case_text: the power to terminate the service of an officer or an enlisted member, the power exercisable in respect of a referred redress of grievance complaint is in modern form statutory and found in the Defence Regulations but, to borrow language employed by Sir Own Dixon in describing the former in Commonwealth v Welsh [1947] HCA 14 ; (1947) 74 CLR 245 at 268, it is no new subject. Though, for the purposes of the present case (Part XV was further amended on 1 May 2008 by the Defence Force Amendment Regulations 2008 (No 1), SLI 68 of 2008 in ways not presently material), they find contemporary expression in reg 75, 76 and 77 within Part XV of the Defence Regulations, when CPL Millar made a complaint to her commanding officer seeking redress of a grievance and then sought the subsequent referral of that complaint to the professional head of the Australian Army she was invoking rights the origins of which are ancient and deeply rooted in our constitutional heritage. As will be seen, it is also no coincidence that the Governor-General in Council by (at the time) reg 81(1)(b) of the Defence Regulations, prescribed Brigadier to be the minimum rank to be held by an officer to whom the Chief of Army may delegate the power to determine a referred redress of grievance complaint. Knowledge of legal history, of the relationship between the Sovereign, the Parliament and the Armed Forces, of the rank structure and chain of command within the Army and of the responsibilities in respect of subordinates assumed by those who hold the Queen's commission in the Defence Force is essential to an appreciation of the nature of the power exercisable on the referral of a complaint seeking a redress of grievance; all the more so because the language of reg 77 is compressed. That regulation assumes that its reader will either have that knowledge or at least make an effort to obtain it. In "not suited to be an enlisted member" the present offers a paradigm example of "a matter of opinion or policy or taste". Further, as Sir Owen Dixon noted in Welsh [1947] HCA 14 ; (1947) 74 CLR 245 , at 268 of other regulations governing the relationship between the Commonwealth (and that term is used to include the Crown in right of the Commonwealth) and members of the Defence Force and in a passage to which I have already alluded: [In] considering the meaning and effect of the Air Force Regulations their purpose cannot be neglected, namely to provide rules to govern one of the armed forces of the Crown. The relation to the Crown of members of the armed forces is no new subject; the rules of the common law define it. The regulations are not to be read in disregard of those rules and of the long tradition to which they have contributed. At common law neither commission nor enlistment in the services does or can amount to a contract with the Crown and neither officer nor man obtains any legal right against the Crown to pay, deferred pay, half pay, pension or emolument. 'All engagements between those in the military service of the Crown and the Crown are voluntary only on the part of the Crown, and give no occasion for an action in respect of any alleged contract:' per Lord Esher M.R. in Dunn v. The Queen: see Macdonald v. Steele; Gibson v. East India Co.; R. v. Secretary of State for War; Leaman v. The King: Lucas v. Lucas. (footnote references omitted). The relationship between the Crown and a soldier is not that of employer and employee: Attorney-General (NSW) v Perpetual Trustee Company [1955] AC 457, at 489-490; Attorney-General (NSW) v Perpetual Trustee Company [1952] HCA 2 ; (1951-1952) 85 CLR 237 , at 301-302 per Kitto J. At common law, the relationship between the Crown and a soldier may be terminated without notice and for any reason, no reason or a mistaken reason: The Commonwealth v Welsh [1947] HCA 14 ; (1947) 74 CLR 245 , at 257-258 per Latham CJ, McTiernan J agreeing; at 262 per Rich J, at 274 per Williams J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 105 per Brennan J.


case_outcome: cited

case_title: Attorney-General (NSW) v. Perpetual Trustee Company [1952] HCA 2 ; (1951-1952) 85 CLR 237

case_text: relationship between the Crown and a soldier is not that of employer and employee: Attorney-General (NSW) v Perpetual Trustee Company [1955] AC 457, at 489-490; Attorney-General (NSW) v Perpetual Trustee Company [1952] HCA 2 ; (1951-1952) 85 CLR 237 , at 301-302 per Kitto J. At common law, the relationship between the Crown and a soldier may be terminated without notice and for any reason, no reason or a mistaken reason: The Commonwealth v Welsh [1947] HCA 14 ; (1947) 74 CLR 245 , at 257-258 per Latham CJ, McTiernan J agreeing; at 262 per Rich J, at 274 per Williams J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 105 per Brennan J.


case_title: Attorney-General (NSW) v. Perpetual Trustee Company [1955] AC 457


case_outcome: considered

case_title: Marks v. The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549

case_text: a passage later cited with approval by Dawson J in Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 120, Windeyer J, observed in Marks v The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549 , at 564 that, in Australia, the position of the Crown in relation to the Defence Force depended not upon the prerogative but rather upon statute such that the inquiry was whether the relevant statute law modified or abrogated the common law position. Hence the significance of Sir Owen Dixon's observation as to the manner of construing the provisions now found in reg 87 of the Defence (Personnel) Regulations . This observation of Sir Owen Dixon has subsequently been cited with approval both in the High Court ( Marks v The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549 , at 573 per Windeyer J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 98 per Wilson J, Brennan J agreeing).and in this Court ( Bowthorpe v Minister for Defence (1986) 17 IR 192, at 195 per Neaves J; Bromet v Oddie ((2002) 78 ALD 320, at 331 per Finn J).


case_text: feature just mentioned does not mean that statutory powers the exercise of which is dependent upon the engendering or achievement of a state of "satisfaction" in relation to an event or fact are unexaminable on judicial review either at common law or under the Administrative Decisions (Judicial Review) Act , as was explained by Brennan CJ, Toohey, McHugh and Gummow JJ in a survey of pertinent authority in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 275-277. Paragraph 5(1)(f) of the Administrative Decisions (Judicial Review) Act would permit the setting aside of BRIG Bornholt's decision in the event that it "involved an error of law". CPL Millar's referred redress complaint relevantly pressed a case that he should countermand the termination decision because he ought on the whole of the material not form an opinion in terms of reg 87(4) and 87(1)(e) of the Defence Personnel Regulations. In these circumstances and having regard to the nature of the regulation concerned an error of law might be found, as with judicial review under s 75(v) of the Constitution , in one or more of the ways described by Gibbs J in Buck v Bavone [1976] HCA 24 ; (1976) 135 CLR 110 at 118-119: In all such cases the authority must act in good faith; it cannot act merely arbitrarily or capriciously. Moreover, a person affected will obtain relief from the courts if he can show that the authority has misdirected itself in law or that it has failed to consider matters that it was required to consider or has taken irrelevant matters into account. Even if none of these things can be established, the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it. However, where the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred in one of these ways, or that its decision could not reasonably have been reached. [Emphasis added] In respect of the words emphasised in the passage quoted. Gummow J made the following observation in Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at 654, [137] : This passage is consistent with the proposition that, where the criterion of which the authority is required to be satisfied turns upon factual matters upon which reasonable minds could reasonably differ, it will be very difficult to show that no reasonable decision-maker could have arrived at the decision in question. It may be otherwise if the evidence which establishes or denies, or, with other matters, goes to establish or to deny, that the necessary criterion has been met was all one way.


case_text: is a feature of reg 87(4) of the Defence (Personnel) Regulations , noted by the Full Court in Martincevic [2007] FCAFC 164 ; (2007) 164 FCR 45 at 54, [44] , that, once the Chief of Army (or a delegate) forms the opinion described in that sub-regulation, the service of the member concerned must be terminated. One aspect of that opinion is whether the decision-maker is "satisfied" in terms of reg 87(1)(e) that the member is not suited to be an enlisted member. These features of reg 87 mean that it is one of those provisions where "some fact or event [is] condition upon the existence of which the jurisdiction of a court or tribunal shall depend": R v Federal Court of Australia; ex parte Pilkington ACI (Operations) Pty Ltd [1978] HCA 60 ; (1978) 142 CLR 113 at 125. In this instance, the "fact or event" upon which the jurisdiction of the Chief of Army to terminate the service of a member depends is a state of subjective satisfaction, an opinion. In Bankstown Municipal Council v Fripp [1919] HCA 41 ; (1919) 26 CLR 385 at 403, Isaacs and Rich JJ observed of provisions of this type that they are employed with the object of preventing litigation on matters of jurisdictional fact.


case_title: Coutts v. The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91

case_text: relationship between the Crown and a soldier is not that of employer and employee: Attorney-General (NSW) v Perpetual Trustee Company [1955] AC 457, at 489-490; Attorney-General (NSW) v Perpetual Trustee Company [1952] HCA 2 ; (1951-1952) 85 CLR 237 , at 301-302 per Kitto J. At common law, the relationship between the Crown and a soldier may be terminated without notice and for any reason, no reason or a mistaken reason: The Commonwealth v Welsh [1947] HCA 14 ; (1947) 74 CLR 245 , at 257-258 per Latham CJ, McTiernan J agreeing; at 262 per Rich J, at 274 per Williams J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 105 per Brennan J. In a passage later cited with approval by Dawson J in Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 120, Windeyer J, observed in Marks v The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549 , at 564 that, in Australia, the position of the Crown in relation to the Defence Force depended not upon the prerogative but rather upon statute such that the inquiry was whether the relevant statute law modified or abrogated the common law position. Hence the significance of Sir Owen Dixon's observation as to the manner of construing the provisions now found in reg 87 of the Defence (Personnel) Regulations . This observation of Sir Owen Dixon has subsequently been cited with approval both in the High Court ( Marks v The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549 , at 573 per Windeyer J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 98 per Wilson J, Brennan J agreeing).and in this Court ( Bowthorpe v Minister for Defence (1986) 17 IR 192, at 195 per Neaves J; Bromet v Oddie ((2002) 78 ALD 320, at 331 per Finn J).


case_outcome: applied

case_text: what has become a seminal Australian exposition on the subject of procedural fairness, Mason J, in Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 585, remarked of the expression that it "conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case". It is not difficult to see how, in the context of operational service in times of a large scale deployment of the Australian Army, the content of a procedural fairness obligation in respect of a redress complaint either as initially made or on referral may in some cases be very limited indeed. In the present case, though the occasion for the initiation of termination procedures arose from incidents on operational service, the decision making process occurred in more benign circumstances in Australia. There is nothing in the circumstances which would suggest that any attenuated procedural fairness obligation attended BRIG Bornholt's consideration of the referred redress complaint. Thus, the assumption of the parties that the making of a decision by him was attended with a procedural fairness obligation which included the affording of a fair opportunity to CPL Millar to know the case made against her and to contradict it is correct. I accept therefore that he was obliged to afford CPL Millar procedural fairness in determining that referred redress complaint. The nature of that obligation though, as Mason J observed, depends on the circumstances of the particular case. In this case, CPL Millar had already been the recipient of a Termination Notice which set out the basis upon which it was proposed to terminate her service in the Army. Only after that notice and an opportunity to respond had been given was the decision to terminate her service made by a delegate of the Chief of Army. In turn, before BRIG Bornholt became involved, CPL Millar had already sought redress from her CO and had the benefit of a reasoned decision as to why her complaint was not upheld. In light of those processes and their outcomes, it is clear that CPL Millar was well aware by then that the reason why a decision had been made to terminate her service on the basis of unsuitability and why her initial grievance was not upheld was a view, supported by the opinion of the Army psychologist CAPT Brown in her report of 15 November 2006 in particular, that, considering her behaviour on operational service in Iraq against the background of her service as a whole, there was a risk that under stress her performance would not be satisfactory. In seeking to have the Chief of Army overturn the termination decision on the review of her grievance complaint she furnished a further report from Mr Zemaitis along with character references from military associates and superiors. Upon referral and as required by Defence Instruction (General) PERS 34-1 Redress of Grievance Tri-Service Procedures made under the Defence Act, a report in respect of the referred complaint was prepared for the Chief of Army's (or delegate's) consideration by the Complaints Resolution Agency within the Headquarters of the Australian Defence Force. It is the report of that agency which came before BRIG Bornholt and which he came to adopt. In adopting that report, its suggested outcome and the reasons as his own BRIG Bornholt adopted a report in which the case advanced by CPL Millar was thoroughly rehearsed and commented upon, as was the process that had led up to the decision to terminate her service and the initial rejection of her redress complaint. No new consideration personal to CPL Millar was introduced by the staff who compiled the report for Brig Bornholt. Neither did he do this of his own motion. In these circumstances, a further passage from the judgement of Mason J in Kioa v West (at 559) is apposite: [T]his is not to say that fairness will necessarily, or even generally, require that an applicant for a further entry permit be given an opportunity to be heard even where deportation may follow from its refusal. The grant of an entry permit is a matter of discretion. Indeed, the cancellation of a temporary entry permit is expressed to be a matter of absolute discretion (s.7(1)) . In the ordinary course of granting or refusing entry permits there is no occasion for the principles of natural justice to be called into play. The applicant is entitled to support his application by such information and material as he thinks appropriate and he cannot complain if the authorities reject his application because they do not accept, without further notice to him, what he puts forward. But if in fact the decision-maker intends to reject the application by reference to some consideration personal to the applicant on the basis of information obtained from another source which has not been dealt with by the applicant in his application there may be a case for saying that procedural fairness requires that he be given an opportunity of responding to the matter ( In re H.K. (An Infant) (1967) 2 QB 617). If the application is for a further temporary entry permit and it is made in circumstances which are relevantly similar to those in which the earlier permit was granted, the applicant may have a legitimate expectation that the further entry permit will be granted or will not be refused in the absence of an opportunity to deal with the grounds on which it is to be refused. And if the refusal is to be attended by the making of a deportation order, the case for holding that procedural fairness requires that such an opportunity be given is unquestionably stronger. 40. In this respect recent decisions illustrate the importance which the law attaches to the need to bring to a person's attention the critical issue or factor on which the administrative decision is likely to turn so that he may have an opportunity of dealing with it. FAI is one illustration. Cole v. Cunningham (1983) 49 ALR 123 , is another, as are Reg. v. Gaming Board for Great Britain; Ex parte Benaim and Khaida (1970) 2 QB 417, at p 431; and Daganayasi v. Minister of Immigration (1980) 2 NZLR 130 . BRIG Bornholt was obliged to investigate the referred complaint. As a senior officer he was able, as would have been the Chief of Army of Army himself, to require staff to prepare a report on the subject. In that regard, the procedure envisaged by the Defence Instruction (General) is not inconsistent with the Defence Regulations in relation to the investigation of a referred redress complaint. Whether he interfered with the termination decision was a matter for the exercise of discretion after investigation. Given the particular way in which the investigation was conducted, effectively on the papers, there was no need to give CPL Millar any further opportunity to be heard before making a decision. At the very latest, the fullness of the case she had to meet, both in terms of expert opinion and underlying reports and service history had been exposed to her in the disposal by her CO of her redress complaint. BRIG Bornholt decided not to uphold her redress complaint not on the basis of new information personal to her obtained from another source and not exposed already to her but on the basis of existing materials. In these circumstances, and contrary to the submission advanced on her behalf, he was not obliged again to revert to her and to offer her an opportunity to comment upon the reasons he proposed to adopt in declining to uphold her redress application. Rather, as is evident from the passage quoted, she, "cannot complain if the authorities reject [her] application because they do not accept, without further notice to [her], what [she] puts forward". I therefore reject the submission that BRIG Bornholt denied CPL Millar procedural fairness in making his decision. A further submission was made that CPL Millar had not been afforded an opportunity to comment upon an assessment made of her by her Squadron Sergeant Major which was taken into account by CAPT Brown in her report. However, as the Respondents demonstrated in their written submissions, by the time that CPL Millar sought the referral of her redress complaint she had had two opportunities to comment upon this assessment, of which she had taken advantage; once in the course of showing cause why her service ought not be terminated and again in the seeking of the referral of her redress complaint. There is no substance in this aspect of her procedural fairness challenge. Neither, when it is recalled that it is the referral decision which is under review is there any substance in her assertion that she was denied an opportunity to comment upon comments made by the Army's Psychological Support Service North Queensland on the subject of her suitability. Those comments were limited to a concurrence with the views already expressed by CAPT Brown and were exposed to CPL Millar in the results of the "Quick Assessment" which was made of her initial redress complaint. An examination of his reasons discloses that BRIG Bornholt approached his task in two particular ways. On the one hand, he examined whether the procedures adopted to date had been appropriate and whether the decisions reached were reasonably open; on the other and in any event he reached his own opinion on the whole of the evidence before him, which included the further evidence provided by CPL Millar in seeking the referral of her redress complaint, as to whether she was, in terms of reg 87(1)(e) of the Defence (Personnel) Regulations , suited to be an enlisted member.


case_outcome: followed

case_text: following observation of Brennan J in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-6 is no less pertinent in this case than in other judicial review cases: The essential warrant for judicial intervention is the declaration and enforcing of the law affecting the extent and exercise of power: that is the characteristic duty of the judicature as the third branch of government ... [T]he duty extends to judicial review of administrative action alleged to go beyond the power conferred by statute or by the prerogative or alleged to be otherwise in disconformity with the law. The duty and the jurisdiction of the courts are expressed in the memorable words of Marshall CJ in Marbury v Madison : "It is, emphatically, the province and duty of the judicial department to say what the law is." The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone. (footnote reference omitted) Like other officers of the Commonwealth, the decisions of the Chief of Army and his delegates are amenable to judicial review either by the High Court by constitutional writ under s 75(v) of the Constitution or in such other courts as the Parliament invests with federal jurisdiction judicially to review their decisions, but only for error of law. There is nothing inherently illogical or unreasonable about the opinion as to CPL Millar's suitability to which BRIG Bornholt came. Twice before she had been considered for discharge on the basis of unsuitability but a choice had been made as between competing assessments not to discharge her. As a result of her performance on operational service two psychologists, MAJ Hadfield (provisionally) and CAPT Brown formed the opinion that CPL Millar was not suited to be a soldier. Assisted by their opinions and looking at the whole of her service history, BRIG Bornholt was entitled to form the opinion he did as to her unsuitability. In so doing, he was entitled to and self evidently did take into account the views of Mr Zemaitis. It is just that he chose not to accept the latter's views. BRIG Bornholt was also entitled to form a view, based on a comparison of the reports of the Army psychologists and Mr Zemaitis prepared for him by staff and adopted by him that one reason for the differing views may have been that Mr Zemaitis did not have access to CPL Millar's full psychological file.


case_title: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259


case_title: Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611


case_text: completeness, I should note that, though reference is made by the Full Court in Martincevic v Commonwealth [2007] FCAFC 164 ; (2007) 164 FCR 45 to a redress of grievance investigation, it did not prove necessary in that case for the Full Court to explore the nature of the power able to be exercised by the Chief of Army upon the referral of a redress complaint. Rather, that case highlighted that the existence and outcome of a subsisting redress investigation before the making of a discharge decision may constitute (and in the circumstances of that case was held to constitute) a relevant consideration for the purposes of the making of that discharge decision. It does not follow from the lack of understanding of the nature of the power evident in the Commonwealth's submissions that CPL Millar must succeed in her judicial review application. To determine that it is first necessary to relate in more detail the factual background which gave rise to CPL Millar's initial redress complaint, its later referral and this judicial review application. It is also necessary to set out why BRIG Bornholt came to confirm the decision to terminate her service with the Army. BRIG Bornholt's reasons are comprehensive. It would do that officer less than justice not to set them out in full but so to do in the main body of the judgement would, in my opinion, detract from its continuity and ready comprehensibility. I therefore annex the full text of BRIG Bornholt's reasons and highlight pertinent features in the main body of the judgement. Before CPL Millar deployed to Iraq as part of Operation CATALYST 2 she undertook pre-deployment training at Randwick Barracks in Sydney from 27 June 2006 for a period of one month. During that time, CPL Millar maintained a good rapport with most, but not all, of the members attending this pre-deployment training course. It is a feature of reg 87(4) of the Defence (Personnel) Regulations , noted by the Full Court in Martincevic [2007] FCAFC 164 ; (2007) 164 FCR 45 at 54, [44] , that, once the Chief of Army (or a delegate) forms the opinion described in that sub-regulation, the service of the member concerned must be terminated. One aspect of that opinion is whether the decision-maker is "satisfied" in terms of reg 87(1)(e) that the member is not suited to be an enlisted member. These features of reg 87 mean that it is one of those provisions where "some fact or event [is] condition upon the existence of which the jurisdiction of a court or tribunal shall depend": R v Federal Court of Australia; ex parte Pilkington ACI (Operations) Pty Ltd [1978] HCA 60 ; (1978) 142 CLR 113 at 125. In this instance, the "fact or event" upon which the jurisdiction of the Chief of Army to terminate the service of a member depends is a state of subjective satisfaction, an opinion. In Bankstown Municipal Council v Fripp [1919] HCA 41 ; (1919) 26 CLR 385 at 403, Isaacs and Rich JJ observed of provisions of this type that they are employed with the object of preventing litigation on matters of jurisdictional fact.


case_title: Bowthorpe v. Minister for Defence (1986) 17 IR 192


case_title: Bromet v. Oddie ((2002) 78 ALD 320


case_text: is the plenary nature of the power exercisable on the merits by the Chief of Army or a delegate on a referred redress complaint that this Court might decide, as a matter of discretion rather than jurisdiction, summarily to dismiss the application of a member of the Army who has chosen to seek judicial review of a termination of service decision rather than seek redress under the Defence Regulations. That, I note, was one of the bases upon which a Queen's Bench Divisional Court refused to grant prerogative relief to an officer in such a position in R v The Army Council; ex parte Ravenscroft [1917] 2 KB 504. Insofar as there are also suggestions (at 508 per Viscount Reading CJ, at 512 per Ridley J and at 513 per Avory J) in that case that a court would not interfere with the dismissal of an officer because that was a matter of military discipline, the case is inconsistent with, for example, Welsh's Case , supra, here and not good law. The latter aspect of the case is perhaps explicable on the basis that, at the time, officers served at the pleasure of the Crown with the basis for their dismissal being the Prerogative rather than, as in Australia, statutory. That distinguishing feature does not though affect the authority of that case insofar as it recognises that the plenary nature of the right of redress may provide a basis for discretionary refusal of a prerogative writ.


case_title: R v Army Board of the Defence Council; ex parte Anderson [1992] 1 QB 169

case_text: was common ground as between CPL Millar and the Respondents that BRIG Bornholt was obliged to afford her procedural fairness in deciding her referred redress complaint. As it happens, there is contemporary English intermediate appellate authority which would support such a conclusion in the particular context of the consideration of a referred redress of grievance complaint, in that case one arising from an allegation of racial discrimination by a member of the British Army: R v Army Board of the Defence Council; Ex parte Anderson [1992] 1 QB 169.


case_text: same sentiments are evident in judgements of the Federal Court of Canada with respect to the judicial review of decisions relating to the disposition of grievances in the Canadian Forces. In Armstrong v Canada (Attorney General) [2006] F.C.J. No. 625; 2006 FC 505 Layden-Stevenson J observed of the grievance procedures for which s 29 of the National Defence Act (Can) and Chapter 7 of the Queen's Regulations and Orders made thereunder provide: [34] The purpose of the National Defence Act (NDA) is to provide for the management, direction and administration of the Canadian Forces (CF). The purpose of the specific provisions, in relation to this matter, is the efficient resolution of grievances or disputes. The issue in this case is not polycentric. Rather, it is of a private or personal nature. Some deference is appropriate in view of the fact that the final decision lies with the Chief of the Defence Staff (CDS), or an officer delegated by him. [35] The expertise of the decision-maker militates in favour of deference. The CDS, the most senior officer in the CF, is charged with control and administration of the CF. The NDA mandates that all orders and instructions to the CF, to carry out the directions of the Governor in Council or the Minister, are to be issued through the CDS. It is to be expected that the CDS, or his delegate, will be conversant with all facets of the military context, unlike the court. This factor indicates a high level of deference. Her Honour's judgement was affirmed on appeal to the Federal Court of Appeal: Armstrong v Canada (Attorney General) [2007] F.C.J. No. 546; 2007 FCA 157 and has since been cited with approval in relation to another judicial review proceeding arising out of the Canadian Forces grievance resolution provisions: Leading Seaman D.M. Morphy v Canada (Attorney General) [2008] F.C.J. No. 242; 2008 FC 190 at [63]. The observation Layden-Stevenson J made has like application for like reasons in the present case in relation to whether CPL Millar is suitable to be an enlisted member. In the circumstances of this case, the person to be "satisfied" or not on this subject was a senior military officer, not a judicial officer. Deference is called for in relation to the value judgement made by that military officer.


case_title: Armstrong v Canada (Attorney General) [2007] F.C.J. No. 546; 2007 FCA 157


case_title: Leading Seaman D.M. Morphy v. Canada (Attorney General) [2008] F.C.J. No. 242; 2008 FC 190


case_text: To support its contention, Hoy refers to the decision in Goldberg v Ng [1995] HCA 39 ; (1995) 185 CLR 83, where Deane, Dawson and Gaudron JJ observed at 96 that in cases of implied waiver of legal professional privilege the question is whether fairness requires that the privilege should cease: see also Attorney-General (NT) v Maurice [1986] HCA 80 ; (1986) 161 CLR 475 at 481 and 488 (per Gibbs CJ and Mason and Brennan JJ). The principle of implied waiver was expressed and applied by this Court in Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341, where the Full Court at 354-356 decided that if a party makes an assertion as part of its case that puts the contents of otherwise privileged material in issue, or necessarily opens an inquiry into an issue which gives rise to an inconsistency between maintaining the privilege claim and making the assertion, the privilege is waived by implication: see also Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1; Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347.


case_text: Drawing upon the reasoning of Gyles J in Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 ; (2004) 140 FCR 101 at 119, Hoy submits that this passage constitutes a waiver of the gist or conclusion of the legal advice provided to Allphones, and that in these circumstances any privilege which vests in the legal advice to which the above passage refers has been waived by disclosure. 23 In my opinion, the reference to a position which is 'based on' legal advice does not, in the circumstances of this case, amount to a sufficient disclosure of that legal advice as to amount to a waiver of privilege. Neither the conclusion, nor the gist, nor even any of the content of the legal advice is referred to or disclosed. All that is disclosed is that Allphones has obtained advice and has considered it as part of a basis for making a decision as to its future course of action. The passage is consistent with Allphones having made an independent decision after reading the advice. Moreover, I do not consider that the use of a generalised reference to an extant piece of legal advice constitutes a use of that advice in such a way as to make it unfair or unreasonable not to disclose the full contents of that advice. I am of the view that no privilege which vests in any of the communications in dispute has been waived by disclosure. 24 Hoy further submits that, where a party raises an issue which would be unjust to litigate without access to records bearing on its state of mind, it has impliedly waived privilege in respect of the material on which that state of mind is based. Hoy argues that Allphones has impliedly waived privilege as to a number of the documents because, by electing to continue to require the performance of the franchise agreement from Hoy and by electing to pursue contractual and statutory dispute resolution procedures, Allphones has affirmed the agreement and waived its right to terminate. This, it is said, puts in issue Allphones' state of mind, and thus impliedly waives privilege. Hoy also argues that by purporting to reserve its right of termination Allphones acted in bad faith and with the real purpose of negotiating more favourable terms in its franchise agreement with Hoy. Again, it is said, Allphones has put in issue its state of mind and thereby impliedly waived privilege. Hoy also submits that the implied waiver of privilege is also supported by that fact that Allphones has alleged fraudulent conduct against Hoy as a basis for termination of the franchise agreement.


case_title: Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341


case_text: The claims for privilege in this case are to be determined by common law principles, and not pursuant to the provisions of the Evidence Act 1995 (Cth), because the Notice to Produce has not been issued for the purpose of adducing the documents into evidence: see Esso Australia Resources Ltd v Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 at 59-63 (per Gleeson CJ, Gaudron and Gummow JJ). 3 The evidentiary basis for the claim of privilege in respect of each particular document has been set out in detailed evidence in the form of three affidavits sworn by the solicitor for Allphones, Mr Lloyd. There has been no cross-examination on those affidavits. 4 In his affidavit of 5 April 2007, Mr Lloyd records that the principal proceeding relates to a dispute between Allphones as franchisor and Hoy as franchisee. Beginning in early 2006, Hoy raised a number of issues and complaints with Allphones concerning questions as to exclusive territory; the loss of the original franchise agreement by Allphones; the execution of a new tax invoice agreement; the payment of money as a contribution to the original fit-out of the premises; and calculations as to payment to Hoy of a commission on sales and connections of mobile telephones and other goods. During the period of March to August 2006, efforts were made to resolve these issues and complaints. The present litigation was commenced on 1 September 2006.


case_text: Hoy submits that Allphones, as the party asserting the claim of privilege, bears the onus of proof of the elements of the privilege. To this end, it relies on the comments of Spigelman CJ in Sydney Airports Corp Ltd v Singapore Airlines [2005] NSWCA 47 at [3] . Hoy also argues that it is not sufficient to discharge this onus for the party claiming privilege simply to depose an affidavit making conclusory assertions as to the purpose for which the documents were brought into existence together with a statement about the category of legal professional privilege which applies. To this end, it relies on the decision of the Full Court in Kennedy v Wallace [2004] FCAFC 337 ; (2004) 142 FCR 185 at [12] - [16] (per Black CJ and Emmett J) and [144]-[145] (per Allsop J). Hoy submits that Allphones has not discharged its onus because Mr Lloyd's affidavits are insufficient and because, after having regard to non-privileged correspondence between the parties, it is clear that the dominant purpose for the creation of the documents was a commercial one. It argues that the documents were created in the course of an ongoing business relationship between the parties, rather than for the dominant purpose of legal assistance or obtaining material for use in legal proceedings.


case_title: Sydney Airports Corp Ltd v Singapore Airlines [2005] NSWCA 47


case_text: To support its contention, Hoy refers to the decision in Goldberg v Ng [1995] HCA 39 ; (1995) 185 CLR 83, where Deane, Dawson and Gaudron JJ observed at 96 that in cases of implied waiver of legal professional privilege the question is whether fairness requires that the privilege should cease: see also Attorney-General (NT) v Maurice [1986] HCA 80 ; (1986) 161 CLR 475 at 481 and 488 (per Gibbs CJ and Mason and Brennan JJ). The principle of implied waiver was expressed and applied by this Court in Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341, where the Full Court at 354-356 decided that if a party makes an assertion as part of its case that puts the contents of otherwise privileged material in issue, or necessarily opens an inquiry into an issue which gives rise to an inconsistency between maintaining the privilege claim and making the assertion, the privilege is waived by implication: see also Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1; Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347. 28 Nor does the reasoning in Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 assist Hoy. In that case, the plaintiff was asserting a right to claim damages under a statute. The statutory context made it implicit in making the claim that the plaintiff had not effectively exercised an alternative right, and thus access to the plaintiff's material was necessary to challenge this implicit assertion. That is not the present case. 29 For the above reasons, I do not consider there has been an implied waiver of legal professional privilege in this case. 30 On 3 July 2006, Bartier Perry, three weeks after it had been retained by Allphones, wrote to Mr Quarmby, a customer of Allphones, with a draft statement for his consideration. The statement was in the form of a standard witness a statement, apparently drawn up by the solicitors on instructions. It related to inquiries made in relation to the purchase of an unbundled mobile telephone from an Allphones store. 31 On 15 August 2006, another draft statement was sent by Bartier Perry to a Mr Shepherd for his consideration. The covering letter was marked 'Private & Confidential'. The statement relates to the observations and statements made at Allphones' store concerning 'unlocked phones'. 32 These documents were created and sent to Messrs Quarmby and Shepherd after Allphones retained Bartier Perry to give legal advice and assistance and shortly before the notice of its intention to terminate the franchise agreement was sent on 28 August 2006 and legal proceedings were commenced by Hoy on 1 September 2006.


case_text: In this case the thrust of Hoy's submission is that, on the available evidence, the dominant purpose of the documents is not to seek legal assistance but rather to work out an overall strategy to determine the ongoing commercial relationship of the parties. The reality is that parties to a dispute may have dual purposes, in which the seeking of legal advice remains the dominant purpose. Indeed, the notion that there may well be other purposes, such as managerial or commercial objectives, which account for the existence of a record is inherent in the 'dominant purpose' test itself: see Three Rivers District Council v Bank of England (No 6) [2005] A.C. 610 at 650 (per Lord Scott of Foscote). 19 In considering whether a particular document is privileged, it is helpful to consider the documents as a whole and have regard to the whole stream of communications passing between the parties, rather than to examine each document in isolation. This is because, by standing back and looking at the overall course of communication across a period of time, a picture may emerge which characterises the nature and purpose of each individual communication more clearly. Such an approach enables a decision to be made more confidently as to whether a specific document is privileged. In this case, the overall course of communication, when considered in its factual context together with the contents and form of the documents and the specific evidence provided by Mr Lloyd as to the provenance of the documents, is sufficient to persuade me that the dominant purpose for the creation of each of the documents presently in dispute was to obtain legal advice or assistance or to be used in anticipated litigation. Accordingly, I am of the view that each of the communications is privileged. In particular, I do not accept the submission that the steps taken towards the dispute resolution procedure provided for in the franchise agreement is sufficient to displace the strong, detailed and specific evidence supporting the claim for privilege, especially when considered in light of Allphone's retainer of Bartier Perry on 14 June 2006 and the commencement of litigation on 1 September 2006 by Hoy. 20 Hoy also claims that by a letter of 7 July 2006 Allphones waived legal professional privilege in any legal advice referred to in that letter by disclosing the substance of that advice. 21 The letter in question is from Mr Donnellan, Chief Executive Officer of Allphones, to Mr Birch. The relevant passage reads: 'There are serious matters which need to be discussed. Your client will be given an opportunity to respond to those matters and failure to do so will result in immediate termination of its franchise agreement, based on the advice of our lawyers. ' (Emphasis added.)


case_title: United States Surgical Corp v Hospital Products International Pty Ltd (unreported, Supreme Court of New South Wales, McClelland J, 13 October 1981)

case_text: The difficulty in Hoy's submissions is that, in the present case, the issue of election is not raised by Allphones but by Hoy itself in section K of its Statement of Claim. Allphones, in paragraph 44 of its Further Amended Defence, simply denies the allegation. Similarly, the allegation of bad faith is an issue raised by Hoy and denied by Allphones. In any event, it seems to me that the allegation of fraud puts in issue the state of mind of Hoy and not that of Allphones, and consequently it cannot be unfair or inconsistent for Allphones to retain its privilege with respect to records relating to its own state of mind. As McClelland J said in United States Surgical Corp v Hospital Products International Pty Ltd at 7 (unreported, Supreme Court of New South Wales, McClelland J, 13 October 1981): '...before the privilege can be said to have been lost on this principle, one must at least be able to identify some element or feature of the claim made, or the evidence adduced, by the party otherwise entitled to the privilege , which would render reliance on the privilege unjust.' (Emphasis added.) 27 There is no unfairness, in my view, in maintaining the privilege claim by Allphones in these circumstances. It is not implicit in the denial of an allegation of bad faith that Allphones must in fairness make available otherwise privileged material relating to its state of mind simply because the other party has made the allegation. The position may be altered if Allphones were to positively assert and put in issue its state of mind by, for example, claiming that it had no reason to believe a certain matter existed or raising an issue of undue influence. But that is not this case. Such an allegation is the converse of this case, because Hoy, and not Allphones, has raised the issue.


case_outcome: referred to

case_text: I said in those reasons that it was arguably unconscionable within the meaning of s 51AA of the Trade Practices Act 1976 (Cth) ('the Act') for ONGC to threaten to call, or to call, on the performance guarantees, to take advantage of the Banks' propensity to pay, despite, arguably there being no right to call on the performance guarantees. Clough also says that, ONGC is in breach of an implied negative stipulation in the Construction Contract to the effect that it will not, except where Clough is in such breach, call on the performance guarantees or any of them. See Anaconda Operations Pty Ltd v Fluor Daniel Pty Ltd [1999] VSCA 214 at [8] .


case_title: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 197 ALR 153

case_text: Section 80(2) enables the Court, where, in its opinion, it is desirable to do so, to grant an interim injunction pending determination of an application under s 80(1): ACCC v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 197 ALR 153; ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301. This section confers a judicial discretion of the widest kind upon the Court: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 185-187 per Bowen CJ.


case_title: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2 ; (2000) 96 FCR 491

case_text: This conclusion was reached although the contractor was, in calling up these guarantees, acting according to his strict legal entitlement: Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489. See also: ACCC v CG Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2 ; (2000) 96 FCR 491 at 498 adopted with approval in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 76 ALJR 1 Gummow and Hayne JJ.


case_title: Australian Competition and Consumer Commission v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301

case_text: Clough continues to contend that it would be unconscionable for ONGC to exercise or purport to exercise its apparent legal rights. It points to several equitable norms falling within the "unwritten law" for the purposes of s 51AA of the Act: (a) There is equitable relief analogous to relief against forfeiture even absent waiver or estoppel, where the first party's breach has effectively contributed to the second party's breach, equity may regard it as unconscionable for the first party to exercise its legal rights arising from the second party's breach: Legione v Hateley [1983] HCA 11 ; (1983) 152 CLR 406. See also Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315, [40], [58]. (b) Equity may restrain the exercise of legal right if it is sought to be used unconscionably in the sense of it being used unreasonably or arbitrarily: Pierce Bell Sales Pty Ltd v Frazer [1973] HCA 13 ; (1973) 130 CLR 575. (c) Equity may relieve against one party's insistence upon rights in circumstances which make that harsh or oppressive. ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301. 14 Section 80(2) enables the Court, where, in its opinion, it is desirable to do so, to grant an interim injunction pending determination of an application under s 80(1): ACCC v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 197 ALR 153; ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301. This section confers a judicial discretion of the widest kind upon the Court: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 185-187 per Bowen CJ.


case_title: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 76 ALJR 1


case_text: The Banks contend that even if ONGC has incorrectly drawn down on the performance guarantees there are remedies available between Clough and ONGC, for example, by suing the beneficiary for an account and payment of any overpayment under a performance bond: Cargill International SA v Bangladesh Sugar & Food Corporation [1996] 2 Lloyd's LR 524 at 530. See also Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) [1978] HCA 45 ; (1978) 141 CLR 335 at 351 and Wood Hall Ltd v Pipeline Authority [1979] HCA 21 ; (1979) 141 CLR 443 at 454. It points also to the fact that there is no suggestion that ONGC would be unable to repay any amount owing. Accordingly damages from ONGC, it is said, would be an adequate remedy.


case_text: The Banks submit that there is no serious question to be tried. At a general level what is said on behalf of the Banks as to the well established independence or autonomy of irrevocable letters of credit, is uncontroversial. A standby letter of credit is a letter of credit which performs the function of providing security against the danger that a party to a contract will fail to perform it: Bachmann Pty Ltd v BHP Power New Zealand Ltd [1998] VSCA 40 ; [1999] 1 VR 420 at 428 [26] . The purpose of a standby letter of credit is "to provide the beneficiary with an unfettered, immediate remedy upon the triggering event on the letter of credit, pending resolution of any dispute on the underlying contract": Ideas Plus Investments Ltd v NAB Ltd (2006) 32 WAR 467 at 478 [34]. A standby letter of credit is not simply a mere method of payment but creates a direct liability upon the banker independent of the underlying contract; Ideas Plus at 477, 497, [33], [99], Bachmann at 429-430 [28]-[29]. The contractual promise between the banker and the beneficiary is unaffected by the terms of any underlying contract between the beneficiary and the applicant for the letter of credit. However the applicant for the letter of credit might be able to apply to prevent the beneficiary from claiming against the banker due to the terms of an underlying contract: Bachmann at 429-430 [28]-[29]. These principles apply equally to the performance guarantees the subject of this application. 19 I now turn to consider a number of relevant authorities. In Bachmann the appellant agreed to design, manufacture, supply and commission steel manufacturing equipment for the respondent. A clause in the Supply Contract required the supplier to provide security for the performance of its obligations, which it did by an irrevocable standby letter of credit in favour of the purchaser. The letter of credit required the purchaser to provide the bank with a statement that the supplier had failed to comply with the contract and a sight draft, which the bank undertook to honour. The relevant clause provided: "A party shall not convert into money security that does not consist of money until the party becomes entitled to exercise a right under the contract in respect of the security." 20 Brooking JA with whom Tadgell JA and Ormiston JA agreed said: 'It is also plain that it is competent to the holder of security provided by the other contracting party to promise as part of the contract under which the security is provided the underlying contract not to do some act in relation to the security except in a certain event. Such a contractual promise is efficacious, not in the sense, of when the security is constituted by the obligation of a third person, that the third person can rely by way of defence as against the security holder on a term of the underlying contract, to which he was not a party, but in the sense that relief can be afforded to the person who procured the security in an action brought against the security holder on the promise contained in the underlying contract. No principle or rule of law would deny that a promise forming part of the underlying contract is in this sense efficacious, and the cases recognise this.' [28] 22 The supplier in Bachmann did not seek to establish any case of fraud on the purchaser's part but relied only on the contractual qualification upon the purchaser's powers under the general conditions of the underlying contract to demand payment under the letter of credit. It was conceded that the clause referred to constituted a contractual qualification on the purchaser's powers in relation to the security. This is to be contrasted with earlier Australian cases where the initial question was whether the underlying contract on its proper construction qualified the security holder's powers to claim under the security. The only point in the appeal as his Honour put it was as to the content of the qualification. [30]


case_text: The Banks submit that the only traditional exception where a banker may be enjoined, is where the beneficiary is fraudulently attempting to draw down the letter of credit. That is because of the Court's special jurisdiction to prevent fraud, which is wider than the jurisdiction to prevent the beneficiary breaching the underlying contract with the applicant for a letter of credit: Bolivinter Oil SA v Chase Manhattan Bank NA [1984] 1 Lloyd's Rep 251 at 254, Deutsche Ruckversicherung AG v Wallbrook Insurance Co Ltd [1995] 1 WLR 1017 at 1029-1030, Ideas Plus at 496 [93]. There is no allegation of fraud here and so, the Banks submit, no injunction should be granted against them. The Banks nonetheless rightly, in my opinion, accept that another basis upon which the Banks might be enjoined is by reason of it being allegedly unconscionable, contrary to s 51AA of the Act, for ONGC to exercise its contractual rights in the underlying construction contract and draw upon the performance guarantees although any such restraint would be ancillary to Clough's claim against ONGC.


case_text: I remain satisfied that there is a serious issue to be tried as to whether ONGC has acted unconscionably in contravention of s 51AA of the Act in calling on or threatening to call on the performance guarantees despite there being no legal right, on its part, to do so. As Austin J said in Boral Formwork v Action Makers (2003) ATPR 41-953 at [14] when referring relevantly to s 51AA of the Act: "The principle of autonomy, applicable to a standby letter of credit, cannot override the Statute" . I am also satisfied that, upon the same factual matrix, there is a serious issue to be tried whether ONGC is in breach if the negative stipulation conditioning the right to call up the performance guarantees. 44 These findings warrant the continuation of the injunctive orders as against ONGC, and subject to consideration of the balance of convenience, ancillary injunctive orders as against the Banks. 45 In these circumstance it is not necessary for me presently to enter upon the question of the construction of the performance guarantees and in particular whether, as between the Banks and ONGC the obligation to pay under a call is conditioned by 'breach of contract' by Clough, and if so, just what is required to be done by way of notice, or proof, or otherwise, in order for that condition to be satisfied.


case_title: Cargill International SA v Bangladesh Sugar & Food Corporation [1996] 2 Lloyd's LR 524


case_text: The affidavit of Mr Malcolm Rutter sworn 15 June 2007 provides a very detailed account of the background to the Construction Contract and what has occurred since its execution. I have set out the relevant factual background as exposed in that affidavit in my reasons of 7 June 2007 when I, amongst other things, restrained ONGC from taking any further step to demand or to obtain payment or renewing or claiming to renew a demand for payment from any of the respondent Banks under the respective performance guarantees: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2007] FCA 881 [8]-[23]. It is accordingly not necessary for me to repeat that background detail here. Mr Rutter has variously deposed in his affidavit to the effect that Clough is not in any way in default under the Construction Contract. The Banks do not, understandably, attempt to contradict this. ONGC has not appeared in this application. 7 It is fundamental to Clough's arguments that it is not relevantly in breach of the Construction Contract nor are there any other contractual bases such as to entitle ONGC to make a demand upon the Banks under the respective performance guarantees. It is contended alternatively that if it is in breach then ONGC has contributed to this in the sense that to the extent that Clough has not met any of its obligations, this has been directly caused by ONGC's failure to perform its obligations. In other words Clough's obligations are dependent upon ONGC's performance. 8 Clough says that it has, at all material times, been ready willing and able to comply with its obligations, subject to ONGC's timely performance of its inter-dependent obligations. Clough says that, otherwise, it has completed the work required of it. However, on the evidence of Mr Rutter, ONGC has been in breach of a number of its obligations, including failing to effect necessary well-completion at the deep water field, as well as meeting invoiced payments from Clough in the order of US$7 million.


case_title: Deutsche Ruckversicherung AG v Wallbrook Insurance Co Ltd [1996] 1 WLR 1017


case_title: Fletcher Construction Australia Limited v Varnsdorf Pty Ltd Australian Competition and Consumer Commission [1998] 3 VR 812

case_text: In Ideas Plus Steytler P with whom McLure and Buss JJA agreed concluded that the National Australia Bank (NAB) was empowered to claim under a letter of credit granted by HSBC Bank of Australia Ltd (HSBC) so long as it had a bona fide belief that the conditions were satisfied. The certificate by the NAB issued to HSBC certifying in effect that the conditions of the letter of credit had been met was only a representation of such a bona fide belief and perhaps that there were reasonable grounds for such a belief. [55]-[57], [105] See also Fletcher Construction Australia Limited v Varnsdorf Pty Ltd [1998] 3 VR 812. Steytler P with whom McLure JA agreed held that the basis for the payment made by HSBC pursuant to its independent obligation by it to NAB under the letter of credit was the provision by NAB of a certificate in the required terms. It was, his Honour found, the presentation of that certificate, not the truth of the facts certified, which conditioned HSBC's obligation to pay.


case_text: Gibbs J, having regard to the proper construction of the performance guarantee, said that to hold that the Banks should not pay on receiving a demand, but should be bound to inquire into the rights of the Authority and the contractor under a contract to which the bank was not a party would be to depart from the ordinary meaning of the undertaking that the Bank is to pay on demand. (p 451) However, Stephen J observed that, if the construction contract itself had contained some qualification upon the Authority's power to make a demand under a performance guarantee, the position in relation to the grant of such an injunction might well have been different (p 459). Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 at 550-551 made observations to like effect. 35 In Reed Construction Services Pty Ltd v Kheng Seng (Australia) Pty Ltd (1999) 15 BCL 158, 164 Austin J said: 'There are three principal exceptions. The first, noted in passing by Gibbs J in the Wood Hall case (at 451) and recognised as well by Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1986) 2 BCL 366, 370, is that the Court will enjoin the party in whose favour the bond has been given from acting fraudulently. The second exception, recently recognised by the Victorian Supreme Court in Olex Focas Pty Ltd v Skodaexport Co Ltd, [1997] ATPR (Digest) [46-163], is that the Court will intervene to restrain the party for whose benefit the bond was given from acting unconscionably for the purposes of s 51AA of the Trade Practices Act 1974 (Cth). There is a third exception, which is based on contract and is the most important for present purposes. A line of cases has recognised that whilst the Court will not restrain the issuer of the bond from acting on the unqualified promise to honour it, if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.' [emphasis added]


case_text: His Honour canvassed a number of cases in which the proper construction of the language contained in the standby letter of credit, "... until the party becomes entitled to exercise a right under the contract ..." had been similarly discussed. Those authorities range from requiring no more than a claimed entitlement which is not specious or fanciful: Hughes Bros Pty Ltd v Telede Pty Ltd (1989) 7 BCL 210 to requiring that the holder of the security establish, whether by litigation or arbitration, an actual entitlement to payment of the moneys: Mitsui Kensetsu Corporation Australia Pty Ltd v State of South Australia (unreported Qld Supreme Court, 9 August 1990 per Byrne J).


case_text: By s 80 of the Act the Court may grant an injunction in such terms as it determines to be appropriate, relevantly in this case, where, on the application of Clough it is satisfied that the Banks intend, unless restrained, to pay under the guarantees, and are thereby proposing to engage in conduct that constitutes or would constitute aiding or abetting ONGC to contravene s 51AA under Part IVA of the Act, or would, thereby, be directly or indirectly knowingly concerned in or party to the contravention. See ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 266 per Gummow J.


case_title: Ideas Plus Investments Ltd v National Australia Bank Ltd (2006) 32 WAR 467

case_text: The Banks submit that there is no serious question to be tried. At a general level what is said on behalf of the Banks as to the well established independence or autonomy of irrevocable letters of credit, is uncontroversial. A standby letter of credit is a letter of credit which performs the function of providing security against the danger that a party to a contract will fail to perform it: Bachmann Pty Ltd v BHP Power New Zealand Ltd [1998] VSCA 40 ; [1999] 1 VR 420 at 428 [26] . The purpose of a standby letter of credit is "to provide the beneficiary with an unfettered, immediate remedy upon the triggering event on the letter of credit, pending resolution of any dispute on the underlying contract": Ideas Plus Investments Ltd v NAB Ltd (2006) 32 WAR 467 at 478 [34]. A standby letter of credit is not simply a mere method of payment but creates a direct liability upon the banker independent of the underlying contract; Ideas Plus at 477, 497, [33], [99], Bachmann at 429-430 [28]-[29]. The contractual promise between the banker and the beneficiary is unaffected by the terms of any underlying contract between the beneficiary and the applicant for the letter of credit. However the applicant for the letter of credit might be able to apply to prevent the beneficiary from claiming against the banker due to the terms of an underlying contract: Bachmann at 429-430 [28]-[29]. These principles apply equally to the performance guarantees the subject of this application. 17 The Banks submit that the only traditional exception where a banker may be enjoined, is where the beneficiary is fraudulently attempting to draw down the letter of credit. That is because of the Court's special jurisdiction to prevent fraud, which is wider than the jurisdiction to prevent the beneficiary breaching the underlying contract with the applicant for a letter of credit: Bolivinter Oil SA v Chase Manhattan Bank NA [1984] 1 Lloyd's Rep 251 at 254, Deutsche Ruckversicherung AG v Wallbrook Insurance Co Ltd [1995] 1 WLR 1017 at 1029-1030, Ideas Plus at 496 [93]. There is no allegation of fraud here and so, the Banks submit, no injunction should be granted against them. The Banks nonetheless rightly, in my opinion, accept that another basis upon which the Banks might be enjoined is by reason of it being allegedly unconscionable, contrary to s 51AA of the Act, for ONGC to exercise its contractual rights in the underlying construction contract and draw upon the performance guarantees although any such restraint would be ancillary to Clough's claim against ONGC. 26 In Ideas Plus Steytler P with whom McLure and Buss JJA agreed concluded that the National Australia Bank (NAB) was empowered to claim under a letter of credit granted by HSBC Bank of Australia Ltd (HSBC) so long as it had a bona fide belief that the conditions were satisfied. The certificate by the NAB issued to HSBC certifying in effect that the conditions of the letter of credit had been met was only a representation of such a bona fide belief and perhaps that there were reasonable grounds for such a belief. [55]-[57], [105] See also Fletcher Construction Australia Limited v Varnsdorf Pty Ltd [1998] 3 VR 812. Steytler P with whom McLure JA agreed held that the basis for the payment made by HSBC pursuant to its independent obligation by it to NAB under the letter of credit was the provision by NAB of a certificate in the required terms. It was, his Honour found, the presentation of that certificate, not the truth of the facts certified, which conditioned HSBC's obligation to pay.


case_text: Clough continues to contend that it would be unconscionable for ONGC to exercise or purport to exercise its apparent legal rights. It points to several equitable norms falling within the "unwritten law" for the purposes of s 51AA of the Act: (a) There is equitable relief analogous to relief against forfeiture even absent waiver or estoppel, where the first party's breach has effectively contributed to the second party's breach, equity may regard it as unconscionable for the first party to exercise its legal rights arising from the second party's breach: Legione v Hateley [1983] HCA 11 ; (1983) 152 CLR 406. See also Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315, [40], [58]. (b) Equity may restrain the exercise of legal right if it is sought to be used unconscionably in the sense of it being used unreasonably or arbitrarily: Pierce Bell Sales Pty Ltd v Frazer [1973] HCA 13 ; (1973) 130 CLR 575. (c) Equity may relieve against one party's insistence upon rights in circumstances which make that harsh or oppressive. ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301.


case_text: However, the Court held that there were serious questions to be tried whether the parties were engaged in trade and commerce between Australia and a place outside Australia, for the purposes of s 6(2) of the Act, and whether the head-contractor had acted unconscionably, and in contravention of s 51AA of the Act, by making demand under the mobilisation guarantees, in the sense that it had insisted on strict legal rights in circumstances which made that harsh or oppressive or caused hardship. Accordingly, the sub-contractors were entitled to injunctions in respect of the mobilisation guarantees: ( Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537; Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489 referred to). Batt J in so finding held that the effect of the Act, applying as it did to international trade and commerce, was to work a substantial inroad into the well-established common law autonomy of letters of credit and performance bonds and other bank guarantees. In that case the bank which operated in Victoria, had made a submitting appearance only.


case_title: Mitsui Kensetsu Corporation Australia Pty Ltd v State of South Australia (unreported Qld Supreme Court, 9 August 1990


case_title: Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380 at 400

case_text: In Olex Focas Pty Ltd v Skodaexport Co Ltd , sub-contractors provided unconditional bank guarantees to the head contractor known as mobilisation guarantees. Additionally they provided performance bonds again by way of bank guarantees to the head contractor. All the guarantees contained unconditional undertakings by the bank to pay the head contractor on demand. The contracts made between the sub-contractors and the head-contractor were variously expressed to be subject to the laws of India or Switzerland. The contracts also contained an arbitration clause requiring disputes to be arbitrated in Paris. 28 Disputes arose between the sub-contractors and the head-contractor. The sub-contractors claimed that they had performed all their obligations under the contract. The head-contractor denied this. The head-contractor then called up the full amount of the guarantees. The sub-contractors sought interlocutory injunctions requiring the head-contractor to countermand the demands made upon the bank, restraining the head-contractor from making any further demand under any of the guarantees and restraining the bank from making any payment pursuant to any of the guarantees. 29 The mobilisation and bank guarantees all contained irrevocable undertakings on the part of the bank "to pay the buyer at site forthwith on first demand and in writing without protest or demur or proof or satisfaction and without reference to the seller any and all amounts demanded from us by the buyer", subject to an aggregate limit. 35 In Reed Construction Services Pty Ltd v Kheng Seng (Australia) Pty Ltd (1999) 15 BCL 158, 164 Austin J said: 'There are three principal exceptions. The first, noted in passing by Gibbs J in the Wood Hall case (at 451) and recognised as well by Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1986) 2 BCL 366, 370, is that the Court will enjoin the party in whose favour the bond has been given from acting fraudulently. The second exception, recently recognised by the Victorian Supreme Court in Olex Focas Pty Ltd v Skodaexport Co Ltd, [1997] ATPR (Digest) [46-163], is that the Court will intervene to restrain the party for whose benefit the bond was given from acting unconscionably for the purposes of s 51AA of the Trade Practices Act 1974 (Cth). There is a third exception, which is based on contract and is the most important for present purposes. A line of cases has recognised that whilst the Court will not restrain the issuer of the bond from acting on the unqualified promise to honour it, if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.' [emphasis added] 40 As I have mentioned, Batt J was not persuaded, on the evidence before him in Olex Focas , that there was a serious issue to be tried that the head-contractor was acting unconscionably for the purposes of s 51AA of the Act in calling up the performance guarantee. His Honour came to the opposite conclusion on the evidence before him in respect to the mobilisation/procurement guarantees. This was because his Honour considered that the calling up the whole amount secured by this category of guarantees, when the greater part had already been paid, was "according to ordinary human standards, quite against conscience" and accordingly, unconscionable within the terms of the Act. 50 I have already adverted to the well-established line of authority underlining the importance of the certainty generated by letters of credit, performance bonds and the like. The Banks submit that this is an important factor on the balance of convenience and point to the case of Olex Focas Pty Ltd v Skodaexport Co Ltd where Batt J refused an injunction against either the beneficiary or the bank to prevent payment on performance bonds based on claims of unconscionable conduct contrary to s 51AA of the Act. 51 It is submitted that an injunction may well adversely affect the commercial reputation of the Banks in a way that would mean that those arranging international letters of credit and performance guarantees would prefer banks from other jurisdictions. This, it is contended, gives rise to an unquantifiable difficulty, which means that an undertaking as to damages, by Clough, may well be insufficient to protect the position of the Banks. 52 As between Clough and ONGC I have already concluded, when granting an interim interlocutory injunction against ONGC that the balance of convenience favoured the grant of an injunction because the evidence demonstrated how Clough would be irreparably affected (both financially and through an adverse impact on its reputation) if ONGC were to press its demands and secured payment under the performance guarantees. I found that damages would not be an adequate remedy for Clough on the evidence then before me. 67 In these circumstances, and in light of the serious issues to be tried as between Clough and ONGC, it is necessary, in my opinion, in order to preserve the status quo, and the efficacy of the injunctive orders made against ONGC, given the Banks' intention, otherwise, to pay under the guarantees, to restrain them from doing so: see Olex Focas at p 405. 68 Accordingly I am of the view that the motion by the Banks should be dismissed. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 19 June 2007 Counsel for the Applicant: Mr G Murphy SC with Mr B Dharmananda Solicitors for the Applicant: Corrs Chambers Westgarth Counsel for the 1 st Respondent No appearance Counsel for the 2 nd -4 th Respondents: Mr J Thomson Solicitors for the 2 nd -4 th Respondents: Allens Arthur Robinson Date of Hearing: 12 June 2007 Date of Judgment: 19 June 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/927.html


case_title: Pierce Bell Sales Pty Ltd v Frazer [1973] HCA 13 ; (1973) 130 CLR 575


case_text: In Reed Construction Services Pty Ltd v Kheng Seng (Australia) Pty Ltd (1999) 15 BCL 158, 164 Austin J said: 'There are three principal exceptions. The first, noted in passing by Gibbs J in the Wood Hall case (at 451) and recognised as well by Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1986) 2 BCL 366, 370, is that the Court will enjoin the party in whose favour the bond has been given from acting fraudulently. The second exception, recently recognised by the Victorian Supreme Court in Olex Focas Pty Ltd v Skodaexport Co Ltd, [1997] ATPR (Digest) [46-163], is that the Court will intervene to restrain the party for whose benefit the bond was given from acting unconscionably for the purposes of s 51AA of the Trade Practices Act 1974 (Cth). There is a third exception, which is based on contract and is the most important for present purposes. A line of cases has recognised that whilst the Court will not restrain the issuer of the bond from acting on the unqualified promise to honour it, if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.' [emphasis added]


case_text: However, the Court held that there were serious questions to be tried whether the parties were engaged in trade and commerce between Australia and a place outside Australia, for the purposes of s 6(2) of the Act, and whether the head-contractor had acted unconscionably, and in contravention of s 51AA of the Act, by making demand under the mobilisation guarantees, in the sense that it had insisted on strict legal rights in circumstances which made that harsh or oppressive or caused hardship. Accordingly, the sub-contractors were entitled to injunctions in respect of the mobilisation guarantees: ( Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537; Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489 referred to). Batt J in so finding held that the effect of the Act, applying as it did to international trade and commerce, was to work a substantial inroad into the well-established common law autonomy of letters of credit and performance bonds and other bank guarantees. In that case the bank which operated in Victoria, had made a submitting appearance only. 41 This conclusion was reached although the contractor was, in calling up these guarantees, acting according to his strict legal entitlement: Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489. See also: ACCC v CG Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2 ; (2000) 96 FCR 491 at 498 adopted with approval in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 76 ALJR 1 Gummow and Hayne JJ.


case_title: Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315


case_text: The cases relied upon by his Honour included Wood Hall Ltd v The Pipeline Authority [1979] HCA 21 ; (1979) 141 CLR 443 at 452-4 per Gibbs J (with whom Mason J agreed) and at 459 per Stephen J. His Honour continued: 'I do not overlook the credible distinction between the effect of the underlying contract as between the parties to it and its effect (if any) as between the holder of the security and the third person whose obligation constitutes the security. One can for brevity speak of a contractual qualification upon the owner's powers in relation to the security where the underlying agreement between the owner and the contractor or supplier contains a term which restricts the exercise of those powers in some way.' [29] 31 The Court declined to grant injunctions under the general law, they not having established a clear case of fraud by the head-contractor in making demand under the guarantees and that the bank was aware of any such fraud at the time of the post payment. There was accordingly no serious question to be tried in that respect. In so finding the Court applied Wood Hall Ltd v The Pipeline Authority [1979] HCA 21 ; (1979) 141 CLR 443. 33 In Wood Hall Ltd v The Pipeline Authority a condition in a contract for the construction of a pipeline required the contractor to provide a cash security or, alternatively, a bank guarantee as security for the contractors due and faithful performance of the work. This was in the nature of a performance guarantee. Another condition entitled the owner to retain 10% of the progress payments due to the contractor until the work had been performed and accepted in accordance with the contract. The owner, at the contractor's request, agreed to accept a bank guarantee in lieu of the monies retained. This was a so-called retention guarantee. By each of the guarantees the bank unconditionally undertook to pay the owner on demand any sum up to the limit specified in each guarantee. When the work was almost complete, the owner demanded payment from the bank under the guarantee. The contactor sought declarations and orders the purpose of which was to restrain the bank from making payment to the Authority under four instruments described on their face as bank guarantees given by the bank to the Pipeline Authority. The Court there held that the owner was entitled to demand and be paid the amount of the performance guarantee whether or not there had been a want of due and faithful performance of the work, and the monies so paid must be held by him as security for the contractors due and faithful performance of the work. 34 Gibbs J, having regard to the proper construction of the performance guarantee, said that to hold that the Banks should not pay on receiving a demand, but should be bound to inquire into the rights of the Authority and the contractor under a contract to which the bank was not a party would be to depart from the ordinary meaning of the undertaking that the Bank is to pay on demand. (p 451) However, Stephen J observed that, if the construction contract itself had contained some qualification upon the Authority's power to make a demand under a performance guarantee, the position in relation to the grant of such an injunction might well have been different (p 459). Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 at 550-551 made observations to like effect. 47 The Banks contend that even if ONGC has incorrectly drawn down on the performance guarantees there are remedies available between Clough and ONGC, for example, by suing the beneficiary for an account and payment of any overpayment under a performance bond: Cargill International SA v Bangladesh Sugar & Food Corporation [1996] 2 Lloyd's LR 524 at 530. See also Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) [1978] HCA 45 ; (1978) 141 CLR 335 at 351 and Wood Hall Ltd v Pipeline Authority [1979] HCA 21 ; (1979) 141 CLR 443 at 454. It points also to the fact that there is no suggestion that ONGC would be unable to repay any amount owing. Accordingly damages from ONGC, it is said, would be an adequate remedy.


case_text: Section 80(2) enables the Court, where, in its opinion, it is desirable to do so, to grant an interim injunction pending determination of an application under s 80(1): ACCC v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 197 ALR 153; ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301. This section confers a judicial discretion of the widest kind upon the Court: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 185-187 per Bowen CJ.


case_text: A patent specification should be given a purposive rather than a purely literal construction: Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 (' Catnic ') at 242-243; Décor at 400; Improver Corporation v Remington Consumer Products Ltd [1990] FSR 181 (' Improver '); Nicaro Holdings Pty Ltd v Martin Engineering Co (1989-1990) 16 IPR 545 at 560-561; Commonwealth Industrial Gases Ltd v M W A Holdings Pty Ltd (1970) 44 ALJR 385 at 388; Beltreco at [81]; Kirin-Amgen Inc v Hoeschst Marion Roussel Ltd (2004) 64 IPR 444 (' Kirin-Amgen '); Sachtler at [43]-[67]. It is inappropriate, however, to approach construction of the specification with a view to being 'fair' to the patentee; Kirin-Amgen at [33]; Sachtler at [60]. The fact that the monopoly is granted in consideration for the disclosure of the invention to the general knowledge base of society must be recognised: Beltreco at [70]. Indeed, the principles governing a definition of a monopoly operating over the public at large require a description of the claims that 'is not reasonably capable of misunderstanding': Martin at 59. The patentee must define the invention with sufficient precision to permit the monopoly to be determined and allow the general public to identify from the words of the claims the conduct prohibited: British United Shoe Machinery Co Ltd v A Fussell & Sons Ltd (1908) 25 RPC 631 at 650-651. The public are entitled to be able to design around the monopoly claimed in a patent and therefore they must be able to determine reliably the scope of the claims: Beloit Technologies Inc v Valmat Paper Machinery Inc [1895] 24 RPC 705 at 720.


case_text: It is important, however, that the focus of the inquiry remain on the claims under consideration. If claims are clear and unambiguous, they are not to be varied, qualified or made obscure by statements found in other parts of the patent: Welch Perrin at 610; Interlego at 478-479; Electric & Musical Industries at 41; Rosedale Associated Manufacturers Ltd v Carlton Tyre Saving Co Ltd [1960] RPC 59 at 69; Cooper Industries Inc v Metal Manufactures Ltd (1994) 29 IPR 106 at 113; Lantech Inc v First Green Park Pty Ltd (1995) 31 IPR 327 at 333; Beltreco at [74]. It is not legitimate to narrow or expand the boundaries of the monopoly as fixed by the words of the claims by adding to those words a gloss drawn from other parts of the specification: Welch Perrin at 610; Décor at 391, 398; Braas & Co GmbH v Humes Ltd (1993) 26 IPR 273 at 284; Beltreco at [74].


case_text: Clorox contended that the respondents' expert witnesses' evidence was inadmissible, at least to the extent that their opinions went to the construction of the claims. It was argued that in the absence of technical or scientific words or expressions requiring expert explanation, which was said not to be the case here, the task of construction of the claims was for the Court and, as such, this evidence was irrelevant and consequently inadmissible. See, for instance, the recent judgment in Breville Pty Ltd v The Warehouse Group (Australia) Pty Ltd [2005] FCA 1893 at [34] - [36] . Clorox also submitted that certain portions of the respondents' affidavit evidence were inadmissible, again on grounds of irrelevance, as it was not for a witness to rewrite or redraft the Patent. I should note that Clorox made further submissions in respect of the admissibility of the respondents' evidence in the context of infringement and I will consider those objections when addressing infringement. 36 The respondents submitted that the evidence to which Clorox raised an objection was admissible on the basis that it responded to the evidence of Clorox's own expert witness; was of assistance to the Court in construing the relevant claims of the Patent; and that the weight to be given to such evidence was a matter for submissions.


case_title: British United Shoe Machinery Co Ltd v A Fussell & Sons Ltd (1908) 25 RPC 631


case_text: A patent specification should be given a purposive rather than a purely literal construction: Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 (' Catnic ') at 242-243; Décor at 400; Improver Corporation v Remington Consumer Products Ltd [1990] FSR 181 (' Improver '); Nicaro Holdings Pty Ltd v Martin Engineering Co (1989-1990) 16 IPR 545 at 560-561; Commonwealth Industrial Gases Ltd v M W A Holdings Pty Ltd (1970) 44 ALJR 385 at 388; Beltreco at [81]; Kirin-Amgen Inc v Hoeschst Marion Roussel Ltd (2004) 64 IPR 444 (' Kirin-Amgen '); Sachtler at [43]-[67]. It is inappropriate, however, to approach construction of the specification with a view to being 'fair' to the patentee; Kirin-Amgen at [33]; Sachtler at [60]. The fact that the monopoly is granted in consideration for the disclosure of the invention to the general knowledge base of society must be recognised: Beltreco at [70]. Indeed, the principles governing a definition of a monopoly operating over the public at large require a description of the claims that 'is not reasonably capable of misunderstanding': Martin at 59. The patentee must define the invention with sufficient precision to permit the monopoly to be determined and allow the general public to identify from the words of the claims the conduct prohibited: British United Shoe Machinery Co Ltd v A Fussell & Sons Ltd (1908) 25 RPC 631 at 650-651. The public are entitled to be able to design around the monopoly claimed in a patent and therefore they must be able to determine reliably the scope of the claims: Beloit Technologies Inc v Valmat Paper Machinery Inc [1895] 24 RPC 705 at 720. 20 The hypothetical addressee of the patent specification is the non-inventive person skilled in the art before the priority date: Welch Perrin at 610; Populin v HB Nominees Pty Ltd (1982) 41 ALR 471 (' Populin ') at 476-477; Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd (1991) 103 ALR 239 at 260; Décor at 397; Stanway Oyster Cylinders Pty Ltd v Marks (1996) 66 FCR 577 at 582-583; Beltreco at [81]; Kimberly-Clark Australia Pty Limited v Arico Trading International Pty Limited [2001] HCA 8 ; (2001) 207 CLR 1 at [24] ; Gambro Pty Ltd v Fresenius Medical Care South East Asia Pty Ltd (2004) 61 IPR 442 at [113]; Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 496; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 26 IPR 513 (' NV Philips ') at 531; Catnic at 225; Wheatley (Davina) v Drillsafe Ltd [2001] RPC 7 at 141 142. Thus, the words used in a specification are to be given the meaning that the hypothetical addressee would attach to them, both in the light of his or her own general knowledge and what is disclosed in the body of the specification: Décor at 391; Photocure at [170]. 25 A feature of a claim is considered essential if the hypothetical reader (that is, a reader skilled in the art before the priority date) would have understood from the language used in the claim, in the context of the specification as a whole, that the patentee intended that strict compliance was an essential requirement of the invention: Catnic at 243; Décor at 400; Populin at 476; Beltreco at [81]. 55 Mr Hess for Clorox submitted that the use of the word, 'straight' in this context referred to the visual approximation of straight. While Mr Caine submitted on behalf of the respondents that 'straight' was used in its geometric sense, he accepted that the term would encompass joinder involving a slight degree of curvature. In this sense, Mr Caine seemed to be accepting and adopting a purposive construction similar to that applied by Lord Diplock in Catnic in relation to the term 'vertical'. On one level at least the dispute seemed to be about just how much deviation from geometric precision was consistent with the description, 'straight'. This aspect of the debate seems to be what is behind the characterisation of the straight sides requirement as an intermediate term; see [26]-[28] above. 56 As noted above, the Patent is addressed to the hypothetical non-inventive person skilled in the art before the priority date. A patent is a public instrument designed to disclose the invention. As such, the term should be given a construction that is consistent with this role. The relevant claims require that the front and rear panels be joined along three straight sides. The claims do not require that these panels be joined along lines that appear to be straight or that the join is displayed as straight. In my view, in this context 'straight' must be construed to require that the joins, when the nominal bag is in the laid-flat form, are straight in the geometric sense but not so as to restrict the term to absolute or perfect geometric precision. It might, in my view, extend to encompass joinder along sides that display a slight or modest curvature. Ultimately, however, it is not necessary for me to be more precise on this point as, for reasons explained below, I have formed the view that the sides of the Hercules Bag are distinctly curved and do not fall within any possible meaning of straight as used in the Patent specification. 57 Section 13 of the Act relevantly provides that a patentee has the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention. The term 'exploit' is relevantly defined in Schedule 1 of the Act as follows: ' exploit , in relation to an invention, includes: (a) where the invention is a product--make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or (b) ...'


case_text: It is appropriate to consider the principles applicable to the construction of a patent and their application to the Patent's specification before addressing Clorox's claims of infringement: see CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 267-268 referring to Ransburg Co v Aerostyle Ltd [1968] RPC 287 per Lord Upjohn at 297. Indeed, it is important to ensure that consideration of the allegedly infringing product does not influence the determination of the proper construction of the claims.


case_title: Commonwealth Industrial Gases Ltd v M W A Holdings Pty Ltd (1970) 44 ALJR 385


case_title: Cooper Industries Inc v Metal Manufactures Ltd (1994) 29 IPR 106