case_text: I do not consider it was incumbent upon the Third Tribunal to accede to the appellant's request for a transcript of previous Tribunal hearings, even if they were available: see generally SZKOB v Minister for Immigration and Citizenship [2007] FCA 1949 at [12] - [14] per Flick J. 53 However, the real question is whether, in circumstances where the appellant had the tapes in his possession, the Third Tribunal was required (as suggested by the appellant) to play that part of the tape of the appellant's evidence on each point the Third Tribunal wished to consider, or possibly contest, because of inconsistencies in the evidence. I do not regard this as necessary in the circumstances of this case. The issue of credibility arose because of inconsistencies in the prior evidence given by the appellant. Accepting the information conveyed by the appellant on the tapes, and not the way the evidence was adduced, gave rise to credibility issues, the important matter was to bring to the appellant's attention such issues. This the Third Tribunal did. How it did this was a matter for the Third Tribunal. It is to be recalled that the appellant had the tapes and the issue of credibility was an issue going to the appellant's very own evidence in the previous hearings, of which he was either familiar with or could re-familiarise himself with by himself playing the tapes prior to the hearing. 54 In my view, the Federal Magistrate's observations on this matter were correct, and provide a proper basis for rejecting this ground of appeal. Fairness did not require, in the circumstances before the Third Tribunal, the playing of the tapes and the identification therein of the parts considered relevant by the Third Tribunal, at the hearing itself. The important requirement, as I have said, was to bring appropriately and fairly the point of contest to the attention of the appellant, so the appellant could respond. This the Tribunal did, and in my view, the procedure suggested by the appellant was unnecessary to achieve fairness.


case_outcome: cited

case_text: It has been held on a number of occasions in this Court that ss 424AA and 424A provide specifically how certain matters are to be brought to the attention of an applicant by a tribunal, and that s 424AA enables information which would need to be given in writing under s 424A to be given orally if an applicant appears before a tribunal: see SZLQD v Minister for Immigration and Citizenship [2008] FCA 739 at [12] per Marshall J; SZLXI v Minister for Immigration and Citizenship [2008] FCA 1270 at [27] per Cowdroy J; SZLWI v Minister for Immigration and Citizenship (2008) 171 FCR 134 , 139 at [19] per Gilmour J; and SZMAE v Minister for Immigration and Citizenship [2008] FCA 1701 at [23] per Edmonds J.


case_title: SZLXI v Minister for Immigration and Citizenship [2008] FCA 1270


case_title: SZLWI v Minister for Immigration and Citizenship (2008) 171 FCR 134


case_title: SZMAE v Minister for Immigration and Citizenship [2008] FCA 1701


case_text: The Statement of Claim pleads that Excom breached its employment contract with Mr Patankar by failing to assist him to achieve his potential and goals as provided for by cl 24 of the offer of employment. It is not clear that this claim was pressed. In my view it is clear that the opening words of cl 24 of the terms and conditions upon which Mr Patankar was offered employment by Excom were aspirational in the sense that they merely sought to describe the attitude that would inform the way in which Excom would conduct staff performance reviews ( Whitlock v Brew [1968] HCA 71 ; (1968) 118 CLR 445 ; Bishop v Taylor [1968] HCA 68 ; (1968) 118 CLR 518). The meaning of the words is insufficiently certain to be enforced. They were not, in my view, intended of themselves to give rise to any legal obligation.


case_outcome: referred to

case_text: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 ; [2006] HCA 46 at [65] , Gummow and Hayne JJ said that it is enough for a plaintiff to show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending trial; how strong the probability need be depends on the practical consequences likely to flow from the relief.


case_outcome: distinguished

case_text: accept Mr Webb's submission that the observations of Logan J in Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong [2009] FCA 539 at [1] and [28] are distinguishable from the present matter.


case_text: Mr Webb SC who appeared for Clarion conceded that there is a serious question to be tried, he submitted that the likelihood of success at the trial is not great. He pointed in particular to the observations of the High Court in Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 ; [2000] HCA 12 at [101] to [103], and he emphasised the full wording of the scratch cards and the leisurely circumstances in which a hypothetical, reasonable consumer will be likely to be able to study the full details.


case_text: I am satisfied that there is a sufficient likelihood of success to justify the relief for which the ACCC ultimately contended, or relief substantially in that form. In coming to this view, I have taken into account, in particular, the balance of convenience which, in my opinion, justifies the relief when weighed in the balance with the serious question to be tried. The relief which is sought does not in a practical sense determine the substance of the matter in issue; compare Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533. It merely requires Clarion to send an SMS to a scratch card winner informing him or her that to claim a prize it is necessary to pay the subscription fees to which I have referred, as well as to give some indication of the value of the prize that has been won. The "winner" is then given the opportunity to proceed or withdraw. The cost of complying with this order is relatively minor and it is in conformity with an industry code which is shortly to come into operation. It takes into account the public interest character of the proceedings and the serious questions to which I have referred above. I have heard argument as to the appropriate form of the order and I have taken into account the evidence of Ms Lesley Hynes in her affidavit sworn 9 June 2009. The orders I will make are as set out in the short minutes of order handed up by Ms Higgins for the Commission, save that the form of the SMS message set out in paragraph 1.1 is to be as follows: Free Msg Must subscribe 2 Mobyplanet 2 get prize $10 every 6 days. Flexibreak prize worth $80 or more (min spend reqd). Subscribe reply Yes.


case_text: applicants submitted that the object of cl 5.1, when considered in the context of the Shareholders Agreement as a whole, was that any shareholder desirous of transferring the legal or equitable interest therein should inform the company and offer the other shareholders an opportunity to participate in the transfer on a pro rata basis. In support of this submission, the applicants relied on Lyle & Scott Ltd v Scott's Trustees [1959] AC 763 , and in particular the passage at 785: "If I may express my view of the article in the most general sense, I think the prohibitory part of the article is the sanction which prevents a shareholder from carrying through a transfer of shares without complying with the machinery of transfers set out in the second part of the article. And I think a shareholder who has transferred, or pretended to transfer, the beneficial interest in a share to a purchaser for value is merely endeavouring by subterfuge to escape from the peremptory provisions of the article. A share is of no value to anyone without the benefit it confers. A sale of a share is the sale of beneficial rights that it confers, and to sell or purport to sell the beneficial rights without the title to the share is, in my opinion, a plain breach of the provisions of article 9." However, that passage must be understood in the context of the findings of fact in that case to which I refer later. The respondents submitted that: (a) The evidence demonstrated that ARC Strang was not desirous of transferring the PrixCar shares, as if it was so desirous it could not achieve the outcome it sought, namely, avoiding triggering the provisions of cl 5.1 of the Shareholders Agreement. Rather, the shareholders in ARC Strang were desirous of selling their shares in ARC Strang. (b) There was no change of control clause in the Shareholders Agreement, that is there was no clause which regulated or related to a sale or transfer of shares in the companies whose assets included shares in PrixCar. The evidence demonstrated that all parties proceeded on the basis that cl 5.1 was not triggered when shares in a joint venturer were sold, as distinct from a sale of shares in the joint venture company, PrixCar, itself. The applicants attempted to achieve a change of control in ARC Strang in favour of themselves previously, but did not proceed when they formed a view about the problematic impact of the trust structure. (c) On the proper construction of cl 5.1 it is concerned only with transfers of legal interests, not beneficial interests. This follows textually from the words of the Shareholders Agreement. It is the sale of the shares that is relevant, not the equitable obligations pursuant to which ARC Strang held its assets. The initial issue to be determined is whether on 30 May 2007 and prior thereto ARC Strang was a person "desiring to transfer" its shares in PrixCar within the meaning of cl 5.1 of the Shareholders Agreement. ARC Strang had withdrawn its transfer notice given in its letter dated 14 July 2006 on 23 November 2006. At that time, ARC Strang's desire to transfer its shares in PrixCar terminated. Was that desire resurrected thereafter? I do not consider that it was. During December 2006, Mr Robert Strang had discussions with Kawasaki and Toll interests about a proposal that the shares in ARC Strang be sold. It does not follow from this fact that ARC Strang was desiring to transfer its shares in PrixCar. Indeed, the proposal that the shares in ARC Strang be sold was for the reason that Kawasaki and Toll did not want the pre-emptive provisions of cl 5.1 of the Shareholders Agreement triggered by any proposal or desire by ARC Strang that its shares in PrixCar be transferred. Although a sale of the shares in ARC Strang would change the ultimate ownership and effective control of the shares ARC Strang held in PrixCar, a desire by the shareholders in ARC Strang to sell the shares they held in it does not, of itself, demonstrate a desire by ARC Strang to transfer its shares in PrixCar. Indeed, if the concern of all relevant parties was to avoid triggering the pre-emptive provisions in cl 5.1 of the Shareholders Agreement, a proposal by the shareholders in ARC Strang to sell the shares they held in it made it clear that ARC Strang did not desire to transfer its shares in PrixCar. The applicants placed particular emphasis upon observations in Lyle & Scott Ltd v Scott's Trustees (supra). In that case the relevant article of association of the company contained pre-emptive provisions which were activated by a shareholder "who is desirous of transferring his ordinary shares". An offer was made to the shareholders in the company offering to purchase their shares for a specified amount. The consideration was payable on receipt of valid and effective transfers of the shares and a general proxy in favour of the purchaser's nominees. Some shareholders in the company accepted the offer by completing and returning the form of acceptance and a form of proxy. In their acceptance they agreed to sell their shares, authorised the use of the proxy, and agreed to deliver up their share certificates and to sign transfer deeds when called on in exchange for the price. The House of Lords concluded that the actions of the shareholders were such that it could be inferred that they were "desirous of transferring" their shares within the meaning of the article containing the pre-emptive provisions. Viscount Simonds said at 774-775: "In my opinion, it is not open to a shareholder, who has agreed to do a certain thing and is bound to do it, to deny that he is desirous of doing it. I wish to make it quite clear, for it goes to the root of the matter, that I regard Scott's trustees as desirous of transferring their ordinary shares unless and until their agreement with Mr. Fraser has been abrogated. ... I have already indicated that a shareholder who has agreed to sell his shares and has received the price is to be deemed to be desirous of transferring them." Lord Reid said at 777-778: "I have come to the conclusion without difficulty that on their own admissions the respondents are in breach of article 9. The purpose of the article is plain: to prevent sales of shares to strangers so long as other members of the company are willing to buy them at a price prescribed by the article. And this is a perfectly legitimate restriction in a private company. But the respondents argue that, whatever may have been the intention, the terms of the article are such that it has only very limited application. They say that 'transfer' and 'transferring' only apply to a complete transfer of the ownership of shares by acceptance and registration of deeds of transfer, and that a shareholder who agrees to sell his shares is quite entitled to do so and to receive the price and vote as the purchaser wishes so long as he is not desirous of having a transfer registered. I see no reason for reading the article in that limited way. Transferring a share involves a series of steps, first an agreement to sell, then the execution of a deed of transfer and finally the registration of the transfer. The word transfer can mean the whole of those steps. Moreover, the ordinary meaning of 'transfer' is simply to hand over or part with something, and a shareholder who agrees to sell is parting with something. The context must determine in what sense the word is used." That case and the reasoning in it is of no assistance to applicants. In that case it was found as a fact that the shareholders were desirous of transferring their shares because of the actions they had taken. The shareholders had entered into an agreement to sell their shares and had received and retained the sale price and had agreed to sign transfer deeds when called on to do so. Their abstaining from delivering executed transfer forms did not displace the finding that they were desirous of transferring their shares. I have made no such finding in this case. Rather, I have found that the evidence does not support such a finding. It may be accepted, as the applicants submitted, that the documentation and transactions entered into on 30 May 2007 delivered to Toll Holdings and its associate Toll (FHL) control of the interest in PrixCar held by ARC Strang as a matter of substance. But it does not follow from such a conclusion that cl 5.1 was triggered by what occurred on 30 May 2007. The applicants submitted that the provisions of cl 5.1 of the Shareholders Agreement would have no substance if the shareholder could transfer its beneficial interest in PrixCar to a third party as was done in this case. In this context, the applicants relied on the observation of Lord Keith in Lyle & Scott Ltd v Scott's Trustees (supra) set out in par [46] above. That observation must be understood in the context of the facts as found, namely that there had been an agreement to sell the shares which were the subject of the pre-emptive provisions. Lord Keith was saying no more than if a shareholder sells its whole interest in a share, which includes its legal interest and its beneficial interest, the withholding of the delivery of an executed transfer of the share, in the circumstances which obtained in that case, does not mean that the shareholder is not desirous of transferring the share as contemplated by the relevant article. The applicability of Lord Keith's observation depends upon the extent to which the provisions of cl 5.1 of the Shareholder's Agreement have been triggered. In Lyle & Scott Ltd v Scott's Trustees (supra) the relevant article was triggered because of the finding that the shareholders were "desirous of transferring" their shares in the company. That is not a finding which I have made in the present case. I am satisfied that on its proper construction cl 5.1 of the Shareholders Agreement does not extend to, or cover, a transfer of shares in a company which includes within its assets shares in PrixCar. Clause 5.1 does not include within its terms, nor is it appropriate to imply into its terms, a change in control of shareholder provision. There is no part of the transactions entered into on 30 May 2007 which falls within cl 5.1 of the Shareholders Agreement or which triggers its operation. Clause 5.1 is not triggered by the sale by Mr and Mrs Strang of their shares in ARC Strang, the shareholder whose assets include shares in PrixCar, nor is it triggered by the deed of assignment whereby ARC Strang as trustee transferred the beneficial interest in the PrixCar shares to itself. The expression "transfer" in cl 5.1 of the Shareholders Agreement refers to a transfer of the legal interest in the shares and not to a transfer of the beneficial interest. I reach this conclusion as result of a textual analysis of cl 5.1 and on the basis of principles found in authorities. My conclusion that in the context in which it appears in cl 5.1 of the Shareholders Agreement the expression "transfer" means a transfer of the legal interest or estate in shares from one person to another person and not a transfer of the equitable or beneficial interest in the shares is supported in a number of cases. Such a connotation or definition of the expression "transfer" is implicit in the reasoning in Safeguard Industrial Investments Ltd v National Westminster Bank [1981] 1 WLR 286; Scotto v Petch [2000] 2 BCLC 211, on appeal [2001] BCC 889; Lyle & Scott Ltd v Scott's Trustees (supra); Coles Myer Limited v Commissioner of State Revenue [1998] 4 VR 728.


case_text: applicants submitted that the Court should look at the surrounding circumstances of the Shareholders Agreement, namely that PrixCar was a closely held joint venture corporation and that the purpose or the object of the Shareholders Agreement was that specified persons should carry on business together and only control the joint venture vehicle in specified portions. It was submitted that with this in mind the Court should give the Agreement a commercially, sensible construction. In this context, Kawasaki referred to Lion Nathan Australia Pty Ltd v Coopers Brewery Limited (2006) 236 ALR 561 where Weinberg J (at 563 4) and Kenny J (at 580) considered the principles which apply to the construction of commercial documents. These principles of construction may be accepted but they do not entitle the Court to distort the language used in an agreement or imply into the provisions of an agreement terms which are not there. The applicants submitted that the parties should be taken to have desired no change in the effective ownership and control of PrixCar unless all members first had a pro rata opportunity to participate in that change of ownership or control. However, that desire in those terms was not translated into a specific provision in the Shareholders Agreement nor is it to be implied from the terms used in the Shareholders Agreement. The parties to the Shareholders Agreement turned their minds to the nature of the pre-emptive rights which they wanted to enshrine in the agreement but they did not include a change in control of a shareholder provision.


case_outcome: considered

case_title: Safeguard Industrial Investments Ltd v National Westminster Bank [1981] 1 WLR 286, on appeal [1982] 1 WLR 589

case_text: conclusion that in the context in which it appears in cl 5.1 of the Shareholders Agreement the expression "transfer" means a transfer of the legal interest or estate in shares from one person to another person and not a transfer of the equitable or beneficial interest in the shares is supported in a number of cases. Such a connotation or definition of the expression "transfer" is implicit in the reasoning in Safeguard Industrial Investments Ltd v National Westminster Bank [1981] 1 WLR 286; Scotto v Petch [2000] 2 BCLC 211, on appeal [2001] BCC 889; Lyle & Scott Ltd v Scott's Trustees (supra); Coles Myer Limited v Commissioner of State Revenue [1998] 4 VR 728. In Safeguard Industrial Investments Ltd v National Westminster Bank (supra) the Court was concerned to construe an article of association of a company which provided that: "A member shall not be entitled to transfer an ordinary share except ... in accordance with the following provisions: (a) ... (b) Except where the transfer made is pursuant to article 8 hereof, in order to ascertain whether any member is willing to purchase an ordinary share, the proposing transferor shall give notice in writing (hereinafter called 'the transfer notice') to the company that he desires to transfer the same. ..." The Court held that "transfer" in this article meant a transfer of the legal interest in the shares and did not refer to the transfer of the beneficial interest in the shares. Vinelott J said at 297-298: "A 'transfer of a share' in the ordinary sense of that expression is a transfer of the legal title to the share with the rights and liabilities attaching to it; on registration of the transfer the transferor ceases to be and the transferee becomes a member of the company in right of that share. A member who desires to transfer a share will carry his intention into effect by executing a transfer and lodging it for registration. At that stage the restrictions in the pre-emption provisions come into operation. To treat the references to the transfer of a share as comprehending a transfer or disposition of a beneficial interest in a share is to give the expression 'transfer of a share' a meaning wider than it would ordinarily bear. ..." Vinelott J's reasoning was upheld by the Court of Appeal: Safeguard Industrial Investments Ltd v National Westminster Bank [1982] 1 WLR 589 at 598-599. It was also accepted by the Queensland Court of Appeal in Reef & Rainforest Travel Pty Ltd v Commissioner of Stamp Duties [2002] Qd R 683 at 688.


case_title: Scotto v Petch [2002] 2 BCLC 211, on appeal [2001] BCC 889

case_text: conclusion that in the context in which it appears in cl 5.1 of the Shareholders Agreement the expression "transfer" means a transfer of the legal interest or estate in shares from one person to another person and not a transfer of the equitable or beneficial interest in the shares is supported in a number of cases. Such a connotation or definition of the expression "transfer" is implicit in the reasoning in Safeguard Industrial Investments Ltd v National Westminster Bank [1981] 1 WLR 286; Scotto v Petch [2000] 2 BCLC 211, on appeal [2001] BCC 889; Lyle & Scott Ltd v Scott's Trustees (supra); Coles Myer Limited v Commissioner of State Revenue [1998] 4 VR 728.


case_title: Coles Myer Limited v Commissioner of State Revenue [1998] 4 VR 728


case_text: to 30 May 2007 ARC Strang was the trustee of The A.R.C. Strang Family Trust which was established by a deed of settlement on 5 January 1994. ARC Strang Australia Pty Ltd became the trustee of The A.R.C. Strang Family Trust on 30 May 2007. Since June 2001 Mr Robert Strang Senior ("Mr Robert Strang") has been the sole director and company secretary of ARC Strang, and he has always been the appointor of The A.R.C. Strang Family Trust with the power to remove and appoint any trustee. The A.R.C. Strang Family Trust is a "discretionary trust": Chief Commissioner of Stamp Duties for New South Wales v Buckle [1998] HCA 4 ; (1998) 192 CLR 226 at 234; Commissioner of Taxation (Cth) v Vegners (1989) 90 ALR 547 at 552. That is to say, the entitlement of the beneficiaries of the trust to the income and capital of the trust is not specified in, or immediately ascertainable from, the terms of the trust. The distribution of the income and capital of the trust is dependent on the exercise of a discretion by the trustee who is able to select from a nominated class of beneficiaries the beneficiary or beneficiaries to whom, or for whose benefit, any income or capital of the trust is to be distributed from time to time. In the deed of settlement establishing The A.R.C. Strang Family Trust, two classes of beneficiaries were provided for. One class described as "Primary Beneficiaries" included Mr Robert Strang and any spouse, widow or child of Mr Robert Strang. The other class described as "General Beneficiaries" included the Primary Beneficiaries, their children and remoter issue, other relatives of them and charities.


case_title: Commissioner of Taxation (Cth) v Vegners (1988) 90 ALR 547


case_text: noted earlier in par [ 6 ] above, The A.R.C. Strang Family Trust is a discretionary trust. There is no beneficiary under it with a vested interest and the trustee has a discretion as to the distribution of the income and capital of the trust fund among a wide range of potential beneficiaries. Accordingly, by the Deed of Assignment there was no disposition of the beneficial interest in the shares by the trustee to a third party. There was no separation of the legal and equitable interests in the PrixCar shares: Commissioner of Stamp Duties (Queensland) v Livingston [1964] UKPCHCA 2 ; [1965] AC 694 at 712; Barns v Barns [2003] HCA 9 ; (2003) 214 CLR 169 at 189. Such interest as those who fell within the definition of "beneficiaries" in the trust deed had in the trust property was a right to have the trust administered in accordance with the terms of the trust deed: Official Receiver in Bankruptcy v Schultz [1990] HCA 45 ; (1990) 170 CLR 306 at 313-314.


case_title: Official Receiver in Bankruptcy v Schultz [1990] HCA 45 ; (1990) 170 CLR 306


case_text: relevant principle was recently re-stated by Hollingworth J in Lygon Nominees Pty Ltd v Commissioner of State Revenue (2005) 60 ATR 135 at [58]: "Neither the right to due administration of the trust nor the fiduciary obligations owed by the trustee is capable of making the object of a power of appointment into a 'beneficial owner' of the subject matter of the trust. The right of an object to take legal proceedings to prevent a disposal of income or capital by the trustee to persons outside the designated object does not involve the assertion of a proprietary right by the object and does not require the conclusion that the object has a proprietary interest in particular assets within the fund or is a 'beneficial owner' of such assets". (See also R&I Bank of Western Australia Ltd v Anchorage Investments Pty Ltd (1993) 10 WAR 59 at 79-80 per Owen J.)


case_title: R&I Bank of Western Australia Ltd v Anchorage Investments Pty Ltd (1993) 10 WAR 59


case_text: is nothing in the reasoning of French J in Australian Securities and Investments Commission v Carey (No 6) [2006] FCA 814 ; (2006) 153 FCR 509 which doubts these principles in relation to the nature of interests in or under a discretionary trust. French J was concerned with the content and extent of a contingent interest for the purposes of s 9 of the Corporations Act 2001 (Cth). My conclusion is that on 30 May 2007 the transactions which occurred on that day did not trigger the pre-emptive provisions in cl 5.1 of the Shareholders Agreement. Nor were these provisions triggered by any action of ARC Strang subsequent to 23 November 2006 and up to and including 30 May 2007. There has been no contravention by ARC Strang of cl 5.1 of the Shareholders Agreement or a failure by it to observe the pre-emptive provisions of that clause. It follows that the application by the applicants should be dismissed with costs. I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg . Associate: Dated: 9 April 2008 Counsel for the Applicants: J W S Peters S.C. and D J Crennan Solicitor for the Applicants: Minter Ellison Counsel for the Respondents: N Mukhtar QC and P D Crutchfield Solicitor for the Respondents: Clayton Utz Date of Hearing: 7 and 8 February 2008 Date of Judgment: 9 April 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/461.html


case_text: Safeguard Industrial Investments Ltd v National Westminster Bank (supra) the Court was concerned to construe an article of association of a company which provided that: "A member shall not be entitled to transfer an ordinary share except ... in accordance with the following provisions: (a) ... (b) Except where the transfer made is pursuant to article 8 hereof, in order to ascertain whether any member is willing to purchase an ordinary share, the proposing transferor shall give notice in writing (hereinafter called 'the transfer notice') to the company that he desires to transfer the same. ..." The Court held that "transfer" in this article meant a transfer of the legal interest in the shares and did not refer to the transfer of the beneficial interest in the shares. Vinelott J said at 297-298: "A 'transfer of a share' in the ordinary sense of that expression is a transfer of the legal title to the share with the rights and liabilities attaching to it; on registration of the transfer the transferor ceases to be and the transferee becomes a member of the company in right of that share. A member who desires to transfer a share will carry his intention into effect by executing a transfer and lodging it for registration. At that stage the restrictions in the pre-emption provisions come into operation. To treat the references to the transfer of a share as comprehending a transfer or disposition of a beneficial interest in a share is to give the expression 'transfer of a share' a meaning wider than it would ordinarily bear. ..." Vinelott J's reasoning was upheld by the Court of Appeal: Safeguard Industrial Investments Ltd v National Westminster Bank [1982] 1 WLR 589 at 598-599. It was also accepted by the Queensland Court of Appeal in Reef & Rainforest Travel Pty Ltd v Commissioner of Stamp Duties [2002] Qd R 683 at 688.


case_text: 31A of the Federal Court of Australia Act 1976 (Cth) introduced what might be described as a slightly more exclusionary rule of access to contested trial proceedings than previously obtained under General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 and the earlier authority of Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 in respect of claims made or defences propounded in such a proceeding where the Court is satisfied that the relevant party has no reasonable prospect of successfully maintaining a particular claim or defence whether as to a part only or the entirety of the proceeding.


case_title: Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62


case_title: Swain v Hillman [2001] All ER 91

case_text: respondent says that Mrs Vranic's contention as to the question of construction is so lacking in merit or substance as to be not fairly arguable and the phrase "no reasonable prospect of successfully" prosecuting or defending the proceeding (or that part of the proceeding) should be accorded the same construction as that described by Lord Woolf in Swain v Hillman [2001] All ER 91 in respect of the phrase "no real prospect of successfully", as directing the Court to "the need to see whether there is a 'realistic' as opposed to a 'fanciful' prospect of success". For the purposes of s 31A, a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success (s 31A(3)).


case_title: Hocking v Bell (1947) 75 CLR 125

case_text: this application, there are no contested questions of fact which might be resolved one way or the other so as to enable one side or the other to succeed in the sense contemplated in Hocking v Bell (1947) 75 CLR 125 , which influenced the approach to s 31A by Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352. Finkelstein J in Jefferson Ford v Ford Motor Co of Australia Ltd [2008] FCAFC 60 ; (2008) 246 ALR 465 took the view that the test of reasonable prospect of success was a less stringent test than that proposed by Rares J in Boston Commercial . Plainly, the Court must be cautious not to do Mrs Vranic an injustice by summarily dismissing or foreclosing the proceeding. However, the question is whether as a matter of substance rather than form ( White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298 per Lindgren J) Mrs Vranic's construction has no reasonable prospect of success.


case_title: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352


case_title: Jefferson Ford v Ford Motor Co of Australia Ltd [2008] FCAFC 60 ; (2008) 246 ALR 465


case_title: White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298


case_text: a case such as the present where the question to be decided is a question of law, the Court must determine whether the argument advanced by Mrs Vranic is "sufficiently strong to warrant the matter going to trial" ( Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2008] FCA 1257 per Emmett J at [28]; Spencer v Commonwealth of Australia [2008] FCA 1256 per Emmett J; and McAleer v The University of Western Australia (No 3) [2008] FCA 1490 per Siopis J).


case_title: Spencer v Commonwealth of Australia [2008] FCA 1256


case_title: McAleer v The University of Western Australia (No 3) [2008] FCA 1490


case_text: the interests of justice are not served by making such a reference as I am satisfied that Mrs Vranic's contention has no serious prospect of succeeding and thus her proceeding would be dismissed. The interests of justice are not served by requiring the matter to proceed to trial and requiring the respondent to prepare an appeal record, retain solicitors on the hearing and brief counsel on the trial, when the costs incurred in doing so represent, in a real sense, public money. The amount in issue is approximately $910.00 and Mrs Vranic has no reasonable prospect of success in the proceeding. There is no prospect of the respondent's costs of the hearing of an appeal being paid by the applicant having regard to unsatisfied orders for costs made against Mrs Vranic in other Federal Court proceedings. (See Vranic v Chief Executive Officer, Centrelink [2004] FCA 992 and Vranic v Chief Executive Officer, Centrelink [2004] FCA 1511).


case_title: Vranic v Chief Executive Officer, Centrelink [2004] FCA 1511


case_outcome: applied

case_text: In the affidavit sworn by the applicant on 11 September 2008 and filed in support of his Application, the sole ground relied upon by the applicant for setting aside the Bankruptcy Notice was that he had a " counter-claim, set off or cross demand equal to or exceeding the amount in the Bankruptcy Notice " which he could not have set up in the original proceedings. The " original proceedings " in the present case are the Common Law proceedings in the Supreme Court of New South Wales in which the judgment for $4,794.75 was obtained (see Glew v Harrowell of Hunt & Hunt Lawyers [2003] FCA 373 ; (2003) 198 ALR 331 at [3] (p 332)). 9 In handwriting, in par 2 of the applicant's affidavit, the applicant set out the following particulars of that ground: Pinata Pty Ltd paid William James Hamilton an amount of $28000 for conducting its Administration and amount of over $25000 in 1996 for a progress payment to him as a Joint Receiver of the Pinata Pty Ltd and Partners Partnership under a Deed of Dissolution and Appointment of Receivers in which William James Hamilton should be disentitled to receive no remuneration because of his acts of wilful neglect and wilful default under Ch 6.3 of the Deed of Dissolution and Appointment of Receivers. Further details of the acts of wilful neglect and wilful default are set out in the accompanying Notice of Motion filed in the Supreme Court of NSW Equity Division on 1 Aug 06 and its annexed affidavit which is attached or accompanying this Notice to Respondent. 10 The applicant attached to his affidavit a copy of the Notice of Motion referred to in par 2 of his affidavit, being a Notice of Motion filed by him on 1 August 2006 in Supreme Court Proceedings No 3346 of 2001 between Pinata Pty Limited, as plaintiff, and the present respondent, as first defendant (" the Supreme Court proceedings "). The other defendant parties to the Supreme Court proceedings, in the order in which they were named in those proceedings, were: Robert Peter Leigo Yvonne Lesley Leigo Geoffrey Naunton Davies Kerrie Joy Davies Neill Robert Leigo Bryce Geoffrey Lyle Killen (the present applicant) 30 Subsection 40(1)(g) of the Act has been considered in many authorities over the years. A useful summary of the relevant principles is found in the judgment of Lindgren J in Glew [2003] FCA 373 ; 198 ALR 331 at [8] to [12] (333 334). I will not set out in these Reasons for Judgment what his Honour said in those paragraphs but I do accept the statements made by his Honour as correct statements of principle and I propose to apply them in the present case. 31 Before doing so, I will rule on the admissibility of the material tendered by the applicant. 32 Many objections were taken to the material on behalf of the respondent. I should say that most of the objections were well taken. Some concerned the fragmented nature of the material. Some were objections as to form and others were taken on the basis that the material was irrelevant. The respondent's Notice of Objections may be found in the Court file.


case_text: The statements in the affidavits of Mr Pearson and Mr Owbridge walk a very fine line between the maintenance of confidentiality in the legal advice and implied assertions that are inconsistent with it: Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1 at [29] ; Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341 at [52] .


case_title: DSE (Holdings) Pty Ltd v Intertan [2003] FCA 384 ; (2003) 127 FCR 499

case_text: The question of whether the content has been put in issue or deployed lies at the heart of the principle of waiver. I am not satisfied that the assertions necessarily lay open the content of the confidential communications to scrutiny: DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384 ; (2003) 127 FCR 499 at [58] . 20 It follows that the motion must be dismissed. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 4 April 2008 Counsel for the Applicant: S Gageler SC with M Darke Solicitor for the Applicant: Clayton Utz Counsel for the Respondent: T Howe QC with R A Dick Solicitor for the Respondent: Australian Government Solicitor Date of Judgment: 4 April 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/449.html


case_title: Mann v Carnell (1999) 201 CLR


case_text: said that, based on the material that was before me, I am impelled to the view that the answer to the issue reflected in the question posed in the notice of motion is attended with sufficient doubt that, if it were the subject of separate decision prior to the determination of other issues, the strong likelihood is that the unsuccessful party would appeal. Contrary to the submission of the Institute referred to in [19] above, that is a factor which I am entitled to take into account. The possibility that '... the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the Court and undesirable fragmentation of the proceedings ...' was certainly a factor taken into account by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7(5)(c)] . The experience of French J is echoed in the observations of Einstein J in Idoport at [6]: 'The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings ...' In my view, the proposition embodied in the last sentence of the extract from his Honour's reasons should be the guiding criterion, namely, that '... it must be possible to clearly see that [the separate determination of an issue] will facilitate the quicker and cheaper resolution of the proceedings ...' (emphasis added), before one departs from the usual course of determining all issues at the one time. Adopting that criterion, for the reasons that follow, I am not satisfied that there should be separate determination of the issue reflected in the question posed in the notice of motion, as amended with leave on the hearing of the motion. In my view, it is far from clear that there will not be an overlap of issues and witnesses as between the threshold issue sought to be separated whether the conduct of the respondents in making the media releases or any representation that may be conveyed by either release is conduct in trade or commerce and what has been described as the merits issue whether such conduct was misleading or deceptive and/or be likely to mislead and/or deceive in contravention of s 52 of the TPA. Resolution of these issues is infected with questions of fact as well as questions of law. That, in itself, would not be decisive against separation of the kind sought, but the very nature of the questions of fact, in particular the truth or falsity of the representations actually conveyed by the media releases (as distinct from those pleaded) suggests that there will be overlap between the two issues.


case_text: Honour further observed (at [8]) that the principles that govern the circumstances in which an order will be made under O 29 r 2 are relatively well established and she summarised them in a fashion which I gratefully adopt: '(a) the term "question" in O 29 r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an "issue" and a "question" is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an "issue", and less decisive matters of dispute being "questions" ( Landsal Pty Ltd (in liq) v REI Building Society (1993) 41 FCR 421 at 425; 113 ALR 643 at 647); (b) a question can be the subject of an order for a separate decision under O 29 r 2 even though a decision on such a question will not determine any of the parties' rights ( Landsal Pty Ltd (in liq) v REI Building Society at FCR 245; ALR 647); (c) however, the judicial determination of a question under O 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties ( Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; 161 ALR 399; [1999] HCA 9 at [45] ); (d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined ( Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1969] UKHL 3 ; [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at [53]); (e) care must be taken in utilising the procedure provided for in O 29 r 1 to avoid the determination of issues not "ripe" for separate and preliminary determination. An issue may not be "ripe" for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved ( CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 per Kirby P at 606); (f) factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may (i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or (ii) contribute to the settlement of the litigation ( CBS Productions Pty Ltd v O'Neill per Kirby P at 607); (g) factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may - (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial ( GMB Research & Development Pty Ltd v Commonwealth [1997] FCA 934 ; (ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding: GMB Research & Development Pty Ltd v Commonwealth ; Arnold v Attorney-General (Vic) (unreported, Fed C of A, Sundberg J, Nos VG 629-37 of 1995, 8 September 1995, BC9502745). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or (iii) prolong rather than shorten the litigation ( GMB Research & Development Pty Ltd v Commonwealth ).' As French J observed in Olbers Co Ltd v Commonwealth of Australia (No. 3) [2003] FCA 651 at [8] : 'The overarching consideration informing the discretion to make an order under O 29 r 2 is efficient case management.' The Institute made the following submissions in support of its motion: (1) The conduct complained of by David Jones was not, on the Institute's part, conduct in trade or commerce for various reasons including that the media release and the further media release were not made for any business purposes of the Institute or Dr Hamilton but for the public benefit and to engender, participate in and foster public debate with the ultimate aim of, as suggested in the Discussion Paper, instigating improvements to the regulatory system for marketing and advertising of this kind. (2) An answer favourable to the Institute on the issue of whether its conduct is in trade or commerce would be a complete answer to David Jones' case; and (3) The evidence on the threshold issue of whether the conduct of the Institute complained of is in trade or commerce is discrete and totally, or almost totally, quarantined from the merits issues whether the conduct was misleading or deceptive and whether there was any contravention of the TPA. In furtherance of the submission in [16](3) above, the Institute submitted that the expert evidence in this case is entirely limited to the merits issues whether or not the conduct engaged in was misleading or deceptive and that apart from some accounting evidence, there is no expert evidence that could be called or would be helpful to the issue of whether the Institute or Dr Hamilton engaged in trade or commerce. This is why, the submission went, there is the potential for such an enormous cost saving and saving of court time because the contravention issues involve a very wide range of expert evidence, the nature of which is outlined in Ex. 2. It was submitted on behalf of the Institute that if there was an issue of credit, it might go to, for example, the sort of business the Institute is engaged in and the extent to which the discussion papers were published for a commercial purpose. Such credit issues would not be significant; they are not expected to overlap with the same issue on the merits part of the case; it is not expected that the same lay witnesses who would be called on the question of the business activities of the Institute would also be giving evidence about the nature of the advertising or the nature of the conduct engaged in by David Jones. Finally, the Institute submitted that, if there was a separate issue ordered and decided, the fact that it might generate an appeal was not a relevant factor. As to the possibility that the resolution of the question posed in a particular way would dispose of the proceedings or significantly shorten them with an attendant saving in time and money, one is reminded of what French J said in Olbers at [31]: '... any prophesied economies are to be balanced against the fragmentation of the trial of the issue. Experience in the courts over many years has demonstrated that fragmentation of proceedings rarely result in any saving of time in the long run and that projections as to costs savings are likely at best to be speculative.'


case_text: Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 Branson J observed that the authorities show that O 29 r 2 has been relied on to support the making of orders that have modified the ordinary or general rule in the following way (at [7]): '(a) by requiring that certain questions, formulated by the order, be decided separately from (and presumably, before) any other questions in the proceeding on the basis of a special case stated in accordance with O 50 r 1 (see, for example, Chippendale Printing Co Pty Ltd v Commonwealth (1995) 17 ACSR 328); (b) by requiring the determination of a preliminary issue of law in circumstances in which it was unnecessary for any facts to be stated or evidence to be adduced (see, for example, Blurton v Minister for Aboriginal Affairs (1991) 29 FCR 442; 101 ALR 350); (c) by requiring the determination of certain preliminary questions of law as to the competence of the case of the applicant on the basis of certain agreed facts (see, for example, Pritchard v Racecage Pty Ltd (1996) 64 FCR 96; 135 ALR 717 and on appeal, (1997) 72 FCR 203; 142 ALR 527; South Pacific Air Motive Pty Ltd v Magnus (1998) 87 FCR 301; 157 ALR 443); (d) by requiring the separate trial "as a preliminary issue" of certain of the claims made by the applicant (see, for example, Comite Interprofessionnel des Vins des Cotes de Provence v Bryce (1996) 69 FCR 450); (e) by requiring that the question of the respondents' liability be tried separately, and that any question as to the quantum of any damages to be paid by the respondents, or any of them, to the applicants, or as to the taking of any account of the respondents' profits, be tried separately and at a dated to be fixed after the determination of the question of liability (see, for example, Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1985) 10 FCR 567; 75 ALR 601).'


case_text: all issues of fact and law in a proceeding will be determined at the one time by the Court following a trial. As was said (by Giles CJ in Comm Div) in Tallglen Pty Ltd & Anor v Pay TV Holdings Pty Ltd & Ors (1996) 22 ACSR 130 in relation to Part 31 r 2 of the (NSW) Supreme Court Rules (the equivalent of O 29 r 2(a) of this Court's rules) (at 141 142): 'In the ordinary course all issues in proceedings should be decided at the one time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expenses and hardship greater than that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties' dispute.'


case_text: Jones, in opposing the motion, made the following submissions: (1) In summary, it submitted that none of the criteria for making an order for the determination of a separate question are satisfied there will be overlap of both witnesses and issues. Senior Counsel for David Jones submitted that the only case of which he was aware in which the trade or commerce issue had been separately 'hived off' is Village Building Co Ltd v Canberra International Airport Pty Ltd [2003] FCA 1195 and he observed that there were two critical factors in that case: first, his Honour had already determined to hive off the question as to whether or not one of the parties was carrying on business; and second, Village, ostensibly the opposing party, did not, his Honour recorded, positively oppose the application; moreover, he submitted, nobody suggested there would be significant overlap of witnesses or issues. So that case is no guide to the present case. (2) Turning to the pleadings, the allegation in para 4 that the Institute carries on a business that is denied in the course of which it conducts research and analysis for the purpose of reward that is admitted albeit with an additional qualification. It is clear that the Institute makes available its research and paper provision services for reward to non-government and private enterprises. Additionally, its recent accounts show it earned some $35,000 of income from that activity. (3) There is no attack by David Jones on the publication of the Discussion Paper. These proceedings do not seek to restrain the publication of discussion papers but, fundamentally, the allegation is that the media release, having regard to its terms and the context in which it was issued, was issued for the purpose of, or for purposes which include, promoting the sale of the very paper which it publicised and promoting the Institute generally, including its services which are available for reward and promoting donations and sales of other books. (4) If the Institute is selling the Discussion Paper and makes a media release for the purpose of publicising that Discussion Paper, the proposition that a statement made in that media release is beyond all notions of trade or commerce is one with which David Jones cannot agree. There is a plain trading transaction which takes place when the Institute sells the Discussion Paper. The nature of the conduct engaged in is something which is critical in considering whether or not the conduct is in trade or commerce. (5) A company which has charitable objects may still engage in trade or commerce. For example, that company may lease premises; in the leasing transaction it may make a representation that it can afford to pay rent of 'x' dollars. If that is a misleading representation, it cannot be said that that conduct is not in trade or commerce. (6) David Jones disputes the Institute's pleading that the media release was issued in the course of addressing issues with a view to promoting an ultimate change in the law, by informing the community of these issues and to promote public debate amongst law makers and legislators. David Jones submits that the purpose of the inclusion of the David Jones name in the media release was to give the media release 'legs' and attract publicity. Effectively accusing David Jones of being a corporate paedophile, without even the explanation of what that means, which appears in the Discussion Paper but not in the media release, causes all the sting and all the connotations of that combination of words to be associated with the name David Jones. On the other hand, in the Discussion Paper, which contains the explanation and the serious allegations about various companies, David Jones is not mentioned. Only in the annexures are there references, with respect to two photographs, to David Jones, in the context of 'possible mild' sexualisation or 'implicit alleged sexualisation'. This is not within a 'bull's roar' of the content of the allegations made in the media release. (7) In distinguishing between conduct in trade or commerce and fair, genuine, academic debate about a serious issue, it is important to know whether the representations David Jones allegedly made are true or false. If they are false, then the conclusion that the media release was a 'publicity stunt' for the purpose of promoting the Institute can be more easily reached a conclusion which tends to foreclose a finding that the relevant conduct was fair, genuine academic debate. (8) The analysis which the Institute says should be confined to the liability issue is the very matter David Jones wants to rely upon, among other matters, in relation to the threshold issue sought to be separated. That the statements in the media release were made in academic debate is open to challenge. When the gravity of the representations in the media release are compared to the absence of any statement in the Discussion Paper referencing the conduct of David Jones, the contrast is 'breath-taking'. That is a very good guide it does not have to be determinative, but a good guide to support David Jones' position that this is all about publicity. If it is all about publicity it is hardly about engaging in active debate and more likely to be regarded as an attempt to use the media to promote the goods and services which the Institute is offering. (9) David Jones' first proposition is encapsulated this way: that one cannot determine whether conduct was in trade or commerce without determining whether the relevant conduct includes the making of the representations alleged. In other words, the separate question is sought to be dealt with in a vacuum so far as the representations are concerned, and David Jones submits that is inappropriate. (10) Second, the order sought on the motion is that the question, to be decided separately from and in advance of the hearing of the other issues in the proceedings, is whether the conduct of the first respondent in making the media releases complained of was conduct in trade or commerce. That is language which attracts the claim in para 11 of the statement of claim (see [5] above); it does not deal with para 12 thereof (see [5] above) and hence will not resolve all the issues in the proceedings anyway. Senior Counsel for the Institute subsequently sought leave to amend the terms of the separate question for decision in the notice of motion to include the words 'or any representation that may be conveyed by either release' after the words "statement of claim' and to amend para 18 of the Institute's amended defence by the inclusion of the words 'nor any representation that may be conveyed by either release', after the words 'Further Media Release'. I granted such leave. (11) Third, even if the separate question was to address para 12 of the statement of claim, David Jones submits that the threshold issue sought to be separated cannot be determined without resolving the dispute as to the content of the representations. David Jones submits that the very character of the representations informs the question of whether or not they constituted conduct with a commercial or trading end or were simply or merely fair and open debate about a serious issue; and that interrelation which David Jones wants to pray in aid is prayed in aid by the respondents themselves in para 18 of the further amended defence. (12) Fourth, and again this draws on arguments already outlined, the truth or falsity of the representations will inform the question as to whether the representations which were made were conduct in trade or commerce; demonstrating the absence of support in the Discussion Paper for the content of the representations pleaded will support the conclusion that the representations were for publicity purposes and not part of rational debate. (13) Dr Hamilton is the second respondent; he is also the Executive Director of the Institute. It is probable that he will give evidence on the trade and commerce issue. It is probable that his evidence would also be relevant to the question of whether or not the statements he made were mere expressions of opinion. He will be cross-examined if he gives evidence to say they were not; in David Jones' submissions nobody could have those opinions having regard to the relevant material, that is, the Discussion Paper. If he says to the contrary, it will be suggested to him that he is not telling the truth and there will be a credit issue. If he is giving evidence on the trade and commerce issue, it will be suggested to him, contrary to any evidence he may give to the case being put, that the media release and representations are not part of a serious discussion, that no rational person could say there is any support for them in the Discussion Paper. He will be cross-examined about that and if he does not agree with that proposition, his evidence will be contested. (14) The Institute's submission that expert evidence is likely to be called as to whether anyone is likely to be misled by the representations, or whether they are recognised as part of a public debate, itself recognises the inevitable overlap even on the expert evidence; the public debate point is the Institute's trade or commerce point. The Howie evidence (Exs. 1 and 2) indicates that there is going to be a lay witness on trade or commerce. One cannot exclude the possibility it will be the same witness, or other lay witnesses, dealing with the questions relating to liability, and that is likely, and the likely candidate, one would imagine, would be Dr Hamilton. For the reasons already indicated his credit will be called into question on both issues. His evidence is relevant to both, and there is an interrelationship between the evidence on which he can be cross-examined, whether he gives the evidence in chief or not, it cannot be disentangled. (15) David Jones will be relying on the heading 'Corporate Paedophilia' as part of the context in which the representation should be found. The Institute will wish to diffuse that by saying that would be understood in the scientific way in which it is discussed in the Discussion Paper. The Discussion Paper is not part of the media release. If that was sought to be made out, there would have to be evidence about that. (16) Other difficulties in relation to the separate question, by reason of the issues, arise. If somebody called on the trade or commerce issue is cross-examined in the way suggested, and your Honour takes a view of that person's credit and David Jones wins the trade or commerce issue, the likelihood is your Honour will not be able to hear the rest of the case. That is inefficient. That is one of the key considerations, the cases say, that should be taken into account. (17) David Jones also says it is a factor to be taken into account that this bifurcation process can result in appeals. So the decision can go either way. One party appeals. And if there is a successful appeal it has to come back to your Honour. Or if your Honour is permitted to do the rest of it subject to the credit findings and if it was a case, for example, that the rest of the case has to be heard, the whole process is delayed. That is just one of the examples as to why there are general warnings against splitting of cases. (18) One should add that obviously David Jones is not here to debate the question as to whether the Institute's conduct was in trade or commerce. But the proposition that a company has altruistic motives is not determinative of whether or not its conduct is in trade or commerce. Although some of the arguments from both sides went to the merits or otherwise of the issue reflected in the question posed in the notice of motion, evident from the submission referred to in [20](18) above, this is not the occasion on which to elaborate on that issue. The issue now before the Court is whether the question identified in the motion, as amended with the leave of the Court, if resolved one way, would dispose of the proceedings or significantly shorten them with an attendant saving in time and money.


case_text: There is a dispute as to the reach of the similar provision to s 12CA(1) contained in s 51AA of the Trade Practices Act 1974 (Cth): see Australian Competition and Consumer Commission v Berbatis Holdings Pty Limited [2003] HCA 18 ; (2003) 214 CLR 51 at [5] [7] per Gleeson CJ, at [38] [46] per Gummow and Hayne JJ, at [75] [77] per Kirby J, at [160] per Callinan J. 465 I do not need to enter this debate because the claim depends upon ASIC establishing that Citigroup was under a fiduciary duty to Toll, which it breached by failure to avoid the five alleged conflicts of interest. The claim fails for the reasons given above. 466 The first insider trading claim is that Citigroup, through Mr Manchee, sold 192,352 shares in Patrick, at or shortly after 3:37pm on 19 August 2005 while in possession of inside information. The inside information is said to be a supposition made by Mr Manchee at about 3:30pm during the 'cigarette on the pavement conversation' with Mr Darwell, that Citigroup was acting for Toll in relation to the takeover of Patrick: see Further Amended Statement of Claim [143] [150].


case_text: The findings of Santow J on this question were unaffected by the decision of the Court of Appeal: see Adler v ASIC [2003] NSWCA 131 ; (2003) 46 ACSR 504 per Mason P, Beazley and Giles JJA.


case_text: A fiduciary relationship arises between a financial adviser and its client where the adviser holds itself out as an expert on financial matters and undertakes to perform a financial advisory role for the client: see Daly v The Sydney Stock Exchange Limited [1986] HCA 25 ; (1986) 160 CLR 371 at 377 per Gibbs CJ, 385 per Brennan J; Aequitas v Sparad No 100 Limited (formerly Australian European Finance Corporation Limited) (2001) 19 ACLC 1006 at [307] per Austin J. 284 The same principle will usually apply to financial advisers and corporate advisers. Each will owe fiduciary obligations to the client because each undertakes to act in the client's interests and not solely in its own interests: see Aequitas at [310] per Austin J. This is consistent with the principle stated by Mason J in Hospital Products at 96-97. 286 Vulnerability of the client is one of the indicia of the fiduciary relationship. But this would appear to flow from the special opportunity of the adviser to abuse the expectation of loyalty: see Breen v Williams at 134 per Gummow J; Aequitas at [313] per Austin J; cf News Limited at 541 per Lockhart, von Doussa and Sackville JJ; Hospital Products at 97 per Mason J. 325 It is true, as is shown by Daly, Hadid and Aequitas , that an adviser may have fiduciary obligations to the client. But for the express terms of the mandate letter, the pre-contract dealings between Citigroup and Toll would have pointed strongly toward the existence of a fiduciary relationship in Citigroup's role as an adviser. 326 I have set out the pre-contract dealings in some detail because they were referred to by Mr Walker and they contain all of the indicia of a fiduciary relationship of adviser and client. 327 In summary, Citigroup gave Toll advice as to the wisdom and merits of making a bid for Patrick. Citigroup gave strategic advice which involved the use of its financial acumen, judgment and expertise to further Toll's interests. Citigroup worked closely with Toll as is evidenced by the presentations made before the execution of the mandate, as well as the large number of communications between them, both oral and by email. 330 There were substantial negotiations as to the fees payable to Citigroup, and Citigroup ultimately secured success fees in the range of AUD$10 million to AUD$18 million. Fees of that order are testimony in themselves to a finding that Citigroup held itself out as an expert adviser on mergers and acquisitions, which points to the existence of a fiduciary relationship: see Daly at 377 per Gibbs CJ, 385 per Brennan J; Aequitas at [307], [310] per Austin J. 375 There is force in Citigroup's submission that Australian law does not recognise a fiduciary duty to make full disclosure. The strong weight of judicial authority is that fiduciary duties are proscriptive rather than prescriptive; accordingly, a fiduciary does not have a positive duty to disclose information: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer at [74] per McHugh, Gummow, Hayne and Callinan JJ; Aequitas at [283] [287] per Austin J; Dresna Pty Limited v Linknarf Management Services Pty Limited (In Liq) [2006] FCAFC 193 at [132] per Gyles J; P & V Industries Pty Limited v Porto (No 2) [2007] VSC 64 at [29] per Hollingworth J. 376 It may follow that Brennan J's observations in Daly are to be confined in the manner discussed by Austin J in Aequitas at [287]. ASIC asserted that Daly was referred to by the High Court in Pilmer without disapproval at [70]; but I do not consider that their Honours' remarks amounted to a clear acceptance of the reasoning of Brennan J. However I do not need to consider this question because in my view the claim fails at a factual level.


case_text: The effect of the Australian and English authorities referred to above is that where a fiduciary relationship is said to be founded upon a contract, the ordinary rules of construction of contracts apply. Thus, whether a party is subject to fiduciary obligations, and the scope of any fiduciary duties, is to be determined by construing the contract as a whole in the light of the surrounding circumstances known to the parties and the purpose and object of the transaction: see Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 ; (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Lion Nathan Australia Pty Limited v Coopers Brewery Limited [2006] FCAFC 144 ; (2006) 156 FCR 1 at [46] per Weinberg J. The same approach applies to exclusion clauses: see Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82 ; (1986) 161 CLR 500 at 510 per Mason, Wilson, Brennan, Deane and Dawson JJ; Andar Transport Pty Limited v Brambles Limited [2004] HCA 28 ; (2004) 217 CLR 424 at [122] per Callinan J.


case_text: Citigroup has established Chinese walls between employees who work in the private side and the public side of its business. It is apparently now more common to describe these structures by the anodyne term "information barriers": see Asia Pacific Telecommunications Limited v Optus Networks Pty Limited [2007] NSWSC 350 at [4] . I prefer the traditional description, Chinese walls. 10 The issues which arise in the present proceedings raise, at least in part, the question of whether Citigroup's Chinese walls were adequate to prevent the flow of inside information from the private side to the public side. 11 The proceedings arise out of the purchase by a public side employee of over one million shares in Patrick Corporation Limited ('Patrick') at a time when private side employees working in the IBD were acting for Citigroup's client, Toll, on a proposed takeover bid for Patrick. The shares were purchased by a trader, Mr Andrew Manchee, who worked on the proprietary trading desk which is situated in Equity Derivatives, within the Equities Division. 321 A reminder that Chinese walls may sometimes be porous is to be found in the recent decision of Bergin J in Asia Pacific v Optus. 322 The authorities to which I have referred above at [276] [281] make it clear that the question of whether any fiduciary relationship existed between Citigroup and Toll is to be determined by the proper construction of the mandate letter.


case_text: The subject matter over which any fiduciary obligations will extend must be determined by the character of the venture or undertaking: see Birtchnell v The Equity Trustees, Executors and Agency Company Limited [1929] HCA 24 ; (1929) 42 CLR 384 at 408 per Dixon J; United Dominions v Brian at 13 per Mason, Brennan and Deane JJ; News Limited at 539 per Lockhart, von Doussa and Sackville JJ. This is to be ascertained from the terms of the agreement and the course of dealing between the parties: see News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Australian Breeders Co-operative Society Limited v Jones (1997) 150 ALR 488 at 514 per Wilcox and Lindgren JJ; Beach Petroleum NL v Kennedy [1999] NSWCA 408 ; (1999) 48 NSWLR 1 at [194] per Spigelman CJ, Sheller JA and Stein JA.


case_outcome: followed

case_text: The subject matter over which any fiduciary obligations will extend must be determined by the character of the venture or undertaking: see Birtchnell v The Equity Trustees, Executors and Agency Company Limited [1929] HCA 24 ; (1929) 42 CLR 384 at 408 per Dixon J; United Dominions v Brian at 13 per Mason, Brennan and Deane JJ; News Limited at 539 per Lockhart, von Doussa and Sackville JJ. This is to be ascertained from the terms of the agreement and the course of dealing between the parties: see News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Australian Breeders Co-operative Society Limited v Jones (1997) 150 ALR 488 at 514 per Wilcox and Lindgren JJ; Beach Petroleum NL v Kennedy [1999] NSWCA 408 ; (1999) 48 NSWLR 1 at [194] per Spigelman CJ, Sheller JA and Stein JA. 289 The distinguishing or over-riding duty of a fiduciary is the obligation of undivided loyalty: see Gibson Motorsport Merchandise Pty Limited v Forbes [2006] FCAFC 44 ; (2006) 149 FCR 569 at [11] per Finn J; Beach Petroleum at [201] per Spigelman CJ, Sheller JA and Stein JA; Bristol and West Building Society v Mothew [1998] Ch 1 at 18 per Millett LJ. 313 Further support may be found in the discussion of the authorities by the New South Wales Court of Appeal in Beach Petroleum at [199] [206] per Spigelman CJ, Sheller JA and Stein JA. The duty of a fiduciary is one of undivided loyalty. The "no conflict" rule is based on practical considerations and recognises that the fiduciary's over-riding duty may be swayed by a conflicting interest. The existence of a Chinese wall cannot, of itself, overcome the prohibition against a fiduciary acting at the same time both for and against the same client. Indeed, it exposes the vice to which Professor Finn referred. 314 However, as the UK Law Commission observed, a financial conglomerate may obtain protection against any allegation of breach of the duty of loyalty if the client consents to the company carrying on business using Chinese walls as part of its organisational structure. The extent of the duty of loyalty would then be determined according to the contractual arrangements between the parties: see Law Commission Consultation Paper at [4.5.1]. 335 It is true, as Frankfurter J said in Securities and Exchange Commission v Chenery Corporation 318 US 80 (1942) at 85, that "to say a man is a fiduciary only begins the analysis": see the citation in Beach Petroleum at [185] per Spigelman CJ, Sheller JA and Stein JA. But it is otherwise where the parties acknowledge that they are not in a fiduciary relationship. In my view, those words mean what they say and should be enforced accordingly, unless the mandate letter was vitiated as a matter of law. 365 Brickenden has been followed in this Court in CBA v Smith at 394 per Davies, Sheppard and Gummow JJ. It has also been followed and explained by the New South Wales Court of Appeal in Beach Petroleum at [435] [450] per Spigelman CJ, Sheller JA and Stein JA. 366 Their Honours said in Beach Petroleum at [444] that Brickenden is not authority for the general proposition that in no case involving breach of fiduciary duty may a court consider what would have happened if the duty had been performed. This is because Brickenden is now to be understood in light of the decision of the House of Lords in Target Holdings Limited v Redferns [1996] 1 AC 421. Their Lordships there said at 439 that causation is to be determined using commonsense and hindsight: see Beach Petroleum at [432] per Spigelman CJ, Sheller JA and Stein JA. I respectfully agree with the views of the Court of Appeal. 368 I do not need to decide the issue of causation. ASIC's submissions assumed, contrary to my finding, that Citigroup and Toll were in a fiduciary relationship. Whilst the issue of causation does not need to be determined, it seems to me that in light of the observations of the New South Wales Court of Appeal in Beach Petroleum , ASIC's submission that "the expectations, or inclination to give permission of the beneficiary Toll are irrelevant", should be rejected. 369 ASIC alleges five separate breaches of fiduciary duty by Citigroup. These claims fail because I have come to the view that Citigroup was not in a fiduciary relationship with Toll. Nevertheless, I will address each of the five alleged conflicts because there are other reasons why those claims would fail even if Citigroup did owe fiduciary duties to Toll. 370 I will deal with the five "conflicts" in the order in which they were pleaded. All of them are said to be conflicts of interest and duty.


case_title: Birtchnell v The Equity Trustees, Executors and Agency Company Limited [1929] HCA 24 ; (1929) 42 CLR 384


case_text: Citigroup's advice was given to Toll which was a person who was, or was "likely to become, an interested party" in Patrick: see Reg 7.1.29(3)(c)(i). In my view, in this context "likely" means a real and not remote chance: see for example Global Sportsman Pty Limited v Mirror Newspapers (1984) 2 FCR 82 at 87 per Bowen CJ, Lockhart and Fitzgerald JJ; Boughey v The Queen [1986] HCA 29 ; (1986) 161 CLR 10 at 21 per Mason, Wilson and Deane JJ. It seems to me that Toll's past record of success in takeover bids, its core competence in the field, and the planning and effort which went into this bid made it likely, even as at 8 August 2005, that Toll would become an interested party within the meaning stated in the authorities.


case_text: As Lord Upjohn said in Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606 at 637-638, there must be a "real conflict of duty and interest and not some theoretical or rhetorical conflict". 393 The fourth conflict, as pleaded at [79] [88] of the Further Amended Statement of Claim, is that it was in the interests of Toll that the price of Patrick shares not go up during trading on 19 August 2005. 394 By placing itself in this position of conflict, Citigroup is said to have breached its fiduciary duty to Toll. The claim fails because of the absence of a fiduciary relationship but I will deal with the other elements of the claim contained in the pleading.


case_text: As Gaudron and McHugh JJ observed in Breen v Williams [1995] HCA 63 ; (1996) 186 CLR 71 at 106, "Australian courts have consciously refrained from attempting to provide a general test for determining when persons [...] stand in a fiduciary relationship". It may be, as their Honours said, that the term "fiduciary relationship" defies definition. This is because of the difficulty of stating a comprehensive principle suitable for application to different types of relationships that carry different obligations: see Hospital Products at 69 per Gibbs CJ; News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 538 per Lockhart, von Doussa and Sackville JJ. 277 The observations of Gummow J in Breen v Williams at 132-133 are to the same effect. But his Honour also pointed out that a contractual term may be so precise in its regulation of what a party may do that there is no scope for the creation of a fiduciary duty. 278 It follows from these statements of principle that it is open to the parties to a contract to exclude or modify the operation of fiduciary duties. This was the view of the Law Commission Consultation Paper which was reached after a careful examination of the authorities: see at [3.3.12]. 286 Vulnerability of the client is one of the indicia of the fiduciary relationship. But this would appear to flow from the special opportunity of the adviser to abuse the expectation of loyalty: see Breen v Williams at 134 per Gummow J; Aequitas at [313] per Austin J; cf News Limited at 541 per Lockhart, von Doussa and Sackville JJ; Hospital Products at 97 per Mason J. 290 In Australia, the duty of loyalty is proscriptive rather than prescriptive in nature: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer v Duke Group Limited (In Liq) [2001] HCA 31 ; (2001) 207 CLR 165 at [74] per McHugh, Gummow, Hayne and Callinan JJ. 311 Indeed, this is a distinction which is recognised in s 912A(1)(aa) of the Corporations Act . It imposes a duty upon a financial services licensee to have in place adequate arrangements for "the management of conflicts of interest". The statutory requirement is to be contrasted with the duty in equity of a fiduciary to eliminate or avoid conflicts: see Breen v Williams at 108 per Gaudron and McHugh JJ. Of course, one way of managing conflicts would be to eliminate them but s 912A(1)(aa) does not require a licensee to take that step: see the discussion by Mr Tuch, 29 MULR at 514-515. 312 Support for the proposition that Chinese walls do not eliminate conflicts may be found in the Law Commission Consultation Paper . At [4.5.1], the UK Law Commission referred to a paper by Professor Finn, "Fiduciary Law and the Modern Commercial World", Norton Rose Oxford Law Colloquium (1991) at p 13. Professor Finn pointed out that the vice is not the possibility of misuse of confidential information but, rather the "compromising of a fiduciary's duty of loyalty." 375 There is force in Citigroup's submission that Australian law does not recognise a fiduciary duty to make full disclosure. The strong weight of judicial authority is that fiduciary duties are proscriptive rather than prescriptive; accordingly, a fiduciary does not have a positive duty to disclose information: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer at [74] per McHugh, Gummow, Hayne and Callinan JJ; Aequitas at [283] [287] per Austin J; Dresna Pty Limited v Linknarf Management Services Pty Limited (In Liq) [2006] FCAFC 193 at [132] per Gyles J; P & V Industries Pty Limited v Porto (No 2) [2007] VSC 64 at [29] per Hollingworth J.


case_text: The standard of proof of the claim is the balance of probabilities but I must take into account the gravity of the matters alleged: see s 140(2)(c) of the Evidence Act . This would appear to correspond with common law principles so that the well known test stated in Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 applies: see Heydon JD, Cross on Evidence (7 th ed, LexisNexis Butterworths, 2004) at [9130]; cf Odgers S, Uniform Evidence Law (7 th ed, LawBook Co, 2006) at [1.4.100]. 469 As stated above, Mr Manchee was one of five traders on the proprietary trading desk; he reported to Mr Darwell; his daily trading limit was AUD$10 million: see [53] [54] above. 470 Mr Manchee's evidence was that his trading style was to look at chart patterns and relative performance of stocks to look for trading ideas. I accept his evidence on this matter.


case_text: The distinguishing or over-riding duty of a fiduciary is the obligation of undivided loyalty: see Gibson Motorsport Merchandise Pty Limited v Forbes [2006] FCAFC 44 ; (2006) 149 FCR 569 at [11] per Finn J; Beach Petroleum at [201] per Spigelman CJ, Sheller JA and Stein JA; Bristol and West Building Society v Mothew [1998] Ch 1 at 18 per Millett LJ. 292 The nature of the fiduciary obligation is encapsulated in the following remarks of Millett LJ in Bristol and West Building Society v Mothew at 18: "The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary. As Dr. Finn pointed out in his classic work Fiduciary Obligations (1977), p. 2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary."


case_text: That view is supported by both Australian and English authority: see Chan v Zacharia [1984] HCA 36 ; (1984) 154 CLR 178 at 196 per Deane J; News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Noranda Australia Limited v Lachlan Resources NL (1988) 14 NSWLR 1 at 17 per Bryson J; Woolworths Limited v Kelly (1991) 22 NSWLR 189 at 225 per Mahoney JA; Kelly v Cooper [1993] AC 205 at 213-214 per Lord Browne-Wilkinson. See also Henderson v Merrett Syndicates Limited [1994] UKHL 5 ; [1995] 2 AC 145 at 206 per Lord Browne-Wilkinson. 291 This duty embodies "the twin themes" of preventing undisclosed conflict of duty and interest (or of duty and duty), and of prohibiting misuse of the fiduciary position: see Chan v Zacharia at 198-199 per Deane J; Gibson Motorsport at [12] per Finn J. 323 In Chan v Zacharia , Deane J said in plain terms at 196 that the parties to a partnership agreement could provide "that any fiduciary relationship between the partners was excluded." The observations of Mahoney JA in Woolworths v Kelly at [225] were to the same effect. His Honour said that fiduciary duties could be "varied or released" by contract. Also, in News Limited , a Full Court of this Court (Lockhart, von Doussa and Sackville JJ) said at 539 that whether there are any fiduciary obligations at all may depend on the terms of the contract.


case_text: ASIC called Mr Chatfield to give evidence but it chose not to lead any evidence from him on the relevance of the information. I can therefore infer that Mr Chatfield's evidence would not have assisted: see Commercial Union Assurance Company of Australia Limited v Ferrcom Pty Limited (1991) 22 NSWLR 389 at 418-419 per Handley JA. 385 The other person identified in the particulars, Mr Little, was not called by ASIC to give evidence. The plain inference is that his evidence would not have assisted. 386 The third conflict is said to have arisen because it was likely that the fact that Citigroup had acquired "such a substantial body of shares" would come to the notice of private side employees providing corporate advisory services, namely Mr Dempsey and his team, or to those providing investment banking services, namely Mr Bartels and his team, or their superiors, Mr Roberts and Mr Sinclair, or the Compliance department and in-house lawyers: see Further Amended Statement of Claim [75].


case_text: It is also important to bear in mind that, as is noted in Ford's Principles of Corporations Law at [8.020], the origin of the extended definition of "officer" is to be found in Parliament codifying, at least in part, the principles stated by Ormiston J in Commissioner for Corporate Affairs v Bracht [1989] VR 821. 489 In Bracht , Ormiston J considered the proper construction of s 227 of the Companies (Victoria) Code which prohibited a person who was bankrupt from taking part in the management of a corporation. His Honour considered at 830 that the concept of "management" comprehended: "activities which involve policy and decision-making, related to the business affairs of a corporation, affecting the corporation as a whole or a substantial part of that corporation, to the extent that the consequences of the formation of those policies or the making of those decisions may have some significant bearing on the financial standing of the corporation or the conduct of its affairs". 490 The language of subparagraphs (b)(i) and (b)(ii) of the definition of "officer" corresponds, in large measure, with Ormiston J's description of the concept of management. What emerges from this is that an officer is involved in policy making and decisions that affect the whole or a substantial part of the business of the corporation. 491 Moreover, this is reflected in the distinction drawn in the Corporations Act between officers and employees and it is supported by authorities that have considered the statutory definition. 496 It is true, of course, that the meaning of "officer" must be considered in its particular statutory context: see for example Bracht at 827-828 per Ormiston J. Duties of honesty, care and diligence are imposed on officers by ss 180 184 of the Corporations Act . But it seems to me that, if anything, this reinforces the view I have expressed as to the requirement that an officer occupy a management role. 497 In my view, Mr Manchee did not fall within either subparagraph (b)(i) or (b)(ii) of the definition of "officer". ASIC has not established that he had any involvement in policy making or decisions that affected the whole or a substantial part of the business of Citigroup. Mr Manchee was one of five proprietary traders employed by Citigroup. There was no evidence that anyone reported to him or that he had any responsibilities apart from proprietary trading. 498 The proprietary trading desk is one of four trading desks in the Equity Derivatives Division which is itself a subdivision of Equities, one of six divisions in the CIB. The CIB is one of Citigroup's three businesses. Mr Manchee's trading was subject to daily limits and to the direction of his risk manager, Mr Darwell.


case_text: The amendment was explained in [319] [320] of the Explanatory Memorandum to the Corporations Legislation Amendment Bill 1991 (Cth) as follows: "[319] Doubt was also expressed as to whether the term 'information' would be interpreted as encompassing supposition, intentions and other matter not sufficiently certain to require its release to the public, notwithstanding the broad interpretation given to the term in Commissioner for Corporate Affairs v Green [1978] VR 505 at 511. Proposed amendment [320] Proposed section 1002A(1) provides definitions of 'information' and 'securities', in relation to a body corporate, to apply for the purposes of the insider trading provisions. The definition of information is an inclusive one, with information being taken to include supposition and other matters insufficiently definite to warrant being made known to the public and matters relating to the intentions, or likely intentions, of a person." 534 It is also apparent that the new definition was to include in the concept of information, factual knowledge obtained by means of a hint or veiled suggestion from which the receiver of it can impute other knowledge: see Commissioner for Corporate Affairs v Green [1978] VR 505 at 511.


case_text: A person may be in a fiduciary relationship as to some aspects of the relationship but not others: see New Zealand Netherlands Society 'Oranje' Incorporated v Kuys [1973] 2 All ER 1222 at 1225-6 per Lord Wilberforce; see also Noranda Australia v Lachlan Resources at 15-17 per Bryson J. Thus, a bank which gives its customers financial advice in the course of a transaction that includes an advance of money to the client may be in a fiduciary relationship with the client in its role as adviser. The bank may be expected to act in its own interests in ensuring the security for the loan but it will undertake fiduciary obligations to the client if it creates an expectation that it will advise in the customer's interests on the wisdom of the investment: see Commonwealth Bank of Australia v Smith (1993) 42 FCR 390 at 391 per Davies, Sheppard and Gummow JJ. 293 A person occupying a fiduciary position will be absolved from liability for what would otherwise be a breach of duty by obtaining a fully informed consent: see CBA v Smith at 393 per Davies, Sheppard and Gummow JJ.


case_text: Nevertheless, warnings have been sounded in other authorities about the risk of leakage through Chinese walls. Thus, for example, Bryson J said in D & J Constructions Pty Limited v Head & ors trading as Clayton Utz (1987) 9 NSWLR 118 at 123: " ...it is not realistic to place reliance on such arrangements in relation to people with opportunities for daily contact over long periods, as wordless communication can take place inadvertently and without explicit expression, by attitudes, facial expression or even by avoiding people one is accustomed to see, even by people who sincerely intend to conform to control." 453 Nevertheless, having seen Mr Monaci in the witness box, it seems to me that the warning sounded by Bryson J in D & J Constructions is apt. That is to say, it is not always realistic to place reliance on arrangements comprising Chinese walls: see [320] above. 454 Adequate arrangements require more than a raft of written policies and procedures. They require a thorough understanding of the procedures by all employees and a willingness and ability to apply them to a host of possible conflicts. 455 Mr Monaci's entire statement was the result of reflection by him in hindsight which he did not take into account in the particular circumstances that arose on 19 August 2006. The 83 page statement was prepared for him in draft by his solicitors and adopted by him.


case_text: A fiduciary relationship arises between a financial adviser and its client where the adviser holds itself out as an expert on financial matters and undertakes to perform a financial advisory role for the client: see Daly v The Sydney Stock Exchange Limited [1986] HCA 25 ; (1986) 160 CLR 371 at 377 per Gibbs CJ, 385 per Brennan J; Aequitas v Sparad No 100 Limited (formerly Australian European Finance Corporation Limited) (2001) 19 ACLC 1006 at [307] per Austin J. 330 There were substantial negotiations as to the fees payable to Citigroup, and Citigroup ultimately secured success fees in the range of AUD$10 million to AUD$18 million. Fees of that order are testimony in themselves to a finding that Citigroup held itself out as an expert adviser on mergers and acquisitions, which points to the existence of a fiduciary relationship: see Daly at 377 per Gibbs CJ, 385 per Brennan J; Aequitas at [307], [310] per Austin J. 371 The first conflict is said to have arisen once Citigroup acquired its own interest in Patrick shares on 19 August 2005. Citigroup is then said to have had a fiduciary duty to disclose to Toll, as its adviser, all relevant knowledge in relation to decisions to be made by Toll about the bid. The duty is said to be based on the decision of the High Court in Daly , in particular the reasons of Brennan J at 385. 372 The duty of disclosure pleaded in the first conflict is said to be a duty to furnish Toll with all relevant knowledge possessed by Mr Bartels which may reasonably be regarded as relevant to the making of Toll's decision as to whether the premium for the bid should be marketed by reference to the closing price of Patrick shares on Friday, 19 August 2005 or the closing price on Thursday, 18 August 2005: see Further Amended Statement of Claim [59]. 373 It is then said that it was relevant for Toll, when making a decision as to how to market the bid, to know that the market activity in Patrick shares on 19 August 2005 "had been materially contributed to by Citigroup's own actions" in acquiring its stake in Patrick for the purpose of making profits for itself: see Further Amended Statement of Claim [60]. 376 It may follow that Brennan J's observations in Daly are to be confined in the manner discussed by Austin J in Aequitas at [287]. ASIC asserted that Daly was referred to by the High Court in Pilmer without disapproval at [70]; but I do not consider that their Honours' remarks amounted to a clear acceptance of the reasoning of Brennan J. However I do not need to consider this question because in my view the claim fails at a factual level. 379 The second conflict, as with the first, also raises the question of whether Australian law recognises the positive duty to furnish information consistently with that stated in Daly . 380 The second conflict is said to arise from the following knowledge, as at about 7pm on 19 August 2005, on the part of Messrs Roberts, Sinclair, Monaci and Scott: − that Mr Dempsey and the private side employees of Citigroup in the IBD who were assisting him, were advising Toll on the bid; − that Citigroup had acquired a substantial shareholding in Patrick on its own account on 19 August 2005; − that they were concerned about how the acquisition of Citigroup's stake would be perceived by Toll and by the market; − that there was a perception that Toll and the market might infer that Citigroup's Chinese walls had failed. 381 Citigroup is then said to have had a duty (through Messrs Roberts, Sinclair, Monaci and Scott) to inform Toll that it had engaged in substantial trading in Patrick shares on 19 August 2005. Thus Citigroup is said to have had a conflict of interest and duty: see Further Amended Statement of Claim [66], [70]. 461 Both counts of misleading or deceptive conduct are founded upon a fiduciary duty to disclose in accordance with Daly. The claims fail in the absence of any finding of fiduciary relationship between Citigroup and Toll and particularly my rejection of any Daly duty in the circumstances of the present case. 462 Section 12CA(1) of the ASIC Act prohibits conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law. 463 ASIC contends that by being in the five alleged positions of conflict, Citigroup breached its fiduciary duty to Toll and that each breach of fiduciary duty was unconscionable conduct within the meaning of the unwritten law of a State or Territory.


case_title: Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82 ; (1986) 161 CLR 500