case_text: I am fortified in my conclusion that there is no res judicata by the nature of the legislative scheme under which the NCC exercises its statutory duties. The NCC is not an ordinary litigant. It does not seek to vindicate its own private rights. Prima facie, duties conferred by statute are intended by Parliament to be exercised from time to time as occasion arises. See generally s 33(1) of the Acts Interpretation Act 1901 (Cth) and the well-known observations of Gummow J in Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 at 211 and 218-9. 125 It follows that Hamersley's claim of res judicata is not made out. 126 Hamersley next submitted, albeit tentatively, that the NCC was barred from dealing with the TPI application even if Kenny J's orders did not bear the interpretation for which it contended. 146 If a representation is to found an estoppel, it must be clear and unambiguous. See Legione v Hately [1983] HCA 11 ; (1983) 152 CLR 406 at 436 per Mason and Deane JJ and Minister for Immigration and Ethnic Affairs v Kurtovic . See also the cases discussed at footnotes 10 and 11 to [190-245] of Halsbury's .


case_outcome: cited

case_text: It may be that counsel had in mind some notion akin to abuse of process as the basis for this contention. If so, the argument fails. The doctrine of abuse of process, as distinct from various forms of proprietary estoppel, ordinarily operates as a shield rather than a sword. In addition, it is generally confined to curial proceedings and does not operate to prevent investigative or other like processes from being carried out. See generally Papazoglou v Republic of the Philippines (1997) 74 FCR 108 at 131-2. 128 I reject Hamersley's submission that some notion akin to abuse of process can be used to obtain prohibition or injunctive relief of the kind now sought. 129 Hamersley submits that Mr Brett's assurance to Kenny J that the NCC would abide by declaratory orders without the need for any permanent injunction to be granted gave rise to an undertaking to the Court from which the NCC should not now be permitted to resile.


case_text: Undertakings are often given to a court by one or more parties to a dispute. In many cases, the undertakings do not form part of any court order. Nonetheless, an undertaking has the same effect in law as an injunction. Breach of an undertaking is a contempt of court. Self-evidently, the principles that apply to interpreting court orders also apply to interpreting undertakings: S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358. 132 It is quite common when injunctive relief is sought against the Commonwealth for the court to inquire of its own motion whether an injunction is really necessary or whether an appropriate undertaking will be forthcoming. Typically, in such circumstances, undertakings are readily proffered. The need to grant injunctive relief is thereby avoided. 133 It is less common, though still not unusual, when declaratory and injunctive relief are sought against the Commonwealth for an assurance to be given that it will abide by any declaration and that no injunction is therefore necessary. In such cases, formal undertakings are not normally proffered. It is assumed that the Commonwealth will act in accordance with the law as declared by the Court. The Commonwealth is expected to act as a "model litigant". It is assumed that it will comply with the spirit as well as the letter of the law.


case_text: Hamersley submits that the central feature of an undertaking is nothing more than a commitment to perform a particular duty. It is not necessary for the word "undertake" to be used. Some undertakings are merely implied. See for example: Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 304. As with an injunction, the terms of an undertaking must be strictly observed: Lade & Co Pty Ltd v Black [2006] 2 Qd R 531 at [36].


case_title: Lade & Co Pty Ltd v Black [2006] 2 Qd R 531


case_text: Hamersley's submissions in this regard have some force. The indication by Kenny J that she would "accept" what was proffered on behalf of the NCC reflects the usual terminology employed by a court that accepts an undertaking from a party in lieu of an injunction. See Thomson Australian Holdings Proprietary Limited v The Trade Practices Commission [1981] HCA 48 ; (1981) 148 CLR 150 at 164. 139 Having given this matter careful consideration, I have concluded that Mr Brett's statements to Kenny J should not be regarded as amounting to a formal undertaking. The words that he used seem to me to have been casually expressed and spoken without any attention to formality. His "assurance" cannot properly be understood as constraining the NCC forever from entertaining any application made by a different applicant for a declaration recommendation in respect of what might have become a different service.


case_outcome: applied

case_text: At common law, an estoppel by representation arises only as a result of words or conduct reasonably likely to be understood as a representation of fact and not a mere expression of opinion. Moreover, the circumstances must be such that a reasonable person would accept the representation as an invitation to act upon it in a particular way. It must be causally linked to the decision of the party to whom it is made to act upon it to that party's detriment. See generally Commonwealth v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394. 148 Next, it might be thought that any representation embedded in that "assurance" involved a promise as to future conduct and not a statement as to an existing state of affairs: Legione v Hately ; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 398 per Mason CJ and Wilson J, at 415 per Brennan J, at 459 per Gaudron J; and Commonwealth v Verwayen at 499-500 per McHugh J. Of course, a statement as to whether a present intention exists may itself be a representation as to an existing fact. However, that is hardly a proper characterisation of Mr Brett's language.


case_text: If a representation is to found an estoppel, it must be clear and unambiguous. See Legione v Hately [1983] HCA 11 ; (1983) 152 CLR 406 at 436 per Mason and Deane JJ and Minister for Immigration and Ethnic Affairs v Kurtovic . See also the cases discussed at footnotes 10 and 11 to [190-245] of Halsbury's . 148 Next, it might be thought that any representation embedded in that "assurance" involved a promise as to future conduct and not a statement as to an existing state of affairs: Legione v Hately ; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 398 per Mason CJ and Wilson J, at 415 per Brennan J, at 459 per Gaudron J; and Commonwealth v Verwayen at 499-500 per McHugh J. Of course, a statement as to whether a present intention exists may itself be a representation as to an existing fact. However, that is hardly a proper characterisation of Mr Brett's language.


case_text: Next, it might be thought that any representation embedded in that "assurance" involved a promise as to future conduct and not a statement as to an existing state of affairs: Legione v Hately ; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 398 per Mason CJ and Wilson J, at 415 per Brennan J, at 459 per Gaudron J; and Commonwealth v Verwayen at 499-500 per McHugh J. Of course, a statement as to whether a present intention exists may itself be a representation as to an existing fact. However, that is hardly a proper characterisation of Mr Brett's language. 149 It is well recognised that statements as to future conduct may ground equitable estoppel. Equity will come to the aid of a party, who has acted to his or her detriment on the basis of some assumed state of affairs to which the other party to the transaction has contributed, if it would be unfair or unjust not to do so. There are, however, constraints upon the use of equitable estoppel. The applicant must prove that he or she assumed the existence of a particular legal relationship with the respondent, that the respondent induced that assumption, that the applicant acted or abstained from acting on the faith of that assumption, that the respondent knew of the applicant's action or intended the applicant to act in that way and that the applicant would suffer detriment if the assumption were not fulfilled. See Waltons Stores (Interstate) Ltd v Maher . 150 In effect, in order to establish equitable estoppel, it must be shown that it would be unconscionable for one party to resile from the assumed state of affairs on which the other party has relied. 151 In circumstances where it is uncertain as to the form that any permanent injunction might have taken, it is difficult to see how any assurance given by Mr Brett, expressed, it must be said, casually and in informal terms, can make it unconscionable for the NCC to go about performing its statutory duty. It must be remembered that Hamersley was represented by experienced and competent counsel at the time the assurance was given. It could have sought clarification of Mr Brett's remarks but did not do so. If, at the end of the day, Mr Brett had one thing in mind, and Ms Sloss something else, that is unfortunate. However, the test to be applied when determining whether something said by counsel gave rise to an undertaking must be the same as that to be adopted when construing judicial orders. That test is an objective, and not a subjective, one.


case_outcome: considered

case_text: In Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622 the High Court observed that a prima facie case is made out where, if the evidence remains as it is , there is a probability that at the trial of the action the plaintiff will succeed. How strong the probability needs to be depends upon the nature of the rights asserted and the likely practical consequences of the order for sales. 12 The protection afforded by a preservation order to an applicant is a substantial encroachment on the basic right and freedom of the respondent to deal with his or her property. Practice Note 23 emphasises this point when it states that the purpose of the order is to prevent abuse of process and not to provide security in respect of the judgment. The restraint must be regarded as an extraordinary remedy because it restricts the right to deal with property even before judgment. This level of interference confirms the necessity of the person seeking the freezing order to provide sufficient oral or documentary evidence of his or her prima facie case. The mere making of allegations in correspondence or the assertion of a case in a Statement of Claim is not of itself, in my view, sufficient to make out a good arguable case. This is especially so where, as in the present case, there is a denial of the allegations both in correspondence and in the pleaded Defence. 13 In my view, at the time of this application for an asset preservation order, sufficient evidence has not been adduced by the applicants to establish a prima facie case. There are serious shortcomings in that evidence which has been adduced. By way of illustration, there is no evidence that the works being performed on the hospital were "unauthorised" by the New South Wales Department of Health or the local Council. There is no evidence that the hospital did not comply with fire safety requirements or that they could not be lawfully and safely occupied. As to the questions of causation, there is no evidence of damage being suffered as a result of the work allegedly being unauthorised. Nor is there any evidence as to the feasibility or cost of reinstatement. These are matters central not only to the applicants' claim but also to any consideration of whether they have a prima facie case. In the absence of such evidence, the Court is left with only bare allegations in correspondence and the Statement of Claim, the general circumstances of the case, some relevant documents, and a chronology of events unassisted by any evidence from persons familiar with the facts. 14 The applicants seek to rely on the certificate given by their solicitor under s 347 of the Legal Profession Act 2004 (NSW) ("the Act ") to the effect that there are reasonable grounds for believing, on the basis of provable facts and a reasonably arguable view of the law, that the claim for damages in the proceeding has reasonable prospects of success. In my view, such a certificate does not advance the applicants' case for several reasons. First, the certifying solicitor is not able to give any evidence as to the factual basis for the allegations since the certificate is no doubt given on the basis of instructions by a client which are then used to formulate the allegations in the Statement of Claim. There is no indication of what claims were made by the solicitor as distinct from his or her client. Secondly, the certificate is directed to satisfying a minimum requirement for the filing of the claim in a court (see s 347(2) of the Act ) and not directed to establishing the soundness of the allegations. It is concerned to prevent the filing of hopeless, vexatious or scandalous accusations. Thirdly, the certificate cannot prove that facts alleged have occurred or that any opinion or evidence is sound it purports only to verify the facts alleged. 15 Accordingly, on the meagre material before me, I cannot find that there is sufficient evidence to constitute a prima facie case. In light of this conclusion, there is no need for me to consider at length whether there is a danger of the respondents disposing of or removing their assets so that a prospective judgment may not be fully satisfied. I only note that I am not satisfied that, in all the circumstances, there is any such danger in this case. Although an applicant for a freezing order need not go so far as to show that the respondent formulated a plan or expressly or impliedly threatened to dispose of its assets, it must at least adduce evidence showing an appreciable or real risk or danger that the respondent will do so. In my view, that threshold has not been met in the present case. In light of these conclusions, the application for the preservation order must fail. 16 The applicants' application for an asset preservation order is therefore dismissed with costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin J. Associate: Dated: 12 September 2007 Counsel for the Applicants: W G Muddle Solicitor for the Applicants: Bruce Stewart Dimarco Counsel for the Respondents: S Climpson Solicitor for the Respondents: Bull Son & Schmidt Date of Hearing: 4 September 2007 Date of Judgment: 12 September 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1410.html


case_text: The need for evidence to make out a prima facie case is illustrated by Patterson (1989) 18 NSWLR 319. In that case, Gleeson CJ at 321 referred to the need to establish a prima facie cause of action, and also noted at 322 that Giles J was satisfied, as the primary judge, that there was sufficient evidence to satisfy this first condition for grant of the remedy. Giles J only came to that conclusion after carefully considering the extensive and detailed evidence before him, which provided the necessary basis for his finding: see BTR Engineering (Australia) Ltd v Patterson (unreported Supreme Court of New South Wales, Giles J, 1 September 1989) at 3-5; see also Biscoe P, Mareva and Anton Piller orders: freezing and search orders (LexisNexis, 2005) at [2.60]-[2.61].


case_text: The nature of the remedy was described by Gleeson CJ in Patterson v BTR Engineering (Aust) Limited (1989) 18 NSWLR 319 at 321-322 in these terms: 'The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant's absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.' 5 The issues for determination on this application, therefore, are whether: (i) there is a prima facie cause of action made out against the respondents; (ii) there is a danger that by reason of the respondents disposing of or removing the assets the prospective judgment debt will not be satisfied; and (iii) if the forgoing requirements are each satisfied, the Court's discretion to grant the remedy should be exercised in all the circumstances. 6 The relationships between the parties, the nature of the main proceeding and the chronology and circumstances of the proceeding are set out by the respondents as follows: ' The parties 5. The First to Sixth and Eighth to Ninth Respondents are medical practitioners. The Seventh Respondent is a chartered accountant. They have at all material times been the Directors of Rosanza which owns the property at 12 Macdonald Street, Harbord, in its capacity as Trustee of the Peninsula Private Hospital Trust ("the Unit Trust"). They were previously directors of the Second Applicant (Peninsula Hospital Management Pty Limited) ("Peninsula") before the shares in Peninsula were sold to the First Applicant (KGL). Those Respondents are being sued by Peninsula for alleged breach of directors' duties to Peninsula. They may be conveniently referred to as "the Director Respondents". 6. The Eleventh to Nineteenth Respondents (as well as the Fourth, Sixth and Ninth Respondents) were previously the holders of shares in Peninsula before they sold them to KGL in about March 2004. They may be conveniently referred to as "the Vendor Respondents". Those Respondents also owned the units in the Unit Trust. Chronological Overview .7. From about 1996, Peninsula carried on the business of a private hospital and day procedures centre from the premises which were owned by Rosanza. 8. On about 18 February 2004, the shareholders of Peninsula (being the Vendor Respondents referred to in paragraph 6 above) entered into a Sale of Share Deed with the First Applicant (KGL). Under that Deed, the Vendor Respondents sold their shares in Peninsula to KGL and the Director Respondents (other than the Ninth Respondent) ceased to be directors. Rosanza executed a fresh lease of the premises to Peninsula for a term of six years commencing 3 March 2004 ("the Lease"). The new Directors of Peninsula guaranteed Peninsula's obligations under the Lease ("the Guarantors"). 9. Clause 4 of the Lease required Peninsula to operate the Hospital business from the premises, to maintain the Hospital Licence and to ensure that the premises and the Hospital business complied with all relevant laws and regulations. 10. On or about 13 April 2006, Peninsula ceased to carry on the Hospital business and the Hospital Licence was no longer maintained. 11. After 13 April 2006, Peninsula's then solicitors (Cosoff Cudmore Knox) sent a letter dated 20 April 2006 to Rosanza advising that Peninsula had ceased to carry on the Hospital business because the building on the premises did not meet Australian Building Code Standards and that, as a result, Peninsula was in breach of the Hospital Licence and that it would be unsafe and possibly illegal to continue to operate. Rosanza replied denying the allegations. 12. On or about 30 May 2006, Rosanza received another letter of demand from new solicitors acting for Peninsula (Bruce Stewart Dimarco) dated 30 May 2006 alleging matters not raised in the previous letter from Cosoff Cudmore Knox and alleging that it was a consequence of those matters that the Hospital ceased operating on 13 April 2006. A similar letter of demand dated 30 May 2006 was sent to the Vendor Respondents. 13. Rosanza and the Vendor Respondents (through their solicitors) replied denying the allegations and further correspondence ensued between the parties' legal representatives. 14. On 22 December 2006, the Applicants commenced these proceedings alleging that: (a) the Director Respondents had breached their directors' duties to Peninsula by allowing certain works to be carried out without authorisation (" the Works "); (b) the Vendor Respondents and Rosanza had engaged in misleading and deceptive conduct by making certain representations but failing to disclose matters relating to the Works; (c) the Vendor Respondents had breached certain warranties under the Sale of Share Deed. 15. The Applicants allege in the Statement of Claim that, as a result of the Works, the Licence was liable to cancellation and the continued operation of the Hospital business exposed the current Directors of Peninsula to personal liability.... 16. The Applicants also allege that, when matters relating to the Works came to the Applicants' attention, the Directors resolved to close the Hospital business.... 17. The Respondents deny the allegations in the Statement of Claim. In particular, they deny that the Works were in breach of or threatened the Hospital Licence or were in breach of [the Environmental Planning and Assessment Act 1979 (NSW)] or threatened the continued operation of the Hospital business or that closure of the Hospital business was as a consequence of any matters arising from the Works or an absence of consent or authorisation of those Works related to the Works. 18. On 10 May 2007, Rosanza terminated the Lease. It has cross-claimed against Peninsula and the Guarantors for rent and other debts due under the Lease to the date of termination as well as liquidated and general damages arising from the loss of the Lease. 19. On 22 August 2007, Rosanza entered into a contract for the sale of the premises to a third party who will use the premises as a hospital. That sale is due to complete on 12 September 2007.' 10 The need for evidence to make out a prima facie case is illustrated by Patterson (1989) 18 NSWLR 319. In that case, Gleeson CJ at 321 referred to the need to establish a prima facie cause of action, and also noted at 322 that Giles J was satisfied, as the primary judge, that there was sufficient evidence to satisfy this first condition for grant of the remedy. Giles J only came to that conclusion after carefully considering the extensive and detailed evidence before him, which provided the necessary basis for his finding: see BTR Engineering (Australia) Ltd v Patterson (unreported Supreme Court of New South Wales, Giles J, 1 September 1989) at 3-5; see also Biscoe P, Mareva and Anton Piller orders: freezing and search orders (LexisNexis, 2005) at [2.60]-[2.61].


case_text: of the appellants made two separate and distinct claims that were not considered by the Tribunal. They were claims based on imputed political opinion as a result of the appellants' sister's position, and claims based on the proposition that they would be members of a particular social group, being citizens returning to Sri Lanka after making unsuccessful claims to be refugees in other countries. It is well-established that the Tribunal is obliged to deal with each and every claim made by an applicant for review of a decision refusing to grant a protection visa. Failure to do so amounts to jurisdictional error. As Allsop J (with whom Spender J concurred) said in Htun v Minister for Immigration & Multicultural Affairs [2001] FCA 1802 (2001) 194 ALR 244 at [42] : The requirement to review the decision under s 414 of the [ Migration ] Act requires the tribunal to consider the claims of the applicant. To make a decision without having considered all the claims is to fail to complete the exercise of the jurisdiction embarked on. See also Merkel J at [8] and SCAT v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 80 (2003) 76 ALD 625 at [26] and [30] per Madgwick and Conti JJ.


case_title: Htun v Minister for Immigration & Multicultural Affairs [2001] FCA 1802 (2001) 194 ALR 244


case_text: These proceedings were commenced following a decision by Finkelstein J in judicial review proceedings in Carey v Australian Securities and Investments Commission, VID57 of 2008, that ASIC was not authorised under s 50 of the ASIC Act to cause previous Federal Court proceedings, VID 351 of 2007, brought in the name of the company in liquidation, and existing Federal Court proceedings, VID 386 of 2007, to be carried on by it in the name of Ann Street: Carey v Australian Securities and Investments Commission [2008] FCA 963. 3 The decision by Finkelstein J was made at a time that applications for interlocutory freezing orders had been listed for hearing in the Perth Registry of the Court in VID 386 of 2007. On 27 June 2008, ASIC brought an urgent application in the earlier proceedings WAD 83 of 2006, which had been brought under s 1323 of the Corporations Act , seeking an extension of orders which had been made against Mr Carey and others in those proceedings and which were due to expire today. Those orders had been made in March of this year. That application was adjourned to today. In the meantime, the proceedings presently before the Court were commenced by ASIC in the name of Ann Street pursuant to what is, on Finkelstein J's judgment, the proper application of ASIC's powers under s 50. 4 In that proceeding, VID 485 of 2008, ASIC has brought an interlocutory process in which it seeks Mareva-style relief against various of the defendants and a variety of other entities which are set out in Schedule C, inter alia, to that application, and they are being referred to as "the Carey entities". Those are companies which, as I understand it for the most part, have not been served and so I do not propose to make any orders in relation to them. I have heard debate on the question whether I can make an order under s 1323 of the kind which ASIC seeks or directly under s 23 of the Federal Court of Australia Act 1976 (Cth) . 5 There is a question about whether or not an application for relief under s 1323 can be brought as an interlocutory process in a pending civil proceeding. Plainly, the power under s 1323 can be exercised where there is a civil proceeding pending but the structure of the section, which includes provision for interim orders and the absence of any requirement to offer an undertaking as to damages in interim orders in proceedings under that section, rather suggests that it is to be treated as self-contained and collateral to, rather than an element of, the civil proceeding upon which it may rely. I do not need to give a concluded opinion on that matter.


case_text: The argument put by ASIC in relation to the s 1323 element of its application was that I should make an order under s 23 as an incident of my power to make an order under s 1323. This would be on the basis that I was satisfied that receivers could be appointed under s 1323 and could then resort to s 23 as a fallback position: see Australian Securities & Investments Commission; In the Matter of Richstar Enterprises Pty Ltd ACN 099 071 968 v Carey (No 14) [2007] FCA 310. I think the preferable course here is to go directly to s 23 and the power it confers in aid of the jurisdiction invoked in these proceedings. In my opinion, at least for the purposes of making an interim order under s 23 and allowing parties further time to consider their position and also to consider the position of third parties who have not been served, there is sufficient to warrant my making an interlocutory freezing order. 7 ASIC relies largely upon evidence which it adduced before this Court in WAD 83 of 2006 in relation to Mr Carey. That evidence has been reviewed in previous judgments of the Court in WAD 83 of 2006. I do not propose again to go through that litany of transactions described in previous judgments, nor the reference to overseas dealings which were said to have been at first denied by Mr Carey and then falsified by reference to documents that were later obtained as part of the investigative process, ancillary to the proceedings in WAD 83 of 2006. It suffices to say that there is still some risk of a dissipation of assets, if there be assets, under the control of Mr Carey. I express no concluded view about that, but it is sufficient for me to identify a risk and to say that in this case an order can be structured in such a way that the balance of convenience favours making the order rather than not making it. The form of the order which is proposed largely accords with existing arrangements which have applied under the s 1323 orders made in WAD 83 of 2006. I will, however, delete the reference to the travel restraint which really only operated in the context of those orders. I think also, given what has been said about Mr Carey's capacity to either control or effectively direct or influence the disposition of assets in third party companies, that there should be some restraint imposed in relation to his capacity to do that in a way that might be adverse to the plaintiff as a potential creditor in these proceedings. 8 I am expressing no concluded view, obviously, about the merits of the proceedings themselves beyond the fact that there is, on the material which I have previously seen, an arguable case in relation to the various causes of action that are raised. I do not wish to say any more about that. I do not wish to pre-empt any judgment that might be made on complex, factual questions. 9 I propose to make an order in terms of the s 23 orders which are sought by ASIC in its interlocutory process relevant to Mr Carey and subject to certain variations. I will add to para 1, after the words, "all or any of his assets whether within or outside Australia whether held legally or beneficially by him" these words, "nor do any act by way of instruction, advice or expression of wishes to any company or third party which has the purpose or is likely to have the effect of reducing the value of any asset owned by him or under his control." Subject to that change and the deletion of the travel restraint, which is not in dispute, and other minor variations, I will make the orders sought. There will be no order as to costs. I do not require that ASIC offer an undertaking as to damages. Relevant to that consideration, is the fact that the proceeding is brought in the exercise of its statutory responsibilities and in the public interest. Liberty to apply is available at short notice in the event of any apprehension that the freezing order will result in some unexpected and unfair detriment to Mr Carey. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 7 July 2008 Counsel for the Plaintiff: Mr S Owen-Conway QC with Mr JC Vaughan and Mr DM Archibald Solicitor for the Plaintiff: Australian Government Solicitor Counsel for the Third Defendant Solicitor for the Third Defendant: Counsel for the Fourth Defendant: Solicitor for the Fourth Defendant: Mr SJ Lemonis Fairweather & Lemonis Mr M De Kerloy Mony De Kerloy Date of Hearing: 30 June 2008 Date of Judgment: 30 June 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/1021.html


case_outcome: discussed

case_text: the invitation to the appellant under s 424A in relation to the information from DFAT and the appellant's response, the Tribunal placed no reliance upon any information received from DFAT that was not put to the appellant in that invitation. Accordingly, there was no breach of s 424A. The High Court's decision in Minister for Immigration and Citizenship v SZKTI These reasons were written prior to the decision of the High Court, handed down this morning, to allow the appeal in SZKTI ( Minister for Immigration and Citizenship v SZKTI [2009] HCA 30). The High Court there accepted (at [28]) the Minister's submissions (at [27] [28]) that s 424(2) does not operate to limit the general facultative power given by s 424(1) in aid of the inquisitorial functions of the Tribunal. The limitation on that general power is that the Tribunal ' must have regard ' to that information in making its decision (at [37]). Procedural fairness is assured by, inter alia , the requirements of s 424A. The High Court concluded (at [48]) that the procedural restrictions on the specific power to issue an invitation to give additional information do not qualify the Tribunal's general power in s 424(1) to ' get any information that it considers relevant '. It follows that the method adopted by the Tribunal to obtain the information did not give rise to jurisdictional error. I see no jurisdictional error in the decision of the Tribunal or error on the part of the Federal Magistrate.


case_text: to the appellant's complaints about the Tribunal's use of independent country information, his Honour observed at [60] that, if there was particular information which the appellant considered relevant, it was up to him to bring that material to the Tribunal's attention. As his Honour observed, the Tribunal is not obliged to make the appellant's case for him ( Re Ruddock; Ex parte Applicant S154/2002 [2003] HCA 60 ; (2003) 201 ALR 437 at [57] ).


case_title: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152

case_text: Magistrate Scarlett concluded that the Tribunal had also complied with s 425 of the Act and with the procedures otherwise required by the Act and the Regulations. His Honour noted that the credibility of the appellant's claims, which had been an issue before the delegate, was also a significant factor in the Tribunal hearing and that ' there was no issue that would have taken the [appellant] by surprise '. In that respect also, his Honour found compliance with s 425 of the Act ( SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 228 CLR 152).


case_text: the grounds of the application were, his Honour said, seeking merits review or complaints as to the use of independent country information, the use of which was a matter for the Tribunal ( SZJHP v Minister for Immigration and Citizenship [2008] FCA 119 per Tamberlin J). The ground of bias was not, his Honour said, made out.


case_title: SZKCQ v Minister for Immigration and Citizenship (2008) 170 FCR 236

case_text: s 424A letter sent to the appellant following receipt of the response from DFAT did not fail adequately to set out clear particulars of the information obtained or fail to ensure, as far as reasonably practicable, that the appellant understood why it was relevant to the review (cf. SZKCQ v Minister for Immigration and Citizenship [2008] FCAFC 119 ; (2008) 170 FCR 236).


case_outcome: referred to

case_title: SZKTI v Minister for Immigration and Citizenship (2008) 168 FCR 256

case_text: to s 424B, Scarlett FM considered that the request to DFAT about the authenticity of the document purportedly from the Supreme Court of Bangladesh should be distinguished from SZKTI v Minister for Immigration and Citizenship [2008] FCAFC 83 ; (2008) 168 FCR 256 and that there was no prejudice to the appellant, who had been given the opportunity to comment on the response from DFAT in accordance with s 424A of the Act. His Honour did not explicitly find that s 424(2) had not been engaged by the request to DFAT about the authenticity of the document but that finding is implicit in his Honour's finding that SZKTI should be distinguished. Accordingly, given that s 424(2) was not engaged, there was no need for the Tribunal to comply with s 424B in making that request. Federal Magistrate Scarlett found no jurisdictional error and dismissed the application. The appellant raises three grounds of appeal: The Federal Magistrates Court failed to follow the rules of natural justice and procedural fairness when making decision. The Federal Magistrates Court was in improper exercise of its power conferred by the enactment in pursuance of which it was purported; therefore the decision on 11 th September 2008 should be sat aside. The Federal Magistrates Court an error of law and jurisdictional error when it made its decision.


case_outcome: followed

case_text: to his Honour's consideration of the Full Court decision in SZKTI , the decision of the Full Court in SZLPO v Minister for Immigration and Citizenship (2009) 255 ALR 407 at [88] [114] and at [123] [124] makes it clear that the request from the Tribunal to DFAT did not enliven s 424(2) of the Act. It was not an invitation to give "additional information" for the purposes of that subsection (as then in force). It was not an invitation for additional information from DFAT.


case_text: ACE Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 Weinberg J set out a number of principles which he considered to be relevant on an application of this nature. His Honour said: 'The authorities which govern the operation of s 459G of the Corporations Law seem to me to establish the following propositions:  The respondent is presumed to be insolvent and as such bears the onus of proving its solvency: s 459C(2) and (3); Elite Motor Campers Australia v Leisureport Pty Ltd (1996) 22 ACSR 235 per Spender J; Commissioner of Taxation v Simionato Holdings Pty Ltd . (1997) 15 ACLC 477 per Mansfield J.  In order to discharge that onus the Court should ordinarily be presented with the "fullest and best" evidence of the financial position of the respondent: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1081 per Hayne J.  Unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency. Nor are bald assertions of solvency arising from a general review of the accounts, even if made by qualified accountants who have detailed knowledge of how those accounts were prepared: Simionato Holdings Pty Ltd ( supra); Re Citic Commodity Trading Pty Ltd v JBL Enterprises (WA) Pty Ltd [1998] FCA 232 per Heerey J; Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 at 463 per Sackville J.  There is a distinction between solvency and a surplus of assets. A company may be at the same time insolvent and wealthy. The nature of a company's assets, and its ability to convert those assets into cash within a relatively short time, at least to the extent of meeting all its debts as and when they fall due, must be considered in determining solvency: Rees v Bank of New South Wales [1964] HCA 47 ; (1964) 111 CLR 210; Re Tweeds Garages Ltd [1962] Ch 406 at 410 per Plowman J; Simionato Holdings Pty Ltd (supra); Melbase Corporation Pty Ltd v Segenhoe Ltd (1995) 13 ACLC 823 at 832 per Lindgren J; Leslie v Howship Holdings Pty Ltd (supra) at 465-466.  The adoption of a cash flow test for solvency does not mean that the extent of the company's assets is irrelevant to the inquiry. The credit resources available to the company must also be taken into account: Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 671 per Barwick CJ (with whom McTiernan and Windeyer JJ agreed); Leslie v Howship Holdings Pty Ltd (supra) at 466; Taylor v ANZ Banking Group Ltd (1988) 6 ACLC 808 at 812 per McGarvie J.  The question of solvency must be assessed at the date of the hearing. However, this does not mean that future events are to be ignored: Leslie v Howship Holdings Pty Ltd (supra) at 466-467.  It is no abuse of process for an applicant to seek to wind up a company presumed to be insolvent by reason of its failure to comply with a statutory demand merely because that company contends that it is solvent, or because there may be alternative means available to the applicant to vindicate its rights : Elite Motor Campers Australia v Leisureport Pty Ltd (supra).'


case_text: Chief Commissioner of Stamp Duties v Paliflex Pty Ltd [1999] NSWSC 889 ; (1999) 47 NSWLR 382 at [49] Austin J identified three matters relevant to whether leave should be granted under s 459S. They are as follows: '(i) a preliminary consideration of the defendant's basis for disputing the debt which was the subject of the demand; (ii) an examination of the reason why the issue of indebtedness was not raised in an application to set aside the demand, and the reasonableness of the party's conduct at that time; and (iii) an investigation of whether the dispute about the debt is material to proving that the company is solvent.'


case_title: Commonwealth Bank of Australia v Begonia Pty Ltd (1993) 11 ACLC 1075

case_text: are three aspects to this topic. The first aspect is the evidence that relates to Helimount's profit and loss and trading performance. The second aspect is the quality of the evidence put forward by Helimount and, in particular, whether it was the 'fullest and best' evidence: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1085 per Hayne J. The third aspect is the evidence as to the assets and liabilities of Helimount and this is relevant for the purposes of considering its ability to borrow funds to overcome any temporary cashflow or liquidity problems. I start with Helimount's profit and loss and trading performance. The liquidator has deposed to Helimount's profit and loss and trading performance over certain years. His evidence is to the effect that in 2003 Helimount earned $78,916 from the sale of wine grapes and made a profit of $1,510. In 2004 the company earned $105,000 from the sale of wine grapes and $124,228 as a profit on the sale of property and made a profit of $150,623. In 2005 Helimount made sales of $472,015 and made a profit of $159,247. In 2006 Helimount could not sell its wine grapes. The liquidator states that no financial statements have been prepared for the last year, which I assume to be the financial year ended 30 June 2006. The liquidator does not reveal the source of these figures. In ACE Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 Weinberg J set out a number of principles which he considered to be relevant on an application of this nature. His Honour said: 'The authorities which govern the operation of s 459G of the Corporations Law seem to me to establish the following propositions:  The respondent is presumed to be insolvent and as such bears the onus of proving its solvency: s 459C(2) and (3); Elite Motor Campers Australia v Leisureport Pty Ltd (1996) 22 ACSR 235 per Spender J; Commissioner of Taxation v Simionato Holdings Pty Ltd . (1997) 15 ACLC 477 per Mansfield J.  In order to discharge that onus the Court should ordinarily be presented with the "fullest and best" evidence of the financial position of the respondent: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1081 per Hayne J.  Unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency. Nor are bald assertions of solvency arising from a general review of the accounts, even if made by qualified accountants who have detailed knowledge of how those accounts were prepared: Simionato Holdings Pty Ltd ( supra); Re Citic Commodity Trading Pty Ltd v JBL Enterprises (WA) Pty Ltd [1998] FCA 232 per Heerey J; Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 at 463 per Sackville J.  There is a distinction between solvency and a surplus of assets. A company may be at the same time insolvent and wealthy. The nature of a company's assets, and its ability to convert those assets into cash within a relatively short time, at least to the extent of meeting all its debts as and when they fall due, must be considered in determining solvency: Rees v Bank of New South Wales [1964] HCA 47 ; (1964) 111 CLR 210; Re Tweeds Garages Ltd [1962] Ch 406 at 410 per Plowman J; Simionato Holdings Pty Ltd (supra); Melbase Corporation Pty Ltd v Segenhoe Ltd (1995) 13 ACLC 823 at 832 per Lindgren J; Leslie v Howship Holdings Pty Ltd (supra) at 465-466.  The adoption of a cash flow test for solvency does not mean that the extent of the company's assets is irrelevant to the inquiry. The credit resources available to the company must also be taken into account: Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 671 per Barwick CJ (with whom McTiernan and Windeyer JJ agreed); Leslie v Howship Holdings Pty Ltd (supra) at 466; Taylor v ANZ Banking Group Ltd (1988) 6 ACLC 808 at 812 per McGarvie J.  The question of solvency must be assessed at the date of the hearing. However, this does not mean that future events are to be ignored: Leslie v Howship Holdings Pty Ltd (supra) at 466-467.  It is no abuse of process for an applicant to seek to wind up a company presumed to be insolvent by reason of its failure to comply with a statutory demand merely because that company contends that it is solvent, or because there may be alternative means available to the applicant to vindicate its rights : Elite Motor Campers Australia v Leisureport Pty Ltd (supra).'


case_text: above principles were recognised as the relevant principles by the New South Wales Court of Appeal in Expile Pty Ltd v Jabb's Excavations Pty Ltd (2003) 45 ACSR 711 per Santow JA (with whom Meagher and Handley JJA agreed) at 718 [16]. It is to be presumed until the contrary is proved that Helimount is not able to pay all its debts as and when they become due and payable. Helimount submits that it has discharged the onus of proving that it is solvent. It submits that it has at most only a couple of creditors and a substantial excess of assets over liabilities. It points to three matters in particular. First, it submits that three of the valuations of the land it has produced are more reliable than the liquidator's estimates and should be preferred to the liquidator's estimates. It seems to me that the answer to this submission is that it is a matter of small consequence because even if it is correct it increases the upper limit of the liquidator's estimates by no more than $40,000. Secondly, Helimount submits the debt owed by it to Mr Callipari (which on Helimount's case is now in the order of $1,000,000) is not presently due and owing. The answer to this submission is that even if it is correct, on the liquidator's figures there is still an excess of liabilities over assets. In saying this I am assuming as liabilities the full debt to the ANZ and the principal amount of the debt claimed by Web Wealth. Thirdly, Helimount refers to the values placed on properties owned by Helimount in a letter from NFFA Finance Warehouse Pty Ltd to it dated 31 August 2006. It is said that the letter embodies an offer of finance to Helimount. I do not place any weight on the values referred to in the letter first, because I do not know who is putting forward the values and secondly, because the letter specifically states that 'the properties are being revalued and values may change'. Furthermore, I note that the figures put forward in the letter suggest that in some cases there have been very significant increases in what Helimount said were the value of various properties in early 2005.


case_text: this case Mr Callipari has caused the company to make an application for review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth). For the purposes of the application of s 471A(1), I do not think that any distinction should be drawn between an application for review and an appeal although in the case of an application for review what French J called the 'constitutional imperative' in HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd (2002) 44 ACSR 169 may be relevant to whether approval to cause a company to bring an application for review should be granted. That consideration would not be relevant in the case of an appeal. In HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd (supra) at 184 [53] French J was inclined to agree with that approach saying that s 459S should be given a strict construction in order that the purpose of the legislative scheme could best be served.


case_text: application for approval can be made before a proceeding is commenced or sought nunc pro tunc after the proceeding has been commenced but before the substantive proceeding (be it an application for review or an appeal) is heard. A key consideration when an application is made at either of these stages is the preservation of the company's assets and the importance of avoiding a situation whereby the company's assets are diminished by an unsuccessful appeal ( Lane Cove Council v Geebung Polo Club Pty Ltd (No 2) [2002] NSWSC 118 ; (2002) 167 FLR 175. Therefore, in deciding whether to grant approval a court will consider the solvency of the company and whether the director offers to undertake to pay the costs if the appeal is unsuccessful (see Lightburn Pty Ltd v Kama Power Products Pty Ltd (supra) at [24]-[33]).


case_text: Callipari caused Helimount to bring the application for review. At the time the application was made Helimount was subject to a winding up order and, by reason of s 471A(1) of the Corporations Act , Mr Callipari did not have the power to cause the company to bring the application. For the reasons I gave in Lightburn Pty Ltd v Kama Power Products Pty Ltd (2003) 226 LSJS 61 at [24] there is no longer a residual power at common law in directors to cause a company to appeal against a winding up order. In my opinion, the same applies in the case of an application for review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth). However, the Court is able to grant approval under s 471A(1A) of the Corporations Act nunc pro tunc for Mr Callipari to cause the company to bring the application. The first question before me is whether approval under s 471A(1A) should be granted. As I have said, Helimount did not make an application to set aside the statutory demand under s 459G of the Corporations Act . However, it disputes the debt, or at least the quantum of the debt, it is said to owe to Web Wealth. By reason of s 459S of the Corporations Act Helimount may not, without the leave of the Court, oppose the application for it to be wound up in insolvency on a ground that it could have relied on but did not so rely on for the purposes of an application by it for the statutory demand to be set aside. The second question before me is whether Helimount should be granted leave under s 459S. By reason of Helimount's failure to comply with the statutory demand it is presumed to be insolvent: s 459C(2) of the Corporations Act . It seeks to establish that it is not insolvent and whether it has discharged the onus of proving that it is not insolvent is the third question before me. An application for approval can be made before a proceeding is commenced or sought nunc pro tunc after the proceeding has been commenced but before the substantive proceeding (be it an application for review or an appeal) is heard. A key consideration when an application is made at either of these stages is the preservation of the company's assets and the importance of avoiding a situation whereby the company's assets are diminished by an unsuccessful appeal ( Lane Cove Council v Geebung Polo Club Pty Ltd (No 2) [2002] NSWSC 118 ; (2002) 167 FLR 175. Therefore, in deciding whether to grant approval a court will consider the solvency of the company and whether the director offers to undertake to pay the costs if the appeal is unsuccessful (see Lightburn Pty Ltd v Kama Power Products Pty Ltd (supra) at [24]-[33]).


case_text: these principles to the facts, I do not think that leave under s 459S should be granted. I have divided the grounds upon which the debt might be disputed into those which relate to the principal amount and those which relate to interest. Leave should not be granted in relation to the grounds which bear on the principal amount because even on a preliminary consideration there is no genuine dispute in relation to the principal amount and, furthermore, Helimount's explanation for not applying to set aside the statutory demand is unsatisfactory. Leave should not be granted in relation to the grounds which bear upon the interest because the explanation for not applying to set aside the statutory demand is unsatisfactory and, more importantly, it is not clear to me (and in terms of s 459S(2) I am not satisfied: see Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd [2005] NSWSC 1338 per Barrett J at [10]) that grounds bearing upon the interest are material in proving Helimount is solvent. In other words, it is not clear to me that Helimount is not saying that it is solvent irrespective of Web Wealth's claim for interest. I decline to grant leave under s 459S. Section 95A of the Corporations Act provides: '95A(1) A person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. 95A(2) A person who is not solvent is insolvent.'


case_text: matter referred to in (iii) is an express limit on the power to grant leave (s 459S(2)) and its scope and operation have been considered in later cases. The issue which has arisen is whether s 459S(2) means that the debt must on the company's case make the difference between a finding of solvency and a finding of insolvency, or is it sufficient that depending on what other findings are made it may be relevant to the question of solvency? The New South Wales Court of Appeal in Switz Pty Ltd v Glowbind Pty Ltd [2000] NSWCA 37 ; (2000) 48 NSWLR 661 favoured the former interpretation. Spigelman CJ (with whom Handley and Giles JJA agreed) said (at 674 [53]-[54]): 'By the time an application under s 459s is made, the company will be presumed to be insolvent and will have the burden of proving that it is not. In my opinion s 459s(2) directs attention, in part, to what it is that the company intends to prove and how it intends to prove it. If the company is not prepared to contemplate the possibility that its assertion of solvency is subject to qualification, then the Court cannot be "satisfied" of the mandatory precondition in s 459s(2). An objective element is introduced by the word "material" but that can only be determined after identifying the company's contentions. If, as here, the company intends to prove that it is solvent whether or not a debt is payable, then with respect to a ground based on dispute about the debt, the test of materiality to it "proving" its solvency, cannot be satisfied.'


case_title: Re Wylie and CALDB (1998) 54 ALD 523

case_text: complaint in this case against the applicant is that he failed to perform adequately and properly the duties or functions of a liquidator. Section 1292(2) of the Corporations Act is as follows: 5 " 1292: Powers of Board in relation to auditors and liquidators... (2) The Board may, if it is satisfied on an application by ASIC for a person who is registered as a liquidator to be dealt with under this section that, before, at or after the commencement of this section: (a) a person has: (i) contravened section 1288 ; or (ii) ceased to be resident in Australia; or (d) that the person has failed, whether in or outside this jurisdiction, to carry out or properly perform adequately and properly: (i) the duties of a liquidator; or (ii) any duties or functions required by Australian law to be carried out or performed by a registered liquidator; or is otherwise not a fit and proper person to remain registered as a liquidator; by order, cancel, or suspend for a specified period, the registration of a person as a liquidator." The Board is assigned functions under s 204 of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act ") conferred on it by the ASIC Act and the Corporations Act . Under s 203 of the ASIC Act , the Board comprises a Chairperson, a Deputy Chairperson, three members selected by the Minister from a panel of seven persons nominated by the Board of the Institute of Chartered Accountants in Australia, three members selected by the Minister from a panel of seven persons nominated by the Board of Directors of CPA Australia, and six business members selected by the Minister who are eligible under s 203(2A) for appointment. The constitution of the Board can therefore be said to reflect characteristics of a body acquainted with the expectations of the accounting and business communities, which is informed by experience with the practices of those communities. THE BOARD'S DECISION The relevant findings made by the Board were that Mr Dean-Willcocks: (a) accepted an appointment as an administrator where there existed a prior continuing professional relationship of a related practice with the appointee company during the two years prior to appointment, displaying a lack of professional independence and actual or apparent conflict of interest within the meaning of paragraph 4 of the IPAA Code of Professional Conduct and paragraph 22 of the ICAA Code of Professional Conduct F1 "Professional Independence" in relation to the administrations of: i. Freedom; and ii. Holilop and Callen. (b) did not adequately disclose within the meaning of the ICAA Code of Professional Conduct, F.1 paragraph 21 and the IPAA Code, paragraph 3, the extent of his and/or his firm's relationship with Crosbie Warren Sinclair Pty Ltd ("CWSPL") and or Crosbie Warren Sinclair Partners ("CWS Partners") and the joint venture company Star Dean-Willcocks Crosbie Insolvency Administrators ("SDW") in either the circular to creditors and/or at a creditors' meeting convened under s 436E in relation to the administrations of the two corporations noted in (a); (c) had a conflict of interest within the meaning of paragraph 3 of the IPAA Code of Professional Conduct and paragraph 21 of the ICAA Code of Professional Conduct F.1 "Professional Independence," in that he accepted appointment as administrator where there was an existing relationship with a creditor of the appointee company in relation to the administration of Freedom; (d) did not adequately disclose within the meaning of the ICAA Code of Professional Conduct, F.1 paragraph 21, and the IPAA Code, paragraph 3, the extent of his and/or his practice's professional relationship with the shareholders of the appointee company in either the circular to creditors and/or at the creditors' meeting under s 436E in relation to the administration of MailTV. The first question raised is the correct construction of s 1292(2). The Board saw the dispute as turning on a difference between the parties as to the role, if any, which professional standards played in constituting or defining the "duties" under s 1292(2)(d)(ii). As summarised by the Board, ASIC's contention is that having regard to the existence and nature of the commercial relationships between SDW and CWSPL, the acceptance by the applicant of appointments as administrator of clients of CWSPL or CWS Partners contravened the professional standards and therefore constituted a failure by the applicant to carry out his duties properly and adequately. The Board noted the contention of the applicant that a contravention of professional standards is not a breach of a duty or function of any administrator required by the Corporations Law or any other legislative or common law duty, and that if professional standards had been breached, these breaches could not be taken into account under the section in determining whether s 1292(2) had been contravened. The Board decided that the words "required by an Australian law" do not confine the meaning of the word "duties," but rather serve to identify the relevant duties and functions as being those which attach to an office (such as administrator) required by Australian law to be performed and observed by a registered liquidator. The duties and functions are those which the administrator must carry out to perform that office. It is not essential to identify a specific statutory provision as to the source of that duty. Failure to carry out the function and office of an administrator in an adequate and proper manner constitutes a breach of that section. The Board observed that in s 1292(2)(d)(i), the term "duties" is not confined by reference to Australian law. The Board referred to decisions in Re Wylie and CALDB (1998) 54 ALD 523; Re Vouris [2003] NSWSC 702 ; (2003) 47 ACSR 155 and Goodman v ASIC [2004] FCA 1000. After considering these decisions, the Board concluded that it is permissible to have regard to professional standards in deciding whether the office has been "adequately and properly" carried out or performed. The Board considered it is artificial to confine "duties" to matters required by an Australian law because there exist a large number of matters governing proper professional practice which are not dealt with by specific statutory prescriptions. Therefore, guidance can be obtained from relevant material published by professional bodies and other evidence, including expert evidence, in determining the terms, nature and content of the relevant duties to assess whether there has been an adequate and proper performance. Moreover, the expressions "adequate" and "proper" call for an evaluation of the way in which, and the extent to which, the functions have been performed. This indicates that it may be appropriate to consider professional standards or guidelines. The Board relied on evidence from Mr Lombe, who was accepted by the Board as an expert. Although the Board noted that some criticism could be made of Mr Lombe's evidence, it did not accept that he was lacking in independence or objectivity. The Board took his opinion into account and gave weight to it. In relation to the Codes regarding professional conduct, the Board accepted that the published professional standards do not override the law and that where there is inconsistency between professional standards and the law, the law must prevail. The Board also accepted that references in the professional standards to conflicts and apparent conflicts meant that there must be a real possibility of conflict or potential conflict and not simply a theoretical, fanciful or speculative conflict. In construing the expression "related practice," the Board concluded that if the arrangement between CWSPL and SDW was capable of impairing the independence of SDW (from the viewpoint of a client of SDW), then CWSPL was a related practice of SDW and the joint venture was an ongoing financial or commercial relationship. The Board considered that if, on an objective view, the relationship when created resulted in a real possibility of impairment of independence, then the definition of related practice applied. This did not depend on being able to identify particular circumstances of any appointment or administration as giving rise to a possibility of impairing independence. Acceptance of an appointment where the relationship existed was sufficient to contravene s 1292(2). The Board concluded that the existence of a prior relationship (between SDW and CWSPL) was such that where there were known circumstances (e.g. the fact that CWS had previously acted as auditor, external accountant or was a creditor of the company concerned) which could potentially give rise to a conflict, then that in itself was sufficient to create the perception at the time of acceptance of the appointment that the independence of the applicant could be impaired. In considering the circumstances of the present case, the Board accepted that there had been a breach of s 1292. In relation to the joint venture, the Board considered that the existence of the relationship between SDW and CWSPL was crucial, not because the creation of the relationship was itself a breach of duty, but because of its impact on the possible acceptance by the applicant of each appointment. The Board considered that the important provisions of the joint venture agreement were as follows: • SDW would refer to the joint venture all administration work it obtained in the defined region; • CWSPL would refer to the joint venture all administration work it obtained except for client work which would be introduced to SDW who may in turn contract the services of CWSPL subject to conflicts; • SDW would refer to CWSPL all accounting, audit and tax business it obtained in the region; • CWSPL would make available to the joint venture office accommodation and facilities, as would SDW, but to a lesser extent; • both parties would make staff available to the joint venture and would be reimbursed at standard rates for the time of partners and staff. In relation to the disclosure question, the Board considered an unsigned letter by a solicitor, Mr Somerset, of 29 October 1997, in relation to a joint venture which had been entered into between the applicant and another practice in similar circumstances to the present case. In this letter, it was stated that Mr Dean-Willcocks was under no legal obligation to disclose the agreement and that entry into it did not present a problem. The letter said that the agreement was not contrary to the Corporations Law and did not raise a moral issue, so therefore there was no reason, except in exceptional circumstances of which the solicitor had no knowledge, to make any disclosure to creditors. The Board considered that letter to be irrelevant. In forming this opinion, it referred to the evidence of Mr Lombe, who considered that the letter did not go to the real issues of the present case because it did not consider the relevant professional standards. The Board considered that the letter did not provide a sufficient basis for believing that appointments as administrator could be accepted in the circumstances of the present case. The Board then proceeded to consider each of the contentions outlined in the application before it and found that those in respect of which this review application is made had been established. As a consequence, it ordered that the registration of the applicant as a liquidator be suspended for twelve months. RELEVANCE OF PROFESSIONAL STANDARDS The applicant submits that professional standards are irrelevant to the Board's consideration because they are not duties or functions required by an Australian law to be carried out or performed by a registered liquidator. They are simply guideline indicators which record the views held by professional bodies as to appropriate conduct, and are not requirements of any legislative provision. The applicant submits that ASIC must point to a particular legislative provision imposing the duties and obligations in respect of which there has been a failure to perform. It is said that the reference to "an Australian law" in s 1292(2)(d)(ii) must be read as a reference to a legislative instrument. In support of this submission, the applicant refers to the reference in s 1292(2)(d)(i) to "duties of a liquidator". This is expressed in general terms and there is no reference to any requirement of an Australian law. Therefore, it is said the word "duties" in 1292(2)(d)(ii) refers to duties which are required by a legislative provision to be performed, and does not extend to include general professional standards or levels of performance. Since professional standards do not satisfy this requirement of s 1292(ii), then the Board erred in law in exercising its power to suspend the registration. In order to be approved or act as an administrator, a person must be a registered liquidator (s 448B). The applicant submits that because s 448C disqualifies a person seeking consent to act as an administrator in certain circumstances and does not refer to the professional codes, it would be wrong to proceed on the basis that it is permissible to imply the provisions of those codes or guidelines into the regulatory legal framework. The difficulty with this argument is that the matters referred to in s 448C are not expressed to be exclusive. The language of s 1292(2)(d)(ii) directs attention to the question of whether there has been a failure to adequately and properly carry out or perform the duties or functions required to be performed by a registered liquidator. The emphasis is on the adequacy level or sufficiency of performance of the function or role by the registered liquidator. In this case, the function to be performed is that of an administrator. To evaluate the level of performance is a question of fact and degree which calls for the application of a standard. It is not a qualitative consideration whether there has been performance, but rather calls for consideration as to the sufficiency of the acts or omissions of the administration. This is a task which calls for some acquaintance with professional standards applicable to the role of an administrator. Upon and after accepting appointment of the office of an administrator, the liquidator must perform the functions and tasks of that office in a proper and adequate way. This obligation to meet a standard is attracted by the terms of s 1292(2)(d) itself. It is not necessary, in my view, to identify a specific legislative duty independently imposed by legislation. When a person assumes the office of an administrator, he or she is then bound to perform adequately and properly the functions of the office. The focus of the provision concerns the sufficiency and quality of the performance of the office that must be carried out by a registered liquidator. The expression "registered liquidator" is expressly used in s 1292(2)(d)(ii) in contradistinction to the reference in s 1292(2)(d)(i) to "liquidator." There is nothing in the language of s 1292(2)(d)(ii) which excludes regard to professional standards and codes when deciding whether the performance is a proper and adequate exercise of the office. The reference to "proper" and "adequate" invites the testing of performance against a relevant standard or benchmark of performance. The interpretation advanced for the applicant, in my view, is too narrow in requiring the identification of a specific duty directly imposed by legislation. The level of performance called for is that of "adequacy." The standard is that the duty must be performed "properly". The provision is designed to enable a Board representative of the commercial and accounting communities to consider whether the function has been adequately and properly carried out. To assess this, it is permissible, in my view, to have regard to the standards operative in the relevant sphere of activity. One of the functions to be performed by a registered liquidator is that of administrator. It is in the performance of that office, created under Australian law, on which the provision is focused. Under Australian law, the role of administrator of a corporation is a person who is not only a liquidator but who must also be a registered liquidator. The interpretation of s 1292(2)(d)(ii) is subject of authority adverse to the applicant's case. In Re Vouris at [99], Campbell J considered that the duties or functions required by an Australian law to be carried out or performed by a registered liquidator within s 1292 were intended to be those duties and functions connected with being an administrator. At [100], his Honour said: 'It is possible for someone to fail to carry out or perform adequately and properly the duties and functions of being an administrator, even if it is not possible to point to some particular statutory provision which has been breached.' This is directly contrary to the applicant's submissions. His Honour gave some examples in support of this conclusion. In particular, he referred to the circumstance that it would be a breach of s 1292(d)(ii) if an administrator had taken a bribe for making a particular recommendation even though nothing in Pt 5.3A of the Act said that administrators were not to take bribes. The applicant points out that there are provisions in the Act which would cover the taking of bribes. Notwithstanding the applicant's submissions as to the inadequacy of the examples given by his Honour, I consider that the reasoning and conclusion of his Honour accord with the proper approach to the interpretation of the provision. In Goodman v Australian Securities and Investments Commission, a decision of Branson J, her Honour said at [26]-[27]: 'The question of whether the applicant failed to carry out or perform adequately and properly that duty or function is not a pure question of law. The words 'adequately' and 'properly' incorporate notions of judgment. The relevant judgments call for consideration to be given to accepted professional standards .... The task of determining the relevant professional standards is a task within the expertise of the Board. The accepted professional standards may be found by the Board to be set by, or alternatively reflected in, published Auditing Standards notwithstanding that the Auditing Standards have no direct statutory significance. For the above reasons I reject the contention of the applicant that in considering whether the applicant carried out or performed adequately and properly the duty or function of reviewing TSG's financial report for the half-year ended 31 December 1999, the Board is not entitled to consider Auditing Standards. (Emphasis added) Again, the applicant's submission is contrary to her Honour's view. The applicant says that on a proper analysis this case does not support the Board's reasoning because her Honour's remarks were made in circumstances where the relevant section of the Act imposes a specific statutory obligation. It is argued that those circumstances are not evident in the case here. While it is true that in Goodman, there was an obligation imposed by statute, the reasoning of her Honour in relation to the application of s 1292 strongly supports the position of the respondents in respect of the interpretation of that section. I consider that the observations of their Honours in the above authorities accord with natural reading of s 1292, they are decisions directly on point. It is also in the interests of uniformity and consistency in the application of the law that there should be a uniform interpretation of the provision. I am not persuaded that these observations are wrong. I consider they are correct. I therefore propose to follow and apply them in the present case. For these reasons, I do not accept the first argument advanced for the applicant. The applicant also contends that the Board erred in deciding that acceptance of the appointment amounted to a breach of duty because voluntary administration only commences on and after appointment, and an administrator does not have any duty or function as an administrator until that appointment takes place. I do not accept this submission. The proper performance of the function of an administrator is sufficiently wide to include the act of accepting the appointment of the office. The obligation to act properly in accepting appointment is one of the duties and obligations of the administrator. Next it is submitted that since s 448C imposes restrictions on consenting to be appointed or acting as an administrator as a matter of Australian law, these factors ought to have been taken into account by the Board. In my view, for reasons given earlier, s 448C is not relevant to the present issue and it does not purport to or set out in an exhaustive manner all the relevant considerations. This argument has no substance. There was therefore no need for the Board to specifically refer to this provision. In the context of disclosure obligations, the applicant referred to the Harmer Report. This report made recommendations which were not taken up by Parliament to the effect that any association between the company and the administrator (or the firm of the administrator) should be declared and publicised at the time of appointment of the administrator. In my view, the fact that this proposal was not adopted by Parliament does not warrant a conclusion that duty of disclosure is not relevant for consideration. It does not exclude consideration of such a factor. It does not follow from the non-inclusion of such a provision in the legislation that there is no such obligation at law. There are many possibilities as to why the provision was not adopted, one of which may be that it was considered not to be a necessary having regard to the present state of the law. APPLICATION OF THE CONFLICT TEST The applicant submits that the Board applied the wrong test. It says that the law requires the liquidator to consider the specific circumstances of each appointment and that a conflict can only be held to arise if there is a "real conflict" such that the circumstances give rise to an actual or potential, and not merely a theoretical, possibility of conflict or embarrassment. The existence of the relationship provided for in the joint venture, it is said, is not sufficient to warrant a finding of conflict. Further, it is said, a liquidator is permitted to act as administrator, even where there is a prior involvement with the company in liquidation, provided that the involvement is not likely to impede or inhibit the liquidator from acting impartially in the interests of all creditors or give rise to a reasonable apprehension of such impediment. Moreover, it is not improper for a person to give professional advice in respect of actual or apprehended insolvency and then accept appointment as an administrator. The applicant further submits that central to the Board's reasoning is the proposition that the decision as to whether CWSPL was a related practice of SDW does not depend on being able to identify particular circumstances of any appointment or administration as having a real possibility of impairing independence in connection with that appointment. It is contended that the Board fell into error because it did not analyse each particular appointment to see if there was a real possibility of conflict. In failing to do this, it is submitted that the Board departed from settled legal principle and applied the professional standards as though they had statutory force. A number of authorities are referred to in support of this proposition. The principal authority relied on is the decision of Sackville J in Pongrass Group Operations Pty Ltd v Lowerpinems Pty Ltd (1994) 15 ACSR 341 at 345-346. The authorities referred to are not of assistance to the applicant because they do not address the terms of the statutory provisions concerning the cancellation of registration or suspension of liquidators under the regime established by ss 1290-1298. These provisions are specifically designed to set up a regime for cancellation and suspension where there has not been proper or adequate performance of duties as determined by a representative specialist Board, which is set up to take into account the conduct standards formulated by relevant professional bodies. Section 1292 is concerned with the manner and sufficiency of the liquidator's performance of the office of administration. Both the constitution of the Board and the formulation of the standards provide a benchmark and specialist framework of reference for consideration of questions of adequacy and sufficiency of performance. Since it is permissible to take professional standards into account as guidelines, it is open to the Board to give such weight as it thinks appropriate to those guidelines which categorically state that a person in practice shall not accept appointment as administrator of a company where any person in the practice has, or during the previous two years has had, a continuing professional relationship with the company: (see ICAA Code at paragraph F.22). It is for the specialist Board to give weight to this provision as it sees fit. The function of the Board, when considering circumstances such as those in this case, is to decide whether there has been adequate and proper performance and execution of duties and functions. The Board's determination states that it has considered accepted professional standards to provide guidance in dealing with the allegations. The Board acknowledged that the published statements of professional bodies could not override the law and that references to conflict required a real possibility of potential conflict as opposed to a theoretical or remote prospect of conflict. The Board did not apply the wrong test or standard. In reaching its decision, the Board also had regard to the expert evidence of Mr Lombe and assigned what it considered to be appropriate weight to that evidence, which was accepted by the Board for the most part. His evidence was subject to strong criticism by the applicant. The Board noted this criticism but accepted the substance of the evidence. It was a matter for the Board to determine its acceptance and the appropriate weighting of Mr Lombe's evidence this is not a matter for the Court. The Board considered that the decision as to whether the entities were related did not depend on identifying whether the detailed circumstances of any particular appointment or administration created a real possibility of impairing independence. It accepted that a related practice should be viewed as part of the practice of the applicant. The Board also accepted, in light of the evidence and the standards, that the likelihood of potential conflict is regarded by professional bodies as being so great that there exists a presumption of impairment of independence. This conclusion was based on the formulated professional standards governing the performance of an administrator's duties. The Board considered that these standards require that a registered liquidator accepting an appointment as administrator must first consider whether there could be a real risk of apparent conflict. In reaching this conclusion, the Board accepted the evidence of Mr Lombe. This conclusion was open to it on the evidence. The emphasis of the Board is on the relationship created by the joint venture. It refers to the professional standards which establish that the relationship itself is sufficient to indicate a real possibility of apparent impairment of independence upon acceptance of any particular appointment. In my view, the Board, as a specialist body, applied generally accepted relevant professional standards in the light of accepted professional evidence to reach its conclusion that the duties referred to in s 1292(2)(d)(ii) had not been adequately or properly performed. In so doing, there is no error of law as the Board's evaluation was open to it. It is not warranted to impose a further obligation to investigate all the circumstances of each appointment to establish whether, in the case of each appointment, there exists an actual conflict. The Board considered that acceptance of any appointment where such a relationship exists amounts to relevant failure of duty without any further investigation of the circumstances surrounding the appointment being necessary. The applicant submits that the concept of a related practice or a commercial relationship that of itself gives rise to an impermissible conflict is unknown to the law. I do not accept this broad general proposition as relevant to this matter. There are circumstances set out in the reasons for determination as to the nature of the related practice in the present case. I do not consider it was necessary for the Board to descend into an analysis of each particular appointment or to travel beyond the circumstances of the relationship and the fact of acceptance of appointment in order to determine there was an inadequate performance of the relevant duty. The applicant's submission that there was no conflict arising by virtue of the joint venture is sought to be substantiated by detailed analysis of the evidence of Mr Lombe and the historical circumstances of each appointment. In my view, these submissions do not advance the applicant's case. Central to the criticism of the evidence of Mr Lombe is the proposition that examples given by him in relation to the possible impairment of independence were pure conjecture. It was submitted that the examples did not fall within the relevant principles because they did not point to specific or real conflicts likely to impede independence. However, the weight to be given to the evidence of Mr Lombe and his detailed cross-examination is a question of fact for determination by the Board. I do not consider the analysis advances the applicant's case. In my view, it is not necessary for the Board to conclude that there was in fact a position of conflict upon the applicant's acceptance of the appointments to the three companies in question. It was open to the Board to conclude that the acceptance of the appointments, in circumstances where the joint venture existed, was contrary to professional standards and sufficient to establish that there had been a failure to properly or adequately perform the functions of administrator. The Board is a specialist body bringing to bear professional experience and taking into account of professional standards. In relation to MailTV, the Board formed the view that the disclosure made was not an effective and prompt disclosure sufficient to meet an adequate level as indicated by the evidence of Mr Lombe and the professional standards. It is submitted that so long as creditors are given an opportunity to replace the administrator, it is not necessary that there should be an immediate opportunity for removal. Therefore, it is contended, the creditors' interests are not irredeemably prejudiced and this means that the later disclosure was sufficient. Paragraph 21 of the ICAA Code entitled "Conflicts" requires that full and frank explanation and disclosure of actual or apparent conflict is made to the clients. It is a matter for the Board to determine whether the timing, nature and extent of the disclosure were adequate and proper. In relation to the MailTV appointment, it was noted that there was a failure to disclose the nature of the conflict in both the administrator's letter to creditors and the notice convening the first creditors' meeting. The Board held that in these circumstances, this meant that there was not sufficient or timely disclosure. The Board considered that there existed a duty to disclose at the first practical opportunity so that the first meeting of creditors were on notice of the conflict and would have an immediate opportunity to appoint a different administrator if they considered appropriate. This objective would not be met if the disclosure was not made until the meeting itself. Moreover, it was considered necessary to have disclosure in the notice convening the creditors' meeting in order to ensure that all creditors had full benefit of the disclosure in making the important decision whether to attend. There is no error of law identified in the Board's decision that disclosure should have been made at the earliest opportunity, in particular having regard to what the Board considered to be real problems in disclosure at a later stage. It was open to the Board to reach this conclusion. APPROPRIATENESS OF PENALTY The applicant contends that there were errors in the exercise of the Board's discretion as to the appropriate sanctions to be imposed in the light of its reasons. This proposition is advanced on two bases. The first is that comparable sanctions in other cases were not considered or expressly referred to by the Board. The second submission is that there was a failure to give any weight to a letter by Mr Somerset in October 1997 in relation to another proposed joint venture arrangement along similar lines to the joint venture in the present case. It was submitted that this letter indicated that there was no problem at law in entering into such an arrangement except in exceptional circumstances. In relation to the first matter, I am not satisfied that the Board did not take into account other comparable cases in reaching its conclusion as to the period of suspension. In any event, only the most general guidance can be obtained from this type of "precedent" because these cases cannot be readily compressed into a template which permits reasonable comparison. The reasons for the Board's orders were set out by the Board on 12 April 2006 after hearing submissions from the parties and after reading the reasons for determination. In those reasons, the Board adopted as its guiding principle the protection of the public as opposed to any consideration of punishment. It was considered important to demonstrate publicly that there is a regulatory regime which is applicable to liquidators and is effective. The Board took a balanced approach and recognised that the applicant was contrite and regretted entering into the joint venture agreements and accepting the appointments considering the Board's findings. Nevertheless, it considered that a reasonably competent registered liquidator would have recognised the existence of the conflict in the light of accepted standards of professional conduct. The Board accepted that the character references produced for the applicant indicated that his personal integrity and professional competence were outstanding and that there were some very laudatory remarks by some of Sydney's leading figures in the insolvency industry. Nevertheless, the Board gave great weight to the importance of enforcing the regulatory regime and the seriousness of the matters which had been found to be established in so far as they dealt with independence, objectivity and conflicts of interest. The Board also took into account that there were no mitigating circumstances put forward to explain the breaches other than the applicant's view of the professional standards. The Board noted evidence that the applicant turned his mind to the issue of conflict prior to consenting to act in each case. The Board specifically dealt with the Somerset letter at paragraph 5.7 of its reasons for determination and considered the advice given therein was not relevant to the contentions before the Board because it did not refer to published professional codes or standards and was directed to breaches of "law". The Board also refers to the fact that there was no reference to Mr Somerset in relation to the present joint venture or further advice sought about the circumstances of this particular case. The Board agreed with the view of Mr Lombe that the letter did not go to the real issues in the applicant's present circumstances and that there was a necessity to consider professional standards. This conclusion was open to it. In my view, the reasons given by the Board for not assigning weight to the Somerset letter are cogent and the conclusion reached as to the form of orders was open to the Board on the law and in light of the evidence before it. I am not persuaded that the Board erred in law or principle in relation to the sanction imposed in this case. Accordingly, I dismiss the application for review in this case with costs. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 8 November 2006 Counsel for the Applicant: I M Jackman SC, V Whittaker Solicitor for the Applicant: Kemp Strang Counsel for the Respondent: S R Donaldson SC, R Francois Solicitor for the Respondent: Australian Securities and Investments Commission Date of Hearing: 11 & 12 July 2006 Date of Judgment: 8 November 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1438.html


case_title: Goodman v Australian Securities and Investments Commission [2004] FCA 1000


case_outcome: distinguished

case_title: Pongrass Group Operations Pty Ltd v Lowerpinems Pty Ltd (1994) 15 ACSR 341


case_text: The causes of action pleaded are based on conduct engaged in in the United States. Even though the duties pleaded depend upon conduct in Australia that does not mean that their breach by acts outside Australia gives rise to a cause of action 'arising in the Commonwealth' under O 8 r 1(a). As von Doussa J observed in Delco Australia Pty Ltd v Equipment Enterprises Incorporated trading as Kukla Trenchers [2000] FCA 821 , the authorities establish that 'cause of action' within the meaning of O 8 r 1(a) does not refer to all the elements of the cause of action. It refers rather to the act on the part of the defendant which gave the plaintiff his cause for complaint. In Distillers Co (Biochemicals) v Thompson [1971] AC 458 at 467, Lord Pearson said (at 468): It is not the right approach to say that, because there was no complete tort until the damage occurred, therefore the cause of action arose wherever the damage happened to occur. The right approach is, when the tort is complete, to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise? Theory no (iii) is that the cause of action arose within the jurisdiction if the act on the part of the defendant, which gives the plaintiff his cause of complaint has occurred within the jurisdiction. That is the rule laid down in Jackson v Spittal (1870) LR 5CP 542, which is an authoritative case, and the rule is inherently reasonable, as the defendant is called upon to answer for his wrong in the courts of the country where he did the wrong.' In my opinion the causes of action in breach of confidence and breach of fiduciary duty are not demonstrated, on the current state of the pleadings, to be proceedings to which O 8 r 1 applies. 63 The question that then arises is whether, given that the causes of action in misleading or deceptive conduct and breach of contract are within O 8 r 1, that is sufficient to satisfy the requirement that the rule 'applies to the proceeding' within the meaning of O 8 r 2(2)(b). As to that von Doussa J in Delco Australia said [at 35]: 'In this Court r 1(n) makes express provision for a proceeding where a proceeding does not fall squarely within one of the heads enumerated in the earlier paragraphs. In my opinion r 1(n) makes it clear that an originating process to be served out of the Commonwealth must be confined to causes of action that fall wholly within one or several of the heads in r 1. An originating process that includes a claim that does not fall within one or more of the heads is not an originating process that meets the description of r 1, in that it is not one "in" any of the cases described in the rule. It is not a "proceeding to which rule 1 applies" so as to meet the requirement of r 2(2)(c)(b). A similar conclusion was expressed by Wilcox J in Tycoon Holdings Ltd v Tencor Jetco Inc (1992) 34 FCR 31 at 35.' 64 In the circumstances, because of the inclusion of the claims for breach of confidence and breach of fiduciary duty, it is not possible to conclude that 'the proceeding' is one to which O 8 r 1 applies. The order sought by Traxon cannot be made on the current state of the pleadings. It will be necessary to reconsider the pleadings and either plead those facts which would make it clear that the causes of action referred to fall within the scope of the rule or to abandon those causes of action.


case_text: The causes of action pleaded are based on conduct engaged in in the United States. Even though the duties pleaded depend upon conduct in Australia that does not mean that their breach by acts outside Australia gives rise to a cause of action 'arising in the Commonwealth' under O 8 r 1(a). As von Doussa J observed in Delco Australia Pty Ltd v Equipment Enterprises Incorporated trading as Kukla Trenchers [2000] FCA 821 , the authorities establish that 'cause of action' within the meaning of O 8 r 1(a) does not refer to all the elements of the cause of action. It refers rather to the act on the part of the defendant which gave the plaintiff his cause for complaint. In Distillers Co (Biochemicals) v Thompson [1971] AC 458 at 467, Lord Pearson said (at 468): It is not the right approach to say that, because there was no complete tort until the damage occurred, therefore the cause of action arose wherever the damage happened to occur. The right approach is, when the tort is complete, to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise? Theory no (iii) is that the cause of action arose within the jurisdiction if the act on the part of the defendant, which gives the plaintiff his cause of complaint has occurred within the jurisdiction. That is the rule laid down in Jackson v Spittal (1870) LR 5CP 542, which is an authoritative case, and the rule is inherently reasonable, as the defendant is called upon to answer for his wrong in the courts of the country where he did the wrong.' In my opinion the causes of action in breach of confidence and breach of fiduciary duty are not demonstrated, on the current state of the pleadings, to be proceedings to which O 8 r 1 applies.


case_text: The requirement to show a 'prima facie case for the relief sought' was expounded in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. The Court quoted with approval a passage from the judgment of Heerey J in Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390 where his Honour said: '... the requirement of O 8, r 2(2)(c) has to be met at the outset of the proceedingS. It does not suggest the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant's case at trial... It may be therefore that a court at this stage might draw inferences more readily in favour of an applicant, bearing in mind, among other things, that the applicant will not have had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial.' As I observed in Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 at 110: 'A prima facie case is made out if, on the material before the Court, inferences are open which it translated into findings of fact, would support the relief claimed.' The requirement for a prima facie case is satisfied by demonstration of a prime facie case 'for the relief sought by the party on the proceeding'. Where the relief sought is based upon more than one cause of action, it is sufficient that there is a prima facie case demonstrated for at least one of the causes of action relied upon. In my opinion it is sufficient to say for the moment that a prima facie case within the meaning of O 8 r 2(2)(c) is raised in respect of the cause of action in breach of contract. It is questionable whether there is a prima facie case shown for misleading or deceptive conduct without more than the alleged breach of the promises embodied in the agreements. There is a disquieting confusion about the documentation comprising the written part of the so called Distribution and Confidentiality Agreement made in 1998. Having regard, however, to my conclusions that the proceeding is not one to which O 8 r 1 applies, these are matters which may be able to be addressed by Traxon prior to a renewal of its motion.


case_title: Merpro Montass Ltd v Conoco Specialty Products In (1991) 28 FCR 387


case_title: Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102