case_text: In advancing this argument, Ranbaxy did not go beyond matters which were apparent on the face of the complete specification for the Enantiomer Patent. The specification specifically refers to and incorporates the US Patent. It also refers to the 981 Patent as relevant prior art. In this sense, Ranbaxy based its argument squarely on the ground of invalidity that was recognised in Commissioner of Patents v Microcell Ltd [1958] HCA 58 ; (1959) 102 CLR 232 ( 'Microcell' ) and NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd [1995] HCA 15 ; (1995) 183 CLR 655 ( 'Philips' ). 175 For the reasons elaborated below, I do not accept that Ranbaxy's case on 'manner of manufacture' is foreclosed by the High Court's decision in Ramset . In my opinion, Ranbaxy's argument falls squarely within the framework of the High Court's decision in Philips . In Ramset , the High Court did not question the authority of Philips and, as the Full Court of this Court said in Bristol - Myers , nothing in Ramset detracts from the binding effect of Philips in this Court. As to merits of the argument, I have reached the conclusion that Ranbaxy has not established on the facts that the Enantiomer Patent claims 'nothing but ... a new use of an old substance'. Consequently, Ranbaxy has failed to establish that the Enantiomer Patent is invalid, and liable to revocation, on the ground that was recognised and applied in Microcell and Philips . My detailed reasons for this conclusion are also set forth below. 181 In the course of their reasons, Brennan, Deane and Toohey JJ discussed and approved the earlier High Court decisions in Microcell and National Research Development Corporation v Commissioner of Patents [1959] HCA 67 ; (1959) 102 CLR 252 ( 'NRDC' ). There is no doubt that their Honours considered that Microcell (a decision under the Patents Act 1903 (Cth)) and NRDC (a decision under the 1952 Act) applied with equal force to s 100(1)(d) of the 1952 Act and to the threshold requirement of 'invention' in s 18(1) of the 1990 Act. 187 Warner-Lambert relied on several passages in the majority judgment in Ramset for its contention that Ranbaxy's manner of manufacture argument was legally unavailable. Its contention that the doctrinal content of s 100(1)(d) of the 1952 Act did not extend to the manner of manufacture argument recognised and applied by the High Court in Microcell was based on the following passage at 190 [33] and [34]: 'In particular, s 100(2) assumes that issues of obviousness and lack of novelty are extracted by pars (e) and (g) of s 100(1) from what otherwise may have been their inclusion (by means of par (d)) in the general concept of invention within the ambit of s 6 of the Statute of Monopolies. Novelty and obviousness are dealt with specifically and exhaustively in pars (e) and (g). There remains no scope for the doctrine of secret use, as a qualification to obviousness and novelty, in par (d), and in s 100(2), no occasion to refer to par (d). What then was left to provide the doctrinal content of par (d)? Section 6 of the Statute of Monopolies excluded any manner of new manufacture which was "contrary to the Law" or "generally inconvenient". The classification of certain methods of treatment of the human body as an inappropriate subject for grants under the Act appears to rest on this footing. Further, it has long been established that "a clear distinction will be drawn between the discovery of one of nature's laws, and of its application to some new and useful purpose". Whilst discovery adds to the sum of human knowledge, s 6 of the Statute of Monopolies is concerned with a manner of new manufacture. Thus, in Neilson v Minister of Public Works (NSW) , Isaacs J, speaking of a discovery which might be applied in the improved treatment of sewage, said: "Assuming, therefore, the idea is original that the best conditions are fermentation short of putrefaction, still without some practical means of carrying out that idea so as to add to the sum of human art -- not merely human discovery -- the idea is not patentable." On the other hand, "manufacture" in s 6 is not restricted to vendible processes or their products and may include agricultural and horticultural processes involving the selective use of herbicides.' In my opinion, this passage does not go so far as to support Warner-Lambert's contention, and ultimately it is inconclusive. 188 The proposition that novelty and obviousness are dealt with specifically and exhaustively in s 100(1)(e) and (g), and not in s 100(1)(d), does not deny Ranbaxy's proposition that the ground of invalidity discussed in Microcell , NRDC and Philips falls squarely within s 100(1)(d) and s 18(1). The remainder of the passage poses, but does not definitively answer, the question of what is left to provide the doctrinal content of s 100(1)(d). Some examples are given, but they do not address the question whether the ground of invalidity recognised in Microcell , NRDC and Philips would fall within s 100(1)(d). So far as it goes, the distinction that is drawn between discovery and any manner of new manufacture tends to suggest that, if revocation were sought, cases like Microcell and NRDC would fall for consideration under s 100(1)(d). Earlier in their reasons at 183 [15], the majority in Ramset said that the right question when applying the definition of invention and the expression 'any manner of new manufacture' under the 1952 Act is: '"Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?"' The majority's endorsement of this test also tends to suggest that cases like Microcell and NRDC would have fallen within s 100(1)(d) of the 1952 Act, had revocation been sought on that ground. 192 In the present case, Ranbaxy based its argument on Microcell and Philips . The majority decision in Ramset does not cast any doubt on the soundness of Microcell . It also expressly approved the High Court's decision in NRDC , which in turn endorsed the principles discussed in Mircocell . 193 Microcell concerned an appeal from a decision of the Deputy Commissioner of Patents to refuse to accept a patent application in the exercise of powers conferred by s 46 of the Patents Act 1903 . The High Court considered that, if it appeared manifest that a valid patent could not be granted, the Commissioner had not merely the power but the duty to reject the application pursuant to s 46. The alleged invention concerned the use of synthetic resinous plastics reinforced with mineral fibres in the manufacture of self-propelled rocket projectors. The Court rejected an argument that the specification need do no more than claim an alleged invention. The Court concluded that a claim for the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable cannot be subject matter for a patent. It is not a claim for an invention as defined in the Act. The position cannot be affected by the fact that nobody had thought of doing the thing before or by the fact that it was found to be a good thing to do: at 246-247, 249, 250-251. 194 The question in NRDC was whether the claimed process fell within the category of inventions to which, by definition, the application of the 1952 Act was confined. In applying the definition of invention in s 6 of the 1952 Act, Dixon CJ, Kitto and Windeyer JJ said that the correct approach is not to ask whether the claim is for a manner or kind of manufacture, but to ask whether it is a proper subject of letters patent according to the principles which have been developed in the application of s 6 of the Statute of Monopolies. 195 In NRDC , Dixon CJ, Kitto and Windeyer JJ said at 261-262: 'The principles which govern the power to refuse a patent have been discussed recently in the case of Commissioner of Patents v. Microcell Ltd . It is shown in that case that in the portion of the definition of invention which includes in the meaning of the word an alleged invention, the word "alleged" goes only to the epithet "new" in the expression "a manner of new manufacture", and that accordingly the Commissioner may properly reject a claim for a process which is not within the concept of a "manufacture". But the case cited shows also that even if the process is within the concept the Commissioner is not bound to accept the allegation of the applicant that it is new, if it is apparent on the face of the specification, when properly construed, that the allegation is unfounded: see also Re Johnson's Patent . It is therefore open to the Commissioner in a proper case to direct the deletion of a claim for a process which may be seen from the specification, considered as a whole, to be "outside the whole scope of what is known as invention" because, in the words of Lord Buckmaster, when Solicitor-General, in Re B.A.'s Application it is "nothing but a claim for a new use of an old substance". But, as the Microcell Case emphasizes, it must always be remembered how much is wrapped up in the "nothing but". Lord Buckmaster did not use the words without explanation:-- " ... when once a substance is known," he said, "its methods of production ascertained, its characteristics and its constituents well defined, you cannot patent the use of that for a purpose which was hitherto unknown". And why? Because in the postulated state of knowledge the new purpose is no more than analogous to the purposes for which the utility of the substance is already known, and therefore your suggestion of the new purpose lacks the quality of inventiveness: see per Bowen L.J. in Elias v. Grovesend Tinplate Co . Unless invention is found in some new method of using the material or some new adaptation of it so as to serve the new purpose, no valid patent can be granted: see Moser v. Marsden; Pirrie v. York Street Flax Spinning Co., Ltd. If, however, the new use that is proposed consists in taking advantage of a hitherto unknown or unsuspected property of the material, the situation is not that to which Lord Buckmaster's language refers. In that case there may be invention in the suggestion that the substance may be used to serve the new purpose; and then, provided that a practical method of so using it is disclosed and that the process comes within the concept of patent law ultimately traceable to the use in the Statute of Monopolies of the words "manner of manufacture," all the elements of a patentable invention are present: see the Microcell Case. It is not necessary that in addition the proposed method should itself be novel or involve any inventive step: Hickton's Patent Syndicate v. Patents and Machine Improvements Co. Ltd. ' 196 The majority in Ramset agreed that NRDC sets out the correct way of approaching the definition of invention in the 1952 Act. As s 100(1)(d) provides for revocation where the claimed invention is not an invention within the meaning of the Act, there is no reason to suppose that the application of s 100(1)(d) should be approached in any different fashion from that explained in Microcell and NRDC . 197 The holding and the rationale of Philips were recently applied in Merck & Co Inc v Arrow Pharmaceuticals Ltd [2006] FCAFC 91 ; (2006) 68 IPR 511 ( 'Merck' ). At 529 [63], the Full Court (comprising Heerey, Kiefel and Dowsett JJ) said that Microcell , NRDC and Philips established the following propositions: '1. The opening words of s 18(1) ("a patentable invention is an invention that") impose a threshold requirement that the "patentable invention" be an "invention", that is to say an "alleged" "manner of new manufacture" within s 6 of the Statute of Monopolies ( Philips at CLR 663; ALR 121; IPR 453). 2. That requirement will not be met if, on the face of the specification, the subject matter: (a) lacks the necessary quality of inventiveness under the Statute of Monopolies ( Phillips at CLR 664; ALR 122; IPR 454) (b) is not new ( NRDC at CLR 262, ALR 115; IPR 65, Philips at CLR 664; ALR 122; IPR 454) 3. A new use of an old substance is not an invention if its known properties make it suitable for that use in such a case the new purpose is "no more than analogous to the purposes for which the utility of the substance is already known" ( NRDC at CLR 262; ALR 115; IPR 65) 4. But there will be an invention if the new use consists in taking advantage of a hitherto unknown or unsuspected property of the substance ( NRDC at CLR 262; ALR 115; IPR 65).' Subject to one matter, I consider these propositions are equally applicable to s 100(1)(d) of the 1952 Act. The qualification is that I am not sure what is meant by proposition 2(b) or that it adds anything to proposition 2(a). 198 In Wm Wrigley Jr Company v Cadbury Schweppes Pty Ltd (2005) 66 IPR 298 ( 'Wrigley' ) at 314-315 [87]-[93], Heerey J held that a manner of manufacture argument could be advanced under s 100(1)(d) of the 1952 Act so long as the ground in s 100(1)(d) was established on the face of the specification. His Honour expressly stated that this was the effect of the decision in Ramset . Furthermore, his Honour considered that the question whether or not the ground in s 100(1)(d) was established on the face of the specification was to be determined by considering and applying the principles discussed in Microcell . 201 As the US Patent is substantially identical to the 981 Patent I do not need to consider whether the citation of the 981 Patent as prior art would be sufficient for it to be characterised as information that appears on the face of the specification: see Bristol-Myers at 536 [30]; Microcell at 250; cf Ramset at 192-193 [40]. Nor do I need to consider the additional observations made by the majority in Philips (which were unnecessary for the decision) to the effect that s 18(1)(a) of the 1990 Act would permit the Court to look beyond the face of the specification in determining whether a claimed invention is nothing more than a new use of an old substance, and whether those observations can be reconciled with the reasoning in Ramset . My task is to apply the principles that were enunciated in Microcell , NRDC and Philips to the claims of the Enantiomer Patent. 203 It therefore cannot be said, at least not strictly, that the Enantiomer Patent claims 'nothing but a claim for a new use of an old substance'. In Microcell and NRDC , the High Court stressed that a lot is wrapped up in the expression 'nothing but': it contemplates a case where the substance is known, its methods of production ascertained, and its characteristics and constituents are well defined: NRDC at 261-262; Microcell at 249-251. Here, the question is whether the Enantiomer Patent claims a different class of compounds having characteristics and constituents that were identified by the US Patent and the 981 Patent; or whether it is nothing but a claim for a known compound with known properties. No question arises of the kind that was considered in NRDC : the compounds of the Enantiomer Patent are not being applied to a new use that takes advantage of hitherto unknown or unsuspected properties. Like the compounds of the 981 Patent, the compounds of the Enantiomer Patent are to be applied to the inhibition of the synthesis of cholesterol. 204 Ranbaxy attempts to meet these points by arguing that entirely routine steps, including the resolution of a racemate into its enantiomers and the selection of a preferred pharmaceutically acceptable salt, can be employed to narrow the class of compounds from those claimed in the 981 Patent to those claimed in the Enantiomer Patent. There are numerous difficulties with this argument, both at the level of principle and when one turns to the evidence. 205 In my view, Ranbaxy's argument requires an extension of the principles that the High Court applied in Microcell , NRDC , Philips and Ramset . Ranbaxy did not accept that this was so. It contended that racemic atorvastatin lactone was a known compound with known properties that were reported in Table 1 (compound 1) of the 981 Patent specification, and that the activity of this racemate is, and was, known to be due to the RR enantiomer. In closing submissions, however, senior counsel for Ranbaxy could not identify any case on 'manner of manufacture' that deals with a situation that is analogous to the present case where a selection process forms the basis of the compounds claimed by the later patent.


case_outcome: applied

case_text: In advancing this argument, Ranbaxy did not go beyond matters which were apparent on the face of the complete specification for the Enantiomer Patent. The specification specifically refers to and incorporates the US Patent. It also refers to the 981 Patent as relevant prior art. In this sense, Ranbaxy based its argument squarely on the ground of invalidity that was recognised in Commissioner of Patents v Microcell Ltd [1958] HCA 58 ; (1959) 102 CLR 232 ( 'Microcell' ) and NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd [1995] HCA 15 ; (1995) 183 CLR 655 ( 'Philips' ).


case_text: In these circumstances, the transitional provisions in s 234 of the 1990 Act apply. Section 234(2) and (5) provide: '(2) Where, before the commencing day: (a) a patent application had been lodged under the 1952 Act; and (b) a complete specification, or a petty patent specification, had been lodged under that Act in respect of the application; and (c) the application had not been withdrawn or finally dealt with; then, subject to this Chapter and the regulations, this Act applies on and after that day: (d) in relation to the application as if it were a complete application made under this Act; and (e) in relation to the petty patent specification as if it were a complete specification filed under this Act in respect of the application. ... (5) Objection cannot be taken to: (a) an application mentioned in subsection (2); or (b) a patent granted on such an application; and such a patent is not invalid, so far as the invention is claimed in any claim, on any ground that would not have been available against the application or patent, as the case may be, under the 1952 Act.' The effect of these provisions is that the Enantiomer Patent can only be revoked under the 1990 Act on a ground of invalidity that would also have been available under the 1952 Act. Where the relevant ground of invalidity under the 1952 Act is narrower than the corresponding ground under the 1990 Act, the patentee has the benefit of the narrower ground. Thus, an applicant for a patent under the 1952 Act is not to be worse off than if the 1952 Act had continued to operate: NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 253-254 per Lockhart J; and ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc [2000] FCA 1349 ; (2000) 106 FCR 214 at 224 [23] per Lee, Heerey and Lehane JJ. 176 In Philips , the patent in question was granted under the 1952 Act. However, the proceedings were commenced on 5 July 1991, after the commencement of the 1990 Act, and sought revocation of the patent under s 138 of the 1990 Act. In those circumstances, s 233 of the 1990 Act operated in much the same way as s 234 operates in the present case. Section 233(1) provides that the 1990 Act applies to a standard patent granted under the 1952 Act as if the patent had been granted under the 1990 Act. Section 233(4) provides that objection cannot be taken to such a patent, and such a patent is not invalid, so far as the invention is claimed in any claim, on any ground that would not have been available against the patent under the 1952 Act. As Lockhart J explained in the Full Court, this meant that the elements of each ground of revocation under the 1990 Act applied only to the extent that they replicated in substance the elements that previously constituted a ground of revocation under the 1952 Act: (1993) 44 FCR 239 at 253-254 per Lockhart J, and also at 268 per Burchett J. 177 Another similarity between Philips and the present case is that the respondent, Mirabella, abandoned the ground of obviousness but persisted with the argument that the subject of the patent was not an invention amounting to a manner of manufacture within the meaning of s 6 of the Statute of Monopolies. At trial, Hill J held that the 1990 Act required that the subject matter of a patent be an invention as defined by that Act, that is to say it must be a manner of new manufacture within the meaning of s 6 of the Statute of Monopolies, and that this requirement did not differ in substance from that pertaining under the 1952 Act. His Honour found that the invention lacked inventiveness on the basis that it was no more than a use of a selection of known phosphors, in known compact fluorescent globes, being a purpose for which the known properties of the phosphors indicated suitability. All of this information was apparent on the face of the specification. Accordingly, the trial judge made an order revoking the patent under s 138(3)(b) of the 1990 Act. 178 The Full Federal Court reached the same conclusion. Lockhart J (with whom Northrop J agreed) said that the combination of s 18(1)(a) of the 1990 Act and Sch 1 thereto continued in force the notion of 'manner of new manufacture' present in s 100(1)(d) of the 1952 Act: at 263. His Honour also said at 263 that the requirement that a patentable invention be a manner of new manufacture is inherently distinct from the requirements of novelty, lack of obviousness, involving an inventive step and utility as required by s 18 of the 1990 Act. Although Burchett J reached a different conclusion on the facts, he also considered that the language of s 18, read in the light of the definition of invention, imposes a threshold test of patentability by reference to the expression 'manner of new manufacture'. The test requires that the subject matter of the patent must not fall outside the whole scope of what is known as an invention: at 269-270. 179 A majority of the High Court affirmed the Full Court's decision. In their joint majority judgment, Brennan, Deane and Toohey JJ said at 663-664: 'The effect of those opening words of s 18(1) is that the primary or threshold requirement of a "patentable invention" is that it be an "invention". Read in the context of s 18(1) as a whole and the definition of "invention" in the Dictionary in Sch 1, that clearly means "an alleged invention", that is to say, an "alleged" "manner of new manufacture the subject of letters patent and grant of privilege within s 6 of the Statute of Monopolies". In the light of what has been said above about what is involved in an alleged manner of new manufacture, that threshold requirement of "an alleged invention" will, notwithstanding an assertion of "newness", remain unsatisfied if it is apparent on the face of the relevant specification that the subject matter of the claim is, by reason of absence of the necessary quality of inventiveness, not a manner of new manufacture for the purposes of the Statute of Monopolies. That does not mean that the threshold requirement of "an alleged invention" corresponds with or renders otiose the more specific requirements of novelty and inventive step (when compared with the prior art base) contained in s 18(1)(b). It simply means that, if it is apparent on the face of the specification that the quality of inventiveness necessary for there to be a proper subject of letters patent under the Statute of Monopolies is absent, one need go no further.' In reaching this conclusion, their Honours expressly rejected Philips' argument that s 18(1)(b) was exclusive and exhaustive insofar as inventiveness is concerned and that, as a result, there was no scope to raise an argument under s 18(1)(a) or any other part of s 18(1) that the subject matter of the claim as identified in the specification lacks the quality of inventiveness required by s 6 of the Statute of Monopolies. More particularly, they rejected Philips' argument that, aside from s 18(1)(b), there was no scope to argue that a claimed use is 'nothing but ... a new use of an old substance' so that it falls outside the whole scope of what is known as an invention: at 663. 180 Although it was strictly unnecessary for their decision, Brennan, Deane and Toohey JJ also said that they would reach the same conclusion under s 18(1)(a). In their view, the preferable construction of s 18(1)(a) is that the phrase 'manner of manufacture' within the meaning of s 6 of the Statute of Monopolies should be understood as referring to a process which is a proper subject matter of letters patent according to traditional principle: at 667. The Court endorsed the factual conclusion reached by the trial judge and the Full Court that the relevant process was no more than a new use of a particular known product. It therefore followed that the claimed invention was not a manner of manufacture for the purposes of s 18(1)(a) and consequently not a 'patentable invention': at 668. 369 These provisions are directed to the question whether the invention enables the addressee to attain the result promised by the patentee in the patent specification: see Rehm Pty Ltd v Webster's Security Systems (International) Pty Ltd (1981) 81 ALR 79 ( 'Rehm' ) at 96; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 267 per Lockhart J; Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676 ( 'Old Digger' ) at [216]; Wrigley at [134]-[141]. Want of utility in this sense is different from want of utility in the broader commercial sense that the invention is useless for any purpose whatsoever: see Alsop's Patent (1907) 24 RPC 733 at 752; and Lane-Fox v Kensington & Knightsbridge Electric Lighting Co Ltd [1892] 3 Ch 424 at 431.


case_outcome: cited

case_text: In these circumstances, the transitional provisions in s 234 of the 1990 Act apply. Section 234(2) and (5) provide: '(2) Where, before the commencing day: (a) a patent application had been lodged under the 1952 Act; and (b) a complete specification, or a petty patent specification, had been lodged under that Act in respect of the application; and (c) the application had not been withdrawn or finally dealt with; then, subject to this Chapter and the regulations, this Act applies on and after that day: (d) in relation to the application as if it were a complete application made under this Act; and (e) in relation to the petty patent specification as if it were a complete specification filed under this Act in respect of the application. ... (5) Objection cannot be taken to: (a) an application mentioned in subsection (2); or (b) a patent granted on such an application; and such a patent is not invalid, so far as the invention is claimed in any claim, on any ground that would not have been available against the application or patent, as the case may be, under the 1952 Act.' The effect of these provisions is that the Enantiomer Patent can only be revoked under the 1990 Act on a ground of invalidity that would also have been available under the 1952 Act. Where the relevant ground of invalidity under the 1952 Act is narrower than the corresponding ground under the 1990 Act, the patentee has the benefit of the narrower ground. Thus, an applicant for a patent under the 1952 Act is not to be worse off than if the 1952 Act had continued to operate: NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 253-254 per Lockhart J; and ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc [2000] FCA 1349 ; (2000) 106 FCR 214 at 224 [23] per Lee, Heerey and Lehane JJ.


case_outcome: considered

case_text: On the face of these provisions, it is difficult to discern any substantive difference between s 100(1)(d) of the 1952 Act on the one hand, and the combined effect of the opening words of s 18(1), the definition of invention in Sch 1, and para (a) of s 18(1) of the 1990 Act on the other hand. This is, however, an issue to which I will need to return in the context of a fuller discussion of the decisions in Advanced Building Systems Pty Limited v Ramset Fasteners (Aust) Pty Limited [1998] HCA 19 ; (1998) 194 CLR 171 ( 'Ramset' ) and Bristol-Myers . 173 Warner-Lambert submitted that Ranbaxy's case on 'manner of manufacture' is foreclosed by the High Court's decision in Ramset . It pointed out that Ranbaxy had abandoned the grounds of obviousness and lack of inventive step in s 18(1)(b) of the 1990 Act and in the corresponding provision in s 100(1)(e) of the 1952 Act. Against this background, it argued that Ranbaxy's contention that the Enantiomer Patent claimed nothing but a new use of an old substance, and therefore lacked the quality of inventiveness, ought to be regarded as an argument based on obviousness and the lack of an inventive step. It contended that under the 1952 Act such an argument could only be raised under s 100(1)(e) and not under s 100(1)(d). 174 In advancing this argument, Warner-Lambert appeared to accept that, were it not for the transitional provision in s 234 of the 1990 Act, Ranbaxy's argument could have been advanced under the opening words of s 18(1) or possibly under s 18(1)(a) of the 1990 Act, in accordance with the High Court's decision in Philips . However, Warner-Lambert submitted that there is a distinction between revocation under s 100(1)(d) of the 1952 Act and revocation under s 18(1)(a) of the 1990 Act. Relying on Ramset at 190 [34], it submitted that the doctrinal content of s 100(1)(d) is confined to alleged inventions which are 'contrary to law' or 'generally inconvenient', categories which were excluded from the field covered by the expression 'any manner of new manufacture' in s 6 of the Statute of Monopolies. In contrast, it said that the reference to 'invention' in the opening words of s 18(1) is not so confined. 175 For the reasons elaborated below, I do not accept that Ranbaxy's case on 'manner of manufacture' is foreclosed by the High Court's decision in Ramset . In my opinion, Ranbaxy's argument falls squarely within the framework of the High Court's decision in Philips . In Ramset , the High Court did not question the authority of Philips and, as the Full Court of this Court said in Bristol - Myers , nothing in Ramset detracts from the binding effect of Philips in this Court. As to merits of the argument, I have reached the conclusion that Ranbaxy has not established on the facts that the Enantiomer Patent claims 'nothing but ... a new use of an old substance'. Consequently, Ranbaxy has failed to establish that the Enantiomer Patent is invalid, and liable to revocation, on the ground that was recognised and applied in Microcell and Philips . My detailed reasons for this conclusion are also set forth below. 182 The High Court's decision, like that of the Full Court and Hill J, did not depend solely upon a construction of s 18 of the 1990 Act. As the patent in suit in Philips was granted under the 1952 Act, the decision also depended, critically, on a finding that the manner of manufacture ground of invalidity under s 18(1) would also have been available under the 1952 Act. The majority judgment makes it clear, in my view, that the Court considered that the manner of manufacture ground was fully available under the 1952 Act and that s 18(1) had not altered that position. There are several relevant passages. Immediately following the key passage that I have extracted from their judgment, Brennan CJ, Deane and Toohey JJ said that the position under s 18(1) of the 1990 Act remains that indicated in NRDC , namely that under the 1952 Act the Commissioner could reject an application if it was apparent on the face of the specification that the alleged invention fell outside the scope of what is known as an invention: at 663-664. Later in their reasons, Brennan, Deane and Toohey JJ said at 665: 'More important, it seems to us to be highly unlikely that it was the legislative intent that there should be a significant alteration of the law as explained in Microcell by extending the ambit of a patentable invention so as to include what is "nothing more" than "the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable". In that regard, we do not accept the argument on behalf of Philips that Microcell was decided on the question of newness and not on manner of manufacture. It is true that, in Microcell, "counsel for the applicants argued that ... they were required to show no more than that the specification described a manner of manufacture and that it was alleged to be new". But it is clear that the decision of the Court was that "[t]he specification in the present case does not, in our opinion, disclose a patentable invention". Rather, the deliberate retention of the established definition of "invention" in the Dictionary in Sch 1 strongly supports the view that it was the legislative intent that the threshold requirement of "an invention" would continue to exclude from a "patentable invention" any claimed process, method or use which was not, on the face of the specification, a proper subject of letters patent according to traditional principles.' Lastly, when Brennan, Deane and Toohey JJ turned from the introductory words of s 18(1) to consider the proper construction of s 18(1)(a), they noted that NRDC was decided under the 1952 Act and said that the phrase 'manner of manufacture' in s 18(1)(a) should be construed in accordance with the decision in NRDC and earlier judicial decisions about the content of that phrase as used in the saving clause of s 6 of the Statute of Monopolies. They expressly endorsed Lockhart J's statement in the Full Court that the combination of s 18(1)(a) of the 1990 Act and Sch 1 thereto had continued in force the notion of 'manner of new manufacture' present in s 100(1)(d) of the 1952 Act: see also Burchett J's judgment at 270, 278 and 282; and Kirby J's dissenting judgment in Ramset at 194 [42]. 183 The patent in suit in Ramset was granted under the 1952 Act. The proceedings were instituted under the 1952 Act, prior to its repeal on 30 April 1991 by the 1990 Act. Accordingly, the 1990 Act had no application to the litigation. 184 At trial, the grounds of obviousness or lack of inventive step, based upon s 100(1)(e) of the 1952 Act, had been abandoned. Hill J held that none of the prior publications relied upon by the respondent was sufficient to make out a case for revocation under s 100(1)(g) of the 1952 Act on the ground that, on the priority date of the claims, the invention was not novel in Australia. 185 In the High Court, in their joint majority judgment, Brennan CJ, Gaudron, McHugh and Gummow JJ said that the issue was whether the Full Court, in purported reliance upon s 100(1)(d), had strayed into a consideration of issues that would have arisen if the ground of revocation in question had been obviousness (which had been abandoned) or lack of novelty (which the Full Court had put to one side): Ramset at 182 [13]. In the result, the majority held that by going beyond the text of the specification and placing decisive weight upon the prior publications, the Full Court had erred. Prior publications of that kind could not be relied upon in considering the ground of revocation in s 100(1)(d); those matters could only have arisen under other grounds, namely obviousness and lack of novelty, which in the circumstances of the case either did not arise or were to put to one side: at 193 [40]. 186 The majority distinguished Philips as a case in which the absence of the quality of inventiveness necessary for there to be a proper subject of letters patent under the Statute of Monopolies was apparent on the face of the specification: at 192-193 [39] and [40]. 187 Warner-Lambert relied on several passages in the majority judgment in Ramset for its contention that Ranbaxy's manner of manufacture argument was legally unavailable. Its contention that the doctrinal content of s 100(1)(d) of the 1952 Act did not extend to the manner of manufacture argument recognised and applied by the High Court in Microcell was based on the following passage at 190 [33] and [34]: 'In particular, s 100(2) assumes that issues of obviousness and lack of novelty are extracted by pars (e) and (g) of s 100(1) from what otherwise may have been their inclusion (by means of par (d)) in the general concept of invention within the ambit of s 6 of the Statute of Monopolies. Novelty and obviousness are dealt with specifically and exhaustively in pars (e) and (g). There remains no scope for the doctrine of secret use, as a qualification to obviousness and novelty, in par (d), and in s 100(2), no occasion to refer to par (d). What then was left to provide the doctrinal content of par (d)? Section 6 of the Statute of Monopolies excluded any manner of new manufacture which was "contrary to the Law" or "generally inconvenient". The classification of certain methods of treatment of the human body as an inappropriate subject for grants under the Act appears to rest on this footing. Further, it has long been established that "a clear distinction will be drawn between the discovery of one of nature's laws, and of its application to some new and useful purpose". Whilst discovery adds to the sum of human knowledge, s 6 of the Statute of Monopolies is concerned with a manner of new manufacture. Thus, in Neilson v Minister of Public Works (NSW) , Isaacs J, speaking of a discovery which might be applied in the improved treatment of sewage, said: "Assuming, therefore, the idea is original that the best conditions are fermentation short of putrefaction, still without some practical means of carrying out that idea so as to add to the sum of human art -- not merely human discovery -- the idea is not patentable." On the other hand, "manufacture" in s 6 is not restricted to vendible processes or their products and may include agricultural and horticultural processes involving the selective use of herbicides.' In my opinion, this passage does not go so far as to support Warner-Lambert's contention, and ultimately it is inconclusive. 188 The proposition that novelty and obviousness are dealt with specifically and exhaustively in s 100(1)(e) and (g), and not in s 100(1)(d), does not deny Ranbaxy's proposition that the ground of invalidity discussed in Microcell , NRDC and Philips falls squarely within s 100(1)(d) and s 18(1). The remainder of the passage poses, but does not definitively answer, the question of what is left to provide the doctrinal content of s 100(1)(d). Some examples are given, but they do not address the question whether the ground of invalidity recognised in Microcell , NRDC and Philips would fall within s 100(1)(d). So far as it goes, the distinction that is drawn between discovery and any manner of new manufacture tends to suggest that, if revocation were sought, cases like Microcell and NRDC would fall for consideration under s 100(1)(d). Earlier in their reasons at 183 [15], the majority in Ramset said that the right question when applying the definition of invention and the expression 'any manner of new manufacture' under the 1952 Act is: '"Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?"' The majority's endorsement of this test also tends to suggest that cases like Microcell and NRDC would have fallen within s 100(1)(d) of the 1952 Act, had revocation been sought on that ground. 189 Warner-Lambert also relied on the following passage from the majority reasons in Ramset at 192 [38]: 'Under that law, as the doctrine with respect to obviousness and lack of inventive step developed in the nineteenth century, it was decided that a claim for "nothing but" a new use of an old substance lacked the quality of inventiveness. There also were instances in which this lack of inventive step was admitted on the face of the specification. If so, a grant might properly be refused in the first instance on the footing that the admission of the lack of an inventive step itself disentitled the applicant to argue that even an alleged invention was disclosed. If such an application had proceeded to grant, the grant would be liable to revocation under s 100(1)(e).' Again, I do not think this passage goes so far as to support Warner-Lambert's submission that the argument that a claim lacked the quality of inventiveness because it was for nothing but a new use of an old substance could only be raised under s 100(1)(e), and not under s 100(1)(d), of the 1952 Act. The last sentence of the passage addresses the case where the lack of an inventive step is admitted on the face of the specification; in terms, a case of that kind would fall within para (e). It does not explicitly address the other cases mentioned earlier in the passage, viz, where it appears from the face of the specification that the claim is not for 'a manner of new manufacture', and where the claim is for nothing but a new use of an old substance so that it lacks the quality of inventiveness required by the 1952 Act. The majority do not say that, in cases like those, revocation is only available under s 100(1)(e), or that there can never be any overlap between the grounds in paras (d) and (e) of s 100(1). The possibility that grounds for revocation may overlap in particular cases is well recognised: see Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd [1961] HCA 39 ; (1961) 180 CLR 98 at 112-113 per Windeyer J; see also Ramset at 189 [31] in the majority judgment, and at 198 [50] and 200 [55] in Kirby J's dissenting judgment. 191 More generally, Warner-Lambert submitted that the majority judgment in Ramset draws a distinction between the grounds that can be relied upon for revocation under s 100(1)(d) of the 1952 Act and those that can be relied upon under the introductory words and/or para (a) of s 18(1) of the 1990 Act. It is correct that the majority drew attention to the significant differences in structure between s 100 of the 1952 Act and the provisions of s 138(3)(b), s 18(1) and Sch 1 of the 1990 Act. The majority also observed that Philips was decided upon a construction of the introductory words of s 18(1) of the 1990 Act. It is unclear, however, where these observations go. With great respect, I doubt that it is entirely correct to say, as Black CJ and Lehane J did in Bristol-Myers at 531 [20], that the Court in Ramset distinguished Philips on the basis that there were significant differences between the 1990 Act and its predecessors. While these differences were noted, the majority ultimately did not rely upon them to distinguish Philips . Rather, as I have already observed, the express basis for distinguishing Philips was that it was a case in which the absence of inventiveness appeared on the face of the specification, rather than emerging from prior publications of the kind that might have supported an objection of obviousness or lack of novelty under s 100(1)(e) or (g). It also needs to be borne in mind that the observed differences between the 1952 Act and the 1990 Act would not have constituted a valid or sufficient basis for distinguishing Philips , given that the case attracted the transitional provisions in s 233(4) of the 1990 Act. 192 In the present case, Ranbaxy based its argument on Microcell and Philips . The majority decision in Ramset does not cast any doubt on the soundness of Microcell . It also expressly approved the High Court's decision in NRDC , which in turn endorsed the principles discussed in Mircocell . 196 The majority in Ramset agreed that NRDC sets out the correct way of approaching the definition of invention in the 1952 Act. As s 100(1)(d) provides for revocation where the claimed invention is not an invention within the meaning of the Act, there is no reason to suppose that the application of s 100(1)(d) should be approached in any different fashion from that explained in Microcell and NRDC . 198 In Wm Wrigley Jr Company v Cadbury Schweppes Pty Ltd (2005) 66 IPR 298 ( 'Wrigley' ) at 314-315 [87]-[93], Heerey J held that a manner of manufacture argument could be advanced under s 100(1)(d) of the 1952 Act so long as the ground in s 100(1)(d) was established on the face of the specification. His Honour expressly stated that this was the effect of the decision in Ramset . Furthermore, his Honour considered that the question whether or not the ground in s 100(1)(d) was established on the face of the specification was to be determined by considering and applying the principles discussed in Microcell . 199 In light of the foregoing authorities, I would sum up the position as follows. There is nothing in the majority judgment in Ramset that casts any doubt on the actual decision in Philips . Ranbaxy's argument on manner of manufacture is not foreclosed by any of the reasoning in Ramset , which does not go nearly as far as Warner-Lambert contends. 201 As the US Patent is substantially identical to the 981 Patent I do not need to consider whether the citation of the 981 Patent as prior art would be sufficient for it to be characterised as information that appears on the face of the specification: see Bristol-Myers at 536 [30]; Microcell at 250; cf Ramset at 192-193 [40]. Nor do I need to consider the additional observations made by the majority in Philips (which were unnecessary for the decision) to the effect that s 18(1)(a) of the 1990 Act would permit the Court to look beyond the face of the specification in determining whether a claimed invention is nothing more than a new use of an old substance, and whether those observations can be reconciled with the reasoning in Ramset . My task is to apply the principles that were enunciated in Microcell , NRDC and Philips to the claims of the Enantiomer Patent. 205 In my view, Ranbaxy's argument requires an extension of the principles that the High Court applied in Microcell , NRDC , Philips and Ramset . Ranbaxy did not accept that this was so. It contended that racemic atorvastatin lactone was a known compound with known properties that were reported in Table 1 (compound 1) of the 981 Patent specification, and that the activity of this racemate is, and was, known to be due to the RR enantiomer. In closing submissions, however, senior counsel for Ranbaxy could not identify any case on 'manner of manufacture' that deals with a situation that is analogous to the present case where a selection process forms the basis of the compounds claimed by the later patent. 206 The decisions in Philips and Ramset do not leave room for the kind of extension that is necessary to accommodate Ranbaxy's argument. My earlier discussion of those cases makes it plain that one of the reasons why the manner of manufacture ground of invalidity has, relevantly, been limited to cases where the lack of inventiveness appears on the face of the specification is to ensure that it does not render otiose the more specific requirements of novelty and inventive step: see Philips at 663-664 and Ramset at 190 [33]-[34] and 192 [38]. Ranbaxy abandoned arguments based on lack of novelty, obviousness and inventive step and it would be inappropriate to allow the manner of manufacture argument to be used as a de facto attack based on obviousness or lack of inventive step. It is also relevant to note that Ranbaxy does not seek to go, and indeed cannot go, behind the claim in the Enantiomer Patent specification that the R-trans enantiomer achieved surprising and unexpected inhibition of the biosynthesis of cholesterol, in the way that it does when pursuing its arguments based on false suggestion and inutility. 207 Later in these reasons, I discuss the authorities on selection patents in the context of the ground of inutility. Those authorities clearly show that a compound selected from a large range of possible compounds can be the subject of a patent, provided special properties are identified through the process of selection. 208 At a factual level, the evidence does not make good Ranbaxy's contention that the gap between the compounds of the 981 Patent and those claimed by the Enantiomer Patent can be dismissed as so routine as to be inconsequential. The expert evidence as a whole establishes that a number of real choices or important selection steps separate the two patents.


case_text: In the course of their reasons, Brennan, Deane and Toohey JJ discussed and approved the earlier High Court decisions in Microcell and National Research Development Corporation v Commissioner of Patents [1959] HCA 67 ; (1959) 102 CLR 252 ( 'NRDC' ). There is no doubt that their Honours considered that Microcell (a decision under the Patents Act 1903 (Cth)) and NRDC (a decision under the 1952 Act) applied with equal force to s 100(1)(d) of the 1952 Act and to the threshold requirement of 'invention' in s 18(1) of the 1990 Act.


case_text: Warner-Lambert also relied on the following passage from the majority reasons in Ramset at 192 [38]: 'Under that law, as the doctrine with respect to obviousness and lack of inventive step developed in the nineteenth century, it was decided that a claim for "nothing but" a new use of an old substance lacked the quality of inventiveness. There also were instances in which this lack of inventive step was admitted on the face of the specification. If so, a grant might properly be refused in the first instance on the footing that the admission of the lack of an inventive step itself disentitled the applicant to argue that even an alleged invention was disclosed. If such an application had proceeded to grant, the grant would be liable to revocation under s 100(1)(e).' Again, I do not think this passage goes so far as to support Warner-Lambert's submission that the argument that a claim lacked the quality of inventiveness because it was for nothing but a new use of an old substance could only be raised under s 100(1)(e), and not under s 100(1)(d), of the 1952 Act. The last sentence of the passage addresses the case where the lack of an inventive step is admitted on the face of the specification; in terms, a case of that kind would fall within para (e). It does not explicitly address the other cases mentioned earlier in the passage, viz, where it appears from the face of the specification that the claim is not for 'a manner of new manufacture', and where the claim is for nothing but a new use of an old substance so that it lacks the quality of inventiveness required by the 1952 Act. The majority do not say that, in cases like those, revocation is only available under s 100(1)(e), or that there can never be any overlap between the grounds in paras (d) and (e) of s 100(1). The possibility that grounds for revocation may overlap in particular cases is well recognised: see Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd [1961] HCA 39 ; (1961) 180 CLR 98 at 112-113 per Windeyer J; see also Ramset at 189 [31] in the majority judgment, and at 198 [50] and 200 [55] in Kirby J's dissenting judgment.


case_text: The holding and the rationale of Philips were recently applied in Merck & Co Inc v Arrow Pharmaceuticals Ltd [2006] FCAFC 91 ; (2006) 68 IPR 511 ( 'Merck' ). At 529 [63], the Full Court (comprising Heerey, Kiefel and Dowsett JJ) said that Microcell , NRDC and Philips established the following propositions: '1. The opening words of s 18(1) ("a patentable invention is an invention that") impose a threshold requirement that the "patentable invention" be an "invention", that is to say an "alleged" "manner of new manufacture" within s 6 of the Statute of Monopolies ( Philips at CLR 663; ALR 121; IPR 453). 2. That requirement will not be met if, on the face of the specification, the subject matter: (a) lacks the necessary quality of inventiveness under the Statute of Monopolies ( Phillips at CLR 664; ALR 122; IPR 454) (b) is not new ( NRDC at CLR 262, ALR 115; IPR 65, Philips at CLR 664; ALR 122; IPR 454) 3. A new use of an old substance is not an invention if its known properties make it suitable for that use in such a case the new purpose is "no more than analogous to the purposes for which the utility of the substance is already known" ( NRDC at CLR 262; ALR 115; IPR 65) 4. But there will be an invention if the new use consists in taking advantage of a hitherto unknown or unsuspected property of the substance ( NRDC at CLR 262; ALR 115; IPR 65).' Subject to one matter, I consider these propositions are equally applicable to s 100(1)(d) of the 1952 Act. The qualification is that I am not sure what is meant by proposition 2(b) or that it adds anything to proposition 2(a). 200 In the present case, Warner-Lambert did not dispute that the US Patent is incorporated into the specification for the Enantiomer Patent. Ranbaxy's argument therefore does not require me to look beyond the face of the specification. This view is supported by the decisions of the Full Court in Merck at 518-523 [27]-[39] and Bristol-Myers at 536 [30] and Heerey J in Wrigley at 314 [87]-[93].


case_text: In Wm Wrigley Jr Company v Cadbury Schweppes Pty Ltd (2005) 66 IPR 298 ( 'Wrigley' ) at 314-315 [87]-[93], Heerey J held that a manner of manufacture argument could be advanced under s 100(1)(d) of the 1952 Act so long as the ground in s 100(1)(d) was established on the face of the specification. His Honour expressly stated that this was the effect of the decision in Ramset . Furthermore, his Honour considered that the question whether or not the ground in s 100(1)(d) was established on the face of the specification was to be determined by considering and applying the principles discussed in Microcell . 200 In the present case, Warner-Lambert did not dispute that the US Patent is incorporated into the specification for the Enantiomer Patent. Ranbaxy's argument therefore does not require me to look beyond the face of the specification. This view is supported by the decisions of the Full Court in Merck at 518-523 [27]-[39] and Bristol-Myers at 536 [30] and Heerey J in Wrigley at 314 [87]-[93]. 228 These principles were applied by Heerey J in Wrigley where he made the following observation at 321 [125]: 'If a representation was made which was objectively likely to contribute to a decision to grant a patent, and a patent is granted, it may be inferred that the representation in fact contributed to that decision; cf the common law position on inducement in the context of fraud and misrepresentation discussed in Gould v Vaggelas [1985] HCA 75 ; (1985) 157 CLR 215 at 219, 236, 250 and 262...' 229 Under the heading, 'Background of the Invention', the patent specification states: 'It is now unexpectedly found that the enantiomer having the R form of the ring-opened acid of trans-5 (4 fluorophenyl) 2 (1 methylethyl) N,4 diphenyl 1 [2 tetrahydro 4 hydroxy 6 oxo 2 H pyran 2 yl) ethyl] 1 H pyrrole 3 carboxamide; that is [R (R*,R*)] 2 (4 fluorophenyl) ß, δ dihydroxy 5 (1 methylethyl) 3 phenyl 4 [(phenylamino)carbonyl] 1 H pyrrole 1 heptanoic acid, provides surprising inhibition of the biosynthesis of cholesterol.' 230 On the next page, after referring to what was generally known in the field concerning the inhibition of HMG-CoA reductase, the specification states: 'However, an ordinarily skilled artisan may not predict the unexpected and surprising inhibition of cholesterol biosynthesis of the present invention in view of these disclosures.' 369 These provisions are directed to the question whether the invention enables the addressee to attain the result promised by the patentee in the patent specification: see Rehm Pty Ltd v Webster's Security Systems (International) Pty Ltd (1981) 81 ALR 79 ( 'Rehm' ) at 96; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 267 per Lockhart J; Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676 ( 'Old Digger' ) at [216]; Wrigley at [134]-[141]. Want of utility in this sense is different from want of utility in the broader commercial sense that the invention is useless for any purpose whatsoever: see Alsop's Patent (1907) 24 RPC 733 at 752; and Lane-Fox v Kensington & Knightsbridge Electric Lighting Co Ltd [1892] 3 Ch 424 at 431.


case_outcome: approved

case_text: This submission correctly identifies the causal connection that is required. It is not necessary to show that 'but for' the suggestion or representation no grant would have been made. In Prestige Group (Australia) Pty Ltd v Dart Industries Inc (1990) 19 IPR 275 (' Prestige '), Lockhart J said at 279-280: 'I agree in substance with the statement in Blanco White [Patents for Inventions, 5th ed] that conduct "calculated substantially to influence the [Commissioner's] decision under the [1952] Act whether or not to grant the patent" is the proper test. I would state the test, however, in different terms, namely, whether the conduct constituting the false suggestion or representation materially contributed to the Commissioner's decision to grant the patent even if other circumstances or causes also played a part in the making of that decision. It is sufficient if the conduct is a material inducing factor which led to the grant. It goes too far to say that the false suggestion or representation must be material in the sense that without it the patent would not have proceeded to grant.' See also Gummow J at 296.


case_text: This test was approved by the Full Court in Pfizer at 80-83 [394]-[403] and by Crennan J in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 at 94 [134]-[136]. There is no requirement of a deliberate intent to deceive: Pfizer at 80 [394]. Insofar as the representation is based on belief, it is relevant to consider whether the belief is false or not reasonably held: see NSI Dental at 579 [207] per Tamberlin J.


case_text: These provisions are directed to the question whether the invention enables the addressee to attain the result promised by the patentee in the patent specification: see Rehm Pty Ltd v Webster's Security Systems (International) Pty Ltd (1981) 81 ALR 79 ( 'Rehm' ) at 96; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 267 per Lockhart J; Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676 ( 'Old Digger' ) at [216]; Wrigley at [134]-[141]. Want of utility in this sense is different from want of utility in the broader commercial sense that the invention is useless for any purpose whatsoever: see Alsop's Patent (1907) 24 RPC 733 at 752; and Lane-Fox v Kensington & Knightsbridge Electric Lighting Co Ltd [1892] 3 Ch 424 at 431. 370 In Rehm , Gummow J explained the governing principles at 96, as follows: 'The basic principle has been formulated as follows in Fawcett v Homan (1896) 13 RPC 398 at 405 per Lindley LJ: "If an invention does what it is intended by the patentee to do, and the end attained is itself useful, the invention is a useful invention." What the invention is intended to do is a matter to be gathered from the title and the whole of the specification: Blanco White, Patents For Inventions , SS 4 403. A distinction may be drawn between a case where a patentee claims a result and bases his claim on the production of that result and the case where a patentee merely points to certain advantages that will accrue from the use of his invention: Fox H G, Canadian Patent Law and Practice , 4th ed, pp 152 4.' See also TA Blanco White, Patents for Inventions , 5 th edn, Stevens & Sons, London, 1983 ( 'Blanco White' ) at [4-402] and [4-403]; and Terrell on the Law of Patents , 14 th edn, ed D Young et al, Sweet & Maxwell, London, 1994 at [5.121]-[5.128]. 371 As the latter part of the passage from Rehm suggests, the grounds of utility and false suggestion or misrepresentation can overlap. False suggestion or misrepresentation is a wider concept; it extends to representations that are extraneous to the specification and representations that do not attract the inutility ground. Blanco White states at [4-405]: 'It is not easy to distinguish between the sort of failure to fulfil a promise of results made in the specification that will amount to lack of utility and the sort that merely amounts to a false representation and accordingly will invalidate only if the patent has been "obtained" upon it. The distinction has been phrased as one between a promise of results and a mere wrong statement of the purposes for which that which is attained can be used; also as one between a promise of results and a "mere puff", or between a false representation of the attributes of the product claimed and an accurate representation as to its attributes coupled with an expression of an "over-sanguine and erroneous view of its character."' See also Hatmaker v Joseph Nathan Co Ltd (1919) 36 RPC 231 at 239 and Old Digger at [216].


case_text: These provisions are directed to the question whether the invention enables the addressee to attain the result promised by the patentee in the patent specification: see Rehm Pty Ltd v Webster's Security Systems (International) Pty Ltd (1981) 81 ALR 79 ( 'Rehm' ) at 96; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 267 per Lockhart J; Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676 ( 'Old Digger' ) at [216]; Wrigley at [134]-[141]. Want of utility in this sense is different from want of utility in the broader commercial sense that the invention is useless for any purpose whatsoever: see Alsop's Patent (1907) 24 RPC 733 at 752; and Lane-Fox v Kensington & Knightsbridge Electric Lighting Co Ltd [1892] 3 Ch 424 at 431. 371 As the latter part of the passage from Rehm suggests, the grounds of utility and false suggestion or misrepresentation can overlap. False suggestion or misrepresentation is a wider concept; it extends to representations that are extraneous to the specification and representations that do not attract the inutility ground. Blanco White states at [4-405]: 'It is not easy to distinguish between the sort of failure to fulfil a promise of results made in the specification that will amount to lack of utility and the sort that merely amounts to a false representation and accordingly will invalidate only if the patent has been "obtained" upon it. The distinction has been phrased as one between a promise of results and a mere wrong statement of the purposes for which that which is attained can be used; also as one between a promise of results and a "mere puff", or between a false representation of the attributes of the product claimed and an accurate representation as to its attributes coupled with an expression of an "over-sanguine and erroneous view of its character."' See also Hatmaker v Joseph Nathan Co Ltd (1919) 36 RPC 231 at 239 and Old Digger at [216].


case_title: Alsop's Patent (1907) 24 RPC 733

case_text: These provisions are directed to the question whether the invention enables the addressee to attain the result promised by the patentee in the patent specification: see Rehm Pty Ltd v Webster's Security Systems (International) Pty Ltd (1981) 81 ALR 79 ( 'Rehm' ) at 96; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 at 267 per Lockhart J; Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676 ( 'Old Digger' ) at [216]; Wrigley at [134]-[141]. Want of utility in this sense is different from want of utility in the broader commercial sense that the invention is useless for any purpose whatsoever: see Alsop's Patent (1907) 24 RPC 733 at 752; and Lane-Fox v Kensington & Knightsbridge Electric Lighting Co Ltd [1892] 3 Ch 424 at 431.


case_title: Lane-Fox v Kensington & Knightsbridge Electric Lighting Co Ltd [1892] 3 Ch 424


case_text: As the latter part of the passage from Rehm suggests, the grounds of utility and false suggestion or misrepresentation can overlap. False suggestion or misrepresentation is a wider concept; it extends to representations that are extraneous to the specification and representations that do not attract the inutility ground. Blanco White states at [4-405]: 'It is not easy to distinguish between the sort of failure to fulfil a promise of results made in the specification that will amount to lack of utility and the sort that merely amounts to a false representation and accordingly will invalidate only if the patent has been "obtained" upon it. The distinction has been phrased as one between a promise of results and a mere wrong statement of the purposes for which that which is attained can be used; also as one between a promise of results and a "mere puff", or between a false representation of the attributes of the product claimed and an accurate representation as to its attributes coupled with an expression of an "over-sanguine and erroneous view of its character."' See also Hatmaker v Joseph Nathan Co Ltd (1919) 36 RPC 231 at 239 and Old Digger at [216].


case_text: This construction of the specification is consistent with the character of the Enantiomer Patent. It is, in effect, a selection patent: ie the compounds of the Enantiomer Patent have been selected from the broad class of compounds disclosed by the 981 Patent on the ground that those compounds have unexpected properties. The criteria for the grant of a selection patent were considered in IG Farbenindustrie AG's Patents (1930) 47 RPC 289 ( 'IG Farbenindustrie' ) at 322-323 and are quite stringent: the selection must be based on some substantial advantage gained or some substantial disadvantage avoided; the whole of the selected members must possess the advantage in question; and the selection must be in respect of a quality of a special character which may fairly be said to be peculiar to the selected group. The authorities also require that the advantages gained, or disadvantages avoided, by the selection must be expressly identified in the body of the specification. Blanco White states at [4-511]: 'Where the patent is a "selection patent," there is an additional requirement for sufficiency that the special advantage obtained from the selection must be stated in the specification. More generally, the advantage resulting from the invention must be stated whenever failure to do so leaves the invention inadequately defined.' In IG Farbenindustrie at 323, Maugham J said: '"I must add a word on the subject of the drafting of the specification of such a patent. It should be obvious, after what I have said as to the essence of the inventive step, that it is necessary for the patentee to define in clear terms the nature of the characteristic which he alleges to be possessed by the selection for which he claims a monopoly. He has in truth disclosed no invention whatever if he merely says that the selected group possesses advantages. Apart altogether from the questions of what is called sufficiency, he must disclose an invention; he fails to do this in the case of a selection for special characteristics, if he does not adequately define them".' In the Enantiomer Patent specification, Warner-Lambert has defined the claims of unexpected and surprising inhibition of cholesterol biosynthesis by means of the CSI Table at pg 8 of the specification.


case_text: The decision in May & Baker Ltd v Boots Pure Drug Co Ltd (1948) 65 RPC 255 provides a useful illustration of the application of these principles in circumstances which are not unlike this case: see also E.I. Du Pont Nemours & Co (Witsiepe's) Application [1982] FSR 303.


case_title: E.I. Du Pont Nemours & Co (Witsiepe's) Application [1982] FSR 303


case_text: Warner-Lambert submitted that Lipitor's commercial success demonstrates that the compounds claimed by the Enantiomer Patent (including claim 6) are undoubtedly useful. It also submitted that Ranbaxy's intention to market its own version of atorvastatin calcium in Australia supports the view that the compound has surprising activity and consequently utility. These submissions are misdirected. Utility in patent law is directed to the results promised by the specification, and not to the broader question of commercial or financial success: see Terrell on the Law of Patents at [5.128]; Badische Anilin Und & Soda Fabrik v Levinstein (1887) 4 RPC 449 at 462. 379 Ranbaxy has succeeded in its challenge to the validity of the Enantiomer Patent. Accordingly, it is entitled to an order revoking the Enantiomer Patent. 380 Warner-Lambert has succeeded in its cross claim that Ranbaxy's intended importation and sale of its product will infringe the 981 Patent. It is entitled to a permanent injunction restraining Ranbaxy during the term of the 981 Patent, and any extension of that term, from infringing the 981 Patent.


case_text: The scheme is a scheme for the reconstruction of the company. It passes the test set out by Buckley J in Re South African Supply and Cold Storage (1904) 2 Ch 268 at 286. The undertaking is being transferred to persons who are not outsiders so that substantially the same business will be carried on by substantially the same persons who previously conducted the business. 14 I have been provided with a helpful written outline of pSivida Ltd's submissions. In accordance with the practice usually followed, I will mark the outline of submissions as MFI 1, but will not make any further reference to them in these reasons. 15 I am satisfied that I should make orders in accordance with the short minutes of order which I have now signed and dated and placed with the Court papers. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 15 May 2008 Counsel for the Plaintiff: I M Jackman SC Solicitor for the Plaintiff: Blake Dawson Date of Hearing: 1 May 2008 Date of Judgment: 1 May 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/627.html


case_outcome: followed

case_text: In accordance with the approach taken in Royal Victorian Institute for the Blind Ltd v RBS.RVIB.VAF Ltd [2004] FCA 735 ; (2004) 206 ALR 581 at [17] and SGIC Insurance Ltd v Insurance Australia Ltd (2004) 51 ACSR 470 at [6], New pSivida Inc has been joined as a defendant in this application.


case_title: SGIC Insurance Ltd v Insurance Australia Ltd (2004) 51 ACSR 470


case_text: This is an application brought by Hardel Property Holdings Pty Ltd ("Hardel Holdings") seeking interlocutory relief by way of an injunction to restrain Allmark Property Management Pty Ltd ("Allmark") from instituting proceedings for the winding up of Hardel Holdings on the basis of presumed insolvency, Hardel Holdings having failed to comply with the statutory demand: see s 459C, s 459Q and s 465A of the Corporations Act 2001 (Cth). Hardel Holdings previously applied to have the statutory demand set aside under s 459G of the Corporations Act claiming that it was not indebted to Allmark at all or else that there was a genuine dispute as to its indebtedness. That application was dismissed at the instigation of Hardel Holdings, it being acknowledged that the application had not been served within the time specified in s 459G. It was accepted that the period allowed for an application under s 459G could not be extended: see David Grant & Co Pty Ltd (rec apptd) v Westpac Banking Corporation [1995] HCA 43 ; (1995) 184 CLR 265. 2 Ordinarily, if a company the subject of a statutory demand wishes to oppose a winding up order notwithstanding its failure to comply with it, it may apply to do so under s 459S of the Corporations Act . The statutory demand procedure created by Pt 5.4 of the Corporations Act does not, though, totally preclude an application for an injunction to restrain an abuse of process in the initiation or prosecution of winding up proceedings founded on non-compliance with statutory demand. As was said by Gummow J in David Grant at 279: "No doubt, in some circumstances, the new Pt 5.4 may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. It also may transpire that a winding up application in respect of a solvent company is threatened or made for an improper purpose which amounts to an abuse of process in the technical sense of that term, as explained in Williams v Spautz [(1992) [1992] HCA 34 ; 174 CLR 509 at 518-522, 532-537]. However, in an appropriate case, injunctive relief may then be available to the company in a court of general equity jurisdiction."


case_title: Williams v Spautz [1992] HCA 34 ; (1992) 174 CLR 509

case_text: Ordinarily, if a company the subject of a statutory demand wishes to oppose a winding up order notwithstanding its failure to comply with it, it may apply to do so under s 459S of the Corporations Act . The statutory demand procedure created by Pt 5.4 of the Corporations Act does not, though, totally preclude an application for an injunction to restrain an abuse of process in the initiation or prosecution of winding up proceedings founded on non-compliance with statutory demand. As was said by Gummow J in David Grant at 279: "No doubt, in some circumstances, the new Pt 5.4 may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. It also may transpire that a winding up application in respect of a solvent company is threatened or made for an improper purpose which amounts to an abuse of process in the technical sense of that term, as explained in Williams v Spautz [(1992) [1992] HCA 34 ; 174 CLR 509 at 518-522, 532-537]. However, in an appropriate case, injunctive relief may then be available to the company in a court of general equity jurisdiction." 3 An abuse of process in the technical sense to which his Honour referred occurs when a party institutes proceedings "for a purpose or to effect an object beyond that which the legal process offers": see Williams v Spautz at 523. Hardel Holdings is alleging in this proceedings that such is the case. It contends that the evidence establishes a prima facie case of Allmark knowingly instituting proceedings against it which it knows to be without foundation but has done so as a tactical manoeuvre in respect of a dispute between two other companies in the Hardel and Allmark families which is presently the subject of legal proceedings in the Supreme Court of South Australia. Those proceedings seek the winding up of an Allmark company on the basis of non-compliance to the statutory demand. 4 The matter presently before me is for interlocutory relief. It is brought as a matter of urgency because, Hardel Holdings not having satisfied the statutory demand, Allmark is entitled under the Corporations Act to institute proceedings to wind up the company and has indicated it wishes to do so. For its part Hardel Holdings says it will suffer significant prejudice if such a course was to be taken by Allmark, the more so given that the taking of that course would, Hardel contends, constitute a technical abuse of process in the circumstances. The apprehended prejudice making the application an urgent one is that the institution of winding up proceedings against it would trigger default events under, or otherwise would imperil, financing arrangements it has in place for property developments that it is undertaking in several parts of Australia. 5 It is fair to say that the material that has been filed by both parties but in particular by Allmark suffers from opacity and generates some real level of doubt as to what is the true position between the parties in respect of the alleged debt and in respect of such object as Allmark may have had in bringing the proceedings. Nonetheless, serious allegations are made against Allmark. 19 It is well established that the onus of satisfying the court that there is an abuse of process lies upon the party alleging it. That onus is a heavy one and the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances: Williams v Spautz at 529. The present hearing being only of an interlocutory character, a permanent stay is not being sought. Nonetheless, I am mindful of the gravity of the allegation being made and, in consequence of, the need for a prima facie case to be properly established in light of that.


case_text: The two main inquiries to be addressed in applications for interlocutory injunctive relief have recently been reiterated by the High Court in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 (see esp [65] ff) and need not be rehearsed at any length here. I would, though, note that the first inquiry "whether the applicant has made out a prima facie case" only requires the applicant to "show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial": ibid [65]. The necessary strength of that likelihood depends upon the nature of the right asserted by the applicant and the practical consequences likely to flow from the order sought: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622. I would add, as well, that, if I am satisfied that a prima facie case has been made out in this matter, the balance of convenience favours the grant of relief. The injury likely to be suffered by Hardel Holdings through its financing arrangements if an injunction was refused would outweigh the injury which Allmark would suffer in being held out of its statutory right. Damages would not adequately compensate Hardel Holdings if an injunction was refused and its right were injured. The final matter I should mention is that, while there is a clear conflict between Mr Harris and Mr Riggs as to the occurrence of conversations, etc between them and while there are serious imputations being made and denied, it is quite inappropriate for me on such an application to make, or to foreshadow, findings on credit.


case_title: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618


case_text: I have already indicated that the abuse of process procedure cannot properly be used as a collateral method of disputing the existence of a debt: see generally Braams Group Pty Ltd v Miric [2002] NSWCA 417 ; (2002) 44 ACSR 124. This said, I reiterate that Pt 5.4 of the Corporations Act does not preclude the allegation of an abuse of process where the abuse is alleged to be the institution of proceedings for an improper purpose. In this matter the plaintiff alleges such to be the case. For the purposes of making out a prima facie case of this, emphasis is placed upon three particular matters. 22 It is said, first, that there is evidence that should sufficiently satisfy me for present purposes of the likelihood that Allmark (through Mr Riggs) has instituted proceedings against Hardel Holdings in the knowledge that no debt was owed by it and/or that any alleged indebtedness arising out of the joint venture arrangement would be the indebtedness of Stanhope in any event. To the extent that this merely calls into question the existence of the debt, it alone would not satisfy me that a prima facie case of abuse of process has been made out. 23 The second matter relied upon relates to the genuineness of the nine invoices alleged to evidence the debt. There is on the evidence a serious issue raised here. The lack of any historical record of the alleged debt and the provenance of the alleged invoices do suggest there may well be a question as to the genuineness of the invoices. There is Ms Hentzschel's evidence that they were never received by the Hardel Group. Additionally, there is no evidence to demonstrate that project management services were in fact rendered in the period in respect of which the claims were made.


case_outcome: referred to

case_text: my view, the power conferred on the Court by s 600B is an ample one which can be exercised by reference, not only to the interests of creditors, but also by reference to the public interest and commercial morality. A similar observation applies in relation to the power conferred on the Court by s 447A. Although Bidald Consulting v Miles Special Builders [2005] NSWSC 1235 ; (2005) 226 ALR 510 concerned an application to set aside under s 445D, I treat what Campbell J said in that case at [286] ff about the relevance of public interest considerations to the exercise of the Court's discretion as applicable, generally speaking, to the discretion under the two sections just mentioned. 3. The issue of termination of the DOCA and constitution of the Creditors' Fund The Administrators contend that the DOCA terminated on 21 June 2006 when the Creditors' Fund was fully exhausted: see s 445C(c) of the Act and cl 14.1(a) of the DOCA. As already observed, s 445C provides that a DOCA terminates when the first of three events identified in the section occurs, one of the events being "(c) if the deed specifies circumstances in which it is to terminate those circumstances exist". Clause 14.1(a) of the DOCA specified that the DOCA was to terminate "on the completion of the distribution of the whole Creditors' Fund in accordance with [the DOCA]". The Administrators say that the termination has two relevant effects. The first is that since the DOCA had no further scope for operation after 21 June 2006, from that time the Court lacked power to terminate it. I agree that if the DOCA terminated at that time, by the operation of s 445C(c) and cl 14.1(a), the Court no longer has power to terminate the DOCA under s 445D. The first reason is the general consideration that it would not be possible to terminate a DOCA that had already terminated. Second, s 445C makes it clear that a DOCA terminates when any one of the three events specified in the section first occurs, and one of those events is the making of an order under s 445D terminating the DOCA (para (a)), while another is that the DOCA specifies circumstances in which it is to terminate and those circumstances exist (para (c)). They are alternatives: if a DOCA terminates by reason of the operation of s 445C(c) and the existence of the circumstances specified in the DOCA as those in which it is to terminate, it is no longer possible for the Court to terminate it under s 445D.


case_text: question of the considerations that are relevant to a company administrator's exercise of a casting vote under reg 5.6.21 and of applications under s 600B to set aside a resolution passed on the casting vote has been considered in Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707 ( Bartlett ), Re Coaleen Pty Ltd (Administrator Appointed) (1999) 30 ACSR 200 ( Coaleen ), Re Martco Engineering Pty Ltd (Administrator Appointed); Deputy Commissioner of Taxation v Martco Engineering Pty Ltd (1999) 32 ACSR 487 , Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394 ( Cresvale ), Young v Sherman [2002] NSWCA 281 ; (2002) 170 FLR 86 , and Blue Ring Pty Ltd v Landshore Pty Ltd (Subject to a Deed of Company Arrangement) [2006] WASC 245 ( Blue Ring ). These authorities show that: (1) Good faith alone will not necessarily shield the resolution from a setting aside (or variation) under s 600B ( Cresvale 37 ACSR 394 at [111]); (2) A factor that may justify setting aside the resolution is a statement in or omission from the administrator's report under s 439A that is apt to have misled creditors when they cast their deliberative vote ( Blue Ring [2006] WASC 245) ; (3) Inadequacy and superficiality of an administrator's investigation of the company's business, property, affairs and financial circumstances, at least as disclosed by the evidence before the Court, may warrant a setting aside of the resolution ( Bartlett 12 ACSR 707 ; Cresvale 37 ACSR 394 at [113]); (4) There is no presumption in favour of the majority in value, although any large disproportion between the values of the debts of the numerical minority and the numerical majority will be a factor to be taken into account ( Coaleen 30 ACSR 200 ; Cresvale 37 ACSR 394 at [115]); and (5) Payment of a premium to the creditors who supported the DOCA but not to a dissident creditor will justify a setting aside by the court ( Young v Sherman [2002] NSWCA 281 ; 170 FLR 86).


case_title: Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394


case_text: in Deputy Commissioner of Taxation (Cth) v PDDAM Pty Ltd (1996) 19 ACSR 498 , Heerey J observed that the Harmer Report and the Explanatory Memorandum referred to above, indicated that the investigation was to be "a swift and practical one" (at 510). His Honour observed that Pt 5.3A assumed that the company was either trading while insolvent or was likely to be trading while insolvent within a predictable period of time, citing s 436A(1)(a). His Honour considered that it was self-evidently essential that such a state of affairs be brought to an end promptly, either by the execution of a DOCA or by a winding up. Heerey J observed (at 510) that "[t]he tight timeframes set for the convening of the first and second meetings of creditors are consistent with that need".


case_text: Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99 ; (2000) 34 ACSR 391 ( Portinex ), Austin J noted (at [125]) that it was "an unfortunate but unavoidable consequence of the scheme established by Pt 5.3A that the creditors must make their decision on the basis of information that is likely to be imperfect". After referring to Hagenvale 17 ACSR 139 , his Honour stated (at [126] [127]): [126] The balance between speed and accuracy is a delicate one. An administrator who accepts the company's information uncritically and without exercising judgment, cutting corners to complete the administration and receive his fee, will be treated harshly by the court, since the whole scheme of Pt 5.3A depends on the independence, competence, professionalism and hard work of the insolvency practitioners who accept appointments as voluntary administrators. [127] The distinction between an adequate preliminary investigation, leading to the conclusion that there are grounds for suspecting insolvent trading and unfair preferences but going no further, and an inadequate preliminary investigation which fails to assemble available information with respect to insolvent trading and unfair preferences, is a matter of degree. If the administrator has conducted an adequate preliminary investigation in accordance with the principles in the Hagenvale case, his obligation is to bring the results of the investigation to creditors so that they can decide what is to be done next. If the administrator's preliminary investigation has been adequate, he is entitled to decline to embark upon further substantial investigations unless funds are made available to cover his fees and expenses of doing so. As I think Austin J implied in Portinex [2000] NSWSC 99 ; 34 ACSR 391 , it must often be a difficult question for company administrators how far to go in their investigations and report. An administrator does not have the powers of a liquidator, and I do not understand Gillard J in Rugs Galore [1999] VSC 126 to have suggested that an administrator should be held to standards applicable to a liquidator. Much will depend on what comes to the administrator's notice in the course of his or her investigations, and how much will come to notice will be influenced by, among other considerations, the fact that he or she is not expected to conduct a moral crusade (see [210] ff below). It will often be appropriate, as Mr Hamilton did, to draw the creditors' attention to lines of inquiry that it would be open to a liquidator to pursue, to the likely cost of pursuing them, to the need for funding, and to the issue whether the prospective defendant would have the means to satisfy a judgment.


case_text: Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139 ( Hagenvale ), Cohen J stated in relation to Pt 5.3A (at 145 146 ): ... an administrator, constrained as he or she is by the time limits imposed under the Part, cannot carry out a detailed investigation of a company in the same way as can a liquidator, and accordingly the administrator's actions must be looked at in the light of that more restricted range of activities which are available to him [or her]. A further result, when dealing with a deed of company arrangement under Pt 5.3A , is that the amount of detailed information which would be given to creditors in a scheme of arrangement under s 411 of the Corporations Law is not available, again because of time restrictions and the need to have material sent to the creditors quickly. In Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99 ; (2000) 34 ACSR 391 ( Portinex ), Austin J noted (at [125]) that it was "an unfortunate but unavoidable consequence of the scheme established by Pt 5.3A that the creditors must make their decision on the basis of information that is likely to be imperfect". After referring to Hagenvale 17 ACSR 139 , his Honour stated (at [126] [127]): [126] The balance between speed and accuracy is a delicate one. An administrator who accepts the company's information uncritically and without exercising judgment, cutting corners to complete the administration and receive his fee, will be treated harshly by the court, since the whole scheme of Pt 5.3A depends on the independence, competence, professionalism and hard work of the insolvency practitioners who accept appointments as voluntary administrators. [127] The distinction between an adequate preliminary investigation, leading to the conclusion that there are grounds for suspecting insolvent trading and unfair preferences but going no further, and an inadequate preliminary investigation which fails to assemble available information with respect to insolvent trading and unfair preferences, is a matter of degree. If the administrator has conducted an adequate preliminary investigation in accordance with the principles in the Hagenvale case, his obligation is to bring the results of the investigation to creditors so that they can decide what is to be done next. If the administrator's preliminary investigation has been adequate, he is entitled to decline to embark upon further substantial investigations unless funds are made available to cover his fees and expenses of doing so.


case_text: his submissions, Mr Hamilton explains why repaying part of its debt to Wyreach by funding the Parkwind DOCA was not necessarily "uncommercial". Whether there was a voidable unfair preference given by Wellnora to Wyreach would depend on whether Wellnora was insolvent at the time of the transaction (at 6 December 2004 or 11 January 2005). Consideration of that question would require consideration of the matters mentioned by Palmer J in Lewis v Doran [2004] NSWSC 608 ; (2004) 208 ALR 385. It would require a detailed and thorough investigation of the relationship and financial arrangements as between Wellnora and other companies within the Wyreach sub-group. Mr Hamilton was not in a position as company administrator to pursue those inquiries. Predictably, the DCT submits that this shows why a winding up and the appointment of a liquidator are desirable. However, in his Supplementary Report Mr Hamilton emphasised the need for funding to be provided to a liquidator and also the fact that it was unclear what assets would be available to satisfy a successful recovery action by a liquidator. Notwithstanding the specific mention of the need for a liquidator to be funded, Ms Kelly did not at the second meeting of creditors on 14 February 2006 say that the DCT was or even might be prepared to fund a recovery action. I accept the following submissions of the Administrators (paras 3.18, 3.19): 3.18 In summary, the evidence [of] Hamilton concerning this transaction, showed that he reported the following to creditors in the first report: (i) The Wyreach ledger needed further investigation: ... (ii) The Parkwind Transaction may constitute a loan or a preference: ... (iii) There is a question as to whether Parkwind has any assets: ... (iv) The full facts need to be established and further investigation carried out, the ability to recover the amounts, the legal fees involved and whether a public examination is justified and at what cost: ... (v) Liquidator would need to be fully indemnified: ... (vi) At the end of the day preferences are notoriously difficult to sustain: ... (vii) The good faith defence of the recipient of the fund Parkwind; (viii) The problems of related party funding and understandings. 3.19 In the Supplementary Report his analysis above was expanded, including as follows ... (i) A ledger adjustment in Wellnora's books shows a reduction in the intercompany debt owed by Wellnora to Wyreach for the $300,000 Wellnora paid to Parkwind; (ii) Hamilton obtained relevant documents surrounding the circumstances of the Parkwind DOCA and the payment by Wellnora, from its administrator G Woodgate; (iii) Books of a company are prima facie evidence of matters they record, so it might be inferred that Wyreach was a party to the transaction; (iv) The timings of the transaction need to be investigated; (v) The whole group of companies may need to be analysed to prove whether there was insolvency at a particular time; (vi) Creditor funding would be needed for the examination of directors; (vii) Even if a claim was successful, the recovery potential is unknown.


case_title: Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707


case_text: R v Bradford Metropolitan City Council; ex parte Corris [1989] 3 All ER 156 at 160 Neill LJ said: A person who has a second or casting vote is clearly under a duty to exercise it honestly and in accordance with what he believes to be the best interests of those who may be affected by the vote. Subject to this, however, it seems to me that the person presiding at a meeting is fully entitled to use his vote as he thinks fit. According to this passage, Mr Hamilton was required to exercise his casting vote honestly and in accordance with what he believed to be the best interests of the creditors. He did so. Unlike her colleague, Leisa Kelly, who seems to have thought that Mr Hamilton was committed to favouring the DOCA, Ms Brennan disavowed any such view. She seems to have accepted that Mr Hamilton acted in good faith and without bias when he voted in the way he did. In any event, I find that he did. Mr Hamilton had calculated that the DOCA would give creditors a marginally better return than a winding up would do. The dividend that the proposed DOCA promised was paltry, but it exceeded what creditors would receive on a winding up. Mr Hamilton considered the likelihood of recoveries by a liquidator and dealt with the matter in the Report and the Supplementary Report, concluding that the likelihood of a successful claim was so small as not to outweigh the tiny dividend offered by the proposed DOCA. On what basis should Mr Hamilton have exercised his casting vote to deny creditors the promised dividend, very small though it was?


case_text: question of the considerations that are relevant to a company administrator's exercise of a casting vote under reg 5.6.21 and of applications under s 600B to set aside a resolution passed on the casting vote has been considered in Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707 ( Bartlett ), Re Coaleen Pty Ltd (Administrator Appointed) (1999) 30 ACSR 200 ( Coaleen ), Re Martco Engineering Pty Ltd (Administrator Appointed); Deputy Commissioner of Taxation v Martco Engineering Pty Ltd (1999) 32 ACSR 487 , Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394 ( Cresvale ), Young v Sherman [2002] NSWCA 281 ; (2002) 170 FLR 86 , and Blue Ring Pty Ltd v Landshore Pty Ltd (Subject to a Deed of Company Arrangement) [2006] WASC 245 ( Blue Ring ). These authorities show that: (1) Good faith alone will not necessarily shield the resolution from a setting aside (or variation) under s 600B ( Cresvale 37 ACSR 394 at [111]); (2) A factor that may justify setting aside the resolution is a statement in or omission from the administrator's report under s 439A that is apt to have misled creditors when they cast their deliberative vote ( Blue Ring [2006] WASC 245) ; (3) Inadequacy and superficiality of an administrator's investigation of the company's business, property, affairs and financial circumstances, at least as disclosed by the evidence before the Court, may warrant a setting aside of the resolution ( Bartlett 12 ACSR 707 ; Cresvale 37 ACSR 394 at [113]); (4) There is no presumption in favour of the majority in value, although any large disproportion between the values of the debts of the numerical minority and the numerical majority will be a factor to be taken into account ( Coaleen 30 ACSR 200 ; Cresvale 37 ACSR 394 at [115]); and (5) Payment of a premium to the creditors who supported the DOCA but not to a dissident creditor will justify a setting aside by the court ( Young v Sherman [2002] NSWCA 281 ; 170 FLR 86). In Coaleen 30 ACSR 200 , the plaintiff accounted for 96.3 percent of the company's indebtedness. In the present case the DCT represented 55.84 percent of the total amount for which creditors were admitted to vote. If the amount truly owing to the DCT was only $681,990 as admitted by Ms Soong in the RATA, the percentage would be far below 50 percent. However, if the amounts truly owing to Mr Soong and the Soong companies were less than the amounts for which those claims were admitted for voting purposes, the DCT's debt could account for far more than 55.84 percent. I can only consider the position on the basis that the amount owing to the DCT was just over 50 percent a position vastly different from that in Coaleen 30 ACSR 200. Mr Hamilton has given affidavit evidence in considerable detail of his course of reasoning and of the materials that led him to exercise the casting vote in the way in which he did. He treated all creditors equally; carried out a thorough investigation; indicated lines of inquiry that could be pursued by a liquidator; formed the view that recovery proceedings by a liquidator would face hurdles and might well be fruitless, even if nominally successful; and exercised his casting vote in favour of the marginally better return that the DOCA offered. It is difficult to understand the basis on which his vote can be impugned unless it should be on the ground that Mr Hamilton did not properly inform himself with respect to (a) the Parkwind/Wyreach transaction, or (b) Wellnora's failure to pay GST to the DCT. I will now turn to these two matters. 8. The Parkwind/Wyreach transaction