case_text: The parties said that this amendment was by consent provided that I considered it should be made under the slip rule (and see O 35 r 7(3)). The Court has an implied or inherent power to correct any clerical mistake or error in a judgment or order if it were the result of an accidental slip or omission: Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 at 449E per McHugh JA. He said that the power extended to permit a proposed variation of an order which related to a matter that was in issue in the proceedings or something which was incidental to such a matter if the need for such a variation is the result of an accidental omission or mistake ( Storey & Keers 9 NSWLR at 452F-G; see too Australian Fisheries Management Authority v PW Adams Pty Ltd (No 2) (1996) 66 FCR 349). 6 In addition to the power under the slip rule and O 35 r 7(3), under O 35 r 7(2)(e) the Court has power to vary or set aside an order after entry where it does not reflect the intention of the Court. 7 I intended that my orders restore BGR and its group to the position they should have been in had the oppressive conduct of Triad and Cordato Partners Services in causing the payment of their costs not occurred. I overlooked the plaintiffs' submissions that I should frame the relief more generally than just affecting BGR.


case_outcome: cited

case_text: 177C(1)(b) tells the taxpayer (and others) that a tax benefit in the form of a deduction has been obtained in connection with schematic arrangements if a deduction allowable to the taxpayer under the scheme, would not have been allowable (in whole or in part) if the scheme had not been struck or carried out, or on the second limb, might reasonably be expected not to have been allowable to the taxpayer, in the circumstances of the scheme as struck or carried out. Section 177C(1) thus requires the entire set of schematic arrangements to be set aside so that the postulate contemplated by s 177C(1)(b) might be considered. In Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255, Sackville J at 278 made these observations concerning the operation of s 177C(1)(b): ... In determining whether Mr Lenzo obtained a tax benefit in connection with the scheme for the purposes of s 177C(1)(b), three things should be noted about the statutory formulation. First, the question posed by s 177C(1)(b) has to be answered on the assumption that the scheme had not been entered into or carried out. Section 177C, unlike for example s 177D, does not refer to "any part of the scheme". Thus the question, in order to be answered as s 177C(1)(b) requires, must be approached by assuming that the entire scheme found by the Court was not entered into or carried out: cf Federal Commissioner of Taxation v Peabody (1994) 181 CLR 359 at 383-384, per curiam . It is not open to the taxpayer to point to what might reasonably be expected to have been done if only part of the scheme had not been entered into or carried out. In this case, for example, it is not open to Mr Lenzo to point to what could reasonably be expected to occur if the Loan Deed is ignored, by the remainder of the scheme is assumed to have continued in tact. Secondly, s 177C(1)(b) applies where the deduction would not have been allowable or might reasonably be expected not to have been allowable had the scheme not been entered into or carried out. As the High Court observed in FCT v Peabody 181 CLR at 385: [a] reasonable expectation requires more than a possibility. It involves a prediction as to events which would have taken place if the relevant scheme had not been entered into or carried out and the prediction must be sufficiently reliable for it to be regarded as reasonable. Thirdly, s 177C(1)(b) presents what might be described, perhaps loosely, as a question of characterisation. For the Court to conclude that a taxpayer has obtained a tax benefit in connection with a scheme, it must find that a deduction is allowable to a taxpayer in relation to a year of income in circumstances where the whole or part of "that deduction" would or might not have been allowable in the absence of the scheme. What does the expression "that deduction" mean? If the expression means the very deduction claimed by the taxpayer, in the sense of a deduction for the precise liability incurred by reason of the taxpayer's participation in the impugned scheme, the Commissioner would have little difficulty in persuading the Court that the taxpayer has obtained a tax benefit in connection with the scheme. By hypothesis, if there were no scheme (assuming the incurring of the liability was a consequence of the scheme) the taxpayer simply could not have claimed the identical deduction. If the expression "that deduction" has a wider meaning, it may be open to a taxpayer to satisfy the onus of showing the Commissioner's assessment is excessive by demonstrating that, had the scheme not been entered into or carried out, he or she would have or might reasonably be expected to have incurred a liability of the kind actually claimed as a deduction. For example, in WD & HO Wills (Australia) Pty Ltd v Federal Commissioner of Taxation (1996) 65 FCR 298, the taxpayer argued that had it not entered into the scheme (involving payment of insurance premiums by it to a "captive" insurer), the taxpayer would have paid an equivalent sum in premiums to another insurer. On that hypothesis, even without the scheme, the whole of the deduction claimed by the taxpayer would have been an allowable deduction. The argument failed on the facts, but was accepted in principle: WD & HO Wills (Aust) Pty Ltd v Federal Commissioner of Taxation 65 FCR at 329. In that sense, the Tribunal did not formulate an incorrect test to be applied in deciding whether the kind of deduction claimed under the scheme would not have been allowable or might reasonably be expected not to have been allowable to the taxpayer, absent the scheme. That test however necessarily involves an examination of the particular activity the taxpayer would have undertaken or might reasonably be expected to have undertaken in lieu of the scheme and whether the activity would or might reasonably be expected to have resulted in an allowable deduction of the same kind as that claimed by the taxpayer in the two tax years, under the scheme: Federal Commissioner of Taxation v Lenzo per Sackville J at [128] and Heerey J at [38] to [41]. There was however no evidence before the Tribunal of that activity. What would or might the taxpayer have reasonably done absent the scheme? Would the taxpayer have paid all the amounts due under the contracts to the two brothers by making the contributions to the superannuation fund? The Tribunal thought not, because the characterisation of the payments involved fully deductible employment contributions by the taxpayer and the taxpayer had implemented the scheme, together with the Trail brothers, so as to enable the contractual payments to be varied and paid to the new Employee Welfare Fund to preserve the fully deductible character of those payments. It followed, in the Tribunal's view, that it was contrary to the interests of the taxpayer and each brother to engage in any activity that "did not allow for complete deductibility of all payments". It necessarily follows, having regard to that finding, that the taxpayer would not have made the pre-scheme contractual payments to the Employee Superannuation Scheme except to the extent of the age-limited deductible contributions. What would the taxpayer have otherwise done or might reasonably be expected to have done in the circumstances absent the scheme? Might it have varied the agreements to negotiate new employment contracts containing particular terms which might have given rise to an allowable deduction of the kind claimed in the full amount claimed, and, if so, on what basis or by reference to what steps? The Commissioner says that it is not part of the s 177C(1)(b) test nor is it therefore relevant to consider the tax implications of the alternate postulate as this simply invites the substitution of a new "scheme" for the one required to be stripped away. The Commissioner also says that since the variation of the agreements is part of the scheme that must be stripped away in its entirety, it is not part of the test under s 177C(1)(b) nor is it relevant, to bring within any formulation of an alternate postulate, any variation of the agreements. The matter is to be remitted to the Tribunal to determine the questions before it by applying the test so as to determine whether there is evidence which supports an hypothesis that the taxpayer would have undertaken or might reasonably be expected to have undertaken a particular activity in lieu of the scheme and whether that activity would or might reasonably be expected to have resulted in an allowable deduction of the same kind as the deduction claimed by the taxpayer under the scheme consistently with the methodology identified in the authorities and in particular, Commissioner of Taxation v Peabody (1994) 181 CLR 359; Commissioner of Taxation v Hart (2004) 217 CLR 216; and Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255 at 278 [121] to [125] and [128]; Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404.


case_text: 177C(1)(b) tells the taxpayer (and others) that a tax benefit in the form of a deduction has been obtained in connection with schematic arrangements if a deduction allowable to the taxpayer under the scheme, would not have been allowable (in whole or in part) if the scheme had not been struck or carried out, or on the second limb, might reasonably be expected not to have been allowable to the taxpayer, in the circumstances of the scheme as struck or carried out. Section 177C(1) thus requires the entire set of schematic arrangements to be set aside so that the postulate contemplated by s 177C(1)(b) might be considered. In Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255, Sackville J at 278 made these observations concerning the operation of s 177C(1)(b): ... In determining whether Mr Lenzo obtained a tax benefit in connection with the scheme for the purposes of s 177C(1)(b), three things should be noted about the statutory formulation. First, the question posed by s 177C(1)(b) has to be answered on the assumption that the scheme had not been entered into or carried out. Section 177C, unlike for example s 177D, does not refer to "any part of the scheme". Thus the question, in order to be answered as s 177C(1)(b) requires, must be approached by assuming that the entire scheme found by the Court was not entered into or carried out: cf Federal Commissioner of Taxation v Peabody (1994) 181 CLR 359 at 383-384, per curiam . It is not open to the taxpayer to point to what might reasonably be expected to have been done if only part of the scheme had not been entered into or carried out. In this case, for example, it is not open to Mr Lenzo to point to what could reasonably be expected to occur if the Loan Deed is ignored, by the remainder of the scheme is assumed to have continued in tact. Secondly, s 177C(1)(b) applies where the deduction would not have been allowable or might reasonably be expected not to have been allowable had the scheme not been entered into or carried out. As the High Court observed in FCT v Peabody 181 CLR at 385: [a] reasonable expectation requires more than a possibility. It involves a prediction as to events which would have taken place if the relevant scheme had not been entered into or carried out and the prediction must be sufficiently reliable for it to be regarded as reasonable. Thirdly, s 177C(1)(b) presents what might be described, perhaps loosely, as a question of characterisation. For the Court to conclude that a taxpayer has obtained a tax benefit in connection with a scheme, it must find that a deduction is allowable to a taxpayer in relation to a year of income in circumstances where the whole or part of "that deduction" would or might not have been allowable in the absence of the scheme. What does the expression "that deduction" mean? If the expression means the very deduction claimed by the taxpayer, in the sense of a deduction for the precise liability incurred by reason of the taxpayer's participation in the impugned scheme, the Commissioner would have little difficulty in persuading the Court that the taxpayer has obtained a tax benefit in connection with the scheme. By hypothesis, if there were no scheme (assuming the incurring of the liability was a consequence of the scheme) the taxpayer simply could not have claimed the identical deduction. If the expression "that deduction" has a wider meaning, it may be open to a taxpayer to satisfy the onus of showing the Commissioner's assessment is excessive by demonstrating that, had the scheme not been entered into or carried out, he or she would have or might reasonably be expected to have incurred a liability of the kind actually claimed as a deduction. For example, in WD & HO Wills (Australia) Pty Ltd v Federal Commissioner of Taxation (1996) 65 FCR 298, the taxpayer argued that had it not entered into the scheme (involving payment of insurance premiums by it to a "captive" insurer), the taxpayer would have paid an equivalent sum in premiums to another insurer. On that hypothesis, even without the scheme, the whole of the deduction claimed by the taxpayer would have been an allowable deduction. The argument failed on the facts, but was accepted in principle: WD & HO Wills (Aust) Pty Ltd v Federal Commissioner of Taxation 65 FCR at 329. At [26], the Tribunal noted that in the absence of any variation to the contracts, the amounts that would have been deductible under s 82AAC of the Act as superannuation contributions were in 1997 $27,170.00 (Mr Mark Trail) and $9,782.00 (Mr Allan Trail) and in 1998, $28,620.00 (Mr Mark Trail) and $10,232.00 (Mr Allan Trail). At [27], the Tribunal noted that s 177C(1)(b) requires the making of an hypothesis as to what might reasonably be expected to have happened had the scheme not been entered into or carried out. The Tribunal noted the observations of Gummow and Hayne JJ in Commissioner of Taxation v Hart (2004) 217 CLR 216 at 243 [66] that the enquiry directed by Part IVA requires comparison between the scheme in question and an alternative postulate. The Tribunal also noted that the High Court in Commissioner of Taxation v Peabody [1994] HCA 43 ; (1994) 181 CLR 359 determined that a reasonable expectation requires more than a possibility with the result that the prediction must be sufficiently reliable for it to be regarded as reasonable. The matter is to be remitted to the Tribunal to determine the questions before it by applying the test so as to determine whether there is evidence which supports an hypothesis that the taxpayer would have undertaken or might reasonably be expected to have undertaken a particular activity in lieu of the scheme and whether that activity would or might reasonably be expected to have resulted in an allowable deduction of the same kind as the deduction claimed by the taxpayer under the scheme consistently with the methodology identified in the authorities and in particular, Commissioner of Taxation v Peabody (1994) 181 CLR 359; Commissioner of Taxation v Hart (2004) 217 CLR 216; and Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255 at 278 [121] to [125] and [128]; Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404.


case_text: 177C(1)(b) tells the taxpayer (and others) that a tax benefit in the form of a deduction has been obtained in connection with schematic arrangements if a deduction allowable to the taxpayer under the scheme, would not have been allowable (in whole or in part) if the scheme had not been struck or carried out, or on the second limb, might reasonably be expected not to have been allowable to the taxpayer, in the circumstances of the scheme as struck or carried out. Section 177C(1) thus requires the entire set of schematic arrangements to be set aside so that the postulate contemplated by s 177C(1)(b) might be considered. In Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255, Sackville J at 278 made these observations concerning the operation of s 177C(1)(b): ... In determining whether Mr Lenzo obtained a tax benefit in connection with the scheme for the purposes of s 177C(1)(b), three things should be noted about the statutory formulation. First, the question posed by s 177C(1)(b) has to be answered on the assumption that the scheme had not been entered into or carried out. Section 177C, unlike for example s 177D, does not refer to "any part of the scheme". Thus the question, in order to be answered as s 177C(1)(b) requires, must be approached by assuming that the entire scheme found by the Court was not entered into or carried out: cf Federal Commissioner of Taxation v Peabody (1994) 181 CLR 359 at 383-384, per curiam . It is not open to the taxpayer to point to what might reasonably be expected to have been done if only part of the scheme had not been entered into or carried out. In this case, for example, it is not open to Mr Lenzo to point to what could reasonably be expected to occur if the Loan Deed is ignored, by the remainder of the scheme is assumed to have continued in tact. Secondly, s 177C(1)(b) applies where the deduction would not have been allowable or might reasonably be expected not to have been allowable had the scheme not been entered into or carried out. As the High Court observed in FCT v Peabody 181 CLR at 385: [a] reasonable expectation requires more than a possibility. It involves a prediction as to events which would have taken place if the relevant scheme had not been entered into or carried out and the prediction must be sufficiently reliable for it to be regarded as reasonable. Thirdly, s 177C(1)(b) presents what might be described, perhaps loosely, as a question of characterisation. For the Court to conclude that a taxpayer has obtained a tax benefit in connection with a scheme, it must find that a deduction is allowable to a taxpayer in relation to a year of income in circumstances where the whole or part of "that deduction" would or might not have been allowable in the absence of the scheme. What does the expression "that deduction" mean? If the expression means the very deduction claimed by the taxpayer, in the sense of a deduction for the precise liability incurred by reason of the taxpayer's participation in the impugned scheme, the Commissioner would have little difficulty in persuading the Court that the taxpayer has obtained a tax benefit in connection with the scheme. By hypothesis, if there were no scheme (assuming the incurring of the liability was a consequence of the scheme) the taxpayer simply could not have claimed the identical deduction. If the expression "that deduction" has a wider meaning, it may be open to a taxpayer to satisfy the onus of showing the Commissioner's assessment is excessive by demonstrating that, had the scheme not been entered into or carried out, he or she would have or might reasonably be expected to have incurred a liability of the kind actually claimed as a deduction. For example, in WD & HO Wills (Australia) Pty Ltd v Federal Commissioner of Taxation (1996) 65 FCR 298, the taxpayer argued that had it not entered into the scheme (involving payment of insurance premiums by it to a "captive" insurer), the taxpayer would have paid an equivalent sum in premiums to another insurer. On that hypothesis, even without the scheme, the whole of the deduction claimed by the taxpayer would have been an allowable deduction. The argument failed on the facts, but was accepted in principle: WD & HO Wills (Aust) Pty Ltd v Federal Commissioner of Taxation 65 FCR at 329.


case_text: J concluded that s 177C(1)(b) should be given the wider interpretation that he discussed otherwise the words, "or might reasonably be expected not to have been allowable", would seem to have no role to play. Sackville J noted that the wider view seems to be implicit in the approach adopted in FCT v Peabody ; Federal Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 207 CLR 235 at 261-262 and Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404. In FCT v Spotless , the High Court in considering the obtaining of a tax benefit for the purposes of s 177C(1)(a), considered that the section identified an amount not being included in the assessable income of the taxpayer "more generally" than the taxpayer had contended for on the narrow basis.


case_text: J concluded that s 177C(1)(b) should be given the wider interpretation that he discussed otherwise the words, "or might reasonably be expected not to have been allowable", would seem to have no role to play. Sackville J noted that the wider view seems to be implicit in the approach adopted in FCT v Peabody ; Federal Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 207 CLR 235 at 261-262 and Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404. In FCT v Spotless , the High Court in considering the obtaining of a tax benefit for the purposes of s 177C(1)(a), considered that the section identified an amount not being included in the assessable income of the taxpayer "more generally" than the taxpayer had contended for on the narrow basis. The first step is to isolate with clarity the particular activity that would or might reasonably be expected to have occurred. In undertaking that step it is relevant to have regard to the evidence of the taxpayer as to the steps it says it would have undertaken or would have been likely to undertake in the absence of the scheme: Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at pp 423 and 424 per Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ. That subjective evidence of the individuals informing the guiding mind of the taxpayer is, of course, not in any sense determinative of the alternate postulate. However, that evidence, against the background of all the evidence, might assist in framing the nature of the activity the taxpayer would have undertaken or might reasonably be expected to have undertaken. Ultimately, the hypothesis is a prediction as to future events that would or might reasonably be expected to have been undertaken, and the Court, or the administrative decision-maker, must form its own objective view of that hypothesis and whether, against the background of all the evidence, a sufficiently reliable counterfactual can be identified for it to be regarded as reasonable. The matter is to be remitted to the Tribunal to determine the questions before it by applying the test so as to determine whether there is evidence which supports an hypothesis that the taxpayer would have undertaken or might reasonably be expected to have undertaken a particular activity in lieu of the scheme and whether that activity would or might reasonably be expected to have resulted in an allowable deduction of the same kind as the deduction claimed by the taxpayer under the scheme consistently with the methodology identified in the authorities and in particular, Commissioner of Taxation v Peabody (1994) 181 CLR 359; Commissioner of Taxation v Hart (2004) 217 CLR 216; and Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255 at 278 [121] to [125] and [128]; Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404.


case_text: [26], the Tribunal noted that in the absence of any variation to the contracts, the amounts that would have been deductible under s 82AAC of the Act as superannuation contributions were in 1997 $27,170.00 (Mr Mark Trail) and $9,782.00 (Mr Allan Trail) and in 1998, $28,620.00 (Mr Mark Trail) and $10,232.00 (Mr Allan Trail). At [27], the Tribunal noted that s 177C(1)(b) requires the making of an hypothesis as to what might reasonably be expected to have happened had the scheme not been entered into or carried out. The Tribunal noted the observations of Gummow and Hayne JJ in Commissioner of Taxation v Hart (2004) 217 CLR 216 at 243 [66] that the enquiry directed by Part IVA requires comparison between the scheme in question and an alternative postulate. The Tribunal also noted that the High Court in Commissioner of Taxation v Peabody [1994] HCA 43 ; (1994) 181 CLR 359 determined that a reasonable expectation requires more than a possibility with the result that the prediction must be sufficiently reliable for it to be regarded as reasonable. The matter is to be remitted to the Tribunal to determine the questions before it by applying the test so as to determine whether there is evidence which supports an hypothesis that the taxpayer would have undertaken or might reasonably be expected to have undertaken a particular activity in lieu of the scheme and whether that activity would or might reasonably be expected to have resulted in an allowable deduction of the same kind as the deduction claimed by the taxpayer under the scheme consistently with the methodology identified in the authorities and in particular, Commissioner of Taxation v Peabody (1994) 181 CLR 359; Commissioner of Taxation v Hart (2004) 217 CLR 216; and Federal Commissioner of Taxation v Lenzo (2008) 167 FCR 255 at 278 [121] to [125] and [128]; Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404.


case_text: is well settled that an appeal lies to the Federal Court of Australia under s 44(1) of the AAT Act in the original jurisdiction of the Court, "on a question of law" and not in a matter that raises a question of law or involves a question of law. An appeal only lies if there is raised for determination, a question of law and the subject matter of the appeal is the resolution of that question: Birdseye v Australian Securities and Investments Commission (2003) 38 AAR 55; [2003] FCAFC 323; TNT Skypac International (Aust) Pty Ltd v Commissioner of Taxation (1988) 82 ALR 175; Comcare v Etheridge (2006) 149 FCR 522; Hussain v Minister for Foreign Affairs (2008) 169 FCR 241. The questions of law to be determined must be properly framed in the notice of appeal supported by the contended grounds of appeal: Order 53, rule 3(2).


case_title: TNT Skypac International (Aust) Pty Ltd v Commissioner of Taxation (1988) 82 ALR 175


case_title: Comcare v Etheridge (2006) 149 FCR 522


case_title: Hussain v Minister for Foreign Affairs (2008) 169 FCR 241


case_text: of fact are generally not susceptible of challenge unless the manner of their making gives rise to a question of law: Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154. The question of whether the Tribunal has isolated the relevant legal test is plainly a question of law. The question of whether the Tribunal has applied a correctly identified test or in applying the test so identified, has in fact applied a different test, is a question of law. The question of whether facts found fall within the statute properly construed is generally regarded as a question of law: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280. In Minister for Immigration and Multicultural Affairs v Al Miahi 65 ALD 141, Sundberg, Emmett and Finkelstein JJ said this: [34] The question whether there is any evidence of a particular fact is a question of law. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law. That is because, before the inference is drawn, there is a preliminary question as to whether the evidence reasonably admits a different conclusion. Accordingly, in the context of judicial review, the makings of findings and the drawing of inferences in the absence of evidence is an error of law. On the other hand, there is no error of law simply in making a wrong finding of fact. Even if the reasoning whereby the court reached its conclusions of fact were demonstrably unsound, that would not amount to an error of law. A party does not establish an error of law by showing that the decision-maker inferred the existence of a particular fact by a faulty process, for example by engaging in an illogical course of reasoning. Thus, at common law, want of logic is not synonymous with error of law. So long as the particular inference is reasonably open, even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.


case_title: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280


case_title: Minister for Immigration and Multicultural Affairs v Al Miahi 65 ALD 141


case_text: identifying whether the administrative decision-maker (in this case the Tribunal) has engaged in an error of law giving rise to a question of law , it is necessary to precisely identify the "nature and quality" of the error and the legal principle that attracts a particular legal consequence, that is, the "legal rubric under which a decision is challenged": Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 per Gleeson CJ at [9]. The scope of that legal rubric is conventionally understood in terms of the well known passage from Craig v South Australia (1995) 184 CLR 163 at 179 per Brennan, Deane, Toohey, Gaudron and McHugh JJ, adopted and applied in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 351 [82] per McHugh, Gummow and Hayne JJ. As to misconceptions which might suggest an unsupportable supposition on the part of the decision-maker, see Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360 per Dixon J and R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co. Pty Ltd (1953) 88 CLR 100 at 120 per Dixon CJ, Williams, Webb and Fullagar JJ. As to the constraints upon a court interfering with a decision-maker's assessment of the evidence in exercising supervisory review of administrative decision-making, see Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36 per Brennan J. At common law, want of logic, is not synonymous with error of law: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason CJ at 356 with whom Brennan, Toohey and Gaudron JJ agreed. As to inferences, Mason CJ said this at 356 in Bond : So long as there is some basis for an inference in other words, the particular inference is reasonably open, even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place. [the emphasis is his Honour's emphasis]


case_title: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323


case_title: Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353


case_title: R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co. Pty Ltd (1953) ADH CLR 100


case_title: Attorney-General (NSW) v Quin (1990) 170 CLR 1


case_title: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321


case_text: to these questions and the broader framework of whether an administrative decision-maker has fallen into error of law see Wecker v Secretary, Department of Education, Science and Training [2008] FCAFC 108; (2008) 249 ALR 762, per Greenwood J at [96] to [99], per French J agreeing, at [3] and Weinberg J agreeing at [41]. It follows therefore that if the Tribunal takes an irrelevant consideration into account in reaching its decision, it has engaged in an error of law and the question of whether the Tribunal has taken an irrelevant consideration into account raises a question of law. It also follows that a question of whether the Tribunal has reached a finding unsupported by any evidence, raises a question of law. A contention that inferences have been drawn from facts in circumstances where those inferences are not reasonably open, also raises a question of law. Considerations The position in relation to the resolution of the present application seems to me to be this.


case_title: Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404


case_text: In these circumstances the Court of its own motion listed the matter for a directions hearing on 9 April 2008. At that directions hearing the Court directed the parties to file and serve submissions in relation to the disposition of the application pursuant to s 190F(6) of the Native Title Act on or before 7 May 2008. Subsequent to this date and in light of the Full Court's decision in the matter of Gudjala People # 2 v Native Title Registrar [2008] FCAFC 157 delivered on 27 August 2008, parties were invited by the Court to file and serve any further submissions prior to the hearing of the application. 5 On 21 May 2008 the applicant filed submissions in relation to all the Collard applications currently before the Court today ('the Collard Submissions') pursuant to the Order of the Court made on 9 April 2008. 6 The effect of the Collard submissions across the applications appears to be to the effect that the Court should not dismiss them under s 190F(6) of the Native Title Act because they are likely to be withdrawn in exchange for some form of recognition by the South West Aboriginal Land and Sea Council. It is not said in what way that is to be achieved or the terms in which it might be achieved. Somehow, it is said, it would recognise the status of Mr and Mrs Collard who are the Applicants.


case_text: The Court can only make an order under s 588FF(1) if it is 'satisfied' that the relevant payment transactions are voidable under s 588FE. This means, inter alia, that the relevant transactions must be proven to be insolvent transactions and unfair preferences and/or uncommercial transactions. In this case, Scott and Fairbank wish to contest the claims that the relevant payments were transactions within the meaning of s 9 , that they were unfair preferences or uncommercial transactions (as the case may be) within the meaning of ss 588FA and 588FB, and that the company was insolvent at the time when the relevant payments were made. Generally speaking, the right to contest issues that only arise in the principal proceeding are an accepted incident of third party status: see Helicopter Sales (Australia) Pty Ltd v Rotor Work Pty Ltd [1974] HCA 32 ; (1974) 132 CLR 1 per Barwick CJ at 5 and Mason J at 15.


case_outcome: discussed

case_text: The authorities recognise that directors in the position of Scott and Fairbank should be able to contest the liquidator's claims against the Commissioner: see Crosbie v Commissioner of Taxation [2003] FCA 922 ; (2003) 130 FCR 275 at [4] - [7] (' Crosbie' ); Hall v Commissioner of Taxation [2004] NSWSC 985 ; (2004) 186 FLR 111 at [16] and [21]-[23] (' Hall' ), and Dean-Willcocks v Commissioner of Taxation (No 2) (2004) 49 ACSR 325. In Crosbie , Finkelstein J made an order that the directors have leave to defend the liquidator's claim against the Commissioner of Taxation on terms that they be bound by all decisions made in that action and they be treated as if parties to the action on any issue relating to costs. In Hall , Barrett J directed that the third parties have leave to appear and take part in the hearing of the plaintiffs' claims and to defend those claims: at [25]. 24 When these issues were raised, I made orders in each proceeding in the same form as those made by Finkelstein J in Crosbie . Specifically, I ordered that the third parties have leave to defend the plaintiff's claim against the Commissioner on terms that: (a) they each be bound by all decisions made in those actions; and (b) they each be treated as if parties to the action on any issue relating to costs. This order was not opposed by either the plaintiff or the Commissioner. 25 In Crosbie , Finkelstein J also expressed the view, which was not necessary to his decision, that the Court should not act on the parties' admissions as to insolvency without satisfying itself on the evidence as to the correctness of that admission. In his Honour's view, this conclusion followed from the fact that the Court can only make an order under s 588FF if it is satisfied that a transaction of a company is voidable under s 588FE. Subsequent cases have rejected this view, and held that the Court can reach the requisite satisfaction on the basis of the parties' agreement: see Wanted World Wide (Australia) Limited v Commissioner of Taxation [2004] FCA 1063 ; (2004) 139 FCR 205 (' Wanted World Wide ') and Young v Commissioner of Taxation (2006) 56 ACSR 654 (' Young' ). As I see it, no practical significance attaches to the issue in this case, notwithstanding the settlement reached between the plaintiff and the Commissioner, because the claims made by the plaintiff as to solvency and other matters were contested by Scott and Fairbank. However, if and to the extent that the issue has any significance for this case, I prefer, and would apply, the views expressed in Wanted World Wide and Young .


case_text: The authorities recognise that directors in the position of Scott and Fairbank should be able to contest the liquidator's claims against the Commissioner: see Crosbie v Commissioner of Taxation [2003] FCA 922 ; (2003) 130 FCR 275 at [4] - [7] (' Crosbie' ); Hall v Commissioner of Taxation [2004] NSWSC 985 ; (2004) 186 FLR 111 at [16] and [21]-[23] (' Hall' ), and Dean-Willcocks v Commissioner of Taxation (No 2) (2004) 49 ACSR 325. In Crosbie , Finkelstein J made an order that the directors have leave to defend the liquidator's claim against the Commissioner of Taxation on terms that they be bound by all decisions made in that action and they be treated as if parties to the action on any issue relating to costs. In Hall , Barrett J directed that the third parties have leave to appear and take part in the hearing of the plaintiffs' claims and to defend those claims: at [25].


case_title: Dean-Willcocks v Commissioner of Taxation (No 2) (2004) 49 ACSR 325


case_text: In Crosbie , Finkelstein J also expressed the view, which was not necessary to his decision, that the Court should not act on the parties' admissions as to insolvency without satisfying itself on the evidence as to the correctness of that admission. In his Honour's view, this conclusion followed from the fact that the Court can only make an order under s 588FF if it is satisfied that a transaction of a company is voidable under s 588FE. Subsequent cases have rejected this view, and held that the Court can reach the requisite satisfaction on the basis of the parties' agreement: see Wanted World Wide (Australia) Limited v Commissioner of Taxation [2004] FCA 1063 ; (2004) 139 FCR 205 (' Wanted World Wide ') and Young v Commissioner of Taxation (2006) 56 ACSR 654 (' Young' ). As I see it, no practical significance attaches to the issue in this case, notwithstanding the settlement reached between the plaintiff and the Commissioner, because the claims made by the plaintiff as to solvency and other matters were contested by Scott and Fairbank. However, if and to the extent that the issue has any significance for this case, I prefer, and would apply, the views expressed in Wanted World Wide and Young .


case_title: Young v Commissioner of Taxation (2006) 56 ACSR 654


case_text: As Sundberg J said recently in Tru Floor Service Pty Ltd v Jenkins (No 2) [2006] FCA 632 at [43] ( 'Tru Floor' ), s 95A mandates a cash flow rather than a balance sheet approach to determining solvency. 39 In the end, it is a question of fact to be ascertained from a consideration of a company's financial position taken as a whole whether a voluntary arrangement with a third party for the provision of funds amounts to a sufficient basis for concluding that the company is able to meet its liabilities as they fall due: see Southern Cross Interiors at 224; Lewis at 572 [79] and Tru Floor at [44]. In Tru Floor at [44], Sundberg J said, correctly in my view, that it must also be borne in mind that the plain words of s 95A ('as and when they become due') require anticipated debts to be taken, to some extent, into account in determining solvency.


case_text: The relevant principles were distilled by Palmer J in Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation [2001] NSWSC 621 ; (2001) 53 NSWLR 213 at 224-225 ( 'Southern Cross Interiors' ): 'In my opinion, the following propositions may now be drawn from the authorities: (i) whether or not a company is insolvent for the purposes of the Corporations Act (Cth), ss 95A , 459B , 588FC or 588G (1)(b), is a question of fact to be ascertained from a consideration of the company's financial position taken as a whole: Sandell v Porter, Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651; 15 ACLC 1,293 and Fryer v Powell ; (ii) in considering the company's financial position as a whole, the Court must have regard to commercial realities. Commercial realities will be relevant in considering what resources are available to the company to meet its liabilities as they fall due, whether resources other than cash are realisable by sale or borrowing upon security, and when such realisations are achievable: Sandell v Porter , Taylor v Australia and New Zealand Banking , Re Newark and Sheahan v Hertz ; (iii) in assessing whether a company's position as a whole reveals surmountable temporary illiquidity or insurmountable endemic illiquidity resulting in insolvency, it is proper to have regard to the commercial reality that, in normal circumstances, creditors will not always insist on payment strictly in accordance with their terms of trade but that does not result in the company thereby having a cash or credit resource which can be taken into account in determining solvency: Bank of Australasia v Hall [1906] HCA 54 ; (1907) 4 CLR 1,514 at 1,528; Re Norfolk Plumbing (at 615; 169); Taylor v Australia and New Zealand Banking (at 784; 811); Guthrie (as liq of ULT Ltd (rec apptd) (in liq)) v Radio Frequency Systems Pty Ltd (2000) 34 ACSR 572 at 575; (iv) the commercial reality that creditors will normally allow some latitude in time for payment of their debts does not, in itself, warrant a conclusion that the debts are not payable at the times contractually stipulated and have become debts payable only upon demand: Standard Chartered Bank v Antico (at 331); Hall v Press Plumbing ; Melbase (at 199; 832-3); Carrier (at 253; 777-778); Cuthbertson v Thomas (at 320); Lee Kong (at 112; 1,568); (v) in assessing solvency, the court acts upon the basis that a contract debt is payable at the time stipulated for payment in the contract unless there is evidence, proving to the court's satisfaction, that: • there has been an express or implied agreement between the company and the creditor for an extension of the time stipulated for payment; or • there is a course of conduct between the company and the creditor sufficient to give rise to an estoppel preventing the creditor from relying upon the stipulated time for payment; or • there has been a well established and recognised course of conduct in the industry in which the company operates, or as between the company and its creditors as a body, whereby debts are payable at a time other than that stipulated in the creditors' terms of trade or are payable only on demand: Newark (at 414-415); Standard Chartered Bank v Antico (at 331); Melbase ; Cuthbertson v Thomas ; Fryer v Powell (at 444-445); (vi) it is for the party asserting that a company's contract debts are not payable at the times contractually stipulated to make good that assertion by satisfactory evidence: Fryer v Powell (at 444-445); Melbase ; Cuthbertson v Thomas .' 39 In the end, it is a question of fact to be ascertained from a consideration of a company's financial position taken as a whole whether a voluntary arrangement with a third party for the provision of funds amounts to a sufficient basis for concluding that the company is able to meet its liabilities as they fall due: see Southern Cross Interiors at 224; Lewis at 572 [79] and Tru Floor at [44]. In Tru Floor at [44], Sundberg J said, correctly in my view, that it must also be borne in mind that the plain words of s 95A ('as and when they become due') require anticipated debts to be taken, to some extent, into account in determining solvency.


case_text: As Palmer J indicated, the law takes a commercially realistic view in determining what resources are available to a company to enable it to pay its debts as and when they fall due. This has long been recognised. In Rees v Bank of New South Wales [1964] HCA 47 ; (1964) 111 CLR 210 at 218, Barwick CJ said: 'It is quite true that a trader, to remain solvent, does not need to have ready cash by him to cover his commitments as they fall for payment, and that in determining whether he can pay his debts as they become due regard must be had to his realizable assets. The extent to which their existence will prevent a conclusion of insolvency will depend on a number of surrounding circumstances, one of which must be the nature of the assets and in the case of a trader, the nature of his business.'


case_text: The relevant principles were distilled by Palmer J in Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation [2001] NSWSC 621 ; (2001) 53 NSWLR 213 at 224-225 ( 'Southern Cross Interiors' ): 'In my opinion, the following propositions may now be drawn from the authorities: (i) whether or not a company is insolvent for the purposes of the Corporations Act (Cth), ss 95A , 459B , 588FC or 588G (1)(b), is a question of fact to be ascertained from a consideration of the company's financial position taken as a whole: Sandell v Porter, Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651; 15 ACLC 1,293 and Fryer v Powell ; (ii) in considering the company's financial position as a whole, the Court must have regard to commercial realities. Commercial realities will be relevant in considering what resources are available to the company to meet its liabilities as they fall due, whether resources other than cash are realisable by sale or borrowing upon security, and when such realisations are achievable: Sandell v Porter , Taylor v Australia and New Zealand Banking , Re Newark and Sheahan v Hertz ; (iii) in assessing whether a company's position as a whole reveals surmountable temporary illiquidity or insurmountable endemic illiquidity resulting in insolvency, it is proper to have regard to the commercial reality that, in normal circumstances, creditors will not always insist on payment strictly in accordance with their terms of trade but that does not result in the company thereby having a cash or credit resource which can be taken into account in determining solvency: Bank of Australasia v Hall [1906] HCA 54 ; (1907) 4 CLR 1,514 at 1,528; Re Norfolk Plumbing (at 615; 169); Taylor v Australia and New Zealand Banking (at 784; 811); Guthrie (as liq of ULT Ltd (rec apptd) (in liq)) v Radio Frequency Systems Pty Ltd (2000) 34 ACSR 572 at 575; (iv) the commercial reality that creditors will normally allow some latitude in time for payment of their debts does not, in itself, warrant a conclusion that the debts are not payable at the times contractually stipulated and have become debts payable only upon demand: Standard Chartered Bank v Antico (at 331); Hall v Press Plumbing ; Melbase (at 199; 832-3); Carrier (at 253; 777-778); Cuthbertson v Thomas (at 320); Lee Kong (at 112; 1,568); (v) in assessing solvency, the court acts upon the basis that a contract debt is payable at the time stipulated for payment in the contract unless there is evidence, proving to the court's satisfaction, that: • there has been an express or implied agreement between the company and the creditor for an extension of the time stipulated for payment; or • there is a course of conduct between the company and the creditor sufficient to give rise to an estoppel preventing the creditor from relying upon the stipulated time for payment; or • there has been a well established and recognised course of conduct in the industry in which the company operates, or as between the company and its creditors as a body, whereby debts are payable at a time other than that stipulated in the creditors' terms of trade or are payable only on demand: Newark (at 414-415); Standard Chartered Bank v Antico (at 331); Melbase ; Cuthbertson v Thomas ; Fryer v Powell (at 444-445); (vi) it is for the party asserting that a company's contract debts are not payable at the times contractually stipulated to make good that assertion by satisfactory evidence: Fryer v Powell (at 444-445); Melbase ; Cuthbertson v Thomas .' 37 In Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670-671, Barwick CJ stressed that it was important not to confuse insolvency with a temporary lack of liquidity: 'Insolvency is expressed in s. 95 as an inability to pay debts as they fall due out of the debtor's own money. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. Whether that state of his affairs has arrived is a question for the Court and not one as to which expert evidence may be given in terms though no doubt experts may speak as to the likelihood of any of the debtor's assets or capacities yielding ready cash in sufficient time to meet the debts as they fall due.' This passage was directed to a definition of solvency which was more restrictive than the definition now found in s 95A of the Act, as the previous section spoke of an inability to pay debts as they fall due 'out of the debtor's own money'.


case_text: In Lewis (as liq of Doran Constructions Pty Ltd (in liq)) v Doran (2005) 219 ALR 555 at 579 [109]-[110] ( 'Lewis' ), Giles JA (with whom Hodgson and McColl JJA agreed) said: 'Particularly when the limiting words are no longer part of the test, there is no compelling reason to exclude from consideration funds which can be gained from borrowings secured on assets of third parties, or even unsecured borrowings. If the company can borrow without security, it will have funds to pay its debts as they fall due and will be solvent, provided of course that the borrowing is on deferred payment terms or otherwise such that the lender itself is not a creditor whose debt can not be repaid as and when it becomes due and payable. It comes down to a question of fact, in which the key concept is ability to pay the company's debts as and when they become due and payable. Even before the wording of s 95A , in Re RHD Power Services Pty Ltd (1991) 3 ACSR 261; 9 ACLC 27 McPherson SPJ was prepared to pay regard to ability to borrow without security. Kearney J in Re Adnot Pty Ltd (1982) 7 ACLR 212; 1 ACLC 307 took into account that the company "instead of having to resort to some outside lender, is in the fortunate position of having its fellow member of the group of companies to which it belongs, available in effect as banker to provide funds required to meet any shortfall": at ACLR 217; ACLC 311; the shortfall was until completion and sale of a shopping centre. In Re a Company [1986] BCLC 261 Nourse J declined to find that a company was unable to pay its debts as they fell due although it was being "propped up by loans made to it by associated companies and possibly by others": at 262; his Lordship noted at 263 that he had evidence from a director to the effect that there was no question of the loans being withdrawn, the loans not being repayable for some 18 months.' (The emphasis appears in the judgment.) Giles JA went on to add that solvency can be established even though the arrangement under which funds are to be provided by a third party is entirely voluntary. 39 In the end, it is a question of fact to be ascertained from a consideration of a company's financial position taken as a whole whether a voluntary arrangement with a third party for the provision of funds amounts to a sufficient basis for concluding that the company is able to meet its liabilities as they fall due: see Southern Cross Interiors at 224; Lewis at 572 [79] and Tru Floor at [44]. In Tru Floor at [44], Sundberg J said, correctly in my view, that it must also be borne in mind that the plain words of s 95A ('as and when they become due') require anticipated debts to be taken, to some extent, into account in determining solvency. 97 Given my factual findings, the decision in Lewis does not assist the directors. In any event, that was a very different case. There, a corporate reconstruction had resulted in a number of intercompany loans. Following the reconstruction, over a period of slightly more than three years, the company paid all of its debts as and when they fell due with the assistance of funds provided by other companies in the group. Over that period, there was no evidence of any of the usual indicia of insolvency, such as unpaid group tax or payroll tax or other unpaid debts. Most importantly, the funds provided by other group companies were sufficient at all relevant times to enable the company to discharge its debts as and when they fell due: see at 570-573 [74]-[82]. The present case is very different, in that the related company was never providing sufficient funds to enable TSI and TSIA to pay their respective debts as and when they fell due. 98 In the first proceeding, the liquidator alleges that each of the claimed payments was an unfair preference within the meaning of s 588FA. In the second proceeding concerning TSIA, the liquidator alleges that six payments, totalling $66,827.05, were unfair preferences. 99 To establish these contentions, the liquidator must establish three things: (1) the payments were transactions; (2) the Commissioner received the payments in his capacity as a creditor; and (3) each payment resulted in the Commissioner receiving in respect of an unsecured debt more than he would receive if he proved for that debt in the winding up.


case_text: I am also satisfied that the funds actually advanced by Swift Malaysia directly, or via Swift Australia, to TSI and TSIA were not sufficient to enable either TSI or TSIA to pay their debts as and when they fell due. On the contrary, there is clear evidence that TSI and TSIA never had sufficient funds, whether from Swift Malaysia or elsewhere, to pay all of their debts as and when they fell due. It does not avail the directors to say that they used funds provided by Swift Malaysia to pay some of the larger and more pressing debts of TSI and TSIA, especially those, such as the debt to the Commissioner, which might expose the directors to personal liability. As Kirby P said in FAI Insurances Limited v Gold Leaf Interior Decorators Pty Ltd (1988) 14 NSWLR 643 at 649, a company's failure to pay a small debt may often be the best possible evidence of the company's insolvency.


case_text: In my opinion, the payments in question were uncommercial transactions. They conferred no benefit on TSIA. Indeed, the payments conferred only detriments on TSIA in that they had the effect of increasing the outstanding liabilities of TSI to TSIA in circumstances where there was no prospect that TSI would be able to repay the advances. This conclusion is supported by the decision in D'Aloia v Commissioner of Taxation (2003) 203 ALR 609 (' D'Aloia '). In D'Aloia , the issue was whether payments that had been made on behalf of another company for the discharge of its taxation debts were uncommercial transactions within the meaning of the Act. In return for making the payment, there was a reduction in the loan account of the company making the payment. Merkel J held that the transaction was uncommercial. His Honour said (at 613): 'The only benefit to Damark from making payments totalling in excess of $36,000 on behalf of Gralyn appears to have been the reduction in the loan account to Gralyn in the sum of $3775 and, possibly, the use of some of Gralyn's motor vehicles. However, the evidence is to the effect that the benefit to Damark was minor compared to the amount it paid. I am not satisfied that, having regard to the matters set out in s 588FB(1), a reasonable person in Damark's circumstances would have made the payments. Accordingly, subject to any defence under s 588FG(2), I am satisfied that the three payments in question constituted uncommercial transactions .' The present is a stronger case than D'Aloia . Neither Scott nor Fairbank pointed in evidence, or in submissions, to any benefit to TSIA in making these tax payments on behalf of TSI. 108 The payments made by TSIA to discharge TSI's tax liabilities to the Commissioner were insolvent transactions within the meaning of s 588FC; they were uncommercial transactions which were entered into when TSIA was insolvent. 109 For the foregoing reasons, I am satisfied that each of the payments challenged by the liquidator is voidable because of s 588FE. Each payment in question was an insolvent transaction of the relevant company and it was entered into during the six months ending on the relation back day. It is unnecessary to consider the longer relation back period relating to uncommercial transactions.


case_text: Section 588FGB(3) is expressed in the same terms as the former s 588H of the Corporations Law. Austin J explained the meaning and effect of s 588H in Tourprint International Pty Ltd (in liq) v Bott (1999) 32 ACSR 201 at 215 [67]: '"Expectation", as required by s 588H(2), means a higher degree of certainty than "mere hope or possibility" or "suspecting": 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 378; Dunn v Shapowloff [1978] 2 NSWLR 235 at 249; (1978) 3 ACLR 775. The defence requires an actual expectation that the company was and would continue to be solvent, and that the grounds for so expecting are reasonable. A director cannot rely on a complete ignorance of or neglect of duty ( Metal Manufacturers Ltd v Lewis (1986) 11 ACLR 122 at 129) and cannot hide behind ignorance of the company's affairs which is of their own making or, if not entirely of their own making, has been contributed to by their own failure to make further necessary inquiries: Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405; Morley v State Wide Tobacco Services Ltd [1993] 1 VR 423; (1992) 8 ACSR 305.'


case_text: The operation of the defence was described in similar terms by Einfeld J in Metropolitan Fire Systems Pty Ltd v Miller (1997) 23 ACSR 699 at 711: 'The onus of proof for these defences is on the director seeking to rely on them who must establish the elements of the defences on the balance of probabilities. The grounds on which the director forms the view as to the company's solvency or otherwise must be reasonable. This implies an objective consideration of the grounds viewed against all circumstances and not whether, when looked at from the point of view of the director in question, the grounds appear reasonable. The defences under s 588H require that there be reasonable grounds to "expect", as opposed to "suspect", solvency as provided in s 588G. From the cases in which the meaning of these words has been considered, it would appear that to "suspect" something requires a lower threshold of knowledge or awareness than to "expect" it: see a discussion on "to suspect" by Kitto J in Queensland Bacon Pty Ltd v Rees [1966] HCA 21 ; (1966) 115 CLR 266 at 303; [1966] ALR 855; and 3M Australia at 192. The expectation must be differentiated from mere hope in order to satisfy this defence: Dunn v Shapowloff [1978] NSWLR 235; (1978) 3 ACLR 775. It implies a measure of confidence that the company is solvent. The directors must have reasonable grounds for regarding it as likely that the company would at the relevant date have been able to pay its debts as and when they fall due.' Einfeld J also said at 703 that the requirement for objectively reasonable grounds must be judged by the standard appropriate to a director of ordinary competence: 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 373.


case_text: Section 588FGB(3) is expressed in the same terms as the former s 588H of the Corporations Law. Austin J explained the meaning and effect of s 588H in Tourprint International Pty Ltd (in liq) v Bott (1999) 32 ACSR 201 at 215 [67]: '"Expectation", as required by s 588H(2), means a higher degree of certainty than "mere hope or possibility" or "suspecting": 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 378; Dunn v Shapowloff [1978] 2 NSWLR 235 at 249; (1978) 3 ACLR 775. The defence requires an actual expectation that the company was and would continue to be solvent, and that the grounds for so expecting are reasonable. A director cannot rely on a complete ignorance of or neglect of duty ( Metal Manufacturers Ltd v Lewis (1986) 11 ACLR 122 at 129) and cannot hide behind ignorance of the company's affairs which is of their own making or, if not entirely of their own making, has been contributed to by their own failure to make further necessary inquiries: Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405; Morley v State Wide Tobacco Services Ltd [1993] 1 VR 423; (1992) 8 ACSR 305.' 114 The operation of the defence was described in similar terms by Einfeld J in Metropolitan Fire Systems Pty Ltd v Miller (1997) 23 ACSR 699 at 711: 'The onus of proof for these defences is on the director seeking to rely on them who must establish the elements of the defences on the balance of probabilities. The grounds on which the director forms the view as to the company's solvency or otherwise must be reasonable. This implies an objective consideration of the grounds viewed against all circumstances and not whether, when looked at from the point of view of the director in question, the grounds appear reasonable. The defences under s 588H require that there be reasonable grounds to "expect", as opposed to "suspect", solvency as provided in s 588G. From the cases in which the meaning of these words has been considered, it would appear that to "suspect" something requires a lower threshold of knowledge or awareness than to "expect" it: see a discussion on "to suspect" by Kitto J in Queensland Bacon Pty Ltd v Rees [1966] HCA 21 ; (1966) 115 CLR 266 at 303; [1966] ALR 855; and 3M Australia at 192. The expectation must be differentiated from mere hope in order to satisfy this defence: Dunn v Shapowloff [1978] NSWLR 235; (1978) 3 ACLR 775. It implies a measure of confidence that the company is solvent. The directors must have reasonable grounds for regarding it as likely that the company would at the relevant date have been able to pay its debts as and when they fall due.' Einfeld J also said at 703 that the requirement for objectively reasonable grounds must be judged by the standard appropriate to a director of ordinary competence: 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 373.


case_text: I have already indicated that I do not accept the evidence given by Scott and Fairbank concerning the asserted payment arrangements with creditors such as the SRO, Swinburne, and MBA. Scott's unsubstantiated assertions about these payment arrangements are not capable of discharging the onus that falls on the directors to establish the defence set out in s 588FGB(3): see Superior Press Pty Ltd v Deputy Commissioner of Taxation (2004) 55 ATR 541 (' Superior Press ')at 546-547. 118 I am also satisfied that the financial support that was provided by Swift Malaysia did not provide Scott and Fairbank with reasonable grounds to expect that TSI and TSIA were solvent during the six months ending 15 May 2003, and that they would remain solvent even if they made the payments to the Commissioner with the support of Swift Malaysia. I refer to my earlier findings: the July agreement does not contain any obligation or undertaking by Swift Malaysia to provide funds to TSI and TSIA on a continuing basis to enable those companies to discharge their liabilities as and when they arose; and the funds actually advanced by Swift Malaysia and/or Swift Australia to TSI and TSIA were ad hoc loans and were not sufficient to enable either company to pay its debts as and when they fell due. 119 I also consider that there was no evidence establishing that Scott and Fairbank could reasonably rely upon Swift Malaysia to provide all of the funds necessary to enable TSI and TSIA to pay their debts, on a continuing basis, as and when they fell due. 123 The first part of the submission was that any order against the Commissioner requiring it to repay amounts that were paid to the Commissioner in respect of ITW liabilities would simply involve unwinding preferential payments that the Commissioner had no entitlement to receive. On this basis, it was submitted that the Commissioner would not suffer any loss or damage. I disagree. By the order I propose to make in favour of the liquidator, the Commissioner will be required to repay amounts it received in payment of debts that were outstanding to the Commissioner. To the extent that those debts relate to ITW liabilities, an order requiring that the amounts in question be paid to the liquidator will cause loss or damage within the meaning of s 588FGA(2). Instead of retaining payments amounting to $29,260.82 in the case of TSI's ITW liabilities, and $107,329.99 in respect of ITW liabilities owed by TSIA, the Commissioner will have to prove in the winding up of TSI and TSIA respectively. As the liquidator said in evidence, unsecured creditors will not receive any distribution in the winding up of those companies. Consequently, the orders sought against the Commissioner will result in loss or damage: see Superior Press , per Byrne J at 548 [35]-[37]. 124 In the first proceeding, the Commissioner has agreed to submit to an order that he will pay the liquidator the sum of $16,865.33 in respect of interest and costs. The corresponding order in the second proceeding does not make any provision for interest or costs. Scott and Fairbank argue that interest and costs paid by the Commissioner to the liquidator forms no part of the loss or damage resulting from the s 588FF order. 125 In Superior Press , Byrne J accepted that interest that the Commissioner is ordered to pay to the liquidator pursuant to s 588FF will constitute loss and damage suffered by the Commissioner within the meaning of s 588FGA(2), or at least it will do so when payment is made: at 549 [38]. However, Byrne J took into account the fact that the interest ordered under s 588FF related to all of the impugned payments, whereas the indemnity under s 588FGA only relates to those payments which were made in respect of ITW liabilities. Accordingly, Byrne J adjusted the amount of interest to reflect the ratio of total tax payments recovered by the liquidator to the ITW tax payments that attracted indemnity. I propose to adopt a similar course. In TSI's case, the ITW liabilities of $29,260.82 represented 76.36 per cent of the payments totalling $38,319.55 which will be the subject of the order under s 588FF; and in TSIA's case, the ITW liabilities of $107,329.99 represented 67.15 per cent of the payments totalling $159,815.12 which are to be the subject of orders under s 588FF. 126 Scott and Fairbank also submitted that any costs that the Commissioner might be required to pay to the liquidator of TSI pursuant to s 588FF should not attract indemnity under s 588FGA(2). In Superior Press , Byrne J accepted that if the Commissioner is ordered to pay costs to the liquidator in an appropriate amount, that will form part of the Commissioner's recoverable loss and damage under s 588FGA(2): at 549 [39]-[40]. I agree. 127 For these reasons, I reject the argument that the Commissioner has not suffered any recoverable loss or damage resulting from the order I propose to make in each proceeding under s 588FF. To the extent that the Commissioner is ordered to pay an amount to the liquidator in each case, representing the amount of payments it received in respect of ITW liabilities, and amounts in respect of interest and costs, those amounts can properly be the subject of an indemnification order. I am satisfied that the figure agreed for interest and costs in the first proceeding of $16,865.33 is an appropriate sum, and less than the figure that might have been awarded in the absence of agreement. I will, however, adjust this figure so as to take account of the ratio of ITW payments to total payments. 128 At the commencement of these reasons for judgment, I set out the orders which the liquidator seeks in each proceeding as against the Commissioner. I propose to make orders in each proceeding in the form sought by the liquidator.


case_text: While I consider that the liquidator is entitled to recover costs from Scott and Fairbank, it would be too harsh to run the calculations from 14 November 2005. The more appropriate date from which to calculate costs is 13 December 2005, being the date upon which Finkelstein J made directions for the contested hearing of these two proceedings. Aside from the settlement agreement between the liquidator and the Commissioner, the liquidator would have been entitled to recover interest from the Commissioner in each proceeding pursuant to s 51A(1) of the Federal Court of Australia Act 1976 (Cth). In the ordinary course, interest would relate to the period from the date of demand by the liquidator for the repayment of the preferences until the date upon which such preferences were repaid: Ferrier v Civil Aviation Authority (1994) 55 FCR 28 at 92-93. In these proceedings, however, the liquidator did not advance any claim for the recovery of interest from the Commissioner, save and to the extent that the orders proposed in the first proceeding include an agreed amount of $16,865.33 in respect of interest and costs. The liquidator has not advanced any cause of action against Scott and Fairbank that would entitle him to recover interest directly from them. Furthermore, the Commissioner has not made any claim for the recovery of interest from Scott and Fairbank. The Commissioner's only entitlement against Scott and Fairbank is for an indemnity under s 588FGA and as the Commissioner is not exposed to any liability for interest in respect of the period after 14 November 2005, there is no basis for claiming interest against Scott and Fairbank in respect of that period. In my opinion, it is not appropriate to order that Scott and Fairbank make any payment of interest to the liquidator. 132 As for the order that Scott and Fairbank pay $46,126.15 to the Commissioner, the figure has two components. The first component represents that part of the total payments of $38,319.55 that reflects the payment of ITW liabilities, namely $29,260.82. The second component represents the sum agreed between the Commissioner and the liquidator for interest and costs of $16,865.33. In my opinion, the second component is excessive. As I have explained, it needs to be reduced to take account of the fact that ITW liabilities represented only 76.36 per cent of the total figure of $38,319.55. Applying this percentage produces a figure of $12,878.37 for interest and costs, which I consider to be the appropriate measure of the Commissioner's loss and damage in this respect. 133 It follows that the order referred to in sub-paragraph (3) above must be adjusted by substituting the amount of $42,139.19 for the sum of $46,126.15 proposed by the Commissioner.


case_outcome: referred to

case_text: In the circumstances, it is unnecessary to address a further argument put by Graphix Labels and Mr Atta against implying such a term and that was that such a term would amount to an unreasonable restraint of trade. I was referred to Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288. Of course, there have been a number of cases dealing with the common law doctrine of restraint of trade since those two cases (see, for example, the discussion in Seddon and Ellinghaus, Cheshire & Fifoot's Law of Contract (8 th Australian ed, 2002) pages 860-863).


case_text: I do not think that Pioneer Concrete is of assistance on the present point. The issue there was an alleged breach of restraint of trade covenants and required the Court to consider the difference between acts preparatory to the carrying on of a business and carrying on a business. Independent Management is more helpful. The plaintiff in that case alleged that a former employee had misused confidential information obtained during her employment and had breached her duty of fidelity. The employee had successfully tendered for a contract previously held by the plaintiff. Marks J said that the skill and information gained by the defendant was outside the protected category. He referred to the following observations of Gowans J in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 (at 40): In this field a distinction has to be maintained between information and knowledge acquired in confidence by an employee during his employment which he uses or discloses for his own advantage while he is still an employee, and information and knowledge so acquired which he uses for his own advantage after his employment is finished. A further distinction has to be drawn between information which forms part of the employee's stock of general knowledge, skill and experience, and that which should fairly be regarded as a separate part of the employee's stock of knowledge (whether it be identifiable as "particular" or "detailed" or "special") which a man of ordinary intelligence and honesty would regard as the property of the former employer.


case_text: An employee owes a duty of fidelity and good faith to his employer. That duty arises as a matter of an implied term of the contract of employment: Robb v Green [1895] 2 QB 315 at 317 per Lord Esher MR. As part of the duty of fidelity and good faith, an employee owes certain duties of confidentiality: Blyth Chemicals v Bushnell [1933] HCA 8 ; (1933) 49 CLR 66.


case_text: In the case of a formal contract a party alleging an implied term must show the following: 1. The term must be reasonable and equitable; 2. The term must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; 3. The term must be so obvious that "it goes without saying"; 4. The term must be capable of clear expression; and 5. The term must not contradict any express term of the contract. BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40 ; (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Railway Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 346 per Mason J (as he then was); Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) IPR 497 (" Gold Peg "). 123 The differences between the test for a formal contract and the test for an informal contract are not easy to identify with precision. In addition to the matters identified in Hawkins v Clayton and Byrne v Australian Airlines Ltd it may be assumed that even in the case of an informal contract a term will be implied only if it is capable of clear expression and does not contradict an express term of the contract. The authors of Contract Law in Australia (5 th ed, 2007) JW Carter, E Peden and GJ Tolhurst at 223-224 [11-06] suggest that the matters identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra) are, in the case of an informal contract, "more in the nature of factors to be considered than essential requirements".


case_text: That passage was cited with approval by the majority (Brennan CJ, Dawson and Toohey JJ) in Byrne v Australian Airlines Ltd [1995] HCA 24 ; (1995) 185 CLR 410 at 422. In that case, their Honours went on to reject the alleged implied term on the ground that the contract was capable of operating reasonably and effectively in the absence of the term. 123 The differences between the test for a formal contract and the test for an informal contract are not easy to identify with precision. In addition to the matters identified in Hawkins v Clayton and Byrne v Australian Airlines Ltd it may be assumed that even in the case of an informal contract a term will be implied only if it is capable of clear expression and does not contradict an express term of the contract. The authors of Contract Law in Australia (5 th ed, 2007) JW Carter, E Peden and GJ Tolhurst at 223-224 [11-06] suggest that the matters identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra) are, in the case of an informal contract, "more in the nature of factors to be considered than essential requirements".


case_text: In the case of a formal contract a party alleging an implied term must show the following: 1. The term must be reasonable and equitable; 2. The term must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; 3. The term must be so obvious that "it goes without saying"; 4. The term must be capable of clear expression; and 5. The term must not contradict any express term of the contract. BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40 ; (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Railway Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 346 per Mason J (as he then was); Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) IPR 497 (" Gold Peg ").


case_text: In addition to the duty of fidelity and good faith arising as a matter of contract, an employee may owe similar duties because the relationship is a fiduciary one or because the elements of ss 182 or 183 of the Corporations Act 2001 (Cth) are made out. The relationship between employee and employer is one of the accepted fiduciary relationships ( Concut Pty Ltd v Worrell (2000) 176 ALR 693) but not every obligation undertaken by an employee is fiduciary in character ( Nottingham University v Fishal [2000] ICR 1462). Within the fiduciary duties is a duty on an employee to act in his employer's interests and not in his own interests at the expense of his employer and also a duty not to misuse confidential information. The duties are not absolute however, and an employee is able to do certain things in preparation for his new employment.


case_text: As far as the confidentiality agreement is concerned, Mr Atta made the following submissions: 1. The confidentiality agreement is void for uncertainty because it contains only an inclusive and not an exclusive definition of confidential information. Reading down or severance is not possible. 2. The confidentiality agreement is a restraint on competition and void as against public policy because it purports to go beyond what may be lawfully protected. Mr Atta referred to the decision in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317. Again, it is said that reading down or severance is not possible. 3. As I understood it, the submission was that even in the case of a confidentiality agreement which purports to define confidential information a party complaining of a breach of such an agreement must prove the information disclosed was in fact confidential. Reference was made to the requirements in equity for the protection of confidential information: Corrs Pavey Whiting and Byrne v Collector of Customs (1987) 14 FCR 434 at 443 per Gummow J. There is no evidence that the information was confidential and Mr Atta said that it was not confidential. 4. The information disclosed [to THQ and Cygnett] was disclosed after Mr Atta had left the company's employ. 5. There is no pleading of loss which could conceivably flow from a breach of the confidentiality agreement. There is a claim for damages for breach of the confidentiality agreement, but the only claim for loss and damage particularised in the statement of claim relates (so it is said) to the alleged breach of the implied term. 170 I do not think the submission in paragraph 3 is right. In the case referred to Gummow J identified the elements of an equitable action for breach of confidence. His Honour was not dealing with a claim for breach of contract by disclosing confidential information as defined in the agreement. There is nothing to suggest that subject to restraint of trade considerations the parties cannot define for themselves what is confidential. They are not bound to protect no more than is already protected in equity. 171 The submission in paragraph 4 cannot succeed because the confidentiality agreement specifically purports to apply to the period after Mr Atta has left the employ of Futuretronics. 172 The submission in paragraph 5 is essentially a pleading point which I would not allow Mr Atta to raise at this late stage or at least without giving Futuretronics the opportunity to apply to further amend.


case_title: Forkserve Pty Ltd v Pachiaratta (2000 40 IPR 74

case_text: In Forkserve Pty Ltd v Pachiaratta (2000) 40 IPR 74, Young J considered the obligations of a former employee in terms of general knowledge and skills acquired while he was an employee and confidential information acquired while he was an employee. Two propositions emerge from the case which I accept as correctly stating the law. First, Young J said, after referring to the Restraint of Trade Doctrine , JD Heydon (2 nd ed, 1999) at 80, that an employee can approach a customer or client whose name he can recall without a list or deliberate memorisation. Secondly, by reference to one of his own previous decisions Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 his Honour said that the general coverage of the predecessors of ss 182 and 183 "are not to any major extent wider than the duties under the general rules of equity".


case_text: As far as the confidentiality agreement is concerned, Mr Atta made the following submissions: 1. The confidentiality agreement is void for uncertainty because it contains only an inclusive and not an exclusive definition of confidential information. Reading down or severance is not possible. 2. The confidentiality agreement is a restraint on competition and void as against public policy because it purports to go beyond what may be lawfully protected. Mr Atta referred to the decision in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317. Again, it is said that reading down or severance is not possible. 3. As I understood it, the submission was that even in the case of a confidentiality agreement which purports to define confidential information a party complaining of a breach of such an agreement must prove the information disclosed was in fact confidential. Reference was made to the requirements in equity for the protection of confidential information: Corrs Pavey Whiting and Byrne v Collector of Customs (1987) 14 FCR 434 at 443 per Gummow J. There is no evidence that the information was confidential and Mr Atta said that it was not confidential. 4. The information disclosed [to THQ and Cygnett] was disclosed after Mr Atta had left the company's employ. 5. There is no pleading of loss which could conceivably flow from a breach of the confidentiality agreement. There is a claim for damages for breach of the confidentiality agreement, but the only claim for loss and damage particularised in the statement of claim relates (so it is said) to the alleged breach of the implied term.


case_outcome: distinguished

case_title: Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) IPR 497


case_text: A formal contract is one which appears complete on its face. The test is not as stringent in the case of an informal contract. The contract or contracts in this case are informal contracts. In Hawkins v Clayton [1988] HCA 15 ; (1988) 164 CLR 539, Deane J said (at 573): The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties. 123 The differences between the test for a formal contract and the test for an informal contract are not easy to identify with precision. In addition to the matters identified in Hawkins v Clayton and Byrne v Australian Airlines Ltd it may be assumed that even in the case of an informal contract a term will be implied only if it is capable of clear expression and does not contradict an express term of the contract. The authors of Contract Law in Australia (5 th ed, 2007) JW Carter, E Peden and GJ Tolhurst at 223-224 [11-06] suggest that the matters identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra) are, in the case of an informal contract, "more in the nature of factors to be considered than essential requirements".


case_text: In this context the respondents referred to Pioneer Concrete Services Ltd v Galli [1985] VR 675 (" Pioneer Concrete ") and Independent Management Resources Pty Ltd v Brown [1987] VR 605 (" Independent Management "). 154 I do not think that Pioneer Concrete is of assistance on the present point. The issue there was an alleged breach of restraint of trade covenants and required the Court to consider the difference between acts preparatory to the carrying on of a business and carrying on a business. Independent Management is more helpful. The plaintiff in that case alleged that a former employee had misused confidential information obtained during her employment and had breached her duty of fidelity. The employee had successfully tendered for a contract previously held by the plaintiff. Marks J said that the skill and information gained by the defendant was outside the protected category. He referred to the following observations of Gowans J in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 (at 40): In this field a distinction has to be maintained between information and knowledge acquired in confidence by an employee during his employment which he uses or discloses for his own advantage while he is still an employee, and information and knowledge so acquired which he uses for his own advantage after his employment is finished. A further distinction has to be drawn between information which forms part of the employee's stock of general knowledge, skill and experience, and that which should fairly be regarded as a separate part of the employee's stock of knowledge (whether it be identifiable as "particular" or "detailed" or "special") which a man of ordinary intelligence and honesty would regard as the property of the former employer.


case_text: Futuretronics relied on the decision of Crennan J in Gold Peg . That case went on appeal: Kovan Engineering (Aust) Pty Ltd v Gold Peg International Pty Ltd [2006] FCAFC 117 but the appeal was dismissed and there was no suggestion by the Full Court that her Honour erred in her approach. The applicant was the inventor of the Direct Steam Injection Cooking Machine (the DSI Cooker). The first respondent was a manufacturer of the DSI Cooker. The principal issue in the case was the ownership of the copyright used in the development and manufacture of the DSI Cooker. That was resolved in favour of the applicant. Her Honour also addressed whether terms could be implied to the following effect: (e) Kovan would not make any use of and would keep confidential the Assigned Rights and the drawings created by Kovan to manufacture the cooking machines for Gold Peg; and (f) Kovan would not use the Assigned Rights and the drawings created by Kovan to manufacture the cooking machines other than for manufacturing cooking machines for Gold Peg to its order. In dealing with those issues her Honour said: "I am also satisfied that it is necessary to imply a term into the agreement that the first respondent would not make any use on its own behalf of, and would keep confidential, the Alfa Laval Drawings and the drawings created by the first respondent to manufacture the machines. This is a clear matter of business efficacy; the applicant would not have been able to maintain its rights to exclusively manufacture its machine if its manufacturer were to assert rights in the drawings against it or to refuse to maintain confidence in the drawings. I am also satisfied that the first respondent would never have been retained by the applicant to undertake manufacture for it if the first respondent had sought to debate these issues. I am also satisfied Mr Miller and Mr Zakis well understood this at the time of commencement of manufacture for the applicant. Similarly, I am satisfied that it is appropriate as a matter of business efficacy to imply a term that the first respondent would not use the Alfa Laval Drawings or the manufacturing drawings it created to manufacture cooking machines for the applicant other than for the purposes of manufacturing for the applicant. This term was, in any event, partly oral and was agreed to by Mr Smith and Mr Miller in around 1992. Both Mr Miller and Mr Zakis confirmed this was their understanding of the general agreement between the parties for the manufacture of cooking machines by the first respondent to the order and specification of the applicant." 132 In my opinion, Gold Peg is clearly distinguishable from the present case. The terms in Gold Peg related to the use of drawings of the DSI Cooker either in existence or to be brought into existence. They or their forerunners were technical drawings in respect of which patent applications had been made. In this case the implied term does not relate to drawings but rather to an idea which did not involve a patentable invention or confidential information. 133 In my opinion, the fact that the product was not unique and does not involve confidential information, the fact that the contract or contracts between Futuretronics and Graphix Labels were not for a set term and did not involve a minimum quantity and the fact that the proposed term was so general indicate that it is not appropriate to imply a term of the nature advanced by Futuretronics. It is not necessary for the reasonable or effective operation of the contracts constituted by each order to imply such a term.


case_title: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535


case_title: Nottingham University v Fishal [2000] ICR 1462


case_title: Pioneer Concrete Services Ltd v Galli [1985] VR 675


case_title: Robb v Green [1895] 2 QB 316

case_text: An employee owes a duty of fidelity and good faith to his employer. That duty arises as a matter of an implied term of the contract of employment: Robb v Green [1895] 2 QB 315 at 317 per Lord Esher MR. As part of the duty of fidelity and good faith, an employee owes certain duties of confidentiality: Blyth Chemicals v Bushnell [1933] HCA 8 ; (1933) 49 CLR 66. 155 Marks J then considered the allegation that the defendant had breached her duty of fidelity to the plaintiff. He accepted that this could be described as a duty to serve faithfully the plaintiff and to act in its interests and not against them. There was an allegation that the defendant's decision to tender while still employed by the plaintiff created a conflict between her own interest and that of the plaintiff. In dealing with that allegation he said (at 613-614): In Robb v Green [1895] 2 QB 1, at p 15 Hawkins J (who was the Judge at first instance) said: 'In what I have said I do not intend to convey that while the contract of service exists a person intending to enter into business for himself may not do anything by way of preparation, provided only that he does not, when serving his master, fraudulently undermine him by breaking the confidence reposed in him. For instance, he may legitimately canvass, issue his circulars, have his place of business in readiness, hire his servants, etc. Each case must depend on its own circumstances'. This passage was quoted with approval by Maugham LJ as a member of the Court of Appeal in Wessex Dairies v Smith [1935] 2 KB 80, at 87 although he qualified his acceptance of the reference to canvassing. I think the essence of the matter is that the plaintiff must satisfy me there was some conduct on the part of the defendant which, to use the phrase of Hawkins J, 'fraudulently undermined' the plaintiff whilst the defendant was in its employ. For the reasons I have stated, the plaintiff has failed to do so. 156 Like the contractual duty, the fiduciary duty ends on cessation of the employment. The qualification to this statement is that a transaction current when the employee leaves his or her employment cannot be exploited by the employee after the employment has ended. Absent a restrictive covenant an employee can compete with his employer after the employment has ended. 157 Another duty an employee may owe the employer is the equitable duty of confidence.


case_title: Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779


case_text: In the Federal Magistrates Court, the appellants gave evidence that they did not open the post box where the invitation was sent until after the hearing date. Emmett FM did not accept that the letter was late in arriving. However, the authorities are clear that the reason for non-attendance at a hearing does not matter. If the Tribunal has complied with ss 425 and 425A of the Migration Act in inviting an applicant to attend a hearing, it may proceed under s 426A of the Act to consider and decide the matter without conducting any further inquiries. See NADK of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 184 , NALQ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 121 , VNAA v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 136 FCR 407; [2004] FCAFC 134 , NASF v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 162 , Minister for Immigration and Multicultural and Indigenous Affairs v VSAF of 2003 and Others [2005] FCAFC 73 , Minister for Immigration and Multicultural Affairs and Indigenous Affairs and Another v SZFHC (2006) 150 FCR 439; [2006] FCAFC 73 , SZDPB v Minister for Immigration and Multicultural Affairs and Indigenous Affairs [2006] FCAFC 110 and Minister for Immigration and Multicultural Affairs v SZFDE [2006] FCAFC 142. In several of these cases the invitation was allegedly never received by the applicant. See VNAA v MIMIA , MIMIA v SZFHC and SZDPB v MIMIA .


case_title: Minister for Immigration and Multicultural Affairs and Indigenous Affairs and Another v SZFHC (2006) 150 FCR 439; [2006] FCAFC 73


case_outcome: followed

case_text: These grounds cannot succeed. The facts of this case are quite close to the facts of three unanimous decisions of Full Courts of this Court. The members of each court were different. The decisions are NAST v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 208 (Beaumont, Merkel and Hely JJ), NAVX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 287 (French, Emmett and Dowsett JJ) and Minister for Immigration and Multicultural and Indigenous Affairs v VSAF of 2003 [2005] FCAFC 73 (Black CJ, Sundberg and Bennett JJ). In each case the court emphasised the proposition that the task of the Minister, through his delegate, and the Refugee Review Tribunal on appeal, pursuant to s 65 of the Migration Act 1958 (Cth), is to consider whether they are satisfied that the requirements for the grant of a visa have been satisfied. It will be difficult to achieve the requisite degree of satisfaction if the appellant does not provide sufficient information, such as by not attending a hearing. In the absence of a positive finding of satisfaction, a visa application must be rejected. In NAVX at paragraph [5] the Full Court said this: "In assessing the adequacy of [the Tribunal's] reasons, it must be kept in mind that the Tribunal had indicated to the appellant that it was unable to find in his favour on the basis of the material in its possession and invited him to attend to provide additional information. Clearly enough, the Tribunal was not obliged to accept at face value his short and very vague outline of his basis for fearing persecution in China. Having found that the outline was not sufficient to satisfy it that the appellant had a well-founded fear of persecution, it could do little more than offer him an opportunity to elaborate. When he failed to accept that opportunity, the inevitable consequence was the rejection of his application." 5 In the Federal Magistrates Court, the appellants gave evidence that they did not open the post box where the invitation was sent until after the hearing date. Emmett FM did not accept that the letter was late in arriving. However, the authorities are clear that the reason for non-attendance at a hearing does not matter. If the Tribunal has complied with ss 425 and 425A of the Migration Act in inviting an applicant to attend a hearing, it may proceed under s 426A of the Act to consider and decide the matter without conducting any further inquiries. See NADK of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 184 , NALQ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 121 , VNAA v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 136 FCR 407; [2004] FCAFC 134 , NASF v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 162 , Minister for Immigration and Multicultural and Indigenous Affairs v VSAF of 2003 and Others [2005] FCAFC 73 , Minister for Immigration and Multicultural Affairs and Indigenous Affairs and Another v SZFHC (2006) 150 FCR 439; [2006] FCAFC 73 , SZDPB v Minister for Immigration and Multicultural Affairs and Indigenous Affairs [2006] FCAFC 110 and Minister for Immigration and Multicultural Affairs v SZFDE [2006] FCAFC 142. In several of these cases the invitation was allegedly never received by the applicant. See VNAA v MIMIA , MIMIA v SZFHC and SZDPB v MIMIA .


case_title: NADK of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 184


case_title: NALQ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 121