case_text: in any event I consider the facts that the profit forecasts which formed the framework for negotiations and discussions in relation to the profit guarantee related only to the Brisbane-based business of Forbes Australia, and that there was no suggestion prior to 22 September 1997 that Forbes would undergo any radical expansion in its operations, are of no moment in relation to the liabilities of the respondents as guarantors. I take this view because I consider that the acquisition of Favco in the circumstances I have outlined was actually, to paraphrase comments of Phillips J in City of London v New Hampshire Insurance Company (unreported, Phillips J Queens Bench Division (Commercial Court) 18 January 1991), discussed in Butterworth's Journal of International Banking and Financial Law , March 1991, pp 144-5 and cited in Duffy Bros Fruit Market (Campbelltown) v Gumland Property Holdings Pty Ltd [2007] NSWCA 7 at [220] ) an event "arising out of a contemplated course of dealing" and as such it remained within the scope of the guarantee. No provision of the share sale agreement or the guarantees signed by the respondents limited the activities of Forbes Australia following execution of the share sale agreement. The expansion of the business of Forbes Australia under the control of Mr Forbes as chief executive officer by the acquisition of Favco was not an event which could be considered as outside the terms of either the share sale agreement or the relevant guarantees. There was no covenant in any relevant agreement that, for example, Forbes Australia would continue to operate a business based only in Brisbane (contrast for example Spencer, Turner and Boldero v Lotz (1916) 32 TLR 373 where the Court held that the intention of the parties was that the guarantee should only be in respect of goods supplied in a certain location and not otherwise).


case_outcome: cited

case_title: State Bank v Lo [2000] NSWSC 1191

case_text: legal principles emerging from Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 have been largely confined to circumstances where a banker's certificate has been issued as to the amount of indebtedness of a debtor to the bank (for example Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 , Je Maintiendrai Pty Ltd v Australia and New Zealand Banking Group Ltd (1985) 128 SASR 70, Campbell v National Australia Bank Ltd [1994] SASC 4526 , Equus Financial Services Limited v Sabri [1994] FCA 1331 , George Biritz v National Australia Bank Limited [1995] VSC 91 , Shomat v Rubenstein (1995) 124 FLR 284 , Thurwood v First for Finance Pty Ltd [1997] FCA 559 , Australia & New Zealand Banking v Pan Foods Company Importers & Distributors Pty Ltd [1998] VSC 346 , Jenkins v National Australia Bank Ltd [1999] VSCA 33 , State Bank v Lo [2000] NSWSC 1191 , State Bank of NSW v Kit Cheng Chia [2000] NSWSC 552 , Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 , Julong Pty Ltd v Fenn [2002] QCA 529 , Apple Computer [2003] NSWSC 126 , Commonwealth Bank of Australia v Bouwman [2003] WASC 205 , Timms v Commonwealth Bank of Australia [2004] NSWSC 76 , Permanent Trustee Company Limited v Gulf Import and Export Company [2008] VSC 162). Since and possible because of Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 , bankers' certificates have become well-known in practice. That is not to say that the principle articulated in Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 has not been extended beyond the banker/customer/surety relationship, however circumstances in which the Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 principle is applicable are primarily confined to those involving the issue of a certificate as to the existence of a fact pursuant to legislation, or certain types of agreement, for example:


case_text: legal principles emerging from Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 have been largely confined to circumstances where a banker's certificate has been issued as to the amount of indebtedness of a debtor to the bank (for example Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 , Je Maintiendrai Pty Ltd v Australia and New Zealand Banking Group Ltd (1985) 128 SASR 70, Campbell v National Australia Bank Ltd [1994] SASC 4526 , Equus Financial Services Limited v Sabri [1994] FCA 1331 , George Biritz v National Australia Bank Limited [1995] VSC 91 , Shomat v Rubenstein (1995) 124 FLR 284 , Thurwood v First for Finance Pty Ltd [1997] FCA 559 , Australia & New Zealand Banking v Pan Foods Company Importers & Distributors Pty Ltd [1998] VSC 346 , Jenkins v National Australia Bank Ltd [1999] VSCA 33 , State Bank v Lo [2000] NSWSC 1191 , State Bank of NSW v Kit Cheng Chia [2000] NSWSC 552 , Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 , Julong Pty Ltd v Fenn [2002] QCA 529 , Apple Computer [2003] NSWSC 126 , Commonwealth Bank of Australia v Bouwman [2003] WASC 205 , Timms v Commonwealth Bank of Australia [2004] NSWSC 76 , Permanent Trustee Company Limited v Gulf Import and Export Company [2008] VSC 162). Since and possible because of Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 , bankers' certificates have become well-known in practice. That is not to say that the principle articulated in Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 has not been extended beyond the banker/customer/surety relationship, however circumstances in which the Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 principle is applicable are primarily confined to those involving the issue of a certificate as to the existence of a fact pursuant to legislation, or certain types of agreement, for example: In this case cl 3.3 and Annexure 1 are not framed in such terms that an audit report is final and conclusive irrespective of any errors (whether manifest or otherwise) in calculations of the audited financial statements or failure of the audit report to comply with the prescribed formula in Annexure 1 (contrast for example State Bank of NSW v Chia [2000] NSWSC 552). Accordingly it could not be contended that the claimed profit shortfall of $1,691,284 as stated in the Deloitte Touche Tohmatsu report would be final and conclusive even if the respondents were able to demonstrate flaws in the calculations which arrived at that figure, including failure to comply with the prescribed formula in Annexure 1 or otherwise. The respondents submit that because of the absence of source financial documentation, they cannot test the accuracy of the report through cross-examination or other analysis. In light of this submission I note the following: The expert accounting evidence tendered during the proceedings suggests deficiencies attendant upon the Deloitte Touche Tohmatsu report; The expert report of Mr Angus Blackwood dated 18 September 2006 for the applicants is of minimal assistance in relation to the report because Mr Blackwood's comments in relation to the 1999 profits are based upon the audited financial statements by Deloitte Touche Tohmatsu. Mr Elia Lytras, an expert witness for the respondents, deposed that in order to determine the audit profit shortfall or excess for Forbes Australia for the year ended 31 December 1999 he required copies of all the instructions, working papers and files of Deloitte Touche Tohmatsu in relation to their audit of the Financial Reports of Forbes Australia (affidavit of Elia Lytras affirmed 18 January 2007). It is not in dispute that the documentation requested by Mr Lytras was not available. Mr Robert Edwards, a registered company auditor who gave expert evidence for the respondents, deposed that as at the date of his affidavit there was an absence of essential documentation necessary for him to prepare an audit of the accounts of Forbes Australia for 1999. More significantly, Mr Edwards deposed that the lack of essential documentation provided by Deloitte Touche Tohmatsu in response to requests for information meant that he was unable to assess the quality of the 1999 audit of Forbes Australia undertaken by Deloitte Touche Tohmatsu (affidavit of Robert Edwards affirmed 21 September 2007). Annexure 1 requires that, in calculating the audited profit before tax of Forbes Australia and its subsidiaries, the following were to be excluded: extraordinary items; abnormal items; gain or loss on disposal and/or revaluation of assets; expenses relating to research and development; provisions for long service leave; additional depreciation and amortisation resulting from the value of any item. However as the respondents submitted, these were steps which were, in accordance with the formula, to be undertaken after the delivery of the audited accounts. The significance of these items is apparent from the undisputed evidence of Mr Lytras in his affidavits affirmed 11 September 2007 and 11 February 2008. In his affidavit affirmed 11 September 2007, Mr Lytras stated that Deloitte Touche Tohmatsu was unable to provide any data which explained a $1,068,399 variance in their audited figures from the management accounts for the year ended 31 December 1999. In a briefing note exhibited to his affidavit affirmed 11 February 2008 (exhibit 6), Mr Lytras stated that he believed that the variance arose due to a substantial and material write-down of trade debtors, accompanied by raising a significant bad debt provision, as at 31 December 1999. Mr Lytras also stated, inter alia , that: The material provided by Deloitte Touche Tohmatsu contained no explanation for the reasons or basis for those write-downs or the additional bad debt provision accordingly it was not possible to form an opinion as to the reasonableness of the write-down. At least one of the debts written off was more than twelve months prior to 31 December 1999. The nature of the Favco Australia amounts written off were unclear. The write-down causing the variance accords with the definition of "abnormals", was of significant size and had a significant impact upon the entity's trading performance for the subject period. In view of the lack of source financial documentation it was unclear whether the write-down was extraordinary. In summary, Mr Lytras' evidence was that the possible treatment of extraordinary and abnormal items potentially affected the 1999 calendar year profit result, as stated in the Deloitte Touche Tohmatsu report. In the absence of the source financial documentation, it is not possible to be confident that the accounts were produced in accordance with the Australian Accounting Standards or that the formula in Annexure 1 had been followed. In my view this evidence demonstrates that there are grounds for inferring either errors in the Deloitte Touche Tohmatsu report, or that the report does not comply with Annexure 1 of the share sale agreement. On this basis I do not consider that the audit statements in the report are reliable evidence of the profit position of Forbes Australia in the year ending 31 December 1999. Should the Deloitte Touche Tohmatsu report be ruled inadmissible? Finally, the respondents submit that the Deloitte Touche Tohmatsu report should be ruled inadmissible on the basis of both s 135 and s 136 of the Evidence Act 1995 (Cth). The applicants concede that, if I were to so rule, there is a cascading effect in relation to the report prepared by Ernst & Young dated 4 October 2001 (exhibited to Mr Poh's affidavit) based on the Deloitte Touche Tohmatsu Report, so that my decision in relation to the Deloitte Touche Tohmatsu report will determine the fate of the Ernst and Young document (TS p 26 ll 9-13).


case_text: this case it is clear that: Any clause which purports to specify how a particular issue will be determined so as to preclude the parties from subsequently ventilating that issue in court must be expressed in the clearest of terms ( Stylis v United Medical Protection Ltd [2007] NSWCA 109). Neither cl 3.3 (nor Annexure 1) clearly express such a limitation. While these provisions do purport to prescribe a method of calculation of profits, they do not purport to have the effect of finality as was the situation in many of the cases to which I have referred. In the absence of such language the Court will be loath to impute such an effect: Permanent Trustee Company Ltd v Gulf Import and Export Company & Emirates Trading Agency LLC [2008] VSC 162 at [38] . The preparation of an audit opinion in accordance with Australian Accounting Standards, while usually undertaken by experts, is clearly not a banker's certificate as contemplated in Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 and the overwhelming majority of cases where the Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 principles have been applied. Nor, in my view, is it akin to a banker's certificate, whereby a person nominated by the relevant bank certifies the existence of a fact appearing in bank records, namely the recorded amount of indebtedness of a customer to the bank. Further, in the sense that an audit report is produced, albeit in an expert fashion, but based upon information provided by the company itself, in my view it is not akin to a certificate given by an engineer, an architect or a builder, who certifies the existence of a state of affairs in relation to construction of a building which he or she has personal knowledge and control. Clause 3.3 can be contrasted with cll 3.4.2, 3.4.3 and 3.4.4 of the share sale agreement which do purport to prescribe certifications by third parties in a manner akin to cases where Dobbs [1935] HCA 49 ; (1935) 53 CLR 643 has been applied. These clauses refer to the retention and subsequent payment of the "Retention Sum" by the vendors' solicitors as follows: ... 3.4.2 secondly, to the Company, such sum of money which represent the difference in the Net Tangible Asset ("NTA") of the Company represented by the Vendors under the Said Accountants (as hereinafter defined ) as at 30.6.97 namely A$1,611,432.00 and the actual NTA of the Company as certified by a firm of accountants appointed by the Purchaser in verifying the NTA of the Company as represented by the Vendors to the Purchaser; 3.4.3 thirdly, to the Company such sum of money which represent the loss and damages suffered by the Company as a result of FFT's breach of FFT's warranties, representations and covenant under the FEH/FFT Agreement upon the Vendors' Solicitor's receipt of FEH's auditor's certification of such amount of loss and damages suffered by the Company; 3.4.4 fourthly, to the Company, such sum of money which represent the loss and damages suffered by FI as a result of FBT's breach of FBT's warranties, representations and covenants under the FIA/FIPL Agreement, upon the Vendors' Solicitor's receipt of FEH's auditor's certification of such amount of loss and damages suffered by the Company. Clauses 3.4.2, 3.4.3 and 3.4.4 provide for conclusive certification by nominated persons of certain facts. Such language does not appear in cl 3.3. Significantly, cl 17 of the share sale agreement provides that " any dispute in connection with the agreement should be finally settled by arbitration by an independent person appointed by the President for the time being of the Australian Society of Certified Practising Accountants (Queensland) at the request of either party". This clause did not exclude disputes in respect of cl 3.3. The existence of cl 17 and the fact that it applies to all disputes militates against an interpretation that audited financial statements were to be a final and conclusive determination of the profits of Forbes Australia within the meaning of cl 3.3. Possible failure of Deloitte Touche Tohmatsu report to comply with Annexure 1


case_title: Thurwood v First for Finance Pty Ltd [1997] FCA 559


case_title: Timms v Commonwealth Bank of Australia [2004] NSWSC 76


case_text: is settled law that a surety will be discharged from his or her obligations where there is a fundamental alteration to the guaranteed obligations to which the surety has not consented: Ankar [1987] HCA 15 ; (1987) 162 CLR 549 , Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd [2005] FCAFC 49 at [302] . As the majority said in Ankar (1987) 162 CLR 546 after discussing a number of English cases: These statements of principle ... indicate that the principle is the by-product, not so much of the general law of contract, as of the special relationship between creditor and surety arising out of the suretyship contract upon which equity fastened to protect the surety when the creditor's conduct affected the surety's liability: Holme v Brunskill . According to the English cases, the principle applies so as to discharge the surety when conduct on the part of the creditor has the effect of altering the surety's rights, unless the alteration is unsubstantial and not prejudicial to the surety. The rule does not permit the courts to inquire into the effect of the alteration. The consequence is that, to hold the surety to its bargain, the creditor must show that the nature of the alteration can be beneficial to the surety only or that by its nature it cannot in any circumstances increase the surety's risk, e.g. a reduction in the debtor's debt or in the interest payable by the surety. The mere possibility of detriment is enough to bring about the discharge of the surety. (at 559-560) As I have already observed, a surety is discharged where there is a fundamental alteration to the guaranteed obligations to which the surety has not consented unless the alteration is unsubstantial and not prejudicial to the surety: Ankar [1987] HCA 15 ; (1987) 162 CLR 549 ; Wallace-Smith [2005] FCAFC 49.


case_text: is trite law that past consideration is no consideration ( Eastwood v Kenyon [1840] EngR 80 ; (1840) 11 A & E 438 , 113 ER 482 , Roscorla v Thomas [1842] EngR 70 ; (1842) 3 QB 234 , 114 ER 496, and see the discussion in such learned texts as Chitty on Contracts (30th ed, Vol 1, Sweet & Maxwell, 2008) at 270 et seq and Carter JW, Carter on Contract (Vol 1 looseleaf, Butterworths, 2002) at [06-230] et seq). However where the giving of the consideration and the making of the promise are substantially one transaction, the exact order of events is not decisive and the consideration is treated as executed consideration rather than past consideration (Carter JW, Carter on Contract (Vol 1 looseleaf, Butterworths, 2002) at [06-250], Chitty on Contracts (30th ed, Vol 1, Sweet & Maxwell, 2008) at 271). So, for example, a contract to erect buildings on land and a contract to grant of lease of land were in fact one transaction, notwithstanding that the lease was not entered until the relevant buildings were completed: Westminster City Council v Duke of Westminster [1991] 4 All ER 136 , discussed in Chitty at 271). Further, executed consideration is good consideration in circumstances where an act is done at the request of the promisor, it is understood that payment would be made, and the payment is legally recoverable ( re Casey's Patents [1892] 1 Ch 104 , Pao On v Lau Yiu Long [1979] UKPC 2 ; [1980] AC 614 at 629).


case_text: The Magistrate has referred to what his Honour described as " a long line of authority " addressing the jurisdiction to undertake the review then being urged upon that Court and correctly concluded that " the applicant has no arguable case for establishing jurisdiction in relation to the relief sought in this matter ". Included among those authorities was the review of the authorities undertaken by Lindgren J in Raikua v Minister for Immigration & Multicultural & Indigenous Affairs [2007] FCA 370 , 158 FCR 510. 7 In Raikua , review was sought of both the failure of the Minister to exercise the power conferred by s 417 of the Migration Act 1958 (Cth) and the decision of the Manager of the Ministerial Interventions Unit (Ms Connolly) not to bring Ms Raikua's subsequent s 417 application to the attention of the Minister. Ms Connolly had made that decision because she had formed the view that the subsequent application fell within Guidelines which had been issued in respect to the exercise of the power. Lindgren J analysed the position as follows: [62] The Minister could have decided not to consider any requests for the exercise of his power under s 417(1) for a specified period of time, and that decision would not have been subject to review. In the present case, his decision not to consider exercising that power was of a more limited kind. It is plain that the Minister's intention, as expressed in his note of 14 August 2003 relating specifically to this case, and in paras 6.5.7 and 6.5.11 of Guidelines MSI 387, was to decide not to consider exercising the power in the case of any request where the criteria of 'unique or exceptional circumstances' were not met 'in the opinion of the assessing officer' (his note of 14 August 2003) or where it 'appears' or is 'found' (to or by the relevant officer) (respectively Guidelines MSI 387 paras 6.5.7 and 6.5.11) that they are not met. [63] The Minister's decision not to consider exercising his power under s 417(1) in the particular case of the applicants comprises his decision just referred to operating upon the subjective judgment formed by Ms Connolly. There is no suggestion in the evidence that the Minister intended anything other than that provided the officer in good faith formed the view that the 'unique or 'exceptional circumstances' criterion was not met, the Minister did not wish to consider exercising his s 417(1) power. The applicants do not suggest that Ms Connolly did not act in good faith. [64] Ms Connolly's decision is not something provided for by the Act, and does not itself affect legal rights; cf Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 335 338. The decision of Ms Connolly is not susceptible to judicial review. The only decision that might conceivably be susceptible to judicial review is that of the Minister. However, it was permissible for the Minister take the decision not to consider exercising his power under s 417(1) by laying down guidelines as to the classes of case that were not to be referred to him ( Bedlington v Chong (1998) 87 FCR 75...) , and because of s 417(7), the jurisdiction-denying provisions, whether found in the former s 476(2) or in the present ss 474(1), (2) and (7), 476(2) and 476A(1)(a), cannot be avoided in relation to the Minister's decision by resort to the notion of jurisdictional error. 9 There is considered to be no relevant distinction between the facts of the present case and the facts before Lindgren J. No reason has been shown to reach any different conclusion to that reached by His Honour. His Honour's conclusion, with respect, is considered to be manifestly correct. 10 Nothing is gained by a further review of either the provisions of ss 417 , 474 or 476 of the Migration Act 1958 (Cth) or the authorities.


case_outcome: followed

case_text: Lacking in substance is an attempt to draw a distinction founded upon a factual contention that in the circumstances of the present case a Departmental officer intervened to " prohibit the possible exercise of the power by the Minister ". In SZFDZ v Minister for Immigration & Multicultural Affairs [2006] FCA 974 Moore J concluded that a like application for leave should be refused and reached that conclusion " regardless of whether the request was forwarded to the Minister ". His Honour observed: [7] The Minister submitted that the application for leave to appeal should be dismissed with costs because there were no reasonable prospects of success. First, the Federal Magistrate was clearly correct in concluding that there was no jurisdiction to review the Minister's decision for the reasons accepted by the Federal Magistrate. This was so regardless of whether the request was referred to the Minister for her personal consideration, and regardless of whether the delegate's decision was affected by jurisdictional error, notwithstanding there was no evidence at all to support such an assertion. Secondly, as was clear from s 417(7) of the Act, the Minister had no duty to consider the power under s 417, and therefore relief could not have been granted in the Court below even if there had been jurisdiction to consider the application. An application for special leave to appeal from His Honour's decision has been dismissed: SZFDZ v Minister for Immigration & Multicultural Affairs [2007] HCA Trans 759.


case_title: SZFDZ v Minister for Immigration & Multicultural Affairs [2007] HCA Trans 759


case_text: The present Application , it may be noted, was heard concurrently with another Application for Leave to Appeal involving s 351 of the 1958 Act. Leave was also refused in the proceedings concerning that other Application : Trinh v Minister for Immigration & Citizenship [2008] FCA 299. 12 Leave should be refused as the Application has no prospects of success. 13 An Affidavit has been filed by the Respondent Minister estimating its costs on a party-party basis to be $1,800. In the event that the Application was refused, Counsel for the Applicant neither opposed the making of an order for costs nor an order in the sum estimated.


case_title: Australasian Meat Industry Employees' Union v Peerless Holdings [2000] FCA 1047 ; (2000) 103 FCR 577

case_text: Economic pressure that is applied illegitimately can amount to duress. Such is the position in relation to the common law torts: Universe Tankships Inc of Monrovia v International Transport Workers Federation [1981] UKHL 9 ; [1983] 1 AC 366 at 400 per Scarman LJ. However, as Finn J observed (in Australasian Meat Industry Employees' Union v Peerless Holdings Pty Ltd [2000] FCA 1047 ; (2000) 103 FCR 577 at [54] ): 'Economic duress should not be found lightly'.


case_text: The question to be resolved is: did any conduct of the respondent constitute the application of duress in connection with an AWA? As a starting point, it is worth noting the notion of freedom of contract that underpins the legal framework of social intercourse and interaction. As Kirby P (as he then was) observed in Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 133: 'It is an attribute of a free society, as we know it, that it is generally left to parties themselves to make bargains. It is therefore left to them sometimes to fail to make bargains or to fail to agree on particular terms. Well meaning, paternalistic interference by courts in the market place, unless authorised by statute or clear authority, transfers to the courts the economic decisions which our law, properly in my view, normally reserves to parties themselves'.


case_outcome: applied

case_text: Ryan J held in C anturi v Sita Coaches Pty Ltd [2002] FCA 349 ; (2002) 116 FCR 276 ('C anturi ') at [44] that the onus of proof rests with the party alleging duress, the contravention must be proved on the balance of probabilities, and the cautions in Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 are to be applied: ' [T] he onus of proving duress remains on the applicants and it is one which, having regard to the seriousness of the alleged contravention, has to be proved to the reasonable satisfaction of the Court in accordance with Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336.'


case_title: Canturi v Sita Coaches Pty Ltd [2002] FCA 349 ; (2002) 116 FCR 276

case_text: Ryan J held in C anturi v Sita Coaches Pty Ltd [2002] FCA 349 ; (2002) 116 FCR 276 ('C anturi ') at [44] that the onus of proof rests with the party alleging duress, the contravention must be proved on the balance of probabilities, and the cautions in Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 are to be applied: ' [T] he onus of proving duress remains on the applicants and it is one which, having regard to the seriousness of the alleged contravention, has to be proved to the reasonable satisfaction of the Court in accordance with Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336.' 18 In Canturi Ryan J considered the meaning of duress in relation to complaints made by two employees of a coach and bus service who claimed to have been deprived of certain more lucrative and congenial classes of work offered by their employer, and which they had long performed, as a direct result of their refusal to sign AWAs. His Honour said (at [43]): 'In my view, the consensus of the authorities to which I have referred is that duress, in the relevant sense, involves the illegitimate application of pressure to induce a party to enter into an AWA, or to discourage a party from taking that course. What is illegitimate is a question of fact to be decided in the circumstances of each case which may include whether there is an existing relationship of employer and employee or some other relationship of utmost good faith between the parties to the proposed AWA. As is made clear by the...Full Court in Schanka ...it is not only pressure which in fact overbears the will of one party so as to result in an AWA being concluded that can amount to duress.' 24 The potential for duress to contaminate the negotiation and conclusion of an AWA is heightened in circumstances of significant power disparity between the parties. As Ryan J noted in Canturi at [88]: '[t]he requisite openness and freedom is lost if one party to an existing relationship in a position of great economic superiority uses that advantage to apply illegitimate or unconscionable pressure to induce the other party to enter into an AWA'. 31 In essence, the applicant submitted that, while there is no case directly on point, Mr Bishop's case was more analogous with the transferring ENA workers in Schanka or the bus drivers in Canturi than that of the non-employees offered new employment on an AWA in Burnie Port . By analogy with the Schanka litigation, the applicant submitted that a breach of s 170WG occurs when an employer makes the signing of an AWA the condition upon which existing employment is retained and continued. While the Schanka cases concerned continuation of employment, the applicant submitted, in effect, that the present set of circumstances concern the practical continuation of promotion. Given this similarity, the applicant argued that the present case should be governed by the same principles. 32 Similarly, the applicant submitted that, by analogy with Canturi , a 15.8 percent reduction in salary would have a similar effect to the withdrawal of the more congenial types of available work. The applicant also submitted that the employment arrangement in Canturi was not one of permanency, but one in which the employees had been rostered onto the tourist route or given overtime (the preferred work) over a long period of time. Thus, relying on Canturi at [45], duress also includes disadvantaging an employee in relation to the position he or she held . 33 The applicant also submitted that an expectation about his potential transition from acting to permanent Site Supervisor had been generated by the respondent. The applicant said that, after accepting the role of acting Site Supervisor but prior to his commencement in the position, Mr Trethewey told him that, subject to a trial period in the higher position, the job would be his on a permanent basis. Indeed, the applicant acted in the position for a period of eight months. Although Mr Trethewey denied indicating that the applicant would get the position permanently, that there was a trial period, or giving him any understanding that he was 'on a promise', the applicant submitted that a reasonable expectation that he would remain in the Site Supervisor's position had been generated. Further, there had been a pattern of employees acting in positions for the respondent, and then being promoted on a permanent basis. Under those circumstances, the applicant could have reasonably expected to be confirmed in the position. 34 The respondent accepted that the courts have found an application of duress to have occurred in circumstances where the behaviour by the party applying the pressure in connection with an AWA was punitive and unconscionable, and in circumstances where employees of long standing service were required to undertake exactly the same job. However, here the circumstances were different. First, the respondent had made an offer of permanent employment to Mr Bishop in terms and on conditions it was lawfully able to make, one of those terms being the execution of an AWA. Second, the respondent provided various opportunities over several months for further discussion with Mr Bishop in relation to the proposed AWA. Third, the applicant did not consider the particular AWA in issue as he was opposed to all AWAs in principle. Fourth, at no point did the applicant proffer any reasons for his refusal to sign the AWA in question, and in particular, did not tell Mr Trethewey or Mr Batchelor about any concerns he may have had relating to particular clauses or elements of the AWA, nor did he attempt to negotiate the content of that AWA. 44 There is no doubt that, in this case, the proposed elevation to the position of Site Supervisor was a genuinely promotional position. There is no case directly in point. While there are factors that support an interpretation in favour of the applicant, there are also factors that suggest that duress was not applied. Factors that suggest duress was applied • There was, as matters were presented to the applicant, a difference in the rate of pay between the Site Supervisor and Groundsman roles that stemmed from the application and availability of the higher duties allowance. • It was common ground that the applicant wanted the Site Supervisor position at the ADC Weston site and that the respondent was aware of this desire. • The applicant said that when he told Landscape Direct representatives that he did not believe in AWAs, he was referring to concerns that he had about AWAs at a general and a specific level . • At a general level, the applicant explained in evidence his support for the trade union movement; he took the view that AWAs served to reduce that power, and ultimately, remove power from workers collectively to influence the conditions under which they are employed. While the applicant did not provide this or any other explanation for the position he took on AWAs to the respondent, no enquiry was made by Landscape Direct as to the precise nature of his objection to AWAs in principle. • When the applicant commenced employment with Landscape Direct, he was aware that his position was covered by an award, and this factor was of some importance to him. • At the specific level, the form of the proposed AWA presented to him appeared to indicate less pay than he had been receiving in an acting capacity. • The applicant said that feelings of intimidation and nervousness, and a desire not to upset his employer prevented him from giving any detailed explanation of his objection to AWAs. The applicant explained that Mr Trethewey made him nervous, and that he hesitated before telling Mr Trethewey that he did not believe in AWAs because of that nervousness and a desire to avoid confrontation. • As Burnie Port and Canturi make clear, the existence of a prior relationship may influence an assessment of whether duress has been applied in connection with an AWA. The question then becomes: given that the applicant and the respondent had a substantial prior relationship, did this relevantly affect the process of permanently filling the Site Supervisor's position at the ADC Weston site? One factor that may suggest that duress has been applied is the disappointment of a legitimate expectation if an employee does not sign an AWA. Arguably, an expectation of permanent promotion was initially generated in the applicant's mind from his acting appointment to the higher position. While the applicant understood that he was only acting in the Site Supervisor position, he had the impression that his role as Site Supervisor would be permanent arrangement, subject to a trial period. It is certainly clear that his performance in the acting position was considered to be excellent, and that what intervened to prevent the applicant's ascension to permanency was the refusal to sign an AWA. • The company had a preference to fill higher level jobs by internal promotion, where it could. There had been some practice of internal promotions. In that context, and with the vacancy in question having occurred before the announcement of the AWA policy, it is said that the applicant had a reasonable expectation that if he performed well he would get the job on a permanent basis. That expectation having already arisen, for the respondent to inject the further proposition that the applicant would only get the position if he entered an AWA might be considered unfair. • It is possible to interpret this background as evidence of a settled arrangement for the applicant to have the position permanently if he performed his work in the trial period in a satisfactory manner. Following the expiration of a reasonable trial period, the applicant's freedom of choice about entering into the AWA was not the same as that of somebody coming to employment with the respondent for the first time. 46 It is not necessarily the case that the applicant had as much right to the promotion as the bus drivers in Canturi had a right to the more lucrative and congenial work. The employees in Canturi had a longstanding expectation, whereas the applicant in the present case could hardly have had that. In short, the applicant had no legal right to the promotion and the evidence does not suggest that he was given any settled expectation of such. It is this element of expectation that both Canturi and the series of Schanka decisions seem to turn upon. 47 The applicant had been warned, and was fully aware, that if he did not sign the AWA he would remain in his substantive position as a Groundsman, that the Site Supervisor's position would not be available to him, and that the position would be advertised internally. A practical choice was open to the applicant: he could have simply continued in his permanent job, and as such, on one view, no real change, and therefore no detriment, occurred to the applicant. 48 Even though the applicant felt threatened when Mr Batchelor informed him that if he did not sign the AWA the respondent would have to advertise the position internally, that is not sufficient to amount to the respondent's applying duress. The applicant was approached several times and given the opportunity to rethink his position, and take up the offer of promotion governed by an AWA. It was common ground that the applicant was aware of this choice for some time. 62 Thus, merely to remind an employee of his or her weak economic position or of the economic consequences of not entering into an AWA is, of itself, unlikely to constitute the application of duress. Advocacy of a projected contract such as an AWA may produce a sensation of pressure in the person to whom it is directed, but duress requires something more. In my view, the added component appears when something is done, threatened or proposed which would alter the operation of market forces adversely to the person subjected to the act, threat or proposal if the offered AWA is not accepted. Thus, in the Canturi case, the consequence for the bus drivers was to make their work much less congenial. They were punished for their stance. By contrast, in Burnie Port , despite the bleak employment climate in the district, there was no diminution or threat of diminution of the position of the offerees if they did not accept the AWA offered.


case_text: The Full Court in Schanka v Employment National (Administration) Pty Ltd [2000] FCA 202 ; (2000) 97 FCR 186 ('the Schanka appeal') at [24] said: 'what appears to be the policy underlying Pt VID [of the Act is] that AWAs should be negotiated and concluded openly and freely at arm's length without outside interference and without either party being deceived or misled'. This policy included an intention to prevent employers, in an attempt to induce entry into an AWA containing particular terms, from applying pressure which, in the circumstances, is illegitimate: ibid at [23]. A similar view of the legislative policy was adopted by Ryan J in Maritime Union of Australia v Burnie Port Corporation Pty Ltd (2000) 101 IR 435 (' Burnie Port '). His Honour observed (at [66]): 'There is discernible in many provisions of the WR Act, including s 170WG, a policy that wages and working conditions are to be determined by a process of bargaining at arm's length using weapons, including protected industrial action, which the legislation impliedly regards as fair, but without resort to proscribed tactics or techniques which are to be characterised as unfair.' 23 The existence of any prior relationship between the party allegedly applying duress and the party subject to it may be significant. As Ryan J observed in Burnie Port at [71]-[72]: 'This is not a case in which those alleged to have been subjected to duress were in any relationship with the Corporation, other than that of applicants for vacant positions. If such a relationship, from pre-existing employment or otherwise, had existed, it would have been relevant to examine the circumstances of the employer's conduct to determine whether there were features which rendered illegitimate or unconscionable a threat or inducement offered to procure entry into an AWA and thereby amounted to duress . The terms of the proposed AWA in relation to those available to the rest of the employer's workforce and the relevant labour market as a whole will also have a bearing on this question of duress. In the present case, the Corporation has sought to compel prospective employees to enter into AWAs which are not markedly disadvantageous in their terms. Having regard to those considerations, what is left of the alleged duress in the present case is that entry into the AWAs was made a condition of appointment to vacancies in circumstances where the prevailing scarcity of employment made it more likely that the condition would be accepted by those interviewed. I have been unable to discern any positive conduct by the Corporation beyond its decision to offer employment under the AWAs, albeit with some knowledge of that circumstance. This, I consider, does not amount to illegitimate pressure of the kind needed to establish duress under s 170WG.' (emphasis added) 28 Having regard to the decision of Ryan J in Burnie Port the applicant conceded that, without more, offering a non-employee a position conditional upon entering into an AWA is probably not duress. However, the applicant relied on the qualifying remarks of Ryan J at [62]: '...merely informing interviewees for positions that the successful candidate must enter into an AWA as a condition of engagement is not "duress" for the purposes of the section, but presence or absence of duress will depend upon the particular circumstances: see Geraldton (at pars 396-399), and Schanka (at pars 21-22).' 29 The applicant submitted that the relevant 'particular circumstances' of this case involved the applicant's being threatened with the loss of, and ultimately denied, the opportunities associated with performance of the Site Supervisor position duties and the higher remuneration (submitted to be approximately an extra $2.18 per hour, or a 15.8 percent difference) for that position: denying the applicant access to a promotion for the sole reason that he declined to enter an AWA, in circumstances where he was acting in the position with 'excellent' performance and earning the higher wages attached to the position, amounted to duress. As a consequence of refusing to enter into an AWA, the opportunity of future promotion in other representative roles was also closed off to the applicant. The applicant felt threatened. The threat was simple: if he did not sign the AWA, he would be denied the position. As a result, the applicant's freedom of negotiation was removed. The applicant contended that the subsequent reiteration of this same proposal after the initial offer constituted multiple breaches of s 170WG(1). 30 The applicant submitted that the concept of duress addressed by the Act and s 170WG differs from that which would apply in other contexts. 31 In essence, the applicant submitted that, while there is no case directly on point, Mr Bishop's case was more analogous with the transferring ENA workers in Schanka or the bus drivers in Canturi than that of the non-employees offered new employment on an AWA in Burnie Port . By analogy with the Schanka litigation, the applicant submitted that a breach of s 170WG occurs when an employer makes the signing of an AWA the condition upon which existing employment is retained and continued. While the Schanka cases concerned continuation of employment, the applicant submitted, in effect, that the present set of circumstances concern the practical continuation of promotion. Given this similarity, the applicant argued that the present case should be governed by the same principles. 43 The policy underpinning the legislation is relevant in the present context. The object of the legislation is not to prevent any pressure being felt by the employee. The result in Burnie Port , given the extreme paucity of jobs and the dire economic environment locally, highlights this. Rather, the provisions seem to be intended to create a situation whereby entry (or the refusal of entry) into an AWA is determined by the authentic strength of the parties in the market. The legislation is not concerned with saving an individual from his or her poor economic position: it is a question of ensuring that the other party does not exacerbate that position and thereby distort labour market forces. 44 There is no doubt that, in this case, the proposed elevation to the position of Site Supervisor was a genuinely promotional position. There is no case directly in point. While there are factors that support an interpretation in favour of the applicant, there are also factors that suggest that duress was not applied. Factors that suggest duress was applied • There was, as matters were presented to the applicant, a difference in the rate of pay between the Site Supervisor and Groundsman roles that stemmed from the application and availability of the higher duties allowance. • It was common ground that the applicant wanted the Site Supervisor position at the ADC Weston site and that the respondent was aware of this desire. • The applicant said that when he told Landscape Direct representatives that he did not believe in AWAs, he was referring to concerns that he had about AWAs at a general and a specific level . • At a general level, the applicant explained in evidence his support for the trade union movement; he took the view that AWAs served to reduce that power, and ultimately, remove power from workers collectively to influence the conditions under which they are employed. While the applicant did not provide this or any other explanation for the position he took on AWAs to the respondent, no enquiry was made by Landscape Direct as to the precise nature of his objection to AWAs in principle. • When the applicant commenced employment with Landscape Direct, he was aware that his position was covered by an award, and this factor was of some importance to him. • At the specific level, the form of the proposed AWA presented to him appeared to indicate less pay than he had been receiving in an acting capacity. • The applicant said that feelings of intimidation and nervousness, and a desire not to upset his employer prevented him from giving any detailed explanation of his objection to AWAs. The applicant explained that Mr Trethewey made him nervous, and that he hesitated before telling Mr Trethewey that he did not believe in AWAs because of that nervousness and a desire to avoid confrontation. • As Burnie Port and Canturi make clear, the existence of a prior relationship may influence an assessment of whether duress has been applied in connection with an AWA. The question then becomes: given that the applicant and the respondent had a substantial prior relationship, did this relevantly affect the process of permanently filling the Site Supervisor's position at the ADC Weston site? One factor that may suggest that duress has been applied is the disappointment of a legitimate expectation if an employee does not sign an AWA. Arguably, an expectation of permanent promotion was initially generated in the applicant's mind from his acting appointment to the higher position. While the applicant understood that he was only acting in the Site Supervisor position, he had the impression that his role as Site Supervisor would be permanent arrangement, subject to a trial period. It is certainly clear that his performance in the acting position was considered to be excellent, and that what intervened to prevent the applicant's ascension to permanency was the refusal to sign an AWA. • The company had a preference to fill higher level jobs by internal promotion, where it could. There had been some practice of internal promotions. In that context, and with the vacancy in question having occurred before the announcement of the AWA policy, it is said that the applicant had a reasonable expectation that if he performed well he would get the job on a permanent basis. That expectation having already arisen, for the respondent to inject the further proposition that the applicant would only get the position if he entered an AWA might be considered unfair. • It is possible to interpret this background as evidence of a settled arrangement for the applicant to have the position permanently if he performed his work in the trial period in a satisfactory manner. Following the expiration of a reasonable trial period, the applicant's freedom of choice about entering into the AWA was not the same as that of somebody coming to employment with the respondent for the first time. 62 Thus, merely to remind an employee of his or her weak economic position or of the economic consequences of not entering into an AWA is, of itself, unlikely to constitute the application of duress. Advocacy of a projected contract such as an AWA may produce a sensation of pressure in the person to whom it is directed, but duress requires something more. In my view, the added component appears when something is done, threatened or proposed which would alter the operation of market forces adversely to the person subjected to the act, threat or proposal if the offered AWA is not accepted. Thus, in the Canturi case, the consequence for the bus drivers was to make their work much less congenial. They were punished for their stance. By contrast, in Burnie Port , despite the bleak employment climate in the district, there was no diminution or threat of diminution of the position of the offerees if they did not accept the AWA offered.


case_text: For illegitimate pressure to arise, an offer of employment contingent upon the signing of an AWA is insufficient in the absence of additional factors. As Moore J observed in the first stage of the Schanka litigation in Schanka v Employment National (Administration) Pty Ltd (1999) 166 ALR 663 (' Schanka No 1 ') at [43]: 'I doubt that the mere fact that an employer offers employment on the basis that an AWA in certain terms must be made is illegitimate pressure. It would do no more than place the potential employee in the position of either declining or accepting the employment on those terms and regulated that way, that is by an AWA. Something more is probably necessary'. 20 This view was confirmed by the Full Court in the Schanka appeal. The Court said (at [22]): 'In our view, the Explanatory Memorandum indicated only that to stipulate that entry into an AWA is essential to obtain employment with the offeror will not, of itself, or necessarily, constitute duress'. 21 As Moore J said in Schanka No 1 at [43], for the application of pressure to become illegitimate: 'it must be pressure that is likely to have the effect of denying the exercise of free will if an AWA was made. It also must be intended to have that effect'. It follows that s 170WG(1) does not confine the prohibition on duress to situations which have actually resulted in the conclusion of an AWA. The authorities make it clear that s 170WG(1), with its prohibition of duress 'in connection with' an AWA, applies to both the formulation of an AWA and to the completed AWA, regardless of whether entry into an AWA by an employee or employer eventuates. As Moore J said in the Schanka No 1 at [42]: 'In my opinion s 170WG(1), properly construed, applies to the conduct of a person applying duress irrespective of whether that conduct actually results in the making of an AWA and irrespective of whether, as a matter of fact, the party subjected to that conduct did not freely make the AWA if one was made.'


case_text: The Full Court in Schanka v Employment National (Administration) Pty Ltd [2000] FCA 202 ; (2000) 97 FCR 186 ('the Schanka appeal') at [24] said: 'what appears to be the policy underlying Pt VID [of the Act is] that AWAs should be negotiated and concluded openly and freely at arm's length without outside interference and without either party being deceived or misled'. This policy included an intention to prevent employers, in an attempt to induce entry into an AWA containing particular terms, from applying pressure which, in the circumstances, is illegitimate: ibid at [23]. A similar view of the legislative policy was adopted by Ryan J in Maritime Union of Australia v Burnie Port Corporation Pty Ltd (2000) 101 IR 435 (' Burnie Port '). His Honour observed (at [66]): 'There is discernible in many provisions of the WR Act, including s 170WG, a policy that wages and working conditions are to be determined by a process of bargaining at arm's length using weapons, including protected industrial action, which the legislation impliedly regards as fair, but without resort to proscribed tactics or techniques which are to be characterised as unfair.'


case_text: In the second stage of the Schanka litigation, following the appeal to the Full Court, Moore J further considered how the test of illegitimate pressure was to be applied to s 170WG(1) in Schanka v Employment National (Administration) Pty Ltd [2001] FCA 579 ; (2001) 112 FCR 101 (' Schanka No 2 '). His Honour concluded at [100] that: '...the question raised by s 170WG is not answered, in my opinion, by first asking whether the prospective employer (as alleged in this case) applied pressure as a discrete question and then asking whether the pressure was illegitimate. The question raised by the section is whether duress was applied which can be answered by considering whether illegitimate pressure was applied to secure, at the very least, ostensible agreement to enter an AWA and thereby to secure, again at the very least, ostensible agreement to the terms and conditions of employment embodied in the AWA. That is, to repeat what I said in the judgment of 24 September 1999, whether illegitimate pressure was applied, and conduct was engaged in, by a person (in this case the prospective employer, ENA) that might result in illusory and not real negotiation or bargaining and general agreement'.


case_title: Universe Tankships Inc of Monrovia v International Transport Workers Federation [1981] UKHL 9 ; [1983] 1 AC 366


case_outcome: referred to

case_text: It is also the position that, in seeking to apply the rules of court of the High Court to documents sought to be filed by an applicant which sought an exercise or purported to seek an exercise of the judicial power of the Court, a registrar, or deputy registrar as the case may be, is exercising the judicial power of the Court on its behalf and as such is acting judicially and not administratively: see, for example, Croker v Deputy Registrar of the High Court of Australia [2003] FCA 34 ; Gunter v Doogan [2003] FCA 667.


case_title: Gunter v Doogan [2003] FCA 667


case_outcome: considered

case_text: I have also had regard to the detailed judgment delivered in the proceedings previously brought by Mr Walsh where Buchanan J examined a statement of claim in relation to similar facts, albeit based on different causes of action, and ordered that it be struck out and the proceedings dismissed (see Walsh v University of Technology, Sydney [2007] FCA 880). In that decision, his Honour examined carefully the relevant authorities concerning the dismissal of proceedings, the adequacy of a statement of claim as a proper proceeding, and the necessary elements of a claim under the Trade Practices Act 1974 (Cth). There is no need to recite those principles here. While his Honour held in that case that the Court had jurisdiction because Mr Walsh had pleaded the Trade Practices Act 1974 (Cth), in the present case, and apparently as a consequence of his Honour's earlier decision, the draft statement of claim has been amended to exclude that claim with the result that it fails to incorporate a federal element, and as a consequence this Court has no jurisdiction. 6 Accordingly, I order that the proceedings brought by Mr Walsh be dismissed with costs. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 21 August 2007 Counsel for the Applicant: None Solicitor for the Applicant: None Counsel for the Respondent: Mr P. Brereton Solicitor for the Respondent: Minter Ellison Date of Hearing: 15 August 2007 Date of Judgment: 15 August 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1288.html


case_title: Aristoc Ltd v Rysta [1945] AC 68

case_text: concept of a "trade mark" thus has both functional and formative aspects. It must be used "to distinguish" goods, that is "to indicate the origin of the goods to which it is applied": Aristoc Ltd v Rysta [1945] AC 68 at 96 (Lord MacMillan); and it must be capable of description as a "sign", which is defined in s 6 as: sign includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.


case_text: Blount 83 FCR at 58C, Branson J took the view that the question under s 41(2) whether a mark is capable of distinguishing is "governed entirely" by subss 41(3) (6). Accordingly, her Honour considered that it is not the case, as might be expected from the terms of s 33, that the Registrar must accept an application if he or she is uncertain whether the mark is capable of distinguishing an applicant's goods. Her Honour's analysis of s 41 has been followed in a number of cases, including Ocean Spray Cranberries Inc v Registrar of Trade Marks [2000] FCA 177 ; (2000) 47 IPR 579 ( Ocean Spray ) and Austereo Pty Ltd v DMG Radio (Australia) Pty Ltd [2004] FCA 968 ; (2004) 61 IPR 257 ( Austereo ). Reconciling s 41(4) and Branson J's decision in Blount , with the presumption and French J's decision in Kenman Kandy , is not entirely free from difficulty. The matter is further complicated by the fact that the onus is reversed under s 41(5) (the Registrar must be "satisfied" that the mark does or will distinguish) and s 41(6) (the applicant must "establish" that the mark does distinguish). In its submissions, the Registrar accepts that the presumption applies in relation to s 41(3), but says that the use of the term "satisfied" in s 41(5) suggests that the presumption no longer applies once the inquiry moves to s 41(5). I agree. Sections 41(3)-(6) contemplate that there are degrees to which a mark might be inherently adapted to distinguish: see Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [82] (Lindgren J); Austereo [2004] FCA 968 ; 61 IPR 257 at [35] (Finn J). The ultimate question under s 41(3) is whether the mark is inherently adapted to a sufficient degree to conclude that it is "capable of distinguishing". In my view, the effect of the presumption of registrability on s 41(3) is that, in considering whether a mark is capable of distinguishing by reason of the "inherently adapted" criteria, it should be presumed that the mark is sufficiently adapted unless the Registrar is satisfied otherwise on the balance of probabilities. If the Registrar is otherwise satisfied, then he or she will be "unable to decide the question" (see s 41(4)) whether the mark is capable of distinguishing on the basis of any inherent adaptation alone, and must then proceed to consider s 41(5) or (6). Under those provisions, the presumption no longer has any operation, as the applicant is then required to either "satisfy" the Registrar (s 41(5)), or "establish" (s 41(6)), that the relevant criteria set out therein is met. As Branson J said in Blount 83 FCR at 56, referring to Rejfek v McElroy [1965] HCA 46 ; (1965) 112 CLR 517 at 521, a test of satisfaction requires the Registrar to "be persuaded of the matter according to the balance of probabilities". These observations have been followed in several first instance decisions, albeit with varying degrees of caution: see Bennett J in Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd [2003] FCA 901 ; (2003) 59 IPR 318 ( Torpedoes ) at [16]-[22], Finn J in Austereo [2004] FCA 968 ; 61 IPR 257 at [4] - [5] and Lander J in Kowa Company Ltd v NV Organon [2005] FCA 1282 ; (2005) 66 IPR 131 at [123] - [141] . In Austereo , Finn J considered that he ought "as a matter of comity" apply the Lomas standard as adopted by Bennett J in Torpedoes . In Kowa , Lander J expressed some doubt about the point but considered he was bound by Lomas and the Full Court decision in Woolworths [1999] FCAFC 1020 ; 93 FCR 365. Each of these chocolate boxes was purchased in May or June 2008, well after the priority date (16 April 2002). This raises a question about the acceptable use of this evidence. It is clear that the relevant date for assessing whether a trade mark is capable of distinguishing the goods for which it is used is the priority date: Austereo [2004] FCA 968 ; 61 IPR 257 at [30] . The parties both accepted that evidence of use by Guylian of the seahorse shape after the priority date is relevant for the purposes of s 41(5) of the Act, because it is open to draw rational inferences from such evidence as to whether the shape in fact had the required capacity to distinguish as at the priority date. That proposition was accepted by Finn J in Austereo , where his Honour referred to Conde Nast Publications Pty Ltd v Taylor (1998) 41 IPR 505 and Burchett J's reference to actual events as being "capable of illuminating the probabilities already inherent in [a prior] situation". Although differing as to the weight such evidence should be given, the parties also appeared to accept more generally that evidence of events taking place after the priority date, whether that be the applicant's use of the mark itself or use of other similar or otherwise relevant shapes by rival traders, may be relevant to whether the seahorse shape is capable of distinguishing Guylian's goods. This was an appropriate course to take. In my view, evidence of what other traders were selling prior to, at or subsequent to the priority date has the ability to rationally affect, albeit with varying degrees of weight, the conclusion one might reach about the extent to which a mark is inherently adapted to distinguish under s 41(3) of the Act. As Kitto J said in Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55 ; (1964) 111 CLR 511 ( Clark ) at 514: [T]he question whether a mark is adapted to distinguish [is to] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it. In assessing as at the priority date the "likelihood" that other traders will behave in a certain way in the future, evidence of how they have in fact come to behave will be relevant, although close attention should be paid to whether such rival behaviour has been "actuated only by proper motives". In the absence of evidence of improper motive, however, it seems to me logical and appropriate that post priority date events should, where appropriate, be taken into account by decision makers in exercise of the "evaluative judgment" (see French J in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [47] ) required under s 41(3). The parties were not in dispute about the applicable principles, only the application of those principles to the facts. The question whether a trade mark is inherently adapted to distinguish is directed at the nature of the trade mark itself and is not concerned with the mark's capability to distinguish arising from its actual or intended use: Burger King Corporation v Registrar of Trade Marks (The Whopper case) [1973] HCA 15 ; (1973) 128 CLR 417 ( Burger King ) at 424; Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [83] (Lindgren J). A trade mark that is inherently adapted to distinguish goods is one that can "do the job of distinguishing without first educating the public that it is a trade mark": British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 ( British Sugar ) at 306 (Jacob J); see also Austereo [2004] FCA 968 ; 61 IPR 257 at [48] (Finn J). Although in dissent on the ultimate outcome, Lindgren J observed in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [84] that: While inherent adaptation to distinguish requires attention to be focused on the mark itself, and is intended to stand in sharp contrast to a mark's capacity to distinguish arising from use, the notion of "the mark itself" does not exclude from consideration the nature of the range of goods within the class or classes in respect of which registration is sought, or the various ways in which the mark might, within the terms of the registration, be used in relation to those goods. Indeed, those matters must be taken into account. Section 41(5) permits the registration of trade marks that are not, by their inherent qualities, sufficiently adapted to distinguish, but which have as at the priority date in fact acquired a capability to distinguish the relevant goods: see Austereo [2004] FCA 968 ; 61 IPR 257 ; see also Clark 111 CLR at 515; British Sugar [1996] RPC 281 at 306; Nestle [2006] FCA 782 ; 154 FCR 165 at [29] . In other words, s 41(5) recognises that marks which are insufficiently inherently adapted to distinguish may nevertheless by their use have become distinctive in the minds of consumers so that they will be able to "do the job of distinguishing" the applicant's goods, that is, they will in fact serve as a badge or an indicator of origin. Accordingly, under s 41(5) an applicant relying on use prior to the priority date will need to point to evidence that the mark has been used as a trade mark , so as to have acquired the requisite capability to distinguish the applicant's goods: see, in the context of s 41(6), Woolworths Ltd v BP Plc (No 2) [2006] FCAFC 132 ; (2006) 154 FCR 97 at [72] and [77] ( BP (No 2) ); Ocean Spray [2000] FCA 177 ; 47 IPR 579 at [38] - [41] , in particular [40]. Guylian's submissions With reference to Austereo [2004] FCA 968 ; 61 IPR 257 at [53] , the Registrar says that one should take into account the extent to which the mark applied for has been used in conjunction with any other distinctive marks. Here, there are two: (1) the "Guylian" trade mark (see [34]), and (2) the letter "G", which Guylian uses as a logo on each of its chocolate pieces. The image of the seahorse shape on Guylian's packaging, it said, is overwhelmed by the use of the highly distinctive "Guylian" trademark, which serves as the true indicator of origin. Similarly, the "G" logo, appearing on each chocolate piece and the pictures of the chocolates on the boxes, plays a dominant role in indicating the origin of the goods, particularly when they are out of the box.


case_text: 41(2) requires the Registrar to reject an application where the purported trade mark is "not capable of distinguishing the applicant's goods ... in respect of which the trade mark is sought to be registered from the goods ... of other persons". Whether a trade mark is "capable of distinguishing" goods from those sold by other traders is to be determined by reference to subss 41(3)-(6). As Branson J said in Blount Inc v Registrar of Trade Marks [1998] FCA 440 ; (1998) 83 FCR 50 ( Blount ) at 56, subss 41(3)-(6) are "designed to control the process by which the Registrar is to reach a conclusion as to whether the trade mark for which registration is sought is capable of distinguishing the applicant's goods". That "process" involves the following steps: (a) The Registrar must first "take into account the extent to which the trade mark is inherently adapted to distinguish" the relevant goods from the goods of others: subs 41(3); (b) If that consideration leads to a conclusion that the trade mark is capable of distinguishing the goods from those of others, then, so long as the Registrar is not satisfied that any other grounds for rejecting the IRDA exist, she must accept the IRDA: reg 17A.24 (cf s 33 of the Act); (c) However, if the Registrar is "unable to decide" whether the trade mark is capable of distinguishing the goods by the "inherently adapted" consideration alone, then either subs 41(5) or subs 41(6) applies: see subs 41(4). Subsection 41(5) will apply if the Registrar finds that the trade mark "is to some extent inherently adapted to distinguish the ... goods ... from the goods ... of other persons but is unable to decide, on that basis alone, that the trade make is capable of so distinguishing the ... goods". By contrast, subs 41(6) will apply if the Registrar finds that the trade mark "is not to any extent inherently adapted to distinguish". (d) If the Registrar finds the trade mark is to some extent inherently adapted (subs 41(5)), the Registrar is then required to consider whether the trade mark "does or will distinguish the ... goods as being those of the applicant", by taking into account the combined effect of the following three matters (par 41(5)(a)): the extent to which the trade mark is inherently adapted to distinguish; the use, or intended use, of the trade mark by the applicant; and any other circumstances. (e) After taking those matters into account, the trade mark is "taken to be capable of distinguishing the applicant's goods ... from the goods ... of other persons" only if the Registrar is "satisfied" that the trade mark in fact does or will so distinguish the goods: par 41(5)(b). If the Registrar is not so satisfied, then the trade mark is taken not to be capable of distinguishing (see par 41(5)(c)), a ground for rejecting the IRDA will thereby exist and the Registrar is then required to reject the IRDA: reg 17A.24(3). (f) In the alternative scenario that the Registrar finds that the trade mark is not to any extent inherently adapted to distinguish (subs 41(6)), then the trade mark is taken not to be capable of distinguishing the goods unless the applicant "establishes" that, because of the extent to which the applicant has used the trade mark prior to the relevant filing date of the application, the trade mark does in fact distinguish the goods as being those of the applicant: pars 41(6)(a) and (b). Prior to the commencement of the Act on 1 January 1996, "shape" trade marks were not capable of registration under Australian trade mark legislation: see Trade Marks Act 1955 (Cth) (the 1955 Act). However they are now recognised in the current Act. Section 17 defines "trade mark" as: a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. The nature of an "appeal" to the Federal Court under s 35 (and in respect of a decision in an opposition proceeding under s 56) has been discussed at length in several cases: see Blount 83 FCR at 58D-59A (Branson J); Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [21] - [22] (French J); Registrar of Trade Marks v Woolworths Ltd [1999] FCAFC 1020 ; (1999) 93 FCR 365 ( Woolworths ) at [32]-[34] (French J). In hearing an appeal pursuant to s 35, the Court exercises its original jurisdiction and conducts a hearing de novo. It is to determine on the merits the same question that was before the Registrar namely, whether or not the trade mark should be accepted and in doing so, it is to apply the same legal criteria that the Registrar is required to adopt under the Act. The Registrar's decision is not to be presumed correct but the Court is entitled to have regard to the Registrar's opinion as that of a skilled and experienced person in the field of trade mark registrations: Woolworths [1999] FCAFC 1020 ; 93 FCR 365 at [33] (French J). Presumption of registrability and standard of proof In Blount 83 FCR at 58C, Branson J took the view that the question under s 41(2) whether a mark is capable of distinguishing is "governed entirely" by subss 41(3) (6). Accordingly, her Honour considered that it is not the case, as might be expected from the terms of s 33, that the Registrar must accept an application if he or she is uncertain whether the mark is capable of distinguishing an applicant's goods. Her Honour's analysis of s 41 has been followed in a number of cases, including Ocean Spray Cranberries Inc v Registrar of Trade Marks [2000] FCA 177 ; (2000) 47 IPR 579 ( Ocean Spray ) and Austereo Pty Ltd v DMG Radio (Australia) Pty Ltd [2004] FCA 968 ; (2004) 61 IPR 257 ( Austereo ). Reconciling s 41(4) and Branson J's decision in Blount , with the presumption and French J's decision in Kenman Kandy , is not entirely free from difficulty. The matter is further complicated by the fact that the onus is reversed under s 41(5) (the Registrar must be "satisfied" that the mark does or will distinguish) and s 41(6) (the applicant must "establish" that the mark does distinguish). In its submissions, the Registrar accepts that the presumption applies in relation to s 41(3), but says that the use of the term "satisfied" in s 41(5) suggests that the presumption no longer applies once the inquiry moves to s 41(5). I agree. Sections 41(3)-(6) contemplate that there are degrees to which a mark might be inherently adapted to distinguish: see Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [82] (Lindgren J); Austereo [2004] FCA 968 ; 61 IPR 257 at [35] (Finn J). The ultimate question under s 41(3) is whether the mark is inherently adapted to a sufficient degree to conclude that it is "capable of distinguishing". In my view, the effect of the presumption of registrability on s 41(3) is that, in considering whether a mark is capable of distinguishing by reason of the "inherently adapted" criteria, it should be presumed that the mark is sufficiently adapted unless the Registrar is satisfied otherwise on the balance of probabilities. If the Registrar is otherwise satisfied, then he or she will be "unable to decide the question" (see s 41(4)) whether the mark is capable of distinguishing on the basis of any inherent adaptation alone, and must then proceed to consider s 41(5) or (6). Under those provisions, the presumption no longer has any operation, as the applicant is then required to either "satisfy" the Registrar (s 41(5)), or "establish" (s 41(6)), that the relevant criteria set out therein is met. As Branson J said in Blount 83 FCR at 56, referring to Rejfek v McElroy [1965] HCA 46 ; (1965) 112 CLR 517 at 521, a test of satisfaction requires the Registrar to "be persuaded of the matter according to the balance of probabilities". In short, Guylian contends that its long standing and extensive sales and promotion of its sea shell range with the seahorse shape beginning in 1980 and continuing up to the priority date (16 April 2002) and beyond demonstrate that the shape itself has been used as a trade mark and was therefore capable of distinguishing Guylian's chocolate goods as at the priority date. By reference to its annual retail sale figures and marketing expenditure (see [39] above), Guylian emphasises that its sales, advertising and promotion of the sea shell range with the seahorse shape has been not only significant in scope but continuous over a long period of time. It refers to its promotional material, including its chocolate box packaging, and placed particular reliance on its seahorse shaped boxes, which it commenced selling in 1999, together with their related point of sale display units. It points also to its relationship with the Project Seahorse initiative and some of the advertising exposure that the initiative has provided. In the circumstances, it says, the evidence of large, sustained sales and promotion bears out the "common sense" approach suggested by Branson J in Blount 83 FCR at 61G: Nonetheless, common sense suggests that significant promotion and use of a trade mark amongst people concerned with the relevant market will have a tendency to enhance, rather than diminish, the trade mark's capacity to distinguish the goods in respect of which it is used from the goods of others. Certainly, the absence of evidence of promotion and use is likely to assume significance where distinctiveness resulting from use is in issue. As has become common in trade mark registration appeals, Guylian seeks to rely on the ACNielsen survey results as evidence of an association by consumers of the seahorse shape with Guylian, an association it says is "clear" and "strong" and demonstrats that Guylian has been, and is, using the shape as a badge of origin. Particular reference was made to the survey responses being "unprompted" (ie respondents were not, for example, provided with brand names and asked to choose between them), as well as the fact that the Registrar did not, whether by cross examination or opposing expert evidence, controvert any of Mr Callaghan's evidence, most notably his conclusions (1) that consumers' association of the shape with Guylian was of a "very high level", and (2) the strength of the association with Guylian, when compared to associations made with other brands, was statistically "very significant". In the absence of evidence from the Registrar, Guylian says, any attack on Mr Callaghan's conclusions should be given no weight. Registrar's submissions


case_text: parties were not in dispute about the applicable principles, only the application of those principles to the facts. The question whether a trade mark is inherently adapted to distinguish is directed at the nature of the trade mark itself and is not concerned with the mark's capability to distinguish arising from its actual or intended use: Burger King Corporation v Registrar of Trade Marks (The Whopper case) [1973] HCA 15 ; (1973) 128 CLR 417 ( Burger King ) at 424; Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [83] (Lindgren J). A trade mark that is inherently adapted to distinguish goods is one that can "do the job of distinguishing without first educating the public that it is a trade mark": British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 ( British Sugar ) at 306 (Jacob J); see also Austereo [2004] FCA 968 ; 61 IPR 257 at [48] (Finn J). Although in dissent on the ultimate outcome, Lindgren J observed in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [84] that: While inherent adaptation to distinguish requires attention to be focused on the mark itself, and is intended to stand in sharp contrast to a mark's capacity to distinguish arising from use, the notion of "the mark itself" does not exclude from consideration the nature of the range of goods within the class or classes in respect of which registration is sought, or the various ways in which the mark might, within the terms of the registration, be used in relation to those goods. Indeed, those matters must be taken into account. Section 41(5) permits the registration of trade marks that are not, by their inherent qualities, sufficiently adapted to distinguish, but which have as at the priority date in fact acquired a capability to distinguish the relevant goods: see Austereo [2004] FCA 968 ; 61 IPR 257 ; see also Clark 111 CLR at 515; British Sugar [1996] RPC 281 at 306; Nestle [2006] FCA 782 ; 154 FCR 165 at [29] . In other words, s 41(5) recognises that marks which are insufficiently inherently adapted to distinguish may nevertheless by their use have become distinctive in the minds of consumers so that they will be able to "do the job of distinguishing" the applicant's goods, that is, they will in fact serve as a badge or an indicator of origin. Accordingly, under s 41(5) an applicant relying on use prior to the priority date will need to point to evidence that the mark has been used as a trade mark , so as to have acquired the requisite capability to distinguish the applicant's goods: see, in the context of s 41(6), Woolworths Ltd v BP Plc (No 2) [2006] FCAFC 132 ; (2006) 154 FCR 97 at [72] and [77] ( BP (No 2) ); Ocean Spray [2000] FCA 177 ; 47 IPR 579 at [38] - [41] , in particular [40]. Guylian's submissions The Registrar contends that Guylian's evidence of use fails to demonstrate that the shape has been used as a trade mark . The Registrar referred to the observations of Jacob J in British Sugar [1996] RPC 281 at 303, where his Lordship dealt with evidence of the use of the word "Treat" by the applicant in relation to its desert sauce and syrup products: There is an unspoken and illogical assumption that "use equals distinctiveness". The illogicality can be seen from an example: no matter how much use a manufacturer made of the word "Soap" as a purported trade mark for soap the word would not be distinctive of his goods. ... I do not consider that the evidence filed to support the registration was anywhere near enough to support the conclusion that when the mark was registered, it was distinctive. Yes it had been used for about 5 years in conjunction with Silver Spoon, but it was not proved that the public regarded it as a trade mark a reliable badge of trade origin on its own. In the case of a three dimensional shape mark, the Registrar said, the necessity to show clear evidence that consumers have been educated to perceive the shape as a trade mark, an indicator of origin, is all the more important. While the shape of goods might distinguish the goods as goods , the shape will not necessarily distinguish the goods as originating from one trade source rather than another. In this case, says the Registrar, the shape has been used not as a badge of origin but rather as simply one of the chocolate shapes out of a number of sea shell/marine shapes that Guylian sells and markets as one collection. Where Guylian uses the shape on its packaging and promotional material, it is more often than not displayed alongside the other sea shell shapes. It is not given such a prominence as to educate the public that it is being used as a trade mark. Rather, it is used in a descriptive or informative manner, identifying to the public examples of the novelty shapes included in Guylian's sea shell chocolate range. The Registrar makes two main submissions about the survey evidence. First, it says the results fail to establish that consumers see the seahorse shape as a badge of origin. It referred to BP (No 2) [2006] FCAFC 132 ; 154 FCR 97 and British Sugar [1996] RPC 281 , where surveys indicating 85% and 60% recognition of the mark in suit nevertheless failed to demonstrate distinctiveness. Those cases, it said, show that there is a difference between mere association and the perception of a sign as a trade mark. Evidence of an association between a sign and a manufacturer, even a high one, will not necessarily mean that consumers rely on the sign to identify the origin of the goods. Here, the survey question tested association and no more. It did not test whether consumers have in fact come to perceive and understand the seahorse shape as a trade mark, by, for example, asking whether or not respondents believed that the shape belonged to one particular manufacturer and, if so, whether they could identify the manufacturer. Secondly, the Registrar relied on the survey results themselves, referring to the fact that (1) less than half of the respondents associated the shape with Guylian (or, putting it the other way, over half did not associate it with Guylian) and, (2) of those that did associate it with a particular manufacturer, approximately 25% associated it with someone other than Guylian. While the degree of association with an applicant's goods may in itself be relevant to the overall assessment whether the mark has acquired a capacity to distinguish, the results here, said the Registar, are manifestly insufficient so as to be satisfied that the shape alone distinguishes Guylian's goods in the minds of the chocolate buying public. Resolution


case_text: parties were not in dispute about the applicable principles, only the application of those principles to the facts. The question whether a trade mark is inherently adapted to distinguish is directed at the nature of the trade mark itself and is not concerned with the mark's capability to distinguish arising from its actual or intended use: Burger King Corporation v Registrar of Trade Marks (The Whopper case) [1973] HCA 15 ; (1973) 128 CLR 417 ( Burger King ) at 424; Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [83] (Lindgren J). A trade mark that is inherently adapted to distinguish goods is one that can "do the job of distinguishing without first educating the public that it is a trade mark": British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 ( British Sugar ) at 306 (Jacob J); see also Austereo [2004] FCA 968 ; 61 IPR 257 at [48] (Finn J). Although in dissent on the ultimate outcome, Lindgren J observed in Kenman Kandy [2002] FCAFC 273 ; 122 FCR 494 at [84] that: While inherent adaptation to distinguish requires attention to be focused on the mark itself, and is intended to stand in sharp contrast to a mark's capacity to distinguish arising from use, the notion of "the mark itself" does not exclude from consideration the nature of the range of goods within the class or classes in respect of which registration is sought, or the various ways in which the mark might, within the terms of the registration, be used in relation to those goods. Indeed, those matters must be taken into account. The application of this test, as French J observed at [49], is "largely a matter of evaluative judgment within the broad principles laid down by [the] authorities". The reference to "likelihood" by Kitto J in Clark was described by Gibbs J in Burger King 128 CLR at 425 as a reference to whether another trader "might", without improper motive, want to use the mark in relation to his or her goods: see also Time Warner Entertainment Company LP v Stepsam Investments Pty Ltd [2003] FCA 1502 ; (2003) 134 FCR 51 at [33] (Wilcox J).