case_text: The classic test for resolving the distinction between capital and revenue is that stated by Dixon J in Sun Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337 at 363: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." See also Citylink (High Court) at [147] and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 137. 83 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the Prepayment really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428 at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see FCT v Raymor (NSW) Pty Ltd (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink (High Court) at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed). 85 This distinction between acquisition and use was articulated by Dixon J in Sun Newspapers : " whether on the one hand [the payment] is a capitalized sum payable by deferred instalments or on the other hire or rent accruing de die in diem, or at other intervals, for the use of the thing " (363). More recently, the test was re-stated by Stephen J in his dissenting judgment in Cliffs International Inc v FCT [1979] HCA 8 ; (1979) 142 CLR 140 at 160 where his Honour said: "The important distinction between ... [recurrent capital outgoings] ... and instances of leases of land or the licensing of patents is that in those cases rent or royalties are paid for the right to occupy or use the property or rights of another. But here the vendors, upon exercise of the option, retained nothing and the taxpayer thereafter made no use of anything to which the vendors retained any claim." See also Gibbs ACJ in Federal Commissioner of Taxation v South Australian Battery Makers Pty Ltd [1978] HCA 32 ; (1978) 140 CLR 645 at 655.


case_outcome: followed

case_text: That the series of steps identified must constitute of itself one and only one "scheme", "plan" or "arrangement" (see ss 177A(3) and (5) and FCT v Consolidated Press Holdings Ltd [2001] HCA 32 ; (2001) 207 CLR 235 at 254 [52] and 264 [96]) is made clear by the fact that the dominant purpose under s 177D of the 1936 Act is usually determined at the time the scheme is entered into: FCT v Mochkin [2003] FCAFC 15 ; (2003) 127 FCR 185 at [45] ; Vincent v FCT [2002] FCAFC 291 ; (2002) 124 FCR 350 at 372-373. In other words, the scheme must be identified and the identified scheme must exist from the outset.


case_outcome: cited

case_text: In Walstern Pty Ltd v Commissioner of Taxation [2003] FCA 1428 ; (2003) 138 FCR 1 at [77] , Hill J after referring to W Nevill & Co Ltd v Federal Commissioner of Taxation [1937] HCA 9 ; (1937) 56 CLR 290, said that: " ... it cannot be said that the question whether a payment is a one-off payment or whether it is a recurrent payment is a matter irrelevant to whether the outgoing is capital. In a case such as the present where the payment operates to create the capital of a trust fund the outlay will ordinarily be seen as capital both because of the lasting qualities enjoyed and the fact that what is being made is a final payment to secure future benefits. However, if a contribution is one of a number of 'recurrent' contributions for employees, so that it can be seen to be part of the ordinary flow of business expenditure of a taxpayer, the character of the outlay will take on a different complexion. It is important to bear in mind that the evidence of Mr Medich was that he and his brother wanted to draw money out of Walstern and establish a fund for investment and that it was decided to do so by contributing two amounts of $1 million. This evidence is highly significant in determining whether the contributions were recurrent or really represented a once and for all contribution of $2 million to set up a fund although made in two annual instalments each of $1 million."


case_outcome: applied

case_text: In Walstern Pty Ltd v Commissioner of Taxation [2003] FCA 1428 ; (2003) 138 FCR 1 at [77] , Hill J after referring to W Nevill & Co Ltd v Federal Commissioner of Taxation [1937] HCA 9 ; (1937) 56 CLR 290, said that: " ... it cannot be said that the question whether a payment is a one-off payment or whether it is a recurrent payment is a matter irrelevant to whether the outgoing is capital. In a case such as the present where the payment operates to create the capital of a trust fund the outlay will ordinarily be seen as capital both because of the lasting qualities enjoyed and the fact that what is being made is a final payment to secure future benefits. However, if a contribution is one of a number of 'recurrent' contributions for employees, so that it can be seen to be part of the ordinary flow of business expenditure of a taxpayer, the character of the outlay will take on a different complexion. It is important to bear in mind that the evidence of Mr Medich was that he and his brother wanted to draw money out of Walstern and establish a fund for investment and that it was decided to do so by contributing two amounts of $1 million. This evidence is highly significant in determining whether the contributions were recurrent or really represented a once and for all contribution of $2 million to set up a fund although made in two annual instalments each of $1 million." 158 Even if contrary to the views I have earlier expressed, Part IVA applies, a penalty may only be imposed at a rate of 50% if Star City's position was not reasonably arguable. Whether or not a position is reasonably arguable was explained by Hill J in Walstern Pty Ltd v Commissioner of Taxation [2003] FCA 1428 ; (2003) 138 FCR 1 at [108] in the context of s 226K in the following terms: "Subject to what has been said the view advanced by the taxpayer must be one where objectively it would be concluded that having regard to the material included within the definition of 'authority' a reasoned argument can be made which argument when contrasted with the argument which is accepted as correct is about as likely as not correct. That is to say the two arguments, namely, that which is advanced by the taxpayer and that which reflects the correct view will be finely balanced. The case must thus be one where reasonable minds could differ as to which view, that of the taxpayer or that ultimately adopted by the Commissioner was correct. There must, in other words, be room for a real and rational difference of opinion between the two views such that while the taxpayer's view is ultimately seen to be wrong it is nevertheless 'about' as likely to be correct as the correct view. A question of judgment is involved." 159 In the present case, the Commissioner sought to impose penalties at 50% under s 226L of the 1936 Act . Section 226L provided: "Subject to this Part, if: (a) a taxpayer has a tax shortfall for a year; and (b) the shortfall or part of it was caused by the taxpayer in a taxation statement treating an income tax law as applying in relation to a scheme in a particular way; and (c) the scheme was a tax avoidance scheme within the meaning of section 224(1); and (d) none of the scheme sections applies in relation to the scheme; the taxpayer is liable to pay, by way of penalty, additional tax equal to: (e) if, when the statement was made, it was reasonably arguable that the way in which the application of the law was treated was correct 25% of the amount of the shortfall or part; or (f) in any other case 50% of the amount of shortfall or part." 160 Three issues are significant: first, the intended operation of s 226L by reference to the definition of "scheme sections" in s 226L(d); secondly, the definition of "tax avoidance scheme" in s 226L(c) and, finally, whether Star City's position was "reasonably arguable" for the purposes of s 226L(e).


case_text: Whether the scheme identified by the Commissioner is a scheme within the meaning of s 177A is a question of fact: Walters v Commissioner of Taxation [2007] FCA 1270 at [59] - [60] . Where there is no evidence of an express agreement or arrangement, the question is whether an inference as to the existence of a scheme can be drawn from all the facts proved: EA Greenwood (NSW) Pty Ltd v FCT 80 ATC 4039 at 4041-2; (1980) 10 ATR 571 at 573-574 citing Federal Commissioner of Taxation v Cooper Brookes (Wollongong) Pty Ltd (1979) 10 ATR 128 (Full Court of the Federal Court).


case_text: Clause 5.2 cannot be considered in isolation. The whole of the Occupational Licence Agreement is relevant together with the other documents to which it refers and which were executed "contemporaneously": Chacmol Holdings Pty Ltd v Handberg (2005) 215 ALR 748 at [63] - [78] (per North and Dowsett JJ) (collecting and discussing authority for the proposition that contemporaneously executed contracts forming part of the same transaction should be construed as one instrument). It was not suggested that anything turns on the order in which documents were executed or that "contemporaneously" means anything more precise than "bearing the same date". The other documents fitting this description of being executed "contemporaneously" include the documents listed in [19] above as having been executed on 14 December 1994. Further, construction of an agreement as a whole necessarily involves giving effect to each part of it in relation to all other parts of it: Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36 ; (1973) 129 CLR 99 at 109 (per Gibbs J) and Wilkie v Gordian Runoff Ltd [2005] HCA 17 ; (2005) 221 CLR 522 at [15] - [16] .


case_text: I am prepared to treat the appellant's submissions as an application for leave to appeal and deal with it accordingly. It is, as I explained to the appellant, well established that the Court will only grant leave to appeal from an interlocutory decision of the Federal Magistrates Court if the person seeking that leave can show that there is sufficient doubt as to the correctness of the judgment of the Federal Magistrates Court to warrant review and, secondly, assuming the judgment below to be wrong, that substantial injustice would be suffered by the applicant if leave to appeal were refused: see Decor Corporation Proprietary Limited v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397. 17 The Court is only in a position, when hearing appeals from the Federal Magistrates Court, to act on the evidence that was before the Tribunal and that was, in turn, considered by the Federal Magistrates Court. This Court is not, save in exceptional cases, in a position to receive additional evidence that was not placed before the Tribunal. It is concerned to determine whether, in conducting the judicial review of the Tribunal's decision, the Federal Magistrates Court erred in law. 18 The appellant's notice of appeal, which I will treat as a draft notice of appeal, alleged that the Federal Magistrate erred because, first, the appellant was not given enough time to submit all the documents which he had. Secondly, that he considered the decision given by the Federal Magistrates Court was "inappropriate". Thirdly, that the circumstances in which the country of Pakistan has recently found itself led to him feeling very threatened for his life. He asked that this Court review his case "deeply". Whilst one may have a good deal of sympathy with an appellant who comes from a country such as Pakistan where there is considerable political turmoil at present, it can only intervene, as I have already said, if it finds error on the part of the Federal Magistrate.


case_outcome: referred to

case_text: the present context the word "interlocutory" must be used with caution. Palmer J pointed out in Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605 that when granting an injunction under s 1324(1) or (4) of the Act the Court is not exercising the traditional equitable jurisdiction to grant final or interlocutory injunctions. While considerations that are customarily relevant to the exercise of that jurisdiction may be also relevant to the exercise of the discretion under s 1324(1) or (4), the dominant consideration in cases under the section is the purpose of the provision of the Act that is said to have been contravened. Unfortunately, to a large extent the parties have not joined issue in their submissions. HPM emphasises that the purpose of Pt 5C of the Act is to establish a régime to protect those who contemplate acquiring or have acquired interests in MISs. Counsel for HPM submits that the arrangement established and implemented by the defendants was the very kind of arrangement that the legislature intended should be registered and regulated by Pt 5C. This submission, however, assumes what is to be decided that there was an MIS in the first place. Counsel for the defendants, on the other hand, places heavy reliance on s 564 of the Act. That section expressly contemplates the possibility that a creditor or creditors will indemnify a liquidator and so enable the liquidator to recover property which would not otherwise have been recovered. The section empowers the Court to make such orders as it deems just with respect to the distribution of the property recovered with a view to giving the funding creditor or creditors an advantage over others in consideration of the risk assumed. Counsel correctly points out that the notion of "creditors" for this purpose includes contingent creditors. It seems not to be disputed by HPM that the various investor-borrowers are contingent creditors of TROM or Merilbah or of both of them.


case_text: parties made submissions for and against the proposition that the arrangement established by the defendants constituted an unlawful MIS. HPM's submissions were founded upon the decision of the Full Court of this Court in Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (2009) 260 ALR 643. More precisely, HPM's submissions were founded on the majority judgment of Sundberg and Dowsett JJ in that case Jacobson J dissented. Over all, two Judges of this Court, the majority in the Full Court, considered that the litigation funding arrangement in that case constituted an MIS as defined in s 9 of the Act, while the primary Judge Finkelstein J, and Jacobson J in dissent in the Full Court, considered that it did not.


case_text: referred the parties to the more recent decision of the Full Court in National Australia Bank Ltd v Norman [2009] FCAFC 152 delivered on 30 October 2009, on which the parties also made submissions. I do not propose to embark upon a detailed consideration of the various elements of an MIS as defined in s 9 of the Act. It suffices to say that I do not think that either of the authorities named above or others to which I was referred demonstrate conclusively that the arrangement in the present case was or was not an MIS. Both possibilities are arguable. It seems to me that for the purpose of this application for urgent interim relief, I should proceed on the assumptions that arguably funds have been and are to be raised under an unlawful MIS and that arguably the assignments are invalid and HPM lacks title to them. In his submissions, counsel for HPM has stated in a different connection that neither TROM nor Merilbah has any assets from which to pay damages and that TROM's Liquidator and Merilbah's Liquidators are not a source of recovery. I infer that unless the funds already raised from investor-debtors are made available, the question of the validity of the assignments will not be able to tested. TROM's Liquidator and Merilbah's Liquidators are officers of the Court. So far as the evidence reveals, no investor-debtor who has provided funding or been asked to provide it is complaining. I appreciate that it can be said that the investor-debtors would not be aware of circumstances giving them a right to complain. For example, apparently they would not know that HOL has misrepresented to them that if the assignments are held to be invalid, they will definitely obtain a discharge of their debts. The Australian Securities and Investments Commission is aware of the present dispute but has not sought an injunction restraining the defendants from approaching the investor-debtors. Several questions of concern are raised by the present application for interim relief. Who are the creditors (including, but not limited to, contingent creditors) of TROM and Merilbah who will benefit from a determination that the assignments are invalid? What is the ground of their status as creditors or contingent creditors? What is the fund that it is hoped will provide the basis of a distribution to creditors? Have TROM's Liquidator and Merilbah's Liquidators been encouraging investor-debtors to make claims and thereby to become contingent creditors? How can TROM's Liquidator and Merilbah's Liquidators support a result that all investor-debtors be released from their debts? Has there been an abuse by TROM's Liquidator and Merilbah's Liquidators of their powers in seeking to create challenges to the validity of the assignments in circumstances in which, if it be the case, the only persons who will benefit in terms of payment of money will be themselves?


case_text: On 12 May 2006, I delivered judgment in this matter: Dresna Pty Ltd v Linknarf Management Services Pty Ltd (In Liq) [2006] FCA 540. I ordered that the application be dismissed, with costs. The respondents foreshadowed at that time that they wished to apply for costs to be awarded on an indemnity basis. I gave directions to facilitate the making of such an application. 2 On 19 May 2006, the respondents filed a notice of motion seeking costs on an indemnity basis or, alternatively, on a solicitor/client basis. They also sought an order that the applicant pay their costs thrown away (by reason of certain amendments made to the applicant's statement of claim) on an indemnity basis, or alternatively, on a solicitor/client basis. I had previously directed that that application be dealt with after the conclusion of the trial. 3 There are three separate bases upon which the respondents contend that they are entitled to costs on a higher scale. They say that such costs are warranted because: • the applicant conducted the litigation in a manner that was wasteful, causing loss of time and inconvenience to the parties, and to the Court; • the proceeding had been commenced or continued in circumstances where the applicant, properly advised, should have known that it had no chance of success; and • there was an imprudent refusal of an offer of compromise, essentially contained in what was described as a "Calderbank" letter or letters.


case_text: The principles applicable to an order for costs on an indemnity or solicitor/client basis are well-established. The starting point in considering an application for costs on these higher scales is that ordinarily costs are payable on a party/party basis. Section 43 of the Federal Court of Australia 1976 (Cth) confers upon the Court a wide discretion in relation to costs. Of course that discretion must be exercised judicially. Indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying a departure from the ordinary rule: Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151.


case_text: In Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233, Sheppard J provided some examples of the circumstances that might warrant an order for costs on an indemnity basis. The principles are well-known, and need not be elaborated here. 15 Dealing first with the contention that the applicant's conduct of this litigation provides a basis for indemnity costs, I am not persuaded by that submission. It is true that the applicant attempted on a number of occasions to reformulate its case against the respondents. The number was less than the 12 that Mr Fitzgerald suggested, but was still significant. Nonetheless, it would be disproportionate and unduly harsh, in my view, to visit indemnity costs upon the applicant in relation to virtually the entire trial because of errors made early on in the conduct of the proceeding. 16 Moreover, I do not think that the applicant's failure to give discovery of the letter of 8 January 2002, which was a mistake on its part, and not a deliberate act, warrants such consequences.


case_text: In the first place, there is some doubt as to whether these letters constitute Calderbank offers. There are cases that suggest that an offer by a defendant to settle a case on the basis that each party bears its own costs does not constitute a Calderbank offer: see Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd (No 2) (2002) 201 ALR 618 per Hill J; McKerlie v State of New South Wales (No 2) [2000] NSWSC 1159 per Dunford J; Vasram v AMP Life Limited [2002] FCA 1286 per Stone J, Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 per Kenny J and Jacomb v The Australian Municipal, Administrative, Clerical and Services Union [2004] FCA 1600 per Crennan J.


case_title: McKerlie v State of New South Wales (No.2) [2000] NSWSC 1159


case_title: Vasram v AMP Life Limited [2002] FCA 1286


case_title: Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212


case_title: Jacomb v The Australian Municipal, Administrative, Clerical and Services Union [2004] FCA 1600


case_text: I note, however, that the New South Wales Court of Appeal in Leichardt Municipal Council v Green [2004] NSWCA 341 took what is arguably a different view of this matter. 22 If anything, the case for treating the respondents' letters as Calderbank offers is weaker than the case for treating an offer to settle on the basis that each party bear its own costs in that way. The element of "compromise" involved in the present case was significantly less than the element of compromise that would be involved in a case where each party would bear its own costs. 23 In any event, and irrespective of whether the letters qualify as Calderbank offers, I am not persuaded that the applicant acted unreasonably in rejecting those offers. It is by no means clear whether they amounted to a serious compromise of the respondents' rights, as the respondents considered them to be. There is no evidence before me regarding the actual amount expended by the respondents in the defence of this proceeding by March, April or August 2005. I am in no position to gauge whether anything really tangible was being offered to the applicant in return for discontinuing this case. I will not speculate about that issue. 24 For these reasons none of the matters identified by Mr Fitzgerald, whether they are considered in isolation, or in conjunction with each other, warrant a departure from the ordinary rule that costs are paid on a party/party basis. 25 As for the alternative claim that the costs associated with the last amendment to the pleadings be paid on an indemnity basis, that submission must also fail. There is nothing to suggest that the trial of this matter was conducted upon a basis that cast doubt upon the utility of the amendments. The normal rule that costs thrown away by reason of an amendment to the pleadings are paid on a party/party basis should apply. 26 For these reasons the respondents' notice of motion filed on 19 May 2006 should be dismissed. The respondents must pay the costs of and incidental to that notice of motion. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice W. Associate: Dated: 15 June 2006 Counsel for the Applicant: Mr M.K. Moshinsky Solicitor for the Applicant: Foster Harris Counsel for the Respondents: Mr G.J. Fitzgerald Solicitors for the Respondents: Home Wilkinson Lowry Date of Hearing: 15 June 2006 Date of Judgment: 15 June 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/755.html


case_text: The Court has power in equity and under the Act to set aside a resolution made in circumstances where there has been a fraud on a power by the members ( Ngurli Ltd v McCann [1953] HCA 39 ; (1953) 90 CLR 425 at 438-439 per Williams ACJ, Fullagar and Kitto JJ) or by directors (e.g. Whitehouse v Carlton Hotel Pty Ltd [1987] HCA 11 ; (1987) 162 CLR 285 at 289-290, 293-294 per Mason, Deane and Dawson JJ). The provisions of s 233 give the Court broad powers to make 'any order ... that it considers appropriate in relation to the company'. In their natural and ordinary meaning the introductory words of the section justify the making of an order setting aside a resolution and substituting another. Indeed, s 233(b) contains an express power to modify or repeal a company's constitution. Ordinarily, that could only be done by a special resolution passed by a general meeting. I am of opinion the general power given in the chapeau to s 233 authorises the Court to set aside and substitute resolutions of directors or members. The purpose of s 233 is to enable the Court to remedy a situation brought about by the conduct of members or directors of companies. The remedial power extends to ordering the company to do directly what could have been done by it through the proper exercise by its members or directors of their powers sourced in its constitution or in the Act.


case_text: In Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281 at 287 [34] Hely J reviewed the authorities and concluded that conduct of a defendant in failing to accept a Calderbank offer had to be shown by the offeror to be unreasonable in all of the circumstances so as to justify a departure from the normal rule as to costs. Hely J also recognised that while the policy of the law favours the sensible compromise of disputes, there was also a policy against deterring parties from pursuing claims to which they reasonably believed themselves entitled ( Braverus 212 ALR at 289-290 [46]). I am also of opinion that the policy of the law entitles the parties to pursue defences against claims in circumstances where they reasonably believe they cannot achieve a compromise on commercially acceptable grounds. 36 Here, the plaintiffs were seeking to keep their options open in the offers on which they rely. The defendants did not have to accept that stance. The absence of any clear offer capable of acceptance which would have resolved the whole dispute, other than those which the defendants were reasonably entitled not to accept, leads me to conclude that I should dismiss the application for indemnity costs. I certify that the preceding thirty six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate: Dated: 28 February 2007 Counsel for the Plaintiffs: Mr F Lever SC with Mr R Alkadamani Solicitor for the Plaintiffs: Haywards Solicitors Counsel for the Defendants: Mr S Reuben with Mr D Jarrett Solicitor for the Defendants: Cordato Partners Date of Hearing: Date of Judgment: 14, 19 February 2007 28 February 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/220.html


case_outcome: distinguished

case_text: During the course of oral argument the plaintiffs referred to the decision of Rogers CJ in Comm D in the Supreme Court of New South Wales in Singleton v Macquarie Broadcasting Holdings Ltd (unreported, 22 November 1989; BC8902891). There, no offer of settlement had been made under the provisions of the then Pt 22 of the Supreme Court Rules 1970 (NSW) or in the form of a Calderbank letter. However, the plaintiffs there had offered to settle for a sum which was less than ultimately they were found to be entitled to receive. Rogers CJ in Comm D said that during the course of the proceedings it became apparent that the defendant had sought to put in the forefront of its resistance to the plaintiffs' claims an argument or defence that should have been perceived as unsustainable on the evidentiary material (BC8902891 at 12). He pointed out that the provisions in the Court's rules gave substantial guidance on the question of whether an order for indemnity costs should be made. The Chief Judge said (BC8902891 at 16): 'Where, prior to the hearing, a party offers to settle on a basis of an amount less than that ultimately recovered, then, all other things being equal, costs incurred thereafter may be appropriate on an indemnity scale.' 34 While I agree with that expression of principle, the plaintiffs here are unable to point to any offer which they put forward which it was unreasonable for the defendants not to have accepted. Indeed, the only offers on which the plaintiffs rely are the terms of the draft deeds as negotiated and the course of negotiations up to 11 January 2006.


case_title: Whitehouse v Carlton Hotel Pty Ltd [1987] HCA 11 ; (1987) 162 CLR 285


case_text: what happened in the verification of the petition could in one sense be said to be a formal defect or irregularity for the purpose of s 306 of the Bankruptcy Act 1966 (Cth), the conduct of Wright Designed in this litigation would negate any beneficial exercise of the discretion which I have to validate its conduct (cp: Adams v Lambert [2006] HCA 10 ; (2006) 225 ALR 396 at 404-405 [27] - [31] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ). However, I do not think that this is a case in which the proceedings have been invalidated by the defect. The authorities show that the defect could be cured by an amendment pursuant to s 33(1)(b) of the Bankruptcy Act 1966 (Cth). The question is whether or not the petitioning creditor which has not been prepared to comply with the provisions of the Bankruptcy Act 1966 (Cth) so as to make available to creditors generally its security if required by the trustee in bankruptcy should be allowed to proceed to obtain a sequestration order while retaining the benefit of its security. No offer has been made to make the security so available, nor was any application to amend made. I have also considered whether to afford Wright Designed an opportunity to apply for an amendment. Having regard to the way the hearing was conducted and to the findings which I have made above, it would not be fair to do so. If Wright Designed, which was legally represented, could amend and reopen, then, in the interests of justice, Mr and Mrs McClymont could also seek to do so to supplement their evidence on solvency. This would render the above reasons and the hearing otiose. The parties chose to conduct the proceedings on the issues which were contested. I am of opinion that it would not be in the interests of justice or fair to grant to Wright Designed, at this late stage, an opportunity to amend its defective creditor's petition and evidence.


case_text: Designed argued that no relevant interest in land could be created because Mr and Mrs McClymont had not executed a mortgage under s 56 of the Real Property Act 1900 and, therefore no interest in land existed at all. This is fundamentally misconceived. It ignores decisions of the High Court on the existence of equitable estates and interests in land under Torrens title: Barry v Heider [1914] HCA 79 ; (1914) 19 CLR 197 at 216 per Isaacs J. In Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242 at 257 Mason CJ, Brennan, Deane and McHugh JJ approved Isaacs J's statement that where parties had a right to have an instrument executed and registered, that right according to accepted rules of equity is an estate or interest in the land. Until the instrument is executed neither ss 41 or 56 of the Real Property Act 1900 could affect the matter. If the instrument is executed, inefficacy until it is registered can not cut down or merge the pre-existing right which led to its execution. The antecedent agreement is effective in accordance with the principles of equity to bring into existence an equitable estate or interest in the land. Their Honours pointed out that it was the antecedent agreement, evidenced by the unregistered instrument, not the instrument itself, which created the equitable estate or interest.


case_title: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995)

case_text: failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.'


case_text: the very definition of the word 'mortgage' in s 3 of the Real Property Act 1900 (NSW) encompasses a charge on land of the kind created by cl 23, when that is perfected into the instrument of mortgage required to be brought into existence in order to create a registered mortgage of which Wright Designed would be the registered proprietor under s 56 of that Act. Until such registration occurred, Wright Designed's interest in land existed only in equity in the sense explained in Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242. Wright Designed argued that no relevant interest in land could be created because Mr and Mrs McClymont had not executed a mortgage under s 56 of the Real Property Act 1900 and, therefore no interest in land existed at all. This is fundamentally misconceived. It ignores decisions of the High Court on the existence of equitable estates and interests in land under Torrens title: Barry v Heider [1914] HCA 79 ; (1914) 19 CLR 197 at 216 per Isaacs J. In Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242 at 257 Mason CJ, Brennan, Deane and McHugh JJ approved Isaacs J's statement that where parties had a right to have an instrument executed and registered, that right according to accepted rules of equity is an estate or interest in the land. Until the instrument is executed neither ss 41 or 56 of the Real Property Act 1900 could affect the matter. If the instrument is executed, inefficacy until it is registered can not cut down or merge the pre-existing right which led to its execution. The antecedent agreement is effective in accordance with the principles of equity to bring into existence an equitable estate or interest in the land. Their Honours pointed out that it was the antecedent agreement, evidenced by the unregistered instrument, not the instrument itself, which created the equitable estate or interest.


case_title: Ex parte Leung (1986) 9 FCR 518


case_outcome: considered

case_text: was a clear and unequivocal claim of a charge of the kind which s 7D(3) of the Home Building Act 1989 (NSW) specifically contemplated could be made after judgment had been made by the Local Court. However before me, Mr Cohen argued that in consequence of the fact that the debtors had caused the issue of a lapsing notice for the caveat which resulted in the caveat being removed from the title to their unit, the charge had somehow disappeared. No authority was cited for the proposition. That was unsurprising: it is unarguable. As Kitto J (with whom Dixon CJ and Windeyer J agreed) said in Hall v Richards [1961] HCA 34 ; (1961) 108 CLR 84 at 92 in the context of considering whether a person entitled to a judgment debt was a secured creditor for the purposes of the Bankruptcy Act 1924 (Cth): legal effect of the caveat, as has often been said of caveats under the ordinary caveat provisions of Torrens legislation, was that of a statutory injunction, serving merely to keep property available in case the judgment creditor should wish to have execution against it; and it is clear on the authorities abovementioned that to apply the term ' lien' or even the term ' charge' to anything which has no greater effect than that is to depart from the terminology of the Bankruptcy Act.' Mr Green's verification of the petition and his instructions to lodge the caveat were based on Mr Cohen's advice that the judgment may have created a caveatable interest. That was, in essence, correct because cl 23 operated only when s 7D(3) of the Home Building Act 1989 (NSW) permitted such an interest in land, namely the equitable mortgage, to come into existence which occurred once the Local Court or the tribunal had made an order for payment in favour of Wright Designed. But, contrary to Mr Green's and Mr Cohen's misunderstanding, the caveat did not create any equitable or other interest in land it simply sought to protect the interest which cl 23 created once the Local Court or tribunal had made the order for payment. Next, Mr Cohen argued that the charge provided for in the contracts did not create an equitable estate or interest in the land because it did not meet the definition of 'charge' in s 3 of the Real Property Act 1900 (NSW). That provided, relevantly that a charge meant 'any charge on land created for the purposes of securing the payment of an annuity, rent-charge or sum of money other than a debt'. This, he argued, meant that the judgment or order on which the petition was founded and the other judgment amount owing to Wright Designed each constituted a debt with the result that, whatever cl 23 did, it did not create a 'charge' for the purpose of the Real Property Act 1900 (NSW). However, a 'mortgage' is defined in s 3 of the same Act as 'any charge on land (other than a covenant charge) created merely for the securing the payment of a debt'. 'Charge' in the definition of 'secured creditor' in the Bankruptcy Act 1966 (Cth) has a wide connotation: cf Hall v Richards [1961] HCA 34 ; (1961) 108 CLR 84 at 89. It refers to a relationship which gives the chargee positive rights over the property of the chargor (108 CLR at 92). It is clear that cl 23 created an obligation, enforceable in equity, against the McClymonts to execute a mortgage in registrable form so as to give effect to the equitable mortgage referred to in cl 23. A court of equity could enforce that obligation, absent some unconscientious conduct on the part of Wright Designed, and no reason has been put why it would not do so.


case_text: am of opinion that s 44(5) does not permit Wright Designed to claim falsely in the petition that it holds no security and, if that is proved wrong, to turn around and say that it could present the petition anyway without having voluntarily offered, under s 44(3) , to surrender the security for the benefit of creditors generally. Such a construction of s 44 reflects the principle of bankruptcy law that all unsecured creditors should be treated equally and a secured creditor should not be allowed to prove for its full debt as an unsecured creditor as well as keeping its security: see Harvey v Commercial Bank of Australia Ltd [1937] HCA 81 ; (1937) 58 CLR 382 at 392-393 per Dixon J with whom Rich J agreed at 386; see too per Starke J at 387. Wright Designed was a secured creditor. It incorrectly caused the petition to be verified without complying with s 44(3). It was well aware of the provisions of the contract entitling it to security, for it lodged a caveat making a claim that it had an interest in Mr and Mrs McClymont's home unit at Killara. The caveat lapsed after they caused a lapsing notice to be issued under the provisions of the Real Property Act 1900 (NSW). The holder of an equitable mortgage is a secured creditor: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Ltd (1982) 84 FLR 88; Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403 at 414-415 per Lockhart J, applying Harvey v Commercial Bank of Australia [1937] HCA 81 ; (1937) 58 CLR 382.


case_title: MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72


case_text: Designed issued a bankruptcy notice seeking payment of the then outstanding Local Court judgment debt of $11,898.95. The bankruptcy notice was served on Mr and Mrs McClymont on 1 November 2005. They applied to the Federal Magistrates Court to set it aside. On 16 January 2006 that court dismissed the application in consequence of which an act of bankruptcy was committed on that day by each of Mr and Mrs McClymont ( McClymont v Wright Designed Pty Limited [2006] FMCA 4). Each of Mr and Mrs McClymont had a dwelling house in Australia, namely their home unit, at the time when the act of bankruptcy was committed. Each of Mr and Mrs McClymont was served subsequently with a creditor's petition which relied on the act of bankruptcy. Mr McClymont appeared on behalf of himself and his wife. They oppose the making of sequestration orders on the following grounds: (a) the petition incorrectly alleged that Wright Designed did not hold security over their property; (b) they are solvent; (c) they had sufficient cause to object against payment of the judgment debts due to Wright Designed or its authorized agents; (d) the affidavits verifying the petition were not sworn by a person who knew the relevant facts.


case_outcome: approved

case_title: Montagu v The Earl of Sandwich (1885) 32 Ch D 525

case_text: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Limited (1982) 84 FLR 88, Sweeney J held that a loan contract which provided that the borrower should execute an equitable charge in favour of the lender over the relevant real property and agreed to the lodging of a caveat to protect that interest, created a security in favour of the creditor. He said that the debtor having executed the agreement and accepted the loan pursuant to it had done everything needed to entitle the creditor to require him to execute an equitable charge in a form chosen by the creditor. He referred to Montagu v The Earl of Sandwich (1886) 32 Ch D 525 at 538-539 per Cotton LJ. His Honour held that the loan agreement itself constituted a charge over the interest of the debtor in the relevant real property and that the holder of such a charge was a secured creditor within the meaning of the Bankruptcy Act 1966 (Cth). His Honour's analysis is in my opinion correct and can be applied to the present case.


case_outcome: discussed

case_title: Re A Debtor [1943] 1 Ch 210

case_text: Re A Debtor [1943] 1 Ch 210 at 219 Lord Greene MR, with whom MacKinnon and Goddard LJJ agreed, said that it was true that in a case of inadvertence or of some reasonable excuse, the Court had jurisdiction to allow an amendment to enable compliance with the provisions of the English bankruptcy legislation, requiring a petitioning creditor to set out the fact and value of its security in the petition. His Lordship said at 219, in refusing to allow an amendment: was no inadvertence here, and no mistake of fact. On the other hand, there has been a deliberate attempt by the petitioning creditor throughout to maintain the position that he holds no security and is entitled to disregard the shares [which were the security] . I do not suggest that there has been any bad faith about that. He held, no doubt, a genuine belief that that was the legal position, but, in view of what I consider to be a very unfair attitude, I do not think we ought to allow an amendment.' The position of Wright Designed in the present circumstances is not as clear in relation to its good faith. The verification of the grounds supporting the caveat are in flat contradiction to the verification of the petition. The arguments put forward by Wright Designed in support of its position that it is an unsecured creditor are, in my view, untenable. However, I am mindful of the fact that there is an unsecured creditor, Mr Wright, and of the fact that the McClymonts have not paid that judgment debt. Moreover, there is a public interest in the Court protecting the public generally against insolvents continuing to incur liabilities. But the purpose of ss 44(3) , (4) and (5) is that a secured creditor must make available for the purposes of the bankruptcy which it is seeking to procure in the presentation of the petition, the security which advantages that creditor over all unsecured creditors if the trustee so requires. Obviously, if the secured creditor values the security at nil, the trustee may decide not to require it to be made over, but the secured creditor must also make clear that it has a debt of at least the minimum statutory amount ($2,000) which may be proved for in the bankruptcy the petition seeks to bring about. That is, that sum is unsecured because the security is inadequate.


case_title: In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308


case_title: Re Finn; Ex parte Finn Amoco Australia Limited (1982) 41 ALR 487; 58 FLR 54

case_text: failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.' And s 33(1)(b) confers power on the Court (to be exercised according to the justice of the particular case) to amend a secured creditor's petition, both before and after the making of a sequestration order correct such omissions: Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402-403 and Re Finn; Ex parte Finn v Amoco Australia Ltd (1982) 58 FLR 54 at 60-61; 41 ALR 487 at 493.


case_title: Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403; 39 FLR 400

case_text: holder of an equitable mortgage is a secured creditor: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Ltd (1982) 84 FLR 88; Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403 at 414-415 per Lockhart J, applying Harvey v Commercial Bank of Australia [1937] HCA 81 ; (1937) 58 CLR 382. The failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.' And s 33(1)(b) confers power on the Court (to be exercised according to the justice of the particular case) to amend a secured creditor's petition, both before and after the making of a sequestration order correct such omissions: Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402-403 and Re Finn; Ex parte Finn v Amoco Australia Ltd (1982) 58 FLR 54 at 60-61; 41 ALR 487 at 493.


case_title: Re Kwiatek; Ex parte Big J Ltd v Pattison (1980) 21 FCR 374


case_title: Re Nolan; Ex parte Westpac Banking Corporation (unreported FCA 4 October 1996) Kiefel J

case_text: each case it is necessary, where an amendment is sought, to consider any particular consequences to third parties or the debtor flowing from what was erroneously contained in the petition. But the state of mind of the secured petitioning creditor is also relevant to the exercise of the Court's discretion ( Re Nolan; Ex parte Westpac Banking Corporation (unreported FCA 8 October 1996; Kiefel J at p 5). No amendment has been sought here.


case_title: Re O'Leary; Ex parte Bayne (1985) 61 ALR 674


case_text: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Limited (1982) 84 FLR 88, Sweeney J held that a loan contract which provided that the borrower should execute an equitable charge in favour of the lender over the relevant real property and agreed to the lodging of a caveat to protect that interest, created a security in favour of the creditor. He said that the debtor having executed the agreement and accepted the loan pursuant to it had done everything needed to entitle the creditor to require him to execute an equitable charge in a form chosen by the creditor. He referred to Montagu v The Earl of Sandwich (1886) 32 Ch D 525 at 538-539 per Cotton LJ. His Honour held that the loan agreement itself constituted a charge over the interest of the debtor in the relevant real property and that the holder of such a charge was a secured creditor within the meaning of the Bankruptcy Act 1966 (Cth). His Honour's analysis is in my opinion correct and can be applied to the present case. The holder of an equitable mortgage is a secured creditor: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Ltd (1982) 84 FLR 88; Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403 at 414-415 per Lockhart J, applying Harvey v Commercial Bank of Australia [1937] HCA 81 ; (1937) 58 CLR 382.


case_text: McClymonts sought to make a case that they could pay all their debts as and when they were due and payable but had chosen not to, and were thus not insolvent. They relied on the decision of the Full Court in Re Sarina; Ex parte Wollondilly Shire Council (1980) 32 ALR 596. However, in that case, there was both an accepted fact that the debtor could pay his debts but had simply refused (32 ALR at 597). Bowen CJ, CA Sweeney and Lockhart JJ held that the Court's discretion had been enlivened under s 52(2) of the Act and it could make a sequestration order in such circumstances although the occasions on which it would do so would not be frequent (32 ALR at 600). I am not persuaded that I should find, on the evidence before me, that the McClymonts are solvent. Mr McClymont has recently rendered bills for his professional services of $11,200 which he said in evidence would be paid this month. He claims to have other work in progress worth $26,500, the details of which have not been identified at all by him, despite being offered the opportunity in cross examination to do so. The work in progress is not defined as to when it was undertaken or when Mr McClymont will be in a position to render accounts for it. Nor is there any identification of the likelihood of payment when accounts are finally rendered. The mortgage of $300,000 is likely to attract outgoings, even on an interest only basis, of in the order of at least $20,000-$30,000 yearly. Likewise, there are rates, taxes and outgoings to maintain the home unit property. Mr and Mrs McClymont also have to live and incur the ordinary expenses associated with doing so. On their current assets and income as disclosed in the evidence, I do not consider that they have proved that they are solvent, particularly having regard to the fact that they have three judgment debts for over $100,000 and no ready cash to meet those liabilities other than the claimed amounts to which Mr McClymont says he is entitled arising from his father's beneficence. It is unlikely that after a lengthy estrangement, a parent will treat the estranged child equally with the other children. Of course, everything in life is possible. But it was for Mr McClymont to put on evidence to satisfy me that it was likely that he was presently entitled to realize within a reasonably proximate time, some or all of the assets which his father has allegedly made over to him. He has not even enquired of his brothers whether they would be prepared to allow him to have access to the money to which he claims he has a present right.


case_title: Re Vassis; Ex parte Leung (1986) 9 FCR 518


case_title: Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443; 36 FLR 182


case_text: In Booth v Bosworth [2001] FCA 1453 ; (2001) 114 FCR 39 at [115] , Branson J states: 'In weighing the factors which support an exercise of the Court's discretion in favour of the grant of an injunction under s 475(2) of the Act against those factors which tell against the grant of such an injunction, it seems to me that it would be a rare case in which a Court could be satisfied that the financial interests of private individuals, or even the interests of a local community, should prevail over interests recognised by the international community and the Parliament of Australia as being of international importance.'


case_text: Further, it is not to the point that the actual forestry operations will be undertaken by Gunns, or sub-contractors to Gunns, when s 8(1)(c)(i) of the Forestry Act vests in Forestry Tasmania exclusive management and control of all State forest. See also Coote v Forestry Tasmania [2006] HCA 26 ; (2006) 227 ALR 481 at 487, per Gummow J. 55 The Commonwealth, which was granted leave to intervene with respect to issue two, did not support the submission of Forestry Tasmania on the application of s 524(2) of the EPBC Act. 56 Gunns completed harvesting in coupe 17E on 16 August 2005. Mr Alec Dean, the then supervising officer from Forestry Tasmania, signed the final Forest Harvesting Monitoring Report on 25 August 2005. There is a current certified Forest Practices Plan for coupe 19D. It estimates that harvesting would have been completed by 30 June 2006. This proceeding ensured that did not happen. The Forest Practices Plan for coupe 19D expires on 31 August 2008. Implementation of that Plan will see the completion of roading and the harvesting of trees in the coupe. Roading is intended to be carried out by Gunns and harvesting by a contractor engaged by Gunns.


case_title: Minister for Environment and Heritage v Queensland Conservation Council Inc and Another [2004] FCAFC 190 ; (2004) 139 FCR 24

case_text: Mr Mooney's evidence supports the view that the forestry operations in Wielangta in coupes 17E and 19D and the proposed forestry operations in Wielangta in coupes other than 17E and 19D are not likely to have a significant impact on the eagle, having regard to its endangered status and all other threats to the eagle. However, despite that view, a question arises about whether, as a matter of law, an impact may be significant because of its 'cumulative' or 'potential' impacts; see Minister for Environment and Heritage v Queensland Conservation Council Inc and Another ( 'Queensland Conservation Council' ) [2004] FCAFC 190 ; (2004) 139 FCR 24 at [60] . 92 As a Full Court said in Queensland Conservation Council at [53]: 'It is unhelpful, we consider, to attempt to paraphrase the expression "all adverse impacts" in s 75(2)(a) of the EPBC Act by recourse to phrases like "inextricably involved" or "natural consequence". "Impact" in the relevant sense means the influence or effect of an action: Oxford English Dictionary , [2 nd ed] 5. As the respondents submitted, the word "impact" is often used with regard to ideas, concepts and ideologies: "impact" in its ordinary meaning can readily include the "indirect" consequences of an action and may include the results of acts done by persons other than the principal actor. Expressions such as "the impact of science on society" or "the impact of drought on the economy" serve to illustrate the point. Accordingly, we take s 75(2) to require the Environment Minister to consider each way in which a proposed action will, or is likely to, adversely influence or effect the world heritage values of a declared World Heritage property or listed migratory species. As a matter of ordinary usage that influence or effect may be direct or indirect. "Impact" in this sense is not confined to direct physical effects of the action on the matter protected by the relevant provision of Pt 3 of Ch 2 of the EPBC Act. It includes effects which are sufficiently close to the action to allow it to be said, without straining the language, that they are, or would be, the consequences of the action on the protected matter. Provided that the concept is understood and applied correctly in this way, it is a question of fact for the Environment Minister whether a particular adverse effect is an "impact" of a proposed action. However, we do not consider that the Environment Minister did apply the correct test in answering the question of fact which had arisen in the present case.' 93 Mr Mooney's definition of 'impact' as embracing effects 'significantly close to allow it to be said that they are the consequences of forestry operations' provides a more limited view of the word 'impact' than that adopted by the Full Court, that is, the influence or effect of an action. 94 Even though forestry operations in Wielangta (in coupes 17E and 19D) and the proposed forestry operations in coupes other than 17E and 19D will cause a loss of breeding and foraging habitat for the eagle which is relatively insignificant in the context of other factors causing loss to such habitat, that loss can still be considered 'significant' in the context of legislation which is designed 'to protect native species (and in particular prevent the extinction, and promote the recovery, of threatened species)...'. Loss of habitat caused by forestry operations, while small when compared to other causes, has a significant impact on a threatened species where 'to protect' is seen as a duty not just to maintain population levels of threatened species but to restore the species. 295 Construction of the EPBC Act is informed by the Conventions which it implements in compliance with Australia's international obligations. So much was recognised by a Full Court of this Court in Minister for Environment and Heritage v Queensland Conservation Council Inc and Anor [2004] FCAFC 190 ; (2004) 139 FCR 24 (' Queensland Conservation Council ') at [2]: 'The EPBC Act was enacted to implement the provisions of the Convention on Biological Diversity 1992 , and other international environmental agreements into Australian law. It also represents an attempt to consolidate and clarify the Commonwealth's responsibilities for environmental protection within the Australian Federation (see Second Reading Speech, House of Representatives, Hansard, 29 June 1999, at 7770). The objects of the EPBC Act are set out in s 3(1) as follows: The objects of this Act are: (a) to provide for the protection of the environment, especially those aspects of the environment that are matters of national environmental significance; and (b) to promote ecologically sustainable development through the conservation and ecologically sustainable use of natural resources; and (c) to promote the conservation of biodiversity; and (ca) to provide for the protection and conservation of heritage; and (d) to promote a co-operative approach to the protection and management of the environment involving governments, the community, land-holders and indigenous peoples; and (e) to assist in the co-operative implementation of Australia's international environmental responsibilities; and (f) to recognise the role of indigenous people in the conservation and ecologically sustainable use of Australia's biodiversity; and (g) to promote the use of indigenous peoples' knowledge of biodiversity with the involvement of, and in co-operation with, the owners of the knowledge.' 297 The Biodiversity Convention referred to by the Full Court in Queensland Conservation Council underpins the EPBC Act. It obliges Australia to take steps to promote conservation and the recovery of threatened species; see Arts 8(d), (e) and (f). 298 Australia is also a signatory to the Convention on Conservation of Nature in the South Pacific (done at Apia, Western Samoa on 12 June 1976), otherwise known as the Apia Convention. Australia acceded to the Apia Convention on 28 March 1990 and it came into force in Australia on 26 June 1990. It requires Contracting Parties to: '1. ... in addition to the protection given to indigenous fauna and flora in protected areas, use their best endeavours to protect such fauna and flora (special attention being given to migratory species) so as to safeguard them from unwise exploitation and other threats that may lead to their extinction. 2. ... establish and maintain a list of species of its indigenous fauna and flora that are threatened with extinction. Such lists shall be prepared as soon as possible after this Convention has come into force and shall be communicated to the body charged with the continuing bureau duties under this Convention. 3. ... protect as completely as possible as a matter of special urgency and importance the species included in the list it has established in accordance with the provisions of the last preceding paragraph. The hunting, killing, capture or collection of specimens (including eggs and shells) of such species shall be allowed only with the permission of the appropriate authority. Such permission shall be granted only under special circumstances, in order to further scientific purposes or when essential for the maintenance of the equilibrium of the ecosystem or for the administration of the area in which the animal or plant is found. 4. ... carefully consider the consequences of the deliberate introduction into ecosystems of species which have not previously occurred therein.' 299 Section 139 of the EPBC Act implements these two Conventions by providing: 'In deciding whether or not to approve for the purposes of a subsection of section 18 or section 18A the taking of an action, and what conditions to attach to such an approval, the Minister must not act inconsistently with: (a) Australia's obligations under: (i) the Biodiversity Convention; or (ii) the Apia Convention; or (iii) CITES; or (b) a recovery plan or threat abatement plan.'


case_text: The requirement in s 18(3) of the EPBC Act that an action not occur which is likely to have a significant impact on a listed threatened species must be seen in the context of an Act and Conventions which underlie the promotion of recovery of threatened species. Similarly, the exemption for RFA forestry operations in s 38 of the EPBC Act must be seen, in context, as providing an exception only if an alternative means of promoting the recovery of a species is achieved by a Regional Forest Agreement. Such an approach is consistent with the High Court's view of the influence of Conventions as an aid in interpreting domestic legislation designed to give effect to them; see Minister for Immigration and Ethnic Affairs v Ah Hin Teoh [1995] HCA 20 ; (1995) 183 CLR 273 at 287 where Mason CJ and Deane J said: 'It is accepted that a statute is to be interpreted and applied, as far as its language permits, so that it is in conformity and not in conflict with the established rules of international law.' That proposition, their Honours said, required courts to: '...favour a construction, as far as the language of the legislation permits, that is in conformity and not in conflict with Australia's international obligations.' I have adopted that approach in this judgment. I certify that the preceding three hundred and one (301) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 19 December 2006 Counsel for the applicant: Ms D Mortimer SC and Mr P Tree SC with Mr T Mitchell and Ms C Symons Solicitors for the applicant: FitzGerald and Browne Lawyers Counsel for the respondent: Mr D Gunson SC with Mr A Abbott and Mr C Gunson Solicitor for the respondent: Mr J McDonald Counsel for the first intervener: Mr N O'Bryan SC with Mr A Broadfoot Solicitors for the first intervener: Minter Ellison Counsel for the second intervener: Mr P Turner with Mr M Dixon, Ms C Buxton and Ms K Ganley Solicitors for the second intervener: Office of the Director of Public Prosecutions Dates of Hearing: 5-9, 12-16 December 2005, 6-10, 14,15 February, 1-5, 8-12, 15-19 May, 29, 30 August 2006 Date of Judgment: 19 December 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1729.html


case_text: The State of Tasmania refers the Court to Re Ditfort; ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347 (' Ditfort ') where Gummow J said at 370 there would be no 'matter' before the Court if it was required to consider 'undertakings and obligations depending entirely on political sanctions'. His Honour described such 'non-justiciable issues' as including 'agreements and understandings between governments within the federation'. It is noteworthy that in Ditfort , Gummow J held, at 373, that the non-justiciable principle did not apply because the Court had jurisdiction to deal with the matter in question and the issue of inter-governmental relations arose in the course of dealing with issues which were elements of the matter within jurisdiction. 236 I am not required to consider undertakings and obligations which depend entirely on political sanctions. I am required to consider whether s 38(1) of the EPBC Act applies and to perform that task properly I am required to consider whether Forestry Tasmania's forestry operations in Wielangta are conducted 'in accordance with' the RFA. If, in completing that task, this Court finds the RFA is not being applied to Forestry Tasmania's forestry operations in Wielangta, that does not mean the Court must cease dealing with the application, which is unquestionably within jurisdiction. 237 For the above reasons, I reject the contention that the Court cannot consider whether Forestry Tasmania's forestry operations in the Wielangta area will, or have been, carried out in accordance with the RFA by reference to cl 68. It is wrong to say that issue is non-justiciable. It is an issue on an amended agreed list of issues that the parties filed in the proceeding. It is an issue central to the proceeding, in that it must be answered in order to determine whether the s 38 exemption applies under the EPBC Act. I answer it below.


case_text: As Black CJ and Moore J said in Save the Ridge Inc v Commonwealth and Another [2005] FCAFC 203 ; (2005) 147 FCR 97 (' Save the Ridge '), 105 at [19]: 'The apparent purpose of s 524 is to take the process of authorisation by governments or government agencies outside the purview of the EPBC Act by excluding certain decisions by those bodies from the concept of relevant "action".' 49 Forestry Tasmania is an agency of the State of Tasmania. It submits that as such it has granted to Gunns Limited ('Gunns') a 'governmental authorisation' under s 524(2) to conduct forestry operations in coupes 17E and 19D. It relies on Save the Ridge where a Full Court of this Court held that Ministerial approval and gazettal of changes to the National Capital Plan of the Australian Capital Territory, necessary to permit the construction of a road, was a decision of a Commonwealth agency to grant a governmental authorisation to the Australian Capital Territory. Forestry Tasmania contends that an authorisation, when issued by a government body, will be a 'governmental authorisation when issued by the governmental body in its capacity as such' under s 524(2) of the EPBC Act. 50 Forestry Tasmania says the Forest Practices Plans for coupes 17E and 19D constitute the formal documents by which it authorised Gunns to conduct forestry operations. It submits that on this ground alone the application before the Court must fail. 51 The applicant contends that the submission of Forestry Tasmania referred to above depends on a characterisation of Forestry Tasmania's actions ('that is, logging, roading and the like') not as the physical activities involved, but as a product of a process where it authorises such activities to occur. 53 On this aspect of the proceeding, I prefer the applicant's submission. Save the Ridge is distinguishable because the attack in that case was on the steps taken to amend a plan which would authorise the construction of a freeway extension. There was no attack on the construction of the freeway extension. Here, there is no attack on a Forest Practices Plan, but on the work which is planned to take place under a Forest Practices Plan.


case_text: Forestry Tasmania (in this regard supported by the State of Tasmania) submits that compliance by the State with its obligations under cl 68 of the RFA is a non-justiciable issue. In that regard, it refers to and relies on South Australia v The Commonwealth [1962] HCA 10 ; (1961-62) 108 CLR 130. 225 Alternatively, Forestry Tasmania submits that forestry operations are 'in accordance with the RFA' if they fall 'within the parameters of the RFA and [do] not conflict with the terms of the RFA, considered broadly and not by weighing its words as if they are diamonds'. 226 Further, Forestry Tasmania submits the protection contemplated by cl 68 of the RFA is 'systemic species protection rather than some guarantee of some right to survival of some individual or individuals forming part of a threatened species...with a view to ensuring survival of [that] species in the long-term'. 234 This proceeding is distinguishable from South Australia v The Commonwealth where a party to an inter-governmental agreement sought to enforce it against the other party. The relevant obligation sought to be enforced did not contain a precise time for its enforcement. The High Court considered the matter to require political rather than judicial resolution.


case_text: The Commonwealth and Forestry Tasmania refer to the judgment of the Full Court of the Supreme Court of New South Wales in Stocks and Parkes Investments Pty Ltd v The Minister [1971] 1 NSWLR 932 (' Stocks and Parkes Investments' ) at 940, where the Court said: 'There is a great difference between the verb "provide" and the verb "provide for" or "make provision for" and it is this difference which gives a clue to the construction of cl. 16. The difference between "provide" and "provide for" is that the former means to give or to make available in fact, while the latter looks to the planning stage alone. You provide for a school site by "looking forward" and planning accordingly. You provide a school site by actually making it available.' 198 I accept the submissions of the Commonwealth and Forestry Tasmania concerning the meaning of 'provides for'. I see no reason to doubt the analysis of the Full Court of the Supreme Court of New South Wales in Stocks and Parkes Investments . 199 The recitals to the RFA refer to the establishment of a CAR Reserve System. 'CAR Reserve System' is defined in cl 2. The RFA refers to the JANIS Report and defines it. The JANIS Report contains agreed criteria for the establishment of a CAR Reserve System. Clause 48 of the RFA commits the parties to the establishment of a CAR Reserve System by reference to JANIS Reserve Criteria. Clause 49 (and the attachments it refers to) goes into some detail about how the CAR Reserve System will be established by referring to different types of reserves and the protection of CAR Values by prescription. Clause 51 refers to an agreement to take appropriate action to establish a CAR Reserve System on Public Land described in an attachment and by reference to a map. It also commits the parties to manage that system and maintain CAR Values consistent with expressed management objectives. Clause 68 contains an agreement to protect Priority Species through the CAR Reserve System or by applying relevant management prescriptions. 200 Given the above, and in the context of the meaning of 'provides for' contained in Stocks and Parkes Investments , I consider the RFA meets the definition contained in subparagraph (b) of the definition of RFA in s 4 of the RFA Act, in that it 'provides for a comprehensive, adequate and representative reserve system'. 201 The provision for a CAR Reserve System does not mean that legally enforceable rights to the creation of such a system must be available. That may be the case if there was an obligation to 'provide' a CAR Reserve System, but that is not the obligation contained in the RFA Act. The same may be said of the lack of a legally enforceable obligation to provide ESFM. 202 The applicant's reference to s 3(c) of the RFA Act concerning the Forest and Wood Products Council is of no assistance. But for the obligation in s 11 of the RFA Act , it would be difficult to see any enforceable obligation on any person to ensure that such a body is set up. If s 11 is considered to be the partner of s 3 in compelling the establishment of the Council, no counterpart to s 11 is aligned to subparagraphs (b) or (c) of the definition of RFA in s 4 of the RFA Act to enforce any obligation referrable to a CAR Reserve System or ESFM. 204 Having regard to the above, and in the context of Stocks and Parkes Investments , I consider the RFA meets the definition contained in subparagraph (c) of the definition of RFA in section 4 of the RFA Act, in that it 'provides for the ecologically sustainable management and use of forested areas in the region or regions'. 205 The RFA is an RFA within the terms of the RFA Act. 206 Under Pt 9 of the EPBC Act, the Minister can approve the taking of certain actions pursuant to an approval process set out in that Part. Section 18(3) of the EPBC Act, referred to at [42] above, is found in Pt 3 of the Act. Part 3 deals with the requirements for environmental approvals for actions. Part 4 provides for exemptions from Pt 3. Section 38 is found in Pt 4. It may be that the issue would have been better expressed by referring to an exemption from Pt 4 as well as, or in lieu of, the reference to Pt 9.


case_text: Where the evidence of Mr Meggs differs from that of Dr McQuillan and Dr Michaels, I prefer the evidence of Dr McQuillan and Dr Michaels. Under cross-examination, Mr Meggs was frequently evasive and appeared to me to be much more of an advocate for the cause of Forestry Tasmania than an independent expert. I accept the applicant's submission that Mr Meggs was a 'partisan polemic' and a 'so-called independent expert'; see Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1 at [26], per Wilcox J. 118 The worst aspect of Mr Meggs' lack of independence was his preparedness to alter his affidavit evidence based on 'suggestions' by senior employees of Forestry Tasmania. 119 Mr Meggs gave evidence that his affidavit received 'peer review' from the following people: • Dr Sarah Munks from the Forest Practices Authority; • Dr Stephen Read, the Chief Scientist of the Division of Forest Research and Development from Forestry Tasmania; • Dr Hans Drielsma, the then General Manager of Forestry Management for Forestry Tasmania; • Mr John Hickey, the Manager of the Planning Branch (formerly the Principal Research Officer of the Native Forests Branch) of Forestry Tasmania; and • Dr Marie Yee from Forestry Tasmania.


case_text: dominant purpose for which a document is brought into existence must be determined at the time of its production ( Federal Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247 ; 60 ATR 466 at 478) having regard to the evidence, the nature of the documents and the parties' submissions (supra, at 477). The purpose will ordinarily be that of the maker, although this will not always be the case ( Mitsubishi Electric Australia Pty Ltd at 338; Grant v Downs at 677), and evidence of intention of the document's maker, or the person who authorised or procured it, is not conclusive of purpose ( ACCC v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 545).


case_text: the nomenclature in case law often refers to documents it is to be remembered that 'privilege protects confidential communications, and not documents as such. As Dawson J said in Propend at 515 "... to say that a document is privileged is merely a shorthand way of saying that the communication constituted by the document is privileged"' ( AWB Ltd v Cole [2006] FCA 571 ; (2006) 152 FCR 382 per Young J at [102]). Justice Young went on to observe at [103]: The decision in Propend turned fundamentally on the proposition that legal professional privilege protects communications rather than documents. This explains why, as the High Court held in Propend , legal professional privilege can attach to copies of non-privileged documents; the purpose of bringing the copy into existence may be different from the purpose of bringing the original into existence, and may attract legal professional privilege: see Brennan CJ at 507, Gaudron J at 544, McHugh J at 553-554, Gummow J at 571 and Kirby J at 587. The Basis of the Applicants' Claims


case_text: determination of the dominant purpose is a question of fact that must be determined objectively. It is not the same as the 'primary' or the 'substantial' purpose ( Grant v Downs at 678). The dominant purpose may be best described as the ruling, prevailing, paramount or most influential purpose ( Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority [2002] VSCA 59 ; (2002) 4 VR 332 at 336 337). Where the claim is in respect of communications in documents, the court may examine the documents to ascertain the purpose for their creation (Esso Australia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 at 70). An appropriate starting point is to ask what was the intended use or uses of the document which accounted for it being brought into existence ( Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 ; (2004) 136 FCR 357 (' Pratt ') at [35] per Finn J, confirmed in AWB v Cole (No. 5) [2006] FCA 1234 ; (2006) 155 FCR 30 at [44] ). If a court finds on the balance of probabilities that the entirety of the document was created for the requisite purpose, then the entire document attracts the privilege. If a court finds that parts, but not all of the document, were created for this purpose, then those parts will attract the privilege (see GEC Marconi Systems Pty Ltd v BHP Information Technology [2000] FCA 593 at [11] ; Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 43 FCR 408 at 414 417).


case_text: subsequent provision of that document to solicitors for advice is not determinative of the purpose for which it was created. This purpose is to be differentiated from the purpose for which the information is obtained (see National Employers' Mutual General Insurance Association v Waind [1979] HCA 11 ; (1979) 141 CLR 648 at 654). As Brennan CJ said in Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3 ; (1997) 188 CLR 501 at 508: The test is anchored to the purpose for which the document was brought into existence ; the use to which a document is put after it is brought into existence is immaterial. (Emphasis added) While the nomenclature in case law often refers to documents it is to be remembered that 'privilege protects confidential communications, and not documents as such. As Dawson J said in Propend at 515 "... to say that a document is privileged is merely a shorthand way of saying that the communication constituted by the document is privileged"' ( AWB Ltd v Cole [2006] FCA 571 ; (2006) 152 FCR 382 per Young J at [102]). Justice Young went on to observe at [103]: The decision in Propend turned fundamentally on the proposition that legal professional privilege protects communications rather than documents. This explains why, as the High Court held in Propend , legal professional privilege can attach to copies of non-privileged documents; the purpose of bringing the copy into existence may be different from the purpose of bringing the original into existence, and may attract legal professional privilege: see Brennan CJ at 507, Gaudron J at 544, McHugh J at 553-554, Gummow J at 571 and Kirby J at 587. The Basis of the Applicants' Claims At [41] [47] Finn J observed: [41] To deny that a third party is an agent in such circumstances does not, though, provide a sufficient or principled reason for denying privilege to the documentary communication (or contents) it has authored. The important consideration in my view is not the nature of the third party's legal relationship with the party that engaged it but, rather, the nature of the function it performed for that party. If that function was to enable the principal to make the communication necessary to obtain legal advice it required, I can see no reason for withholding the privilege from the documentary communication authored by the third party. That party has been so implicated in the communication made by the client to its legal adviser as to bring its work product within the rationale of legal advice privilege . [42] There are, in my view, clear reasons of policy that support extending the privilege to such third party authored documentary communications. Whether a natural person or a corporation, a party seeking to obtain legal advice may not have the aptitude, knowledge, skill and expertise, or resources to make adequately, appropriately or at all such communication to its legal adviser as is necessary to obtain the advice required. Such is commonplace today where advice is sought on complex and technical matters. To deny that person the ability to utilise the services of a third party to remedy his or her own inability or inadequacy unless he or she is prepared to forego privilege in the documents prepared by the third party, is to disadvantage that person relative to another who is able adequately to make the desired communication to a legal adviser by relying upon his or her own knowledge, resources, etc. [43] For the law to provide such an incentive not to utilise the services of third parties in such circumstances is to undercut the privilege itself. It would not facilitate access to effective legal advice nor would it facilitate effective communication with legal advisers for the purpose of obtaining legal advice. [44] I earlier indicated that, for the purposes of the above, I had assumed that PricewaterhouseCooper's report had been prepared at Mr O'Halloran's direction with the dominant purpose in mind of it being, or being part of, Pratt Holdings' communication to ABL to obtain legal advice. That assumption is a large one. [45] While the question of Pratt Holdings' purpose(s) in this matter is simply one of fact, particular care needs to be taken in evaluating evidence of purpose in a setting in which the third party performs a professional function for a principal in a non-litigation setting but in a matter in which legal advice is to be or is being sought by that principal. There is a number of reasons why this is so. First, the third-party principal relationship (be it accountant-client, assessor-client or otherwise) will not as such attract privilege to any exchanges made in it: Baker v Campbell at 66, 75, 94 and 128. For this reason alone caution needs to be taken in determining whether the parties' relationship has a character other than the above for privilege purposes. [46] Second, the matter or transaction in respect of which legal advice is sought may well be one in which the principal considers it necessary or appropriate to obtain advice as well from other professional and business sources. In determining the preferred structure of a business transaction, for example, a person might consult not only a lawyer, but also one or more of an accountant, a financial planner and a merchant banker for advice: cf Kennedy v Wallace at [60]. The advices given by such other advisers will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the principal as such, with each advice, along with the lawyer's advice, having a distinctive function and purpose in the principal's decision-making albeit all of the advices may be interrelated in the sense of providing collectively a basis for informed decision by the principal. Those other advices will not later acquire the character of privileged documents in the respective adviser's hands : cf Propend ; merely because the principal subsequently makes the advices available to his or her lawyer when obtaining legal advice . Importantly, as Deane J observed in Baker v Campbell at 112, privilege does not "extend to protect things lodged with a legal adviser for the purpose of obtaining immunity from production". Neither does it extend to third party advices to the principal simply because they are then "routed" to the legal adviser. [47] Third, notwithstanding the principal's stated purpose in having a documentary communication brought into existence, the principal may have so conducted himself or herself in the matter as to indicate that the intended use of the document authored by the third party was not its communication to the legal adviser as the principal's communication, but rather it was to advise and inform the principal concerning its subject matter, with the principal then determining (a) in what manner, if at all, the whole or part of the document would be used by the principal in making its own communication or (b) the purpose(s) for which the document could or should be used. The less the principal performs the function of a conduit of the documentary information to the legal adviser, the more he or she filters, adapts or exercises independent judgment in relation to what of the third party's document is to be communicated to the legal adviser, the less likely it is that that document will be found to be privileged in the third party's hands. This will be because the intended use of the document is more likely to be found to be to advise and inform the principal in making the principal's communication to the lawyer (whether or not that communication embodied wholly or substantially the content of the document) and not to record the communication to be made . (Emphasis added)


case_text: determination of the dominant purpose is a question of fact that must be determined objectively. It is not the same as the 'primary' or the 'substantial' purpose ( Grant v Downs at 678). The dominant purpose may be best described as the ruling, prevailing, paramount or most influential purpose ( Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority [2002] VSCA 59 ; (2002) 4 VR 332 at 336 337). Where the claim is in respect of communications in documents, the court may examine the documents to ascertain the purpose for their creation (Esso Australia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 at 70). An appropriate starting point is to ask what was the intended use or uses of the document which accounted for it being brought into existence ( Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 ; (2004) 136 FCR 357 (' Pratt ') at [35] per Finn J, confirmed in AWB v Cole (No. 5) [2006] FCA 1234 ; (2006) 155 FCR 30 at [44] ). If a court finds on the balance of probabilities that the entirety of the document was created for the requisite purpose, then the entire document attracts the privilege. If a court finds that parts, but not all of the document, were created for this purpose, then those parts will attract the privilege (see GEC Marconi Systems Pty Ltd v BHP Information Technology [2000] FCA 593 at [11] ; Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 43 FCR 408 at 414 417). By letter dated 17 September 2009 from the applicants' solicitors to the respondent's solicitors (Annexure A to Ex. B), the applicants' solicitors wrote: RE: QUALITY PUBLICATIONS AUSTRALIA PTY LTD -V- COMMISSIONER OF TAXATION FEDERAL COURT PROCEEDINGS NO. NSD 275 OF 2009 RE: QUALITY GROUP AUSTRALIA PTY LT D -V- COMMISSIONER OF TAXATION FEDERAL COURT PROCEEDINGS NO. NSD 347 OF 2009 We refer to our letter dated 14 September 2009 serving the affidavit of Dinesh Ratnam sworn 14 September 2009 claiming privilege over certain of the documents produced under subpoena by the accountants and solicitors of the applicants. The purpose of this letter is to particularise the claims for privilege made in that affidavit over documents produced under subpoena by the applicants' accountants and lawyers in respect of communications they have had with the applicants and each other further than has been particularised in the Tables to the affidavit. We do so to assist the respondent to make an assessment as to the merits of the claims for privilege as the respondent is necessarily limited to the particulars of the documents over which privilege is claimed by the applicants because the respondent has no right to inspect documents for the purposes of either challenging or making a decision to challenge the applicants' claims for legal professional privilege over the documents produced. In relation to the claim for privilege made over the various file notes made by the applicants' accountants, namely, those of Scott Nichols of Sullivan Dewing (Table 1 items 1-5, 8-14, 16-19, 21, 29, 30-32, 43-47, 49-58, 63-66), and letters he has written which have been posted or sent by email (Table 1 items 6, 7, 15, 20, 22-28, 36, 37, 41; Table 2 items 1, 2, 7), and also those of Terry Dewing (Table 1 items 59)), together with letters sent by email by Paul Canty & Michael Canty on behalf of the applicants to those two accountants (Table 1 items 39, 40, 48), not being claims for privilege made over document which have been generated by Coleman [&] Greig, the applicants' lawyers, for the transaction the subject of the appeal in matter no. 347 of 2009, the applicants advise that the advice privilege claimed is based on the Full Federal Court decision in [ Pratt ] at [41]-[47], [52], [103]-[106]. That is to say, the documents generated by Sullivan Dewing, Chartered Accountants, which have been either produced by that firm under subpoena were created for the dominant purpose of facilitating the provision of legal advice by the applicants' solicitors, Coleman & Greig and (prior to their involvement) Evangelos Patakas & Associates in respect of the implementation of the subject transaction and, as such, legal professional privilege attaches to them: see Esso Australia Resources Limited v FCT [1999] HCA 67 ; (1999) 201 CLR 49 at [35] - [61] . Assessment of the Applicants' Claims The Evidence I have already dealt with Mr Patakas' evidence in cross-examination at [4] and [5] above, which overwhelmingly points to him having very little to do with the transaction; neither its negotiation nor its execution; he was just too busy on other 'Quality matters'. More importantly, his re-examination studiously avoided raising his role in providing legal advice to the applicants, in particular legal advice predicated on the need to obtain anterior advice from the accountants, specifically Mr Nicholls. A number of the provisions of his affidavit sworn 3 November 2009 (Ex. C) were fairly objected to on the ground of their conclusionary nature, unsupported as they were by any factual premise other than Mr Patakas' opinion. While I did not reject them in the context of an interlocutory hearing, I cannot give them, in particular para 5(d), any weight at all in the absence of supporting evidence; either from Mr Nicholls or the relevant partner in the firm of C&G who replaced Mr Patakas. As just noted, neither Mr Nicholls nor the relevant partner in the firm of C&G who replaced Mr Patakas were called to give evidence going to the necessity to obtain advice from Mr Nicholls on particular subject matters to enable the applicants to obtain the legal advice they required in relation to the transaction and so bestow privilege on the documentary communications authored by Mr Nicholls within the principle that comes out of Pratt .


case_title: Federal Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247 ; 60 ATR 466


case_title: GEC Marconi Systems Pty Ltd v BHP Information Technology [2000] FCA 593


case_text: applicants bear the onus of proving that each relevant communication was undertaken, or each relevant document was brought into existence, for the dominant purpose of giving or obtaining legal advice ( Grant v Downs [1976] HCA 63 ; (1976) 135 CLR 674 at 689). That obligation is not discharged merely by an assertion of privilege in an affidavit verifying a list of documents ( National Crime Authority v S (1991) 29 FCR 203 at 211), nor is it established by the use of a verbal formula or by simple assertion that the communications were undertaken for the dominant purpose of obtaining or giving 'legal advice' ( Grant v Downs at 689). The determination of the dominant purpose is a question of fact that must be determined objectively. It is not the same as the 'primary' or the 'substantial' purpose ( Grant v Downs at 678). The dominant purpose may be best described as the ruling, prevailing, paramount or most influential purpose ( Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority [2002] VSCA 59 ; (2002) 4 VR 332 at 336 337). Where the claim is in respect of communications in documents, the court may examine the documents to ascertain the purpose for their creation (Esso Australia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 at 70). An appropriate starting point is to ask what was the intended use or uses of the document which accounted for it being brought into existence ( Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 ; (2004) 136 FCR 357 (' Pratt ') at [35] per Finn J, confirmed in AWB v Cole (No. 5) [2006] FCA 1234 ; (2006) 155 FCR 30 at [44] ). If a court finds on the balance of probabilities that the entirety of the document was created for the requisite purpose, then the entire document attracts the privilege. If a court finds that parts, but not all of the document, were created for this purpose, then those parts will attract the privilege (see GEC Marconi Systems Pty Ltd v BHP Information Technology [2000] FCA 593 at [11] ; Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 43 FCR 408 at 414 417). The dominant purpose for which a document is brought into existence must be determined at the time of its production ( Federal Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247 ; 60 ATR 466 at 478) having regard to the evidence, the nature of the documents and the parties' submissions (supra, at 477). The purpose will ordinarily be that of the maker, although this will not always be the case ( Mitsubishi Electric Australia Pty Ltd at 338; Grant v Downs at 677), and evidence of intention of the document's maker, or the person who authorised or procured it, is not conclusive of purpose ( ACCC v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 545).


case_title: Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 43 FCR 408