case_text: As stated in SA Brewing at 375, with respect to notices under s 155 of the Act, the Statutory Notices ' must specify the information sought with sufficient clarity to enable [the] recipient to know what is required '. As with s 155 notices, the Statutory Notices are to be reasonably construed and terms used in them ' will ordinarily take their meaning ' from the commercial circumstances in which the notices are given ( SA Brewing at 369 citing Melbourne Home of Ford Pty Ltd v Trade Practices Commission (No 3) (1980) 47 FLR 163 at 175 6).


case_outcome: cited

case_text: It is not the case that the Act purports to exclude the rules of natural justice. There is nothing in Pt XIB that amounts to unmistakable and unambiguous language clearly expressing an intention to exclude natural justice in connection with the issue of a Part A competition notice ( Plaintiff S157/2002 v Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476 at [30] per Gleeson CJ; cf Minister for Immigration & Multicultural Affairs v Lat [2006] FCAFC 61 ; (2006) 151 FCR 214 at [65] to [68] in considering s 51A of the Migration Act 1958 (Cth)). The fact that the Act provides for the provision of certain information in a s 151AKA(10) notice does not of itself evince an intention otherwise to exclude procedural fairness ( Miah at [139] per McHugh J) or, indeed, the possibility of the provision of further information or further consultation. The Act mandates the giving of certain information in a s 151AKA(10) notice as a minimum. Such latitude in the information to be provided is encompassed by the requirement to describe in summary form the kind of anti-competitive conduct proposed to be specified in the Part A competition notice. A "summary form" allows for a minimum but not a maximum of information to be provided. There is no inconsistency between the application of subss (9) and (10), which impose a minimum standard and a common law duty of procedural fairness ( Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 at [10] ).


case_outcome: considered

case_text: Optus relies upon a number of propositions as expounded by Mason P in Minister for Local Government v South Sydney City Council [2002] NSWCA 288 ; (2002) 55 NSWLR 381 at [250] and following. In particular, it adopts what his Honour said at [267] to the effect that, if Telstra were entitled to see adverse submissions of third parties, the whole process would be unworkable ' because it would lead to an infinite regression of counter disputation ' and, at [251] that, while there is no exclusion of an obligation of procedural fairness at the examination and report stage, an obligation to provide any submission supportive of an adverse proposal ' effectively converts the examination and report stage of the process into a full-blown adversarial trial '. 198 As Mason P discussed in South Sydney City Council , a party is entitled to be provided with the opportunity to address issues upon which an adverse finding is based. As his Honour noted at [259], much depends on the nature of the investigation, the specificity and importance of the "adverse" recommendation, the nature of the interest affected and the likelihood of it being anticipated as a matter to be addressed. His Honour gave as an example of the effect of specific interest and direct impact of adverse material the facts in Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 76 ALJR 966. In the present case, the circumstances include the statutory framework of the decisions, the purposes of the notices, the confidentiality of third party submissions and the ability to obtain the information in subsequent legal proceedings.


case_text: Telstra accepts that there was some "matching" between the subject matter of the Consultation Notice and that of the Competition Notice and that there was, in the Competition Notice, further particularisation of the matters set out in the Consultation Notice. However, it contends that this does not extend to all of the new matters raised. Telstra refers to Mison v Randwick Municipal Council (1991) 23 NSWLR 734 at 737 and submits that, by 'significantly altering ' the content of the Competition Notice from what had been foreshadowed in the Consultation Notice, the Commission changed the nature of the content.


case_text: As Mason P discussed in South Sydney City Council , a party is entitled to be provided with the opportunity to address issues upon which an adverse finding is based. As his Honour noted at [259], much depends on the nature of the investigation, the specificity and importance of the "adverse" recommendation, the nature of the interest affected and the likelihood of it being anticipated as a matter to be addressed. His Honour gave as an example of the effect of specific interest and direct impact of adverse material the facts in Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 76 ALJR 966. In the present case, the circumstances include the statutory framework of the decisions, the purposes of the notices, the confidentiality of third party submissions and the ability to obtain the information in subsequent legal proceedings.


case_text: Telstra submits that the words "in connection with", though broad, must be construed in context. In its submission, the purpose of the exclusion in para (f) is to avoid the disruption of investigative procedures or court process with the requirement to furnish reasons. It relies on the observation of Fox J in Murphy v KRM Holdings Pty Ltd (1985) 8 FCR 349 at 351 to the effect that: ' [t] he general idea behind par (f) seems to be that civil procedure will itself take care of what s 13 seeks to achieve when it requires reasons to be given. Conversely, civil procedure is not to be complicated by the s 13 procedure' . The decision to issue a Part A competition notice is said by Telstra to be distinct both from an investigation and a decision to institute or conduct proceedings. 259 There may be no correlative decision by the Commission to institute pecuniary penalty proceedings pursuant to ss 151BX and 151BY of the Act following the issue of a Part A competition notice. Further, third parties will not necessarily issue proceedings to recover damages pursuant to s 151CC of the Act. Certainty of legal proceedings, however, is not necessary for a decision to fall within the broad terms of para (f) of Sch 2. Decisions which "relate to, or may result" in the bringing of proceedings in a civil court for the recovery of pecuniary penalties expressly are included in para (f) of Sch 2 to the ADJR Act. The issue of a Part A competition notice is a prerequisite to the bringing of proceedings in this Court for the recovery of pecuniary penalties for a contravention of the competition rule (s 151BY(3)(g) of the Act). The scheme of the Act expressly contemplates that such proceedings may result from a decision by the Commission to issue a Part A competition notice. Were it not for the fact that such proceedings may result, the desired incentive for the carrier to cease the allegedly anti-competitive conduct would diminish significantly. Indeed, Telstra relies upon that very consequence of the decision in its submissions as to the requirements of common law procedural fairness. 260 The Commission's decision to issue the Competition Notice was a decision within the terms of para (f) of Sch 2 to the ADJR Act. It follows that the Commission was not obliged by s 13(1) of the ADJR Act to furnish Telstra with a statement of reasons for its decision to issue that notice.


case_text: The Commission contends that Telstra has not established that any departure from the requirements of procedural fairness was material or significant in reliance on NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77 ; (2005) 223 ALR 171 at [71] per Kirby J; Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 at [87] per McHugh J in dissent but not on this point). Even if there were deficiencies in the Statutory Notices, the Commission submits that the anti-competitive conduct there described may be sufficiently clear that Telstra suffered no prejudice ( Salim v Loh [2005] FCA 372 at [4] , [32]).


case_text: The Commission accepts that the "decision" to issue the Consultation Notice is a step taken under the Act. It submits, however, that that step is determinative of nothing ( Neate v Australian Securities Commission (1995) 60 FCR 518 at 520 1); it does not confer, alter or otherwise affect legal rights or obligations, whether arising under the Act or otherwise. At most, the decision is said by the Commission to precede ' an act (the issue of a notice under s 151AKA(10)(a)) which gives rise to a limited procedural right (to have a submission considered) and a concomitant obligation to consider it '. 54 The Commission further submits that, in any event, Telstra did not apply for a review of the alleged "decision" to issue the Consultation Notice within time (s 11(3)(b)(iii) of the ADJR Act). 55 Telstra submits that the decision to issue the Consultation Notice depended upon the exercise of a specific statutory power under s 151AKA(10) of the Act, which decision gave rise to a legal right to put submissions to the Commission and legal obligation on the Commission to consider those submissions. It was a prerequisite to the issue of a Competition Notice and therefore had, according to Telstra, operative effect and impacted directly on Telstra's legal rights and obligations. Further, Telstra submits that an extension of time to review that decision should be granted as the Commission has pointed to no prejudice arising from such an extension being granted. Optus consents to an extension of time being granted.


case_text: The historical context of statutory provisions may be referred to where appropriate to give the statutory words a meaning that will give effect to the purpose of the legislation ( Newcastle City Council v GIO General Limited [1997] HCA 53 ; (1997) 191 CLR 85 at 112 per McHugh J). That may include a relevant report laid before Parliament where that report was part of that background and, for example, is referred to in the explanatory memorandum ( Newcastle City Council at 100). 211 In September 2001, the Productivity Commission issued a report titled "Telecommunications Competition Regulation" (Productivity Commission, Telecommunications Competition Regulation , Report No. 16 (2001) ('the Productivity Report')). The Productivity Report contained an observation that there appeared to be no requirements for the Commission to publish its reasons for a decision to issue or not to issue a Part A competition notice (at 161). 212 The 2002 Amending Act implemented the Government's response to the Productivity Report. In part, the 2002 Amending Act contained measures to enhance accountability and transparency of decision making under Pt XIB of the Act. Those measures required the Commission to publish guidelines on the exercise of its powers (Pt 9 of the 2002 Amending Act; now s 151AP(3) and (4)) and to "consult" prior to the issue of a Part A competition notice (Pt 15 of the 2002 Amending Act; now s 151AKA(9) and (10)). The recommendations of the Productivity Report were not adopted universally by Parliament in the 2002 Amending Act. To the extent that Telstra refers to the Productivity Report, it must be read with this in mind.


case_title: Plaintiff S157/2002 v Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476


case_text: There is no general principle that uncertainty in an executive instrument spells invalidity ( Television Corporation Ltd v The Commonwealth [1963] HCA 30 ; (1963) 109 CLR 59 at 71 per Kitto J). The question is whether what has been done in fact answers the description of what the statute permits to be done in law. A statutory notice such as a s 151AKA(10) notice or a Part A competition notice (together, 'the Statutory Notices') must not be so vaguely expressed that its meaning of application is a matter of real uncertainty. The Statutory Notices must convey, with reasonable and sufficient clarity and certainty, the subject matter with which they deal and enable the recipient to know what is required if their issue is to be a valid exercise of statutory power ( Television Corporation Ltd at 70 per Kitto J; SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 at 369 per Fisher and French JJ (with whom Wilcox J agreed); Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 at 373, 374 per the Full Court). Where different kinds of subject matter are dealt with by different statutory provisions, the Statutory Notices should specify or make clear which particular aspects of the statutory regime are referred to and/or relied upon ( Department of Industrial Relations v Forrest (1990) 21 FCR 93 at 118 per Lockhart and Hill JJ). 37 The severity of prospective penalties or consequences of failure to comply with a statutory notice that flow from the subject matter and the impact of the characterisation of the conduct are relevant factors in identifying the requisite degree of certainty (see Pyneboard at 374 , Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 at 208 per Hill J). Account is to be taken of the statutory context in which the issue of a statutory notice arises and of the relevant interests of third parties. To take an example relevant to a Part A competition notice, a third party may contemplate bringing an action for damages in reliance on that notice and has an interest in knowing with clarity the ambit and scope of the notice. 39 The Statutory Notices should be reasonably construed and the requirement for clarity is not to be applied ' in a precious or hypercritical fashion ' ( Pyneboard at 375). Nor should the Statutory Notices themselves be construed as statutory provisions: '[a] rtificial dissection, in the cause of determined obfuscation, can introduce an argumentative element of uncertainty into words which, when read reasonably in context, are adequate to convey a plain and clear meaning ' of what is required ( Pyneboard at 375). The Statutory Notices need not plead all the facts necessary to constitute a contravention or possible contravention of the Act ( SA Brewing at 370 per Fisher and French JJ).


case_text: As Gaudron J said in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22 ; (2001) 206 CLR 57 at [99] , the basic principle of procedural fairness is an opportunity to meet the opposing case, although this does not mean that all material which comes before the decision-maker must be disclosed ( Miah at [140] per McHugh J). 225 As pointed out by Aronson M, Dyer B and Groves M, Judicial Review of Administrative Action (3 rd ed, Lawbook Co., 2004) at 438 41, it is common for statutes to impose procedural requirements which might otherwise be imposed by the rules of natural justice without indicating what effect these express requirements are intended to have on the application of ordinary principles of natural justice. The authors conclude that the presence of express procedural requirements will not normally, of itself, exclude or limit the application of natural justice. The common law rules of natural justice are taken to apply to the exercise of public power unless clearly excluded ( Miah at [126] per McHugh J). The content of the duty is determined in the statutory context (at [130]). 226 It is not the case that the Act purports to exclude the rules of natural justice. There is nothing in Pt XIB that amounts to unmistakable and unambiguous language clearly expressing an intention to exclude natural justice in connection with the issue of a Part A competition notice ( Plaintiff S157/2002 v Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476 at [30] per Gleeson CJ; cf Minister for Immigration & Multicultural Affairs v Lat [2006] FCAFC 61 ; (2006) 151 FCR 214 at [65] to [68] in considering s 51A of the Migration Act 1958 (Cth)). The fact that the Act provides for the provision of certain information in a s 151AKA(10) notice does not of itself evince an intention otherwise to exclude procedural fairness ( Miah at [139] per McHugh J) or, indeed, the possibility of the provision of further information or further consultation. The Act mandates the giving of certain information in a s 151AKA(10) notice as a minimum. Such latitude in the information to be provided is encompassed by the requirement to describe in summary form the kind of anti-competitive conduct proposed to be specified in the Part A competition notice. A "summary form" allows for a minimum but not a maximum of information to be provided. There is no inconsistency between the application of subss (9) and (10), which impose a minimum standard and a common law duty of procedural fairness ( Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 at [10] ).


case_title: Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82


case_text: It is accepted by the Commission that Telstra is a person ' entitled to make an application to [the Court]... under section 5 ' in relation to the decision to issue the Competition Notice (s 13(1)). The Commission submits, however, that that decision is a decision in connection with the institution or conduct of proceedings in a civil court and, by the application of para (f) of Sch 2 to the ADJR Act, not a decision to which s 13 of the ADJR Act applies. The Commission relies on the following matters in support of that submission: • The investigative nature of the Commission's role in deciding whether to issue a Part A competition notice, including the "reason to believe" threshold; • The close connection between the institution of proceedings in a civil court and the issue of a Part A competition notice, including the institution of proceedings for the recovery of pecuniary penalties, as emphasised by Telstra in its submissions as to the effect of a Part A competition notice; • The breadth of the expression "in connection with" as used in para (f) of Sch 2 ( Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 at 146); and • Authority to the effect that a decision to issue a s 155 notice is not a decision to which s 13 of the ADJR applies ( Ricegrowers Co-operative Mills Ltd v Bannerman (1981) 56 FLR 443).


case_text: There is no general principle that uncertainty in an executive instrument spells invalidity ( Television Corporation Ltd v The Commonwealth [1963] HCA 30 ; (1963) 109 CLR 59 at 71 per Kitto J). The question is whether what has been done in fact answers the description of what the statute permits to be done in law. A statutory notice such as a s 151AKA(10) notice or a Part A competition notice (together, 'the Statutory Notices') must not be so vaguely expressed that its meaning of application is a matter of real uncertainty. The Statutory Notices must convey, with reasonable and sufficient clarity and certainty, the subject matter with which they deal and enable the recipient to know what is required if their issue is to be a valid exercise of statutory power ( Television Corporation Ltd at 70 per Kitto J; SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 at 369 per Fisher and French JJ (with whom Wilcox J agreed); Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 at 373, 374 per the Full Court). Where different kinds of subject matter are dealt with by different statutory provisions, the Statutory Notices should specify or make clear which particular aspects of the statutory regime are referred to and/or relied upon ( Department of Industrial Relations v Forrest (1990) 21 FCR 93 at 118 per Lockhart and Hill JJ). 39 The Statutory Notices should be reasonably construed and the requirement for clarity is not to be applied ' in a precious or hypercritical fashion ' ( Pyneboard at 375). Nor should the Statutory Notices themselves be construed as statutory provisions: '[a] rtificial dissection, in the cause of determined obfuscation, can introduce an argumentative element of uncertainty into words which, when read reasonably in context, are adequate to convey a plain and clear meaning ' of what is required ( Pyneboard at 375). The Statutory Notices need not plead all the facts necessary to constitute a contravention or possible contravention of the Act ( SA Brewing at 370 per Fisher and French JJ). 43 As stated in SA Brewing at 375, with respect to notices under s 155 of the Act, the Statutory Notices ' must specify the information sought with sufficient clarity to enable [the] recipient to know what is required '. As with s 155 notices, the Statutory Notices are to be reasonably construed and terms used in them ' will ordinarily take their meaning ' from the commercial circumstances in which the notices are given ( SA Brewing at 369 citing Melbourne Home of Ford Pty Ltd v Trade Practices Commission (No 3) (1980) 47 FLR 163 at 175 6).


case_title: Salim v Loh [2005] FCA 372


case_text: There is no general principle that uncertainty in an executive instrument spells invalidity ( Television Corporation Ltd v The Commonwealth [1963] HCA 30 ; (1963) 109 CLR 59 at 71 per Kitto J). The question is whether what has been done in fact answers the description of what the statute permits to be done in law. A statutory notice such as a s 151AKA(10) notice or a Part A competition notice (together, 'the Statutory Notices') must not be so vaguely expressed that its meaning of application is a matter of real uncertainty. The Statutory Notices must convey, with reasonable and sufficient clarity and certainty, the subject matter with which they deal and enable the recipient to know what is required if their issue is to be a valid exercise of statutory power ( Television Corporation Ltd at 70 per Kitto J; SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 at 369 per Fisher and French JJ (with whom Wilcox J agreed); Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 at 373, 374 per the Full Court). Where different kinds of subject matter are dealt with by different statutory provisions, the Statutory Notices should specify or make clear which particular aspects of the statutory regime are referred to and/or relied upon ( Department of Industrial Relations v Forrest (1990) 21 FCR 93 at 118 per Lockhart and Hill JJ). 206 As I have noted earlier, where the subject matter of the Competition Notice is conduct, the recipient is entitled to know what is required of it ( Television Corporation at 70 per Kitto J). Absence of information will involve a failure to provide necessary details if, without such information, the notice will not fulfil the purpose for which it is required to be given ( Deputy Commissioner of Taxation v Woodhams [2000] HCA 10 ; (2000) 199 CLR 370 at [33] ). However, a notice analogous to a notice before action is not intended to serve the purpose of a statement of claim if and when action is taken ( Woodhams at [35] and [37]). Despite the complexity and alleged ambiguity of the Statutory Notices on which Telstra relies, in context, the conduct described is sufficiently clear within each notice.


case_text: Where the Consultation Notice was insufficient as described, Telstra was entitled to be given additional information to be able to provide the meaningful submission contemplated by s 151AKA(10). Where the differences between the notices were as described earlier in these reasons, it is reasonable to assume that, acting bona fide in the context of the Consultation Notice, the Commission relied upon additional material and material adverse to Telstra that went to the matters not described in the Consultation Notice. If the Commission based its decision to issue the Competition Notice on some particular issue or material adverse to Telstra that was not apparent from the Consultation Notice, procedural fairness would require that some step additional to the issue of the Consultation Notice be taken ( Alphaone at 591-2). Telstra was entitled to be given notice of that material or the substance of it. The Commission accepts that, if it was obliged to provide that material to Telstra which it denies, Telstra was not accorded procedural fairness ( Telstra Corporation Limited v Australian Competition and Consumer Commission (2006) 68 IPR 571 at [30]). Failure to provide such information was a denial of procedural fairness or natural justice.


case_text: The Commission does not accept Telstra's characterisation of the consequences of a Part A competition notice as "extraordinary" and "punitive". It points out that such a notice is an exercise of executive rather than judicial power and cannot be "breached". It contends that the Competition Notice ' simply indicates that [the Commission] has reached the "relatively low threshold of 'reason to believe'" in relation to the conduct described in the notice '. That imports a requirement to come to the view in good faith and on reasonable grounds that Telstra is breaching or has breached the competition rule. There is no "finding" that Telstra has engaged or is proposing to engage in anti-competitive conduct, just a public announcement that the Commission has "reason to believe" that Telstra has engaged in at least one instance of anti-competitive conduct of a kind described in the Competition Notice. This is described as a ' relatively low threshold ' ( The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 ; (2002) 213 CLR 543 at [130] per Callinan J). The Commission does not accept that this involves damage to Telstra's reputation. 247 No penalties or orders flow directly from the Competition Notice; it allows proceedings to be commenced. The Commission points out that the consequences of the Competition Notice could have been avoided by Telstra if Telstra had accepted the Commission's invitation to give undertakings not to engage in the impugned conduct or successfully sought an exemption order pursuant to s 151AS of the Act. If Telstra were able to satisfy the Commission that the conduct was not anti-competitive or that the benefit to the public outweighs the detriment constituted by any lessening of competition, the Commission could make an exemption order (s 151BC(1) of the Act). 248 However, such an undertaking or the seeking of an exemption order would involve an acknowledgement by Telstra that its conduct or proposed conduct was anti-competitive, a proposition that it does not accept. The issue of a Part A competition notice should not force a recipient to accept the veracity of the allegations made which it disputes.


case_text: As Finn J observed in Tobacco Institute of Australia v National Health and Medical Research Council (1996) 71 FCR 265 at 274, the courts have indicated in a variety of contexts that '[c] onsultation is no empty term ' nor ' a mere formality '. The Commission has been given extensive powers which have been granted and affirmed in the context of certain conditions. The statutory process of consultation envisaged by s 151AKA(9) and (10) is rendered ineffective if the recipient is not given adequate and appropriate information in order to make an informed response. 237 Telstra was not afforded the opportunity to address issues relevant to the issue of the Competition Notice. Procedural fairness required that Telstra have that opportunity, whether such natural justice was in accordance with the statutory regime or common law principles. 238 Optus relies upon the context of the statutory power being exercised under a scheme in which the Part A competition notice: (a) does not prevent Telstra from engaging in the conduct referred to in the notice; (b) is not evidence of the matters referred to in it; (c) is akin to a notice before action, in the sense that a person (including the Commission) has no right to sue for a breach of the competition rule unless a Part A competition notice has been issued; and (d) may lead to the possibility of proceedings after its issue (in which proceedings the allegation of a breach of the competition rule will have to be proved to the civil standard of proof).


case_text: Optus also points to the decision of the Full Court in VHAP of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 80 ALD 559 at [27] where it was pointed out that the analysis of whether natural justice is afforded: 'is not a process of syllogistic reasoning. One does not approach it thus: the person is entitled to adverse material, this material was relied on in reaching an adverse result, that makes it adverse material, it was not provided in terms, therefore there has been a failure to afford natural justice.'


case_text: In Abrahams v Federal Commissioner of Taxation [1944] HCA 32 ; (1944) 70 CLR 23 at 44 Williams J, sitting as a single Justice of the High Court, considered that the presence of restrictive Articles was not a factor that should depreciate value because directors were obliged to exercise fiduciary duties conferred by the Article in a proper manner, bona fide and for the benefit of the company. Such obligations are enforceable in the courts. Citing the Privy Council case of Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302 , as applied by the High Court in Geita Sebea v Territory of Papua [1941] HCA 37 ; (1941) 67 CLR 544 , Williams J said (70 CLR at 44): ...the full value to the seller must be ascertained, however limited the market may be, even where there is only one possible hypothetical purchaser. To a prudent purchaser willing to give full value for the shares sooner than fail to obtain them, this restriction should not, to my mind, have many terrors. 44 Subsequently Gibbs J in Gregory v Federal Commissioner of Taxation [1971] HCA 2 ; (1971) 123 CLR 547 at 569, another single Justice case, rather departed from the approach of Williams J in Abrahams . Gibbs J said that even though powers given to directors were fiduciary that does not mean that the presence of restrictive articles has no effect on the value of a minority holding. From a practical point of view, the possibility of obtaining redress in the courts against a wrongful exercise of a power given by the articles is not a substitute for articles under which the power is not conferred. 45 This issue is extensively discussed by Young J in Mike Gaffikin Marine Pty Ltd v Princes Street Marina Pty Ltd (1995) 122 FLR 294 at 303 et seq. His Honour quoted the view of the leading authority on share valuation in Australia, Mr Wayne Lonergan, in his work The Valuation of Businesses, Shares and Other Equity . The corresponding passage in the current edition (4 th ed, Allen & Unwin, 2003) at 143: Few valuers today would share the views of Williams J, and in the light of the significant changes in the world's capital markets and in view of the comments of Gibbs J in Gregory's Case... I believe a modern court would, in the absence of a statutory direction to the contrary, generally discount the value of shares to take account of restrictive clauses. While accepting that he would have followed Abrahams were it not for what Gibbs J said in Gregory , Young J (122 FLR 304) made the following points, first in relation to proprietary company shares generally: • A reasonable purchaser would be influenced by restrictive provisions and there should be some discount; • Directors have fiduciary duties which can be policed; • Litigation to enforce compliance with directors' obligations will be expensive; • But it will also be expensive for the directors, so compromise "somewhere along the line" is likely; • Each case must be looked at in its own circumstances; • But a large discount merely because of the presence of restrictive clauses would not be appropriate. In relation to minority holdings: • The above remarks also apply to an extent; • If the holding is of a size less than that required to block a special resolution the holder is "at the mercy of the majority"; • But the courts are still able to contain the wrongdoing of the majority; • "To a great extent" directors will be able to make determinations as to retention of moneys, dividend policy and the direction of the company; • But there is an "area outside the line where the courts will exercise control"; • Where the valuation is on an assets backing basis, the smaller the value of the shares (without discount), the greater the discount that should be applied for the cost and risk of litigation. 46 An important element in the present case is the special value the shares would have to the majority shareholder nominally Mrs Weeden but, it is reasonable to infer, a holder under the practical control and direction of Mr Weeden. This factor is mentioned in the passage from Abrahams cited in [43] above. Nothing in Gregory casts doubt on it. In Mordecai , 12 NSWLR at 70, Hope JA, with whom the other members of the New South Wales Court of Appeal agreed, said: It is well-established that if property has some special potentiality which only one person would buy, it is to be valued on the basis of a notional sale to that person. The property is not valueless or diminished in value because there would be no other buyers [Vyricherla and Geita Sebea cited]. On this basis the value of Morpak's goodwill is to be determined upon the basis of a hypothetical sale to the only persons to whom, on the appellants' submissions, it could be sold, and to whom the matters which they submit would render the goodwill valueless in any other purchaser's hands would be irrelevant. Young J applied the same principle in Mike Gaffikin Marine , 122 FLR at 304.


case_outcome: distinguished

case_text: Ms Rome-Sievers for the respondents referred to observations by Beaumont and Hill JJ, with whom Lehane J agreed, in Cannane v Official Trustee (1996) 65 FCR 453 at 471 et seq. Those observations deal with a quite different setting, a company which had a deficiency of assets. Its controller, Mr Cannane, contemplated using it as a vehicle for a backdoor listing on the stock exchange. The only value from the point of view of a prospective purchaser was "something extraneous to the shares, namely the assurance by Mr Cannane that the benefit of the advantageous back door listing would inure to (the company)" (at 472). 28 I now turn to the issues in dispute between Mr Lipson and Mr Ferrier which go to the quantum of market value.


case_text: It was common ground that the term "market value" as it appears in s 120(1)(b) is to be construed consistently with the valuation principles stated in Spencer v The Commonwealth [1907] HCA 82 ; (1907) 5 CLR 418 at 432, 436-437, 440 et seq. As the High Court said in Deputy Federal Commissioner of Taxation v Gold Estates of Australia (1903) Ltd (1934) 51 CLR 509 at 515: The supposition must be made that a sale is not forced, and that the owner is willing to sell on reasonable terms, and negotiates with a person willing to buy, that the one is not so anxious to sell and the other to buy, as to disregard the effect of any business consideration, and that each is equipped with knowledge of the existing relevant circumstances.


case_text: Ms Rome-Sievers referred to a passage in the judgment of Aickin J in Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd [1981] HCA 4 ; (1981) 146 CLR 336 at 396 where his Honour said: Where no individual shareholder can procure liquidation and where there is no likelihood of the holders of four out of the five shares joining together in the foreseeable future to wind up the company it can seldom be appropriate to use s. 18 (2) (c). That case concerned liability for Commonwealth gift duty. Section 18(2)(c) of the Gift Duty Assessment Act 1942 (Cth) provided in effect that where a gift included shares in an unlisted company, the Commissioner might, in his discretion, adopt as the value of those shares the sum the holder would receive in the event of the company being voluntarily wound up on the date when the gift was made. On the facts of that case (see the passage from the judgment of the trial judge, Sheppard J, cited at 146 CLR 395) all the members of the Court, except Murphy J, held that it was unnecessary to adopt a winding up basis because the shares were properly valued on an earnings basis. 31 In the present case, as already noted, neither valuer suggested an earnings basis would be appropriate. In any event, the notional winding up in the present case assumes an order made on an oppression petition: Corporations Act 2001 (Cth) s 232 , or on the just and equitable and related grounds: s 461(e) , (f), (g) and (k), not the voluntary winding up predicated by s 18(2)(c) of the Gift Duty Act as relevant in St Helens Farm . 32 If, as both valuers agree, a liquidation basis is appropriate, how would the notional purchaser, properly advised, assess the prospects of obtaining a winding up order? 33 Ms Rome-Sievers points to the history and circumstances of the Weeden Companies. They are closely held family companies. They do not carry on any business, their sole economic worth being the potential receipt of trust distributions as beneficiaries of trusts within the wider Weeden Group. However, the directors of trustees of the relevant trusts have stated that they do not intend to make any distributions in the foreseeable future, and have not done so for some time. No dividends have been declared by the Weeden Companies since 1988 and are not likely to be declared in the future.


case_text: A controlling majority which diverts assets and opportunities of the company to other entities under its control, and from which it will benefit, will be acting oppressively. This is essentially the kind of conduct held to be oppressive in Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324 and a breach of fiduciary duty in Mordecai v Mordecai (1988) 12 NSWLR 58. Similarly, an inflexible policy of not declaring dividends can constitute oppression: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517 at [51]-[56]. It would be no answer to say that such conduct happened to suit the interests of the Weeden family. In Gambotto v WCP Limited [1995] HCA 12 ; (1995) 182 CLR 432 the High Court has reaffirmed the willingness of the courts to protect minority shareholders albeit in the context of a majority seeking to amend Articles of Association.


case_text: In Abrahams v Federal Commissioner of Taxation [1944] HCA 32 ; (1944) 70 CLR 23 at 44 Williams J, sitting as a single Justice of the High Court, considered that the presence of restrictive Articles was not a factor that should depreciate value because directors were obliged to exercise fiduciary duties conferred by the Article in a proper manner, bona fide and for the benefit of the company. Such obligations are enforceable in the courts. Citing the Privy Council case of Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302 , as applied by the High Court in Geita Sebea v Territory of Papua [1941] HCA 37 ; (1941) 67 CLR 544 , Williams J said (70 CLR at 44): ...the full value to the seller must be ascertained, however limited the market may be, even where there is only one possible hypothetical purchaser. To a prudent purchaser willing to give full value for the shares sooner than fail to obtain them, this restriction should not, to my mind, have many terrors.


case_text: Subsequently Gibbs J in Gregory v Federal Commissioner of Taxation [1971] HCA 2 ; (1971) 123 CLR 547 at 569, another single Justice case, rather departed from the approach of Williams J in Abrahams . Gibbs J said that even though powers given to directors were fiduciary that does not mean that the presence of restrictive articles has no effect on the value of a minority holding. From a practical point of view, the possibility of obtaining redress in the courts against a wrongful exercise of a power given by the articles is not a substitute for articles under which the power is not conferred. 45 This issue is extensively discussed by Young J in Mike Gaffikin Marine Pty Ltd v Princes Street Marina Pty Ltd (1995) 122 FLR 294 at 303 et seq. His Honour quoted the view of the leading authority on share valuation in Australia, Mr Wayne Lonergan, in his work The Valuation of Businesses, Shares and Other Equity . The corresponding passage in the current edition (4 th ed, Allen & Unwin, 2003) at 143: Few valuers today would share the views of Williams J, and in the light of the significant changes in the world's capital markets and in view of the comments of Gibbs J in Gregory's Case... I believe a modern court would, in the absence of a statutory direction to the contrary, generally discount the value of shares to take account of restrictive clauses. While accepting that he would have followed Abrahams were it not for what Gibbs J said in Gregory , Young J (122 FLR 304) made the following points, first in relation to proprietary company shares generally: • A reasonable purchaser would be influenced by restrictive provisions and there should be some discount; • Directors have fiduciary duties which can be policed; • Litigation to enforce compliance with directors' obligations will be expensive; • But it will also be expensive for the directors, so compromise "somewhere along the line" is likely; • Each case must be looked at in its own circumstances; • But a large discount merely because of the presence of restrictive clauses would not be appropriate. In relation to minority holdings: • The above remarks also apply to an extent; • If the holding is of a size less than that required to block a special resolution the holder is "at the mercy of the majority"; • But the courts are still able to contain the wrongdoing of the majority; • "To a great extent" directors will be able to make determinations as to retention of moneys, dividend policy and the direction of the company; • But there is an "area outside the line where the courts will exercise control"; • Where the valuation is on an assets backing basis, the smaller the value of the shares (without discount), the greater the discount that should be applied for the cost and risk of litigation. 46 An important element in the present case is the special value the shares would have to the majority shareholder nominally Mrs Weeden but, it is reasonable to infer, a holder under the practical control and direction of Mr Weeden. This factor is mentioned in the passage from Abrahams cited in [43] above. Nothing in Gregory casts doubt on it. In Mordecai , 12 NSWLR at 70, Hope JA, with whom the other members of the New South Wales Court of Appeal agreed, said: It is well-established that if property has some special potentiality which only one person would buy, it is to be valued on the basis of a notional sale to that person. The property is not valueless or diminished in value because there would be no other buyers [Vyricherla and Geita Sebea cited]. On this basis the value of Morpak's goodwill is to be determined upon the basis of a hypothetical sale to the only persons to whom, on the appellants' submissions, it could be sold, and to whom the matters which they submit would render the goodwill valueless in any other purchaser's hands would be irrelevant. Young J applied the same principle in Mike Gaffikin Marine , 122 FLR at 304.


case_title: Hilder v Dexter [1902] AC 474

case_text: It might be suggested that the Explanatory Memorandum ([21] above) is inconsistent with this principle insofar as it disregards "any sort of discount or incentive". However, the Memorandum is not to be taken too literally. For example, a range of "kerbside valuations" would hardly be a determination of market value binding on a court. In any event, an Explanatory Memorandum, however helpful, is not an expression of the will of Parliament and cannot prevail when a statute uses an expression, such as market value, to which courts of the highest authority have given a clear meaning. While Explanatory Memoranda are explicitly included in the extrinsic materials to which a court may give consideration under s 15AB of the Acts Interpretation Act 1901 (Cth), there may still be something to be said for the trenchant view expressed by Lord Halsbury LC in Hilder v Dexter [1902] AC 474 at 477: ... I believe the worst person to construe (a statute) is the person who is responsible for its drafting. He is very much disposed to confuse what he intended to do with the effect of the language which in fact has been employed. 48 Mr Ferrier has applied a 10 per cent "minority discount". To some extent that overlaps with a further discount for litigation risk which he fixes at 25 per cent. 49 Mr Ferrier's figures quoted in [18] above do not take into account this latter discount because his instructions were to assume as a fact that the applicants (strictly speaking, that should be a hypothetical purchaser) would be able to establish oppression and obtain a winding up order. Mr Lipson's corresponding discount is 92.5 per cent, ie he assumes the chance of success at 7.5 per cent. The estimate of the prospects of success in litigation is probably not something within the specialised knowledge of a Chartered Accountant: see Evidence Act 1995 (Cth) s 79.


case_outcome: applied

case_text: The concept of oppression and the relevant authorities are discussed extensively by the Full Court of the Supreme Court of Western Australia in Jenkins v Enterprise Gold Mines NL (1992) 10 ACLC 136 at 143-147 in a passage too lengthy to set out, but which I respectfully adopt and incorporate in these reasons. I particularly note what their Honours said at 145-146: In our opinion the application of the test involves a question of fairness. It is for the court to decide whether in balancing the interests of the company as a whole against minority interests the directors have acted so as to unfairly prejudice the interests of the minority. The court decides this "according to ordinary standards of reasonableness and fair dealing". Whether the conduct is unfairly discriminatory will be judged on standards which reasonable directors with such skills as directors should have, acting bona fide, would think to be fair. 36 The respondents' defence in a hypothetical oppression and winding up application would necessarily be that the assets of the Weeden Companies can be used for the exclusive benefit of the controllers, through the medium of the Related and Associated Entities. The minority shareholder in the Weeden Companies can expect nothing by way of income and nothing by way of capital for the indefinite future. If the net assets of the Weeden Companies were $100 million and the minority interest were 20 per cent, the unfairness of such conduct would be unarguable. It does not become any less unfair when the minority is smaller.


case_title: Mallett v Mallet (1984) 156 CLR 605

case_text: Neither valuer considered a capitalisation of future earnings basis appropriate; see Mallett v Mallet (1984) 156 CLR 605 at 627.


case_text: This issue is extensively discussed by Young J in Mike Gaffikin Marine Pty Ltd v Princes Street Marina Pty Ltd (1995) 122 FLR 294 at 303 et seq. His Honour quoted the view of the leading authority on share valuation in Australia, Mr Wayne Lonergan, in his work The Valuation of Businesses, Shares and Other Equity . The corresponding passage in the current edition (4 th ed, Allen & Unwin, 2003) at 143: Few valuers today would share the views of Williams J, and in the light of the significant changes in the world's capital markets and in view of the comments of Gibbs J in Gregory's Case... I believe a modern court would, in the absence of a statutory direction to the contrary, generally discount the value of shares to take account of restrictive clauses. While accepting that he would have followed Abrahams were it not for what Gibbs J said in Gregory , Young J (122 FLR 304) made the following points, first in relation to proprietary company shares generally: • A reasonable purchaser would be influenced by restrictive provisions and there should be some discount; • Directors have fiduciary duties which can be policed; • Litigation to enforce compliance with directors' obligations will be expensive; • But it will also be expensive for the directors, so compromise "somewhere along the line" is likely; • Each case must be looked at in its own circumstances; • But a large discount merely because of the presence of restrictive clauses would not be appropriate. In relation to minority holdings: • The above remarks also apply to an extent; • If the holding is of a size less than that required to block a special resolution the holder is "at the mercy of the majority"; • But the courts are still able to contain the wrongdoing of the majority; • "To a great extent" directors will be able to make determinations as to retention of moneys, dividend policy and the direction of the company; • But there is an "area outside the line where the courts will exercise control"; • Where the valuation is on an assets backing basis, the smaller the value of the shares (without discount), the greater the discount that should be applied for the cost and risk of litigation. 46 An important element in the present case is the special value the shares would have to the majority shareholder nominally Mrs Weeden but, it is reasonable to infer, a holder under the practical control and direction of Mr Weeden. This factor is mentioned in the passage from Abrahams cited in [43] above. Nothing in Gregory casts doubt on it. In Mordecai , 12 NSWLR at 70, Hope JA, with whom the other members of the New South Wales Court of Appeal agreed, said: It is well-established that if property has some special potentiality which only one person would buy, it is to be valued on the basis of a notional sale to that person. The property is not valueless or diminished in value because there would be no other buyers [Vyricherla and Geita Sebea cited]. On this basis the value of Morpak's goodwill is to be determined upon the basis of a hypothetical sale to the only persons to whom, on the appellants' submissions, it could be sold, and to whom the matters which they submit would render the goodwill valueless in any other purchaser's hands would be irrelevant. Young J applied the same principle in Mike Gaffikin Marine , 122 FLR at 304.


case_title: Mordecai v Mordecai (1988) 12 NSWLR 58

case_text: A controlling majority which diverts assets and opportunities of the company to other entities under its control, and from which it will benefit, will be acting oppressively. This is essentially the kind of conduct held to be oppressive in Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324 and a breach of fiduciary duty in Mordecai v Mordecai (1988) 12 NSWLR 58. Similarly, an inflexible policy of not declaring dividends can constitute oppression: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517 at [51]-[56]. It would be no answer to say that such conduct happened to suit the interests of the Weeden family. In Gambotto v WCP Limited [1995] HCA 12 ; (1995) 182 CLR 432 the High Court has reaffirmed the willingness of the courts to protect minority shareholders albeit in the context of a majority seeking to amend Articles of Association. 46 An important element in the present case is the special value the shares would have to the majority shareholder nominally Mrs Weeden but, it is reasonable to infer, a holder under the practical control and direction of Mr Weeden. This factor is mentioned in the passage from Abrahams cited in [43] above. Nothing in Gregory casts doubt on it. In Mordecai , 12 NSWLR at 70, Hope JA, with whom the other members of the New South Wales Court of Appeal agreed, said: It is well-established that if property has some special potentiality which only one person would buy, it is to be valued on the basis of a notional sale to that person. The property is not valueless or diminished in value because there would be no other buyers [Vyricherla and Geita Sebea cited]. On this basis the value of Morpak's goodwill is to be determined upon the basis of a hypothetical sale to the only persons to whom, on the appellants' submissions, it could be sold, and to whom the matters which they submit would render the goodwill valueless in any other purchaser's hands would be irrelevant. Young J applied the same principle in Mike Gaffikin Marine , 122 FLR at 304.


case_text: A hypothetical purchaser, properly advised, is to be credited with an awareness of the foregoing matters. The price a willing buyer would pay for the shares would reflect the availability of remedies for oppression and entitlement to a winding up order. Such a purchaser is not to be fixed with previous acquiescence in the policies of the controllers of the Weeden Companies. Rather the reasonable assumption is that the purchaser would be entitled to the rights conferred at law by the holding of the shares acquired. Cases such as Re Lowes Park Pty Ltd; Headlam v Lowes Park Pty Ltd (1994) 62 FCR 535 where the minority shareholder had accepted the conduct complained of for many years (see 62 FCR at 548, 550, 553) are distinguishable. 39 The Articles of Association of the Weeden Companies contain pre-emptive rights (Article 37-41) and also confer an "absolute discretion" on the Directors to refuse to register any transfer without being bound to assign any reason for such refusal: Article 36. 40 Mr Peters SC for the applicants pointed out that s 1072C of the Corporations Act confers rights on the trustee in bankruptcy of a shareholder who becomes bankrupt. Pre-emptive rights are effectively removed (sub-s (6)) and consent to a transfer of the bankrupt's shares must not be unreasonably withheld (sub-s (5)). It was put that the surrounding circumstances in the present case include the imminent bankruptcy of Mr Weeden. A willing seller in the position of Mr Weeden, in answer to a buyer's argument that the restrictions in the Articles warranted a lower price, would point out that the next day a trustee in bankruptcy could sell them without any such restrictions.


case_title: Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324


case_title: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517


case_text: It was common ground that the term "market value" as it appears in s 120(1)(b) is to be construed consistently with the valuation principles stated in Spencer v The Commonwealth [1907] HCA 82 ; (1907) 5 CLR 418 at 432, 436-437, 440 et seq. As the High Court said in Deputy Federal Commissioner of Taxation v Gold Estates of Australia (1903) Ltd (1934) 51 CLR 509 at 515: The supposition must be made that a sale is not forced, and that the owner is willing to sell on reasonable terms, and negotiates with a person willing to buy, that the one is not so anxious to sell and the other to buy, as to disregard the effect of any business consideration, and that each is equipped with knowledge of the existing relevant circumstances. 23 It is central to the respondents' case that there was in fact no prospective purchaser for Mr Weeden's shares (apart from Mrs Weeden, a circumstance to which I shall return). The relevance of that fact, if it be a fact, needs to be considered in the light of a passage from the judgment of Griffith CJ in Spencer , a case which concerned compensation for the compulsory acquisition of land. 24 Griffith CJ dealt with the very situation where actual buyers of the property in question are likely to be hard, or impossible, to find. His Honour at 5 CLR 431 noted that, in the case of chattels which are the subject of frequent sale or purchase, the value of the articles is taken to be the current price. Someone wishing to sell such articles can readily find a purchaser at a price which is fairly certain and, conversely, a would-be buyer can find a seller at about the same price. In many cases the same considerations apply to land, where the price per acre is "as definitely fixed as the price of wheat or sugar". His Honour continued (at 431-2): But in the case of a new port, in a new State, where the area of land is limited, and each piece differs in many of its characteristics from the rest, it is impossible to apply any such rule. Bearing in mind that value implies the existence of a willing buyer as well as of a willing seller, some modification of the rule must be made in order to make it applicable to the case of a piece of land which has any unique value. It may be that the land is fit for many purposes, and will in all probability be soon required for some of them, but there may be no one actually willing at the moment to buy it at any price. Still it does not follow that the land has no value. In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie, whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together. 25 Mr Lipson pointed out some unattractive features (for a purchaser) of the shares in question: they were a small minority, they were subject to pre-emptive rights in the Articles of Association and a directors' discretion to refuse registration, there was a long-subsisting policy of not declaring dividends, etc. However, these are matters going to the quantum of market value. They do not deny the existence of market value. Indeed, Mr Lipson implicitly recognised this. In his report of 24 September 2008 he said that he did not believe there was a "deep and identifiable market" for the shares in the Weeden Companies. It follows that, in his opinion, there was a market, albeit one which did not have the desirable attributes mentioned. In re-examination he was asked: Q. And (senior counsel for the applicants) suggested that this often happens; that a minority shareholder in a closely held family company often seeks to sell the shares to outsiders on the would you say that happens that does happen often? A. It rarely happens in private companies within family groups. It rarely, rarely happens. I can it is not something that would be in the normal in the normal course of events. ... It is very rare that in a closely held family context that a minority shareholder will seek to dispose of their interest to an outsider or stranger. So whether or not such sales happen often, the fact remains that they can, and do, happen. 26 In this context, at least in the circumstances of the present case, we are not concerned with the definition of a market in the competition law sense. It is rather a question whether the transfer impugned under s 120 was a transfer of property which has value because it can be bought and sold. Minority shares in proprietary companies in Australia by their nature can be, and are in fact, bought and sold. 41 I doubt whether the circumstance of Mr Weeden's dire personal financial situation is a factor which legitimately can affect the assessment of market value of the shares. In Spencer , 5 CLR at 436-7, Barton J said that a claimant for compensation for resumption of land is entitled to have for his land what it is worth to a man of ordinary prudence and foresight, sight, not holding his land for merely speculative purposes, nor, on the other hand, anxious to sell for any compelling or private reason, but willing to sell as a business man would be to another such person, both of them alike uninfluenced by any consideration of sentiment or need. 42 However, the existence of restrictive provisions in a company's Articles of Association does not indicate that a minority holding has no market value; rather it is a factor which may call for an appropriate discount.


case_title: Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302


case_text: the person seeking the release of the ship were not, prima facie, liable to pay all of the costs of and in connection with her custody and release, there could be a serious inhibition on the exercise by plaintiffs of their rights to arrest. And, this construction would extend the limited form of liability of a person who caused an arrest created by the Parliament in s 34 in cases where the power to arrest had been misused. I reject APC's argument that a defendant who seeks the release of its ship, would simply be required to provide security for the costs and expenses which the plaintiff had already paid to the Marshal in connection with its arrest. A literal meaning of the Rules does not support that construction : Australian Securities and Investments Commission v DB Management Pty Ltd [2000] HCA 7 ; (2000) 199 CLR 321 at 338 [34] - [35] . I am of opinion that at the present time the costs and expenses of the actual arrest should be paid out of the amount that EMAS has paid to the Marshal and the balance of its payment of $100,000 returned to it. And, all other costs and expenses of the Marshal, including in connection with keeping the barge in custody and its release, should be paid out of the $92,100 paid by APC to secure the release. So much of the balance of those funds, equal to what was paid out of EMAS' $100,000, should be added to the amount paid into court by APC as security to abide the ultimate disposition of the proceedings. EMAS may later be able to establish its entitlement to this sum under r 75C or in the substantive proceedings. This allocation of responsibility reflects the prima facie distribution of the burden of the undertakings in rr 41 and 53 which EMAS and APC respectively assumed when each of them became bound to honour them. And it ensures that the security available to EMAS will not be diminished by the costs of the arrest in the event that it is successful in the end result.


case_text: Patrick Stevedores No 2 Pty Limited v Ship MV "Turakina" (No 2) (1998) 84 FCR 506 at 509E-F, Tamberlin J said that it was neither necessary nor appropriate to approach the undertakings, as then provided for in the Rules, on the basis that they were mutually exclusive. He also said that the undertakings did not have to be read down so as not to cover costs or expenses that may be encompassed by other undertakings that might be given by other persons. He observed that the Marshal could not claim double reimbursement in respect of the same costs or expenses. His Honour suggested that the parties should negotiate and resolve, as between themselves, the working out of the entitlements and obligations of each party who had provided an undertaking. However, this was prior to the introduction of r 75C. The undertaking that form 19 requires extends to the whole of the period of the arrest and the release, because the applicant for release must apply under r 52(1) in accordance with form 19 for the release of the ship. Once the person seeking the release of the ship from arrest provides a payment to the Marshal, or a sufficient level of confidence in the undertaking given, the ship will be released. Ordinarily, the person seeking the release of the ship will be the relevant person or someone acting for the relevant person. If the arrest has been short, the costs and expenses are not likely to be large. But, if the arrest has been for a long period of time (until the relevant person has been impelled to appear or to provide the security necessary to recover the ship from arrest) prima facie, there could be a hardship on a plaintiff if APC's construction of the operation of the Rules were correct. As Tamberlin J pointed out the Marshal cannot obtain double reimbursement. In the present case, the Marshal obtained security from EMAS, in the form of cash paid pursuant to his demands. But, the Marshal did not pay any costs and expenses prior to receiving the form 19 and payment from APC. Giving effect to APC's argument would produce the consequence that EMAS would now have to pay all of the Marshal's costs and expenses while APC would simply provide security for those payments to be available in the event that it were held liable for them at the conclusion of the proceedings. Such a construction does not lie easily with the requirements of r 52(1), r 53 and form 19. Nor, does it sit easily with the ordinary and natural meaning of s 34(1)(a)(ii) that limits the right of, among others, a relevant person in APC's position to recover damages from a plaintiff in EMAS' position for wrongful arrest.


case_text: Secondly, the relationship between the management fee and Riddell's income earning activities is direct. Riddell submitted that the services to which the management fee related were, as the invoice stated, for management fees. A label is never determinative: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659 at 4668; Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428; Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 and Sun Newspapers Ltd & Associated Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337. 56 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).


case_text: Secondly, the relationship between the management fee and Riddell's income earning activities is direct. Riddell submitted that the services to which the management fee related were, as the invoice stated, for management fees. A label is never determinative: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659 at 4668; Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428; Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 and Sun Newspapers Ltd & Associated Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337.


case_text: This proceeding was heard on the same day and immediately before Spriggs v Federal Commissioner of Taxation (VID 314 of 2007). To avoid unnecessary repetition in these reasons for decision, I incorporate and adopt in these reasons paras [32] to [41] of the reasons for decision in Spriggs. Those paragraphs set out the relevant legislation, the relevant principles and some general considerations concerning sport and professional sport examined by the High Court in Commissioner of Taxation v Stone [2005] HCA 21 ; (2005) 222 CLR 289 at [11] to [15]. 15 Riddell played rugby league as a child. When he was approximately 15 or 16 years of age, he was first represented by a player agent. That relationship ended towards the end of 1997 when Riddell was approached by Darryl Mather ("Mather") of International Sports Management Pty Ltd ("ISM"). 16 On 29 May 1998, Riddell entered into a management agreement with ISM ("the ISM Agreement"). It provided: "RECITALS: 1. [Riddell] competes professionally in the sport of (sic) 2. [Riddell] desires to engage [ISM] to manage his affairs as hereinafter set out. The Parties Agree as follows: 1. [ISM] agrees to provide the following services to [Riddell]: a) Advise [Riddell] in respect of his sporting career. b) Negotiate playing contracts on behalf of [Riddell]. c) Negotiate product endorsements and sponsorship so far as is reasonably possible. d) Access and arrange legal, financial, superannuation, taxation, insurance and other appropriate advices and services at the request and cost of [Riddell]. ... 2. [ISM] will keep [Riddell] informed in relation to any dealings or negotiations undertaken on [Riddell's] behalf. 3. The term of this Agreement shall be for five (5) years and shall continue thereafter until terminated in writing by either party, provided that no less than three months notice shall be given. 4. ISM shall be entitled to charge [Riddell] fees in respect of its services as follows: a) Twenty per cent (20%) of all gross monies or other considerations paid to [Riddell] for sponsorship, media contracts, endorsement for goods and services, advertising or any form of promotional work and any subsequent income earned from the above monies. The said payments shall continue for a period of three years after termination of the contract in respect of any of the arrangements set out above which commence during the period of the agency. b) In respect of sporting events in which [Riddell] participates: (i) Eight per cent (8%) of all contract monies paid to [Riddell] including bonuses/ incentives negotiated by [ISM]. (ii) Match payments shall not be included for the purpose of this clause. c) The amount payable to [ISM] shall be paid within 14 days of receipt of monies by [Riddell]. ... 10. Outside Australia, [ISM] may assign its rights and obligations hereunder to any company with which it is affiliated, including ProServ USA, ProServ UK, ProServ Europe, ProServ Italy and ProServ Japan. 11. During the first twenty four (24) months of the Period of Service [ISM] agrees to provide [Riddell] with a scholarship period. During this time, [ISM] agrees to waiver (sic) any remuneration which would otherwise be due and payable during this portion of the Period of Service as outlined in Clause 4b). This is in no way prejudices the remuneration which may become subsequently due and payable during the remainder of the Period of Service." 42 As with Spriggs , the Commissioner did not contend that it was not possible for a professional sportsperson to be carrying on a business of exploiting his or her sporting talent. It is worth restating what the High Court said in Stone (at 307): "The conclusion that the taxpayer was engaged in a business during the 1998-1999 year proceeds from an acceptance of the proposition that, showing that both before and during that year, the taxpayer was paid to endorse a company or its products as an athlete demonstrated that she has turned her athletic talent to account for money." 43 Riddell's position is not distinguishable. In the 2005 income year, Riddell was carrying on a business for the purpose of gaining or producing his assessable income. He turned his rugby league talent to account for money both before and during the 2005 income year: see [30] [31] above. For the reasons outlined above, the management fee was incurred by Riddell in carrying on that business. 44 The Commissioner contended that because "business" " includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee" (s 995-1 of the 1997 Act ), an outgoing incurred in the course of employment, or to obtain an employment, is not an outgoing incurred "in carrying on a business". Accordingly, the Commissioner contended that the management fee was not deductible because: (1) Riddell was an employee of Parramatta; and (2) the management fee was incurred in the course of his employment with Parramatta or to obtain employment with Parramatta.


case_text: The classic test for resolving the distinction between capital and revenue is that stated by Dixon J in Sun Newspapers Ltd at 363: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." See also Federal Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 ; (2006) 80 ALJR 1282 at [147] and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 137. 56 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).


case_text: As I said in Spriggs, argument by analogy must never be allowed to obscure the particularity of the arrangements in question. The Commissioner's reliance upon Federal Commissioner of Taxation v Maddalena (1971) 45 ALJR 426 does just that. Maddalena concerned an era of professional sportsmen and women which bears little or no resemblance to professional sport in the twenty first century. One only has to point to the absence of the electronic media, let alone the internet, in the 1930's to make good that proposition. Secondly, as with Spriggs, the factual matrix in Maddalena is very different to the factual matrix of Riddell. 53 Riddell was and remains a full time professional rugby league player. Maddalena was not. Riddell seeks to claim the management fee as a deduction. That fee was incurred after the playing contract was signed, not before, and could not be charged if no playing contract was negotiated. Maddalena sought to claim travelling expenses and legal expenses, expenses which were incurred before the playing contract and which were incurred regardless of whether or not a playing contract was secured. The management fee incurred by Riddell did not "come at a point too soon to be properly regarded as incurred in gaining assessable income". 54 In relation to the "negative limb" of s 8-1 of the 1997 Act , the Commissioner submitted that even if the management fee was an outgoing incurred by Riddell in gaining or producing assessable income, it was on capital, not revenue, account and therefore not deductible under s 8-1 of the 1997 Act . This argument also fails.


case_title: Federal Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90

case_text: An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).


case_text: Whether an outgoing incurred by a taxpayer satisfies one or more of the positive limbs for deductibility depends upon the facts of each case: Maryborough Newspapers Co Ltd v Federal Commissioner of Taxation [1929] HCA 16 ; (1929) 43 CLR 450 and Federal Commissioner of Taxation (Cth) v Total Holdings (Australia) Pty Ltd [1979] FCA 30 ; (1979) 43 FLR 217 at 223.


case_text: The classic test for resolving the distinction between capital and revenue is that stated by Dixon J in Sun Newspapers Ltd at 363: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." See also Federal Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 ; (2006) 80 ALJR 1282 at [147] and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 137.


case_title: Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634


case_title: Maryborough Newspapers Co Ltd v Federal Commissioner of Taxation [1929] HCA 16 ; (1929) 43 CLR 450


case_title: Sun Newspapers Ltd & Associated Newspapers Ltd v Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337

case_text: Secondly, the relationship between the management fee and Riddell's income earning activities is direct. Riddell submitted that the services to which the management fee related were, as the invoice stated, for management fees. A label is never determinative: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659 at 4668; Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428; Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 and Sun Newspapers Ltd & Associated Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337. 55 The classic test for resolving the distinction between capital and revenue is that stated by Dixon J in Sun Newspapers Ltd at 363: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." See also Federal Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 ; (2006) 80 ALJR 1282 at [147] and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 137. 56 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).


case_title: Alfred Crompton Amusement Machines Ltd v Commissioners of Customs and Excise (No 2) [1972] 2 QB 102

case_text: Although Brennan J expressed a narrower view than Mason and Wilson JJ on the question of when legal professional privilege attaches to confidential professional communications between government agencies and salaried legal officers, their Honours were in agreement as to the need in every case for the legal adviser to be "independent" (see also Deane J at p 80). See also Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1972] 2 QB 102 per Lord Denning MR at 129.


case_outcome: followed

case_text: The parties were in agreement that the appropriate test to be applied in determining whether or not the respondents have waived privilege in the external legal advice referred to in the letter of 19 April 2005 is whether they have in effect disclosed the substance or conclusion of that advice. The test was expressed this way by Gyles J, with whom Tamberlin J agreed, in Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 ; (2004) 140 FCR 101 at [65] where his Honour said: ... The voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons for the conclusion. 30 In his additional observations in Bennett v Chief Executive Officer of the Australian Customs Service , Tamberlin J at [13] said: Various expressions are used in the formulation of principles relating to waiver of legal professional privilege, such as references to 'the substance', 'effect', or 'content' of the advice. The weight of the authorities, in my view, supports the conclusion that the disclosure of the conclusion reached in or course of action recommended by, an advice can amount to waiver of privilege in respect of the premises relating to the opinion which has been disclosed, notwithstanding that this reasoning is not disclosed. By way of illustration, if there is a disclosure that a client has been advised that interpretation 'A' is preferable to interpretation 'B' of a legislative provision, then even if there is no disclosure of the reasoning leading to that conclusion, the reasoning and content of the advice may be waived, including the factual premises and circumstances leading to that conclusion. His Honour had earlier observed that it "may perhaps have been different" if it had simply been asserted that, in effect, the client had taken legal advice and thereafter adopted a particular position. 31 The critical question concerning the letter dated 19 April 2005 is thus its proper construction. For this reason only limited assistance is provided by consideration of the facts of other cases. It is necessary for me to form a view, after consideration of the whole of the letter of 19 April 2005, as to whether the respondents by that letter deployed the substance or effect of their external legal advice for forensic purposes. Assuming for present purposes the correctness of the proposition tentatively advanced by Tamberlin J (see [30] above), there would have been no waiver if the letter simply asserted, in effect, that PwC had taken legal advice and thereafter acted from 2 July 2004 in the way complained of by Ms Rich. 32 In my view, a fair reading of the letter of 19 April 2005 leads to the conclusion that it was calculated to convey the message that the conduct of PwC from 2 July 2004 was undertaken on external advice and in accordance with that advice, and, for that reason, PwC did not believe that there had been any victimisation or other conduct for which compensation could properly be sought. This conclusion can, it seems to me, be tested by asking whether, were it the case that PwC had acted in disregard of its external advice, or were it the case that its belief that there had not been any victimisation or other conduct for which compensation could properly be sought was inconsistent with its external advice, would the letter have been misleading? In my view, it is plain that it would have been. The statement that PwC had "acted at all times with the benefit of external advice" was apparently made for the purpose of fortifying the claim that it had not engaged in victimisation, or in other conduct for which compensation could properly be sought. Implicit in the calling-in-aid of the external legal advice for this purpose was the claim that the external legal advice supported the conduct of PwC. 33 I therefore reject the submission of the respondents that the letter does not disclose the substance or conclusion of the external advice received by the respondents and that the statement in the letter reproduced in [18] above amounts to a simple assertion that the client has taken legal advice and has acted with the benefit of it.


case_text: In Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341 the Full Court gave careful consideration to modern authorities, including recent judgments of the Full Court of this Court, on issue waiver. It is not necessary for me to refer extensively to what their Honours there said as they summarised their conclusions at [60]-[61]. At [60] their Honours emphasised that the authorities reveal that whether or not privilege has been waived will in every case depend very much on the particular circumstances of the case. At [61] their Honours identified the governing principle in the following way: Both before and after Mann , the governing principle required a fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence. In DSE [ie DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384 ; (2003) 127 FCR 499] [58], Allsop J put the matter somewhat more descriptively, saying waiver arises when "the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication" (emphasis in original).


case_text: The above factual findings mean that it is appropriate for me to follow the approach adopted by Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384 ; (2003) 127 FCR 499 at [115] . His Honour there rejected a contention that by denying an allegation as to their state of mind, the respondents had put in issue their state of mind and, to the extent that the respondents received legal advice which might have contributed to the state of mind asserted by them, they had waived privilege on the advice. At [121] his Honour noted that his views were in conformity with those of Wheeler J in Commonwealth v Ternwood Holdings Pty Ltd [2002] WASC 107 at 10 where her Honour said: ... it is the conduct of the party who possesses the privilege which is capable of waiving it. It is not apparently open to another party to litigation to force waiver of a party's legal professional privilege by making assertions about, or seeking to put in issue, that party's state of mind.


case_text: In Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341 the Full Court gave careful consideration to modern authorities, including recent judgments of the Full Court of this Court, on issue waiver. It is not necessary for me to refer extensively to what their Honours there said as they summarised their conclusions at [60]-[61]. At [60] their Honours emphasised that the authorities reveal that whether or not privilege has been waived will in every case depend very much on the particular circumstances of the case. At [61] their Honours identified the governing principle in the following way: Both before and after Mann , the governing principle required a fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence. In DSE [ie DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384 ; (2003) 127 FCR 499] [58], Allsop J put the matter somewhat more descriptively, saying waiver arises when "the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication" (emphasis in original). 25 The above factual findings mean that it is appropriate for me to follow the approach adopted by Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384 ; (2003) 127 FCR 499 at [115] . His Honour there rejected a contention that by denying an allegation as to their state of mind, the respondents had put in issue their state of mind and, to the extent that the respondents received legal advice which might have contributed to the state of mind asserted by them, they had waived privilege on the advice. At [121] his Honour noted that his views were in conformity with those of Wheeler J in Commonwealth v Ternwood Holdings Pty Ltd [2002] WASC 107 at 10 where her Honour said: ... it is the conduct of the party who possesses the privilege which is capable of waiving it. It is not apparently open to another party to litigation to force waiver of a party's legal professional privilege by making assertions about, or seeking to put in issue, that party's state of mind.


case_text: The common law of legal professional privilege (or client legal privilege as it has commonly been called since the enactment of the Evidence Act 1995 (Cth)) provides the test for determining whether confidential written communications between lawyer and client must be produced for inspection ahead of trial ( Esso Australia Resources Limited v Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 (" Esso Australia ")). 5 Client legal privilege protects the confidentiality of certain communications, which may be but need not be written, made in connection with giving or obtaining legal advice or the provision of legal services. The communications accorded protection are those made for the dominant purpose of obtaining legal advice or to conduct or aid in the conduct of litigation in reasonable prospect ( Esso Australia per Gleeson CJ, Gaudron and Gummow JJ at [61]). 6 Client legal privilege exists to serve the public interest in the administration of justice by encouraging frank disclosure by clients to their lawyers. As Mason and Wilson JJ stated in Waterford v The Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 ( "Waterford" ) at 62, "the proper functioning of the legal system is facilitated by freedom of consultation between the client and the legal adviser". Their Honours went on to observe at pages 64-65 that legal professional privilege is the product of a balancing exercise between competing public interests whereby, subject to the well-recognised crime or fraud exception, the public interest in the administration of justice is accorded paramountcy over the public interest in a fair trial conducted by reference to all relevant documents (see also Esso Australia per Gleeson CJ and Gaudron and Gummow JJ at [35]). There is no further balancing exercise to be carried out; if client legal privilege attaches to a communication, the privilege may be waived or overridden by statue but is otherwise absolute ( Telstra Corporation Ltd v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445 ( "Telstra" ) at [21]).


case_text: The respondents argued that, even if there were not a sufficient identity of interest between Mr Harrington and Mr Edwards, it does not automatically follow that the limited disclosure to Mr Harrington resulted in a waiver of privilege in the advice against the rest of the world. They placed reliance in particular on the majority judgment in Mann v Carnell at [30] where their Honours said: In Goldberg v Ng this Court considered a case in which there was disclosure of a privileged communication to a third party, for a limited and specific purpose, and upon terms that the third party would treat the information disclosed as confidential. The Court was divided upon whether, in the circumstances of the case, privilege was waived. However, the reasoning of all members of the Court was inconsistent with the proposition that any voluntary disclosure to a third party necessarily waives privilege. No application was made on the present appeal to re-open Goldberg or any of the earlier authorities on the subject. In Goldberg , reference was made to the statement of Jordan CJ in Thomason v Campbelltown Municipal Council : "The mere fact that a person on some one occasion chooses to impart to another or others advice which he has received from his solicitor indicates no intention on his part to waive his right to refuse on other occasions to disclose in evidence what that advice was, and supplies no sufficient reason for depriving him of a form of protection which the law has deemed it specially necessary to throw around communications between solicitor and client". (Citations omitted) 79 Shortly before the publication of the High Court's judgment in Mann v Carnell , Sackville J had followed Goldberg v Ng in Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253. At [44] his Honour said: In my view, the mere fact that otherwise privileged communications at the meeting took place in the presence of persons who did not represent clients of [a legal firm], does not justify a conclusion that the ARU had expressly or intentionally waived privilege in those communications. The disclosure of the privileged communications was to a limited group, namely those attending the meeting. While there is no evidence of an express undertaking by the non-clients present at the meeting to preserve confidentiality, the circumstances suggest that the non-clients were under an implied obligation to respect the confidentiality of the communications at the meeting.