case_text: The main issue that was argued before me was whether, within the meaning of O 15A r 6, there is reasonable cause to believe that the respondents may have the right to obtain relief from KPMG. On this question, some preliminary observations can be made: • It is necessary to examine the various elements of the potential cause of action that is sought to be relied upon to determine whether there is reasonable cause to believe that each of the necessary elements exist. That task requires the Court to conclude at least that there is a reasonable cause to believe that each of the elements of the relevant cause of action might be established. The test is an objective one, and it is not necessary to prove that each of the elements do in fact exist. The rule contemplates that there be reasonable cause to believe that the respondents may have a right to obtain relief: see Austrac Operations Pty Ltd v New South Wales [2003] ATPR 41-960 at [11] and Leighton Contractors Pty Ltd v Page Kirkland Management Pty Ltd [2006] FCA 288 at [5] . • If the cause of action on which an application for preliminary discovery is based could not succeed, is bound to fail, is ill-founded or is doomed to fail, then discovery ought not be ordered: Bradley v Eagle Star Insurance Co Ltd [1989] 1 All ER 961 at 963 to 964; Harris v Newcastle-upon-Tyne Health Authority [1989] 2 All ER 273 at 277. If the potential cause of action would not survive an application for summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 ('Federal Court Act'), then discovery ought not to be ordered. • "Belief" under O 15A r 6 requires more than mere assertion, a "hunch", conjecture or suspicion. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition: see: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [13] to [14]; St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at 154. • The availability of preliminary discovery under O 15A r 6 depends upon the evidence before the Court. . The evidence must incline the mind towards the matter of fact in question: see Austrac Operations [2003] ATPR at [37]; John Holland Services [2004] FCA at [13] to [14], [17] and [73] and St George v Rabo 211 ALR at 154. • The rule is one which should be construed beneficially. In Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733 Burchett J said: It is no answer to the applicant's application under r 6 to say that the proceeding is in the nature of a fishing expedition: cf Meth v Norbert Steinhardt & Son Ltd (1959) 33 ALJR 78 at 81. Rule 6 is designed to enable an applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent -- that is, to "fish" in the old sense... It would be unfortunate if a rule designed to amplify the court's power to penetrate obscurities and uncertainties in the interests of justice were to be weakened by restrictive and unnecessary glosses. I think the rule is of a beneficial kind within the meaning of the well known principle of interpretation, and should be given the fullest scope its language will reasonably allow. The proper brake on any excesses in its use is the discretion of the court, which is required to be exercised in the particular circumstances of each case. See also CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad (2001) 187 ALR 279 at [23] per Tamberlin J. 77 The respondents relied upon a report of John Stewart of BDO Kendalls dated 19 April 2007 in an endeavor to demonstrate breach (and causation). I appreciate that no evidence has been adduced by KPMG and inferences may be drawn from a failure to call evidence in the appropriate case (see Paxus Services 99 ALR at 732 to 733), but this does not excuse the respondents from demonstrating that there is a reasonable cause to believe there may be an entitlement to relief. 78 Mr Stewart set out the following matters he was asked to address: • "My opinion as to whether there is, on a prima facie basis, reason to think that the financial reports of [York Street] and [Market Street] for the periods ended 31 December 2002, 30 June 2003, 31 December 2003 and 30 June 2004 ("enclosed financial reports") do not disclose a true and fair view of the financial position of [York Street] and [Market Street] " ; • "If I determine that, on a prima facie basis, there are reasons to believe the financial reports of [York Street] and [Market Street] do not disclose a true and fair view of the financial position of what audit issues, in my opinion, appear relevant in considering the financial position of the companies: for instance, is there an issue as to whether the balance sheets of [York Street] and [Market Street] should have included a provision for doubt as to the recoverability of the loans to, respectively, Scots Church Development Ltd and 60 Market Street Trust" ; and • "Advice as to what KPMG documents I would require access to, to enable me to provide an expert opinion as to whether or not the KPMG audits of the financial reports of [York Street] and [Market Street] were carried out with due skill and care for each of the years ended 30 June 2002, 30 June 2003 and 30 June 2004". 79 In the report, Mr Stewart: (a) examined the reports to creditors prepared by the liquidators of York Street and Market Street; (b) looked at York Street's financial reports for the year ended 30 June 2003; and (c) looked at Market Street's financial reports for the periods ending 31 December 2002, 30 June 2003, 31 December 2003 and 30 June 2004. 103 Ultimately, the question of whether discovery should be ordered is a matter involving the exercise of judicial discretion. The discretion is to be exercised having regard to the particular circumstances of each case: see Paxus Services 99 ALR at 733 to 734; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549 at [27] .


case_outcome: cited

case_text: In Perre v Apand Pty Ltd [1999] HCA 36 ; (1999) 198 CLR 180, by majority, the High Court of Australia held that the respondent owed a duty of care to the appellants. In his judgment, Gummow J said at [198] that the question was whether the salient features of the matter gave rise to a duty of care owed by the respondent, and that there was no simple formula which can mask the necessity for examination of the particular facts. 59 The facts or elements upon which the respondents rely support the contention that a party such as KPMG may owe a duty of care to a confined class comprising investors who had acquired promissory notes issued by either York Street or Market Street. In the present case, the vulnerability of the applicant arose subsequent to the making of the investment by reason of the loss of control over the use of the funds and the lack of capacity to take any steps to monitor the recoverability of the loan made by the mezzanine companies to the primary borrowing entity. There is a basis for concluding that KPMG either may have known or ought to have known of these facts, and that KPMG may have had the relevant control itself to take steps to protect the confined class of investors. 60 The concept of vulnerability is now an important requirement in providing a basis for a duty of care to avoid economic loss. It cannot be said that the decision in Esanda [1997] HCA 8 ; 188 CLR 241 should not be considered in light of the concept of vulnerability. Both these propositions follow from the passage in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2004) 216 CLR 515 at [23] (footnotes omitted): Since Caltex Oil , and most notably in Perre v Apand Pty Ltd , the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. So, in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiffs' land. In Hill v Van Erp , the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords , the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company. 63 As to the question of indeterminate liability as raised by KPMG it is necessary to make some observations. First, just because there is an exposure to potential indeterminate liability, this in itself does not preclude the existence of a duty of care to avoid economic loss. It is one factor, maybe a very important factor, in determining whether such a duty arises. It is not a principle of law, but only a policy consideration to take into account: see Perre 198 CLR at [32] per Gaudron J. 64 Secondly, as Hayne J commented in Perre 198 CLR at [336], it is important to understand what is meant by indeterminate liability. As his Honour said: It means more than "extensive" or "large". The damage suffered by persons affected by the defendant's negligence may be very large; there may be many who are affected. But neither of those considerations means that the liability is indeterminate. What is meant by indeterminate in the present context is that the persons who may be affected cannot readily be identified. That formulation invites attention to when this identification is to be possible: is it to be possible at or before the time of the negligent act or omission, or is it sufficient if it is possible to identify the class of those affected after the event? I do not think it necessary to say, in this case, whether identification at the later time would suffice. If, as here, it was possible to identify those who would be directly affected by the conduct concerned at the time of the act or omission that is said to be negligent, and it was known to the person alleged to have been negligent that that was possible, then the liability to those persons is not indeterminate. 65 I do not think that any question of indeterminate liability arises here because the promissory note holders could be readily identified at the time of the act or omission that is said to be negligent, and it would probably have been known by KPMG that that was possible. Further, it may have also been possible that KPMG would have known or have the means to know the nature of the likely losses to the promissory note holders. 67 I accept that to focus upon the promissory note holders as a class as a means of denying the existence of indeterminate liability is arbitrary, but as Hayne J said in Perre 198 CLR at [343]: It may be said that defining the class of those to whom the duty was owed as those growers and processors to whom the Western Australian regulation would apply directly, is to do no more than seize upon an arbitrary means for limiting liability that happens to be available in this case. But there are at least two answers to that contention. First, the application of any limiting mechanism (whether foreseeability alone, or, in cases of pure economic loss, foreseeability and some other criterion or criteria) will apply tests that will leave some persons within their reach and others beyond it. Any test is, to that extent, an arbitrary one.


case_outcome: distinguished

case_text: I mention one further matter for completeness. Whilst reliance was placed by the respondents on the decision in Price Waterhouse v Kwan [2000] 3 NZLR 39, I do not consider that decision is of much assistance to them. That case concerned whether auditors of a solicitors' trust account owed a duty of care to clients of the solicitors who had invested money through the trust account by means of the solicitors' nominee company. The court concluded that in light of the facts presented to it and in light of the relationship between the auditors, the solicitors and the latter's clients, there was sufficient proximity between the auditors and the clients to justify the imposition of a duty of care in tort, subject to such policy considerations as may suggest otherwise. 71 The factual circumstances of the decision in Kwan [2000] 3 NZLR 39 were quite different to this case, particularly having regard to the legislative environment and the policy considerations relied upon by the court. Of course, proximity is not the touchstone of liability in Australia. Whilst the special purpose nature of York Street and Market Street is similar to the special purpose of a solicitor's trust account, one cannot automatically apply the decision reached in Kwan [2000] 3 NZLR 39 to the facts and elements relied upon by the respondents in this case, particularly where the law in Australia in relation to this issue differs in its exposition from that in New Zealand. 72 However, for the reasons set out above, within the context of O 15A r 6, there is reasonable cause to believe that KPMG may owe a duty of care to the applicant to avoid pure economic loss as alleged by the respondents. 73 The next question is whether there is sufficient evidence before the Court to conclude that there may have been a breach of that duty and that that breach was causative of any loss.


case_outcome: considered

case_text: It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor & Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst & Young [1997] 2 SCR 165 at [37].


case_text: However, the Wrongs Act cannot apply of its own force to proceedings in this Court exercising federal jurisdiction: John Robertson & Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65; Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334 at [35] ; Solomons v District Court (NSW) [2002] HCA 47 ; (2002) 211 CLR 119 at [21] ; British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30 at [3] and [44] to [45]; Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38 ; (2005) 223 CLR 251 at [58] .


case_text: The main issue that was argued before me was whether, within the meaning of O 15A r 6, there is reasonable cause to believe that the respondents may have the right to obtain relief from KPMG. On this question, some preliminary observations can be made: • It is necessary to examine the various elements of the potential cause of action that is sought to be relied upon to determine whether there is reasonable cause to believe that each of the necessary elements exist. That task requires the Court to conclude at least that there is a reasonable cause to believe that each of the elements of the relevant cause of action might be established. The test is an objective one, and it is not necessary to prove that each of the elements do in fact exist. The rule contemplates that there be reasonable cause to believe that the respondents may have a right to obtain relief: see Austrac Operations Pty Ltd v New South Wales [2003] ATPR 41-960 at [11] and Leighton Contractors Pty Ltd v Page Kirkland Management Pty Ltd [2006] FCA 288 at [5] . • If the cause of action on which an application for preliminary discovery is based could not succeed, is bound to fail, is ill-founded or is doomed to fail, then discovery ought not be ordered: Bradley v Eagle Star Insurance Co Ltd [1989] 1 All ER 961 at 963 to 964; Harris v Newcastle-upon-Tyne Health Authority [1989] 2 All ER 273 at 277. If the potential cause of action would not survive an application for summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 ('Federal Court Act'), then discovery ought not to be ordered. • "Belief" under O 15A r 6 requires more than mere assertion, a "hunch", conjecture or suspicion. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition: see: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [13] to [14]; St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at 154. • The availability of preliminary discovery under O 15A r 6 depends upon the evidence before the Court. . The evidence must incline the mind towards the matter of fact in question: see Austrac Operations [2003] ATPR at [37]; John Holland Services [2004] FCA at [13] to [14], [17] and [73] and St George v Rabo 211 ALR at 154. • The rule is one which should be construed beneficially. In Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733 Burchett J said: It is no answer to the applicant's application under r 6 to say that the proceeding is in the nature of a fishing expedition: cf Meth v Norbert Steinhardt & Son Ltd (1959) 33 ALJR 78 at 81. Rule 6 is designed to enable an applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent -- that is, to "fish" in the old sense... It would be unfortunate if a rule designed to amplify the court's power to penetrate obscurities and uncertainties in the interests of justice were to be weakened by restrictive and unnecessary glosses. I think the rule is of a beneficial kind within the meaning of the well known principle of interpretation, and should be given the fullest scope its language will reasonably allow. The proper brake on any excesses in its use is the discretion of the court, which is required to be exercised in the particular circumstances of each case. See also CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad (2001) 187 ALR 279 at [23] per Tamberlin J.


case_text: In these circumstances, where a respondent desires to rely upon Pt IVAA of the Wrongs Act , it will need to plead and prove each of the statutory elements, including the failure to take reasonable care. In a proceeding where the applicant does not rely upon any such failure, then the need for a particularised plea by a respondent may be particularly important for the proper case management of the proceedings: see eg Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [41] . It would be desirable at an early stage of proceedings for a respondent to put forward the facts upon which it relies in support of the allocation of responsibility it contends should be ordered. If a respondent calls in aid the benefit of the limitation on liability provided for in Pt IVAA of the Wrongs Act , then the respondent has the onus of pleading and proving the required elements. The court, after hearing all the evidence, will then need to determine, as a matter of fact, whether the relevant claim brought by the applicant is a claim arising from a failure to take reasonable care.


case_text: Therefore, I do not consider that KPMG's liability could be described as fitting within the concept of being "in an indeterminate amount for an indeterminate time to an indeterminate class": see Ultramares Corporation v Touche (1931) 174 NE 441 at 444 per Cardozo CJ.


case_text: The concept of vulnerability is now an important requirement in providing a basis for a duty of care to avoid economic loss. It cannot be said that the decision in Esanda [1997] HCA 8 ; 188 CLR 241 should not be considered in light of the concept of vulnerability. Both these propositions follow from the passage in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2004) 216 CLR 515 at [23] (footnotes omitted): Since Caltex Oil , and most notably in Perre v Apand Pty Ltd , the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. So, in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiffs' land. In Hill v Van Erp , the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords , the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company.


case_text: determining whether Mr Young is able to pay his debts I am not entitled to assume that he will realise assets that are necessary for him to maintain a reasonable level of existence, such as household goods: see Alpaca at [16]; Helfenbaum v St George Bank Ltd [2001] FCA 1392 at [24] .


case_title: ICM Agricultural Pty Ltd v Young [2009] FCA 109

case_text: a hearing at which ICM and Mr Young were represented by counsel, I ordered on 19 February 2009 that the appeal be allowed, the orders of the Federal Magistrates Court be set aside, and in lieu thereof it be ordered that the application to that Court be dismissed. I also ordered that Mr Young pay ICM's costs of the FMC Bankruptcy Notice proceeding and that he pay ICM's costs of the FC Bankruptcy Notice Appeal: ICM Agriculture Pty Ltd v Young [2009] FCA 109 (Earlier Reasons for Judgment). I will take my Earlier Reasons for Judgment as read.


case_outcome: discussed

case_text: 5(2) of the Bankruptcy Act provides that a person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. Section 124(3)(a) speaks of a person's being unable to pay that person's debts as they become due from that person's own money. In International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 ( Alpaca ), Katz J referred to these provisions and to the well known discussions of the concept of solvency in Bank of Australasia v Hall [1907] HCA 78 ; (1907) 4 CLR 1514 at 1527-8 and 1542-3 ( Hall ); and Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670-671 ( Sandell ). From the former, his Honour seemed to draw a conclusion that one should consider whether the debtor would be able to pay debts as they fell due in the reasonably near future, not simply those that were immediately payable; from the latter, that where the provision refers to debts being able to be paid from the person's own money, that money may extend to cash realised from sale, mortgage or pledge of the person's assets within a relatively short time, subject to considerations relating to household necessities (see [72] below). Ultimately, however, the approach taken by Katz J to the interpretation of s 52(2)(a) depended on the construction of the provision which the debtor accepted before his Honour. In Rigg v Baker [2006] FCAFC 179 ; (2006) 155 FCR 531 , in a passage with which Sundberg and French JJ did not disagree, Cowdroy J noted at [104] a number of cases, including Alpaca, in which the passages from Sandell and Hall referred to above had been treated as applicable to s 52(2)(a). The decision of a Full Court of this Court in Stankiewicz v Plata [2000] FCA 1185 (see [29]-[30] of that decision) is one such case. In determining whether Mr Young is able to pay his debts I am not entitled to assume that he will realise assets that are necessary for him to maintain a reasonable level of existence, such as household goods: see Alpaca at [16]; Helfenbaum v St George Bank Ltd [2001] FCA 1392 at [24] .


case_outcome: referred to

case_text: is some authority relating to the construction of the generally similar provision in s 95A of the Corporations Act 2001 (Cth). That section defines solvency as requiring that "the person is able to pay all the person's debts, as and when they become due and payable." Like s 52(2)(a) of the Act, the provision does not include the words "from his or her own money". In Lewis v Doran [2004] NSWSC 608 ; (2004) 208 ALR 385 , Palmer J in the Supreme Court of New South Wales concluded that the omission of those words from s 95A "leaves the Court free to determine insolvency, whether retrospective or prospective, as a question of commercial reality having regard to the particular facts of the case" (at [111]). The New South Wales Court of Appeal affirmed his Honour's decision ( Lewis (as liq of Doran Constructions Pty Ltd (in liq)) v Doran [2005] NSWCA 243 ; (2005) 219 ALR 555) and did not express disagreement with his exposition of the relevant legal principles. Giles JA, with whom Hodgson and McColl JJA agreed, suggested at [109] that "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" provided that the company is capable of repaying this loan as and when it falls due. Giles JA noted (at [110]) that even before the introduction of this wording of s 95A, in a number of decisions courts had been prepared to pay regard to the ability to obtain unsecured borrowings.


case_outcome: followed

case_text: the Seed, which is part of the Assigned Property under the Supplementary Deed of Assignment, would have no longer existed as at 12 June 2009 (it existed in 2003). Second, if it still existed somewhere as at 12 June 2009, there is no evidence that it was then the property of AAC. Third, the two "Limited Causes of Action" were not in aid of or incidental or ancillary to the assignment of the Seed: the alleged causes of action arose some six years before the purported assignment of the Seed on 12 June 2009; cf Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 at 151-152 ( Monk ); Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 703 ( Trendtex ). Contrast First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710 , in which the causes of action in question were assigned in order to ensure that the assignee enjoyed the property, which was assigned at the same time. This decision was reversed in part by the Court of Appeal, but on grounds not presently relevant see First City Corporation Limited v Downsview Nominees Ltd [1990] 3 NZLR 265 (and see also the decision of the Privy Council in Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 ; [1993] 1 NZLR 513). The question to be asked is: what genuine commercial interest did Mr Young have at the time of any assignment being considered that would be served by that assignment? It is not as if the assignment was necessary in order that the claimed cause of action against ICM be enforced and Mr Young's interest as shareholder be safeguarded. As sole shareholder, director and controlling mind of AAC, Mr Young was in a position to ensure that AAC itself pursued ICM. Apparently Mr Young thought that it would serve his interests as shareholder for AAC to do so. The answer to the question posed is: "none his interest was to become a creditor of ICM and so avoid bankruptcy". This is a personal benefit, not a genuine commercial interest of the assignee of the kind to which Trendtex refers; cf Monk at 152-153.


case_text: in so far as a cause of action in conversion is pleaded, a right of action in tort is incapable of assignment: see Poulton v The Commonwealth (1953) 89 CLR 540 at 602 per Williams, Webb & Kitto JJ; Salfinger v Niugini Mining (Australia) Pty Ltd (No 3) [2007] FCA 1532 per Heerey J at [115]-[120] ( Salfinger ).


case_text: 5(2) of the Bankruptcy Act provides that a person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. Section 124(3)(a) speaks of a person's being unable to pay that person's debts as they become due from that person's own money. In International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 ( Alpaca ), Katz J referred to these provisions and to the well known discussions of the concept of solvency in Bank of Australasia v Hall [1907] HCA 78 ; (1907) 4 CLR 1514 at 1527-8 and 1542-3 ( Hall ); and Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670-671 ( Sandell ). From the former, his Honour seemed to draw a conclusion that one should consider whether the debtor would be able to pay debts as they fell due in the reasonably near future, not simply those that were immediately payable; from the latter, that where the provision refers to debts being able to be paid from the person's own money, that money may extend to cash realised from sale, mortgage or pledge of the person's assets within a relatively short time, subject to considerations relating to household necessities (see [72] below). Ultimately, however, the approach taken by Katz J to the interpretation of s 52(2)(a) depended on the construction of the provision which the debtor accepted before his Honour. In Rigg v Baker [2006] FCAFC 179 ; (2006) 155 FCR 531 , in a passage with which Sundberg and French JJ did not disagree, Cowdroy J noted at [104] a number of cases, including Alpaca, in which the passages from Sandell and Hall referred to above had been treated as applicable to s 52(2)(a). The decision of a Full Court of this Court in Stankiewicz v Plata [2000] FCA 1185 (see [29]-[30] of that decision) is one such case.


case_text: for ICM referred me to Totev v Sfar [2006] FCA 470 ; (2006) 230 ALR 236 at [37] - [44] ( Totev ) where Allsop J, when a judge of this Court, discussed, inter alia, the matters that a debtor must prove in order to establish "other sufficient cause" within s 52(2)(b) of the Bankruptcy Act . An appeal relating to that decision, Totev v Sfar [2008] FCAFC 35 ; (2008) 167 FCR 193 , is not of present relevance. Importantly, counsel submitted that I could not be satisfied that the claim made by Mr Young in the 2007 DC Proceeding was likely to be determined at any time in the near future. The fact was that Mr Young wished to file a significantly amended pleading in the 2007 DC Proceeding and counsel for ICM said that this would prompt a request for particulars. His submission was that allowing for amendment of the pleadings, the supply of particulars, a revised discovery in the light of amended pleadings, and preparation for trial, the 2007 DC Proceeding, assuming against ICM that it would succeed, could not be regarded as being likely to yield funds for the payment of Mr Young's creditors in anything like the near future so to overcome his present insolvency. Time did not permit the hearing to be concluded on 8 July 2009 and the proceeding was stood over to 2.00 pm on Wednesday 15 July 2009. There was a dramatic change at the resumed hearing on 15 July 2009. Mr J T Svehla of counsel had come to represent Mr Young (without any instructing solicitor). He applied for an adjournment. Mr Svehla said that he had come into the matter only recently and that he wished to achieve the following steps in the interests of Mr Young, both in the Federal Court and elsewhere: In order to establish "other sufficient cause" (or, of course, ability to pay debts) Mr Young must establish that his claim against ICM is likely to succeed, not merely that he has an arguable claim: see the numerous cases listed in McQuade and Gronow, McDonald Henry and Meek's Australian Bankruptcy Law and Practice (6 th ed, Thomson Lawbook Co, as at 7 October 2009) at [52.2.22], esp Totev at [37]-[44] . The test is more stringent and demanding than that which applies under s 41(7) of the Bankruptcy Act , which relates to the extension of time for compliance with a bankruptcy notice where a debtor has applied for an order setting aside that notice on the ground that the debtor has a counter-claim, set-off or cross demand of the kind referred to in s 40(1)(g) of that Act. As Allsop J observed in Totev at [45], the context is different under s 52(2)(b). The authorities referred to by his Honour show that the debtor's claim against the petitioning creditor must be one which is "likely to succeed". For the reasons below and in the Earlier Reasons for Judgment, I am not satisfied that Mr Young's claim is likely to succeed. The terms of the assignment of 11 December 2007 were previously noted. In my Earlier Reasons for Judgment I held that assignment invalid for the reasons there set out. I will not summarise those reasons beyond saying that I held the purported assignment to be of a bare cause of action which the parties accepted could be sustained only if Mr Young had a "genuine commercial interest" in taking the assignment and enforcing it for his own benefit (at [122]). AAC and Mr Young have recently entered into the three deeds of assignment referred to below apparently in an attempt to overcome the problem referred to. Mr Young now seeks to support the assignment of the causes of action as being ancillary to and supportive of an assignment of property as well as on the "genuine commercial interest" ground. The three deeds were executed after the First Sequestration Proceeding was commenced by ICM on 20 March 2009 and after this present sequestration proceeding was commenced by ICM on 5 June 2009.


case_text: the Seed, which is part of the Assigned Property under the Supplementary Deed of Assignment, would have no longer existed as at 12 June 2009 (it existed in 2003). Second, if it still existed somewhere as at 12 June 2009, there is no evidence that it was then the property of AAC. Third, the two "Limited Causes of Action" were not in aid of or incidental or ancillary to the assignment of the Seed: the alleged causes of action arose some six years before the purported assignment of the Seed on 12 June 2009; cf Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 at 151-152 ( Monk ); Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 703 ( Trendtex ). Contrast First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710 , in which the causes of action in question were assigned in order to ensure that the assignee enjoyed the property, which was assigned at the same time. This decision was reversed in part by the Court of Appeal, but on grounds not presently relevant see First City Corporation Limited v Downsview Nominees Ltd [1990] 3 NZLR 265 (and see also the decision of the Privy Council in Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 ; [1993] 1 NZLR 513). Assuming in favour of Mr Young that the assignments could be saved by Mr Young's having had a genuine commercial interest in taking them (see Trendtex ), they would not be saved. Mr Young became the sole shareholder of AAC on 12 June 2009. He did not have a genuine commercial interest as at 11 December 2007 (see the Earlier Reasons for Judgment at [122]-[123]) and the mere fact without more that he was a one hundred percent shareholder in AAC at the time of the subsequent purported assignments on 12 June, 3 July and 15 July 2009 does not support those purported assignments. The question to be asked is: what genuine commercial interest did Mr Young have at the time of any assignment being considered that would be served by that assignment? It is not as if the assignment was necessary in order that the claimed cause of action against ICM be enforced and Mr Young's interest as shareholder be safeguarded. As sole shareholder, director and controlling mind of AAC, Mr Young was in a position to ensure that AAC itself pursued ICM. Apparently Mr Young thought that it would serve his interests as shareholder for AAC to do so. The answer to the question posed is: "none his interest was to become a creditor of ICM and so avoid bankruptcy". This is a personal benefit, not a genuine commercial interest of the assignee of the kind to which Trendtex refers; cf Monk at 152-153.


case_title: Young v ICM Agriculture Pty Limited [2008] FMCA 1038

case_text: 25 July 2008, the Federal Magistrates Court ordered that the Bankruptcy Notice be set aside and that ICM pay Mr Young's costs: Young v ICM Agriculture Pty Ltd [2008] FMCA 1038.


case_text: 25 July 2008, the Federal Magistrates Court ordered that the Bankruptcy Notice be set aside and that ICM pay Mr Young's costs: Young v ICM Agriculture Pty Ltd [2008] FMCA 1038. Following a hearing at which ICM and Mr Young were represented by counsel, I ordered on 19 February 2009 that the appeal be allowed, the orders of the Federal Magistrates Court be set aside, and in lieu thereof it be ordered that the application to that Court be dismissed. I also ordered that Mr Young pay ICM's costs of the FMC Bankruptcy Notice proceeding and that he pay ICM's costs of the FC Bankruptcy Notice Appeal: ICM Agriculture Pty Ltd v Young [2009] FCA 109 (Earlier Reasons for Judgment). I will take my Earlier Reasons for Judgment as read. First, on 17 August 2009, Mr Young and AAC launched proceeding NSD 874/2009 in this Court against ICM. The proceeding was commenced by application supported by a statement of claim. In broad terms, the claims made are in line with those made in the 2007 DC Proceeding. Although the form of application is lengthy, I find it convenient to set out the relief claimed in paras 2 14 of the application (in para 1 the Court's leave was sought for AAC to commence and carry on the proceeding otherwise than by a solicitor: see Young v ICM Agriculture Pty Ltd [2009] FCA 1065): A declaration that in or about the period from 26 May 1997 until about 30 July 2009: (a) the Department of Primary Industries (formerly known as the New South Wales Department of Agriculture) for and on behalf of the State of New South Wales (" NSW DPI ") and the Grains Research and Development Corporation (" GRDC "); (b) alternatively, the NSW DPI on behalf of itself and the GRDC, was or were the grantee (as defined in section 3(1) of the PBR Act), including on a provisional basis, of the PBR (as defined in section 3(1) of the PBR Act): (c) with respect to the chickpea (cicer arientinum) variety " Bumper " (the " Product "); (d) which Product was the subject matter of an application number 1997/097 pursuant to section 24(1) of the PBR Act to the Secretary (as defined in section 3(1) of the PBR Act) for the grant of PBR in the variety " Bumper" (the " PBR Application "); (e) which PBR Application was accepted by the Secretary, pursuant to section 39(1) of the PBR Act, on 26 May 1997 (the " PBR Acceptance "); and (f) in respect of which PBR was granted by the Secretary on 19 June 2000. A declaration that the respondent ( "ICM ") by: (a) refusing to deliver to the second applicant (" AAC ") or as it directed a crop of Bumper chickpeas comprising some 957 metric tonnes or thereabouts (the " Bumper Chickpea Crop ") from at least 11 July 2003 and thereafter; (b) offering for sale the Bumper Chickpea Crop to Agrinational Pty Ltd (" Agrinational ")' (c) selling or purporting to sell the Bumper Chickpea Crop to Agrinational in mid August 2003 and thereafter; (d) receiving at least $458,178.49 exclusive of GST (the " Sale Amoun t") for the Bumper Chickpea Crop; (e) not accounting to and providing to AAC the Sale Amount, ("t he ICM Conduct "), without or otherwise than in accordance with, authorisation from the grantee of the PBR with respect to the Product (the " Rights "), committed an infringement of the Rights pursuant to section 53(1) of the PBR Act. A declaration that NSW DPI and GRDC, alternatively, NSW DPI on its own behalf and on behalf of GRDC, have or has validly and effectively assigned to AAC the Rights, including to commence and continue an action for infringement under section 53(1) of the PBR Act. A declaration that AAC has validly and effectively assigned to the first applicant (" Young ") the Rights, including to commence and continue an action for infringement under section 53(1) of the PBR Act. A declaration that in the events which have happened Young, alternatively, AAC, is the holder of the Rights pursuant to section 53(3) of the PBR Act. An order pursuant to section 56(3) of the PBR Act that ICM pay damages or give an account of profits to Young, alternatively AAC, arising from ICM's infringement of the Rights. A declaration that by engaging in all or part of the ICM Conduct, ICM: (a) converted to its own use and benefit the Bumper Chickpea Crop; (b) is required to pay damages in the Sale Amount, alternatively, some other amount to be determined. A declaration that by engaging in all or part of the ICM Conduct, ICM: (a) breached the terms of the one page agreement titled "GROWERS LICENCE TO RECEIVE PLANTING SEED SCHEDULE TO THE CONTRACT FOR COMMERCIALLY GROWING BUMPER CHICKPEA" dated 21 June 2002 to which AAC and ICM were parties (the "Growers Licence" ); (b) is required to pay damages in the Sale Amount, alternatively some other amount to be determined; (c) is required to indemnify under the indemnity contained in clause 5 of the Growers Licence (" ICM Indemnity ") in the Sale Amount, alternatively some other amount to be determined. A declaration that by engaging in all or part of the ICM Conduct, ICM had and received the Sale Amount to AAC's own use and benefit and that ICM is required to account for or pay by way of restitution the Sale Amount, alternatively some other amount to be determined. A declaration that in the events which have happened, by one or more instruments between AAC and Young and dated: (a) 11 December 2007 and titled " Deed of Assignment of Cause of Action" ; (b) 12 June 2009 and titled " Supplementary Deed of Assignment"; (c) 3 July 2009 and titled " Further Supplementary Deed of Assignment"; (d) 15 July 2009 and titled " Deed of Assignment of Fruits of the Action "; (e) 30 July 2009 and titled " Assignment Deed ", AAC has validly and effectively assigned to Young on the terms therein, AAC's rights and causes of action or the fruits thereof, in respect of AAC's claims against ICM for: (f) breach of contract (the Growers Licence); (g) indemnity under the ICM Indemnity; (h) conversion of the Bumper Chickpea Crop; (i) money had and received or claim in restitution. An order that ICM pay Young, alternative, AAC: (a) damages for breach of the Growers Licence in the Sale Amount, alternatively, in some other amount to be determined; (b) the Sale Amount, alternative some other amount to be determined, pursuant to ICM Indemnity; (c) damages for ICM's conversion of the Bumper Chickpea Crop, in the Sale Amount, alternatively, some other amount to be determined; (d) the Sale Amount, alternatively, some other amount to be determined, as money had and received or in restitution; (e) interest. Costs. An order that there be set off or deducted from any amount which ICM may be ordered to pay Young or ACC [sic] in this proceeding (including any order for costs) the amount which Young owes or upon determination will owe to ICM in respect of: (a) the judgment made and entered on 16 October 2007 by Judicial Registrar McDonald in District Court of New South Wales proceedings number 3126 of 2004 between ICM (as plaintiff) against Young (as defendant) (" 2004 DC Proceeding ") in favour of ICM against Young and accruing interest thereon; (b) ICM's costs in respect of the 2004 DC Proceeding; (c) ICM's costs in respect of Federal Magistrates Court of Australia Sydney Registry proceedings number SYG 3929 of 2007 between Young (as applicant) and ICM (as respondent); (d) ICM's costs in respect of Federal Court of Australia New South Wales District Registry proceedings number NSD 1267 of 2008 between ICM (as appellant) and Young (as respondent), and that the net balance be the amount for which ICM shall be liable to Young or AAC or Young shall be liable to ICM. There has been no suggestion that the State of New South Wales or the GRDC is to be joined as a party, notwithstanding, for example, the relief sought in para 4 of the application. It may be intended, however, that they will somehow indicate their consent to the making of the declarations and orders sought (see [54] above). Second, on 4 September 2009 the 2007 DC Proceeding was transferred to the Supreme Court of New South Wales in proceeding number 13822/09, and on the same day the Supreme Court ordered that it be transferred to this Court where it has been numbered NSD 1026 of 2009. The result of the first and second matters noted is that this Court is now seized of the claims made by Mr Young and AAC against ICM in the 2007 DC Proceeding as well as in the proceeding that they have recently commenced in this Court.


case_title: Mathai v Kwee [2005] FCA 932

case_text: In my opinion, the fact that the debtor always, on the outgoing and incoming passenger cards in evidence, gave his intended address in Australia as Ethersey House, which is his mother's residence, suggests that there is an available argument that he is able regularly to resort to that place as a residence within the meaning of the authorities. Of course, I can make no decision about the likelihood of the success of such an argument. Simply, having regard to the way the matter has been particularised, it seems to me that there is at least an arguable basis, and I put it no higher than that, that depending on the evidence ultimately advanced at the trial in support of and in answer to the particulars, the trial judge could find that the debtor either was ordinarily resident in Australia or had a dwelling house in Australia within the meaning of the authorities discussed by Graham J in Mathai v Kwee [2005] FCA 932 at [111] to [126]. 12 For those reasons, I do not consider that there is any abuse of process or other basis upon which I should strike out the remaining allegations in paragraph 3 of the creditors petition. 13 The next issue is whether the subpoenas to the two clubs should be set aside. Each subpoena seeks in par 1 'application for membership with' the respective club. No name of any person is set out as to whose application it is, nor is there any relevant time period as to which such an application was to be made referrable. In my opinion, there is no legitimate basis for requiring that paragraph to be answered.


case_outcome: related

case_title: Peplin Limited [2007] FCA 1387

case_text: On 23 August 2007, I made orders convening a meeting of the holders of the ordinary shares in Peplin Limited for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement proposed to be made between that company and its shareholders. I also made orders convening a meeting of the holders of options quoted on the Stock Exchange to subscribe for shares in the company for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement proposed to be made between the company and those option-holders. I gave reasons for those orders ( Peplin Limited [2007] FCA 1387). 2 I took the view that the scheme was in a form and the material was such as to justify the matter being put before, respectively, the shareholders and option-holders for their consideration. Those meetings have now been held and the support for the scheme has been overwhelming in each case. The approval percentage at the shareholders' meeting was some 99.12 per cent of all votes cast, representing 94.41 per cent of shareholders in number, were in favour of the motion to approve the scheme. At the option-holders' meeting, 99.98 per cent of all votes cast, representing 96.55 per cent of option-holders in number, were in favour of the motion to approve the scheme.


case_text: I am satisfied that the formalities associated with the calling of the meetings were complied with, save for one irregularity due to a fault on the part of a mailing house. That led to the result that some 274 shareholders had not been dispatched their documents on Friday, 31 August 2007, but the documents were sent on 3 September 2007. That meant that, so far as those shareholders are concerned, comprising approximately 1.4 per cent of the total number of shareholders, they received the information several days late, but in due time to consider the contents. It is submitted that this was a procedural irregularity which is not invalidated unless the court is of the opinion that it has or may cause substantial injustice and declares the proceeding to be invalid. It is submitted that a validation order is unnecessary in this case because s 1322(2) of the Corporations Act 2001 (Cth) (the Act) effects that purpose (see SGIC Insurance Ltd v Insurance Australia Limited (2004) 51 ACSR 593, [2004] FCA 1638 at [12] [15] per Jacobson J). I agree with that submission. 4 I am satisfied that advertising of the scheme took place in due time, the conduct of the meetings was in accordance with the relevant requirements. A letter was received from the Australian Securities and Investments Commission pursuant to s 411(17)(b). No notice of intention to appear at this hearing has been received, and there has been no appearance at this hearing to oppose the orders. 5 Evidence has been given as to the satisfaction of conditions precedent. The deeds poll have been executed and are still in force. In my opinion, the company has made out a case for approval of each of the schemes pursuant to s 411(4)(b) of the Act. I am also satisfied that it is appropriate to make an exemption order pursuant to s 411(12) , that is, there is no need for a court order approving the scheme to be annexed to every copy of the constitution of the company.


case_text: The claim that Ms Manning breached her duty not to make use of any business opportunity obtained during the course of her employment must also be rejected. This kind of claim cannot be brought against an employee in Ms Manning's position. It is reserved for those in "top management" such as directors or senior officers: Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371, 381-382. See also Aberdeen Railway Co v Blaikie Bros (1854) Macq 461, 472.


case_text: It will be noticed that the promisee under each employment contract is AMP Services. Yet it is Arrive that sues for the breach of each contract to recover its alleged loss of $4.3 million. The difficulty with such a course is obvious and was recognised by the plaintiffs. In their amended points of claim they allege that the benefit of the post-employment restraint and the benefit of other provisions of each contract are held on trust for Arrive. In the alternative they contend that each agreement was made by AMP Services as agent for Arrive. Those are the bases upon which Arrive asserts standing to sue. The allegation that several provisions of each contract are held on trust for Arrive has been admitted, although the defendants say that each post-employment restraint is "void and unenforceable". The admission makes it unnecessary to determine several tricky questions that would otherwise arise, including: (1) Whether each promise is capable of being held on trust; (2) Whether the intention to create the trust must be gathered from the contract itself or whether extrinsic evidence is admissible for this purpose: American Financial Corporation v Computer Sciences Corporation , 558 FSupp 1182 (D.Del, 1983); and (3) Whether the requisite intention must be that of both the promisor and the promisee: see the discussion in Restatement (Second) of Contracts SS302. 7 The principal service provided by Arrive to its clients was investment and superannuation planning advice. Its income was derived from fees charged for advice and commissions earned from the management of funds. The business was conducted from offices in most capital cities. The largest office was located in the PwC building in Melbourne where Ms Manning was in charge. The advisers in the Melbourne office were Ms Manning's group from PwC plus two additional advisers, Sam Gray and Andrew Walsh, who had been engaged in 2003. 8 Ms Manning was Arrive's most successful adviser. Yet, she was dissatisfied with several aspects of Arrive's business. I will only mention a few of them. In 2002 she was involved in a dispute with Mr Farrington about the quantum of bonus commission to be paid to herself and her group. The dispute was resolved, but not to Ms Manning's complete satisfaction. Another matter was the structure of the business. From the outset Ms Manning pressed for the introduction of a "self-employment" business model. Under this model clients would "belong" to an adviser and the income that was derived from that client would be split between the adviser and Arrive. Ms Manning was of the view that unless this model was instituted it would not be possible to retain quality advisers. The model was often discussed, but nothing was done. Another sticking point was Ms Manning's concern about the addition of AMP "products" to the range of investments that clients were encouraged to make. She did not believe they were suitable for Arrive's clients. This issue was never resolved.


case_text: I can now deal with the claims. The claims in contract can be disposed of in short order. The plaintiffs contend that by engaging in certain conduct, especially the conversations with clients, Ms Manning acted in breach of the post-employment restraint. Even if I were to make the assumption, as is required by cl 11, that the purpose of each call was to entice away clients or disrupt their relationship with AMP Services, the claim is hopeless. I need do no more than briefly state my reasons. First, by its terms (which notwithstanding the trust remain unaltered) the restraint operates "after the cessation of [Ms Manning's] employment with AMP." I have already explained that her employment did not come to an end until 16 February. By then the damage had been done. Second, it is a condition of the operation of the clause that Ms Manning work for a competitor of "AMP". It is clear from the opening paragraph of the employment contract that "AMP" is a defined term: it is defined to mean "AMP Services Limited". So far as I know GSJBW is not a competitor of AMP Services. It is of course a competitor of Arrive, but that is a different company. Absent a rectification order it is not possible to read "Arrive" for "AMP". Third, the prohibition imposed by cl 11 is against an approach to any client "of AMP" for the purpose of enticing them away "from AMP". The clients that Ms Manning approached were clients of Arrive and not AMP Services. Finally, if it were possible to extend the restraint to Arrive it would be void for being in breach of the common law doctrine of restraint of trade, the modern formulation of which is stated by Lord McNaughton in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565 and accepted for Australia in Buckley v Tutty [1971] HCA 71 ; (1971) 125 CLR 353, 376. The unreasonableness of the restraint lies in the fact that it is wider than necessary, covering all Arrive clients, many of whom did not have any connection with Ms Manning: G W Ploughman & Son Ltd v Ash [1964] 1 WLR 568. If the restraint had been limited to, say, clients of the Melbourne office it may have been lawful: see eg IF Asia Pacific Pty Ltd Galbally [2003] VSC 192 ; Brilliant Lighting (Aust) Pty Ltd v Baillieu [2004] VSC 248.


case_text: The next claim is for breach of fiduciary duty. The particular duties which are said to have been breached are the traditional duties owed by an employee to his employer. These were: (a) to act in all her dealings with clients in the best interests of Arrive; (b) to protect Arrive's business; (c) in the course of her employment, not to favour her own interests or the interests of any other party over the interests of Arrive; (d) not to induce, suggest or otherwise entice any client to take business away from Arrive; (e) to act in the course of all her dealings with other Arrive employees in the best interests of Arrive; and (f) not to induce, suggest or otherwise entice any employee of Arrive to leave his or her employment. It should be observed that the duties came to an end when Ms Manning's employment was terminated. Loyalty cannot be demanded of a former employee: Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371. As Ms Manning was not an employee of Arrive, the fiduciary duties could not arise out of her contract of employment. She was, however, retained by AMP Services to work for Arrive and so the usual conditions which would give rise to the fiduciary obligations claimed here do subsist. For example: Ms Manning was appointed as the head of Arrive's Victorian office and thus undertook to act in its interests; she was given powers which would affect the interests of Arrive; there was a relationship of trust and confidence between herself and Arrive. The absence of a contract of employment does not deny the fiduciary character of the relationship between Arrive and Ms Manning. In the end I do not think that this was seriously contested. 56 Having accepted the existence of the duties for which the plaintiffs contend the question is whether those duties were breached. Much of the conduct which I have found to have been engaged in by Ms Manning was not in breach of duty. For example, informing her group that she was going to leave, telling the group who to contact at GSJBW and even settling some of their terms of employment are not inconsistent with any duty owed to Arrive. Further, merely advising a client that she had resigned would not breach any duty. Nor would informing a client that she was proposing to leave Arrive and that she was going to join or had joined GSJBW. 57 It is true that in some circumstances the use of client contact details to solicit business can amount to a breach of duty if the client contact details are confidential. This is not, however, one of those cases. At the meeting on 21 January Ms Manning handed over her mobile telephone. However she asked that she be permitted to retain the SIM card on which all client details were stored. She explained that she wanted the SIM card to place into her new mobile telephone. The request was granted. Mr Furness removed the SIM card himself and handed it to Ms Manning. It is simply not possible for Arrive now to complain about the use of the information on the SIM card. Clearly Arrive did not regard client contact details as part of its confidential information. 59 The claim that Ms Manning breached her duty not to make use of any business opportunity obtained during the course of her employment must also be rejected. This kind of claim cannot be brought against an employee in Ms Manning's position. It is reserved for those in "top management" such as directors or senior officers: Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371, 381-382. See also Aberdeen Railway Co v Blaikie Bros (1854) Macq 461, 472.


case_text: To accept Arrive's argument is to accept the notion that a fiduciary breach effectively "stops the clock" at the time of breach for the purpose of determining what actual loss was suffered by a party and what the party's ultimate "position" would have been. This line of reasoning was rejected by the House of Lords in Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421. There, Lord Browne-Wilkinson said (at 439): "Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests: to make good a loss in fact suffered by the beneficiaries and which, using hindsight and common sense, can be seen to have been caused by the breach." See also Re Dawson [1966] 2 NSWR 211; Canson Enterprises Ltd v Boughton & Co . (1991) 85 DLR (4th) 129; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow & Arnold (2003) 87 SASR 1. The cases make clear that the court must take advantage of the "full benefit of hindsight" to ensure that "the losses made good are only those which, on a common sense view of causation, were caused by the breach": Canson Enterprises Ltd v Boughton & Co. (1991) 85 DLR (4th) 129, 163. 69 Though the actual quantification of the claim will take place at a later point, it is necessary to say one final word about the method of calculating that loss. When dealing with equitable compensation a court is often faced with the challenge of placing a monetary value on an elusive loss such as a "loss of opportunity", a loss that defies precise measurement: O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262, 273, adopting Canson Enterprises Ltd v Boughton & Co. (1991) 85 DLR (4th) 129, 163. To this end the court is permitted to use somewhat subjective "tools" in arriving at a valuation; tools such as common sense and general notions of justice and fairness.


case_text: The actual loss that Arrive has suffered is not the broad "total loss of clients" as Arrive would have it but the loss of the "value" of keeping those clients between 20 January and 16 February (being the day Ms Manning's employment terminated) together with, perhaps, the loss of the opportunity to take steps in that period to retain the lost clients: Southern Real Estate Pty Ltd v Dellow and Arnold (2003) 87 SASR 1, 12-15; Charles Lo Presti Pty Ltd v Karabalios [2000] NSWSC 395 , [31], [49], and [56]. On this latter aspect, however, given the history and the close relationship between Ms Manning and her clients, I am not at this point persuaded that "but for" her breach of fiduciary duty the clients would have remained with Arrive. On the contrary, the evidence so far suggests that regardless of Ms Manning's breach of duty the clients would have remained with Arrive only until her move to GSJBW and they would then have followed her.


case_text: The conditions for the application of that rule are explained in Payne v Parker [1976] 1 NSWLR 191, 201-202. Opinions have differed as regards whether these conditions can be satisfied when a witness is equally available to both parties. Some judges have said that in such circumstances no inference is available: see eg Claremont Petroleum NL v Cummings (1992) 110 ALR 239. This is not a universally accepted view. For example, in Earle v Castlemaine District Community Hospital [1974] VR 722, 728, a decision of the Full Court of the Supreme Court of Victoria, Little J, cites with approval the following passage from 2 Wigmore on Evidence (3 rd ed, 1940) SS288, 0"> 169- 171 : "The more logical view is that the failure [by both parties] to adduce is open to an inference against both parties, the particular strength of the inference against either depending on the circumstances. To prohibit the inference entirely is to reduce to an arbitrary rule of uniformity that which really depends on the varying significance of facts which cannot be so measured." The judge went on to say that it would be erroneous to lay down any "general rule" that if a witness was available to both parties no inference could be drawn against either and that it must depend on the facts and circumstances of a particular case. This, I think, is the correct view.


case_title: Dawson, Re [1966] 2 NSWR 211

case_text: To accept Arrive's argument is to accept the notion that a fiduciary breach effectively "stops the clock" at the time of breach for the purpose of determining what actual loss was suffered by a party and what the party's ultimate "position" would have been. This line of reasoning was rejected by the House of Lords in Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421. There, Lord Browne-Wilkinson said (at 439): "Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests: to make good a loss in fact suffered by the beneficiaries and which, using hindsight and common sense, can be seen to have been caused by the breach." See also Re Dawson [1966] 2 NSWR 211; Canson Enterprises Ltd v Boughton & Co . (1991) 85 DLR (4th) 129; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow & Arnold (2003) 87 SASR 1. The cases make clear that the court must take advantage of the "full benefit of hindsight" to ensure that "the losses made good are only those which, on a common sense view of causation, were caused by the breach": Canson Enterprises Ltd v Boughton & Co. (1991) 85 DLR (4th) 129, 163.


case_title: Earle v Castlemaine District Community Hospital [1974] VR 722


case_text: If it were possible, I would have called the clients myself in order to get to the truth of the matter. After all, the principal object of a court proceeding is to find the truth and arrive at the right result. Or at least that should be the object. Unfortunately, while the adversary system is touted as "the greatest legal engine ever invented for the discovery of truth" (5 Wigmore on Evidence (3 rd ed, 1940) SS1367) it often falls well short of the mark. The problem is that the system leaves it to the parties to shape the issues to be litigated and to call the evidence they feel will resolve those issues. And in a civil case it is not permissible for the judge to go behind the parties to call witnesses: Enoch and Zaretzkey, Bock & Co's Arbitration [1910] 1 KB 327. Perhaps this will one day be reformed. But until that occurs all a judge is able to do when faced with a refusal by a party to call relevant evidence is, if appropriate, to apply the rule in Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298.


case_text: During the course of argument Ms Manning attempted to rely on two other incidents as a repudiation of the contract which justified her purported termination of it on 21 January. The first is steps taken around 23 January to revoke Ms Manning's status under the Corporations Act 2001 (Cth) as an Authorised Representative of Arrive and the second is the instruction on 4 February to terminate Ms Manning's fortnightly salary payments. This conduct is not repudiatory. Even if it were, it would not assist Ms Manning. It is a well established rule of contract law that if a party gives an incorrect reason for terminating a contract this does not prevent him from later asserting a good reason, whether or not he was aware of the reason when he brought the contract to an end: Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21 ; (1931) 45 CLR 359, 377-378. The rule is so well established it needs no elaboration. But the rule only applies if the unstated (and sometimes unknown) ground was available at the time the contract was brought to an end. If the repudiatory conduct occurs later it cannot be relied upon retrospectively but only as a trigger for a later acceptance, and there was none. Further, by the time the second of the events had occurred Ms Manning had begun to work for GSJBW although still an employee of AMP Services. For example, she attended GSJBW's office on most working days, she sat in on at least one interview with a client (and probably gave advice to the client during the course of the interview), she helped draft letters to clients of Arrive to assist them to transfer their business to GSJBW and she presented a paper at an in-house conference. This put her in breach of her employment contract (a breach not pleaded) and disentitled her from terminating the contract for repudiation: Foran v Wight [1989] HCA 51 ; (1989) 168 CLR 385.


case_outcome: applied

case_title: G W Ploughman & Son Ltd v Ash [1964] 1 WLR 568


case_title: IF Asia Pacific Pty Ltd Galbally [2003] VSC 192


case_text: I can also dispose of the statutory claims without much ado. The amended points of claim assert that the duties imposed by ss 182 and 183 are owed to AMP Services. This is correct. In Walker v Winborne [1976] HCA 7 ; (1976) 137 CLR 1, 6-7, Mason J (as he then was) pointed out that because each company in a group is a "separate and independent legal entity" the officer of a company owes his duties to that company alone. See also Industrial Equity Limited v Blackburn [1977] HCA 59 ; (1977) 137 CLR 567. Here it is said that Ms Manning made "(1) improper use of her position to (a) gain an advantage for herself or someone else; or (b) cause detriment to [AMP Services]; (2) improper use of confidential information [vis name, contact details or financial position of clients] obtained in the course of her employment to (a) gain an advantage for herself or someone else; or (b) cause detriment to [AMP Services]." There is no evidence to support the first allegation and, if it matters, none of the conduct about which complaint is made (even if proven) is conduct engaged in by Ms Manning in her "position" with AMP Services. As to the second allegation, the evidence shows that the information (whether confidential or not) was not the property of Arrive but AMP Services. Sections 182 and 183 do not provide a cause of action for the misuse of confidential information which belongs to a related company and causes damage to the related company.


case_title: Nocton v Lord Ashburton [1914] AC 932

case_text: Arrive is entitled to compensation for Ms Manning's breach of duty. In equity, the object of compensation is to restore the person who has suffered loss to the position in which they would have been if there had been no breach of the equitable obligation: Nocton v Lord Ashburton [1914] AC 932; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow and Arnold (2003) 87 SASR 1. The critical question to determine is in what position would Arrive have been had Ms Manning not breached her equitable obligation -- that is to say, what actual loss was suffered by Arrive due to the breach?


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


case_text: Arrive is entitled to compensation for Ms Manning's breach of duty. In equity, the object of compensation is to restore the person who has suffered loss to the position in which they would have been if there had been no breach of the equitable obligation: Nocton v Lord Ashburton [1914] AC 932; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow and Arnold (2003) 87 SASR 1. The critical question to determine is in what position would Arrive have been had Ms Manning not breached her equitable obligation -- that is to say, what actual loss was suffered by Arrive due to the breach? 66 To accept Arrive's argument is to accept the notion that a fiduciary breach effectively "stops the clock" at the time of breach for the purpose of determining what actual loss was suffered by a party and what the party's ultimate "position" would have been. This line of reasoning was rejected by the House of Lords in Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421. There, Lord Browne-Wilkinson said (at 439): "Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests: to make good a loss in fact suffered by the beneficiaries and which, using hindsight and common sense, can be seen to have been caused by the breach." See also Re Dawson [1966] 2 NSWR 211; Canson Enterprises Ltd v Boughton & Co . (1991) 85 DLR (4th) 129; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow & Arnold (2003) 87 SASR 1. The cases make clear that the court must take advantage of the "full benefit of hindsight" to ensure that "the losses made good are only those which, on a common sense view of causation, were caused by the breach": Canson Enterprises Ltd v Boughton & Co. (1991) 85 DLR (4th) 129, 163. 69 Though the actual quantification of the claim will take place at a later point, it is necessary to say one final word about the method of calculating that loss. When dealing with equitable compensation a court is often faced with the challenge of placing a monetary value on an elusive loss such as a "loss of opportunity", a loss that defies precise measurement: O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262, 273, adopting Canson Enterprises Ltd v Boughton & Co. (1991) 85 DLR (4th) 129, 163. To this end the court is permitted to use somewhat subjective "tools" in arriving at a valuation; tools such as common sense and general notions of justice and fairness.


case_title: Payne v Parker [1976] 1 NSWLR 191


case_title: Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21 ; (1931) 45 CLR 359


case_text: Arrive is entitled to compensation for Ms Manning's breach of duty. In equity, the object of compensation is to restore the person who has suffered loss to the position in which they would have been if there had been no breach of the equitable obligation: Nocton v Lord Ashburton [1914] AC 932; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow and Arnold (2003) 87 SASR 1. The critical question to determine is in what position would Arrive have been had Ms Manning not breached her equitable obligation -- that is to say, what actual loss was suffered by Arrive due to the breach? 66 To accept Arrive's argument is to accept the notion that a fiduciary breach effectively "stops the clock" at the time of breach for the purpose of determining what actual loss was suffered by a party and what the party's ultimate "position" would have been. This line of reasoning was rejected by the House of Lords in Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421. There, Lord Browne-Wilkinson said (at 439): "Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests: to make good a loss in fact suffered by the beneficiaries and which, using hindsight and common sense, can be seen to have been caused by the breach." See also Re Dawson [1966] 2 NSWR 211; Canson Enterprises Ltd v Boughton & Co . (1991) 85 DLR (4th) 129; O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Southern Real Estate Pty Ltd v Dellow & Arnold (2003) 87 SASR 1. The cases make clear that the court must take advantage of the "full benefit of hindsight" to ensure that "the losses made good are only those which, on a common sense view of causation, were caused by the breach": Canson Enterprises Ltd v Boughton & Co. (1991) 85 DLR (4th) 129, 163. 68 The actual loss that Arrive has suffered is not the broad "total loss of clients" as Arrive would have it but the loss of the "value" of keeping those clients between 20 January and 16 February (being the day Ms Manning's employment terminated) together with, perhaps, the loss of the opportunity to take steps in that period to retain the lost clients: Southern Real Estate Pty Ltd v Dellow and Arnold (2003) 87 SASR 1, 12-15; Charles Lo Presti Pty Ltd v Karabalios [2000] NSWSC 395 , [31], [49], and [56]. On this latter aspect, however, given the history and the close relationship between Ms Manning and her clients, I am not at this point persuaded that "but for" her breach of fiduciary duty the clients would have remained with Arrive. On the contrary, the evidence so far suggests that regardless of Ms Manning's breach of duty the clients would have remained with Arrive only until her move to GSJBW and they would then have followed her.


case_title: Target Holdings Ltd v Redferns (a firm) [1996] 1 AC 421


case_title: Walker v Winborne [1976] HCA 7 ; (1976) 137 CLR 1


case_text: Ms Manning accepts (correctly in my opinion) that upon giving notice she could be instructed to stay away from work during the notice period if there was an express term to that effect. On the other hand she says (also correctly in my opinion) that if there was no such term then AMP Services was obliged to provide work for Ms Manning because part of her remuneration was based on performance: see eg William Hill Organisation Ltd v Tucker [1999] ICR 291. 44 In this case the employment contract permitted the employer, AMP Services, to require Ms Manning not to attend work for some or all of the notice period while continuing to pay her wages. I have already set out cl 7 of the employment contract. It is convenient to repeat para 3 of that clause which provides: "AMP may elect to pay you salary in lieu of notice or require you to work during part or all of your notice period." What Ms Manning was told at the meeting on 20 January amounted to the exercise of the option conferred by that clause. The instruction was repeated at the meeting on 21 January, as well as in AMP Service's letters of 23 and 27 January to Ms Manning's solicitors. The instruction was not a repudiation of the employment contract. It was the exercise of a right conferred by the contract.


case_text: The very rapid removal of Mr Morrison from Australia, following the cancellation of his visa and his detention, the latter of which occurred on 8 May 2007, initially raised concerns on my part that it might have been a procedure adopted in order to defeat the possibility of judicial review. In order to grant interlocutory relief to restrain his removal, pending a substantive application, I would have to have regard both to the possibility that he has some case to argue in relation to the decision to cancel his visa and secondly that the balance of convenience lies in favour of an interim order. These two requirements are inter-dependent. Of course, the stronger the case that there is an arguable error on the part of the Minister, the less the balance of convenience need lie in favour of the applicant in order to justify the grant of relief. In this case, I had virtually no basis for determining that there had been, in the Minister's decision, any jurisdictional error of the kind which would warrant the grant of relief under s 39B of the Judiciary Act 1903 (Cth) , in accordance with the principles enunciated in such cases as Plaintiff S157/2002 v The Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476 and other authorities concerning judicial review under the Migration Act . The materials which were before me indicate that there was a reason for his very rapid removal and I was informed from the bar table, by counsel for the Minister, that he was being escorted by no less than 10 police officers. 23 It is not for the Court to pass judgments upon the strength, or weakness, of the considerations which led to the decision not to allow the usual administrative notice of 48 hours before removal. There is no statutory requirement that such notice be given. If I thought that there were a reasonable case that removal were being effected precipitately in order to deprive the applicant of access to the Court, then that would, I think, arguably constitute a collateral purpose outside the proper exercise of the power to detain and remove. However, I was not in a position to make that judgement. However doubtful I may be as to the strength of some of the factors which are relied upon by the Department for his removal in these circumstances I also have regard to the fact that Mr Morrison's relatives have instructed solicitors today, for the first time. Had some form of representation been obtained earlier, following the notice of intention to cancel a visa, then it is possible that there might have been communication with the Department which would have avoided the suddenness of this removal. The intention to cancel Mr Morrison's visa was something of which he has known for a long time and indeed he has made submissions on his own account and provided supportive material from relatives and associates in answer to it. While I also had regard to the fact that there were obviously considerable resources being devoted to his expeditious removal for the reasons that have been given, the question whether those reasons would be judged on their merits as good or bad, is not a matter which concerned the Court. There was not enough to disclose, as I have indicated earlier, a collateral purpose for his removal on this basis and therefore I was not prepared to grant the immediate interlocutory relief that was sought. It remains open to counsel, upon further instructions, to apply to the Court for directions for the return of Mr Morrison to Australia. I make no comment as to the extent of the Court's power upon that regard nor whether any proper case could be made to support such an order assuming the power to exist. 24 For the preceding reasons the motion for interim relief was dismissed. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 14 May 2007 Counsel for the Applicant: Mr S Walker Solicitor for the Applicant: SanLing Chan Counsel for the Respondent: Mr P Macliver Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 8 May 2007 Date of Publication of Reasons: 14 May 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/723.html


case_text: these proceedings there is merit in permitting the immediate family members of Mr McCallum to table written material detailing the impact of the loss of Mr McCallum on their lives. The Court has discretion, as a superior court of record, to regulate its own affairs in a way which permits the Court to hear and assess such information as the Court determines to be of assistance to the Court in resolving the matters before it. I consider that in the context of these particular proceedings this material would be of some assistance in understanding the background to these proceedings: cf North J in Comcare v Commonwealth of Australia [2009] FCA 700. However I consider that the principles raised by the respondent in relation to the tabling of this material have force. In permitting this material to be admitted: In my view the appropriate orders are as follows: The Court will receive material from Mr Paul Everett, Mrs Ann Everett and Mr Andrew McCallum, being immediate family members of Mr Mark McCallum, which material will be confined to the impact of the demise of Mr Mark McCallum on their lives. The material referred to in paragraph 1 of these orders will be in the form of written statements. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 23 October 2009 Counsel for the Applicant: Mr AK Herbert Solicitor for the Applicant: Mr M Curran of Dibbs Barker Lawyers Counsel for the Respondent: Mr J Fernon SC Solicitor for the Respondent: Ms S Flores-Walsh of Australian Business Lawyers Date of Hearing: 12 October 2009 Date of Judgment: 23 October 2009 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2009/1196.html


case_title: R v Previtera (1997) 94 A Crim R 76


case_text: Procedural fairness required that the applicant should be advised of any "critical point on which the decision would turn": see Rocca v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 87 ALD 529 at 540 [43]. He was also entitled to an opportunity to advance evidence and make submissions in relation to any prejudicial material before the Minister made her decision. In Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576, in a passage subsequently quoted with approval by the High Court in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 at 600 [32] , a Full Court of this Court said (at 590-1) that: "It is a fundamental principle that where the rules of procedural fairness apply to a decision-making process, the party liable to be directly affected by the decision is to be given the opportunity of being heard. That would ordinarily require the party affected to be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material."


case_text: Although it is strictly unnecessary to do so, I should add that I do not accept the applicant's contention that the Minister necessarily erred in her construction and application of the treaty obligations to which she had regard. In Kindler v Canada (Communication Number 470/1991) the United Nations Human Rights Committee said that the relevant question under Article 6 of the ICCPR was whether Canada had exposed "a person within its jurisdiction to the real risk (that is to say, a necessary and foreseeable consequence) of losing his life" contrary to the ICCPR. The Minister approached the matter in this way when she accepted the departmental assessment "that country information did not support the view that torture or death would be a "necessary and foreseeable consequence" of the [applicant's] removal from Australia which is the test for risk set by the United Nations Human Rights Commission." The applicant's allegation of error is founded on a more recent formulation of the test by the Human Rights Committee which, it is contended, rephrases the relevant question such that the "necessary and foreseeable consequence" test should not be read as qualifying the test of "real risk". The two tests are set to be cumulative. Reliance was placed on two of the Committee's decisions in 2006 which related to Canada. The Committee's decisions included statements that: "States parties are under an obligation not to expose individuals to a real risk of being killed or subjected to torture or cruel, inhuman or degrading treatment or punishment" and that "The committee must therefore decide whether there are substantial grounds for believing that, as a necessary and foreseeable consequence of [the applicant's removal] there is a real risk that the [applicant] would be subjected to treatment prohibited by articles 6 and 7 [of the ICCPR]." Attention was directed to one of the Committee's decisions in 2004 involving Denmark. There it held that the relevant question was whether expulsion would "expose [the applicant] to a real and foreseeable risk of being subjected to treatment contrary to article 7 [of the ICCPR]". Reliance was also placed on a comparison of the draft and final versions of the Committee's General Comment 31. In none of these instances was the Kindler formulation criticised or rejected. Nor do the formulations which are relied on lend clear support to the applicant's contentions that there are two tests to be applied cumulatively. In any event, even if the more recent expressions of the Committee's understanding of the relevant obligations are to be understood as reflecting a differing view from that previously expressed, it does not follow that the Minster has erred by preferring the opinion expressed in cases such as Kindler . 30 The applicant's second complaint relating to the Minister's treatment of Australia's treaty obligations was that she failed to deal with the test posed by the CAT at all. I am by no means persuaded that this complaint has merit. The Minister's reasons do not refer expressly to either the ICCPR or the CAT. They do, however, refer to " Australia's international obligations ." Moreover, she referred to the department's assessment in which both the ICCPR and the CAT obligations are dealt with. Even if the Minister had failed to give separate or any consideration to the obligations imposed by the CAT, this would not have constituted a jurisdictional error. This is so for at least two reasons. The first is that, if she did not do so, she did not err because she was not bound to have regard to the CAT obligations. The second is that, in any event, the applicant, in written submissions to the Minister, did not seek to suggest that there was anything other than a "real risk" test to be applied in determining whether either or both of the ICCPR and the CAT were engaged. One example was the submission that: "The situation in Lebanon is far from stable and the Department cannot reach a determinative conclusion of whether there is a "real risk" that [the applicant] will face violation of his ICCPR , or CAT, rights upon any return to Lebanon." It is, therefore, hardly surprising that the Minister did not, in terms, deal separately with the CAT obligations once she had explained her reasons for concluding that Australia's international obligations were not engaged. 31 It is common ground that the applicant was not provided with a copy of the reassessment or the issues paper referred to above at [10]. The Minister's reasons do not refer expressly to either document. The applicant argues, nonetheless, that the Minister must have had regard to the reassessment and relied on it because she refers in her reasons to an International Treaties Obligation Assessment "which states that while there was a remote possibility of the risk of torture and/or death if the applicant was to be returned, there was no real risk given the changes in Lebanon since ... July 2005." No such phrasing appears in the initial assessment which was provided to the applicant. It is said that the tests which were to be applied by the Minister in determining whether Australia had non-refoulment obligations to the applicant under the two treaties were formulated differently in the initial assessment, to which the applicant had access, and the reassessment. The comparison is drawn between the questions which are set out above at [8] and what is said in the passages from the reassessment which are extracted in the issues paper: see above at [10]. In particular it is suggested that the formulation of the test in para [118] of the issues paper is confusing and ignores the test posed by the CAT. Complaint is also made that the clarification contained in para [117] in which the department expresses the opinion that the applicant would confront only a "remote possibility" of torture or death if returned to the Lebanon, differs from the initial assessment. In addition, the applicant's solicitor gave evidence that, had she been provided with a copy of the reassessment, she would have made submissions, such as those made in argument in this proceeding, as to the proper construction of the ICCPR and the CAT. However, in cross examination, she conceded that these arguments had not occurred to her at the time that the submissions would have been made in response to the assessment. They occurred to her after the Minister's decision had been made and after counsel had been briefed for the trial.


case_text: This passage cannot be understood as supporting an unqualified proposition that an error in construing and applying a policy or an unincorporated treaty, which the decision-maker is not bound to apply, will amount to jurisdictional error. This will only be so if the misconstruction is "serious" such that "what is applied is not the policy but something else ...". Moreover their Honours' reasoning assumes that the Tribunal was bound to give consideration to the ministerial policy. Whether or not that be right in respect to a ministerial policy, it is now clear that this is not the case where unincorporated international treaty obligations are concerned. This was accepted by French J in Le v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 875. His Honour said (at [59]) that: "There is nothing in s 501 which expressly requires that the Minister have regard to the best interests of the visa holder's children as a condition of the valid exercise of the cancellation power. Nor is there anything in the language of the Act to support an implication to that effect. In the international context, Australia is a party to the Convention on the Rights of the Child and therefore is bound, in international law, by the obligation in legislative, executive and judicial decision-making to treat the best interests of the child as a primary consideration "in all cases concerning children". However the existence of that obligation of international law does not, unless incorporated by the Parliament into domestic legislation, give rise to a corresponding substantive obligation which conditions the exercise of statutory powers. The provisions of an international treaty to which Australia is a party may be a relevant consideration in the exercise of statutory discretions. ... Such considerations do not thereby become mandatory. In the joint judgment in re Minister for Immigration and Multicultural Affairs; ex parte Lam ...McHugh and Gummow JJ referred to the "... established doctrine" that obligations under international treaties "... are not mandatory relevant considerations attracting judicial review for jurisdictional error." The best interests of the children do not, by virtue of Australia's commitments under the Convention, become a mandatory relevant consideration in the exercise of statutory powers and in particular the power of visa cancellation under s 501. It may be acknowledged that statutes are generally to be interpreted and applied, to the extent that their language allows, so as to conform and not conflict with established laws of international law ... But this rule of construction does not extend to writing into statutes conditions, expressive of treaty obligations, which would narrow the powers that Parliament has conferred upon administrative or ministerial decision makers."


case_title: M238 of 2002 v Ruddock [2003] FCAFC 260

case_text: In my opinion, the procedures adopted by the department satisfied the requirements of procedural fairness in the present case. The invitation identified with clarity one of the crucial or relevant points on which the Minister's decision might turn. The applicant was afforded the opportunity, on two occasions, to make detailed submissions on the construction and application of the two treaties. Conflicting assessments by the departmental officer and the applicant's solicitor as to the proper characterisation of the level of risk to be confronted, should the applicant return to the Lebanon, were placed before the Minister. So too were submissions relating to the correct formulation of the relevant treaty obligations. They were incorporated in the issues paper. There was no requirement that the department's issues paper should be provided to the applicant before it was considered by the Minister: see M238 of 2002 v Ruddock [2003] FCAFC 260 at [54] . Furthermore, there was no requirement that the Minister's views on these matters, after she had considered the submissions and the issues paper, should be exposed to the applicant for further comment prior to a decision being made: see SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 at 603 [48] .


case_text: The discretionary power, conferred on the Minister by s 501(1) of the Act, is unfettered in its terms. As Heydon and Crennan JJ (with whom Gleeson CJ agreed) said, in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom [2006] HCA 50 ; (2006) 230 ALR 370 at 401 [128] , speaking of the similarly wide discretion conferred on the Minister by s 501(2): "Parliament has left it to the Minister to decide the matters which are relevant to whether a person who fails the character test should be permitted to remain in Australia. Considerations relevant to the exercise of the power depend on the nature, scope and purpose of the power, understood in the context in the Act. As ministerial direction No 21 makes clear, the minister considers that two of the factors relevant to the exercise of the discretion are related to the protection of the Australian community and the expectations of the community." The protection and expectations of the Australian community are not, however, binding considerations when the Minister him or herself makes a decision under s 501. The same must be true of international treaty obligations. As McHugh and Gummow JJ said in Re Minister for Immigration and Multicultural Affairs; ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 at 33 [101] ; " ...In the case law a line has been drawn which limits the normative effect of what are unenacted international obligations upon discretionary decision making under powers conferred by statute and without specification of those obligations. The judgments in Teoh accepted the established doctrine that such obligations are not mandatory relevant considerations attracting judicial review for jurisdictional error."