should be exercised in favour of the making of an order.
6. The questions posed by rule 6 and referred to above are to be answered in the context of an adversary system of forensic contest in which a proposed respondent is ordinarily entitled to withhold its evidence, certainly prior to the commencement of proceedings.
7. The questions are also to be answered in the light of the nature of the "cause of action" contemplated and the range of information potentially available in respect of a cause of action of that kind.
8. … in my opinion rule 6 is not necessarily rendered unavailable by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief. This is made clear by the reference in para (a) to the existence of "reasonable cause to believe that the applicant has ... the right to obtain relief ..." (emphasis supplied). It would impose an artificial constraint on rule 6, not supported by its terms or purpose, to exclude, a priori, all cases in which the insufficiency of the information possessed by the applicant to enable a decision to be made whether to litigate is due to a matter of "defence" which would defeat the prima facie case.
9. Rule 6 does not provide a means by which an applicant will be enabled to have available to it every document which would assist it in deciding whether to litigate. If that were the intention, paras (a) and (c) would stand alone and the additional condition set out in para (b) would not be necessary.
10. Paragraph 6 (b) contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding.'
18 In St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 ('St George Bank') Hely J stated a series of propositions which his Honour considered had emerged from the authorities in relation to the proper application of Order 15A rule 6 at [26] as follows:
'(a) the rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the court, exercised in the particular circumstances of each case: Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733; 20 IPR 79 at 85; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549; BC9902167 at [27];
(b) each of the elements prescribed in subparas (a), (b) and (c) of the rule must be established: Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 11 [38] ; 167 ALR 385 at 367; 47 IPR 21 at 30. Preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions themselves: Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 202–3 [5]; 164 ALR 330 at 332;
(c) the test for determining whether the applicant has "reasonable cause to believe", as required by subpara (a), is an objective one: Hooper at FCR 11–12 [39]; ALR 367; IPR 30; Malouf v Malouf [1999] FCA 710; BC9902833 at [16]; Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 at 541-2 [24]; 49 IPR 25 at 31;Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391; BC9602085 at 23. Further, the words "or may have" cannot be ignored. The applicant does not have to make out a prima facie case: Quanta Software at ALR 541-2 [24]; IPR 31;Paxus Services at ALR 733; IPR 85;
(d) belief requires more than mere assertion and more than suspicion or conjecture. 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. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679; BC200403021 at [13], [14], [17] and [73];
(e) while uncertainty as to only one element of a cause of action might be compatible with the "reasonable cause to believe" required by subpara (a), uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe: Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215;
(f) the question posed by subpara (b) of the rule is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent. The question is whether the applicant has sufficient information to make a decision whether to commence proceedings in the court: Quanta Software at ALR 543 [33]-[34]; IPR 32-3, Alphapharm at 24–6. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences, or to determine the extent of the respondent's breach and the likely quantum of any damages award: CGU Insurance Ltd v Malaysia International Shipping Corp Berhad (2001) 187 ALR at 285 [21]; Quanta Software at ALR 543 [33]-[34]; IPR 32-3, Alphapharm at 24–6, Airservices Australia at FCR 202–3 [5]; ALR 332
(g) whether an applicant has "sufficient information" for the purposes of subpara (b) also requires an objective assessment to be made: Minister for Health at [44]; Alphapharm at 23–4, Hooper at FCR 12 [40]; ALR 367; IPR 31. The subparagraph contemplates that the applicant is lacking a piece (or pieces) of information reasonably necessary to decide whether to commence proceedings;
(h) it is no answer to an application under the rule to say that the proceeding is in the nature of a "fishing expedition": Paxus Services at ALR 733;IPR 85. Indeed O 15A r 6 "expressly contemplates" what once might have been castigated as "fishing": Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at 143 [27]; 182 ALR 264 at 270-1; 20 IPR 79 at 85. As Burchett J commented in Paxus Services, the rule is (at ALR 733; IPR 85):
… designed to enable an applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent …'
19 If the evidence on an application under Order 15A rule 6 suggests that there is reasonable cause to believe that an inference can be drawn, the inference can be more confidently drawn where a respondent adduces no evidence to deny the fact or matter. It may be that, upon full exploration of the matter, the inference would be rebutted. However, where an applicant is not met by any denial by those best able to throw light on whether an inference as to a relevant fact or matter is correct, namely the respondents in this case, the inference can be drawn more confidently (per Emmett J in John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [16]; see also Burchett J in Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 732-3).
20 In St George Bank Hely J emphasised that the bare possibility that something may have occurred is insufficient to satisfy the test in rule 6(a) that there is reasonable cause to believe that an applicant may have the right to obtain relief in the Court from another person. Whilst an applicant does not need to go so far as to establish a prima facie case, it does have to establish that there is reasonable cause to believe that each of the necessary elements of a potential cause of action exists. The evidence must incline the mind to the view that each necessary element exists. Whilst the threshold test under paragraph (a) of rule 6 is set at quite a low level, it is not sufficient to point to a mere possibility that an applicant may have a claim when that claim is completely dependent on as yet unknown facts. Unsupported speculation will not suffice (per Hely J in St George Bank at [29] and [32]). Mere assertion, conjecture or suspicion is insufficient to establish reasonable cause to believe that an applicant may have a right to obtain relief in the Court from another person. Reliance upon suspicion or a 'hunch' will not suffice (per Middleton J in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216 at [76] and [81]).
21 Whilst Order 15A makes no provision for the means whereby discovery should be given by parties such as the respondents to a party such as the applicant, it seems clear to me that discovery must be given in the manner for which Order 15 rule 2(2) provides, namely:
'2(2) Unless the Court or a Judge orders otherwise, a party must give discovery by serving:
(a) a list of documents required to be disclosed; and
(b) an affidavit verifying the list.'
Mansfield J expressed the same view in Global Intertrade Pty Ltd v Adelaide Festival Centre Trust [1999] FCA 162 at [2].
22 The form of the list of documents may, in my opinion, be taken to be regulated by Order 15 rule 6, which relevantly provides:
'6(1) A list of documents required by or under this Order shall, unless the Court otherwise orders, be in accordance with Form 22 and conform to the requirements of this rule.
(2) A list of documents shall enumerate the documents which are or have been in the possession, custody or power of the party making the list.
(3) A list of documents shall enumerate the documents in a convenient sequence and as shortly as possible, but shall describe each document or, in the case of a group of documents of the same nature, shall describe the group, sufficiently to enable the document or group to be identified.
…
(5) A list of documents shall distinguish those documents which are in the possession, custody or power of the party making the list from those that have been but are no longer in his possession, custody or power.
(6) A list of documents shall, as to any document which has been but is not then in the possession, custody or power of the party making the list, state when he parted with the document and what has become of it.
…
(8) Where a party making a list of documents has a solicitor in the proceeding, the solicitor shall certify on the list that, according to his instructions, the list and the statements in the list are correct.'
23 Form 22, of course, provides for documents to be enumerated one by one in either Schedule 1 Part 1, Schedule 1 Part 2 or Schedule 2 of the relevant list. The operative words in Form 22 include:
'1. The party has in his possession, custody or power, the documents enumerated in Schedule 1.
2. The documents enumerated in Part 2 of Schedule 1 are privileged from production on the ground – …
3. The party has had, but does not now have, in his possession, custody or power, the document (sic) enumerated in Schedule 2.
4(a) document … referred to in Schedule 2 was last in the respondent's position, custody or power on …
…'
Background
24 Prior to 1 October 2002 Tioxide Australia Pty Limited ACN 004 214 439 was a wholly owned subsidiary of Australian Titanium Products Pty Limited ACN 009 553 995, which in turn was a wholly owned subsidiary of the applicant. Until about July 1996 Tioxide Australia Pty Limited operated a titanium dioxide pigment manufacturing plant at a site located five kilometres east of the city of Burnie in Tasmania ('the Heybridge site'). In about July 1996 the plant was closed and in 1999 the remaining titanium dioxide businesses of Australian Titanium Products Pty limited and Tioxide Australia Pty Limited were sold. This left Tioxide Australia Pty Limited as the owner of the Heybridge site, on which significant remediation work had to be undertaken.
25 Under the heading 'Principal activities' in a directors' report for Tioxide Australia Pty Limited for the year ended 31 December 2001 the following appeared:
'Until 30 April 1999, the principal activities of the company consisted of the import and sale of pigments used in the paint, plastics, printing, ink and paper industries. From this date, the principal activity of the company consisted of rehabilitation of the Burnie site that was previously used for the manufacture of pigment.'
26 Under the heading 'Review of operations' the following appeared:
'The Company ceased the importation and distribution of pigment as from 30 April 1999. From this date, the remaining employees at the Ascot Vale marketing branch were made redundant and no trading activities have since occurred.
The Company's current operations now relate to the continued rehabilitation of the Burnie site that was previously used for the manufacture of pigment.'
27 The statement of financial position of Tioxide Australia Pty Limited as at 31 December 2001 showed current assets of $24,317,000 made up of $15,204,000 held on deposit with Australia and New Zealand Banking Group Limited and $9,011,000 on loan to a related corporation and 'other debtors' of $102,000. The only other asset of Tioxide Australia Pty Limited was shown as property, plant and equipment ($310,000) comprising freehold land ($229,000), freehold building ($48,000) and plant and equipment, less accumulated depreciation ($33,000). The net assets of Tioxide Australia Pty Limited were shown in the statement of financial position as at 31 December 2001 at $25,046,000.
28 The relevant liabilities were shown in the statement of financial position as $100,000 for trade creditors, $5,000 for other creditors, $137,000 for loans from other related corporations, $482,000 as 'provision for closure costs' and $100,000 for income tax. Given an allowance of $1,243,000 for 'costs yet to be reimbursed', the liabilities of Tioxide Australia Pty Limited in fact increased the net asset position by $661,000. At the conclusion of note 10 to the accounts dealing with 'provisions' the following entry appeared:
'A provision for closure costs at Burnie has been established in the books of a related company. At 31 December 2001, the balance remaining in this provision is approximately $1,807,000. This related company reimburses closure costs to the company on a periodic basis based on invoices raised by the company. To the extent that future closure costs exceed this provision, the excess will be funded from the company's reserves.'
29 According to Mr R L G K Ross, Vice-President Corporate Finance at the applicant, who in 2002 was Senior Taxation Manager with the applicant and a member of the applicant's team that worked on the sale of Tioxide Australia Pty Limited, Tioxide Australia Pty Limited had approximately $24 million in cash as at 1 October 2002. In his affidavit sworn 9 July 2007 he deposed:
'19 … Prior to the sale, TAPL [referring to Tioxide Australia Pty Limited] management had estimated the total cost of the ongoing remediation work to be $23 million, and this had been verified by independent consultants to the Tasmanian Government. There were also plans to develop a visitors' centre at the Heybridge site. Of the original funds, $6 million was earmarked for construction of the visitors' centre. The balance of $18 million (together with investment income arising on these funds over the twenty year project) was expected to cover all the remediation costs, in the absence of a significant catastrophic incident, particularly one in the first few years.'
30 Australian Titanium Products Pty Limited was registered on 31 October 1985. It would appear that on 14 February 2003 it was wound up under a members' voluntary winding up. On 5 June 2004 it was dissolved and deregistered.
31 Between 1999 and 2003 a Mr Christopher Ian James Hartley served the applicant as its Country Manager in Australia. Mr Hartley previously served the ICI group as Chief Executive Officer of National Starch & Chemical Pty Limited and then as Chief Executive Officer of ICI South Pacific Holdings Pty Limited. Mr Hartley was appointed as a director of Tioxide Australia Pty Limited on 3 July 1998. As at 31 December 2001 the directors of Tioxide Australia Pty Limited were Mr Hartley and Mr Roderick A McLeod, who had been appointed as a director on 1 December 1999.
32 The first respondent was registered on 16 August 2002 at the instigation, so it would seem, of Mr Hartley, who apparently became its sole director and company secretary on that day. This step was clearly undertaken with the blessing of the applicant.
33 The register of members of the first respondent shows Mr Hartley as having acquired one ordinary share in the first respondent on 16 August 2002, that being the only issued share in the capital of the company at that time. Further shares in the capital of the first respondent would appear to have been issued on 1 April 2003 and further mention of them will be made shortly.
34 On 1 October 2002 Australian Titanium Products Pty Limited entered into a Share Purchase Agreement with the first respondent whereunder the first respondent acquired Tioxide Australia Pty Limited for a purchase price of $1.00. The Share Purchase Agreement was apparently signed by A K Cornell as agent for Australian Titanium Products Pty Limited and by Mr Hartley as the sole director and secretary of the first respondent.
35 On 3 July 1996 three separate Environment Protection Notices (numbers 39/1, 40/1 and 41/1) had been issued to Tioxide Australia Pty Limited under the Environmental Management and Pollution Control Act 1994 (Tas). These all related to decommissioning and rehabilitation works at the Heybridge site. The notices alleged that environmental harm had occurred for which Tioxide Australia Pty Limited was responsible and in respect of which remediation was required.
36 Under cover of a letter from the Acting Director of Environmental Management in the Department of Environment and Land Management of the State of Tasmania to Tioxide Australia Pty Limited dated 15 June 1998 three Environment Protection Notice Compliance Certificates were provided to Tioxide Australia Pty Limited recording that, on the evidence available to the Acting Director of Environmental Management, Tioxide Australia Pty Limited had complied with the requirements of the three Environment Protection Notices (numbers 39/1, 40/1 and 41/1). The Acting Director's letter concluded as follows:
'I will advise the Recorder of Titles of the Compliance Certificates, pursuant to Section 46(6) of the Environmental Management and Pollution Control Act 1994 (EMPCA),with a view to cancelling the currently registered EPNs, under Section 46(7) of the EMPCA.
At that time, I propose to issue a new EPN, specific to the sludge dams and landfill land parcels, for lodgement with the Recorder of Titles, pursuant to Sections 44(1)(a) and 46(1)(b) of the EMPCA.'
37 On 20 July 1998 a further Environment Protection Notice was issued to Tioxide Australia Pty Limited in respect of the Heybridge site. The covering letter of the Acting Director of Environmental Management included:
'As outlined in that letter [dated 15 June 1998], I am now issuing a new EPN no. 323/1, replacing all the environmental requirements of EPN no. 39/1.'
38 The land the subject of Environment Protection Notice number 323/1 was identified as Lot 1 in plan registered number D109263 having an area of 185.1 hectares. The ground upon which the notice was issued was expressed as follows:
'It is necessary to ensure appropriate environmental management of the decommissioned and rehabilitated leach residue dams and site landfills, as the potential exists to cause environmental harm, if not managed appropriately.'
39 An 'environmental requirement' was imposed by the Environment Protection Notice number 323/1 which called for management and monitoring of the subject land to be undertaken in accordance with a revised 'Tioxide Site Environmental Monitoring Program' approved by the Acting Director of Environmental Management on 11 June 1998 or as otherwise requested by the Acting Director. The Tioxide Site Environmental Monitoring Program called for sampling of surface water in eight different locations and for sampling of ground water in four different locations. Testing of surface water was to be undertaken quarterly for the first twelve months and thereafter subject to a review of available data. Sampling of ground water was to be undertaken on a six monthly basis with reports submitted in the first instance after six and twelve months. The environmental requirement contained in the Environment Protection Notice number 323/1 included:
'6 The nominated effluent discharges must comply with the following limits:
Arsenic <0.05 mg/L
Cadmium <0.01 mg/L
Chromium (hexavalent) <0.05 mg/L
Chromium (trivalent) <0.5 mg/L
Copper <1.0 mg/L
Iron and Manganese (combined total filtrable) <1.0 mg/L
Lead <0.05 mg/L
Mercury <0.002 mg/L
Zinc <5.0 mg/L'
40 A brochure published by Tioxide Australia Pty Limited incorporated a number of photographs depicting the Heybridge site with the following captions:
'The way we were'
'The way we ended'
'Our Environmental Commitment'
'The Demolition'
'The Clean Up'
41 The text of the brochure included:
'The original Tioxide plant was constructed at Heybridge, … in 1948.
The company enjoyed 50 years of successful operation …
…
The Tasmanian operation was small by global standards. The plant was distant from raw materials supply and markets.
These factors, with increasing globalisation and competition … made closure inevitable.
Tioxide Australia and parent company ICI are committed to the rehabilitation of the site. To date, a total of $A30 million has been spent on the remediation program.
…
The Environmental Decommissioning and Rehabilitation Plan features two phases – demolition, then remediation.
The demolition of the factory site was conducted in accordance with strict occupational health and safety provisions and was undertaken free of any accidents or injuries.
The demolition was completed on time and within budget.
The initial clean up involved the safe removal of 140,000 cubic metres of material from the site.
The three sludge dams were filled and capped with clay and systems developed to collect the acidic and iron-rich leachate for biological filtering.'
42 Each page of the brochure incorporates an ICI logo. The final photographs appear to indicate a bare site with all structures removed.
43 According to Mr Ross' affidavit, the applicant authorised Mr Hartley to negotiate an arrangement with the Tasmanian government on the applicant's behalf which allowed the applicant to sell Tioxide Australia Pty Limited in a manner which met both the applicant's commercial needs and the Tasmanian Government's requirement to have sufficient financial and organisational resources in place to ensure the remediation of the Heybridge site. Mr Hartley apparently took direct charge of the project and handled all the main negotiations, reporting to the applicant's main board and the applicant's team which was working on the sale of Tioxide Australia Pty Limited, including Mr Ross.
44 In July 2002 a proposal was put to the applicant which was approved by the applicant's main board that included the following elements:
(a) a new company [ultimately the first respondent] was to be incorporated with Mr Hartley as its shareholder and sole director;
(b) Tioxide Australia Pty Limited was to be sold to the new company for $1 with the new company thereafter responsible for the remediation of the Heybridge site;
(c) remediation was to be effected with the $24 million-odd held by Tioxide Australia Pty Limited at the time of its sale;
(d) a separate $15 million bank guarantee arrangement was to be set up with Westpac Banking Corporation to meet specifically-identified classes of expense for the first five years after the sale with the applicant standing behind such a guarantee and the applicant's interests to be protected by an independent 'probity auditor'.
45 The protection afforded to the applicant by the sale documents in respect of any potential liability under the bank guarantee arrangement was not what one might call fulsome.
46 The Share Purchase Agreement of 1 October 2002 made no provision for the first respondent to ensure that the environmental requirements imposed upon Tioxide Australia Pty Limited by Environment Protection Notice number 323/1 of 20 July 1998 were duly satisfied.
47 By virtue of clause 2.1 of the Share Purchase Agreement there were two conditions precedent to the contract proceeding to completion. Clause 2.1 provided:
'2.1 Completion will not proceed unless:
(a) a notice in writing is issued by, or on behalf of, the Director of Environmental Management confirming his consent to the parties entering into and completing this Agreement either unconditionally or on terms reasonably acceptable to the Buyer; and
(b) the Bank [defined to mean Westpac Banking Corporation] provides the Banker's Undertaking in the form set out in Annexure C.'
48 Clause 4.1 of the Share Purchase Agreement provided for completion to take place at Hobart, Tasmania on the day of satisfaction or waiver of the last of the two conditions precedent or such later time as may be agreed by the parties. There is no express evidence as to when the Share Purchase Agreement was completed but it may be inferred from the date of the other documents required to be provided at completion that the agreement was completed contemporaneously with its execution, that is to say on 1 October 2002.
49 Under clause 4.2 of the Share Purchase Agreement Australian Titanium Products Pty Limited was required to give certain documents to the first respondent at completion. These included :
'(e) a counterpart of each Transaction Document executed by each party (other than the Buyer) …'
50 'Transaction Documents' was defined in clause 1.1 of the Share Purchase Agreement to mean:
'(a) Deed Appointing Probity Auditor between the Buyer and Ernst and Young and in the form set out in Annexure A;
(b) Deed of Access and Indemnity between the Seller and Christopher I. J. Hartley in the form set out in Annexure B; and
(c) Westpac Banker's Undertaking given to the Buyer in the form set out in Annexure C …'
51 The form of 'Deed of Appointment of Probity Auditor' set out in Annexure A to the Share Purchase Agreement was recorded on 13 typed pages to which four schedules, identified as Schedule 1, Schedule 2, Schedule 3 and Schedule 4, were attached.
52 Annexure B to the Share Purchase Agreement was a form of 'Deed of Access and Indemnity' to be completed on the letterhead of Australian Titanium Products Pty Limited and to which minutes of a resolution of Australian Titanium Products Pty Limited were to be attached.
53 The letter was to acknowledge the resignation of Mr Hartley as a director of Australian Titanium Products Pty Limited on 19 September 2002 and the provision to him of an indemnity and release in consideration of the payment by him of $100 to Australian Titanium Products Pty Limited.
54 It would appear that another 'Release' was given by the applicant to Mr Hartley on 10 March 2006. A letter from Mr Hartley's solicitors to the applicant of 30 August 2007 included:
'Our client is aware of his obligations to ICI PLC and related companies both at general law and pursuant to the Release dated 10 March 2006. …'
55 Annexure C to the Share Purchase Agreement set out the form of an undertaking under the heading 'WESTPAC BANKER'S UNDERTAKING'. It provided for the provision of an undertaking by Westpac Banking Corporation to pay up to $15 million to the first respondent in certain circumstances.
56 It would appear that on 6 June 2006 a claim for payment was made on Westpac Banking Corporation by the first respondent which resulted in the payment by Westpac Banking Corporation of $4,063,367 to the first respondent in early June 2006. The claim would appear to have consisted of two duplicate copies of a letter from the first respondent to Westpac Banking Corporation dated 5 June 2006 which were apparently re-executed by Julian Homer and T T Harrison for the first respondent on 6 June 2006, their respective signatures being witnessed by a notary public in Sydney, in the case of Mr Homer, and a notary public in Hobart, in the case of Mr Harrison. The payment request was accompanied by a Probity Audit Notice provided by the second respondent to the first respondent and dated 31 May 2006.
57 On 7 June 2006 Westpac Banking Corporation demanded payment of a like amount from the applicant 'within five days of the date of this demand' pursuant to an 'Indemnity Re: Bonds and GX Guarantees dated 26 September 2002' issued by the applicant in favour of Westpac Banking Corporation.
58 It would appear that the demand made by Westpac Banking Corporation on the applicant was not met until 9 October 2006 when $4,165,210.23 was remitted to Westpac Banking Corporation.
59 A further payment request was made by the first respondent on Westpac Banking Corporation under the Westpac Banker's undertaking on 1 November 2006. The relevant payment request was signed for and on behalf of the first respondent by Julian Homer and Tony Harrison whose signatures were witnessed by a notary public. The payment requested on this occasion was $1,009,110.30. The payment request was supported by a further Probity Audit Notice issued by the second respondent to the first respondent on 1 November 2006.
60 The payment request of 1 November 2006 would appear to have been presented to Westpac Banking Corporation on 6 November 2006. Presumably it was met by a payment in the amount requested in early November 2006. By letter dated 6 November 2006 Westpac Banking Corporation demanded payment of a like amount from the applicant within five days of the demand made by Westpac Banking Corporation in accordance with the 'Indemnity Re: Bonds and GX Guarantees dated 26 September 2002'.
61 On 23 November 2006 the applicant appears to have met Westpac Banking Corporation's demand by remitting an amount of $1,011,654.81 to Westpac Banking Corporation.
62 The first respondent's payment request which was lodged with Westpac Banking Corporation on 6 June 2006 was expressed as follows:
'Payment Request and Claim Certification
We refer to the Deed between Ernst and Young and Echo Tasmania Pty Limited dated 1 October 2002 and as amended by the Deed of Appointment of the Replacement Probity Auditor dated 27 March 2006
The sum of $4,063,367 is payable to Echo Tasmania Pty Limited
The payment amount must be paid as follows:
[a] to account number Echo Tasmania 017010 837670989
[b] by no later than 11 am on the 6 June 2006
The Payment Amount has been independently determined by an expert third party and the process of that determination has been audited for the probity (sic) by the Probity Auditor under the Deed. Conformation of the Probity Auditor's determination is set out in the attached notice
This Payment Request is dated 5 June 2006'
63 The attached notice referred to in the payment request was a Probity Audit Notice issued by the second respondent to the first respondent in the following terms:
'Probity Audit Notice
We refer to the Deed between Ernst and Young and Echo Tasmania Pty Limited (Echo) dated October 2002 (Deed) as amended by Deed of Appointment of Replacement Probity Auditor dated 27 March 2006.
Terms defined in the Deed have the same meaning in this notice.
In accordance with Clause 3.5 of the Deed, the Probity Auditor is of the opinion that the processes adopted by Echo and referred to in Clause 3.4(f) have been carried out in a fair and equitable manner and conducted with due probity in respect of the following Payment event:
1.1 Payment Event:
Failure of reduction system giving rise to a payment event pursuant to clauses 3.1(a) and 3.1(b) of the Deed.
1.2 Payment Request:
$3,742,301
2.1 Payment Event:
Decontamination caused by leakage from a buried fuel tank, giving rise to a payment event pursuant to Clause 3.1(b) of the Deed.
2.2 Payment Request:
$321,066'
64 On 6 June 2006 Dobson, Mitchell & Allport, the then solicitors for the first respondent, forwarded a facsimile to Westpac Banking Corporation in which the notary public who witnessed the execution of the Probity Audit Notice by the second respondent said:
'I certify that Simon Lester of Deloitte is a director of Deloitte Growth Solutions Pty Ltd ACN 010 764 306, which is the successor to the probity auditor Ernst & Young.'
65 The first respondent's second payment request, which was lodged with Westpac Banking Corporation on 1 November 2006, was expressed as follows:
'Payment Request and Claim Certification
We refer to the Deed between Ernst & Young and Echo Tasmania Pty Limited dated 1 October 2002 ("Deed") as amended by Deed of Appointment of Replacement Probity Auditor dated 27 March 2006.
Terms defined in the Deed have the same meaning in this notice.
The sum of $1,009,111.30 is payable by the Bank to Echo Tasmania Pty Limited.
The Payment Amount must be paid as follows;
(a) to account number 837670989 bsb 017 010
(b) by no later than 11.00am on 6 November 2006
The Payment Amount has been independently determined by an expert third party and the process of that determination has been audited for probity by the Probity Auditor under the Deed. Confirmation of the Probity Auditor's determination is set out in the attached notice.
This Payment Request is dated 1 November 2006.'
66 The attached notice referred to in the second payment request was a Probity Audit Notice issued by the second respondent to the first respondent in the following terms:
'Probity Audit Notice
We refer to the Deed between Ernst and Young and Echo Tasmania Pty Limited (Echo) dated October 2002 (Deed) as amended by Deed of Appointment of Replacement Probity Auditor dated 27 March 2006.
Terms defined in the Deed have the same meaning in this notice.
In accordance with Clause 3.5 of the Deed, the Probity Auditor is of the opinion that the processes adopted by Echo and referred to in Clause 3.4(f) have been carried out in a fair and equitable manner and conducted with due probity in respect of the following Payment event:
Payment Event:
Removal of infrastructure giving rise to a payment event pursuant to clause 3.1(b) of the Deed.
Payment Request:
$1,009,111.30'
67 The Probity Audit Notice was signed by S Lester as a Director of the second respondent. The notary public who witnessed the execution of the probity audit notice by Mr Lester provided a confirmation in the following terms:
'I confirm that this document has been signed, and witnessed by myself, by Simon Lester, who is a partner from the Australian Office of Deloittes (sic) Growth Solutions Pty Limited, who are the appointed Probity Auditor.
I confirm that Simon Lester has provided me with sufficient proof to (sic) his identity.'
68 It is plain from the arrangements that the applicant put in place in 2002 to rid itself of the Heybridge site that it contemplated the possibility of a liability to contribute more funds to the disposal of Tioxide Australia Pty Limited than the $24 million which it left in Tioxide Australia Pty Limited at the time of its sale to the first respondent for $1.
69 The question which presently arises is whether circumstances arose which came within the purview of the 'Deed of Appointment of Probity Auditor' such that:
(a) Westpac Banking Corporation was obliged to make the payments to the first respondent pursuant to the first respondent's payment requests referred to above, and
(b) the applicant was obliged to make the payments mentioned above to Westpac Banking Corporation.
70 The applicant submits that there exists reasonable cause to believe that it may have the right to obtain relief in the Court from each of the respondents for misleading and deceptive conduct within the meaning of the Trade Practices Act 1974 (Cth)and for negligence in respect of the issue by the second respondent of the probity audit notices and the making by the first respondent of payment requests to Westpac Banking Corporation based on those probity audit notices.
71 One of the 'Transaction Documents' which Australian Titanium Products Pty Limited was required to give to the first respondent at completion of the Share Purchase Agreement was a Deed Appointing Probity Auditor executed by Ernst & Young.
72 As it transpires such a Deed was made between Ernst & Young and the first respondent on 1 October 2002. Amongst other things the Deed contemplated the retirement of Ernst & Young as Probity Auditor and the replacement of that firm by another Probity Auditor. Clause 2.3 of the Deed provided:
'2.3 Retirement of Probity Auditor
(a) Subject to Clause 2.3(b), the Probity Auditor may retire by 1 month's written notice to Echo [referring to the first respondent].
(b) The Probity Auditor may not retire unless a replacement Probity Auditor has been appointed and has agreed to be bound by the terms of this Deed as if named in this Deed as the original Probity Auditor but in any event the Probity Auditor will not be required to continue to act for a period greater than 3 months from the date of the notice referred to in Clause 2.3(a) and may retire at the end of this period even if a replacement Probity Auditor has not been appointed.
(c) On receipt of a retirement notice under Clause 2.3(a), Echo must in good faith seek a replacement Probity Auditor. If agreement with a third party is not reached within 30 days of receipt of retirement notice Echo must appoint any person nominated by the President of the Institute of Chartered Accountants in Australia as replacement Probity Auditor.
(d) On retirement, a retiring Probity Auditor is released from all obligations under this Deed.'
73 No agreement by the second respondent with Ernst & Young and the first respondent or either of them has been tendered in evidence on the present application, under which the second respondent agreed to be bound by the terms of the Probity Deed made 1 October 2002 as if named in that Deed as the original Probity Auditor. Each of the first respondent and the second respondent has issued documents referring to the Deed Appointing Probity Auditor between Ernst & Young and the first respondent 'as amended by Deed of Appointment of (the) Replacement Probity Auditor dated 27 March 2006'.
74 Notwithstanding requests for the production of the amending Deed dated 27 March 2006 neither the first respondent nor the second respondent has produced same for inspection by the applicant.
75 Clause 2.1 of the Deed of Appointment of Probity Auditor provided for the appointment of Ernst & Young as 'a probity auditor for the purposes of this Deed' and provided for the payment of consideration by the first respondent to Ernst & Young as the Probity Auditor calculated upon the time and expertise necessarily involved at Ernst & Young's standard rates, less a discount of 20 per cent. Clause 2.1 also provided for the appointment to be subject to Ernst & Young's Terms and Conditions of Business as set out in Schedule 4 to the Deed to the extent that they were not directly in contradiction with the other terms and conditions of the Deed.
76 The applicant submits that, in the absence of the 'Deed of Appointment of Replacement Probity Auditor dated 27 March 2006', the use of the words 'as amended' inclines one to the view that the second respondent did not simply agree to be bound by the terms of the 1 October 2002 Deed as if named in it as the original Probity Auditor, thus providing reasonable cause to believe that the second respondent lacked authority to act as a replacement Probity Auditor under the Deed made 1 October 2002.
77 Another Transaction Document which Australian Titanium Products Pty Limited was required to give to the first respondent at completion of the Share Purchase Agreement was Westpac Banking Corporation's 'Banker's Undertaking' in the form of annexure C to that agreement. Such an undertaking was given by Westpac Banking Corporation to the first respondent by a Banker's Undertaking dated 26 September 2002, executed by an attorney for the Bank under a registered power of attorney. The Banker's Undertaking consisted of two pages of typed script to which a Schedule 1 comprising two pages was attached and a Schedule 2 comprising one page. The Banker's Undertaking relevantly provided:
' Banker's Undertaking
By: Westpac Banking Corporation ABN 33 007 457 141
To: Echo Tasmania Pty Limited
In consideration of Echo Tasmania Pty Limited (the Favouree) accepting this undertaking and subject to satisfaction of the conditions below, Westpac Banking Corporation (Westpac) undertakes to pay any sum or sums which may from time to time be demanded by the Favouree up to a maximum aggregate sum of $15,000,000.00 (Fifteen million dollars) Australian Currency (the Sum).
This undertaking is to continue until the first to occur of:
(a) Westpac receives written notification from the Favouree that the Sum is no longer required by the Favouree; or
(b) this undertaking is returned by the Favouree to Westpac; or
(c) payment to the Favouree by Westpac of an amount equal to the whole of the Sum or such part as the Favouree may require; or
(d) 4-00 p.m. on the 5th anniversary of the date of this undertaking provided that any letter of demand for payment must be delivered into the hands of a Manager of Westpac, at Level 3, 255 Elizabeth Street, Sydney prior to that time.
Westpac agrees to pay to the Favouree the whole or any part or parts of the Sum provided the following conditions are satisfied:-
(i) Westpac receives a certificate which in Westpac's reasonable opinion is substantially in the form annexed hereto as Schedule 1 ("the Certificate"); and
(ii) The Certificate:-
(a) is duly notarised by a Notary Public practising in Australia confirming that it has been signed by a partner (or person of similar authority) from an Australian office of Messrs Ernst & Young (or any authorised signatory of any successor Probity Auditor from time to time thereof); and
(b) purports to be signed by two authorised signatories of the Favouree whose names and specimen signatures are set out in Schedule 2 hereto (as amended from time to time by notice to Westpac in writing).
…
Westpac agrees that other than as set out above, payments claimed in accordance with this undertaking will be made to the Favouree forthwith without reference to any third party. …
…
SCHEDULE 1
Westpac Banking Corporation
Level 3
255 Elizabeth Street
Sydney NSW 2000
Dear Sirs
Payment Request and Claim Certification
We refer to the Deed between Ernst & Young and Echo Tasmania Pty Limited dated [date] 2002 ("Deed").
Terms defined in the Deed have the same meaning in this notice.
The sum of $[amount] ("Payment Amount") is payable by the Bank to Echo Tasmania Pty Limited.
The Payment Amount must be paid as follows:
(a) to account number [account number];
(b) by no later than 11.00 am on [date].
The Payment Amount has been independently determined by an expert third party and the process of that determination has been audited for probity by the Probity Auditor under the Deed. Confirmation of the Probity Auditor's determination is set out in the attached notice.
This Payment Request is dated [date].
Signed for and on behalf of
ECHO TASMANIA PTY LIMITED
Acting by
Authorised Signatory
Authorised Signatory
The Company Secretary
Echo Tasmania Pty Limited
1st Floor
Cnr Reiby and Victoria Street
Ulverstone TAS 7135
Dear Sir
Probity Audit Notice
We refer to the Deed between Ernst & Young and Echo Tasmania Pty Limited ("Echo") dated [date] 2002 ("Deed").
Terms defined in the Deed have the same meaning in this notice.
In accordance with Clause 3.5 of the Deed, the Probity Auditor is of the opinion that the processes adopted by Echo and referred to in clause 3.4(f) have been carried out in a fair and equitable manner and conducted with due probity in respect of the following Payment Event:
(a) [insert description of Payment Event]
(b) [insert amount of Payment Request]
Signed sealed and delivered )
by ERNST & YOUNG )
in the presence of: )
Notary Public Partner
Name (please print)
…'
78 It may be seen that Westpac's agreement to pay monies under its Banker's Undertaking was dependent upon its receipt of a certificate which in the Bank's reasonable opinion was substantially in the form of Schedule 1. Schedule 1, of course, comprised two documents being a Payment Request and Claim Certification from the first respondent to the Bank and a Probity Audit Notice from the Probity Auditor to the first respondent providing confirmation of the Probity Auditor's determination, it being a requirement that the second document be attached to the first.
79 Returning to the Deed Appointing Probity Auditor made 1 October 2002 between Ernst & Young and the first respondent, regard should be had to the following provisions of that Deed:
'BACKGROUND
A. Echo is proposing to purchase all of the issued shares in Tioxide Australia Pty Ltd (ACN 004 214 439) (the "Company"). The Company owns the Site which is the subject of a remediation project.
B. Westpac Banking Corporation (the "Bank") is providing a Banker's Undertaking for the costs of undertaking any remediation work at the Site as a result of specific natural disasters or uncontrollable circumstances and for other specified liabilities of the Company in existence at the date of sale.
C. The Probity Auditor has agreed to report to Echo whether the process for making a claim has been carried out with probity.
THIS DEED WITNESSES:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed:
…
"Completion" means completion of the sale and purchase of all of the issued shares of the Company under the Share Sale Agreement;
"Completion Date" means the date on which Completion occurs;
"Confidential Information" means all:
(a) information relating to the existence of or the terms of this Deed;
(b) information contained in or relating to any Payment Request or deliberation thereon (including, without limitation, the existence of the Payment Request and the liability asserted to be the basis for the Payment Request);
(c) trade secrets and all financial, marketing and technological information, contracts, negotiations, ideas, concepts, know how, technology, processes and knowledge which is confidential or of a sensitive nature,
but excludes that which is in the public domain;
…
"EPN" means Environmental Protection Notices numbers 323/1, 39/1, 40/1 and 41/1 issued by the Department;
"Expert" has the meaning given by Clause 3.4(a);
"Expert Report" means the report issued by an Expert pursuant to Clause 3.4(b);
"Excluded Liability" has the meaning given in Clause 3.2;
…
"Payment Event" has the meaning given in Clause 3.1;
"Payment Notification" means the notice of intention by Echo to make a Payment Request on the Bank delivered under Clause 3.3(a);
"Payment Request" means the request made by Echo to the Bank for any loss or cost of Echo or the Company arising out of a Payment Event;
"Probity Audit Notice" has the meaning given in Clause 3.5;
…
"Share Sale Agreement" means the share sale agreement between Echo and Australian Titanium Products Pty Limited … pursuant to which Echo is to purchase the shares in the Company; …
…
"Term" means the period from the Completion Date until the earlier of the date:
a) 5 years from the Completion Date;
b) when monies paid by the Bank to Echo or the Company total A$15,000,000;
c) that any person other than Echo or a Related Corporation of Echo assumes all the actual, contingent and prospective liabilities of the Company [meaning Tioxide Australia Pty Limited] in existence as at the date of assumption; and
d) that there is a change in the controlling shareholder of Echo.
…
2.4 Term
Echo will notify the Probity Auditor immediately should any of the events referred to in paragraphs (b), (c) or (d) of the definition of "Term" in Clause 1.1 occur.
3. REQUEST FOR PAYMENT
3.1 Payment Events
For the purposes of this Deed, each of the following is a "Payment Event":
(a) the Site has been adversely affected by fire, flood, storm, drought, natural disaster or reed death; and
(b) Echo or the Company becomes aware of any actual or contingent liability of the Company which:
(i) was in existence as at the Completion Date; or
(ii) arose after the Completion Date as a direct or indirect result of an act or omission by any person (including, without limitation, the Company or officers, employees, or agents of the Company) prior to the Completion Date.
3.2 Limitations on Payment
(a) Echo is not entitled to make a Payment Request in respect of an Excluded Liability. For the purposes of this Deed, each of the following is an "Excluded Liability":
(i) a liability arising under the EPN or any liability for works required to be undertaken to comply with the EPN or any Environmental Law with respect to the Site except when it arises directly out of an event referred to in Clause 3.1(a);
(ii) a liability to make any payment or lodge any form of performance bond or surety arising under the EPN or any Environmental Laws;
(iii) a liability for which a provision was made in the Accounts but where that provision is insufficient to meet that liability. To the extent only of that deficiency, the liability is an Excluded Liability; or
(iv) a liability that is less than $50,000.
(b) Echo must reimburse to the Bank an amount equal to any sum paid by the Bank in accordance with any Payment Request which is subsequently recovered by or paid to the Company by any third party (including without limitation any insurer).
3.3 Notice of Payment Event
(a) Echo may at any time during the Term give written notification to the Probity Auditor of its intention to make a Payment Request to the Bank for any loss or cost arising out of a Payment Event ("Payment Notification").
(b) A Payment Notification must include the following information:
(i) an outline of the circumstances under which Echo considers that a Payment Event has occurred;
(ii) if Echo considers that a Payment Event under Clause 3.1(a) has occurred, the amount that Echo considers necessary to be paid by the Bank for application by Echo to rectify the damage or otherwise necessary to enable remediation of the Site to be undertaken in accordance with the EPN;
(iii) if Echo considers that a Payment Event under Clause 3.1(b) has occurred, the amount of that liability; and
(iv) all information regarding the appointment by Echo of Expert(s) in respect of the Payment Event;
(v) all information and documentation relating to the Payment Event; and
(vi) any other information reasonably requested from time to time by the Probity Auditor to be provided in a Payment Notification.
(c) Echo may issue more than one Payment Notification in respect of the same Payment Event.
3.4 Consideration of Payment Notification
(a) The Probity Auditor must consider each Payment Notification and in consultation with Echo conduct an independent review of the probity of Echo's processes for validating the Payment Event. Echo's processes will include the appointment of one or more appropriate experts ("Expert(s)") qualified to make the reports and determinations required under Clause 3.4(b) and which is sufficiently independent of Echo to act impartially.
(b) The Expert(s) shall determine:
(i) whether a Payment Event has occurred;
(ii) if the Payment Event arises under Clause 3.1(a), the amount required by Echo to rectify the damage the subject of the Payment Event or otherwise necessary to undertake remediation of the Site in accordance with the EPN; and
(iii) if the Payment Event arises under Clause 3.1(b), the amount required by Echo to meet the liability the subject of the Payment Event,
and issue a report in respect of these matters.
(c) Echo must provide the Expert(s) with any information reasonably required to review any request for payment under a Payment Request.
(d) The Probity Auditor shall review and evaluate all processes adopted by Echo to validate the Payment Event.
(e) The Probity Auditor's procedures will include but not necessarily be limited to:
(i) ensuring that the processes adopted by Echo for appointing the Expert(s), as well as the process for monitoring and review of the Expert(s) work, are fair and reasonable and likely to lead to an impartial and reliable Expert Report;
(ii) monitoring communications between Echo and any Expert(s) during Echo's validation of the Payment Event and the final recommendation by the Expert(s) and it shall be Echo's responsibility to provide the Probity Auditor with copies of all such communications as reasonably requested by the Probity Auditor; and
(iii) reporting to Echo on any issues raised that relate to the probity of the above processes as they arise.
(f) The Probity Auditor will consider the Expert Report(s) and the report made by Echo and report to Echo as expeditiously as possible and in any event within 1 month of receipt by the Probity Auditor of the Expert(s) Report and the report made by Echo as to whether the processes adopted by Echo to validate:
(i) whether a Payment Event has occurred; and
(ii) if such an (sic) Payment Event has occurred the amount Echo determines is payable under the Payment Request,
have been fair and equitable and conducted with due probity.
(g) In making its report under Clause 3.4(f), the Probity Auditor acts as an expert and not as an arbitrator. The Probity Auditor is an independent observer and advisor, who will not be held responsible for the conclusions reached by Echo and/or the Expert(s) but is merely retained to monitor the probity of the processes undertaken by Echo.
3.5 Probity Audit Notice
When the Probity Auditor issues its report to Echo pursuant to Clause 3.4(f), if the results of that report confirm that all processes relating to the Payment Event adopted by Echo have been fair and equitable and conducted with due probity, it shall also provide Echo with a notice in the form of Schedule 1 (a "Probity Audit Notice").
4. CONFIDENTIALITY
4.1 Confidentiality Undertaking
A Party:
(a) must keep confidential any Confidential Information and all Confidential Information disclosed to, by or on behalf of a Party, or of which the Party becomes aware (whether before or after the date of this Agreement); and
(b) may only disclose any Confidential Information in respect of which the Party has an obligation of confidentiality:
(i) to those of its officers, employees, agents, consultants or advisers who:
(A) have a need to know for the purpose of this Deed and transactions contemplated by it; and
(B) undertake to be bound by the confidentiality undertakings in this Clause;
(ii) if required to do so by any Applicable Law; or
(i)(sic) with the prior written approval of the other Party to this Deed.
…'
80 Schedule 1 to the Deed of Appointment of Probity Auditor of 1 October 2002 took the same form as the second page of Schedule 1 to the form of 'Westpac Banker's Undertaking' referred to above, being in the form of the 'Probity Audit Notice'.
81 In consideration of Westpac Banking Corporation giving the Banker's Undertaking to the first respondent, the applicant gave Westpac Banking Corporation an 'Indemnity Re: Bonds and GX Guarantees' under which the payments of $4,165,210.23 and $1,011,654.81 to Westpac Banking Corporation were made by the applicant on 9 October 2006 and 23 November 2006 respectively. That indemnity relevantly provided:
'Indemnity Re: Bonds and GX Guarantees
To: Westpac Banking Corporation ABN 33 007 457 141
(Westpac)
In consideration of Westpac at the request of IMPERIAL CHEMICAL INDUSTRIES PLC (the Applicant) executing an undertaking (the "Instrument") in favour of Echo Tasmania Pty Limited (the "favouree") in the form annexed to this Indemnity and provided that Westpac has paid out in compliance with the terms of the Instrument, the Applicant agrees:
1. (General indemnity): To fully indemnify Westpac against all claims, proceedings, losses and liabilities of any kind whatsoever which may be made or arise by reason of the Instrument.
2. (Indemnity for amounts paid): Within 5 days of a demand being made by Westpac to pay any amount which Westpac may be called upon to pay (or may in its discretion pay pursuant to Clause 14 of this Indemnity) under or in connection with the Instrument.
…
7 (a) (Payment against documents without reference): That without limiting or in any way affecting any of the provisions of this indemnity: Westpac may pay to the favouree any amount which Westpac may be called upon to pay under the Instrument without reference to the Applicant Provided Always that each payment shall be made in accordance with the terms contained in the Instrument and without making any enquiry or requiring or receiving any evidence other than that specified in the Instrument; and
(b) Other than as specified in the Instrument Westpac has no responsibility to investigate the correctness of any statements or information or documents furnished to Westpac in pursuance or purported pursuance of any condition contained in the Instrument or to investigate the authenticity of any signature or purported signature appearing upon any such document or that any signatory or purported signatory of any such document possesses any title office or position which in such document he claims or purports to possess or the capacity or entitlement of any such signatory or purported signatory to make/sign any document being or purporting to have been made/given pursuant to the terms of the Instrument.
…
9 (Demands): In making any demand for payment hereunder, Westpac shall provide such documentation to the Applicant as is reasonably necessary to evidence the amount which is the subject of the demand.
…'
82 The indemnity was provided to Westpac Banking Corporation by the applicant by an instrument dated 26 September 2002.
83 It will be recalled that the Banker's Undertaking given by Westpac Banking Corporation to the first respondent had a life of five years (see [77]). The Banker's Undertaking, the form of which was Annexure C to the Share Purchase Agreement, contemplated that no liability to make a payment would arise unless a Payment Request and Claim Certification with an attached Probity Audit Notice was received by the Bank no later then 4:00 pm on the fifth anniversary of the date of the Banker's Undertaking.
Notwithstanding this limitation, it was implicit, from the terms of the Deed Appointing Probity Auditor of 1 October 2002, that the Probity Auditor could not provide the first respondent with a Probity Audit Notice if, prior to 1 October 2007, a change in the controlling shareholder of the first respondent had occurred. There was certainly reasonable cause to believe that that was the case.
84 An ASIC [Australian Securities and Investments Commission] Historical Company Extract as at 7 March 2007 showed the directors of the first respondent as Tony Tasman Harrison (Appointment Date: 3 September 2003) and Julian Charles Homer (Appointment Date: 1 April 2003). Mr Hartley was identified as a former director who ceased to hold office on 3 September 2003.
85 In relation to issued shares, the ASIC Historical Company Extract indicated that the first respondent had 10 'class A' shares on issue and 995 'class C' shares on issue.
86 The ASIC Historical Company Extract indicated that all of the ten Class A shares were held by Mr Homer and all of the 995 Class C shares were held by 104 293 129 Echo Foundation Pty Ltd ABN 48 104 293 129.
87 The ASIC Historical Company Extract for the first respondent identified the 'Ultimate Holding Company' as 104 253 705 North West Foundation Pty Ltd ABN 23 104 253 705.
88 By letter dated 26 April 2007 the then solicitors for the first respondent forwarded a copy of what was said to be the first respondent's share register to the solicitors for the applicant.
The copy register of members suggested that the one ordinary share in the first respondent had been allotted to Mr Hartley on 16 August 2002 and that that share had been transferred by him to 'Echo Foundation A.C.N. 104 253 705' (sic) on 1 April 2003.
In another folio of the first respondent's register of members it was suggested that the owner of that share had become 'Echo Foundation Pty Ltd A.C.N. 104 293 129' on 1 April 2003 and that it had been converted into a 'C Class' share.
89 The register of members suggests that on 1 April 2003 a further 994 C Class shares in the capital of the first respondent had been allotted to Echo Foundation Pty Ltd ACN 104 293 129, bringing that company's total shareholding in the first respondent up to 995 C Class shares.
90 A further folio in the first respondent's register of members suggests that on 1 April 2003 ten 'A Class' shares in the first respondent had been allotted to Mr Hartley who proceeded to transfer one only of those shares to Julian Charles Homer on that day, leaving Mr Hartley as the owner of nine A Class shares and Mr Homer as the owner of one A Class share, contrary to what was later revealed in the ASIC Historical Company Extract.
91 On or about 23 April 2007 it would appear that the first respondent lodged a 'Request to withdraw a lodged document' with the Australian Securities and Investments Commission. That request was apparently signed by Mr Homer as a director of the first respondent on 20 April 2007. By his signature he certified 'that the information in this form is true and complete'. The 'lodged document' which the first respondent sought to 'withdraw' was described as a 'change to company details changes to (members) share' form lodged on 7 March 2005 as ASIC document number 020919648.
92 The reason why the withdrawal of the document was requested was said to be that 'A notified event has failed to occur'. The relevant 'specific details' provided by the first respondent were as follows:
'A TRANSER OF A CLASS SHARES FAILED TO VALIDLY OCCUR BECAUSE THE SHARE TRANSFER FORM WAS NEVER SIGNED BY THE TRANSFEROR AND NO CONSIDERATION WAS EVER PAID. FURTHERMORE, THE SHARE TRANSFER FORM WAS NEVER STAMPED FOR STAMP DUTY PURPOSES AND NO ENTRY WAS MADE ON THE REGISTER OF MEMBERS. ACCORDINGLY, CHRISTOPHER IAN JAMES HARTLEY IS STILL THE LEGAL OWNER OF 9 A CLASS SHARES IN THE COMPANY.'
93 Somewhat curiously the ASIC Historical Company Extract never showed Mr Hartley as being an owner of one or ten A Class shares in the first respondent. It simply showed him as being a former owner of nine A Class shares (cf [90] above).
94 As it transpires a 'Change to Company Details Changes to (Members) Share Holdings' form was apparently lodged with the Australian Securities and Investments Commission by the first respondent, as document number 020919648, on 7 March 2005. That document had apparently been signed by Julian Charles Homer on 1 March 2005. Mr Homer purported to sign the document as a director of the first respondent and by his signature he certified that 'the information in this cover sheet and the attached sections of this form are true and complete'. Section C of the form suggested that there had been a transfer of shares in the first respondent, with Mr Hartley ceasing, on 3 September 2003, to be the owner of nine A Class shares and Julian Charles Homer becoming the owner of nine A Class shares on that day.
95 In a letter dated 30 August 2007 from Truman Hoyle Lawyers, who claimed to be the solicitors for Mr Hartley, to the applicant, that firm said:
'Our client has never disposed of his 9 A Class shares in Echo. He has never authorised any such transfer verbally or in writing.'
96 However, there is an unstamped 'Standard Transfer Form' in evidence which was forwarded by the current solicitors for the first respondent to the solicitors for the applicant on 28 August 2007. That Standard Transfer Form bears a signature against the word 'transferee'. It shows as the 'Date of Purchase' 3 September 2003 and is said to relate to a transfer of nine A Class shares in the first respondent from 'Christopher Hartley' to 'Julian Homer'. The form does not bear a signature against the word 'transferor'.
97 Under clause 159 of the constitution of the first respondent provision was made for the capital of the first respondent to be divided into a number of different classes of shares. By virtue of clause 160, 'A' Class shares were voting shares, as were ordinary shares, and 'C' Class shares were non-voting shares.
98 Clause 85 of the constitution empowered the directors to allot and issue unissued shares and clause 124 made provision for the transfer of shares by members. Clauses 124-126 of the constitution provided as follows:
'124. Subject to this Constitution, a Member may transfer one or more Shares the Member holds by an instrument of transfer which is in writing, is in any usual form or in any other form approved by the Directors that is otherwise permitted by law, and is executed by or on behalf of both the transferor and the transferee.
125. An instrument of transfer of Shares must be delivered to the Company for registration at the place where the Register is kept together with the certificate (if any) of the Share to be transferred and any other evidence as the Directors require to prove the title of the transferor to that Share, the right of the transferor to transfer that Share, and the proper execution of the instrument of transfer.
126. A person transferring a Share remains the registered holder of that Share until the transfer for that Share is registered and the name of the person to whom the Share is being transferred is entered in the Register as the holder of that Share.'
99 Section 1274B(2) of the Corporations Act 2001 (Cth) ('the Corporations Act') provides:
'1274B(2) In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the writing is proof of such a matter in the absence of evidence to the contrary.'
100 Section 1305 of the Corporations Act provides:
'1305(1) A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.
(2) A document purporting to be a book kept by a body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1)'
101 Under s 176 of the Corporations Act a register of members may be taken to be proof of the matters shown in the register in the absence of evidence to the contrary.
102 No evidence was given by Mr Homer to explain his certification of the 'Change to company details' form lodged with ASIC number 020919648 on 7 March 2005 in respect of an alleged change of ownership of nine A Class shares in the first respondent on 3 September 2003 from Mr Hartley to himself. Nor was any evidence called to explain the disclosure of 104 253 705 North West Foundation Pty Ltd as the 'Ultimate Holding Company'.
103 Notwithstanding the evidence of the Standard Transfer Form in respect of a purchase on 3 September 2003 of nine A Class shares in the first respondent, which bears a signature that vaguely resembles that which appears against Mr Homer's name on the ASIC form lodged on 7 March 2005 and no transferor's signature, nevertheless, in my opinion, there is reasonable cause to believe that Mr Hartley may have transferred nine A Class shares in the first respondent to Mr Homer at some stage prior to 1 March 2005.
Share transfers under the Corporations Act
104 Whoever coined the expression 'as clear as mud' must have been slaving over the extraordinarily, and unnecessarily, complex provisions of the Corporations Act and the Corporations Regulations 2001 (Cth) ('the Corporations Regulations') relating to the transfer of shares in a proprietary company at the time.
Gaining an understanding of the relevant law on this subject back in 1961 involved a five minute exercise, reference being had to a couple of consecutive sections in the then Uniform Companies Act along with a couple of clauses in the relevant company's Articles of Association or in a set of 'Table A' Articles as recorded in the Fourth Schedule to that Act. Today, a like exercise requires hours of study, reference to numerous sections and regulations, which themselves make no sense without reference to numerous definitions, often shrouded in obfuscation, and, needless to say, strewn throughout the Corporations Act and the Corporations Regulations in various places such as ss 9 and 761A and regulations 1.0.02 and 7.11.01.
105 The starting point seems to be s 1070A(1) of the Corporations Act, which provides as follows:
'1070A(1) A share … in a company ... :
(a) is personal property; and
(b) is transferable … as provided by:
(i) the company's … constitution; or
(ii) the operating rules of a prescribed CS facility if they are applicable; and
(c) is capable of devolution by will or by operation of law.'
106 The next step along the tortuous road towards discovering the requirements of the Corporations Act in relation to share transfers is to go to Subdivision A of Division 2 of Part 7.11 of the Corporations Act. That Subdivision commences with s 1071A, which relevantly provides:
'1071A(1) This Subdivision applies to the following securities:
(a) shares in a company;
…'
107 One then turns to s 1071B of the Corporations Act, the next section that falls within Subdivision A of Division 2 of Part 7.11. It relevantly provides:
'1071B(1) This section does not apply to a transfer of a security through a prescribed CS facility.
(2) Subject to subsection (5), a company must only register a transfer of securities if a proper instrument of transfer (see subsections (3) and (4)) has been delivered to the company. This is so despite:
(a) anything in its constitution; …
…
(3) An instrument of transfer is not a proper instrument of transfer for the purposes of subsection (2) if it does not show the details, specified in the regulations, in relation to the company concerned.
(4) If the transfer of the securities is covered by Division 3 of this Part, then (in addition to subsection (3)), the instrument is not a proper instrument of transfer for the purposes of subsection (2) unless it is a sufficient transfer of the securities under regulations made for the purposes of that Division.
(5) Subsection (2) does not prejudice the power of the company to register, as the holder of securities, a person to whom the right to the securities has devolved by will or by operation of law.
…'
108 It may be observed that s 1071B(2) of the Corporations Act clearly proscribes the registration of a share transfer in the absence of a proper instrument of transfer. Such an instrument of transfer must meet the requirements of s 1071B(3) showing the details specified in the relevant regulations, and also s 1071B(4), if it applies, and the relevant regulations.
109 Division 3 of Part 7.11 of the Corporations Act deals with the 'Transfer of certain securities effected otherwise than through a prescribed CS facility'. It commences with s 1073A and concludes with s 1073F.
110 Section 1073A(1) relevantly provides:
'1073A(1) This Division applies to the following securities:
(a) shares in a company;
…'
111 By virtue of s 1073F of the Corporations Act, Division 3 of Part 7.11 of the Act and the regulations made for the purposes of that Division are rendered paramount. Section 1073F relevantly provides:
'1073F(1) This section deals with the effect of the provisions of:
(a) this Division; and
(b) the regulations made for the purposes of this Division.
(2) The provisions apply in relation to a transfer of securities despite anything to the contrary in:
(a) this Act (other than this Division); or
(b) another law, or instrument, relating to the transfer of the securities.
…
(6) Nothing in the provisions prevents or affects the use of:
(a) any other form of transfer of securities; or
(b) any other mode of executing a document transferring securities;
that is otherwise permitted by law.
…'
112 A curious feature of Division 3 of Part 7.11 is that it empowers the making of regulations in relation to transfers of securities that are not effected through a prescribed CS facility but focuses almost exclusively on transfers of securities between persons represented by brokers and says virtually nothing about transfers of shares directly from a company member to a third party.
113 Section 1073D provides, inter alia:
'1073D(2) The regulations may specify:
(a) the way in which a security may be transferred, including:
(i) the forms (if any) to be used; and
(ii) what amounts to a proper or sufficient transfer of a security; and
(b) the legal effect of a proper or sufficient transfer of a security; and
(c) the rights, liabilities and obligations of a person in relation to the transfer of a security, including the rights, liabilities and obligations of:
(i) the transferor and transferee; and
(ii) any other person involved in the transfer; and
(d) the circumstances in which a person will be taken to be involved in the transfer of a security for the purposes of the regulations; and
(e) the circumstances in which a person is required not to register, or give effect to, a transfer.
1073D(3) Without limiting paragraph (2)(a), the regulations may:
(a) specify the requirements for a document to be a sufficient transfer of a security; and
(b) provide that a document meeting specified requirements may be used:
(i) as a proper instrument of transfer for the purposes of section 1071B; and
(ii) as an instrument of transfer for the purposes of any other law or instrument governing or relating to the security.
…'
114 The obscurity of meaning of the relevant provisions of the Corporations Act dealing with the transfer of shares is compounded by the regulations that are relevantly to be found in Part 7.11 of the Corporations Regulations, which commence with regulation 7.11.01 and conclude with regulation 7.11.22. It is also necessary to have regard to Forms 1 – 4 inclusive which are to be found in Schedule 2A to the Corporations Regulations.
115 The first matter to address by reference to the Regulations is the identification of the 'the details, specified in the regulations' which an instrument of transfer of a share must show in order to be a proper instrument of transfer for the purposes of s 1071B(2) of the Corporations Act (see s 1071B(3)).
116 Given that the shares in the first respondent are 'unquoted securities' within the meaning of regulation 7.11.22(2) of the Corporations Regulations, the details required by s 1071B(3) may be found in regulation 7.11.22(1), which provides as follows:
'7.11.22(1) For subsection 1071B(3) of the Act, for a transfer of unquoted securities, the State or Territory in this jurisdiction in which the company is taken to be registered is a prescribed detail.'
117 The effect of this regulation when taken with s 1071B(2) – (3) of the Corporations Act is such that, given that the first respondent was taken to be registered in the State of New South Wales, then a proper instrument of transfer of shares in it would need to show that fact (see also s 119A(2) of the Corporations Act). So much for s 1071B(3) of the Corporations Act.
118 The next task is to ascertain what is necessary to render an instrument of transfer of a share, a proper instrument of transfer within the meaning of s 1071B(4) of the Corporations Act. When will an instrument of transfer answer the description of 'a sufficient transfer of the securities under regulations made for the purposes of [Division 3 of Part 7.11 of the Act]'?
119 Division 3 of regulation 7.11 of the Corporations Regulations commences with regulation 7.11.10 and concludes with regulation 7.11.22. Regulation 7.11.10 provides:
'7.11.10 This Division is made under section 1073D of the Act, and applies to transfers of Division 3 securities [defined in regulation 1.0.02(1) to include "Division 3 assets", which in turn is defined in regulation 1.1.02(1) to include "(a) shares mentioned in paragraph 1073A(1)(a) of the Act"] effected otherwise than through a prescribed CS facility.'
120 Regulation 7.11.11(1) provides for a document to constitute 'a sufficient transfer of Division 3 assets' if, amongst other things, it is duly completed in accordance with documentation meeting the requirements of the relevant parts of Forms 1, 2, 3 or 4, none of which appear to have any application to a transfer otherwise than through a broker.
121 Regulation 7.11.14 provides an express link to s 1071B(4) of the Act. It relevantly provides:
'7.11.14(1) A document that is a sufficient transfer of Division 3 assets may be used:
(a) as a proper instrument of transfer for section 1071B of the Act; …
…'
122 In the case of the transfer of shares in accordance with one or other of the Forms 1 – 4 inclusive, regulation 7.11.15 provides for transferees under 'sufficient transfers' to become bound by the relevant company's constitution.
123 Regulation 7.11.15 provides as follows:
'7.11.15(1) If Division 3 assets are transferred by means of a sufficient transfer:
(a) the transferee is taken to have agreed at the execution time to accept the Division 3 assets subject to the terms and conditions on which the transferor held them at that time; and
(b) the terms and conditions are the terms and conditions applicable as between:
(i) the issuer in relation to the Division 3 assets; and
(ii) the holder for the time being of the Division 3 assets.
(2) If the Division 3 assets are shares, the transferee is also taken to have agreed, at the execution time:
(a) to become a member of the issuer; and
(b) to be bound, on being registered as the holder of the shares, by the issuer's constitution.'
124 The absurdity of trying to apply these provisions of the Corporations Act, the Corporations Regulations and Forms 1 – 4 under the Corporations Regulations to transfers of shares otherwise than through a broker may well be overcome by s 1073F(6) of the Act. Notwithstanding the paramountcy conferred on Division 3 of Part 7.11 of the Act and the regulations made for the purposes of that Division, it may be that s 1073F(6) prevails even over the other provisions of Division 3 of Part 7.11 of the Act and the Regulations made for the purposes of that Division. As noted above it provided that nothing in the provisions of Division 3 of Part 7.11 and the regulations made for the purposes of that Division should prevent or affect the use of 'any other form of transfer of securities [which would include shares]' that is 'otherwise permitted by law'.
125 I would conclude that a traditional form of share transfer signed by a transferor and transferee in relation to shares in a company effected otherwise than through a broker could constitute a 'proper instrument of transfer' within the meaning of s 1071B(2) of the Corporations Act, notwithstanding the provisions of s 1071B(4) and the lack of a 'sufficient transfer' within the meaning of that subsection.
What I have just said does not imply that an instrument of transfer which fails to comply with regulation 7.11.22(1) could be validly registered under s 1071B(2) of the Corporations Act.
Documents covered by Order 15A rule 6(c)
126 In the foregoing circumstances there is, in my opinion, reasonable cause to believe that the first respondent has or is likely to have or has had or is likely to have had possession of a number of documents relating to the question whether the applicant has the right to obtain relief in the Court from the first respondent, the inspection of which by the applicant would assist it in making a decision whether to commence a proceeding in the Court to obtain such relief. The documents would appear to include:
(a) the Deed of Appointment of Replacement Probity Auditor dated 27 March 2006;
(b) minutes of meetings of directors of the first respondent dealing with the allotment, conversion and transfer of its shares;
(c) the first respondent's register of members set up and maintained in accordance with ss 168-9 of the Corporations Act;
(d) minutes of meetings of directors of the first respondent in relation to the changes that occurred on or about 3 September 2003;
(e) documents recording or relating to the adverse effect on the Heybridge site of fire, flood, storm, drought, natural disaster or reed death, if any, between 1 October 2002 and 1 November 2006;
(f) documents recording or relating to actual or contingent liabilities or claims in respect of such liabilities of Tioxide Australia Pty Limited which were in existence as at 1 October 2002 or arose after 1 October 2002 as a direct or indirect result of an act or omission by any person prior to 1 October 2002;
(g) documents relating to any failure of any reduction system at the Heybridge site which predated 31 May 2006;
(h) documents relating to decontamination caused by leakage from a buried fuel tank which gave rise to an actual or contingent liability of Tioxide Australia Pty Limited;
(i) documents relating to the removal of infrastructure for which a provision had not been made in the accounts of Tioxide Australia Pty Limited as at 31 December 2001;
(j) documents relating to liabilities arising under Environmental Protection Notices numbers 323/1, 39/1, 40/1 and 41/1 or any of them or for works required to be undertaken to comply with them or any of them or any environmental law with respect to the Heybridge site between 1 October 2002 and 1 November 2006;
(k) documents relating to the provisions referred to in note 10 of the notes to the financial statements of Tioxide Australia Pty Limited for the year ended 31 December 2001;
(l) copies of written notifications given to Ernst & Young and/or the second respondent of the first respondent's intention to make a payment request or requests to Westpac Banking Corporation;
(m) documents relating to the appointment of experts by the first respondent to make reports and determinations in respect of payment events said to have occurred which were the subject of notifications to Ernst & Young and/or the second respondent recording the first respondent's intention to make a payment request or requests to Westpac Banking Corporation;
(n) reports of experts appointed by the first respondent in respect of Payment Events said by the first respondent to have occurred;
(o) reports made by Ernst & Young and/or the second respondent and provided to the first respondent between 1 October 2002 and 1 November 2006.
127 Furthermore, there is, in my opinion, reasonable cause to believe that the second respondent has or is likely to have or has had or is likely to have had possession of a number of documents relating to the question whether the applicant has the right to obtain relief in the Court from the second respondent, the inspection of which by the applicant would assist it in making a decision whether to commence a proceeding in the Court to obtain such relief. The documents would appear to include documents within the categories identified in paragraph 126(a), (l), (m), (n) and (o) and, possibly, paragraph 126(g), (h) and (i) also.
128 In his affidavit sworn 9 July 2007 Mr Ross deposed, inter alia, as follows:
'29 In the May Probity Audit Notice, the first Payment Event is described as: "Failure of reduction system giving rise to a payment event pursuant to clauses 3.1(a) and 3.1(b) of the Deed". As I understand it, the reduction system was a system that was to be implemented in order to decontaminate the site for the purposes of complying with the EPN and relevant environmental legislation. I am not aware of there being any event of the kind described in clause 3.1(a) of the Probity Deed that could have caused this system to fail.
30 In the May Probity Audit Notice, the second Payment Event is described as: "Decontamination caused by leakage from a buried fuel tank, giving rise to a payment event pursuant to Clause 3.1(b) of the Deed". … I am not aware of any such liability nor, so far as I am aware, is anyone else within ICI. Further, there is no statement that the liability was not an excluded liability under clause 3.2 of the Probity Deed. The general description of the event, and in particular the reference to "decontamination", gives me reason to believe that, if there was a liability at all, it was one that may fall within clause 3.2(a)(i) of the Probity Deed.
31 In the November Probity Audit Notice, the Payment Event is described as: "Removal of infrastructure giving rise to a payment event pursuant to clause 3.1(b) of the Deed". … I am not aware of any such liability nor, so far as I am aware, is anyone else within ICI. As I understand it the only infrastructure on the site following its sale to Echo [referring to the first respondent] was infrastructure that was put on to the site and was being used on the site by Echo for the purposes of performing work to comply with the EPN and environmental law, and for that reason, if there was a liability at all, I believe it may be an excluded liability under clause 3.2 of the Deed.
32 … ICI has requested Echo to supply it with documents concerning each of the events described in the notices, but Echo has refused to do so.
33 ICI is attempting to decide whether to commence legal proceedings against Echo in relation to these matters and I am involved in that process. The decision includes whether to sue Echo for damages for misleading conduct and negligence.
34 I have not been able to make a decision about whether ICI should commence proceedings because, although I believe from the matters described in this affidavit that the position may be that the amounts Echo claimed from Westpac were not in respect of Payment Events (and therefore not claimable), I have not had access to sufficient information relating to that matter.
…
36 … having regard to the cost of litigation and ICI's desire not to commence and pursue proceedings which would ultimately fail because of information not known to it when the proceedings were commenced, I do not believe that ICI has sufficient information to enable a decision to be made as to whether it should commence proceedings against Echo.
…
43 Without more information about the circumstances of the purported appointment of Deloitte as Probity Auditor, I do not know whether Echo's claims have been supported by valid Probity Audit Notices.
…
45 ICI is attempting to decide whether to commence legal proceedings against Deloitte and I am involved in that process. The decision includes whether to sue Deloitte for damages for misleading conduct and negligence. I have not been able to make a decision about whether ICI should commence proceedings …
…
47 … I do not believe that ICI has sufficient information to enable a decision to be made as to whether it should commence proceedings against Deloitte.
48 … ICI has sought information from Deloitte … but Deloitte has not provided that information.
…'
129 In schedules one and two to the outline of submissions for the applicant, the applicant has set out the 'causes of action that ICI has within its reasonable contemplation' against the first respondent and, similarly, against the second respondent.
130 The categories of documents in respect of which the applicant seeks an order that the first respondent make discovery, referred to in the Application filed 11 July 2007, were:
'(a) the Deed of Appointment of Replacement Probity Auditor dated 27 March 2006 between the first and second respondents ("Replacement Probity Deed");
(b) each and every notification given to a person appointed as "Probity Auditor" under the Deed Appointing Probity Auditor, between Echo [referring to the first respondent] and Ernst & Young, dated 1 October 2002 ("Probity Deed") as amended by the Replacement Probity Deed, in respect of any one or more of the events the subject of:
(i) the letter from the second respondent to Mr Julian Homer at Echo Tasmania Pty Ltd [referring to the first respondent], dated 31 May 2006 and entitled "Probity Audit Notice" ("May Probity Audit Notice"); and
(ii) the letter from the second respondent to Mr Julian Homer at Echo Tasmania Pty Ltd [referring to the first respondent], dated 1 November 2006 and entitled "Probity Audit Notice" ("November Probity Audit Notice");
(c) all documents and records of information provided to a Probity Auditor in relation to any one or more of those events;
(d) all documents recording any instructions, information or documents given by the first respondent to any expert in relation to any one or more of those events;
(e) all documents recording any and all communications between the first respondent and any expert in relation to any one or more of those events;
(f) each and every report, including any expert report, provided to the first respondent in respect of any one or more of those events;
(g) all documents recording any and all communications between the first respondent and a Probity Auditor in relation to any one or more of those events;
(h) any other document relating to the extent to which each event the subject of the May Probity Audit Notice and the November Probity Audit Notice was a "Payment Event" falling within clause 3.1 of the Probity Deed and not excluded by clause 3.2 of the Probity Deed;
…
(j) all documents regarding:
(i) the transfer of shares in the first respondent from Christopher Ian James Hartley to Julian Charles Homer on 3 September 2003 which was notified to ASIC in the share transfer notification lodged with ASIC on 7 March 2005; and
(ii) why that share transfer notification to ASIC was withdrawn,
excluding the first respondent's share register and documents lodged with ASIC.
(k) all documents regarding the first respondent's verification processes for determiningwhether there had been a change in controlling shareholder of the first respondent prior to it making each of the June claim and the November claim.
131 In respect of the second respondent the categories of documents in respect of which the applicant seeks an order that the second respondent make discovery were as follows:
'(a) the Replacement Probity Deed;
(b) documents recording communications with the second respondent in relation to it being retained to act as "Probity Auditor";
(c) documents recording any information provided to the second respondent, or any consideration given by the second respondent, in relation to the reason(s) why the role of probity auditor had been created;
(d) documents held by the second respondent relating to the extent to which it knew that the applicant may be liable to pay to Westpac Banking Corporation all or any part of sums paid by Westpac Banking Corporation to the first respondent;
(e) any copy of any one or more of the following documents:
(i) the Share Purchase Agreement between Australian Titanium Products Pty Ltd (ACN 009 553 995) ("ATP") and the first respondent, dated 1 October 2002;
(ii) the Probity Deed;
(iii) the Westpac Banker's Undertaking to the first respondent, dated 26 September 2002;
(iv) the applicant's indemnity to Westpac Banking Corporation, dated 26 September 2002;
(f) each and every notification given to the second respondent in respect of any one or more of the events the subject of the May Probity Audit Notice and the November Probity Audit Notice;
(g) all documents and records of information given to the second respondent that relate to any one or more of the events the subject of the May Probity Audit Notice and the November Probity Audit Notice;
(h) documents relating to any consideration given by the second respondent to any such notification, documentation and information;
(i) documents relating to any review undertaken or consideration given by the second respondent of the probity of the first respondent's processes for validating the existence of a Payment Event as defined under clause 3.1 of the Probity Deed;
(j) documents relating to any consideration given by the second respondent to the report of any expert retained by the first respondent.'
132 Having regard to the facts of this case, the first respondent would, in my opinion, have reasonably expected that Australian Titanium Products Pty Limited or the applicant or another company related to Australian Titanium Products Pty Limited would have given an indemnity to Westpac Banking Corporation in respect of any payments made by the Bank to the first respondent under the Banker's Undertaking. Furthermore, the second respondent would, in my opinion, have reasonably expected that another person would have given an indemnity to Westpac Banking Corporation in respect of the commitments undertaken by the Bank under the Banker's Undertaking.
133 Given the fact that the Deed Appointing Probity Auditor between Ernst & Young and the first respondent was apparently 'amended' by the Deed of Appointment of Replacement Probity Auditor dated 27 March 2006; the peculiar circumstances relating to the issue and transfer of A Class shares in the first respondent with the unexplained certification by Mr Homer, a director of the first respondent, that he had become the owner of nine A Class shares in the first respondent, previously held by Mr Hartley, on 3 September 2003; the narrow compass of payment events within the meaning of the Deed Appointing Probity Auditor made on 1 October 2002; the width of Excluded Liabilities under the Probity Deed; the provision for the shortening of the term covered by the Probity Deed and the identification by the second respondent of the Payment Events mentioned in the Probity Audit Notices issued by the second respondent on 31 May 2006 and 1 November 2006, when taken with the matters to which Mr Ross deposed in his affidavit sworn 9 July 2007, it seems to me, applying the tests formulated above, that:
· there is reasonable cause to believe that the applicant may have the right to obtain relief in the Court from each of the first respondent and the second respondent as foreshadowed by it;
· after making all reasonable inquiries, the applicant does not have sufficient information to enable a decision to be made whether to commence proceedings in the Court to obtain that relief; and
· there is reasonable cause to believe that each of the first and second respondents has or has had or is likely to have had possession of documents relating to the question whether the applicant has the right to obtain relief in the Court from each of them; and, finally
· inspection of the documents by the applicant would assist it in making the decision whether to commence a proceeding in the Court to obtain the relevant relief against the first respondent and/or the second respondent.
Accordingly, orders should be made that each of the first respondent and the second respondent make discovery to the applicant of the documents of which discovery has been sought in the Application filed 11 July 2007.
134 I am satisfied that each of the three elements has been satisfied in relation to each of the prospective respondents. This is not a case where the applicant was placing reliance upon mere assertion, conjecture or suspicion. What's more, Mr Ross' evidence was unchallenged and no evidence was forthcoming from Mr Hartley, Mr Homer or Mr Harrison for the first respondent or from Mr Lester for the second respondent.
135 In my opinion the respondents should be ordered to pay the applicant's costs of the application, subject to orders being made that the costs of making the relevant discovery be paid by the applicant.
I certify that the preceding one hundred and thirty-five (135) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.
Associate:
Dated: 13 November 2007
Counsel for the Applicant: I M Jackman SC and M R Elliott
Solicitors for the Applicant: Mallesons Stephen Jaques
Counsel for the First Respondent: G K J Rich
Solicitors for the First Respondent: Addisons
Counsel for the Second Respondent: F Gleeson SC
Solicitors for the Second Respondent: Freehills
Dates of Hearing: 22, 23 October 2007
Date of Judgment: 13 November 2007
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Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2007] FCA 1559
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2007/2007fca1559
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2024-09-13T22:51:53.742527+10:00
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FEDERAL COURT OF AUSTRALIA
Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2007] FCA 1559
PRACTICE AND PROCEDURE – application for further discovery – period from which documents discovered – scope of discovery includes documents relating to primary and input products – deferral of discovery pertaining to causation and damages not appropriate.
McMullin v ICI Australia Operations Pty Ltd [1996]FCA 991 considered
JARRA CREEK CENTRAL PACKING SHED PTY LTD (ACN 085 691 425) v AMCOR LIMITED (ACN 000 017 372), AMCOR PACKAGING (AUSTRALIA) PTY LIMITED (ACN 004 275 165), FIBRE CONTAINERS (QUEENSLAND) PTY LIMITED (ACN 051 607 517), VISY BOARD PTY LIMITED(ACN 005 787 913), VISY INDUSTRIES HOLDINGS PTY LTD (ACN 005 787 968) AND VISY INDUSTRIES AUSTRALIA PTY LTD (ACN 004 337 615)
NSD 702 OF 2006
TAMBERLIN J
12 OCTOBER 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 702 OF 2006
BETWEEN: JARRA CREEK CENTRAL PACKING SHED PTY LTD
(ACN 085 691 425)
Applicant
AND: AMCOR LIMITED (ACN 000 017 372)
First Respondent/First Cross-Claimant
AMCOR PACKAGING (AUSTRALIA) PTY LIMITED
(ACN 004 275 165)
Second Respondent/Second Cross-Claimant
FIBRE CONTAINERS (QUEENSLAND) PTY LIMITED
(ACN 051 607 517)
Third Respondent/Third Cross-Claimant
VISY BOARD PTY LIMITED (ACN 005 787 913)
First Cross-Respondent
VISY INDUSTRIES HOLDINGS PTY LTD (ACN 005 787 968)
Second Cross-Respondent
VISY INDUSTRIES AUSTRALIA PTY LTD (ACN 004 337 615)
Third Cross-Respondent
JUDGE: TAMBERLIN J
DATE OF ORDER: 12 OCTOBER 2007
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The applicant serve draft Short Minutes of Orders to give effect to these reasons.
2. Costs are reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD 702 OF 2006
BETWEEN: JARRA CREEK CENTRAL PACKING SHED PTY LTD
(ACN 085 691 425)
Applicant
AND: AMCOR LIMITED (ACN 000 017 372)
First Respondent/First Cross-Claimant
AMCOR PACKAGING (AUSTRALIA) PTY LIMITED
(ACN 004 275 165)
Second Respondent/Second Cross-Claimant
FIBRE CONTAINERS (QUEENSLAND) PTY LIMITED
(ACN 051 607 517)
Third Respondent/Third Cross-Claimant
VISY BOARD PTY LIMITED (ACN 005 787 913)
First Cross-Respondent
VISY INDUSTRIES HOLDINGS PTY LTD (ACN 005 787 968)
Second Cross-Respondent
VISY INDUSTRIES AUSTRALIA PTY LTD (ACN 004 337 615)
Third Cross-Respondent
JUDGE: TAMBERLIN J
DATE: 12 OCTOBER 2007
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This is an application for further discovery in the context of a representative proceeding by the applicant ("Jarra Creek") against the respondents ("Amcor") and cross-respondents ("Visy") on the ground that, although they were competitors in the corrugated fibre products ("CFP") market in Australia, Amcor and Visy entered into an understanding in about January 2000 as to the setting of prices to be charged for CFP, thereby breaching the Trade Practices Act 1974 (Cth) and causing Jarra Creek, and the members of the class it represents, loss and damage.
2 These reasons relate to a motion brought by Jarra Creek proposing categories of further documents to be discovered by Amcor and Visy. In broad terms, the issue is whether Amcor and Visy should be required to make discovery of the documents referred to in the following seven general categories proposed by Jarra Creek:
'3. Investigations by regulatory authorities;
4. Capacity to influence price;
5. Sales & Marketing, Pricing;
6. Making and giving effect – Price Increase Understandings;
7. Making and giving effect – Named Customer Arrangements;
8. Making and giving effect – Other Secondary Arrangements;
9. Financial documents.'
3 There is a dispute as to the period to which the documents falling into the above categories relate. In respect of categories 4, 5, 7 and 9, the period for which documents are sought by Jarra Creek is between 1 January 1995 and 1 May 2006. In respect of categories 6 and 8 the period is between 1 January 1999 and 1 May 2006.
4 There is also a dispute whether the documents falling into the above categories need only relate to causation and damage, or whether they also concern liability. It is said by Amcor that, since they only relate to causation and damages, they should be discovered at a later stage after documents concerning liability have been discovered.
SUBMISSIONS
Period
5 Amcor argues that the facts of this case and the pleadings of the parties concern events and circumstances which began in 2000, and therefore discovery of documents prior to that date is not warranted. In support of its contention, Amcor refers to a report prepared by Professor Rubinfeld, an expert economist, and exhibited to an affidavit sworn 29 August 2007 by Ms Nagy for Jarra Creek. This report states that in order to establish the likelihood of collusive behaviour in the market, it is appropriate to consider a 'clean period' prior to the date of commencement of the alleged behaviour. This would allow an observer to carry out a 'benchmark analysis' to assess the measure of damages Jarra Creek may have suffered by comparing the working of the CFP market during the alleged period of price fixing with a reliable estimate of how the market would have worked without the price fixing activity. Professor Rubinfeld states that the aim of this process is to isolate the impact of the alleged price fixing activity. He says that documents in categories 4, 5 and 9 will help to develop reliable measures of the effect of Amcor's and Visy's conduct within the alleged price fixing period, and to assess whether conditions in the market were conducive to the formation of a price fixing arrangement. Professor Rubinfeld also says that, while a 'clean period' of five years would be desirable, nevertheless an appropriate analysis may be conducted if the observer has access to "sufficiently detailed and reliable documents and data" which pre-date the alleged conducted by three or possibly even two years.
6 Visy submits that discovery should generally be confined to documents created in the period between January 2000 and November 2004, and relies on the substantial burden and costs which have been incurred to date in obtaining documents over this period. It says that investigating and producing documents created after November 2004 is unreasonable because Amcor made public announcements about the possibility of cartel activity in late November 2004 and co-operated with the Australian Competition and Consumer Commission from November 2004. Therefore it must be inferred that there was no reasonable basis from November 2004 to believe that continuing effect was given to any understanding between Amcor and Visy. It says that Jarra Creek has pleaded no facts to support the allegations concerning cartel conduct between December 2004 and May 2005, especially concerning the terms of the arrangements, timing, location and the parties subject to the arrangements. Visy says it is sufficient to discover any contract which immediately pre-dated the alleged arrangement. Finally, it agrees that to give discovery back to 1998 of a standard financial report produced by its corrugated and paper divisions will not impose an undue burden.
Sequence
7 In relation to the question of timing of discovery, Amcor submits that the documents sought in categories 4, 5 and 9 are principally addressed to the quantification of damages and issues of quantum. Therefore, it says, the preferable disposition is not to order Amcor to make discovery of documents sought for the period 1995-1999 at this stage. It would be more appropriate to order production after documents relating to liability have been produced.
8 On the evidence of Professor Rubinfeld, Jarra Creek says that the documents sought go not only to the question of damages but also to liability. Jarra Creek submits that the documents sought would assist in the assessment of market power and therefore relate to the ability of Amcor and Visy by arrangement to impose higher non-competitive prices. If this power did not exist or such an arrangement was not feasible then it would arguably be unlikely that they would attempt to fix prices. Accordingly, Jarra Creek says that the documents sought could relate to liability, and therefore it is not appropriate to defer discovery in the way Amcor suggests. Jarra Creek also points out that in its application the common questions specified in this representative action include matters which go to the existence of damages and quantum. It says that the documents sought are relevant to the issues and that there should be no deferral.
PPP documents
9 Amcor and Visy contend that documents relating to the production or supply of pulp and paper products ("PPP"), or policies for determining prices and records related to PPP, are irrelevant because the claim is limited to alleged price fixing in the CFP market, which is a different market. Visy submits that documents concerning PPP do not relate to any issue disclosed in the pleadings. Amcor says in relation to PPP that there is only limited evidence on which Jarra Creek relies in Professor Rubinfeld's report. Amcor refers to the thirteen classes of documents concerning PPP and submits that none are relevant to material facts alleged in paragraph [9B] of the Amended Statement of Claim. Therefore, it says, the thirteen classes of documents concerning PPP should not be produced as they are unconnected with the pleading, and there is no justification for the production of such a burdensome volume of documents.
10 Jarra Creek again relies on the evidence of Professor Rubinfeld who says that access to information on price and availability of PPP is needed in order to examine the extent to which changes in CFP prices were due to changes in the cost, supply and production capacity of input products (such as PPP), and to what extent changes in CFP prices may be due to the alleged price fixing. The material also indicates that PPP is about 60 percent of the input cost in the manufacture of CFP, and therefore is relevant in carrying out the analysis. Professor Rubinfeld, referring to economic theory, also suggests that the price of PPP affects the price of CFP and therefore is a relevant variable when considering the price of CFP.
Financial documents
11 Some of the documents which Jarra Creek seeks in category 9 relate to break-downs on a monthly, quarterly or annual basis and financial analyses of Visy's business divisions, entities or units engaged in the manufacture and supply of PPP in Australia. Visy objects to the production of these documents in so far as production is sought of sales and budget information by production facility, region, customer and industry segment, and product category. This level of detail, Visy submits, has no relevance to the issues in the proceedings.
REASONING
12 The period over which Jarra Creek's Amended Statement of Claim alleges that Amcor and Visy engaged in the contravening conduct is between May 2000 and July 2005. The group members represented by and including Jarra Creek are those persons and entities who purchased products during the period between 1 May 2000 and 1 May 2005. The Amended Statement of Claim alleges that from a date not later than 1 May 2000, Amcor and Visy supplied CFP to Jarra Creek and members of the representative group in the CFP market, and that from about January 2000 Amcor and Visy were in competition with each other. The Amended Statement of Claim also alleges that up to July 2005 Visy took no step to compete with Amcor in relation to the supply of CFP to one member of the group, namely Gillette Australia Pty Ltd, and thereby gave effect to a cartel arrangement.
13 Facts, circumstances and documents, even where occurring or made before or after the core period of alleged contravening conduct, may throw light on the nature and extent of conduct during that core period. Practical experience teaches that there may be plans, discussions and records leading up to the conduct, and that beyond the core period there may be a continuation of activities or a making of admissions in documents from which inferences can be drawn. The difficulty is to select a suitable period before and after the core period within which to require production of documents, particularly in a case such as the present where the volume of documents is likely to be extremely large. Moreover, there is force in the argument that for comparison purposes it is necessary to consider a 'clean period' before the alleged price fixing conduct began.
14 In this case it is appropriate to go beyond the period between January 2000 and July 2005 referred to in the pleadings. Having regard to the evidence as to the burden, nature and extent of discovery required, and balancing this against the needs expressed by Professor Rubinfeld to enable proper consideration of the effect of the alleged price fixing activity, I consider that an appropriate period for production is between 1 January 1998, which is two years prior to the alleged commencement of the conduct, and mid-2006. I am not satisfied at this stage that a period beginning in 1995 is appropriate or necessary for the purpose of ascertaining a 'clean period' or 'benchmark' by reference to which subsequent pricing standards and conduct can be evaluated.
15 Counsel for Amcor and Visy submit that, having regard to the heavy burden imposed by the extensive discovery in this matter, the further discovery of documents relating to market structure or behaviour should be deferred. The evidence regarding market structure, it is said, only concerns questions of causation and damage, and therefore it is not necessary to make the relevant documents available until after liability questions have been determined. Amcor and Visy submit that in class action cases, issues of quantum and damage are to be determined in relation to each specific class member, and that discovery in relation to those issues should be deferred until the antecedent question of liability is determined. The rationale to this approach is that documents should not be discovered where the necessity to produce such documents may not arise.
16 Professor Rubinfeld observed that material relating to market structure could facilitate an assessment of whether conditions in the market were conducive to the formation of a price fixing arrangement. If conditions were not conducive, it could be argued that it would be unlikely parties would reach any sort of cartel understanding.
17 I accept this reasoning. The documents as to market structure are relevant not only to causation and damage, but also to the liability issues. If the market conditions are such that a price fixing arrangement was not possible or viable, then it is less likely that there a price fixing arrangement would be entered into. In my view, there is a clear link between the material sought and a principal issue in the case concerning liability.
18 Although the final precise assessment of damages in respect of an individual group member must be determined having regard to its individual circumstances, there are often more general questions arising (such as causation, remoteness, and types of damage) which can be determined as common questions. In the present case, the application specifically states in paragraph [4(h)] that one of the common questions is the "correct measure of any damages which the Respondents may be liable … to pay to the Applicant and any Group Member". This does not mean that the exact amount of damages which may depend on individual circumstances is to be determined as a common question, but rather that there are common or overarching questions concerning damages more generally.
19 Nor does it necessarily follow that in every representative proceeding the determination of questions concerning damage will be deferred until after liability has been determined. Of necessity, the Court has adopted a flexible approach to complex representative litigation. For example, in McMullin v ICI Australia Operations Pty Ltd [1996]FCA 991, remoteness of loss and some questions pertaining to damages were determined as common questions. Accordingly, in the present case, even if the nature of the market resulted in only issues of causation and matters of damage being raised, it does not always mean that it is appropriate for common questions and discovery on these matters to be deferred. The reasons of Wilcox J in McMullin [1996]FCA 991 exemplify the particular complexity of representative actions and the need for flexible effective case management.
20 In my view, the material sought by way of discovery as to market structure may have a bearing on the question of liability, and production should not be deferred. Even if this conclusion is incorrect, it still does not follow that questions of market structure should be deferred until after liability questions have been determined. On closer examination it may be desirable as a matter of case management in this case to ensure that all common questions are resolved together.
21 Both Visy and Amcor submit that documents as to PPP are irrelevant because this case turns on behaviour in relation to CFP. Jarra Creek contends that the documents relating to PPP are relevant because, as is pleaded in paragraph [9B] of the Amended Statement of Claim, PPP is "the major physical input, by weight and cost, in CFP" and the major producers of PPP in Australia were related to or business units within Visy or Amcor, thereby having had a significant impact on the costs structure of CFP.
22 Paragraph [9B(d)(iii)] of the Amended Statement of Claim links PPP with CFP in relation to allegations concerning barriers to entry to the CFP market. This linkage is reinforced in paragraphs [12], [18(b)], [54(a)] and [100] of the Amended Statement of Claim. Paragraph [9B] alleges that Visy and Amcor not only have a major position with respect to CFP production and supply, but also with respect to the principal cost input into that product, namely PPP. It could be reasonably argued that this fact, if established, gives Amcor and Visy greater control of the input costs of CFP. On the face of the Amended Statement of Claim, documents concerning PPP are therefore relevant. In addition, it should be noted that Professor Rubinfeld referred to PPP as an item which would assist in deciding whether any CFP price rise occurred due to input cost variations or due to the alleged price fixing.
23 For these reasons, I am satisfied that documents relating to PPP as set out in the categories of discovery sought by Jarra Creek are relevant and should be produced subject to a variation in relation to the relevant period referred to in paragraph [14] above.
24 Visy objects to paragraph [9.2] of Jarra Creek's proposed categories to the extent that it seeks documents by reference to break-downs based on production facilities, regions, customer or industry segments and product categories. Visy contends that such detailed information has no relevance to issues in the proceedings. It also objects for similar reasons to category 9.2(c), which concerns financial analyses also involving detailed break-downs, and to category 9.2(d) on the ground that the reference to "indicator reports" is meaningless.
25 On the material presently before me I am not persuaded that the production of documents by reference to the detailed break-downs sought is appropriate or necessary at this stage. Neither am I persuaded that the financial analyses requested or the break-downs sought in relation to those analyses are appropriate for discovery. Furthermore, the expression "indicator reports" does not appear to describe or refer to any relevant documents. Accordingly, I will not require discovery of the break-down documents sought in category 9.2(c) and (d). In relation to the relevant period, I note in relation to these documents that Visy does not object to the period commencing on 1 January 1998 but says that it ought not to extend to 2006. For reasons given earlier, I consider that the appropriate period in the present case is between 1 January 1998 and mid-2006.
CONCLUSION
26 In summary, I consider that the relevant period is between 1 January 1998 and mid-2006. I do not think it ought to extend back to 1995. I am persuaded that documents relating to PPP may be relevant and that such documents ought to be produced. I do not consider it appropriate to defer questions relating to market structure on the basis that that issue only concerns damages and causation. I am of the view that the information sought relates to liability, and that, in any event, issues as to common questions concerning damages and causation ought be the subject of discovery at the same time. I also consider that category 9.2 proposed by Jarra Creek ought to be modified in the manner indicated above.
27 I direct the parties to bring in Short Minutes to give effect to these orders and I propose to reserve the question of costs until this matter has been finally determined.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.
Associate:
Dated: 12 October 2007
Counsel for the Applicant: Mr I Wylie
Solicitor for the Applicant: Maurice Blackburn Cashman
Counsel for the Respondents/Cross-Claimants: Mr P Solomon
Solicitor for the Respondents/Cross-Claimants: Allens Arthur Robinson
Counsel for the Cross-Respondents: Mr M O'Bryan
Solicitor for the Cross-Respondents: Arnold Bloch Leibler
Date of Hearing: 2 October 2007
Date of Judgment: 12 October 2007
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federal_court_of_australia:fca/single/2009/2009fca0438
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2009-05-05 00:00:00
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Stacey Brothers Plumbing Pty Ltd v Waterco Limited [2009] FCA 438
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2009/2009fca0438
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2024-09-13T22:51:54.014159+10:00
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FEDERAL COURT OF AUSTRALIA
Stacey Brothers Plumbing Pty Ltd v Waterco Limited [2009] FCA 438
PRACTICE AND PROCEDURE – respondent representative order sought against a franchisee as representative of other franchisees in respect of alleged patent infringements – application made to amend pleadings to expand the group to include persons who were not franchisees – whether proceeding should continue as a representative proceeding under O 6 r 13 of the Federal Court Rules – whether "same interest" and "numerous persons" criteria satisfied to enliven jurisdiction – lack of commonality of interest in the putative group and the representative – proceeding not to continue as representative proceeding – O 6 r 13 of the Rules does not allow amendment to expand group of represented persons
Federal Court Rules O 6 r 2, O 6 r 13, O 13 r 2
Duke of Bedford v Ellis [1901] AC 1 referred to
Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 referred to
Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 referred to
Wong v Silkfield Pty Ltd (1999) 199 CLR 255 cited
Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565 referred to
BT (Australasia) Pty Ltd v New South Wales [1997] FCA 1553 referred to
Taff Vale Railway Co v Amalgamated Society of Railway Servants [1901] AC 426 cited
London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 cited
John v Rees [1970] 1 Ch 345 cited
Amos Removals & Storage Pty Ltd v Small [1981] 2 NSWLR 525 discussed
Geelong Wool Combing Ltd v Textile, Clothing and Footwear Union of Australia (2003) 130 FCR 447 referred to
Tony Blain Pty Ltd trading as Acme Merchandising v Jamison (1993) 41 FCR 414 cited
EMI Records Ltd v Kudhail [1985] FSR 36 cited
Irish Shipping Ltd v Commercial Union Assurance Co Plc [1991] 2 QB 206 referred to
Mercantile Marine Service Association v Toms [1916] 2 KB 243 referred to
Roche v Sherrington [1982] 2 All ER 426 referred to
Hardie & Lane Ltd v Chiltern [1928] 1 KB 663 cited
Minister for Industrial Development of Queensland v Taubenfeld [2003] 2 Qd R 655 referred to
SZ v Minister for Immigration and Multicultural Affairs (2000) 172 ALR 172 followed
Bright v Femcare Ltd (2002) 195 ALR 574 referred to
STACEY BROTHERS PLUMBING PTY LTD v WATERCO LIMITED (ACN 002 070 733) and DENBY FALLS PTY LTD (ACN 064 991 555) (TRADING AS SWIMART BALWYN) (FOR AND ON BEHALF OF ITSELF AND AS A REPRESENTATIVE OF THE REPRESENTED PERSONS)
VID 964 of 2008
KENNY J
5 MAY 2009
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY VID 964 of 2008
BETWEEN: STACEY BROTHERS PLUMBING PTY LTD
Applicant
AND: WATERCO LIMITED (ACN 002 070 733)
First Respondent
DENBY FALLS PTY LTD
(ACN 064 991 555)
(TRADING AS SWIMART BALWYN) (FOR AND ON BEHALF OF ITSELF AND AS A REPRESENTATIVE OF THE REPRESENTED PERSONS)
Second Respondent
JUDGE: KENNY J
DATE OF ORDER: 5 MAY 2009
WHERE MADE: MELBOURNE
THE COURT ORDERS THAT:
1. The motion, notice of which is dated 11 February 2009, be dismissed.
2. The application and the statement of claim, both filed 18 November 2008, be struck out in so far as they refer to "the Represented persons", and in particular the following paragraphs be struck out:
(a) in the application – paragraph 9 (in its entirety) and paragraphs 1 to 5 and 7 (in so far as these paragraphs refer to "the Represented persons"); and
(b) in the statement of claim – paragraphs 4, 5, 30 and Schedule 1 (in their entirety) and paragraphs 10, 12, 13, 14, 16, 17, 18, 19, 20, 21, 23, 24, 27, 28 and 29 (in so far as these paragraphs refer to "the Represented persons").
3. Within seven days of the date hereof, the applicant file and serve an amended statement of claim in conformity with paragraph 2 hereof.
4. The applicant pay the respondents' costs of the applicant's motion, notice of which is dated 11 February 2009, and the costs of the respondents' motion, notice of which is dated 10 February 2009.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY VID 964 of 2008
BETWEEN: STACEY BROTHERS PLUMBING PTY LTD
Applicant
AND: WATERCO LIMITED (ACN 002 070 733)
First Respondent
DENBY FALLS PTY LTD
(ACN 064 991 555)
(TRADING AS SWIMART BALWYN) (FOR AND ON BEHALF OF ITSELF AND AS A REPRESENTATIVE OF THE REPRESENTED PERSONS)
Second Respondent
JUDGE: KENNY J
DATE: 5 MAY 2009
PLACE: MELBOURNE
REASONS FOR JUDGMENT
Introduction
1 There are two motions before the Court, which were heard together. For the reasons explained below, the respondents have succeeded on the first of these motions.
2 By a notice of motion dated 10 February 2009, the respondents – Waterco Ltd and Denby Falls Pty Ltd trading as Swimart Balwyn – sought various orders, principally that the proceeding not continue as a representative proceeding. At the hearing, the respondents relied on two affidavits of Scott Robert James Sloan of 11 February 2009 and 18 February 2009. After the hearing, the respondents sought leave to file a third affidavit of Mr Sloan. I discuss this affidavit below.
3 By a notice of motion dated 11 February 2009, the applicant, Stacey Brothers Plumbing Pty Ltd, also sought various orders, including that Swimart Balwyn be appointed to represent itself and any person who, at any time since 22 February 2007, was:
(a) a supplier of, amongst other things, pool filtration components supplied to him, her, them or it [by Waterco]; further or alternatively
(b) an installer of pool filtration systems,
and who has displayed to the public:
(c) the Drawing (as defined in [8] of the Amended Statement of Claim …); further or alternatively
(d) the Poster (as defined in [9(a)] of the Amended Statement of Claim …).
4 If this order were to be made, Stacey Brothers would need to amend its pleadings. Accordingly, Stacey Brothers sought leave to amend.
5 In support of its motion and in opposition to the respondents, Stacey Brothers relied on the affidavit of Joel Pascual Dy of 11 February 2009. After the hearing, Stacey Brothers sought leave to issue a subpoena to Waterco – a matter referred to below. Leave has yet to be granted.
6 In his affidavit, Mr Dy sets out the background to the proceeding and the applicant's current motion. Mr Dy deposes that Stacey Brothers is the registered proprietor of an innovation patent no 2007100141 for an invention entitled "Pool Filtering System". This is the patent in suit. The patent was filed with the Australian Patent Office on 22 February 2007 and was certified on 28 August 2007. The patent in suit is a divisional patent of patent application no 2006201905, which was filed on 5 May 2006, and in turn claims priority from provisional patent application no 2005902284 filed on 5 May 2005. The complete specification of the standard patent application was published by the Australian Patent Office on 23 November 2006 and the patent in suit, on 22 March 2007.
7 The applicant's director, Graham Stacey, visited the retail premises of Swimart Balwyn in August 2008, where he saw the Poster and the Display System referred to in the applicant's statement of claim. Swimart Balwyn is part of the Swimart franchise owned by Waterco. Mr Stacey's partner had earlier discovered the Drawing referred to in the statement of claim in the course of an internet search. Mr Stacey formed the view that Waterco had distributed the Poster to some, if not all, Swimart franchisees.
The pleadings
8 In order to understand the parties' respective positions, it is necessary to refer to the pleadings. Stacey Brothers filed an application and a statement of claim on 18 November 2008, and an amended application and an amended statement of claim, on 5 December 2008. The respondents objected that Stacey Brothers had no leave to amend, such leave being required. Hereafter, I refer to the amended statement of claim without addressing the leave issue. I address this issue at the end of these reasons. No defence or counterclaim has yet been filed.
9 In its pleadings, Stacey Brothers describes itself as a designer and installer of swimming pool water filtering systems that include at least a swimming pool and drain. According to the pleadings, Waterco is the franchisor of a chain of franchises in Australia trading under the brand name 'Swimart'; a manufacturer of pool filtration components; and a supplier of these components to Swimart franchisees. The amended pleading of 5 December 2008 would extend this supply to "other retailers of pool filtration components and installers of pool filtration systems". Stacey Brothers alleges that each franchisee of Swimart "conducts the business of a retail pool and spa store and the provision of on-site pool services". Swimart Balwyn is said to be a Swimart franchisee and a supplier of pool filtration components supplied to it by Waterco.
10 I interpolate here, that, in his affidavit of 11 February 2009, Mr Sloan deposed that there are presently 58 franchisees in Australia and that "the vast majority are independently owned and operated".
11 Relying on s 13 of the Patents Act 1990 (Cth), Stacey Brothers alleges that Swimart Balwyn and the represented persons (as defined in the pleadings) have directly infringed the patent in suit. The infringement is said to be constituted by Swimart Balwyn and the represented persons offering to make pool filtration systems as claimed in claims 1 and 5 of the patent, without Stacey Brothers' licence or authority. The infringement allegedly occurred in the following circumstances.
12 According to the pleadings, a Mr Moutafis, trading as Xenomedia, made a 3D computer drawing of a pool filtration system as claimed in claims 1 and 5 of the patent, which Waterco incorporated in a Poster supplied to Swimart franchisees. In his affidavit of 11 February 2009, Mr Sloan said that the only use that Waterco made of the Drawing was to put it in the Poster. Hereafter in these reasons, a reference to the Poster includes a reference to the Drawing.
13 Stacey Brothers alleges that Swimart Balwyn and the represented persons displayed the Poster, or a Display System in accordance with the Poster, at their retail premises and, I interpolate, thereby offered to make a pool filtration system within claims 1 and 5 of the patent in suit. Alternatively, Stacey Brothers alleges that Swimart Balwyn and the represented persons have infringed claims 1 and 5 of the patent, by making a pool filtration system in accordance with the Poster and/or the Display System. Mr Sloan's affidavit of 11 February 2009 indicates, however, that only Swimart Balwyn made the Display System photographed in its store and referred to in the statement of claim.
14 Relying on s 117 of the Patents Act, Stacey Brothers also makes an indirect infringement claim. Stacey Brothers alleges that Swimart Balwyn and the represented persons indirectly infringed claims 1 and 5 of the patent in suit by supplying to installers of pool filtration systems at least one pool filtration component in circumstances where the installers have used that component or components to make a pool filtration system as claimed in claims 1 and 5 of the patent in accordance with instructions or inducements contained in product information published by Swimart Balwyn, or the represented persons, as the case may be.
15 Stacey Brothers pleads that Waterco authorised Swimart Balwyn and the represented persons to exploit the invention as claimed in claims 1 and 5 of the patent, thereby infringing those claims. Waterco is also alleged to be a joint tortfeasor with, and to have procured and directed the wrongful conduct of, Swimart Balwyn and the represented persons. Further, Stacey Brothers claims against Waterco that Waterco was involved in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) in that it failed to warn Swimart Balwyn or the represented persons that making a pool filtration system in accordance with the Poster would infringe the patent.
16 Stacey Brothers seeks declaratory and injunctive relief, damages or an account of profits in connection with its infringement claims, and damages in respect of its claim of misleading and deceptive conduct.
The class of represented persons
17 Paragraphs 4 and 5 of the amended statement of claim of 5 December 2008 read as follows:
4. Pursuant to Order 6, rule 13 of the Federal Court Rules, the Applicant brings this proceeding against Swimart Balwyn as representing itself and each and every other Swimart franchisee person or persons who has or have, since 22 February 2007, displayed at his, her, their or its retail premises any of:
(a) the Drawing (as defined in paragraph 8, below);
(b) the Poster (as defined in paragraph 9(a), below);
(c) the Display System (as defined in paragraph 10(c), below),
or who has, since 22 February 2007, installed a pool filtration system in accordance with any or all of the Drawing, Poster and Display System (collectively, the Represented persons).
5. Each represented person is and was at all material times:
(a) a Swimart franchisee;
(a) a supplier of, among other things, pool filtration components supplied to it by Waterco; further or alternatively
(b) an installer of pool filtration systems.
18 It is apparent from the above that Stacey Brothers originally proposed that the represented persons be the Swimart franchisees who had displayed the Poster or Display System, or installed a pool filtration system in accordance with the Poster or Display System. As amended on 5 December 2008, Stacey Brothers proposed that the group include all persons who had done these things.
19 In support of Stacey Brothers' present motion, Mr Dy explained that, at the commencement of the proceeding, Stacey Brothers did not know that Waterco had delivered the Poster to retailers and installers other than Swimart franchisees. In relation to the amendments of 5 December 2008, Mr Dy deposed that he had:
since formed the view that those amendments, which in the main concern the expansion of the class of persons represented by Swimart Balwyn:
(a) required an order of the Court pursuant to Order 6 rule 13(2) of the Federal Court Rules; and
(b) should be further amended so as to better define the represented class in accordance [with Stacey Brothers' motion].
20 This third definition of the group of represented persons (in the notice of motion) embraced suppliers of Waterco pool filtration components and installers of pool filtration systems displaying the Poster to the public. In written submissions, Stacey Brothers said:
The scope of the proposed group definition encompasses Swimart franchisees and other persons (being suppliers of pool filtration components and/or installers of pool filtration systems) that have displayed to the public the Poster or the Drawing. It is this conduct that identifies Swimart Balwyn and each Represented person as having the 'same interest' within the meaning of the Rule. The group definition will no longer extend to persons who have merely displayed the Display System or have installed pool filtration systems in accordance with the Poster, Drawing or Display System. The amendment to the group definition is made to remove any doubt that a direct link exists between the conduct of Waterco and each of Swimart Balwyn and the Represented persons.
21 In submissions at the hearing, counsel for Stacey Brothers said that the purpose of amending the definition of represented persons was to "capture" the persons that Stacey Brothers would like Swimart Balwyn to represent, being "those people who were given the poster by Waterco and displayed it, and those people who installed, after that, water systems in accordance with their poster", and "[t]hose persons who sold pool filtration equipment which ended up in a system which infringed the patent – when that component was sold with the inducement of the poster there, or the instructions of the poster used".
Parties' submissions
22 The respondents maintained that the proceeding should not continue as a representative proceeding because of the lack of "same interest" or "numerous persons", as required by O 6 r 13(1) of the Federal Court Rules. Alternatively, as a matter of discretion, the Court should not permit the proceeding to continue as a representative action. In support of these propositions, they advanced the following propositions.
1. The proposed groups of represented persons were uncertain, too broad, and in the nature of a "moving feast". There was no common interest in the proposed groups except an interest in defending the litigation. No group met the "same interest" criterion in O 6 r 13. The representative action rules were not a substitute for the applicant "correctly identifying proper respondents and identifying a basis to issue against each of those respondents prior to the issuance of proceedings as is the normal course".
2. In its original statement of claim, Stacey Brothers identified the represented persons as a subgroup of the Swimart franchisees – those franchisees displaying the Poster or Display System, or installing a pool filtration system in accordance with the Poster or Display System. This original group was not capable of being identified without controversy. In its amended statement of claim of 5 December 2008, the group was defined as any person displaying the Poster or Display System, or installing a pool filtration system in accordance with the Poster or Display System. This group was no less uncertain since it defined a group based on issues of fact in dispute in the proceeding. Defining the group in terms of Stacey Brothers' notice of motion did not cure these defects. Moreover, all the proposed groups were open-ended in the sense that persons might enter the group at any time while the proceeding was on foot.
3. The defences and/or cross-claims of persons within the proposed groups of represented persons and Swimart Balwyn were likely to differ. There could be an infringement only if what was in question was an installation of a pool filtration system within claims 1 and 5 of the patent in suit. This was likely to be denied. Possible defences might also depend on the particular facts relating to the business of a person in the group: see, e.g., ss 119 or 123. Persons within the group might challenge the validity of the patent on different grounds. The quantification of damages might also depend on the particular conduct of the group member: cf s 122(1A). The position of Strathfieldsaye Pump & Pool Shop (referred to in Mr Dy's affidavit of 11 February 2009 and Mr Sloan's affidavit of 18 February 2009) illustrated that there were likely to be relevant differences between group members. Further, Swimart Balwyn's liability for the Display System depended on circumstances peculiar to it.
4. The pleading did not depend only on the display of the Poster, as Stacey Brothers alleged at the hearing of the motions. The relief sought emphasised the broader character of its claims.
5. Swimart Balwyn was not "in management" of any of the proposed groups. Swimart Balwyn operated its business independently and had no legal relationship with the represented persons. Reference was made to Mr Sloan's affidavit of 11 February 2009.
6. Other deficiencies in the proposed groups included that the groups included persons displaying the Poster since 22 February 2007. There could be no infringement until the patent in suit became open for inspection on 22 March 2007. Persons displaying the Poster between 22 February and 22 March 2007 could not have infringed. Moreover, Stacey Brothers neither pleaded nor put forward evidence to show that the five other business listed in Schedule 1 to the statement of claim had displayed the Poster or Display System. Stacey Brothers "has approached matters in the wrong order".
7. Order 6 r 13 did not permit the making of orders expanding the class of represented persons after proceedings are brought. The amendments proposed by Stacey Brothers on 5 December 2008 and in its present motion would expand the represented group beyond the Swimart franchisees. Further, O 13 r 2 did not support the addition of new parties.
23 Stacey Brothers supported the maintenance of a representative proceeding under O 6 r 13 and the amendment of its definition of the represented group on the following bases.
1. Order 6 r 13 was a rule of convenience, designed to avoid a multiplicity of proceedings. The Dy affidavit showed that the rights of many might effectively be determined in this proceeding. The alternative would be that Stacey Brothers initiated possibly 58 proceedings or had as many respondents joined to the one proceeding. The Dy affidavit showed that "the Swimart Franchisees [were] scattered throughout Queensland, New South Wales, Victoria and the Australian Capital Territory and that there would be substantial cost and inconvenience in identifying which ones displayed the Poster or installed the pool filtration system in accordance with it and then joining them to this proceeding or commencing fresh proceedings against them".
2. There were common questions of law and fact as to whether there was infringement and whether the conduct of the represented persons and Waterco was linked. The represented persons had the same interest in the proceeding as a result of displaying the Poster to the public. The same interest requirement might exist notwithstanding the representing party and the represented persons had individual interests in addition to common interests. Whether the same interest existed was determined by reference to the pleadings.
3. By reason of the group definition, the represented persons and Swimart Balwyn will have either: "(a) displayed the Poster … or Display System …; or (b) installed or procured the installation of a pool filtration system in accordance with the Poster, … or Display System". Thus, the represented persons and Swimart Balwyn had the same interest in having the Court determine whether a pool filtration system in accordance with the Poster or Display System would, if built and used, infringe claims 1 and 5 of the patent in suit. If yes, then any such franchisee would have infringed the patent if the franchisee offered to make, or made, the system in accordance with the Poster. Such a finding would also be relevant to the issue of indirect infringement.
4. The Poster was "the key element". A group as defined in the motion would be confined to people who had some interest in pool filtration equipment or in installing pool filtration systems and had displayed the Poster to the public. The common questions was "whether or not a pool filtration system built in accordance with the Poster, as the Poster depicts the pool filtration system, falls within claims 1 and 5 of the patent".
5. Whilst the original definition of the represented persons had the potential to extend to all who had infringed the patent, this might be cured by the proposed amendment.
6. Whilst the represented group was open-ended, this could be corrected later in the proceeding.
7. The group was properly defined by reference to 22 February 2007. Alternatively, the pleading might be amended to avoid this issue, because Waterco did not distribute the Posters until mid 2007.
8. Different defences and cross-claims might be managed under subrules (4), (5) and (6) of O 6 r 13. Even if direct and indirect infringement depended on the particular circumstances of a group member, O 6 r 13(6) provided the necessary protection.
9. Order 6 r 13(2) (alternatively, the "control power" and O 6 r 13(1)) permitted the Court to extend the group of persons a respondent is to represent after the commencement of the proceeding.
10. After amending the group, the next step would be discovery against Waterco, to ascertain the group of represented persons. The outcome of discovery might be an application for joinder, especially if the group were found to be small. The members of the class might be named after discovery. The Court should not rule on the representative proceeding until after discovery. The present application to discontinue the proceeding as a representative proceeding was premature, because there were various ways in which the Court might manage it, and the size of the group was not yet known. Notice might later be given to each represented person to afford an opportunity to apply to become a joined party.
Consideration
24 The respondents have challenged as unsuitable for a respondent representative action all three groups as defined by Stacey Brothers. Whether this challenge succeeds depends on O 6 r 13 of the Rules.
25 Order 6 r 13(1) provides as follows:
Where numerous persons have the same interest in any proceeding the proceeding may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them.
Therefore, before O 6 r 13(1) can be invoked, there must be "numerous persons" having "the same interest in [the] proceeding". This requirement must be satisfied at the time the proceeding is commenced. The interest in question is an interest in the proceeding, to be judged by reference to the effect of the matters at issue on the rights and obligations of the representing respondent and the represented persons. A representative proceeding will not necessarily be defeated because some members, or even the representing party, have separate interests additional to a common interest, providing there is a common interest: compare Duke of Bedford v Ellis [1901] AC 1 at 7 per Lord Macnaghten.
26 Thus, on the respondents' motion, the basic question is whether, at the time the proceeding commenced, it could be said that numerous persons had the same interest in the proceeding as between themselves and Swimart Balwyn. For the reasons stated below, I would answer this question in the negative.
27 In order to understand my reasons for ruling against Stacey Brothers, it is necessary to refer to the case law on the operation of O 6 r 13 and provisions like it.
28 The High Court considered Pt 8, r 13 of the Supreme Court Rules (NSW), which at the time was relevantly the same as O 6 r 13 of the Federal Court Rules, in Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 and Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386: contrast Wong v Silkfield Pty Ltd (1999) 199 CLR 255, an applicant representative action under Pt IVA of the Federal Court of Australia Act 1976 (Cth). As noted in Carnie, "the ancestor" to these Rules "is to be found in the English Rules of the Supreme Court", which was "in turn derived from an earlier rule which itself was derived from the practice of the Court of Chancery": see Carnie 182 CLR at 415 per Toohey and Gaudron JJ and 427-429 per McHugh J.
29 Some care needs to be taken, however, with regard to Carnie and Campbells Cash since both concerned plaintiff representative actions, not defendant representative actions. Thus, in Carnie 182 CLR at 404, Mason CJ, Deane and Dawson JJ said that the purpose of the representative procedure was "to facilitate the administration of justice by enabling parties having the same interest to secure a determination in one action rather than in separate actions". In Campbells Cash 229 CLR at 422 [55], Gummow, Hayne and Crennan JJ made much the same point, saying:
A central objective of the representative procedures for which Pt 8, r 13 provided was the avoidance of multiplicity of proceedings and the efficient determination, once and for all, of controversies in which parties have the same interest. An important indication of the nature of the interest that numerous persons must have in proceedings instituted under Pt 8, r 13 was given by Pt 8, r 13(4). A judgment entered or order made in the proceedings 'shall be binding on all the persons as representing whom the plaintiffs sue'. What the rules were intended to achieve was a single determination of common issues in a way that binds those who were interested in those issues.
30 Speaking generally, it may be accepted that an important purpose of the representative procedure in O 6 r 13 of the Federal Court's rules, whether the proceeding is an applicant representative proceeding or a respondent representative proceeding, is to avoid numerous proceedings where one proceeding could determine a common question in which numerous persons have the same interest. There are, however, differences in the purposes of applicant and respondent representative proceedings. In the present case, in contrast to an applicant representative action, the question is whether there can be a single determination of a common issue of law or fact in a way that binds those interested to justify some relief the applicant seeks against them. This must be determined by reference to the issues that the proceeding raises and the relief that is sought.
31 As Carnie and Campbells Cash show, though simply expressed, the requirement of "same interest" has presented difficulties. In Carnie the High Court held that persons having separate causes of action in contract and tort might have the same interest in a proceeding for the purposes of the representative proceeding rules as they then stood in the NSW Supreme Court. The fact that the represented persons' claims arose under separate contracts was held insufficient to defeat the requirement that there be numerous persons having the same interest. In Carnie 182 CLR at 405, Mason CJ, Deane and Dawson JJ held that, in the circumstances of that case, numerous persons had "the requisite commonality of interest" to satisfy the jurisdictional requirement of the rule. Toohey and Gaudron JJ reached a similar conclusion, holding that the onus was on the named plaintiffs "to identify the class with sufficient particularity", without necessarily identifying every member, and that they had done so, noting that "[t]he class is not open-ended; it is limited to those persons who have credit sale or loan contracts with the respondent which have been varied in circumstances where the variation has been executed in such a way as to be inconsistent with the [Credit] Act": see Carnie 182 CLR at 422.
32 In discussing Carnie in Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565 at 582 [74], Mason P, with whom Ipp JA and McColl JA agreed, usefully summarised the various approaches in Carnie thus:
McHugh J suggested (at 427) that a plaintiff and the represented persons would have 'the same interest' in legal proceedings when they have a community of interest in the determination of any substantial question of law or fact that arises in the proceedings. Brennan J (at 408) agreed with this test. Toohey and Gaudron JJ said (at 421) that persons would have the same interest in proceedings if there was a significant question common to all members of the class and they stood to be equally affected by the (declaratory) relief sought by the appellants in the instant proceedings. Mason CJ, Deane and Dawson JJ thought (at 404) that the 'same interest' requirement 'may … [extend] to a significant common interest in the resolution of any question of law or fact arising in the proceedings'.
33 In Campbells Cash, a proceeding was instituted in the name of one plaintiff and a group of represented retailers who chose, by opting-in, to be bound: see Campbells Cash at 421 [52]. Gummow, Hayne and Crennan JJ accepted, at 421 [54], that "the rule did not require the separate identification of, and consent from, those who were said to constitute the 'numerous persons'". In Campbells Cash, their Honours held, however, that, at the commencement of the proceeding, there was no person, other than the named plaintiff, who had an interest in the proceeding, because no order or judgment given in the proceeding would have bound any other person: see Campbells Cash at 422 [57]-[58]; and see also 472-473 [222]-[226] per Callinan and Heydon JJ. Accordingly, the jurisdictional requirement was not met.
34 As foreshadowed, I accept that there are significant differences between plaintiff (or applicant) representative actions and defendant (or respondent) representative actions: see also BT (Australasia) Pty Ltd v New South Wales [1997] FCA 1553 per Sackville J. As Sackville J noted, members of a represented group may have much to gain when represented by a plaintiff and everything to lose when represented by a defendant.
35 The development of the law relating to defendant representative proceedings reflects the fact that they have typically been used in the past against members of unions and unincorporated associations: see, e.g., Taff Vale Railway Co v Amalgamated Society of Railway Servants [1901] AC 426 at 438-439 per Lord Macnaghten, 443 per Lord Lindley; London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 at 30 per Lord Atkinson, 39 per Lord Parker; and John v Rees [1970] 1 Ch 345 at 371 per Megarry J.
36 Amos Removals & Storage Pty Ltd v Small [1981] 2 NSWLR 525 is illustrative of this history. The plaintiffs, who were members of the New South Wales Road Transport Association, sued 19 members of the Committee of Management of the Shipping Section of the Federated Clerks Union of Australia (NSW Branch) as representing the Section, or at least those members of the Section that attended a meeting at which certain resolutions were passed. The plaintiffs relied on the representative procedure of the NSW Supreme Court, which, as we have seen, was then equivalent to O 6 r 13. In giving reasons for judgment in the case, Hunt J identified three requirements for a defendant representative procedure: first, that the persons to be represented formed an identifiable group or class; secondly, that the person selected as a representative must be in management of the group or class and have control of its funds; and thirdly, that those selected to be represented must have a common interest or a community of interest with all other members: see Amos Removals [1981] 2 NSWLR 525 at 529-530. Hunt J held that this last element was satisfied in Amos Removals because "the liability as alleged against the members ... was … enlarged to become one of conspiracy, based upon what is said to be the history of concerted action by those members and the resolution" at the meeting: Amos Removals [1981] 2 NSWLR 535 at 520.
37 The respondents in this case made much of the "management" issue. Subsequent cases indicate, however, that "management" is neither a sufficient nor a necessary requirement, although there must be something that binds the group together so as to give rise to a commonality of interest and render a representative proceeding appropriate. In truth, in Amos Removals, Hunt J's first two "requirements" are to be understood as factors that were strongly indicative of a commonality of interest. In other circumstances, respondent representative orders have been made where there has been no management and control, although there has been some other factor linking the group. For example, a respondent representative order was made in an action involving breach of trademark to support an ex parte interlocutory injunction against the members of the represented group where the evidence indicated that there was in fact a group of persons acting in a co-ordinated way: see Tony Blain Pty Ltd trading as Acme Merchandising v Jamison (1993) 41 FCR 414. See also EMI Records Ltd v Kudhail [1985] FSR 36. In these cases, there were factors other than mere management and control that supported the representative order, such as knowledge within the group of the group's members, co-ordinated action, and common purpose.
38 Even against unincorporated associations and unions, a representative proceeding is not properly brought where the essential inquiries concern the individual circumstances of the members. For example, in Geelong Wool Combing Ltd v Textile, Clothing and Footwear Union of Australia (2003) 130 FCR 447 at 452 [12], Finkelstein J held that the representative procedure of this Court was unavailable and that the union could not represent its members participating in a picket. First, the evidence did not establish that the members of the group were acting with a common purpose and, secondly, the proceeding was one to recover penalties. As his Honour said, the applicant had to establish that each respondent had contravened the legislation, which involved an inquiry into each respondent's conduct and purpose and, if the contravention were established, separate consideration of the amount of the penalty. There was, therefore, "no community of interest" amongst the members of the group.
39 In the context of a defendant (or respondent) representative proceeding, the nature of defences may be especially significant. The authorities support the proposition that a proceeding will generally not disclose persons in the same interest where defendants are entitled to raise different defences, although this is not an absolute rule. I agree with Mason P who said, in Trustees of the Roman Catholic Church v Ellis 70 NSWLR at 582 [74], that "[t]he requirement that each member of the class have identical defences may not be an absolute proposition". Whether the fact that different defences may be taken will defeat a finding of commonality of interest depends on the nature of the case, the centrality of any common questions of law and fact, and, having regard to the proceeding as a whole, the reality, importance and likely scope of the different defences.
40 For example, the general rule (that separate defences defeat the same interest criterion) did not prevent insurers being sued via representative orders in Irish Shipping Ltd v Commercial Union Assurance Co Plc [1991] 2 QB 206, where a shipowners' contractual claim, which all insurers had an interest in resisting, disclosed a community of interest amongst the insurers, even though there was a possibility that some foreign insurers might have a defence not available to all insurers: see [1991] 2 QB at 227 per Staughton LJ, 231-232 per Sir John Megaw, and 240 per Purchas LJ. An argument that the representative order might work injustice because a represented insurer might wish to contend lack of authority, fraud or misrepresentation was put aside on the basis that there was "no suggestion" that any such contention would be made, and appropriate steps could be taken if there were: see [1991] 2 QB at 232.
41 In other circumstances, however, the availability of different defences has precluded a finding of community of interest. Thus, in Mercantile Marine Service Association v Toms [1916] 2 KB 243, the members of an unincorporated association were to be represented on the defendant's side in a libel action against them. Swinfen Eady LJ noted, at 246, that the various members of the association might be "in a wholly different position", saying:
If the members of the management committee were sued, and if in fact they had authorized the publication of the libel they could raise such defences as might be open to them. It might be that their defence would be that the words complained of were not capable of the meaning alleged or of any defamatory meaning, or that the words did not refer to the plaintiffs. The other members of the association, if sued, might say that, however defamatory the words complained of might be, they did not authorize their publication; that they were on the high seas and knew nothing about the matter.
42 Similarly, in Roche v Sherrington [1982] 2 All ER 426, a proceeding to set aside gifts on the grounds of undue influence against defendants representing the present members of Opus Dei, an organisation within the Roman Catholic Church, failed for lack of common interest amongst the represented defendants. Slade J held that the representative proceeding rule was not available against the defendants because members of the group were likely to have separate defences. His Honour said that "where separate defences may be opened to some members of the class in question, there can be no common interest within the rule": see [1982] 2 All ER at 434.
43 Further, if membership of a defendant group is liable to fluctuate, then this may indicate a want of sufficient particularity and a lack of commonality: see Hardie & Lane Ltd v Chiltern [1928] 1 KB 663 and Minister for Industrial Development of Queensland v Taubenfeld [2003] 2 Qd R 655. In Taubenfeld at 659, Mackenzie J pointed to "the difficulty in establishing the necessary identity of interest of all persons against whom the [representative] order was sought and of eliminating the possibility of different defences" on account of the fluctuating nature of membership of the group.
44 Having discussed some of the authorities, I turn to this proceeding. The jurisdictional question presented by O 6 r 13(1) requires me to decide whether there was a commonality of interest amongst Swimart Balwyn and the members of the putative group at the time the proceeding commenced. That is, O 6 r 13(1) requires the Court to be satisfied that numerous persons had the same interest in the proceeding at the time it was commenced. If this requirement is not satisfied, then the proceeding was not properly begun and there is no representative proceeding to continue. Having regard to the original statement of claim, the jurisdictional question thus becomes whether there was a commonality of interest amongst Swimart Balwyn and the Swimart franchisees displaying the Poster or Display System, or installing a pool filtration system in accordance with the Poster or Display System.
45 It is plain enough that Stacey Brothers has had difficulty in defining the group to be represented. This problem is not merely the result of the fact that it knows insufficient about Waterco's business and the Swimart franchise, although lack of knowledge is a contributing factor. The problem is also attributable to Stacey Brothers' attempt to capture too much in the representative net, with the result that there is a lack of commonality of interest amongst members of the group and between the group and Swimart Balwyn.
46 In my view, bearing in mind all relevant matters, including the following, there was no such commonality of interest within the putative group and with Swimart Balwyn to permit Stacey Brothers to rely on O 6 r 13(1).
1. The group would include persons whose allegedly infringing conduct differed in significant respects. Some but not all members of the group would be franchisees who displayed the Poster. Some members of the group would be franchisees who installed a pool filtration system allegedly in accordance with the Poster, even though not displaying the Poster. Further, Swimart Balwyn's conduct was unique in the sense that it made the Display System. It follows that, although some members might have an interest in resisting the allegation that, in displaying the Poster, they infringed Stacey Brothers' patent rights, there are likely to be other members of the group with no such interest. Indeed, there might be no community of interest amongst installers of pool filtration systems, if some urge that their installation differs relevantly from other installations and the installation depicted in the Poster. Furthermore, Swimart Balwyn's interest in resisting the infringement allegation is likely to become an interest in showing that the whole of its conduct, as defined by reference to the Poster and the Display System, did not amount to an infringement.
2. In these circumstances, having regard to the nature of Stacey Brothers' claims, it would be open to Swimart Balwyn and the group members to rely on various defences of significantly different kinds. The respondents touched on some of these defences in their submissions. The availability of different cross-claims would in such a case as this also be pertinent. In this case, the possibility of separate defences and cross-claims does not merely signify that injustice might be done if the Court does not manage the proceeding so as to allow these defences and cross-claims to be run. Rather, it signifies that there is in truth no commonality of interest between the members of the group and with Swimart Balwyn.
3. Accordingly, this is not a case in which it can be said that, at the time the proceeding began, Swimart Balwyn and the represented persons had the same interest in the determination of some substantial question of law or fact. Nor can it be said that there was a significant question common to all members of the group. When the proceeding commenced, there was no common question concerning the display of the Poster in which all members of the group had an same interest, notwithstanding that this is the question that Stacey Brothers would now seek to put forward as common to all.
4. The relief, including the declaratory relief, sought by Stacey Brothers also emphasises that there is in truth no commonality of interest in the group.
5. Further considerations militating against a finding of same interest include that Swimart Balwyn has no relevant relationship with the members of the group. Swimart Balwyn is not in control in any sense. Nor does it know of, or co-operate or have a common purpose with, members of the group.
6. The group is open-ended. Persons may enter the group in the course of the litigation, as, for example, where, during this time, they install a pool filtration system in accordance with the Poster. It would, therefore, be difficult to identify the separate defences that might be open to all members of the group. The fact that Stacey Brothers might close the group in the course of the litigation would not cure the jurisdictional difficulty that existed when the proceeding commenced.
7. The provisions of O 6 r 13 that operate to protect a represented person in a properly constituted respondent representative proceeding cannot make up for a failure to meet the jurisdictional requirement in O 6 r 13(1). Whilst it may in many cases be appropriate to defer ruling on the appropriateness of a representative proceeding, when it is clear that there is no commonality of interest as required by O 6 r 13(1), the proceeding simply cannot be a representative one.
47 Bearing in mind the above considerations, I conclude that, at the time the proceeding commenced, there was no commonality of interest among the group that Swimart Balwyn was to represent and with Swimart Balwyn. Accordingly, the representative proceeding – as it was framed – was not properly commenced and cannot be continued.
48 If Stacey Brothers had (contrary to the above conclusion) made out the "same interest" requirement, there would be a further question whether the same interest was shared by numerous persons. The respondents pressed this issue in this case. They referred to Mr Sloan's statement in his affidavit of 11 February 2009 that some Swimart franchisees claimed not to have displayed the Poster at all.
49 Whether there are sufficient persons to constitute "numerous" persons has been said to depend on whether "the parties were so numerous that you could never 'come at justice' … if everybody interested was made a party": see Duke of Bedford v Ellis [1901] AC at 8 per Lord Macnaghten. Today, the question may be put a little differently – whether the representative proceeding can be regarded as an efficient and just way to proceed, having regard to the likely costs, the issues involved and the capacity of the Court to manage the proceeding suitably. In view of my conclusion as to lack of commonality of interest, it is unnecessary to explore this question further. It is also unnecessary to consider the effect on this issue of Mr Sloan's third affidavit, as to which see below.
50 Carnie also showed that, even if the jurisdictional requirements of O 6 r 13(1) are satisfied, the Court may nonetheless consider, as a matter of discretion, that the proceeding ought not continue as a representative proceeding. Various factors might be relevant to this determination, including whether alterations to the group description can be allowed, notice requirements for group members, and the practicalities of settlement or discontinuance of the proceeding. As Mason CJ, Deane and Dawson JJ said in Carnie at 405, determining the importance of such matters in the context of the particular case is not necessarily straightforward, especially in the context of a defendant representative proceeding. Again, having regard to the conclusion I have reached on the lack of commonality of interest, it is strictly unnecessary to explore these discretionary considerations further.
51 Since, however, Stacey Brothers specifically sought to amend the definition of the group, in order, so it said, better to "capture" the group, I discuss briefly whether the amendment might be made.
52 If granted, the amendment that Stacey Brothers seeks by its motion would expand the group of represented persons in the sense that the group would henceforth include persons who were not Waterco franchisees. In SZ v Minister for Immigration and Multicultural Affairs (2000) 172 ALR 172, at 179, Lehane J held that O 6 r 13 did not allow an amendment that would expand the group of person on whose behalf an applicant had commenced a proceeding. The case might be distinguished on the basis that it concerned an applicant representative proceeding, as opposed to a respondent representative proceeding. I do not, however, consider that this approach would withstand scrutiny, because his Honour's reasoning is applicable in both kinds of representative proceedings. Further, there is no reason to doubt his Honour's reasoning.
53 In this proceeding, if there were to be an amendment to expand the persons sought to be bound, the amendment would need to take place under O 6 r 2, governing the joinder of parties. This is not an amendment of a kind that might be made under O 13 r 2. Having regard to the terms of O 6 r 2, Stacey Brothers would be obliged to seek leave to amend pursuant to O 6 r 2(b). There is power under O 6 r 2(b) to join additional parties after the commencement of the proceeding. It is, however, a discretionary power. Stacey Brothers did not apply for leave under O 6 r 2 in respect of any particular respondent. Nor did it advance submissions in support of any discretionary exercise of the power in its favour in respect of any respondent. It is therefore inappropriate to say anything more about the possible application of O 6 r 2. It should be borne in mind that any amendment under O 6 r 2 would require amendment of the terms in which the substantive relief claimed in the proceeding is framed. This and other matters would fall for consideration in an application under O 6 r 2(b) to join additional parties.
54 Stacey Brothers relied on passages in Bright v Femcare Ltd (2002) 195 ALR 574 at 580 [18] and 589 [79] per Lindgren J, in support of its argument that the respondents' challenge to the representative character of the proceeding was premature. I observe that this was a case under Pt IVA of the Federal Court of Australia Act, and that his Honours' comments were clearly directed to this legislation. Different considerations apply in a case such as this, where it is apparent even at this early stage that the putative group is not held together by the same interest, so as to satisfy O 6 r 13(1) of the Rules.
disposition
55 For the reasons stated, I would dismiss Stacey Brothers' motion, with costs. I would order that the application and the statement of claim be struck out in so far as each refers to "the Represented persons", and in particular the following paragraphs be struck out:
(a) in the application – paragraph 9 (in its entirety) and paragraphs 1 to 5 and 7 (in so far as these paragraphs refer to "the Represented persons"); and
(b) in the statement of claim – paragraphs 4, 5, 30 and Schedule 1 (in their entirety) and paragraphs 10, 12, 13, 14, 16, 17, 18, 19, 20, 21, 23, 24, 27, 28 and 29 (in so far as these paragraphs refer to "the Represented persons").
Stacey Brothers will have seven days to file and serve an amended statement of claim in conformity with this order. Since the respondents have succeeded on their motion, they should also have their costs.
matters arising after the hearing of the motions
56 At the commencement of these reasons, I noted that, after the hearing, the respondents sought leave to file a third affidavit by Mr Sloan. This affidavit concerned various matters, chiefly the printing and distribution of the Posters, and the information obtained as a result of inquiries made of Swimart franchisees. In a letter dated 13 March 2009, the respondents' solicitor wrote:
The Respondents' position is that the content of the affidavit does not … impact on the majority of the arguments raised by the Respondents and, subject to the stance taken by the Applicant, the Respondents propose that the Court decide on the Notices of Motion and arguments already advanced. If the Applicant wishes to be heard on matters arising from the affidavit then we propose that they be given the opportunity to file supplementary written submissions limited to those issues.
57 Stacey Brothers' response was to seek the issue of a subpoena directed to Waterco, c/- its solicitor in this proceeding, seeking a range of documents, some of which might attract legal professional privilege claims.
58 For the reasons earlier stated, it has proved unnecessary to refer to Mr Sloan's third affidavit in determining the outcome of the present motions. I have not formally granted leave to file this affidavit, although I have had regard to the exchanges at the hearing of the motions and would hear the parties briefly on the question if they so wished. If leave were pressed, this might be the occasion for Stacey Brothers to renew its application for leave to issue the subpoena directed to Waterco. Whether or not Stacey Brothers wishes to do so may depend on the status of Mr Sloan's third affidavit and the manner in which Stacey Brothers proposes to pursue the present proceeding.
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.
Associate:
Dated: 5 May 2009
Counsel for the Applicant: Mr T.D. Cordiner
Solicitor for the Applicant: Mills Oakley
Counsel for the Respondents: Mr I. Horak
Solicitor for the Respondents: Dibbs Abbott Stillman
Date of Hearing: 23 February 2009
Date of Judgment: 5 May 2009
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Federal Court of Australia
CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCAFC 171
Appeal from: CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43
File number: VID 97 of 2021
Judgment of: MIDDLETON, MCKERRACHER AND GRIFFITHS JJ
Date of judgment: 21 September 2021
Catchwords: TAXATION – statutory notice to give information – where Commissioner sought particulars of documents over which legal professional privilege had been claimed – whether the notice was invalid on the ground that it was issued for an improper purpose – whether the extent of information sought and prior requests in correspondence indicated the Commissioner's purpose was to determine the validity of the privilege claims – where the primary judge found that the primary and only purpose of the notice was to provide the Commissioner with sufficient information to decide whether to accept or challenge the privilege claims – whether the primary judge erred in the application of principles concerning multiple purposes
Legislation: Administrative Decisions (Judicial Review) Act 1977 (Cth) s 13
Taxation Administration Act 1953 (Cth) s 353-10; Sch 1
Cases cited: Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee [1945] HCA 55; (1945) 72 CLR 37
Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501
Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187
Glencore International AG v Federal Commissioner of Taxation [2019] HCA 26; (2019) 265 CLR 646
Haneef v Minister for Immigration and Citizenship [2007] FCA 1273; (2007) 161 FCR 40
LHRC v Federal Commissioner of Taxation [2015] FCAFC 184; (2015) 239 FCR 240
Minister for Aboriginal and Torres Strait Islander Affairs v Western Australia [1996] FCA 395; (1996) 67 FCR 40
Minister for Public Works & Local Government v Duggan [1951] HCA 29; (1951) 83 CLR 424
Phosphate Resources Ltd v Minister for the Environment, Heritage & the Arts (No 2) [2008] FCA 1521; (2008) 162 LGERA 154
Planning Commission (WA) v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30
R v Toohey; Ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170
Reid v Sinderberry [1944] HCA 15; (1944) 68 CLR 504
Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 56 ALJR 678; (1982) 41 ALR 467
Thompson v Randwick Municipal Council [1950] HCA 33; (1950) 81 CLR 87
Division: General Division
Registry: Victoria
National Practice Area: Taxation
Number of paragraphs: 64
Date of hearing: 18 August 2021
Counsel for the Appellant: Mr FD O'Loughlin QC with Ms A Lee
Solicitor for the Appellant: Johnson Winter & Slattery
Counsel for the Respondent: Mr PJ Hanks QC with Ms M Clarebrough
Solicitor for the Respondent: Australian Government Solicitor
ORDERS
VID 97 of 2021
BETWEEN: CUB AUSTRALIA HOLDING PTY LTD (ABN 99 615 290 849)
Appellant
AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
Respondent
order made by: MIDDLETON, MCKERRACHER AND GRIFFITHS JJ
DATE OF ORDER: 21 SEPTEMBER 2021
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the respondent's costs of the appeal, to be assessed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
INTRODUCTION
1 The appellant (CUB) appeals from a judicial review decision by a judge of this Court. The respondent (the Commissioner) issued a Notice on 4 March 2020 pursuant to s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) (the TAA) requesting CUB to provide certain details about documents over which CUB claimed legal professional privilege (LPP). CUB advanced four grounds of review at first instance. The first three grounds were dealt with by the primary judge as a separate question. The fourth ground was deferred.
2 The grounds argued below challenged the validity of the Notice on the basis that the Commissioner's purpose or substantial purpose in seeking the information was to determine the validity of CUB's actual LPP claims. The Commissioner's position was that he was simply seeking information which would enable him to form a view as to whether or not to challenge CUB's claim for LPP in a court.
3 The heart of CUB's case before the primary judge, and on appeal, is that the Commissioner's "primary purpose, or alternatively substantial purpose" for issuing the Notice was improper. In particular, CUB argues that the Commissioner's "true purpose, or in the alternative … at least, a substantial purpose" was to arrogate to himself the determination of whether or not CUB's LPP claims were made out when such determination could only be made by a court. It is not in dispute that such a determination would be for a court. The primary judge disagreed that the Commissioner had such a purpose (or substantial purpose).
4 For reasons which follow, the primary judge was correct and the appeal must be dismissed.
EVIDENCE BEFORE THE PRIMARY JUDGE
5 Mr Stewart Grieve, a solicitor representing CUB swore four affidavits and Mr Christopher Ferguson, an Assistant Commissioner of Taxation, who made the decision to issue the Notice, affirmed two affidavits.
6 Mr Grieve's affidavits primarily exhibited documents, specifically:
(a) correspondence exchanged between the parties over a number of years;
(b) copies of the schedules containing CUB's LPP claims and accountants' concession claims over documents that were responsive to earlier statutory notices issued by the Commissioner;
(c) correspondence exchanged before the issuing of the Notice;
(d) notes of a telephone conversation between the parties' representatives before the issuing of the Notice;
(e) CUB's request for a statement of reasons for issuing the Notice pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth); and
(f) the Commissioner's statement of reasons dated 17 March 2020 (the s 13 reasons).
7 Additional correspondence between the parties was also produced in Mr Ferguson's affidavit and a file note of a further telephone conversation between representatives for the parties. Mr Ferguson deposed that the s 13 reasons accurately recorded his reasons for deciding to issue the Notice. Mr Ferguson was not cross-examined on any aspect of his evidence, including his affirmed statement that the s 13 reasons accurately recorded his reasons for deciding to issue the Notice.
8 In totality, these exchanges reveal a history over some years of the Commissioner seeking documents from CUB and CUB's resistance to provision of such documents, or certain information in relation to them, on the grounds of LPP.
CONTENTIONS BEFORE THE PRIMARY JUDGE
9 Before the primary judge, CUB placed considerable emphasis on the content of historical correspondence which had ensued between the parties over some years and on some of the earlier requests and statements in correspondence. The primary judge found that while some of those earlier statements might have presented a difficulty for the Commissioner if such statements reflected his position at the date of the Notice, the better test of his purpose at the time of the Notice was Mr Ferguson's statement of s 13 reasons affirmed by affidavit, and the content of the correspondence much closer to the time of the issuing of the Notice and the Notice itself. The Commissioner accepted that the historical documentation was admissible and relevant, but focussed on the weight of the later correspondence and statements. The Commissioner accepted that there were statements going both ways in the earlier correspondence.
10 The s 13 reasons were in dispute. Before the primary judge, CUB adopted the challenging argument also advanced in this Court that [40.5] of the s 13 reasons did accurately express the Commissioner's purpose, but that [40.4] and [40.6] of those reasons should be rejected. This argument was advanced without having cross-examined Mr Ferguson to that effect or at all. Paragraph 40 of the s 13 reasons was in these terms (references to "ABI Australia" are to CUB as it was formerly known and "SABM Australia" was CUB's predecessor, prior to 2016, as head company of the SAB Group. SABM Australia was also formerly known as "SABMiller Australia": see the primary judge's reasons (at [16]-[19]):
4. I made the decision to issue the 4 March 2020 [Notice] for the following reasons:
40.1 The Commissioner is engaged in considering SABM Australia's objections to the amended assessments issued on 12 September 2019, in order to make a decision pursuant to section 14ZY of the [TAA]. The Commissioner is also assessing SABM Australia's possible liability to administrative penalty pursuant to Division 284 to Schedule 1 of the [TAA] in respect of the notices of amended assessment issued on 12 September 2019.
40.2 The Commissioner is also undertaking the second SABM audit – a process that may produce information relevant to assessments or amended assessments of income tax payable by SABM Australia for the 2014, 2015, 2016 and 2017 income years, pursuant to sections 166 and 170 of the Income Tax Assessment Act 1936 (the ITAA 1936). When the Commissioner has finished considering the question of assessments and amended assessments for those income years, the Commissioner may also need to assess SABM Australia's possible liability to administrative penalty pursuant to Division 284 to Schedule 1 of the [TAA].
40.3 in addition, the Commissioner is undertaking the ABI Australia audit – a process that may produce information relevant to assessments or amended assessments of income tax payable by ABI Australia for the 2017, 2018, 2019 and 2020 income years, pursuant to sections 166 and 170 of the ITAA 1936. When the Commissioner has finished considering the question of assessments and amended assessments for those income years, the Commissioner may also need to assess ABI Australia's possible liability to administrative penalty pursuant to Division 284 to Schedule 1 of the [TAA].
40.4 The documents sought in the 30 May 2018 notice and in respect of which LPP has been claimed remain relevant to the task of investigating, and in due course determining:
(a) the amount of SABMiller Australia's income tax assessments and SABMiller Australia's possible liability to administrative penalties; and
(b) the amount of ABI Australia's income tax assessments and ABI Australia's possible liability to administrative penalties;
and are relevant to the proper discharge by the Commissioner of his duty to:
(c) administer the taxation laws, including the [TAA] and the ITAA 1936;
(d) accurately ascertain the extent of the tax liability of each of SABMiller Australia and ABI Australia; and
(e) pursue the recovery of tax-related liabilities.
40.5 The information sought in the 4 March 2020 [Notice] will assist the Commissioner to determine:
(a) whether each document sought in the 30 May 2018 notice, and in respect of which privilege has been claimed, was brought into existence for the dominant purpose of requesting or providing independent legal advice;
(b) whether privilege in any such document has been waived; and
(c) whether the claim that each document is privileged is well-founded, or whether the Commissioner should continue to press for production of all or some of the documents sought pursuant to the 30 May 2018 notice so as to assist the Commissioner in the proper discharge of the Commissioner's duty referred to in paragraph 40.4 above.
40.6 Accordingly, the information sought in the 4 March 2020 [Notice] is required by the Commissioner for the purpose of the administration of a taxation law – in particular, the [TAA] and the ITAA 1936.
40.7 ABI Australia has not provided the information now sought in the 4 March 2020 [Notice] despite previous requests to do so.
11 The argument for CUB that [40.4] and [40.6] should be rejected will be addressed in due course. It was not accepted by the primary judge.
12 After examining the history of dealings between the parties, the primary judge concluded (at [10], [80] and [92]) that the Commissioner's purpose (or substantial purpose) was to obtain information that he considered necessary to determine whether to accept or challenge CUB's LPP claims in respect of the relevant documents. His Honour said further (at [10]):
… Further, I find that the Commissioner considered that the documents, which were responsive to the May 2018 Notice, remained relevant to the statutory functions he was still carrying on. In light of these findings, I conclude that the March 2020 Notice was issued for the purpose of the administration of a taxation law.
13 The primary judge also relied upon the factual material in Mr Ferguson's affidavit to conclude that [40.4] and [40.6] of the s 13 reasons, which CUB asked him to ignore, should in fact be accepted. The surrounding circumstances, together with the absence of cross-examination of Mr Ferguson were determinative. It was accepted, as it is on appeal, that the Court was not bound to take the s 13 reasons at face value. The Court may test those reasons as it sees fit. As it happens, little in the reasons of the primary judge or in the reasons of this Court turns on the content of [40.4] or [40.6]. Even [40.5] is relatively neutral in ascertaining the purpose. Nothing turns on the word "determine" in [40.5], but read as a whole with particular reference to [40.5(c)], it is tolerably clear that the Commissioner was saying that he needed the information to decide for himself whether to press for production of the documents. But, as CUB noted, the fact that the Commissioner has so described his purpose does not bind the Court to accept that description.
GROUNDS OF APPEAL
14 By the first ground of appeal, it is argued that the primary judge erred by failing to apply the correct test as set out in the decisions of the High Court in Thompson v Randwick Municipal Council [1950] HCA 33; (1950) 81 CLR 87 (at 106) and Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 56 ALJR 678; (1982) 41 ALR 467 (at 468-469) which required him to consider whether there was a substantial and improper purpose. It is said that:
(a) the primary judge did not refer to, or engage with, these authorities;
(b) it is possible for the exercise of a statutory power to be motivated by multiple purposes. The assessment of the propriety of those various purposes is an objective one;
(c) the primary judge sought to determine whether the Commissioner's "primary purpose" in issuing the Notice was authorised. That was not the correct approach in the present circumstances; and
(d) the primary judge was required to determine whether the Notice was invalid because of a further substantial and improper purpose (namely, to determine the validity of CUB's LPP claims). The primary judge failed to undertake that task.
15 By the second ground of appeal, it is asserted that having accepted that there were multiple events disclosed in the evidence (when viewed in isolation) that were capable of supporting CUB's case (at [81]-[83]), the primary judge erred by failing to:
(a) consider whether the cumulative effect of the totality of the evidence supported an inference that the Commissioner was motivated by a substantial and improper purpose in issuing the Notice; and
(b) conclude that the cumulative effect of the totality of the evidence was that the Commissioner should be found to have been motivated by a substantial and improper purpose in issuing the Notice.
APPLICABLE LEGAL PRINCIPLES
16 A purported exercise of statutory power by a public authority is not authorised and is therefore beyond power and invalid if it is exercised for an improper purpose or for improper purposes: R v Toohey; Ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 (at 193, 215-216, 264-265) and Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee [1945] HCA 55; (1945) 72 CLR 37 (at 67-68). Every statutory power, however widely expressed, is limited by the text, subject matter, scope and purpose of the statute. The purpose of the grant of a power or the purpose for which the power may be exercised and the outer limits of the exercise of the power are generally speaking, to be derived from the statute conferring it: Northern Land Council (at 233) and Haneef v Minister for Immigration and Citizenship [2007] FCA 1273; (2007) 161 FCR 40 (at [287]). The notion of impropriety in this context does not necessarily mean that the repository of the power was acting mala fide or dishonestly, and an action can be improper without the repository being aware that the conduct was improper: Northern Land Council (at 233).
17 The relevant purpose or purposes for which a power is exercised is a question of fact: Samrein (at 469) and Reid v Sinderberry [1944] HCA 15; (1944) 68 CLR 504 (at 574). It is to be determined objectively by reference to admissible evidence. Where a statutory power is exercised for multiple purposes and one of those purposes is improper, the exercise of the power will be vitiated if the improper purpose was a substantial purpose: Thompson (at 106), as affirmed in Minister for Public Works & Local Government v Duggan [1951] HCA 29; (1951) 83 CLR 424 (at 445-446); Samrein (at 468-469); and Planning Commission (WA) v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30 (at [58]). An improper purpose does not become a proper purpose merely by asserting that the power was exercised for a proper purpose.
18 The doctrine of LPP affords an immunity from providing certain documents or information concerning legal matters, the production of which might otherwise be compellable: Glencore International AG v Federal Commissioner of Taxation [2019] HCA 26; (2019) 265 CLR 646 (at [12] and [20]-[25]). In the absence of a specific statutory regime, it is for a court of competent jurisdiction to determine the validity of disputed LPP claims: Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501 (at 590) and Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 (at 202 and 217).
19 In the present situation, there is no challenge to the entitlement to issue a notice. It is also accepted that it was for CUB to establish that the Notice was issued for an improper purpose, but CUB also argued (correctly) that in exercising a coercive power, the Commissioner should not impinge upon rights which are not clearly abrogated by the grant of the power: LHRC v Federal Commissioner of Taxation [2015] FCAFC 184; (2015) 239 FCR 240 (at [10]).
CONSIDERATION
Ground 1
20 The primary judge found that the Commissioner's "primary or substantial" purpose in issuing the Notice was to decide whether or not to challenge CUB's LPP claims. CUB argues, however, that if even if that conclusion was open (which it does not accept, and is directly challenged under the second ground), that was not the end of the inquiry because:
(a) first, CUB's case did not require that the Commissioner's dominant or primary purpose be improper or unauthorised in order to succeed. A substantial illegitimate purpose amongst multiple other purposes was sufficient to vitiate the purported exercise of statutory power. We do not understand this proposition to be seriously in dispute. What is essentially in dispute is what the primary judge found and was entitled to find;
(b) secondly, CUB says the primary judge did not properly apply the principles set out by the High Court in Thompson, as affirmed in Duggan and in Samrein, in reaching his decision. CUB says that the primary judge, having been taken to the relevant principles, does not appear to have addressed them;
(c) thirdly, CUB argues that the primary judge failed to address CUB's alternative proposition that underlying the Notice there was (co-existing with any authorised dominant or primary purpose) a substantial and improper collateral purpose, namely, the desire to determine CUB's LPP claims.
21 CUB complains that the primary judge failed to address part of CUB's case or to apply the correct legal test which, relevantly to this appeal, would be an error of law.
Ground 1- consideration
22 These contentions cannot be accepted. A fair reading of the primary judge's reasons for decision makes it clear that he was entirely aware of the reasoning and the ratio in Thompson and Samrein on which CUB relied. CUB made clear that those cases stood for the proposition that "a substantial purpose among multiple purposes if illegitimate will vitiate the exercise of power". That argument was expressed in those terms in the written submissions and was also clearly reflected in oral argument in exchanges between senior counsel for CUB and his Honour. In oral submissions, senior counsel submitted that the evidence revealed that the Commissioner had "dual purposes" in issuing the Notice. This ensued in the following exchange:
HIS HONOUR: So what do you say the dual purposes were?
[SENIOR COUNSEL]: Well, if there was a purpose of making a decision without testing, there was an additional purpose of determining. Which all of the conduct leading up to this point reviews, the conduct and the lack of conduct, we should say. Now, we say, your Honour, the critical indicators of the Commissioner's true purpose are, first - - -
HIS HONOUR: Sorry, the true, what you say is the true purpose is the Commissioner arrogating to himself the determination by himself of whether or not privilege applied?
[SENIOR COUNSEL]: We say that that is his true purpose, or in the alternative, your Honour, at least a substantial purpose.
HIS HONOUR: Yes.
[SENIOR COUNSEL]: And a substantial purpose is enough …
(Emphasis added.)
23 CUB is correct to say that his Honour's reasons do not expressly refer to Thompson or Samrein, but it is quite clear from what his Honour did articulate in his reasons, and from the exchanges set out above, that he clearly understood that the task required was to identify the purpose of the Notice and, if there was more than one, whether any of those purposes were both substantial and improper.
24 The nature of the finding reached by his Honour, however, was such that it was unnecessary to go further to identify a substantial purpose, as his Honour found that "the purpose (or substantial purpose)" of the Commissioner in issuing the Notice was to determine whether to accept or challenge the LPP claims. CUB accepted that approach to be legitimate in the course of oral exchanges with his Honour, where the following occurred:
HIS HONOUR: Sorry, [senior counsel]. If the position was that the Commissioner's purpose was not what I just referred to a moment ago, but was rather to decide whether he accepted the LPP claims or wanted to take it further, would that be a legitimate purpose?
[SENIOR COUNSEL]: The answer to that is, "Yes", your Honour. But we say that the purpose if not the purpose, as a question of fact, that your Honour should conclude with, or if it is, it was at least – it was at least accompanied by other purposes which were substantial purposes sufficient to vitiate the notice.
(Emphasis added.)
25 In this particular case, the primary judge found that there was only one purpose (or only one substantial purpose) rather than multiple purposes. Once that finding was reached, it was unnecessary to further consider CUB's alternative proposition that there was some other collateral or incidental purpose that was improper which could also be said to be a "substantial purpose". That finding was simply not logically possible. There was no need to consider the argument that there were multiple purposes, one of which was improper and substantial because the initial premise for advancing that argument had been rejected.
26 The primary judge did not fail to address any part of CUB's case or take an incorrect approach in any respect in relation to the matters advanced in ground 1, or otherwise.
27 Ground 1 cannot succeed.
Ground 2
28 Ground 2 is essentially a challenge to a finding of fact. No suggestion was raised for the Commissioner that this Court was not in as good a position as the primary judge to draw relevant inferences from the content of the substantial body of documents disclosed in the proceeding.
29 CUB argues that when all that material is taken into account, the totality of the evidence disclosed that at least a substantial collateral purpose of the Commissioner in issuing the Notice was to determine the validity of CUB's LPP claims. Both parties accepted that it was not for the Commissioner to determine the validity of the LPP claims. The Commissioner at all times has asserted before the primary judge and this Court that a proper understanding of the relevant documents close to the time of issuing the Notice was to enable the Commissioner to form a view as to whether or not to challenge CUB's LPP claims, a challenge which would be determined by a court (or perhaps some other agreed independent person).
30 In that regard, it is important to consider the relevant part of the Notice (its schedule), which is as follows:
Schedule
1. For every document responsive to the notice issued under section 353-10 of Schedule 1 to the [TAA] on 30 May 2018 that was not wholly produced due to claims for legal professional privilege, provide:
(a) the title of the document. Where the document is an email, the title of the document means the subject line of the email;
(b) the name of the person who authored the document;
(c) the name of each person to whom the document was communicated; and
(d) where the document is an email, for each person who received the email, whether the email was sent directly to the person or copied to the person.
31 The content of the schedule to the Notice was much reduced from an immediately preceding draft schedule on which there had been negotiations between CUB and the Commissioner.
32 What is also clear is that the information sought by the Commissioner, if provided, could never be sufficient alone to enable the Commissioner to determine the validity of CUB's LPP claims.
33 Nonetheless, CUB relies on the fact that the primary judge acknowledged (at [83]) that there was evidence from earlier communications that if taken in isolation, was capable of supporting an inference at an earlier time that the Commissioner was motivated by an improper purpose of determination of CUB's LPP claims. In this regard, CUB points to the Commissioner's correspondence of 17 September 2018, 26 July 2019, 9 August 2019 and 4 March 2020. The relevant content of those documents is as follows:
17 September 2018
…
• The provision of a consolidated list of accountants' concession and legal professional privilege claims is acceptable. In order to comply with the requirements of the notices, a list of claims must be provided by the extended due date of the notices. Additionally, it should be clear from the consolidated list of claims to which question each of the covered documents relate. Any claims for the accountants' concession or legal professional privilege must be supplemented with information relevant to determining the appropriateness of each claim. The ATO's website details information that is relevant to determining claims for accountants' concession and legal professional privilege, with links provided below.
…
26 July 2019
…
12. We note that merely disclosing the processes connected to making LPP claims is unlikely to put the Commissioner in a position to make an informed assessment of each claim.
…
9 August 2019
…
13. We reiterate that the quantum of your LPP claims is not, in itself, a concern. As stated in our letter dated 26 July 2019, our concerns with your LPP claims arise due to the quantum of claims in combination with the limited information provided to allow us to assess the validity of each claim.
…
4 March 2020
…
3. The Commissioner requires the particulars identified in the 6 December email to allow the Commissioner evaluate the legitimacy of your client's LPP claims over the documents that were the subject of the notice issued on 30 May 2018 – in particular, to allow the Commissioner to make an informed judgement as to:
3.1 whether each document, for which LPP has been claimed, was brought into existence for the dominant purpose of requesting or providing independent legal advice, or reveals a communication made for that purpose; and
3.2 whether LPP in any of those documents has been waived.
4. The notice does not require you or your client to disclose the substance of the communication contained in any document.
5. We remain of the view that the information that you have provided about the documents subject to the LPP claims is insufficient to enable the Commissioner to consider the matters identified in paragraph 3 above.
6. The Commissioner also requires those additional particulars in order to make an informed decision as to whether an alternative dispute resolution process would be an appropriate method of resolving any disputed claims.
(Emphasis added.)
34 The primary judge referred to the 17 September 2018 correspondence (at [32] and [83]) of his decision where his Honour said:
32 On 17 September 2018, the Commissioner wrote to CUB identifying the information that the Commissioner required to substantiate legal professional privilege claims and included links to the relevant legal professional privilege forms on the ATO's website. The Commissioner also noted that a list of legal professional privilege claims must be provided by the extended due date for the earlier notices. The letter included the statement that:
Any claims for the accountants' concession or legal professional privilege must be supplemented with information relevant to determining the appropriateness of each claim.
…
83 Also, some of the earlier communications on behalf of the Commissioner, if taken in isolation, may suggest that the Commissioner was seeking further particulars in order to determine the legal professional privilege claims. I refer to the letter dated 17 September 2018 (see [32] above), paragraph 12 of the letter dated 26 July 2019 (see [45] above), and paragraph 13 of the letter dated 9 August 2019 (see [47] above).
35 The primary judge also discussed the content of [12] in the 26 July 2019 communication where his Honour said (at [45] and [83]):
45 On 26 July 2019, the Commissioner wrote to CUB acknowledging the offer in CUB's 6 June 2019 letter to share their processes for making legal professional privilege claims. The letter included the following statements:
9. We continue to have concerns about the basis of the LPP claims made in relation to the formal notices issued to you …
10. We respect your right to claim LPP. However, our concerns stem from the quantum of your LPP claims (in excess of 20,000) in combination with the limited information provided to allow us to assess the validity of each claim.
11. We acknowledge your offer contained in your letter of 6 June 2019 to explain the processes adopted in connection with your claims of LPP. The Commissioner agrees that the mere disclosure of the processes which resulted in the making of LPP claims would not disclose the substance or gist of the advice associated with each claim and would therefore not be a waiver of that privilege.
12. We note that merely disclosing the processes connected to making LPP claims is unlikely to put the Commissioner in a position to make an informed assessment of each claim.
[primary judge's emphasis]
…
83 Also, some of the earlier communications on behalf of the Commissioner, if taken in isolation, may suggest that the Commissioner was seeking further particulars in order to determine the legal professional privilege claims. I refer to the letter dated 17 September 2018 (see [32] above), paragraph 12 of the letter dated 26 July 2019 (see [45] above), and paragraph 13 of the letter dated 9 August 2019 (see [47] above).
36 As to the 9 August 2019 communication, the primary judge referred to this content at [47] of his reasons, where his Honour said:
47 On 9 August 2019, the Commissioner wrote to CUB reiterating his view that CUB had not provided sufficient particulars in respect of its legal professional privilege claims. The Commissioner's letter also stated that:
13. We reiterate that the quantum of your LPP claims is not, in itself, our concern. As stated in our letter dated 26 July 2019, our concerns with your LPP claims arise due to the quantum of claims in combination with the limited information provided to allow us to assess the validity of each claim.
14. We reject the assertion in your letter dated 31 July 2019 that you have provided sufficient information to allow the Commissioner to form a view in relation to the claims made. It remains our view that you have not provided sufficient particulars in respect of your claims for LPP.
15. Moreover, where LPP claims have been made over only part of documents, the parts of those documents that have been redacted exceed what you would be entitled to redact on the basis of LPP.
16. Even where a document records a communication for the requisite dominant purpose, a privilege holder may redact the document only to the extent necessary to prevent the disclosure of the communication for that purpose.
17. The redactions made to the documents, which reflect the same level of detail as provided in your schedule, entirely obscure the participants in the correspondence, and the subject or title of the correspondence (which we would not ordinarily expect to disclose the substance or gist of any advice given). The redactions have left us unable to even identify which part claim listed in your schedule of LPP claims relates to which partially redacted document.
18. Further, you have not sufficiently described the purpose(s) of the relevant communications to the degree required to support a claim for privilege, or to permit the Commissioner to engage with you regarding the claims. The schedules provided include descriptions which are conclusory in nature.
[primary judge's emphasis]
37 As to the Notice itself and accompanying letter of 4 March 2020, this was dealt with by the primary judge in his reasons (at [81]) where his Honour said:
It may be accepted that parts of the [s 13 reasons], and some of the communications made on behalf of the Commissioner, if taken in isolation, suggest that the Commissioner sought the information set out in the March 2020 Notice in order to determine or resolve CUB's legal professional privilege claims. In particular, in the covering letter dated 4 March 2020, enclosing the March 2020 Notice, it was stated that the Commissioner required the particulars:
… to allow the Commissioner to make an informed judgement as to:
3.1 whether each document, for which LPP has been claimed, was brought into existence for the dominant purpose of requesting or providing independent legal advice, or reveals a communication made for that purpose; and
3.2 whether LPP in any of those documents has been waived.
38 Part of the Commissioner's s 13 reasons (at [40.5(a)] and [40.5(b)]) is also relied upon by CUB to demonstrate that at least a substantial collateral purpose of the Commissioner in issuing the Notice was to determine the validity of the LPP claims. The primary judge dealt with this content in his reasons (at [82]) where his Honour said:
Similarly, paragraphs 40.5(a) and (b) of the Statement of Reasons stated:
40.5 The information sought in the 4 March 2020 [Notice] will assist the Commissioner to determine:
(a) whether each document sought in the 30 May 2018 notice, and in respect of which privilege has been claimed, was brought into existence for the dominant purpose of requesting or providing independent legal advice;
(b) whether privilege in any such document has been waived; …
39 CUB also draws on the Commissioner's correspondence of 1 July 2016 (at the second paragraph), where the Commissioner said:
…
We have attached a spreadsheet outlining all LPP claims made by SABMiller Australia during the audit process. Each claim contains corresponding observations relating to the sufficiency of the information provided to substantiate the claim and where details are lacking. These comments were endorsed by officers of the Information Gathering and Access Network. This document has been provided to you for your feedback and comment.
…
40 Reliance is also placed by CUB on the correspondence of 19 November 2018, exhibited by Mr Ferguson to one of his affidavits. In this document, the Australian Taxation Office (ATO) said under the heading of "Claims for LPP":
As previously outlined in our letter of 1 November 2018, where you have identified documents which you consider can be withheld on the basis of valid LPP or AC claims, details substantiating those claims should be part of your response and provided when the Onshore Notice and Offshore Notice (Notices) are due.
If you anticipate that this information will not be provided by this time, we request that you outline in detail the reasons why, the process you are undertaking to substantiate your claims, including the resources being allocated to this task, and a definitive date agreeable to the Commissioner of when this information will be provided.
To assist you, we will provide you with additional time to fulfil your obligations to substantiate your LPP and AC claims by extending the due date of the Onshore Notice to align with the Offshore Notice.
(Emphasis added.)
41 CUB relies upon the content of an ATO letter to it on 9 August 2019, where in relation to LPP and particularly the ownership of LPP, the ATO said:
…
Ownership of LPP claims
6. LPP belongs to the client, not to the relevant adviser. In the case of the claims made in relation to documents responsive to formal notices issued to your adviser, PricewaterhouseCoopers (PwC), the Commissioner has acted on the basis that PwC made the claims pursuant to its obligations as the adviser to the AB Inbev group (and, we infer, its predecessors, including the SABMiller group).
7. In the absence of any advice to the contrary, the Commissioner will continue to treat the claims made by the AB Inbev group's advisers, as being made on its behalf.
8. If you do not wish to maintain your LPP claims over documents responsive to formal notices issued to PwC, those documents must be provided to the Commissioner immediately.
9. In relation to LPP claims over documents responsive to formal notices issued to PwC that you do wish to maintain, the Australian Government Solicitor (AGS) has communicated the Commissioner's views to King & Wood Mallesons (KWM) on the particulars provided in support of your claims. We confirm the Commissioner's views as follows:
a. The further particulars provided by KWM on behalf of PwC on 12 April 2019 in relation to your LPP claims over documents responsive to formal notices issued to PwC in fact reduced the level of detail included in previous schedules of your LPP claims.
b. The provision of further LPP schedules which reduce the level of detail provided in support of your claims will not assist with the resolution of the dispute over your claims and will result in unnecessary delay and costs to all parties involved.
10. As communicated by AGS on behalf of the Commissioner to KWM, the Commissioner continues to proceed on the assumption that you will not instruct your advisers to provide more detailed particulars of the kind that would advance resolution of the dispute over your LPP claims.
(Emphasis added.)
42 The letter continued:
…
13. We reiterate that the quantum of your LPP claims is not, in itself, our concern. As stated in our letter dated 26 July 2019, our concerns with your LPP claims arise due to the quantum of claims in combination with the limited information provided to allow us to assess the validity of each claim.
14. We reject the assertion in your letter dated 31 July 2019 that you have provided sufficient information to allow the Commissioner to form a view in relation to the claims made. It remains our view that you have not provided sufficient particulars in respect of your claims for LPP.
15. Moreover, where LPP claims have been made over only part of documents, the parts of those documents that have been redacted exceed what you would be entitled to redact on the basis of LPP.
16. Even where a document records a communication for the requisite dominant purpose, a privilege holder may redact the document only to the extent necessary to prevent the disclosure of the communication for that purpose.
17. The redactions made to the documents, which reflect the same level of detail as provided in your schedule, entirely obscure the participants in the correspondence, and the subject or title of the correspondence (which we would not ordinarily expect to disclose the substance or gist of any advice given). The redactions have left us unable to even identify which part claim listed in your schedule of LPP claims relates to which partially redacted document.
18. Further, you have not sufficiently described the purpose(s) of the relevant communications to the degree required to support a claim for privilege, or to permit the Commissioner to engage with you regarding the claims. The schedules provided include descriptions which are conclusory in nature.
19. Additionally, it is clear from the information already provided to the ATO that the multidisciplinary companies and firms identified in your schedules provided a significant amount of commercial advice to you. The need for appropriate identification regarding all of the purposes of each communication over which LPP has been claimed is clear in these circumstances.
20. Contrary to your statement in the final paragraph of page three of your letter dated 31 July 2019, it is not the Commissioner's view that an assessment of the validity of each individual LPP claim is inappropriate or impracticable. Rather, it is the Commissioner's view that prior to withholding a document (or part of a document) from production, there must be a positive conclusion that there is an entitlement to withhold that document from production. It is unclear why the merits of any particular 'sample' of those claims would be 'representative' of the merits of the other claims that had been made. In the circumstances, we do not consider that an independent review process involving a 'representative' sample of the claims would be helpful in resolving the issues in dispute.
Disclosure of the processes connected to making the LPP claims
21. Should you consider that the Commissioner would be assisted in hearing an explanation of the processes connected to making LPP claims in order to progress the outstanding LPP issues, we are happy to consider such an explanation as suggested in your letters dated 6 June 2019 and 31 July 2019. While your explanation may assist the Commissioner, we cannot give an indication as to the extent to which it will address our concerns without first hearing the explanation.
Meeting with the Deputy Commissioner
22. Should you still wish to meet with the Deputy Commissioner, we propose a meeting be held at the ATO on 3 September 2019.
(Emphasis added.)
43 CUB asserts that all this material, viewed collectively, illustrates that by expressing his contentions in the way set out in the correspondence, the Commissioner makes it clear that he was at all times seeking to actually determine CUB's LPP claims. At the very least, CUB argues, it is consistent with the proposition that in issuing the Notice the Commissioner had a substantial purpose of seeking to determine CUB's LPP claims. CUB stresses that the time for providing the sort of particulars sought by the Commissioner is when the validity of the claims for LPP is being determined by the Court. Before such a time, there is no requirement to provide such particulars. It follows, CUB argues, that the request by the Commissioner for particulars to substantiate or support LPP tended to demonstrate objectively that the requests were motivated by a substantial improper purpose, namely, the actual determination of the LPP claims.
44 In particular, CUB contends that when the alleged insufficiency of particulars or information to substantiate the LPP claims is coupled with the Commissioner's various statements (set out below), then the substantial improper purpose is further demonstrated. The Commissioner said that he was seeking to:
(a) "make an informed decision about … [the LPP] claims" (the 27 August 2015 letter);
(b) "evaluate the legitimacy of" the LPP claims and "make an informed judgement" as to LPP matters (the 4 March 2020 letter);
(c) determine "the appropriateness of each claim" (the 17 September 2018 letter);
(d) "assess the validity of each [LPP] claim" (the 26 July 2019 letter at [10] and the 9 August 2019 letter at [13]), and
(e) "make an informed assessment of each claim" (the 26 July 2019 letter at [12]).
45 CUB also complains that the Commissioner did not respond at all, or certainly not substantively, to CUB's assertions that he had enough information to perform the only task that he was permitted to perform, namely, to decide whether to test or accept the LPP claims. Those assertions were made in correspondence by CUB (or its solicitors) of 20 September 2018, 16 August 2019, 1 December 2019 and in speaking notes that Mr Grieve deposed that he used at the conference call between CUB and the Commissioner's representatives on 21 November 2019.
46 All these communications and the Commissioner's response or lack of response to them demonstrate objectively, CUB argues, that the Commissioner was motivated by a substantial improper purpose. The clear manifestation of that substantial improper purpose is said to be evidenced by the contents of the draft notice that was sent to CUB on 13 November 2019 (Draft Notice). The Draft Notice contained a request for substantially more material than the final form of the Notice issued on 4 March 2020. The Draft Notice sought the following documents and information by its schedule:
Schedule
1. For every document responsive to the notice issued to ABI Australia Pty Ltd under section 353-10 of Schedule 1 to the [TAA] on 30 May 2018 that was not wholly produced due to claims for legal professional privilege, provide:
a. the title of the document;
b. a description of the nature of the document, for example, advice, a contract, an invoice, minutes of a meeting, or an email;
c. whether the document is an original or a copy;
d. the date of the document;
e. where the document is an email, the time the email was sent;
f. the number of pages of the document;
g. in relation to the author of the document:
i. the name of the person;
ii. the organisation the person worked for; and
iii. their position or role in the organisation;
h. where the document was signed, in relation to the person who signed the document:
i. the name of the person;
ii. the organisation the person worked for; and
iii. their position or role in the organisation;
i. the full names of the persons who sent the document;
j. in relation to each person to whom the document was communicated:
i. the name of each person;
ii. the organisation the person worked for; and
iii. their position or role in the organisation;
iv. all purposes for communicating the document to the person;
k. the dominant purpose of the communication; and
l. where the document is a copy of an original document:
i. all the purposes for which the copy was created; and
ii. the dominant purpose for which the copy was created.
2 For all documents authored, signed or sent by an in-house legal adviser, provide the following additional details:
a. in relation to the author of the document:
i. the name of the person;
ii. the organisation the person worked for; and
iii. their position or role in the organisation;
b. where the document was signed, in relation to the in-house legal adviser who signed the document:
i. the name of the person;
ii. the organisation the person worked for; and
iii. their position or role in the organisation;
c. how the person acting as the in-house legal adviser described himself or herself in the document;
d. all functions, positions, roles and responsibilities held by the in-house legal adviser at the time the in-house legal adviser authored, signed or sent the document;
e. the capacity in which the in-house legal adviser was acting at the time the document was authored, signed or sent;
f. the year and jurisdiction in which the in-house legal adviser was admitted to practice;
g. whether the in-house legal adviser held a practising certificate at the time the document was authored, signed or sent;
h. in relation to the person who is the direct supervisor of the in-house legal adviser who authored, signed or sent the document:
i. the name of the person; and
ii. their position or role in the organisation;
i. whether the remuneration of the in-house legal adviser who prepared the document was connected in any way to the performance of his or her business unit or to the organisation as a whole; and
j. where the employer of the in-house legal adviser who prepared the communication is a company, whether the in-house legal adviser owned and/or controlled shares in the company.
Ground 2 – consideration
47 Dealing with the last point first, importantly it is not the Draft Notice that is subject to challenge. The Draft Notice is substantially broader than the actual Notice under challenge however, in between the Draft Notice and the actual Notice was the conference call between the Commissioner and Mr Grieve with file notes produced evidencing each side's record. Mr Grieve made clear that the Commissioner was not entitled to the information sought in the Draft Notice.
48 Taken as a whole, the history reveals the Commissioner pursuing a course of attempting to accumulate additional information in circumstances where he has expressed the view that the claims for privilege made by CUB were opaque. Even if the Commissioner was wrong about that view, such an error would not support a conclusion that he was seeking to determine the validity of the LPP claims.
49 The covering letter accompanying the Notice was entirely consistent with the Commissioner's case when the Commissioner said in that letter that the Commissioner "also requires those additional particulars in order to make an informed decision as to whether an alternative dispute resolution process would be an appropriate method of resolving any disputed claims". There is no suggestion that the information provided would or indeed could enable the Commissioner to actually adjudicate the LPP claims.
50 There are essentially two lines of argument advanced for CUB in support of ground 2.
51 The first is that the evidence, some of which was not expressly adverted to in the primary judge's reasons, illustrates that the Commissioner was seeking to determine, in the sense of adjudicate, CUB's LLP claims himself as evidenced by the use of terms such as "substantiate", "support", "evaluate the legitimacy", "determine the appropriateness" and "make an informed assessment" where they appear in different communications from the Commissioner to CUB or its representatives. In addition, CUB claims that the primary judge overlooked some of the evidence of that nature or that his Honour should have reached a different conclusion in respect of that evidence.
52 The second general line of argument is that the Commissioner's failure to accept assertions made for or by CUB that the Commissioner had enough information to decide whether or not to accept or to test the LPP claims, and the failure to accept CUB's offer to explain to the Commissioner the process CUB undertook in making the LPP claims, illustrates that in truth the Commissioner was not interested in the narrower task, but in reality wanted to pursue the impermissible or improper purpose.
53 The complaint that the primary judge overlooked CUB's argument by failing to advert to every single statement in the correspondence cannot be accepted. This is particularly difficult to accept in circumstances where his Honour did expressly and correctly accept that some of the earlier communications would support the argument now advanced for CUB, if those communications were not, in effect, displaced by the ultimate communication and purpose.
54 The key documents were the Notice, the cover letter accompanying the Notice and the s 13 reasons which were all given greater weight by the primary judge in ascertaining the Commissioner's purpose than the earlier correspondence exchanged some months or years before issuing the Notice. This preference was not only open to the primary judge, but was the eminently sensible and preferable course. By the time the actual Notice was issued, the Commissioner had whittled down the information sought and as CUB repeatedly emphasises, had received the benefit of strenuous assertions from CUB that it was not open to the Commissioner to put himself in the shoes of a court by actually determining CUB's LLP claims. Indeed, it would be somewhat surprising if an experienced litigant such as the Commissioner considered otherwise.
55 The primary judge was correct to find that the later documents, upon which no witness for the Commissioner was cross-examined, were consistent with the Commissioner's purpose being to obtain information upon which he could decide whether or not to challenge the claims for LPP by CUB. The particulars of information sought in the Notice, namely, the title of each document or, in the case of an email, the subject line of the email, the name of the author and the name of each person to whom the document was communicated, could not possibly allow the Commissioner to determine the actual validity of CUB's LPP claims. The primary judge said that while these details would assist the Commissioner to form a view as to whether to accept or challenge the LPP claims, they would not enable him to determine the claims. Access to the documents themselves would likely be required in order to do that.
56 His Honour was also correct to find that the cover letter accompanying the Notice, read as a whole and in context, demonstrated that the Commissioner's purpose was not to determine for himself the validity of the LPP claims. The Commissioner expressly stated that he required the particulars "in order to make an informed decision as to whether an alternative dispute resolution process would be an appropriate method of resolving any disputed claims". Indeed, this purpose had also been adverted to by CUB's representative.
57 Further, the primary judge was correct to conclude that the contents of [40] of the s 13 reasons could not be accepted in part only as CUB contended, because Mr Ferguson gave evidence that [40] of the s 13 reason accurately recorded his reasons for deciding to issue the Notice and he was not cross-examined on that material. The primary judge said (at [88] and [96]-[97]):
88 Paragraph 40.5(c) of the [s 13 reasons] is consistent with the Commissioner seeking the information in order to determine whether to accept or challenge the privilege claims. That paragraph was in the following terms:
40.5 The information sought in the 4 March 2020 [Notice] will assist the Commissioner to determine:
…
(c) whether the claim that each document is privileged is well-founded, or whether the Commissioner should continue to press for production of all or some of the documents sought pursuant to the 30 May 2018 notice so as to assist the Commissioner in the proper discharge of the Commissioner's duty referred to in paragraph 40.4 above.
The statement that the information would assist the Commissioner to determine "whether [he] should continue to press for production of all or some of the documents" is consistent with the Commissioner's purpose being to decide whether to accept or challenge the privilege claims.
…
96 Insofar as CUB submits that the documents were no longer needed by the Commissioner to discharge his statutory functions, I do not accept that submission. The facts set out in the first affidavit of Mr Ferguson, together with paragraph 40.4 of the [s 13 reasons], support a finding, which I make, that the Commissioner considered that the documents, which were responsive to the May 2018 Notice, remained relevant to the statutory functions he was still carrying on. The material facts are set out in Mr Ferguson's first affidavit and are summarised in the Background Facts section of these reasons. This is not a case where the facts are merely set out in a statement of reasons. There is affidavit evidence that directly establishes the facts. Further, and significantly, Mr Ferguson gave evidence in paragraph 42 of his first affidavit that paragraph 40 of the [s 13 reasons] accurately recorded his reasons for deciding to issue the March 2020 Notice, and he was not cross-examined. This provides a strong basis to accept the correctness of the statements in paragraph 40.4 of the [s 13 reasons].
97 As noted above, in oral submissions, senior counsel for CUB submitted that no weight should be given to paragraphs 40.4 and 40.6 of the [s 13 reasons]. I do not accept that submission. First, a statement of reasons is evidence of the subjective views held by, and the findings made by, the decision-maker: see Minister for Immigration and Ethnic Affairs v Taveli (1990) 23 FCR 162 (Taveli) at 180 per French J. The statement is evidence that is to be weighed and assessed like any other evidence: Taveli at 180. Secondly, the factual material set out in Mr Ferguson's first affidavit supports the proposition that the documents remained relevant to the statutory functions still being carried out by the Commissioner. Thirdly, as noted above, Mr Ferguson gave evidence in his first affidavit that paragraph 40 of the [s 13 reasons] accurately recorded his reasons, and he was not cross-examined.
(Emphasis added.)
58 This analysis (at [88] and [96]-[97]) is, with respect, correct.
59 As to the lack of cross examination, CUB also relies on an observation by Buchanan J in Phosphate Resources Ltd v Minister for the Environment, Heritage & the Arts (No 2) [2008] FCA 1521; (2008) 162 LGERA 154 in which his Honour found that a statement of reasons was not a true statement of the Minister's reasons because it had been prepared by a departmental staff member and then adopted by the Minister as his own six weeks or so after the decision was made. The Minister whose statement of reasons it purported to be did not verify it. The Minister did not affirm or swear an affidavit. It was mainly for that reason that the statement was given no weight by Buchanan J regardless of a lack of cross-examination. A similar finding was made in Minister for Aboriginal and Torres Strait Islander Affairs v Western Australia [1996] FCA 395; (1996) 67 FCR 40 (at 62-63). It is quite a different circumstance in this case where the actual decision-maker has affirmed, by affidavit, his own purpose. CUB contends that the s 13 reasons were in part self-serving, but if this means that the s 13 reasons were inaccurate or incomplete, it is a very difficult submission to make in the absence of any cross-examination of Mr Ferguson. There is no reason why the s 13 reasons in those circumstances should be accorded limited weight when the Commissioner has verified them on affidavit and a forensic choice was made not to cross-examine the decision-maker. The forensic choice was legitimate, but having been made, the submission that the s 13 reasons were in part false, is not open as a matter of fairness.
60 In much of the earlier correspondence on which CUB places reliance, the Commissioner had used the word "determine". There is no reason to think that "determine", where used by the Commissioner, meant to make an actual determination of the claims for LPP. An alternative usage entirely consistent with the evidence upon which the primary judge based his conclusions was that it was to determine whether or not to challenge the claims for LPP. This is particularly so in the later correspondence on which the final conclusion as to the purpose of the Commissioner was primarily reached.
61 Nothing in the Commissioner's repeated complaint of insufficient information reveals an improper purpose. It is equally consistent with the Commissioner considering he is unable to decide whether to accept or to challenge the LPP claims.
62 The entire process of the exchanges between CUB and the Commissioner revealed commendable attempts by which the parties might have been able to resolve the question of privilege without a formal challenge in court. That the Notice was ultimately issued in the form it was is consistent only with fact that after considerable efforts, the parties could not agree as to the quantity of information that should be supplied by CUB. The actual content of the Notice ultimately issued, in terms of what was sought from CUB, was not consistent with the asserted purpose of the Commissioner himself actually determining (in the sense of adjudicating) the LPP claims.
63 Ground 2 cannot be made out.
CONCLUSION
64 The appeal must be dismissed with costs.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Middleton, McKerracher and Griffiths.
Associate:
Dated: 21 September 2021
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Michelago Limited ACN 057 816 609 (No. 2), in the matter of Michelago Limited ACN 057 816 609 [2006] FCA 1636
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2006/2006fca1636
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2024-09-13T22:51:55.084633+10:00
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FEDERAL COURT OF AUSTRALIA
Michelago Limited ACN 057 816 609 (No. 2), in the matter of Michelago Limited
ACN 057 816 609 [2006] FCA 1636
MICHELAGO LIMITED ACN 057 816 609, IN THE MATTER OF MICHELAGO LIMITED ACN 057 816 609
NSD2091 OF 2006
EMMETT J
21 NOVEMBER 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NSD2091 OF 2006
In the matter of Michelago Limited ACN 057 816 609
MICHELAGO LIMITED ACN 057 816 609
Plaintiff
JUDGE: EMMETT J
DATE: 21 NOVEMBER 2006
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 On 27 October 2006, the Court ordered, pursuant to s 411 of the Corporations Act 2001 (Cth), that Michelago Ltd ACN 057 816 609 ('the Company') convene a meeting of its members for the purpose of considering a scheme of arrangement between the members and the Company. The effect of the scheme was to merge the undertakings of the Company with that of Golden China Corporation on the basis of an exchange of shares. Shareholders in the Company were to receive one consolidated share in Golden China for every 37.5 shares held by members of the Company.
2 Golden China is currently undertaking a private placement to raise up to $4.5 million Canadian dollars. The funds intended to be generated will be used for working capital and general corporate purposes of Golden China. The capital raising is by way of a private placement of units. Each unit will comprise one Golden China share and one warrant. Each warrant will entitle the purchaser to purchaser one Golden China share at 25 cents Canadian per share. There will be terms attached to the warrants that will entitle Golden China to require holders to exercise the warrants if the average price of shares equals or exceeds 30 cents Canadian per share in any period of 15 consecutive days. As at today, the closing price of Golden China shares on the Toronto Stock Exchange was 20 cents. In the scheme booklet that was sent to shareholders, the price then current was said to be 21 cents per share. The total placement represents approximately 10 per cent of the present issued capital of Golden China.
3 The Company has informed Australian Securities and Investments Commission of the proposed placement and a proposed supplementary disclosure document that the Company intends to send to its shareholders and optionholders has been provided to the Commission. The Commission has written to the Company's solicitors, indicating that it has reviewed the supplementary document and does not currently intend to appear to make submissions or to intervene or to oppose the schemes of arrangement that are to be put before members and creditors.
4 The Company has provided evidence in the form of a supplementary report by Mr Robert Duffin, the managing director of Resource Equity Consultants Pty Limited. A report by that company is included in the scheme booklet. Mr Duffin has reported that the proposed placement of securities by Golden China does not change the conclusions set out in the report included in the scheme booklet, that the proposed schemes are in the best interests of Michelago's shareholders and listed optionholders in the absence of an alternative and more attractive proposal. There is no evidence that any such proposal is in the offing.
5 The Company has asked the Court to note the proposed further disclosure to shareholders. However, it seeks no orders.
6 Having considered the material, I am satisfied that there is no reason to depart from the views that I expressed when making the orders of 27 October 2006, that the schemes are schemes that reasonable shareholders and optionholders properly informed might accept and they are schemes that the Court would be likely to approve if agreed to by the members and optionholders.
I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate:
Dated: 27 November 2006
Counsel for the Plaintiff: Mr M Oakes SC
Solicitor for the Plaintiff Kemp Strang
Date of Hearing: 21 November 2006
Date of Judgment: 21 November 2006
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Devarajan v Minister for Immigration and Multicultural Affairs [2001] FCA 1521
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2001/2001fca1521
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2024-09-13T22:51:55.558969+10:00
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FEDERAL COURT OF AUSTRALIA
Devarajan v Minister for Immigration and Multicultural Affairs [2001] FCA 1521
MIGRATION – application for review of decision of Refugee Review Tribunal affirming refusal to grant a protection visa – no error of law demonstrated – application dismissed.
Migration Act 1958 (Cth) s 476
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1 applied
Ravi Kumar Devarajan v Minister for Immigration and Multicultural Affairs
N 1212 of 2001
ALLSOP J
26 OCTOBER 2001
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 1212 of 2001
BETWEEN: RAVI KUMAR DEVARAJAN
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
RESPONDENT
JUDGE: ALLSOP J
DATE OF ORDER: 26 OCTOBER 2001
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The applicant pay the respondent's costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N 1212 of 2001
BETWEEN: RAVI KUMAR DEVARAJAN
APPLICANT
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
RESPONDENT
JUDGE: ALLSOP J
DATE: 26 OCTOBER 2001
PLACE: SYDNEY
REASONS FOR JUDGMENT
1 This is an application for review under the Migration Act 1958 (the Act) of a decision of the Refugee Review Tribunal (the Tribunal) handed down on 25 July 2001. The decision of the Tribunal affirmed the decision of the delegate of the Minister refusing a protection visa. The matter has some considerable procedural history.
2 The applicant, who is a citizen of India, first arrived in Australia in September 1996. He lodged an application for a protection visa under the Act on 16 October 1996. In April 1997 a delegate of the Minister refused his application. Shortly thereafter the applicant applied for review of that decision to the Tribunal. A year later in April 1998 the Tribunal affirmed the decision of the delegate, thereby in effect refusing the applicant his application for a protection visa.
3 Another year went by which involved the applicant's application to this court to set aside the decision of the Tribunal which application was successful. Moore J on 16 June 1999 set aside the decision. Moore J on that occasion did not, as he could not, find the applicant to be a refugee under the Act. Rather he found, within the confines of s 476 of the Act, a legal error in the approach of the Tribunal on that occasion. A further hearing took place before the Tribunal in November 1999.
4 In March 2000 the Tribunal sent the applicant a summary of the applicant's claims for comment by the applicant. In April 2001, the applicant having been given this opportunity for comment, made further submissions to the Tribunal. On 29 June 2001 this differently constituted Tribunal affirmed the delegate's decision to refuse the grant of a protection visa in a decision handed down on 25 July 2001. The matter now comes to this court by way of a request of review of that decision of that Tribunal of June 2001.
5 I go through that history for a number of purposes. The first is to indicate the length of time that Mr Devarajan's application has been under consideration. That will become relevant in examining what the Tribunal did. The second aspect of this length of time is that Mr Devarajan has been in Australia now for five years and it would be understandable on his part if he thought or felt that such a long stay might weigh in the balance in relation to his application in the sense that having been here for five years he may be of the view that his moral or legal entitlement to stay is perhaps strengthened. In one sense that would be an entirely understandable and human reaction to the length of time that he has been in Australia, but it is not and cannot be a consideration that I take into account.
6 The task before me is laid out under s 476 of the Act. The applicant's appreciation of this is reflected in the drafting of the application for review which expressly recognises the need to frame his case within s 476. As I understand the claim in the application I am asked to analyse the reasons of the Tribunal by reference to paragraphs 476(1) (a), (e) and (g) of the Act. I will come back to the application of each of those paragraphs in a moment but I think I should emphasise, even though the applicant appears to be legally trained, that I am not sitting as a Tribunal to review the facts. This court is given a limited role by the Parliament in s 476. The legal and constitutional structure of this court dealing with this Act is that mistakes, if there be mistakes, of fact finding end with the Tribunal.
7 Section 476 lists a number of grounds for review. If one of those errors is present then I can do something about a Tribunal decision but those grounds do not include merely making a mistake about the evidence and the facts. So, even if I were to examine all the evidence and would myself come to an entirely different factual conclusion that is not a ground which I can use to set aside the Tribunal's decision unless an error of this kind in paragraphs (a) or (g) or (e), or (b) or (c) or (d) or (f), of subs 476(1) has led to that factual error.
8 Mr Bromwich in his careful submissions for the Minister has used an expression which is often used in this area and that is he characterises much of the submissions of the applicant as 'merits review'. The expression 'merits review' is a shorthand that lawyers use in this area and I understand him to mean that the applicant is asking me in effect really to do no more than correct factual errors of the Tribunal.
9 With that approach in mind, I now turn to the application.
10 The applicant is a citizen of India. His claims for a protection visa arise out of what he claims to be his political and social views and his political and social activity in India in the past. The Tribunal's decision is some 47 pages long, much of which is taken up reciting in some detail the claims of the applicant. It would not be productive for me to repeat all those claims here and now. They are extensively set out in the Tribunal's decision.
11 The Tribunal indicated at one point in its reasons that it had had difficulty in unravelling and making clear to itself the full extent and nature of all the claims. This was not, as I read it, any personal criticism of the applicant but it does, together with the long procedural history, explain why the Tribunal forwarded a draft consolidation of the applicant's claims to the applicant in March 2000. As I said, I will not try and exhaustively set those claims out, but briefly they include claims of mistreatment, detention and assaults in the past both by Indian authorities and hired thugs connected to large corporate interests in Tamil Nadu. The persecution claimed also involved wrongful and baseless charges brought against him by the authorities some of which were said still to be pending against him. These matters arose at different times for different reasons according to his claims. First, there was the mistreatment of himself and his wife after the assassination of Rajiv Ghandi in 1991. Then there was his activity in opposing what he saw as harmful and corrupt private interests acting contrary to the interests of the poor and the needy, in particular in Tamil Nadu. There was also his participation in Tamil political life in a way which he says made him fear the Tamil Tigers. Thus for the purposes of the definition of a refugee under Article 1A(2) of the Refugees Convention 1951 as amended by the 1967 Protocol, the claims of Mr Devarajan arose from his political beliefs or opinion, in the way that expression is understood, and, perhaps, at one level, his membership of a social group.
12 The Tribunal accepted a number of facts and these were largely set out from page 30 of the Tribunal's reasons. These facts included that the applicant is from Madras and that his wife was a Tamil refugee from Sri Lanka. The facts included that while his family had opposed the marriage to his wife this was eventually accepted. The Tribunal accepted that while a student some years ago the applicant (now 48) was an active member of the youth wing of an organisation referred to by the Tribunal as DMK (Dravida Munnetra Kazhagam). The Tribunal noted that this part of the applicant's life and political beliefs was 25 years ago and even if his claims of being taken into custody and tortured by police at that time were true that was sufficiently long ago, that is 25 years, now to be immaterial except in supporting a claim that he had been involved in politics for a long time.
13 From page 31 of the decision the Tribunal identified a number of matters about which it had difficulty accepting the applicant's evidence. These included his claim to be a lawyer, his claim to be involved in various political groups and his claimed connection with the Naxalites, his claim of activism in relation to particular issues, his claim about the arrest and detention of his wife and his claim of on-going interest in him by Indian authorities. However, the Tribunal while doubting he was a lawyer gave him the benefit of the doubt and proceeded on the basis that he was. The Tribunal accepted that the applicant had belonged to the Tamil Liberation Army (TLA) for some years in the 1980s but it did not accept that the Tamil Tigers had sought to harm him or that now some 15 years later they would be interested in harming him. The Tribunal was prepared to accept that the applicant was or regarded himself as a supporter of the Communist Party of India (Marxist/Leninist) (CPI) but found or was of the view that he was at a sufficiently low level not to cause that political interest to be a source of likely harm. It found that the party did not pay him or support him from 1991. These matters are found at page 33 and thereabouts of the reasons.
14 The Tribunal considered that the applicant would experience no adverse consequences as a result of his activities with the TLA and the CPI and the Tribunal did not accept that the applicant was more than an enthusiastic reader of magazines such as "New Democracy" and "New Culture", being, I take it from the material before me, left wing or communist magazines; and it further found that the applicant was not involved with these magazines in the exposure of wrong doing by the police and other authorities. These matters are dealt with at pages 34 and 35 of the reasons.
15 The Tribunal then examined at page 35 and following claims of assault and arrest and being targeted by interest groups and participants in the political process from approximately 1992. By way of background it did not accept that the applicant had been arrested in the period 1976 to 1991, or indeed in September 1994. These matters are set out on pages 35, 36 and 37.
16 The Tribunal at page 38 dealt with his account of arrest and imprisonment in 1995 and found that account not to be credible. The Tribunal said that if the applicant served a term of imprisonment as he claimed, it was for a reason unconnected with the Refugee Convention and it did not believe him in his claim that a judge warned him not to get involved in politics again and to leave the country. This material concerning the claimed events of 1995 is found at pages 38 and 39 of the reasons.
17 The Tribunal then from page 39 through to pages 41 and 42 dealt with the claims of outstanding charges against the applicant. In respect of these matters the Tribunal said it was unable to accept that the applicant had any outstanding charges against him and consequently it did not accept that he would face court because of them, nor would he experience an unfair trial. That latter point as to the likelihood of experiencing a fair trial was an independent finding on page 42, based on country information.
18 The Tribunal went on and said:
If the applicant was to be taken into custody I do not believe that it will be for the reason he has told of in his application, that of his political opinion and activities.
19 It went on, at page 42, to find that it was unable to accept that the police or security authorities in India have any continuing interest in the applicant for the reasons he had submitted, and the Tribunal found that it did not accept that the evidence indicated that any further charges were or would be laid against him because of political activity, and that it consequently did not believe that either the police or the security forces or the Tamil Tigers or any other organisation he claims to have been associated with, will have any adverse interest in him because of Convention related matters.
20 The Tribunal then turned to the topic of what happened in 1991 to the applicant's wife. In this respect the Tribunal accepted that the applicant was arrested and mistreated in 1991 and that the applicant's wife may have been picked up and detained soon after the assassination of Rajiv Ghandi, but it did not accept that the applicant's wife was required to report to the police regularly for as many years as the applicant had claimed, at least until 1997, nor was it prepared to accept that she was arrested and detained in 1993 or in September of the following year. These matters are dealt with on page 43 of the reasons.
21 The Tribunal was not satisfied that the applicant being struck off as a lawyer had anything to do with matters contained within the Refugee Convention. It is important, though I appreciate that it is distasteful for the applicant, to appreciate that the Tribunal rejected the accuracy and reliability of the applicant's evidence. I appreciate that the view the Tribunal has taken about the evidence may be a matter of deep hurt to the applicant. It is never easy for people to accept the views of a stranger that their evidence is unreliable and should be rejected. This is perhaps especially so for someone who has been a lawyer. Unfortunately, however, it is a matter of some importance, though I do not wish to dwell on it unnecessarily. The Tribunal in cases such as this is charged with a heavy responsibility. Subject to errors identified in s 476 it is the last point of fact finding. As I said earlier, even if I were of the view that I would come to a different view, unless s 476 is in engaged I can do nothing about the Tribunal's decision. So, I must turn to the grounds of review in the application and in the submissions.
22 The first is that procedures that were required by the Act or Regulations were not observed in connection with the making of the decision. This is a reflection of the ground of review in para 476(1)(a). From the submissions and from the application I take it that what is really intended by this is the proposition that material findings of fact were not correctly made. Section 430(1) sets out the obligations of the Tribunal in making and preparing a written statement. That section includes the requirement under para (c) to set out the findings of any material questions of fact and refers in para (d) to evidence or any material upon which the findings of fact were based.
23 Until the decision of the High Court of Australia this year in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1 there was a body of case law in this court which might have gone to support the proposition that if findings of fact should have been made but were not, there was an error of procedure under s 430. Yusuf made it clear that just because a court would have found other facts as important, being facts which were not in the reasons of the Tribunal, did not mean there was an error of procedure under s 430. Another way of explaining this is that some cases in this court seem to mean that if this court thought material facts had been left out, because this court thought these facts were material, there was an error in not following s 430. The High Court said that that approach was wrong. It emphasised that fact finding was for the Tribunal and just because this court thinks other facts were important is not a reason for concluding that the Tribunal has committed any legal error.
24 I have examined the reasons of the Tribunal carefully and the reasons reflect an apparently serious and genuine application by it to the task it had. It approached the matter and approached the evidence in a way that was not illogical or irrational or unreasonable. Its conclusions appear to me to be supported by some probative material and logical grounds. The Tribunal appears to me to have attended to the questions required of it by the Act and Regulations. It may be, and I think I can conclude that it is the case, that the applicant deeply disagrees with the factual conclusions and findings of the Tribunal. However, there appears to me to be material available to support the conclusions and approach of the Tribunal, bearing in mind the view it came to as to the reliability of the applicant's evidence.
25 The application also refers to paragraphs (e) and (g) in s 476(1). As to para (e), I am not able to discern from the material any error of law in the approach adopted by the Tribunal. As to para (g), that there was no evidence or other material to justify the making of the decision, the submissions of Mr Bromwich as to the difficulty of meeting this kind of review in the Act, are in my view, correct. Even if it be the case that in relation to the First Information Report there was a factual error by the Tribunal, para 476(1)(g) requires it to be demonstrated that there was no evidence or other material to justify the making of the decision.
26 The applicant indicated through his interpreter that he had some difficulty in understanding the effect of para 476(1)(g). I explained that para 476(1)(g) is qualified by subs (4) and in particular here, para (b) of subs (4). That sets out what might be seen as a necessary pre-condition for para 476(1)(g) to be engaged. That is, if a fact is of such importance and the decision was based on it and that fact did not exist, one can then move into 476(1)(g). But it does not follow that satisfying subs para 476(4)(b) completes the exercise laid out in para 476(1)(g). Counsel for the Minister quite legitimately interrupted me to make clear that the Minister's submissions are that 476(1)(g) must be satisfied before one goes to (4)(b). I noted that that construction may well be right, but what I wanted to do was to make sure the applicant understood that even if it be the case that an important finding of fact, that could be seen as central to a fact finding process, did not have a factual foundation (which might see para 476(4)(b) apparently satisfied) then if there is otherwise material upon which the decision can rest (for para 476(1)(g)) any error can only be characterised as a factual error and para 476(1)(g) is not engaged. I noted that the matter could be looked at from two ways. Mr Bromwich's point was that there is ample evidence to support the decision, therefore the inquiry never goes to para 476(4)(b). Here, the Tribunal's decision is amply supported by underlying evidence and even if there are factual errors, which was not admitted, the matter did not raise a para 476(1)(g) point.
27 The purpose of my explanation was that even if it could be said that a very important fact was found without factual foundation, there are a number of problems. One it is necessary to prove the negative within para 476(4)(b) ("and that the fact did not exist"). Secondly, 476(1)(g) is not governed or controlled by 476(4)(b). I explained to the applicant that one could go to para 476(4)(b) first and if one could show that what was in para 476(4)(b) was met, that did not mean para 476(1)(g) was met. The Minister's approach was that one never goes to para 476(4)(b) because there was evidence available to support the decision, that is the ultimate decision.
28 I explained that there may be two ways of looking at the operation of paras 476(1)(g) and (4)(b) and the Minister may be correct, but it was not something I had to decide. I explained that my point in dealing with it was to make clear, even if it be correct that an important fact found by the Tribunal was wrong and even if it be correct that the fact found did not have any evidence for it, that does not mean para 476(1)(g) is satisfied. There has to be, for 476(1)(g), no evidence or other material to justify the conclusion.
29 Now, even if the applicant disagrees with the reasoning process, the fact finding and the Tribunal's view of him, my view is that there was material before the Tribunal that it could use to come to that conclusion. That is to say, even if it be the case that there was an error of fact finding by the Tribunal, in my view there was evidence or material which could justify the conclusion even if that material reflects views of the Tribunal that the applicant disagrees with.
30 Thus, in dealing with the submissions of the applicant, ultimately, they all are submissions which go to the correctness or reliability of the fact finding process of the Tribunal. This is so in particular of paras 1 and 3 of the submissions.
31 As to para 2 of his submissions, to the extent that this seeks to characterise what Moore J did as a finding that in some fashion the applicant is entitled to refugee status, this is a misunderstanding of what his Honour did. The result of Moore J's decision was a fresh hearing at the Tribunal and that is what I have to deal with.
32 Paragraph 4 in particular deals with what is said and thought to be the evidentiary shortcomings of the Tribunal, at least in relation to the material tendered within (what I provisionally marked as) exhibits A and B. Whether or not this is the material the Tribunal described as what the applicant said was very sensitive at page 42 of the decision perhaps matters not. This material, I should add, goes to para 3 of the submissions as well as para 4.
33 In any event my task on review is not to find facts about the likely persecution or not of the applicant if he returns to India. My task is to see whether there has been any error in the Tribunal in its approach, that is, whether the Tribunal's decision was, within the confines of the Act, one made according to law. As I have said earlier, the decision of the Tribunal may be incorrect as a matter of fact but that does not mean that it has not been made lawfully and according to law. While to a lay person that distinction may be strange, the applicant is a former barrister or a lawyer: the difference is administrative fact finding on the one hand, and ensuring in the courts that lawful procedures and a lawful approach is made to administrative fact finding, on the other hand.
34 For those reasons, while I accepted exhibits A and B provisionally or conditionally into evidence, they are irrelevant to this review and I reject them. Lest there be any doubt about what they were they can remain on the file as MFI A and MFI B as the evidence conditionally admitted but now rejected.
35 In conclusion, I am unable to find in paras (a), (e) or (g) or indeed in any other paragraph in s 476 any basis to conclude that there was an error in approach of the Tribunal warranting intervention under s 481. At the risk of repetition may I simply add that that conclusion does not carry with it my view of the correctness or incorrectness of the fact finding or the correctness or incorrectness of the Tribunal's approach and view of Mr Devarajan's evidence. That is not said at all by way of criticism of the Tribunal, but I say it because sometimes I feel that applicants may think views, as I have expressed, to be an endorsement of any personal criticism of an applicant's claim that was made in the Tribunal's reasons. Mr Devarajan should not be of the view that I am endorsing any personal criticism there may be of him or his claim in the reasons of the Tribunal. My conclusion is only that there was no error of the kind contained in s 476 demonstrated to exist in the Tribunal's decision.
36 In the circumstances I can see no basis for review under s 476 and my conclusion is that the application be dismissed.
37 The parties addressed me on the question of costs. The question of costs is governed by s 43 of the Federal Court of Australia Act. That section says that subject to para (1A), which is irrelevant, the Court or a judge has jurisdiction to award costs in all proceedings. That is a very wide power, as the Full Court on a number of occasions has said and indeed the High Court has said. However, it is a power to be exercised judicially. It is not a power given to me to exercise by personal whim or preference. Costs usually follow the event. That is appropriate. Sometimes a costs order is made which does not follow the event. Sometimes no order is made. But in my view, though some times apparently harsh, the law does not enable, generally speaking, a successful party to be deprived of his, her or its costs because of the economic circumstances of the losing party, unless it be the case that those circumstances have arisen by reference to the conduct of the litigation or other matters in issue between the parties.
38 I can see no principled basis upon which I might refuse to award costs because of any impecuniosity of the applicant. For the purposes of the application I am prepared to accept that he is impecunious. I do not think it would be a principled application of s 43 if I were to do so. Therefore the orders of the Court are:
39 1. The application be dismissed.
40 2. The applicant pay the respondent's costs.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.
Associate:
Dated: 7 November 2001
The Applicant appeared in person, assisted by an interpreter
Counsel for the Respondent: Mr R Bromwich
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 26 October 2001
Date of Judgment: 26 October 2001
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Naidenov (liquidator) v Davey, in the matter of Josa Civil Group Pty Ltd (in liq) [2021] FCA 1175
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2024-09-13T22:51:56.011099+10:00
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Federal Court of Australia
Naidenov (liquidator) v Davey, in the matter of Josa Civil Group Pty Ltd (in liq) [2021] FCA 1175
File number: NSD 996 of 2021
Judgment of: HALLEY J
Date of judgment: 24 September 2021
Date of publication of reasons: 28 September 2021
Catchwords: CORPORATIONS – ex parte application by liquidator for issue of search and seizure warrants pursuant to s 530C of the Corporations Act 2001 (Cth) (Act) and affidavits about the company's examinable affairs pursuant to s 597A of the Act – whether company property or books have been or are about to be concealed, destroyed or removed – where persistent pattern of non-cooperation and evasion of requests by liquidator to deliver company property and books – application granted
PRACTICE AND PROCEDURE – application for confidentiality orders pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) – where defendants' awareness of application for search and seizure warrants would hinder liquidator's efforts to recover company books and records – non-publication necessary to prevent prejudice to proper administration of justice – application granted
Legislation: Corporations Act 2001 (Cth) ss 530A, 530C, 597A
Federal Court of Australia Act 1976 (Cth) ss 37AF, 37AG
Cases cited: Bailey, in the matter of Australian Recruiting Group Pty Ltd (in liq) v Young [2020] FCA 1473
Brooks (Liquidator) v Bull, in the matter of DV Bull Pty Ltd (in liq) [2021] FCA 967
Carello (Liquidator), in the matter of Drilling Australia Pty Ltd (in liq) (2019) 139 ASCR 187; [2019] FCA 1563
Tang (liquidator) v Wright, in the matter of Wright's Transport Pty Limited (in liq) [2020] FCA 709
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 39
Date of hearing: 24 September 2021
Counsel for the Plaintiffs: Mr R Notley
Solicitor for the Plaintiffs: ERA Legal
ORDERS
NSD 996 of 2021
IN THE MATTER OF JOSA CIVIL GROUP PTY LTD (IN LIQ) ACN 607 760 556
BETWEEN: STEVEN NAIDENOV IN HIS CAPACITY AS LIQUIDATOR OF JOSA CIVIL GROUP PTY LTD (IN LIQ) ACN 607 760 556
First Plaintiff
JOSA CIVIL GROUP PTY LTD (IN LIQ) ACN 607 760 556
Second Plaintiff
AND: LYNNE DAVEY
First Defendant
SPIROS APOKIS
Second Defendant
GEORGE APOKIS
Third Defendant
order made by: HALLEY J
DATE OF ORDER: 24 SEPTEMBER 2021
THE COURT ORDERS THAT:
1. The District Registrar issue, pursuant to s 530C of the Corporations Act 2001 (Cth), warrants substantially in the form of the warrants appearing at Annexure B to these orders.
2. Any requirement that the originating process be served on the defendants is dispensed with in the first instance and leave is granted to the plaintiffs to make the application ex parte.
3. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act) on the grounds that it is necessary to prevent prejudice to the proper administration of justice pursuant to s 37AG(1)(a) of the FCA Act and until further order of the Court or the discharge of this order pursuant to Orders 4 and 5 below, publication or other disclosure of the following is prohibited as follows:
(a) the Originating Process is to be kept confidential and, except with the leave of the Court, is not to be disclosed to anyone other than the Court and Court staff;
(b) the affidavit of Steven Naidenov affirmed on 22 September 2021, Exhibit SN-1 thereto and the affidavit of Blake O'Neill affirmed on 24 September 2021 are to be kept confidential and, except with leave of the Court, are not to be open to inspection to any person other than the Court and Court staff; and
(c) these orders are to be kept confidential and, except with the leave of the Court, are not to be disclosed to anyone other than the Court and Court staff.
4. Within 14 days of the last date on which the warrants have been executed, the plaintiffs file an affidavit reporting on the execution of the warrants and annexing a list of the property and books and records seized.
5. On the filing of the affidavit referred to in Order 4, Order 3 shall be discharged.
6. Within 7 days of the filing of the affidavit referred to in Order 4, the plaintiffs serve on the defendants the originating process, the affidavits referred to in Order 3(b), a copy of any orders made in these proceedings, any reasons for judgment and the affidavit referred to in Order 4.
7. Pursuant to s 597A of the Corporations Act 2001 (Cth), within 14 days of service of the documents referred to in Order 6, each of the defendants file an affidavit specifying:
(a) the current whereabouts of those motor vehicles so defined and listed in Annexure A to these orders (Company Vehicles) that have not been seized by the plaintiffs (the Outstanding Company Vehicles), including the specific address where the Outstanding Company Vehicles are located;
(b) if the current whereabouts of the Outstanding Company Vehicles are unknown to them, and cannot be ascertained after making reasonable enquiry, then the address of the last location of the Outstanding Company Vehicles;
(c) the facts, matters and circumstances, together with any supporting documents, concerning any sale by Josa Civil Group Pty Ltd (in liquidation) ACN 607 760 556 (the Company) of the Company Vehicles, including details of any consideration paid to the Company for the Company Vehicles; and
(d) to the extent that they are aware of the circumstances in which the Company Vehicles have been used since 5 May 2020 (being the date of the appointment of the first plaintiff as liquidator of the second plaintiff), the details of the person(s) or entity(ies) (whether a company, partnership or otherwise) that have been using the Company Vehicles and the facts, matters and circumstances concerning their use of the Company Vehicles.
8. Pursuant to r 10.24 of the Federal Court Rules 2011 (Cth), in lieu of personal service with respect to service on the second and third defendants, a copy of these orders and any documents required by these orders to be served on the second and third defendants be served by:
(a) delivering a hard copy of the documents to 52 Quay Road, Callala Beach NSW 2540;
(b) delivering a hard copy of the documents to 199A Homestead Road, Orchard Hills NSW 2748;
(c) delivering a hard copy of the documents to Praxis Lawyers, Level 21, 133 Castlereagh Street, Sydney NSW 2000;
(d) emailing an electronic copy of the documents to [email protected]; and
(e) emailing an electronic copy of the documents to [email protected].
9. The matter be listed for a case management hearing before the Commercial and Corporations Duty Judge at 9.30 am on Thursday, 11 November 2021, or at any other such time in the week commencing 8 November 2021 depending on the Court's availability.
10. Liberty to the defendants to apply to re-list the proceedings before the Commercial and Corporations Duty Judge on two (2) days' notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Annexure: Company Vehicles
No. Make Model Colour VIN/Chassis #
1 KTM 4T-EXC Racing Orange VBKEXA402DM315901
2 Torino WY125T-21 Blue LFFWJT215C1000061
Wangye Series
3 Ferrari 308 Red F106AL13994
4 Ford Mustang 1 White 5R09C134573
5 Harley FLH Series Black 5HD1KRMG5FB601743
Davidson
6 Harley Softtail Deuce White 1HD1BJL44MY010040
Davidson FXFTD
7 Mazda B32 White MMOUPOYF100400360
8 Mercedes GLA250 4M White WDC1569462J173266
9 Hamelex HXDT 4 Silver 6D9HXW1TTWMW66178
Trailers
10 Freight Liner FL80 CBU Yellow 1FVXJLBB9RL439841
11 Holden Rodeo White MPATFS26H3T100775
12 Mitsubishi Triton Silver MMAJRKB809D013464
13 Ford Commercial White 6FPAAAJGCM5M41737
14 Toyota Prado Silver JTEBU29J900035846
15 Prestige Unknown Blue 6C9T20000R2LF3042
Trailers
16 Home Made 00TRLR Black 6A9T20000W1SS4001
ANNEXURE B
SEARCH WARRANT
TO: Simon Gallant, Consultant, ERA Legal, Level 15, 45 Clarence Street, Sydney NSW
WHEREAS the Court, on the application of Steven Naidenov ("the liquidator"), the liquidator of Josa Civil Group Pty Ltd (in liquidation) ("the company''), was satisfied that Lynne Davey, Spiros Apokis and George Apokis have concealed or removed books and property of the company and that there is on or in the premises being: -
(a) Lot 13 Jervis Bay Road, Huskisson NSW 2540 (herein after called "the premises'') the following:—
(a) books and records of the company; and
(b) motor vehicles registered in the name of and or owned by the company.
AND WHEREAS the Court was satisfied that there was reasonable grounds for the issue of this warrant under the provisions of section 530C of the Corporations Act 2001 (Cth).
YOU ARE HEREBY AUTHORISED between the hours of 8.00 am and 6.00 pm with such help as is reasonably necessary to:—
(a) enter on or into the premises, using such force is as necessary for the purpose and is reasonable in the circumstances;
(b) search the premises for the property as set out in the schedule;
(c) break open, and search for the property, building, room or receptacle whether a fixture or not, on or in the premises;
(d) take possession of or secure against interference any property of the company found on or in the premises; and
(e) deliver to the liquidator or person authorised in writing by the liquidator for the purpose any property of the company of which possession is taken under the warrant.
SCHEDULE
(a) the following motor vehicles registered in the name of the company:
No. Make Model Colour VIN/Chassis #
1 KTM 4T-EXC Orange VBKEXA402DM315901
Racing
2 Torino WY125T-21 Blue LFFWJT215C1000061
Wangye Series
3 Ferrari 308 Red F106AL13994
4 Ford Mustang 1 White 5R09C134573
5 Harley Davidson FLH Series Black 5HD1KRMG5FB601743
6 Harley Davidson Softtail White 1HD1BJL44MY010040
Deuce FXFTD
7 Mazda B32 White MMOUPOYF100400360
8 Mercedes GLA250 4M White WDC1569462J173266
9 Hamelex HXDT 4 Silver 6D9HXW1TTWMW66178
Trailers
10 Freight FL80 CBU Yellow 1FVXJLBB9RL439841
Liner
11 Holden Rodeo White MPATFS26H3T100775
12 Mitsubishi Triton Silver MMAJRKB809D013464
13 Ford Commercial White 6FPAAAJGCM5M41737
14 Toyota Prado Silver JTEBU29J900035846
15 Prestige Unknown Blue 6C9T20000R2LF3042
Trailers
16 Home 00TRLR Black 6A9T20000W1SS4001
Made
(b) the books and records of the company.
YOU ARE TO REPORT to the Court within (14) fourteen days of the execution of this Warrant the result of its execution and all other circumstances you consider relevant.
DATED:
SEARCH WARRANT
TO: Simon Gallant, Consultant, ERA Legal, Level 15, 45 Clarence Street, Sydney NSW
WHEREAS the Court, on the application of Steven Naidenov ("the liquidator"), the liquidator of Josa Civil Group Pty Ltd (in liquidation) ("the company''), was satisfied that Lynne Davey, Spiros Apokis and George Apokis have concealed or removed books and property of the company and that there is on or in the premises being: -
(a) 52 Quay Road, Callala Beach NSW 2540 (herein after called "the premises''), the following:—
(a) books and records of the company; and
(b) motor vehicles registered in the name of and or owned by the company.
AND WHEREAS the Court was satisfied that there was reasonable grounds for the issue of this warrant under the provisions of section 530C of the Corporations Act 2001 (Cth).
YOU ARE HEREBY AUTHORISED between the hours of 8.00 am and 6.00 pm with such help as is reasonably necessary to:—
(a) enter on or into the premises, using such force is as necessary for the purpose and is reasonable in the circumstances;
(b) search the premises for the property as set out in the schedule;
(c) break open, and search for the property, any building, room or receptacle whether a fixture or not, on or in the premises;
(d) take possession of or secure against interference any property of the company found on or in the premises; and
(e) deliver to the liquidator or person authorised in writing by the liquidator for the purpose any property of the company of which possession is taken under the warrant.
SCHEDULE
(a) the following motor vehicles registered in the name of the company:
No. Make Model Colour VIN/Chassis #
1 KTM 4T-EXC Orange VBKEXA402DM315901
Racing
2 Torino WY125T-21 Blue LFFWJT215C1000061
Wangye Series
3 Ferrari 308 Red F106AL13994
4 Ford Mustang 1 White 5R09C134573
5 Harley FLH Series Black 5HD1KRMG5FB601743
Davidson
6 Harley Softtail Deuce White 1HD1BJL44MY010040
Davidson FXFTD
7 Mazda B32 White MMOUPOYF100400360
8 Mercedes GLA250 4M White WDC1569462J173266
9 Hamelex Trailers HXDT 4 Silver 6D9HXW1TTWMW66178
10 Freight Liner FL80 CBU Yellow 1FVXJLBB9RL439841
11 Holden Rodeo White MPATFS26H3T100775
12 Mitsubishi Triton Silver MMAJRKB809D013464
13 Ford Commercial White 6FPAAAJGCM5M41737
14 Toyota Prado Silver JTEBU29J900035846
15 Prestige Trailers Unknown Blue 6C9T20000R2LF3042
16 Home Made 00TRLR Black 6A9T20000W1SS4001
(b) the books and records of the company.
YOU ARE TO REPORT to the Court within (14) fourteen days of the execution of this Warrant the result of its execution and all other circumstances you consider relevant.
DATED:
SEARCH WARRANT
TO: Blake O'Neill, Director, ERA Legal, Level 15, 45 Clarence Street, Sydney NSW
WHEREAS the Court, on the application of Steven Naidenov ("the liquidator"), the liquidator of Josa Civil Group Pty Ltd (in liquidation) ("the company''), was satisfied that Lynne Davey, Spiros Apokis and George Apokis have concealed or removed books and property of the company and that there is on or in the premises being: -
(a) 199A Homestead Road, Orchard Hills NSW 2748 (herein after called "the premises''),
the following:—
(a) books and records of the company;
(b) motor vehicles registered in the name of and or owned by the company.
AND WHEREAS the Court was satisfied that there was reasonable grounds for the issue of this warrant under the provisions of section 530C of the Corporations Act 2001 (Cth).
YOU ARE HEREBY AUTHORISED between the hours of 8.00 am and 6.00 pm with such help as is reasonably necessary to:—
(a) enter on or into the premises, using such force is as necessary for the purpose and is reasonable in the circumstances;
(b) search the premises for the property as set out in the schedule;
(c) break open, and search for the property, any building, room or receptacle whether a fixture or not, on or in the premises;
(d) take possession of or secure against interference any property of the company found on or in the premises; and
(e) deliver to the liquidator or person authorised in writing by the liquidator for the purpose any property of the company of which possession is taken under the warrant.
SCHEDULE
(a) the following motor vehicles registered in the name of the company:
No. Make Model Colour VIN/Chassis #
1 KTM 4T-EXC Racing Orange VBKEXA402DM315901
2 Torino WY125T-21 Blue LFFWJT215C1000061
Wangye Series
3 Ferrari 308 Red F106AL13994
4 Ford Mustang 1 White 5R09C134573
5 Harley Davidson FLH Series Black 5HD1KRMG5FB601743
6 Harley Softtail Deuce White 1HD1BJL44MY010040
Davidson FXFTD
7 Mazda B32 White MMOUPOYF100400360
8 Mercedes GLA250 4M White WDC1569462J173266
9 Hamelex Trailers HXDT 4 Silver 6D9HXW1TTWMW66178
10 Freight Liner FL80 CBU Yellow 1FVXJLBB9RL439841
11 Holden Rodeo White MPATFS26H3T100775
12 Mitsubishi Triton Silver MMAJRKB809D013464
13 Ford Commercial White 6FPAAAJGCM5M41737
14 Toyota Prado Silver JTEBU29J900035846
15 Prestige Unknown Blue 6C9T20000R2LF3042
Trailers
16 Home Made 00TRLR Black 6A9T20000W1SS4001
(b) the books and records of the company.
YOU ARE TO REPORT to the Court within (14) fourteen days of the execution of this Warrant the result of its execution and all other circumstances you consider relevant.
DATED:
SEARCH WARRANT
TO: Nicholas Chase Berry, Associate Director, ERA Legal, Level 15, 45 Clarence Street, Sydney NSW
WHEREAS the Court, on the application of Steven Naidenov ("the liquidator"), the liquidator of Josa Civil Group Pty Ltd (in liquidation) ("the company''), was satisfied that Lynne Davey, Spiros Apokis and George Apokis have concealed or removed books and property of the company and that there is on or in the premises being: -
(a) Suite 201, 35 Doody Street, Alexandria NSW 2015 (herein after called "the premises''),
the following:—
(a) books and records of the company; and
(b) motor vehicles registered in the name of and or owned by the company.
AND WHEREAS the Court was satisfied that there was reasonable grounds for the issue of this warrant under the provisions of section 530C of the Corporations Act 2001 (Cth).
YOU ARE HEREBY AUTHORISED between the hours of 8.00 am and 6.00 pm with such help as is reasonably necessary to:—
(a) enter on or into the premises, using such force is as necessary for the purpose and is reasonable in the circumstances;
(b) search the premises for the property as set out in the schedule;
(c) break open, and search for the property, any building, room or receptacle whether a fixture or not, on or in the premises;
(d) take possession of or secure against interference any property of the company found on or in the premises; and
(e) deliver to the liquidator or person authorised in writing by the liquidator for the purpose any property of the company of which possession is taken under the warrant.
SCHEDULE
(a) the following motor vehicles registered in the name of the company:
No. Make Model Colour VIN/Chassis #
1 KTM 4T-EXC Racing Orange VBKEXA402DM315901
2 Torino Wangye WY125T-21 Blue LFFWJT215C1000061
Series
3 Ferrari 308 Red F106AL13994
4 Ford Mustang 1 White 5R09C134573
5 Harley FLH Series Black 5HD1KRMG5FB601743
Davidson
6 Harley Davidson Softtail Deuce FXFTD White 1HD1BJL44MY010040
7 Mazda B32 White MMOUPOYF100400360
8 Mercedes GLA250 4M White WDC1569462J173266
9 Hamelex HXDT 4 Silver 6D9HXW1TTWMW66178
Trailers
10 Freight Liner FL80 CBU Yellow 1FVXJLBB9RL439841
11 Holden Rodeo White MPATFS26H3T100775
12 Mitsubishi Triton Silver MMAJRKB809D013464
13 Ford Commercial White 6FPAAAJGCM5M41737
14 Toyota Prado Silver JTEBU29J900035846
15 Prestige Trailers Unknown Blue 6C9T20000R2LF3042
16 Home Made 00TRLR Black 6A9T20000W1SS4001
(b) the books and records of the company.
YOU ARE TO REPORT to the Court within (14) fourteen days of the execution of this Warrant the result of its execution and all other circumstances you consider relevant.
DATED:
REASONS FOR JUDGMENT
HALLEY J:
introduction
1 By an originating process filed 24 September 2021, the first plaintiff, Steven Naidenov in his capacity as liquidator of Josa Civil Group Pty Ltd (in liquidation) (Liquidator), seeks, inter alia, an order directing the District Registrar to issue, pursuant to s 530C of the Corporations Act 2001 (Cth) (Act), warrants permitting him to search for and seize the property or books and records of the second plaintiff, Josa Civil Group Pty Ltd (in liquidation) (Company) and related orders pursuant to s 597A of the Act.
2 The Liquidator was appointed as liquidator of the Company on 5 May 2020.
3 The first defendant, Lynne Davey, was the Company's sole director and secretary at the time the Liquidator was appointed on 5 May 2020. Relevantly, the first defendant was only appointed to those positions on 14 April 2020.
4 From the date of the Company's incorporation on 20 August 2015 until 25 March 2020, the second defendant, Spiros Apokis, was the Company's sole director and secretary.
5 Each of the second defendant and the third defendant, George Apokis, holds 50% of the issued capital in the Company.
6 The Liquidator contends that it is appropriate to make orders pursuant to ss 530C and 597A of the Act on the basis that the defendants have concealed, destroyed or removed property and books of the Company, or are about to do so.
7 At the conclusion of the ex parte interlocutory hearing in these proceedings on 24 September 2021, I was satisfied that the conduct of the defendants justified the making of the orders sought by the plaintiffs and I made orders in those terms.
8 These are my reasons for making those orders.
background
9 The Liquidator is also the liquidator of Josa Constructions Pty Ltd (in liquidation) (Josa Constructions) and Equipment Hire Pty Ltd (in liquidation) (Equipment Hire). He was previously the administrator of both companies.
10 Members of the Apokis family have, at various times, been directors and shareholders of Josa Constructions and Equipment Hire. In particular:
(a) Thelma Apokis (Ms Apokis) is the sole director and secretary of Josa Constructions and Equipment Hire;
(b) Ms Apokis is the sole shareholder of Equipment Hire; and
(c) the third defendant was previously the sole director and secretary of Josa Constructions and Equipment Hire and is a shareholder of Josa Constructions.
11 The Company, Josa Constructions and Equipment Hire appear to be a part of a larger group of companies that operate under the name "JG Corp". On the website for "JG Corp" it describes itself as a "locally based sewer, water and stormwater civil construction and sub-divisional contractor". Further:
(a) the second defendant is described as the "Managing Director"; and
(b) the third defendant is described as the "CEO of J Group".
12 The Company has known creditors totalling $162,861.55 according to the proofs of debt received so far by the Liquidator. However, the plaintiffs contend that the advised creditor amount is $5,473,739.83. Neither of those amounts include any claim by the Australian Taxation Office (ATO).
13 On 29 May 2020, the ATO advised that there is presently no claim in the administration of the Company, but noted that there may be a claim by the ATO when the:
(a) income tax returns for the years ending 30 June 2016 to 30 June 2020 are lodged and issued;
(b) annual payment summaries for the years ending 30 June 2017 to 30 June 2020 are lodged and issued; and
(c) activity statements for the quarters January to March 2018, April to June 2018, July to September 2018, October to December 2018, January to March 2019, April to June 2019, July to September 2019, October to December 2019, January to March 2020 and April to June 2020 are lodged and issued.
14 According to the proofs of debt received to date, Josa Constructions has known creditors of $3,552,916.23 and Equipment Hire has known creditors of $2,334,752.70.
15 As a result of his investigations into the affairs of the Company to date, the Liquidator has identified several possible causes of action, including with respect to:
(a) the existence of a scheme designed to defraud the ATO by the non-reporting and non-payment of its taxation liabilities;
(b) whether the business of the Company, Josa Constructions and Equipment Hire may have been illegally phoenixed to one or more companies within the broader corporate group; and
(c) claims against related parties.
relevant legal principles
16 As Davies J recently stated in Brooks (Liquidator) v Bull, in the matter of DV Bull Pty Ltd (in liq) [2021] FCA 967 at [7], there are three requirements for an order to be made under s 530C of the Act:
(1) the company is being wound up;
(2) the application is made by a liquidator; and
(3) the Court must be satisfied that the person has:
(a) concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator will be prevented or delayed; or
(b) concealed, destroyed or removed books of the company or is about to do so.
17 There can be no issue that the first and second requirements are satisfied in the current circumstances.
18 I turn now to consider whether the third requirement is satisfied.
19 The factors that the Court should consider in determining whether to make an order pursuant to s 530C of the Act were usefully summarised by Banks-Smith J in Carello (Liquidator), in the matter of Drilling Australia Pty Ltd (in liq) (2019) 139 ASCR 187; [2019] FCA 1563 at [6]-[9], which I gratefully adopt:
6 Section 530C is ordinarily 'a remedy of last resort': see Cvitanovic v Kenna & Brown Pty Ltd (1995) 18 ACSR 387.
7 A warrant should be granted if the Court finds that there has been a 'persistent pattern of non-cooperation and evasion': Whitemore Holdings Ltd (in liquidation) [2004] FCA 806 at [9] –[10] , affirmed in Beattie v Gray, in the matter of Control Rail Pty Ltd (in liq) [2018] FCA 1524. This does not appear to be a requirement of granting a warrant, but provides useful guidance.
8 Factors that have been relied upon in deciding that a person has concealed or removed the property of the company include:
(a) refusals to comply with liquidators' requests to deliver up the books and records of the company: Vartelas v Kyriakou [2009] FCA 1489 at [6];
(b) transfer of assets to, and continued use of the assets by, related companies or entities without proper accounting: Crisp, in the matter of Buchanan Group Holdings Pty Ltd v Iliopoulos [2011] FCA 1521 at [11]; and
(c) moving of assets, books or records from one place to another: Crisp at [13].
9 It is clear from the s 86 definition that property does not need to be registered to a person's name or in their custody for them to be in possession of it. Control over the property will suffice. In Beattie v Gray, the property was held in storage lockers in the defendant's mother's name. The property was considered to be in the defendant's possession: at [7].
20 In Tang (liquidator) v Wright, in the matter of Wright's Transport Pty Limited (in liq) [2020] FCA 709 Stewart J stated at [14]:
A court's power to issue a warrant is discretionary, but the discretion is only enlivened if the court is satisfied that the elements of s 530C(1) of the Act have been established: Re Ezyclad Pty Ltd (in liq) [2014] VSC 66; 98 ACSR 38 at [59]. The authorities in this Court have made orders issuing a warrant generally without any conditions attached: see Morton v Robins [1996] FCA 472; 14 ACLC 119, Australian Securities Commission v Samson [1997] FCA 739; 24 ACSR 555 and Vartelas v Kyriakou [2009] FCA 1489. Ultimately, however, the question of whether conditions should be imposed is a matter for the court's discretion: see Re Ezyclad at [67].
(Emphasis omitted.)
Consideration
21 The warrants sought by the Liquidator are for the search and seizure of:
(a) books and records of the Company; and
(b) property of the Company, specifically motor vehicles.
Books and records
22 The Liquidator has received no books and records of the Company from the first defendant, despite issuing letters and notices pursuant to s 530A of the Act requesting their production on 8 May 2020 and 30 October 2020. The Liquidator issued a further letter to the first defendant on 4 December 2020 requesting provision of all the Company's books and records as well as a request for information.
23 On 8 May 2020 the Liquidator issued a letter to the second defendant enclosing a notice pursuant to s 530A of the Act requesting the books and records. The plaintiffs submit that on 8 July 2020, the Liquidator received from the second defendant a record box containing approximately 1,000 pages of various tax invoices and payment confirmations issued by the Company dating back to 2016, but no other books and records of the Company. This was despite issuing a request for information on 21 August 2020 and issuing a further request and a notice pursuant to s 530A of the Act on 30 October 2020, requesting that the second defendant deliver to the Liquidator all books and records of the Company in his possession or subject to his control. A further letter was issued on 1 December 2020 requesting information and documentation.
24 The Liquidator has also requested that the third defendant produce to the Liquidator any books and records of the Company in his possession. The request was first made on 6 July 2021, after the Liquidator's attempts to recover the books and records of the Company from the first defendant and the second defendant were, apart from the tax invoices and payment confirmations produced by the second defendant, unsuccessful.
25 On 12 July 2021, the third defendant's solicitor initially requested a 30-day extension of time to respond to the request and then on 17 August 2021 requested a further extension of indeterminate length, although the response requested that the third defendant provide the requested information prior to 17 September 2021. On 22 September 2021 some information was provided by the third defendant's solicitor to the Liquidator but it was stated that the third defendant was "continuing to collate information". The information provided comprised a one page summary email, a one page schedule of vehicles no longer owned by the Company and some 38 pages of detailed spreadsheets purporting to explain transactions on the Company's accounts but including somewhat formulaic explanations for transactions such as: "Funds transferred from another/separate account to pay invoice"; "Transfer from separate unrelated account to pay JCG wages & supplier/contractor invoice" and "Transfer from separate unrelated account to pay JCG financial repayment". What would appear tolerably clear, however, is that the author or authors of the spreadsheets must have had access to a considerable quantity of books and records of the Company in order to prepare the spreadsheets. These are books and records which the Liquidator submits the defendants have failed to provide to him.
26 The Liquidator has received some books and records of the Company from third parties, however there are books and records that the Liquidator expected the Company would have maintained and which, so far, have not been produced to the Liquidator.
Company Vehicles
27 According to the records maintained by New South Wales Roads and Maritime Services (RMS), there are seventeen motor vehicles last registered in the name of the Company (Company Vehicles). The RMS records reveal that the ownership of none of the Company Vehicles have been transferred to any other person or entity and each would thus appear to remain property of the Company, although none are currently registered. The Company Vehicles include a Ferrari, a Mercedes, Harley Davidson motorcycles and four wheel drive utility vehicles.
28 The Liquidator has not been able to identify any monies having been paid to the Company as consideration for the Company Vehicles.
29 Further, the Liquidator does not believe that, at the date of his appointment or shortly prior to that time, any of the Company Vehicles were subject to finance. That is, the Liquidator does not believe that the persons or entities presently in possession of the Company Vehicles paid out any finance secured by the vehicles which might be said to amount to consideration.
30 As previously discussed, the Liquidator has made requests of the first defendant for her to provide details of all of the assets of the Company and to deliver up any assets of the Company in her possession, which she has not responded to. Further, despite the fact that the Company Vehicles were last registered in the name of the Company and the RMS records do not reveal any change of ownership, the first defendant stated that the Company had no assets in her "Report on Company Activities and Property" dated 5 May 2020 and provided to the Liquidator on his appointment.
31 The Liquidator has also made requests of the second defendant requesting, inter alia, that he provide details of any vehicles owned by the Company. Those requests were made on 21 August 2020, 6 November 2020 and 1 December 2020. The Liquidator received no responses to those requests other than the email from the third defendant's solicitor on 22 September 2021. The email does not disclose the existence or location of any of the Company Vehicles. Rather, according to the email, the third defendant is not aware of any vehicles that are "currently in the Company's name".
Conclusion
32 I am satisfied that, in light of what is set out above, there has clearly been a "persistent pattern of non-cooperation and evasion". There have been repeated unexplained failures to comply with requests by the Liquidator to deliver up the property and books and records of the Company, the seriousness of which is exacerbated by the extent of the apparent failure of the Company to comply with its ATO obligations. Moreover, neither the existence nor the location of any of the Company Vehicles has been disclosed.
33 The third defendant does not appear to have ever been a director of the Company, but the Liquidator has been informed by the bookkeeper of the Company that all the books and records of the Company were "returned to" the third defendant after the Liquidator's appointment as a liquidator of the Company. I also take into account the evidence of the Liquidator that the Company was part of a larger group of companies operating as "JG Corp" and that the third defendant was described on the website of JG Corp as the "CEO of J Group".
34 I am satisfied that the defendants have:
(a) concealed or removed property of the Company with the result that the taking of the property into the custody or control of the Liquidator will be prevented or delayed; or
(b) concealed, destroyed or removed books of the Company or are about to do so.
35 I consider that this is an appropriate case for the Court to exercise its discretion under s 530C of the Act to issue warrants for the search and seizure of the books and records of the Company and the Company Vehicles.
Confidentiality orders
36 The Liquidator also seeks confidentiality orders under s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act), on the ground that the order is necessary to prevent prejudice to the proper administration of justice: s 37AG(1)(a) of the FCA Act.
37 I consider that such an order is appropriate in the current circumstances in order to prevent prejudice to the administration of justice. I gratefully adopt the reasoning of Markovic J in Bailey, in the matter of Australian Recruiting Group Pty Ltd (in liq) v Young [2020] FCA 1473 at [30]:
Given the nature of the application and the relief sought, I was satisfied that such an order should be made. The application was made in a proceeding in which Mr Young is a party. In light of the difficulty the Liquidator has encountered in obtaining the books and records of ARG, including in interactions with Mr Young, it is possible that if Messrs Young or Campbell become aware of this application that they may, given the events which have transpired to date, hinder the Liquidator's efforts to recover all of the books and records of ARG by execution of the warrants. If that were to occur, it would amount to conduct which would prejudice the proper administration of justice.
Disclosure affidavits
38 The Liquidator also seeks an order under s 597A of the Act that, after the execution of the warrants under s 530C of the Act, each of the defendants provide an affidavit detailing, inter alia, the current whereabouts or the last known location of those Company Vehicles that were not able to be seized by the plaintiffs. Given the potential uncertainty as to the location of the vehicles, their current unregistered status and the failure of the defendants to disclose the existence of the Company Vehicles, I consider that it is appropriate that an order should be made in those terms pursuant to s 597A of the Act.
Disposition
39 For the reasons set out above, I made the orders on 24 September 2021 granting the relief sought in the originating process, providing for warrants to be issued permitting the plaintiffs to search for and seize the property and books and records of the Company, requiring the defendants to provide affidavits explaining the location of any Company Vehicles not seized by the plaintiffs and imposing a confidentiality regime.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.
Associate:
Dated: 28 September 2021
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BVZ16 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1803
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2024-09-13T22:51:57.893294+10:00
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Federal Court of Australia
BVZ16 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1803
Appeal from: BVZ16 v Minister for Immigration [2019] FCCA 3641
File number: SAD 261 of 2019
Judgment of: WHITE J
Date of judgment: 17 December 2020
Catchwords: MIGRATION – appeal from the Federal Circuit Court – review of decision of the Immigration Assessment Authority – refusal to consider new information under s 473DD of the Migration Act 1958 (Cth) – jurisdictional error in determining whether new information could be considered without addressing the whole of the material on which the appellant relied – appeal allowed.
Legislation: Migration Act 1958 (Cth) ss 5AA, 65, 473CA,473DB, 473DC, 473DD
Cases cited: ALJ18 v Minister for Home Affairs [2020] FCA 491
Applicant S270/2019 v Minister for Immigration and Border Protection [2020] HCA 32
Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184; (2003) 236 FCR 593
AQU17 v Minister for Immigration and Border Protection [2018] FCAFC 111; (2018) 162 ALD 442
AUS17 v Minister for Immigration and Border Protection [2020] HCA 37; (2020) 94 ALJR 1007
BDY18 v Minister for Immigration and Border Protection [2020] FCAFC 24; (2020) 273 FCR 170
BVD17 v Minister for Immigration and Border Protection [2019] HCA 34; (2019) 93 ALJR 1091
BVZ16 v Minister for Immigration [2017] FCCA 775
BVZ16 v Minister for Immigration [2019] FCCA 3641
BVZ16 v Minister for Immigration and Border Protection [2017] FCA 958; (2017) 254 FCR 221
CAQ17 v Minister for Immigration and Border Protection [2019] FCAFC 203
CHF16 v Minister for Immigration and Border Protection [2017] FCAFC 192; (2017) 257 FCR 148
CSR16 v Minister for Immigration and Border Protection [2018] FCA 474
DYS16 v Minister for Immigration and Border Protection [2018] FCAFC 33; (2018) 260 FCR 260 at [31]-[33];
Hossain v Minister for Immigration and Border Protection [2018] HCA 34; (2018) 264 CLR 123
Minister for Immigration and Border Protection v BBS16 [2017] FCAFC 176; (2017) 257 FCR 111
Minister for Immigration and Border Protection v CLV16 [2018] FCAFC 80; (2018) 260 FCR 482
Minister for Immigration and Border Protection v CQW17 [2018] FCAFC 110; (2018) 264 FCR 249
Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v BTW17 [2020] FCAFC 159
Plaintiff M174/2106 v Minister for Immigration and Border Protection [2018] HCA 16; (2018) 264 CLR 217
Re Minister and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59
Division: General Division
Registry: South Australia
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 69
Date of last submissions: 4 December 2020
Date of hearing: 17 June 2020
Counsel for the Appellant: Ms H Stanley with Mr J Marcus
Solicitor for the Appellant: Camatta Lempens
Counsel for the First Respondent: Mr S McDonald
Solicitor for the First Respondent: Australian Government Solicitor
Counsel for the Second Respondent: The Second Respondent filed a submitting notice, save as to costs
ORDERS
SAD 261 of 2019
BETWEEN: BVZ16
Appellant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP, MIGRANT SERVICES AND MULTICULTURAL AFFAIRS
First Respondent
IMMIGRATION ASSESSMENT AUTHORITY
Second Respondent
order made by: WHITE J
DATE OF ORDER: 17 december 2020
THE COURT ORDERS THAT:
1. The appeal is allowed;
2. The orders of the Federal Circuit Court (the FCC) made on 29 October 2019 are set aside.
3. A writ of certiorari be issued quashing the affirmation by the Immigration Assessment Authority (the IAA) on 3 November 2017 of the decision of the Minister's delegate to refuse the Appellant's application for a Safe Haven Enterprise Visa.
4. The matter be remitted to the IAA so that another member may undertake the review required by s 473CC of the Migration Act 1958 (Cth) in accordance with law.
5. The First Respondent is to pay the Appellant's costs of and incidental to the appeal to this Court and of and incidental to the judicial review proceedings in the FCC.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
WHITE J:
1 The appellant appeals from a decision of the Federal Circuit Court (the FCC) dismissing his application for judicial review of a decision of the Immigration Assessment Authority (the IAA).
2 The appellant, a national of Sri Lanka, arrived at Christmas Island on 27 August 2012. He was an unauthorised maritime arrival, as defined in s 5AA of the Migration Act 1958 (Cth) (the Act).
3 On the lifting of the bar, the appellant applied for a Safe Haven Enterprise Visa (SHEV) on 20 August 2015. That application was refused by the Minister's delegate on 3 May 2016 and the refusal was affirmed on review by the IAA on 16 June 2016.
4 The appellant then commenced judicial review proceedings and, while unsuccessful in the FCC (BVZ16 v Minister for Immigration [2017] FCCA 775), his appeal to this Court succeeded: BVZ16 v Minister for Immigration and Border Protection [2017] FCA 958; (2017) 254 FCR 221. The matter returned to the IAA for the review of the delegate's decision to be conducted in accordance with law.
5 On its further consideration, the IAA again affirmed the decision of the delegate. The appellant's application for judicial review of the second IAA decision was unsuccessful: BVZ16 v Minister for Immigration [2019] FCCA 3641. The present appeal is brought against that decision.
6 The IAA decision to which I refer in these reasons is the second IAA decision.
7 The appellant's Notice of Appeal contained two grounds but the appellant pursued only the first. I will refer to the detail of this ground shortly but note that it concerns the question of whether the IAA member properly understood and/or applied s 473DD of the Act concerning the circumstances in which "new information" may be considered.
Factual setting
8 The confined nature of the appeal means that it is not necessary to set out all the circumstances of the appellant's claim for protection in detail. It is sufficient to record that the appellant claimed protection on the basis that he is a Tamil from the north of Sri Lanka; that his home village is in an area which had been infiltrated by the Liberation Tigers of Tamil Eelam (LTTE) and, during the Civil War, had often been subject to attack by the Sri Lankan Army; that the appellant's brother had been killed in one such attack; that the appellant and his family had fled to India where they remained as refugees until February 1988; that they had returned to Sri Lanka but had again fled to India in 1990; that the appellant had remained there until 2008; that after returning to Sri Lanka to marry, the appellant had returned to India and remained there between 14 April 2010 and March 2012; and that between 13 March 2012 and 10 August 2012, when the appellant and his wife had left Sri Lanka to travel to Australia, the appellant had been subject to periodic intensive questioning by the Sri Lankan Police, a Special Task Force member and by customs officers. The appellant claimed that in those interrogations he had been repeatedly accused of having supported the LTTE.
Statutory provisions and principles
9 The IAA is to review fast track reviewable decisions referred to it under s 473CA by considering the same material as was considered by the delegate, without accepting or requesting new information and without interviewing the referred applicant – see s 473DB(1). However, s 473DC(1) of the Act authorises the IAA, subject to the terms of Pt 7AA, to "get" any documents or information that were not before the Minister when the Minister made the decision under s 65 and which the IAA considers may be relevant (defined as "new information").
10 The IAA is not obliged to "get, request or accept" any new information (s 473DC(2) but may "invite" a person to give new information (s 473DC(3)).
11 The operation of s 473DC is subject to s 473DD, which provides:
473DD Considering new information in exceptional circumstances
For the purposes of making a decision in relation to a fast track reviewable decision, the Immigration Assessment Authority must not consider any new information unless:
(a) the Authority is satisfied that there are exceptional circumstances to justify considering the new information; and
(b) the referred applicant satisfies the Authority that, in relation to any new information given, or proposed to be given, to the Authority by the referred applicant, the new information:
(i) was not, and could not have been, provided to the Minister before the Minister made the decision under section 65; or
(ii) is credible personal information which was not previously known and, had it been known, may have affected the consideration of the referred applicant's claims.
12 As is apparent, s 473DD contains two preconditions, both of which must be satisfied before the IAA can consider new information. The second precondition contains internal alternatives, so that satisfaction of one or other of the alternatives will satisfy it.
13 A number of matters of approach concerning the application of s 473DD have now been settled in the authorities. They include AUS17 v Minister for Immigration and Border Protection [2020] HCA 37; (2020) 94 ALJR 1007 which was delivered while the judgment on this appeal was reserved. The parties provided supplementary submissions concerning the significance of the decision in AUS17 for this appeal.
14 The settled matters of approach include:
(a) section 473DD imposes a duty on the IAA to assess new information that it has "got" against the specified criteria and to take the new information into account if satisfied that those criteria are met: AUS17 at [6];
(b) the IAA cannot consider any new information at all unless satisfied that there are exceptional circumstances justifying it doing so and, if the visa applicant is the source of the information, is satisfied as to one or other of the elements in subpara (b): BDY18 v Minister for Immigration and Border Protection [2020] FCAFC 24; (2020) 273 FCR 170 at [23];
(c) the term "exceptional circumstances" in subpara (a) is to be given a broad meaning and requires that consideration be given to all the relevant circumstances: Minister for Immigration and Border Protection v BBS16 [2017] FCAFC 176, (2017) 257 FCR 111 at [104]; Minister for Immigration and Border Protection v CQW17 [2018] FCAFC 110, (2018) 264 FCR 249 at [51]. What is required is a contextual evaluation having regard to all the circumstances of the case: BDY18 at [25];
(d) the matters which will amount to "exceptional circumstances" justifying consideration of the new information for the purposes of subpara (a) are not capable of exhaustive statement. They need not be unique, unprecedented or very rare but cannot be circumstances which are regularly, routinely or normally encountered: Plaintiff M174/2106 v Minister for Immigration and Border Protection [2018] HCA 16; (2018) 264 CLR 217 at [30];
(e) although the requirements of subparas (a) and (b) are cumulative, they overlap. If the new information is found to satisfy either or both the criteria in subpara (b), the IAA must take that circumstance into account when considering whether the subpara (a) criterion is satisfied: AUS17 at [11]-[12]. That is to say, the IAA's satisfaction of either or both of the limbs in subpara (b) may inform its satisfaction under subpara (a) that there are exceptional circumstances justifying consideration of the new information: BBS16 at [102]: AQU17 v Minister for Immigration and Border Protection [2018] FCAFC 111; (2018) 162 ALD 442 at [14]. By way of example, the IAA's satisfaction that the new information could not have been provided to the Minister at the time of the s 65 decision may contribute to its satisfaction that there are exceptional circumstances justifying consideration of the new information: CQW17 at [48]; CHF16 v Minister for Immigration and Border Protection [2017] FCAFC 192, (2017) 257 FCR 148 at [17]-[18], DYS16 v Minister for Immigration and Border Protection [2018] FCAFC 33, (2018) 260 FCR 260 at [31]-[33]; CAQ17 v Minister for Immigration and Border Protection [2019] FCAFC 203 at [91];
(f) the exceptional circumstances may comprise a single factor or be found in a combination of factors considered collectively: AQU17 at [13]. This necessitates consideration of all relevant circumstances because, even though no one factor may be exceptional, the circumstances in combination may be such as reasonably to be regarded as exceptional: AQU17 at [7]-[8];
(g) subparagraphs (b)(i) and (ii) involve different considerations. The former requires a factual enquiry as to whether or not the new information could have been presented to the Minister, whereas the later requires an evaluation of the significance of the new information in the context of the referred applicant's claims more generally: BBS16 at [105];
(h) the "personal" information to which subpara (b)(ii) refers is information about the referred applicant which was not previously known to the Minister, even if known to the referred applicant: Plaintiff M174 at [33];
(i) an error in the formation of the state of satisfaction as to one precondition may infect the other: BDY18 at [26]; and
(j) it is the satisfaction of the IAA which is required by both subparas (a) and (b). Accordingly, it is for the IAA, and not the Court on review, to form the required state of satisfaction: BDY18 at [28].
15 In relation to s 473DD(b)(ii), the plurality in Plaintiff M174 (Gageler, Keane and Nettle JJ) said that all that the IAA needs to be satisfied about in order that this precondition be met is that: "(1) the information is credible information about an identified individual, or an individual who is reasonably identifiable; (2) the information was not previously known by either the Minister or the referred applicant; and (3) had the information been known by either the Minister or the referred applicant, the information may have affected the consideration of the referred applicant's claims", at [34].
16 The requirement that the personal information to which subpara (b)(ii) refers be "credible" has been considered in a number of the authorities. In CSR16 v Minister for Immigration and Border Protection [2018] FCA 474, Bromberg J said:
[41] In my view all that the "credible" element of the s 473DD(b)(ii) criteria requires is the Authority's satisfaction that the "new information" is information which is open to be or capable of being accepted by the Authority as truthful (or accurate, or genuine). It is only at the deliberative stage of its review that the Authority will be required to determine whether or not the "new information" is true. The s 473DD(b)(ii) criteria is concerned with an earlier or anterior stage of the review directed at whether "new information" should be received by the Authority so that it may be considered at the deliberative stage.
[42] The criteria is a filtering mechanism designed to separate information worthy of consideration at the deliberative stage from that which is not. In that context, the word "credible" is used in relation to information, not in the sense that the information is believed, but in the sense that the information is capable of being believed. It is only information that the Authority is satisfied is "evidently not credible" … that fails to meet the credibility requirement imposed by the s 473DD(b)(ii) criteria.
(Citation omitted)
17 This understanding of the requirement that the personal information be credible appears to have been endorsed by the Full Court in Minister for Immigration and Border Protection v CLV16 [2018] FCAFC 80; (2018) 260 FCR 482 at [17]. As the reasons of Mortimer J in ALJ18 v Minister for Home Affairs [2020] FCA 491 at [24]-[25] indicate, the Minister has in other appeals to this Court challenged the correctness of CSR16. However, in this case, no submission was made by the Minister to the effect that the approach in CSR16 set out above was wrong and should not be followed. During the period in which this judgment was reserved, a majority in a Full Court (Mortimer and Jackson JJ) has held that CSR16 was correctly decided: Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v BTW17 [2020] FCAFC 159 at [62].
The new information
18 The matter which gives rise to the present appeal is a claim which the appellant made in May 2016. The claim was new because the appellant had not mentioned it in his arrival interview or in his interview with the Minister's delegate on 19 December 2015. The claim was raised only after the delegate's decision had, in accordance with Pt 7AA of the Act, been referred to the IAA on 6 May 2016.
19 The new information which the appellant sought to have considered by the IAA member comprised:
(i) his statement on 22 May 2016 in which be claimed that, some 15-20 days before he had left Sir Lanka on 10 August 2012, he had been taken by members of the Sri Lankan Army to an army camp and detained for two days. During this time he had been interrogated and tortured, including by being hung from his feet upside down (initially while nearly naked and later while wholly naked), by being beaten with wooden sticks, by having a glass bottle inserted forcibly into his mouth, and by having a pipe inserted into his anus. The appellant also claimed that he had been told at the time of his release that his wife would face similar treatment;
(ii) a report of a general practitioner dated 1 June 2016 which provided some support for symptoms suffered by the applicant being attributable to the claimed episode of torture;
(iii) a report dated 5 October 2017 from a clinical psychologist concerning her treatment of the appellant which also provided some support for his claims; and
(iv) a report from a general practitioner of 11 October 2017 concerning her treatment of injuries which the appellant attributed to the claimed episode of torture.
The IAA reasons
20 The IAA member noted the explanation given by the appellant in his statement of 22 May 2016 for not having made the claim previously. That explanation was as follows:
[12] The reason I did not mention this incident of serious harm previously either to my legal representative or to the delegate who interviewed me in December 2015 was due to the following reasons:
a. Upon arrival in Australia I was afraid to disclose the incident of torture that I underwent as I was afraid the Australian authorities would perceive me to be a member of the LTTE and I could have been returned to Sri Lanka the time I arrived by boat the Australian authorities were returning Tamils who had arrived by boat in large numbers,
b. I was too embarrassed to disclose this incident that occurred to me in the past either to my representative or the department officers as the experience was humiliating and degrading, being a male it was difficult to open up and talk about it, as the incident affected me greatly mentally.
[13] This statement has been read back to me over the phone in Tamil by my representative who assisted me in preparing this statement. As my representative assisted me to prepare this statement over the phone I was able to disclose this truth to him and felt less embarrassed.
[14] Though I have been able to share the facts about this particular incident I am now deeply troubled as certain things I had wanted not to remember are coming back to my mind, I am afraid I could be mentally affected and depressed.
21 The IAA member considered separately the application of s 473DD to the appellant's statement of 22 May 2016 and to the two medical reports of October 2017. That is to say, the IAA member considered first whether the appellant's statement of 22 May 2016 could be considered under s 473DD and then, and only then, addressed the question of whether the two medical reports could be considered. As the FCC Judge noted at [53], this was odd because the medical reports "could only go to support the new claim of the Applicant" and, if that claim was rejected, the medical reports had little relevance. As will be seen, the approach of the IAA was "odd" for a further reason.
22 The IAA member did not refer at all to the report of the general practitioner of 1 June 2016 and I understood counsel for the Minister to accept that it was open to conclude that the report had been overlooked. However, counsel for the appellant did not submit that this was, by itself, indicative of jurisdictional error. She submitted only that it would "build into the assessment of the credibility" of the appellant's claims.
23 The IAA set out its reasons concerning the new claim under the heading "The new claim". The IAA member was particularly concerned about the long period which had elapsed before the appellant had made the new claim and the reasons which he had given for not making the claim earlier. The member said:
[13] While I accept that distress and embarrassment may be a reason a person does not disclose information of this type in some circumstances, given the significance of this interrogation, detention and assault, I do not consider it is plausible that the applicant was unable to mention this to his lawyer before the delegate had produced the decision. His application for protection rests squarely on whether he may face harm now or in the foreseeable future and a central claim would be that he has experienced harm from the Sri Lankan authorities in the past. An event such as the one he claims occurred in July 2012 is so inherently relevant to, and potentially indicative of a real chance of serious harm that I do not accept he would not disclose this, or at least some aspect of it (for example the fact that he was detained and beaten but without referring to the sexual violence) until after his application had been refused, particularly as the delegate had specifically warned him that failing to raise claims at the interview or before the decision was made might mean that he could not raise them if his application was refused.
[14] I also take into account that the applicant has said that he was able to discuss the incident with his lawyer by telephone because he felt less embarrassed. He has not explained why he was not able to do this before the decision was made, to ensure that his complete and personal claims were properly before the delegate.
[15] Further, I take into account that by the time of the interview the applicant had been in Australia for three years and was being assisted by a migration lawyer. I do not accept that by this time, the applicant was too scared to provide details of mistreatment by the Sri Lankan authorities because he thought he might be sent back to Sri Lanka.
[16] Having regard to all of the factors set out above, I do not accept the applicant's reasons for not raising the claims before the delegate made her decision. This leads me to doubt the timing and content of the claims. The applicant has not satisfied me as to either of the matters in s.473DD(b). Nor am I satisfied that there are exceptional circumstances to justify considering this new information.
(Emphasis added)
24 Then, and only then, the IAA member addressed the question of whether the medical reports of 5 and 11 October 2017 could be considered. The member gave the following reasons for concluding that they could not be considered:
[17] The applicant has provided two medical reports. Both are from registered medical practitioners and concern the applicant. The first is from the applicant's current medical practitioner and is dated 11 October 2017, while the second document is a psychological report in respect of the applicant, dated 5 October 2017. Both post-date the delegate's decision and in that sense, could not have been provided to the delegate before that decision was made. The doctor's report notes that the applicant has been attending for treatment since 18 July 2017 and sets out the applicant's as-reported history and records the results of physical examinations in Australia. The report notes an area on the applicant's kidney which is abnormal on ultrasound and "which possibly may be a result of blunt force trauma such as being beaten repeatedly with a pipe", as well as a scar on his left forearm and a scar on his left lower shin which are "consistent with his explanation" of being beaten with a pipe. The report also notes that the applicant has been ashamed and found it difficult to describe his injuries and symptoms to doctors. The psychologist's report notes that the applicant has been receiving specialised torture and trauma support since 30 September 2016 and that the issues he has raised are consistent with the personal history that he provided.
[18] Both reports indicate that the applicant did not attend and seek treatment until after the IAA had affirmed the delegate's decision and both reports are based on the applicant's as-reported claims. As noted above, the reports refer to injuries and diagnoses that are consistent with the applicant's claimed history but do not confirm the applicant's claimed history or state that there are no other explanations for these issues. I am not satisfied that the reports are probative of the applicant's claims and for this reason, together with my earlier observations in relation to the applicant's failure to raise these claims before the delegate, I am not satisfied that there are exceptional circumstances to justify considering these reports.
25 As is apparent, the IAA member attached significance to the fact that, while the reports referred to injuries and diagnoses which were consistent with the appellant's claimed history, they did not confirm it, or state that there were no other explanations for the injuries and diagnoses; that (seemingly because of that matter) the reports were not probative of the appellant's claims and that those circumstances, together with the member's earlier views about the appellant's failure to raise the claims before the delegate, meant that there did not exist exceptional circumstances justifying consideration of the new evidence. It is a matter of significance for the appeal that the IAA did not consider the medical reports when evaluating the appellant's explanation for his belated provision of the new information.
The application to the FCC
26 In the FCC, the appellant alleged two different forms of jurisdictional error, only the first of which is relevant presently. That was that the IAA had "misapplied" s 473DD when determining whether it could consider the new information.
27 The FCC Judge rejected this contention. The Judge considered that the IAA member's reasoning under the heading "The new claim" indicated that the member had not been satisfied "as to why this material was not before the delegate" and had not been satisfied that the appellant's statement of 22 May 2016 constituted "credible personal information", at [50]. The Judge also said that the IAA member had "for good measure" added that he was not satisfied that there were exceptional circumstances for the purposes of subpara (a), at [52].
28 In relation to the medical reports, the Judge considered that the IAA had accepted that subpara (b)(i) had been satisfied but had not been satisfied that there were exceptional circumstances justifying the consideration of the new information, at [56]-[58].
The appellant's submissions
29 The outline of submissions provided by counsel for the appellant in advance of the appeal hearing indicated that counsel would argue that there had been a constructive failure by the IAA to exercise its jurisdiction because:
(a) it had conflated the "enquiries" required by s 473DD(b)(i) and (ii);
(b) it had conflated the subpara (b) "enquiry" with the subpara (a) enquiry; and
(c) it had adopted an unduly narrow construction of the term "exceptional circumstances" in subpara (a).
30 Counsel's initial submission was that the IAA's rejection of the appellant's explanation for not having raised the claim of interrogation and torture in his claim for protection before the delegate (which seemed to relate to subpara (b)(i)) did not mean that the underlying claim was not credible. The basis on which the IAA had found that subpara (b)(i) was not satisfied could not be dispositive of subpara (b)(ii), as (it was submitted) the IAA had reasoned.
31 Counsel then submitted that the IAA had reasoned that "exceptional circumstances" for the purpose of subpara (a) did not exist, by reference to the findings concerning subpara (b).
32 Counsel also advanced what she described as a "more refined submission". This was that the IAA's assessment of whether the information in the appellant's statement was "credible personal information" had proceeded on an unduly narrow understanding of that term, evidenced by:
(a) the IAA member's reliance almost exclusively on his rejection of the appellant's explanation for the delay in providing the statement concerning the claimed interrogation and torture;
(b) the failure of the IAA member to have regard to the medical reports provided by the appellant to support that claim; and
(c) the failure of the IAA member to adopt an approach along the lines stated by Bromberg J in CSR16, outlined above.
33 Counsel accepted that the IAA member had, at [17]-[18], had regard to the medical reports, but emphasised that that had occurred only after the member had stated his satisfaction that neither s 473DD(a) or (b) had been satisfied, so that he could not consider the appellant's claim of interrogation and torture.
Consideration
34 Like the FCC Judge, I consider it odd that the IAA considered the application of s 473DD to the new claim without, as part of that consideration, also having regard to the medical reports on which the appellant relied. That is because it was self-evident that the appellant's purpose in providing the medical reports was to support his new claim in both its content and its timing.
35 However, it convenient to put the appellant's submissions concerning that aspect of the IAA's reasons to one side for the moment and to address first the issues raised by the appeal independently of this matter.
36 The IAA understood that s 473DD prohibited it from considering the new information provided by the appellant unless it was satisfied of both the subpara (a) and (b) conditions. For this reason, the IAA identified at the commencement of its reasons the information provided by the appellant which was new information and that which was not. The IAA also referred, at [12], to the submission of the appellant's representative as to "why all of the new information should be considered".
37 Having made that identification, the IAA then addressed the question of whether the new information could be considered. In doing so, it addressed first the appellant's claim of interrogation and torture in July 2012, characterising that as "the new claim".
38 I have emphasised these two matters about the approach of the IAA because they provide the context for the passages in its reasons which followed.
39 It is evident that, in [13]-[15] of the reasons, the IAA addressed first the issue under s 473DD(b)(i), that is, whether the new claim could have been provided to the Minister before the delegate had made her decision on 3 May 2016. Given that the new information comprised an additional claim of the appellant (as opposed, say, to additional evidence of an existing claim or evidence of some more recent relevant development), this meant naturally that there would be focus on the appellant's explanation for not having made the claim of interrogation and torture until 22 May 2016 (some four years and nine months after his arrival in Australia, some nine months after his application for the SHEV, some five months after his interview with the Minister's delegate, and some three weeks after the delegate's decision). The omission of the appellant to have made the claim earlier and at a time when it would have been in his interest to do so, made it almost inevitable that there arose a question as to the veracity of the claim and of the appellant's explanation for not having made the claim earlier. It is accordingly unsurprising that, in [13]-[15], the IAA addressed directly the explanation proffered by the appellant (through his representative) for the new claim not having been made earlier.
40 In [13], the IAA concluded that the obvious relevance of the new claim made it implausible that the appellant had been unable even to inform his own lawyer of any part of the claim and, in turn, for the delegate to have been informed. This was especially so as the delegate had warned the appellant that "failing to raise claims at the interview or before the decision was made might mean that he could not raise them if his application was refused", at [13].
41 In [14], the IAA noted that the appellant had been able to discuss the claim with his lawyer in May 2016 but had not explained why he had been unable to do so earlier.
42 In [15], the IAA referred to the length of time the appellant had been in Australia and to the assistance he had been receiving from a migration lawyer. This led the IAA to reject the appellant's explanation that he had been "too scared to provide details of mistreatment by the Sri Lankan authorities because he thought he might be sent back to Sri Lanka", at [15].
43 The IAA then concluded, at [16]:
Having regard to all of the factors set out above, I do not accept the applicant's reasons for not raising the claims before the delegate made her decision.
44 This conclusion (and the omission of the IAA to refer to the other explanation which the appellant had provided for the new claim being made only belatedly) made inevitable the finding of the IAA that the appellant had not satisfied it of the subpara (b)(i) matter, namely, that the new information could not have been provided to the Minister before the delegate's decision.
45 In the very next sentence of [16], the IAA then said:
This leads me to doubt the timing and content of the claims.
46 Although not stated so expressly, the evident focus of this sentence was on s 473DD(b)(ii), that is, whether the new claim was "credible personal information". Consideration of the time at which the new claim was made and its content were, considered rationally, an intrinsic part of the assessment of the credibility of the claim. The IAA's rejection of the appellant's explanation for the time at which the complaint was made went directly to its credibility. This was reflected in the IAA's statement that it doubted both the timing and credibility of the claim. That statement of assessment may have been concise but, in context, and reading the reasons fairly and in a way which is not unduly critical (BVD17 v Minister for Immigration and Border Protection [2019] HCA 34; (2019) 93 ALJR 1091 at [38]), it is evident that the IAA was saying that it did not regard the new claim as credible.
47 The impression that the IAA was referring to subpara (b)(ii) when it said that it doubted the timing and content of the claims is confirmed by the fact that, in the very next sentence, it said:
The applicant has not satisfied me as to either of the matters in s.473DD(b).
48 The IAA then addressed s 473DD(a), saying:
Nor am I satisfied that there are exceptional circumstances to justify considering this new information.
49 When the IAA's reasons are considered in the way just discussed, it can be seen that it addressed separately each element in s 473DD. That being so, I do not consider that the FCC Judge was wrong in rejecting the appellant's contention that the IAA had "conflated" the requirements of subparas (b)(i) and (ii). This was a case in which the matters bearing upon subpara (b)(i) (being the timing and content of the new claim) were also pertinent to subpara (b)(ii). That being so, it is unsurprising that the IAA regarded the matters bearing upon its satisfaction of the former as also informing its satisfaction of the latter. To do so was not to conflate the requirements of the two subparagraphs.
50 The decision of Bromberg J in CSR16, on which counsel for the appellant relied, was delivered after the decision of the IAA presently under consideration. It was accordingly not possible for the IAA to make any express reference to that decision. However, on my assessment, this is a matter of no moment. That is because the IAA had found that the appellant's new claim was not credible, in the sense discussed in CSR16. That finding was sufficient for the IAA to conclude that the appellant had not satisfied it of the subpara (b)(ii) matter.
51 As the IAA considered that the appellant had not satisfied either subpara (b)(i) or subpara (b)(ii), there was, strictly speaking, no need for it to have considered whether there were exceptional circumstances (subpara (a)).
52 The decision of the High Court in AUS17 makes plain that the matters bearing upon satisfaction of subpara (b) may inform satisfaction of the "exceptional circumstances" condition. That was obviously so in the circumstances of the present case. The IAA's rejection of the explanation for the new claim not having been made earlier and the lack of satisfaction that the new claim was credible personal information was plainly relevant to the assessment of whether there were exceptional circumstances. In fact, subject to the matter to be considered next, the appellant's submissions did not indicate any rational means by which the IAA could have been satisfied that exceptional circumstances existed justifying the consideration of the new claim when his explanation for not making the new claim earlier had been rejected and when the IAA was not satisfied that the new claim was credible.
53 If matters had stood here, this would have meant that the appeal should be dismissed.
54 However, it is necessary to consider counsel's submission concerning the failure of the IAA to consider the medical reports when considering the credibility of the new information provided by the appellant. As already noted, counsel submitted that this indicated an unduly narrow understanding by the IAA of the term "credible personal information".
55 Paragraphs [17] and [18] of the IAA's reasons have been set out earlier. Both their place in the IAA's reasons and their content indicate that the IAA considered the reports of the appellant's general practitioner and the psychologist only after having found that the appellant had not, in relation to his own account, satisfied either of the conditions in s 473DD in respect of the new information.
56 Further, the manner in which the IAA addressed the medical reports suggests that it regarded them as being relevant only to the question of whether the appellant had been subject to the interrogation and torture he claimed, and not as relevant to the appellant's explanation for not having raised the claims earlier:
[18] … As noted above, the reports refer to injuries and diagnoses that are consistent with the applicant's claimed history but do not confirm the applicant's claimed history or state that there are no other explanations for these issues. I am not satisfied that the reports are probative of the applicant's claims and for this reason, together with my earlier observations in relation to the applicant's failure to raise these claims before the delegate, I am not satisfied that there are exceptional circumstances to justify considering these reports.
(Emphasis added)
57 These passages indicate that the IAA's rejection of the appellant's explanation for the lateness of the claim was reached without regard to the medical and psychological reports and therefore to the whole of the information.
58 The IAA appears not to have appreciated that both reports were relevant to the assessment of the credibility of the appellant's explanation for having raised the new claim only belatedly, and not just to the credibility of his claims concerning those incidents. For example, in the report of 11 October 2017, the general practitioner said:
He has been so ashamed about this treatment [the insertion of objects into his rectum] and the sequelae he has found it difficult to describe to doctors to ask for help …
[The appellant] experiences symptoms consistent with post traumatic stress disorder. He has a low mood and recurrent involuntary thoughts about the events of 2012 …
I hope to continue to work with [the appellant and his wife] to help them recover from their traumatic experience.
(Emphasis added)
59 In her report of 5 October 2017, the psychologist reported:
Furthermore [the appellant's] hypervigilance, sensitivity to reminders of his traumatic history and high levels of anxiety restrict his ability to verbalise specific details of his past experience, such as recalling dates, locations and the times of sequence of events; consistent with the scientific literature on the psychological impact of trauma.
(Emphasis added)
60 This expert medical evidence concerning the appellant's mental health went directly to the explanation proffered by the appellant for the belated making of the new claim. Despite that, in determining whether the new information (being the appellant's new claim) could be considered, the IAA did not have regard to it. The IAA thereby failed to have regard to the whole of the information when addressing the question of whether it could be "considered". This was an error.
61 There are various ways in which the error which the appellant imputes to the IAA may be expressed. It may be a failure to consider the new information as a whole in the assessment of whether it constituted "credible personal information". It may be a misunderstanding by the IAA of the way in which it was to discharge its function. However, the precise characterisation of the error is not important. The IAA was bound to consider whether the appellant's new information was credible personal information: AUS17 at [6], [11]. It was required to undertake that consideration in accordance with law. This was an essential requirement for the discharge of the statutory obligation to review imposed on the IAA by s 473CC of the Act. In undertaking that review, the IAA had to consider whether the new information provided to it by the appellant could be considered: AUS17 at [6]-[7]. That issue had to be determined by regard to all "the information, evidence and arguments" relevant to it: Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184; (2003) 236 FCR 593 at [44]. By failing to have regard to the medical reports when considering whether the appellant's new information was credible personal information, the IAA failed to comply with this part of its statutory task. That was jurisdictional error.
62 This case is distinguishable from Re Minister and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59 in which it was held that a feature to consider evidence corroborating an applicant's account, having rejected that account, was not an error of law, at [12]-[14] (Gleeson CJ), at [49] (McHugh and Gummow JJ). This is not a case of the kind to which Gleeson CJ referred in [14] of Applicant S20:
Decision-makers commonly express their reasons sequentially; but that does not mean that they decide each factual issue in isolation from the others. Ordinarily they review the whole of the evidence, and consider all issues of fact, before they write anything. Expression of conclusions in a certain sequence does not indicate a failure to consider the evidence as a whole. I do not think that the Tribunal member intended to convey that she made up her mind about the evidence of the applicant/appellant before taking account of the evidence of the witness who was said to corroborate him.
63 Instead, the compartmentalised reasoning adopted by the IAA meant that it considered both the appellant's claim and the medical evidence independently of the other, and without considering the new information as a whole.
64 It may be that the IAA's error could also be said to have made its decision legally unreasonable, because of irrationality in the reasoning process – see Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611 at [130]-[131]. However, counsel did not contend for such a characterisation and it need not be considered.
65 The IAA's error should be regarded as material because it affected a foundational step in its reasoning, that is, its rejection of the appellant's reasons for not raising his new claim before the Minister's delegate. As previously noted, the IAA had relied on that conclusion in the assessment of the s 473DD(b)(i) criterion and, in turn, on the assessment of the s 473DD(a) criterion. Given its importance to the IAA's reasoning, it can be concluded that the error has deprived the appellant of the possibility of a successful outcome: Hossain v Minister for Immigration and Border Protection [2018] HCA 34, (2018) 264 CLR 123 at [72]; Applicant S270/2019 v Minister for Immigration and Border Protection [2020] HCA 32 at [4].
66 Accordingly, I consider that, for this limited reason, the appeal must be allowed.
The Minister's "procedural power" submission
67 In reaching this conclusion, I have not overlooked the submission of counsel for the Minister that the IAA is not under any duty to explain its reasons for declining, pursuant to s 473DD of the Act, to consider "new information". Counsel made this submission by reference to BVD17 at [16] and [40] and to CAQ17 at [119]-[120].
68 In BVD17, the plurality said, at [16], that the IAA "in giving reasons for [the] ultimate decision to affirm or remit is not required to give reasons for the exercise or non-exercise of a procedural power such as those conferred on it by s 473DC(1) or s 473GB(3)". In CAQ17 at [119], Derrington and Steward JJ cited BVD17 as authority for the proposition that the IAA is under no obligation to provide reasons for its determination as to whether information obtained by it or given to it was "new information". However, contrary to counsel's submission, neither BVD17 nor CAQ17 was concerned with the requirement for reasons to be provided by the IAA in respect of its decision as to whether it should consider new information which it has received. Following the decision in AUS17 at [6] that the IAA is bound to assess the new information it has received against the s 473DD criteria, it would seem inappropriate to regard the decision on whether the new information can be considered under s 473DD as the exercise of a "procedural power". In any event, in the present case, the IAA did give reasons and did thereby disclose its reasoning.
Conclusion
69 For these reasons given above, the appeal must be allowed. The orders of the Court are:
(a) The appeal is allowed;
(b) The orders of the FCC made on 29 October 2019 are set aside.
(c) A writ of certiorari be issued quashing the affirmation by the IAA on 3 November 2017 of the decision of the Minister's delegate to refuse the appellant's application for a Safe Haven Enterprise Visa.
(d) The matter be remitted to the IAA so that another member may undertake the review required by s 473CC of the Act in accordance with law.
(e) The first respondent is to pay the appellant's costs of and incidental to the appeal to this Court and of and incidental to the judicial review proceedings in the FCC.
I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice White.
Associate:
Dated: 17 December 2020
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