case_title: Inglis v Moore (No 2) (1979) 25 ALR 453

case_text: However, the respondents submit that, as the one set of solicitors and counsel was retained for the several applicants (as had to be the case), it cannot be said that the first applicant incurred any liability for costs in relation to the proceeding. I do not draw that conclusion. I do not know what arrangements existed between the applicants. Even if there were a private arrangement by which one applicant rather than another agreed to bear costs, that would not have any significance ( Inglis v Moore (No 2) (1979) 25 ALR 453). The fact that a third party is involved in funding the costs of a party would not normally have any significance in relation to an entitlement to an order for costs by the party. The fact that one applicant is publicly funded does not alter the situation in principle. 6 Another matter raised by the respondents is the effect of s 45DC and s 84(2) of the Trade Practices Act . The effect of these provisions was raised late against the first and second respondents. It is submitted that there would need to be an adjustment of costs against the first and second respondents on that account. It was also submitted that the third, fourth and fifth respondents should have the benefit of an order for costs as they are protected by s 45DC(4) from payment of damages for breach of s 45D. I do not accept the effect of those arguments. The substance of the case had to be defended. There was only one set of costs involved in doing so. The provisions in question were only relevant to which of the respondents would be liable if the substance of the case was established, as it was. The protection afforded by s 45DC(4) is from the payment of damages only. The finding of breach remains. In my view, the appropriate result is that there be no order either way as to the costs relating to the third, fourth and fifth respondents. I can see no proper basis for relieving the first and second respondents of payment of the costs of the first applicant in relation to the s 45D claim. 7 Thus, in my opinion, the first applicant is entitled to an order against the first and second respondents for those costs attributable to the s 45D claim, which would not have been incurred in pursuing the Workplace Relations Act claim. In practical terms, these can be identified as being the costs associated with proof of damages. In my opinion, the other elements of the cause of action were inextricably entwined with the Workplace Relations Act substratum of facts. That overlap, after all, was the basis for permitting joinder in the first place. The first applicant should have the costs of the argument as to costs. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 3 June 2008 Counsel for the Applicants: Mr RM Goot AM SC, Mr MJ Heath Solicitor for the Applicants: Minter Ellison Lawyers Counsel for the Respondents: Mr JH Pearce Solicitor for the Respondents: Taylor & Scott Date of Last Submission: 20 May 2008 Date of Judgment: 3 June 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/812.html


case_outcome: cited

case_text: The first applicant seeks an order for costs of the claims for damages upon which it succeeded pursuant to s 82 of the Trade Practices Act 1974 (Cth) against the third to fifth respondents for acting in contravention of s 45D of the Trade Practices Act and the first and second respondents for being knowingly concerned in the contravention of s 45D. The respondents submit that such an order would be inconsistent with the decision of the Full Court in Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120 ; (2007) 163 FCR 62 because of the effect of s 347 of the Workplace Relations Act 1996 (Cth) as it was applicable to this case (now s 824) or at least that there is a necessity to "enter the murky waters" of an inconsistency between that decision and Bahonko v Sterjov [2008] FCAFC 30. I do not agree. Bahonko [2008] FCAFC 30 establishes that a discrete federal claim is not affected by the restrictions on the award of costs in the Workplace Relations Act . This was a discrete federal claim (cf Thompson v Big Bert Pty Ltd [2008] FCA 792). However, full operation must be given to the effect of s 347 by ensuring that costs in relation to the discrete federal claim would only be awarded where those costs do not overlap with costs incurred in relation to the Workplace Relations Act claim.


case_outcome: followed

case_text: matters need to be established affirmatively by the plaintiffs in order to make out their cause of action. In determining whether the plaintiffs have proven each element of their cause of action I have applied the civil standard of proof, namely the balance of probabilities but I have done so consistently with, and bearing in mind, the "Briginshaw" approach. This was the standard of proof applied by Mandie J in Australian Securities and Investments Commission v Plymin [2003] VSC 123 ; (2003) 46 ACSR 126 at 208, after his Honour exhaustively considered and analysed relevant and applicable statutes and authorities. I do not consider that this approach is inconsistent with the observation of Foster J in 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 376 where his Honour said, in relation to previous insolvent trading provisions in the Corporations Act : "Where the section is used to establish a head of civil liability, that liability must be established to the extent that its proof be 'Clear and cogent such as to induce, on a balance of probabilities, an actual persuasion of the mind as to the existence of (the liability)'". What is made clear in Sandell v Porter and restated in subsequent cases is that a temporary lack of liquidity does not mean that there is insolvency. As Mandie J pointed out in Australian Securities and Investments Commission v Plymin (supra) at 209, s 95A of the Act provides a "cashflow test" of insolvency which Mandie J described as follows: "The cashflow test provides that a company is insolvent when it is unable to pay its debts as they fall due. It is of no consequence, under this test, that assets exceed liability. The important point is: can the company pay its way in carrying on its business? The court, in examining whether a company is suffering cashflow insolvency, will consider whether the Company is actually paying its debtors". The authorities in relation to determining whether a person or a company is insolvent were exhaustively analysed by Mandie J in Australian Securities and Investments Commission v Plymin (supra) particularly at pars [370]-[380]. I do not propose to rehearse those authorities but would adopt, with respect, the analysis by Austin J in Re United Medical Protection Ltd (prov liq appt) [2003] NSWSC 1031 ; (2003) 47 ACSR 705 at 718 where his Honour said the following points emerge from Mandie J's review of the authorities: "whether or not a company is insolvent ... is a question of fact to be ascertained from a consideration of the company's financial position taken as a whole", and is a question to which '[c]ommercial realities will be relevant": Southern Cross Interiors Pty Ltd (in liq) v DCT [2001] NSWSC 621 ; (2001) 53 NSWLR 213 at 224; [2001] NSWSC 621 ; 188 ALR 114 at 124-5; [2001] NSWSC 621 ; 39 ACSR 305 at 316-17 per Palmer J; "it is useless to say that if its assets are realised there will be ample to pay 20 shillings in the pound: this is not the test. A company may be at the same time insolvent and wealthy": Re Tweed Garages Ltd [1962] Ch 406 at 410 per Plowman J; "it is thus of no consequence, of itself, that assets exceed liabilities, the important point being whether the company can pay its way in carrying on its business": see A R Keay, "The insolvency factor in the avoidance of antecedent transactions in corporate liquidations" (1995) 21 Monash Univ LR 305 at 307); "the question is not whether the debtor would be able, if time were given to him, to pay his debts out of his assets, but whether he is presently able to do so with moneys actually available": Bank of Australasia v Hall [1907] HCA 78 ; (1907) 4 CLR 1514 at 1528 per Griffith CJ; "It is the debtor's inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency": Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670 per Barwick CJ; "If, as a matter of substance, the company is not able to pay its debts as they become due, the circumstance that the relevant creditors may give the company some time before they actually seek to enforce their remedies, and the company may well be able to pay them out given that time, will not negative the application of the section": Standard Chartered Bank of Australia Ltd v Antico (Nos 1 & 2) [1995] NSWSC 31 ; (1995) 38 NSWLR 290 at 331 per Hodgson J; "for the purpose of assessing insolvency, a contractual debt is taken to be payable at the time stipulated for payment in the contract, unless there is evidence of an express or implied agreement between the company and creditor for extension of time, or a course of conduct sufficient to give rise to an estoppel against the creditor, or an established practice in the industry or between the company and its creditors whereby debts are taken to be payable at some other time than provided for in the contract: Southern Cross Interiors at NSWLR 225; ALR 125 ; ACSR 317." It should also be noted that at this point of time, 31 December 2005, there were outstanding debts which had not been paid: see par [70] above. As Mandie J pointed out in Australian Securities and Investments Commission v Plymin (supra) at 370 the mere fact of non-payment of debts is a relevant factor to be taken into account in determining whether a company is insolvent. As I pointed out earlier, and as the authorities confirm, the determination of solvency is not done on a balance sheet basis but rather on a cashflow basis. This gives rise to the question what other sources of cash were available to the Company as at 31 December 2005 and thereafter to enable it to pay debts then due and payable? Mr Carroll and Mr Cameron had ceased to advance money to the Company and the moneys which they had earlier advanced had been exhausted and used up. Mr Carroll submitted that the reason why the Company was not paying its debts as and when they became due and payable on and after 31 December 2005 was not an inability to raise cash with which to pay its debtors, but "an apparent unwillingness (not inability)" on his part to raise cash to pay the debts. It was submitted that Mr Carroll was unwilling to borrow money against the security of the Company's assets, was unwilling to inject fresh capital into the Company and was unwilling to sell down its timber stock on hand for anything less than its full perceived value. There is no evidence to support this submission. There were no assets of the Company which could be provided as security to support the borrowing of sufficient money to provide sufficient cash to discharge all the Company's debts then due and payable. None were identified.


case_text: matters need to be established affirmatively by the plaintiffs in order to make out their cause of action. In determining whether the plaintiffs have proven each element of their cause of action I have applied the civil standard of proof, namely the balance of probabilities but I have done so consistently with, and bearing in mind, the "Briginshaw" approach. This was the standard of proof applied by Mandie J in Australian Securities and Investments Commission v Plymin [2003] VSC 123 ; (2003) 46 ACSR 126 at 208, after his Honour exhaustively considered and analysed relevant and applicable statutes and authorities. I do not consider that this approach is inconsistent with the observation of Foster J in 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 376 where his Honour said, in relation to previous insolvent trading provisions in the Corporations Act : "Where the section is used to establish a head of civil liability, that liability must be established to the extent that its proof be 'Clear and cogent such as to induce, on a balance of probabilities, an actual persuasion of the mind as to the existence of (the liability)'". The distinction was explained succinctly in Tourprint International Pty Ltd v Bott (1999) 32 ACSR 201 at 215: "[67] "Expectation", as required by s 588H(2), means a higher degree of certainty than "mere hope or possibility" or "suspecting": 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 378; Dunn v Shapowloff [1978] 2 NSWLR 235 at 249; (1978) 3 ACLR 775. The defence requires an actual expectation that the company was and would continue to be solvent, and that the grounds for so expecting are reasonable. A director cannot rely on a complete ignorance of or neglect of duty ( Metal Manufacturers Ltd v Lewis (1986) 11 ACLR 122 at 129) and cannot hide behind ignorance of the company's affairs which is of their own making or, if not entirely of their own making, has been contributed to by their own failure to make further necessary inquiries: Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 ; Morley v Statewide Tobacco Services Ltd [1993] 1 VR 423 ; (1992) 8 ACSR 305. " This passage was approved by Palmer J in Hall v Poolman (supra) at 180.


case_text: seminal authority in relation to the meaning of "insolvency" is Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 in which the High Court considered the meaning of insolvency under s 95 of the Bankruptcy Act 1966 (Cth). Barwick CJ (with whom McTiernan and Windeyer JJ agreed) said at 670-671: "... Insolvency is expressed in s. 95 as an inability to pay debts as they fall due out of the debtor's own money. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. Whether that state of his affairs has arrived is a question for the Court and not one as to which expert evidence may be given in terms though no doubt experts may speak as to the likelihood of any of the debtor's assets or capacities yielding ready cash in sufficient time to meet the debts as they fall due." What is made clear in Sandell v Porter and restated in subsequent cases is that a temporary lack of liquidity does not mean that there is insolvency. As Mandie J pointed out in Australian Securities and Investments Commission v Plymin (supra) at 209, s 95A of the Act provides a "cashflow test" of insolvency which Mandie J described as follows: "The cashflow test provides that a company is insolvent when it is unable to pay its debts as they fall due. It is of no consequence, under this test, that assets exceed liability. The important point is: can the company pay its way in carrying on its business? The court, in examining whether a company is suffering cashflow insolvency, will consider whether the Company is actually paying its debtors". The authorities in relation to determining whether a person or a company is insolvent were exhaustively analysed by Mandie J in Australian Securities and Investments Commission v Plymin (supra) particularly at pars [370]-[380]. I do not propose to rehearse those authorities but would adopt, with respect, the analysis by Austin J in Re United Medical Protection Ltd (prov liq appt) [2003] NSWSC 1031 ; (2003) 47 ACSR 705 at 718 where his Honour said the following points emerge from Mandie J's review of the authorities: "whether or not a company is insolvent ... is a question of fact to be ascertained from a consideration of the company's financial position taken as a whole", and is a question to which '[c]ommercial realities will be relevant": Southern Cross Interiors Pty Ltd (in liq) v DCT [2001] NSWSC 621 ; (2001) 53 NSWLR 213 at 224; [2001] NSWSC 621 ; 188 ALR 114 at 124-5; [2001] NSWSC 621 ; 39 ACSR 305 at 316-17 per Palmer J; "it is useless to say that if its assets are realised there will be ample to pay 20 shillings in the pound: this is not the test. A company may be at the same time insolvent and wealthy": Re Tweed Garages Ltd [1962] Ch 406 at 410 per Plowman J; "it is thus of no consequence, of itself, that assets exceed liabilities, the important point being whether the company can pay its way in carrying on its business": see A R Keay, "The insolvency factor in the avoidance of antecedent transactions in corporate liquidations" (1995) 21 Monash Univ LR 305 at 307); "the question is not whether the debtor would be able, if time were given to him, to pay his debts out of his assets, but whether he is presently able to do so with moneys actually available": Bank of Australasia v Hall [1907] HCA 78 ; (1907) 4 CLR 1514 at 1528 per Griffith CJ; "It is the debtor's inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency": Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670 per Barwick CJ; "If, as a matter of substance, the company is not able to pay its debts as they become due, the circumstance that the relevant creditors may give the company some time before they actually seek to enforce their remedies, and the company may well be able to pay them out given that time, will not negative the application of the section": Standard Chartered Bank of Australia Ltd v Antico (Nos 1 & 2) [1995] NSWSC 31 ; (1995) 38 NSWLR 290 at 331 per Hodgson J; "for the purpose of assessing insolvency, a contractual debt is taken to be payable at the time stipulated for payment in the contract, unless there is evidence of an express or implied agreement between the company and creditor for extension of time, or a course of conduct sufficient to give rise to an estoppel against the creditor, or an established practice in the industry or between the company and its creditors whereby debts are taken to be payable at some other time than provided for in the contract: Southern Cross Interiors at NSWLR 225; ALR 125 ; ACSR 317."


case_text: authorities in relation to determining whether a person or a company is insolvent were exhaustively analysed by Mandie J in Australian Securities and Investments Commission v Plymin (supra) particularly at pars [370]-[380]. I do not propose to rehearse those authorities but would adopt, with respect, the analysis by Austin J in Re United Medical Protection Ltd (prov liq appt) [2003] NSWSC 1031 ; (2003) 47 ACSR 705 at 718 where his Honour said the following points emerge from Mandie J's review of the authorities: "whether or not a company is insolvent ... is a question of fact to be ascertained from a consideration of the company's financial position taken as a whole", and is a question to which '[c]ommercial realities will be relevant": Southern Cross Interiors Pty Ltd (in liq) v DCT [2001] NSWSC 621 ; (2001) 53 NSWLR 213 at 224; [2001] NSWSC 621 ; 188 ALR 114 at 124-5; [2001] NSWSC 621 ; 39 ACSR 305 at 316-17 per Palmer J; "it is useless to say that if its assets are realised there will be ample to pay 20 shillings in the pound: this is not the test. A company may be at the same time insolvent and wealthy": Re Tweed Garages Ltd [1962] Ch 406 at 410 per Plowman J; "it is thus of no consequence, of itself, that assets exceed liabilities, the important point being whether the company can pay its way in carrying on its business": see A R Keay, "The insolvency factor in the avoidance of antecedent transactions in corporate liquidations" (1995) 21 Monash Univ LR 305 at 307); "the question is not whether the debtor would be able, if time were given to him, to pay his debts out of his assets, but whether he is presently able to do so with moneys actually available": Bank of Australasia v Hall [1907] HCA 78 ; (1907) 4 CLR 1514 at 1528 per Griffith CJ; "It is the debtor's inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency": Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670 per Barwick CJ; "If, as a matter of substance, the company is not able to pay its debts as they become due, the circumstance that the relevant creditors may give the company some time before they actually seek to enforce their remedies, and the company may well be able to pay them out given that time, will not negative the application of the section": Standard Chartered Bank of Australia Ltd v Antico (Nos 1 & 2) [1995] NSWSC 31 ; (1995) 38 NSWLR 290 at 331 per Hodgson J; "for the purpose of assessing insolvency, a contractual debt is taken to be payable at the time stipulated for payment in the contract, unless there is evidence of an express or implied agreement between the company and creditor for extension of time, or a course of conduct sufficient to give rise to an estoppel against the creditor, or an established practice in the industry or between the company and its creditors whereby debts are taken to be payable at some other time than provided for in the contract: Southern Cross Interiors at NSWLR 225; ALR 125 ; ACSR 317."


case_text: cashflow test enables there to be taken into account in determining solvency or insolvency assets which are available to the Company which can be realised in order to answer indebtedness. However, there is a temporal limit upon this recourse. As Palmer J said in Hall v Poolman [2007] NSWSC 1330 ; (2007) 65 ACSR 123 at 163: "[187] An asset cannot be taken into account in assessing solvency at a particular time without reference to the time it would realistically take to effect realisation and produce cash. It is no indication of solvency indeed, it is the opposite to point to property as available to meet debts falling due next month when, even with the utmost expedition, that property cannot be turned into cash for 6 months. Realisable property can only be taken into account in assessing solvency "if that property is in such a position as to title and otherwise that it could be realised in time to meet the indebtedness as the claims mature": Bank of Australasia v Hall [1907] HCA 78 ; (1907) 4 CLR 1514 at [1907] HCA 78 ; 1543; 14 ALR 51 at 80; see, for example, Crema (Vic) Pty Ltd v Land Mark Property Developments (Vic) Pty Ltd (2006) 58 ACSR 631 ; [2006] VSC 338 at [141] - [144] per Dodds-Streeton J and Noxequin Pty Ltd v DCT [2007] NSWSC 87 at [14] and [15] per Barrett J. ... [265] The liquidators have focused on what they say is a critical gap in the elements of Mr Irving's defence. In order for the defence to succeed, there must be an expectation, held on reasonable grounds, that recourse to assets will enable debts to be paid, not at some indefinite time in the future, but so as to keep the companies solvent according to the definition in s 95A of the CA, namely, as the debts fall due to payment. It is not appropriate to base an expectation of solvency ( Sheahan v Hertz Australia Pty Ltd (1995) 16 ACSR 765 at 769): ... upon the prospect that [the company] might trade profitably in the future thereby restoring its financial position ... The question is whether the company at the relevant time is able to pay its debts as they become due not whether it might be able to do so in the future if given time to trade profitably ... [266] The law recognises that there is sometimes no clear dividing line between solvency and insolvency from the perspective of the directors of a trading company which is in difficulties. There is a difference between temporary illiquidity and "an endemic shortage of working capital whereby liquidity can only restored [sic] by a successful outcome of business ventures in which the existing working capital has been deployed": Hymix Concrete Pty Ltd v Garritty (1977) 13 ALR 321 at 328; 2 ACLR 559 at 566; Re Newark Pty Ltd (in liq); Taylor v Carroll [1993] 1 Qd R 409 ; (1991) 6 ACSR 255. The first is an embarrassment, the second is a disaster. It is easy enough to tell the difference in hindsight, when the company has either weathered the storm or foundered with all hands; sometimes it is not so easy when the company is still contending with the waves. Lack of liquidity is not conclusive of insolvency, neither is availability of assets conclusive of solvency: Expo International Pty Ltd (in liq) v Chant [1979] 2 NSWLR 820 at 837; 4 ACLR 679 at 718. [267] Where a company has assets which, if realised, will pay outstanding debts and will enable debts incurred during the period of realisation to be paid as they fall due, the critical question for solvency is: how soon will the proceeds of realisation be available: see the authorities cited at [187] above. Bearing in mind the commercial reality that creditors will usually prefer to wait a reasonable time to have their debts paid in full rather than insist on putting the company into insolvency if it fails to pay strictly on time, I think it can be said, as a very broad general rule, that a director would be justified in "expecting solvency" if an asset could be realised to pay accrued and future creditors in full within about 90 days." Having regard to the authorities and principles to which I have referred, I am satisfied that as at 31 December 2005 and thereafter throughout the whole of the relevant period up to 10 May 2006 the Company was insolvent. I have reached this conclusion by approaching the matter from a number of different directions. Mr Carroll acknowledged that he knew that he had a cashflow shortage after 31 December 2005. He also acknowledged that during the period from 31 December 2005 to 10 May 2006 the cashflow was tight in some months. He said that "some months the cashflow was very tight". In answer to the question whether the cashflow did not permit payment of superannuation contributions, he answered "yes". The significance of the time within which an asset can be realised in order to meet the liabilities of the Company was again emphasised in Hall v Poolman (supra) at par [187]: see par [107] above. The existence or availability of assets is not an answer to a claim of insolvency in the absence of any indication as to when, and to what extent, those assets can be pledged or realised. In order to have assets taken into account in determining the issue of solvency on a cashflow basis, it is necessary to establish that those assets are readily realisable in a short space of time: Hall v Poolman (supra) at par [267]. In the passage extracted at par [107] above, it is important to note that Palmer J referred to the realisation of an asset in "about 90 days" in order to pay not only accrued but also future creditors in full. Mr Carroll relied principally on the Company's inventory of stock to demonstrate the availability of a source from which cash could be obtained to pay existing debts. He submitted that in determining whether the Company was solvent at relevant times it was appropriate to take into account, and the Court was entitled to take into account, that at all relevant times it had timber stock on hand in excess in value of $1 million. Mr Carroll submitted that immediately prior to the commencement of the administration on 10 May 2006 the value of the stock had increased to in excess of $1.4 million. Mr Carroll relied upon Mr Bright's evidence, which he submitted was uncontested, that the timber stock could be realised by the Company as a going concern within two months. He submitted this was within the three month period referred to in Hall v Poolman (supra) at par [267] as the broadly acceptable timeframe for realisation of assets to meet debts. The value of the stock was contentious between the parties and Mr Bright's evidence must be treated with caution. Mr Bright did not undertake a stocktake valuation of the stock himself. He said that he was required "to allocate a value" to the existing stock on hand and he did so on the basis of an inspection. He did not attempt to confirm or ascertain the value of the stock otherwise than by what he called "a cursory look". I do not consider that I should take into account the total "value" of the stock as set out in either of the balance sheets or the stocktake figures referred to by Mr Carroll in determining whether on the dates of the balance sheets and stocktakes the Company was able to pay all its debts as and when they fell due. I also adopt, with respect, the observation of Palmer J in Hall v Poolman (supra) at 165: "[203] Solvency is a question of fact and in finding whether or not a company was solvent at a particular point of time in the past the court does not proceed upon possibility or speculation as to what might have happened when it has clear evidence as to what did, in fact, happen. ..." There was no other source available to the Company as at 31 December 2005 and throughout the relevant period which could have assisted the cashflow position of the Company to enable it to pay its debts as and when they fell due at that time. Plant and equipment as at 31 December 2005 had a value in the balance sheet of $1,447,972.76 and that value as at 9 May 2006 was not much different. Mr Carroll said that the value of the plant and equipment in the Company's accounts was arrived at by Mr Bright but Mr Bright did not give any evidence to that effect. Mr Carroll gave evidence that around April 2006 he had discussions regarding the obtaining of finance over equipment but these discussions did not proceed anywhere. There was no evidence before the Court that finance on the security of any of the plant and equipment of the Company was available. The next issue to determine is whether at the time the Company was insolvent there were reasonable grounds for suspecting that the Company was insolvent or would so become insolvent as the case may be: s 588G(1)(c). The test prescribed by s 588G(1)(c) is an objective test: Powell v Fryer [2001] SASC 59 ; (2001) 159 FLR 433 , Hall v Poolman (supra) at 174. The concept of "suspecting" or "suspicion" involves having a state of mind which falls between having a firm belief or a significant degree of satisfaction that insolvency exists on the one hand and wondering whether it exists on the other. The concept of having a "suspicion" requires an affirmative feeling: Hall v Poolman (supra) at 174. The distinction was explained succinctly in Tourprint International Pty Ltd v Bott (1999) 32 ACSR 201 at 215: "[67] "Expectation", as required by s 588H(2), means a higher degree of certainty than "mere hope or possibility" or "suspecting": 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 378; Dunn v Shapowloff [1978] 2 NSWLR 235 at 249; (1978) 3 ACLR 775. The defence requires an actual expectation that the company was and would continue to be solvent, and that the grounds for so expecting are reasonable. A director cannot rely on a complete ignorance of or neglect of duty ( Metal Manufacturers Ltd v Lewis (1986) 11 ACLR 122 at 129) and cannot hide behind ignorance of the company's affairs which is of their own making or, if not entirely of their own making, has been contributed to by their own failure to make further necessary inquiries: Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 ; Morley v Statewide Tobacco Services Ltd [1993] 1 VR 423 ; (1992) 8 ACSR 305. " This passage was approved by Palmer J in Hall v Poolman (supra) at 180. However, as I have noted earlier (par [107] above), whether a realisation of the stock or other assets can be taken into account has a temporal aspect or limitation to it. I adopt the observation of Palmer J in Hall v Poolman (supra) at par [187] (see par [107] above). Whether Mr Carroll had the relevant expectation depends upon the facts and circumstances known to him at the time, or throughout the period, he had that expectation. Whether Mr Carroll had reasonable grounds to expect, and did expect, that the Company was solvent throughout the relevant period and would remain solvent even if it incurred the debts during that period requires a staged inquiry. It was explained by Palmer J in Hall v Poolman (supra) at 182: "[269] There comes a point where the reasonable director must inform himself or herself as fully as possible of all relevant facts and then ask himself or herself and the other directors: "How sure are we that this asset can be turned into cash to pay all our debts, present and to be incurred, within 3 months? Is that outcome certain, probable, more likely than not, possible, possible with a bit of luck, possible with a lot of luck, remote, or is there is no real way of knowing?' [270] If the honest and reasonable answer is "certain" or "probable", the director can have a reasonable expectation of solvency. [271] If the honest and reasonable answer is anywhere from "possible" to "no way of knowing", the director can have no reasonable expectation of solvency. [272] If the honest and reasonable answer is "more likely than not", the director runs the risk that a court will hold to the contrary in an insolvent trading claim. [273] If the honest and reasonable answer is "no way of knowing yet, we need more information", the director must then ask: How long before we have the information so that we can give a final answer?" [274] If the honest and reasonable answer to that question is: "By a definite date which will not extend the realisation period (if there is to be one) beyond 3 months", the director may reasonably say: "Let's wait until then before deciding". [275] If the honest and reasonable answer is "there is no way of knowing yet when we will have the information to make a decision", the director must say: "Then there is no way that we can now have a reasonable expectation of solvency and there is no way we can reasonably justify continuing to trade without knowing when we will know whether the company is insolvent. Call the administrators". By this series of questions and answers I do not mean to lay down some pro forma test of directors' liability for insolvent trading. Each case depends on its particular facts. These questions and answers merely serve to illustrate that when a company is struggling to pay its debts, the directors must face up to the issue of insolvent trading directly and with brutal honesty: they must not shirk from asking themselves the hard questions and from acting resolutely in accordance with the honest answers to those questions." Mr Carroll advanced a number of grounds which he submitted were reasonable and which founded his expectation of solvency. Those grounds must be considered against the background that Mr Carroll knew throughout the relevant period that the Company was not in fact paying its debts as and when they fell due. I consider that whether Mr Carroll had reasonable grounds to expect that the Company was solvent during the relevant period depends substantially upon his reliance on the Company's inventory of stock and his reliance on communications with Mr Bright. Sections 1317S and 1318 are applicable to an insolvent trading claim such as has been brought in the present proceeding: Hall v Poolman (supra) at 191. Although there has been a debate as to whether s 1318 applies to an insolvent trading case in addition to s 1317S, it does not matter whether one or other or both sections apply as the Court is required to have regard to the same considerations in each section. I am satisfied that throughout the whole of the relevant period and, indeed, at all material times prior to 31 December 2005 Mr Carroll acted honestly. The plaintiffs did not submit to the contrary. In reaching this conclusion I have adopted the criteria for determining such honesty set out by Palmer J in Hall v Poolman (supra) at 193-194 in the following terms: "[325] In my view, when considering whether a person has acted honestly for the purposes of a defence under ss 1317S(2)(b)(i) or 1318 of the CA, the court should be concerned only with the question whether the person has acted honestly in the ordinary meaning of that term, that is, whether the person has acted without deceit or conscious impropriety, without intent to gain improper benefit or advantage for himself, herself or for another, and without carelessness or imprudence to such a degree as to demonstrate that no genuine attempt at all has been to carry out the duties and obligations of his or her office imposed by the Corporations Act or the general law. A failure to consider the interests of the company as a whole, or more particularly the interests of creditors, may be of such a high degree as to demonstrate failure to act honestly in this sense. However, if failure to consider the interests of the company as a whole, including the interests of its creditors, does not rise to such a high degree but is the result of error of judgment, no finding of failure to act honestly should be made, but the failure must be taken into account as one of the circumstances of the case to which the court must have regard under ss 1317S(2)(b)(ii) and 1318 of the CA." Having regard to all the circumstances of the case ought Mr Carroll fairly to be excused? Mr Carroll submitted that he should be excused in circumstances where he continued to take advice from Mr Bright and acted upon it. It was submitted that his approach to the Company's problems up to 10 May 2006 was that to be expected of a reasonable, commercially experienced director dealing with ongoing issues in a company which was suffering cashflow problems by reason of one of the Company's two businesses experiencing "cash burn". It was submitted that he sought and obtained advice from Mr Bright, an expert accountant experienced in the timber industry and that he did not ignore or downplay that advice, but acted upon it appropriately. The difficulty with this submission is that from September 2004 until 10 May 2006 the Company continued to have problems with the drying of the timber and the use of the kilns which it could not resolve. This had the consequence of creating what Mr Carroll called the "cash burn", which continued until 10 May 2006. It is not in doubt that throughout the relevant period Mr Carroll was faced with difficult decisions. To adopt and adapt the words of Hamlet "to trade or not to trade, that is the question". As I noted in par [148] above, Mr Carroll regularly during the relevant period asked the question whether the Company was insolvent or close to the line of being insolvent and on a number of occasions Mr Bright answered the question in the negative. That dilemma facing Mr Carroll brings to mind the observation of Palmer J in Hall v Poolman (supra) at 194: "[329] As I have discussed above at [266] and following, it is sometimes a difficult decision for a director of a trading corporation suffering from liquidity problems to decide whether, and when, to abandon hope of a change in the company's fortunes and to summon the administrators. There are often pressing interests involved in the decision: the jobs of employees will be lost, the investment of shareholders will evaporate, and a promising venture in which a great deal of personal effort may have been expended will end in failure. On the other hand, the livelihood of creditors whose businesses depend on reasonably prompt payment may also be ruined if a company continues to trade while insolvent. When confronted with the necessity of making a decision involving these factors, a director cannot afford to procrastinate or to avoid confronting realities. He or she must ask and honestly answer the hard questions: see [269] and following above". When finally confronted with the ultimatum from the Australian Taxation Office on 3 May 2006 Mr Carroll did not procrastinate. On the next day he spoke to Mr Bright who put him in contact with Mr McLellan and Mr Carroll met Mr McLellan three days later. The plaintiffs submitted that the fact that Mr Carroll persisted with the kiln drying business which involved cash burn and thereby permitted the Company to incur debts knowing that it could not meet those debts out of cashflow ought to preclude relief under ss 1317S or 1318 as he had been aware, for no less than eighteen months previously, of compelling factors pointing to the Company's insolvency. I have taken that submission into account and weighed it in the balance in having regard to all the circumstances of the case. However it is an exaggeration to say that there were compelling factors pointing to the Company's insolvency for no less than eighteen months prior to 10 May 2006. The potential insolvency facing the Company in June 2005 had been arrested in July 2005 by the capital contributions made by Mr Carroll and Mr Cameron. The spectre of insolvency did not re-emerge until the end of 2005, less than five months before 10 May 2006. There is no doubt that Mr Carroll permitted the Company to incur debts in circumstances giving rise to a contravention of s 588G of the Act. However, he did so against the background of all the circumstances to which I have referred in pars [193] [200] above. Mr Carroll did not profit personally from permitting the Company to trade in this way throughout the relevant period. He was not disregarding advice and, indeed, obtained advice from Mr Bright and others throughout the relevant period.


case_title: Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 188 ALR 114

case_text: Carroll relied upon a number of matters in support of his submission that the Company was not insolvent as at 31 December 2005 or thereafter during the relevant period. However, when considering these matters it is important to bear in mind, as referred to earlier in par [106], that the issue of solvency is a question of fact to be determined from an analysis of the Company's financial position taken as a whole, having regard to "commercial realities". A particular "commercial reality" is the extent to which a company's assets can be realised or made available as a security to raise money and the time it would take to do so. In this respect the observation of Palmer J in Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation [2001] NSWSC 621 ; (2001) 188 ALR 114 at par [54] is relevant: "In considering the company's financial position as a whole, the Court must have regard to commercial realities. Commercial realities will be relevant in considering what resources are available to the company to meet its liabilities as they fall due, whether resources other than cash are realisable by sale or borrowing upon security, and when such realisations are achievable."


case_text: adopt, with respect, the observation of Palmer J in Lewis v Doran [2004] NSWSC 608 ; (2004) 50 ACSR 175 at 198-199: "[108] Where the question is retrospective insolvency, the court has the inestimable benefit of the wisdom of hindsight. One can see the whole picture, both before, as at and after the alleged date of insolvency. The court will be able to see whether as at the alleged date of insolvency the company was, or was not actually paying all of its debts as they fell due and whether it did, or did not, actually pay all those debts which, although not due as at the alleged date of insolvency, nevertheless became due at a time which, as a matter of commercial reality and common sense, had to be considered as at the date of insolvency. By reference to what actually happened, rather than to conflicting experts' opinions as to the implications of balance sheets, the court's task in assessing insolvency as at the alleged date should not be very difficult."


case_text: next issue to determine is whether at the time the Company was insolvent there were reasonable grounds for suspecting that the Company was insolvent or would so become insolvent as the case may be: s 588G(1)(c). The test prescribed by s 588G(1)(c) is an objective test: Powell v Fryer [2001] SASC 59 ; (2001) 159 FLR 433 , Hall v Poolman (supra) at 174. The concept of "suspecting" or "suspicion" involves having a state of mind which falls between having a firm belief or a significant degree of satisfaction that insolvency exists on the one hand and wondering whether it exists on the other. The concept of having a "suspicion" requires an affirmative feeling: Hall v Poolman (supra) at 174.


case_text: distinction was explained succinctly in Tourprint International Pty Ltd v Bott (1999) 32 ACSR 201 at 215: "[67] "Expectation", as required by s 588H(2), means a higher degree of certainty than "mere hope or possibility" or "suspecting": 3M Australia Pty Ltd v Kemish (1986) 10 ACLR 371 at 378; Dunn v Shapowloff [1978] 2 NSWLR 235 at 249; (1978) 3 ACLR 775. The defence requires an actual expectation that the company was and would continue to be solvent, and that the grounds for so expecting are reasonable. A director cannot rely on a complete ignorance of or neglect of duty ( Metal Manufacturers Ltd v Lewis (1986) 11 ACLR 122 at 129) and cannot hide behind ignorance of the company's affairs which is of their own making or, if not entirely of their own making, has been contributed to by their own failure to make further necessary inquiries: Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 ; Morley v Statewide Tobacco Services Ltd [1993] 1 VR 423 ; (1992) 8 ACSR 305. " This passage was approved by Palmer J in Hall v Poolman (supra) at 180.


case_title: Manpac Industries Pty Ltd v Ceccattini [2002] NSWSC 330

case_text: analysis of the defence available under s 588H(3)(a), which is helpful in the present context, was undertaken by Young CJ in Manpac Industries Pty Ltd v Ceccattini (2002) 20 ACLC 1304 , [2002] NSWSC 330. Young CJ said at pars [52]-[54]: "[52] It is extremely difficult for a person to say that a person is responsible for providing adequate information about solvency and was fulfilling that responsibility when the person allegedly relying on the other person was the source of the supply of information and that supply of information was not completely full. [53] The subsection arises from the recommendations made in para 211 of the Law Reform Commission's Discussion Paper No 32 as fleshed out in [303] and following of the Harmer Report. In [307] it was said: "The Commission considers that the defence is clearly necessary in the case of larger companies in which it cannot be expected that directors will have control over every action taken in the conduct of the company's business. Additionally, a defence of this nature may encourage a proper system of financial management." [54] Thus the prime thrust of the defence is to cover the situation where there is a large corporation with bulky accounts and where there is a system in place of competent accountants, credit controllers and financial management and the board has a regime whereby those people, provided they are competent and responsible, will report to the board any problems that the board may pick up. The prime thrust of the exception is not to deal with the situation where a small company with directors who have little idea of accountancy, bring in a trouble shooter, supply the trouble shooter with information which may not be complete, receive reports back from the trouble shooter and then intend to rely on a report which is incomplete because they have provided incomplete information." There is no doubt that Mr Bright was engaged or retained by the Company in March 2005 for the purpose of giving the Company business advice regarding the Company's cashflows, costs and expenses, and an analysis of the business model profits and losses. Mr Bright prepared financial statements which included requiring him to allocate a value to the timber stock inventory. Further, in the middle of 2005 he prepared financial analyses relating to the green timber milling business which he considered to be still profitable. However, I do not consider that Mr Bright was given the role of "the other person" for the purposes of s 588H(3)(a)(i) of the Act. That is to say, I do not consider that Mr Bright was required to fulfil the role or did fulfil the role of a competent and reliable person who was responsible for providing to Mr Carroll adequate information about whether the Company was solvent. Certainly Mr Bright was a competent and reliable person but I do not consider that it can be said that he was "responsible" for providing to Mr Carroll adequate information about whether the Company was solvent. True it is that on occasions he gave Mr Carroll advice about whether the Company was solvent. He gave such advice in or about June 2005 and later during the relevant period, although his evidence as to what he told Mr Carroll in relation to the solvency of the Company during the relevant period was limited. His evidence was: "I was aware by March 2006, as Tony had told me, that TSM's cashflow situation was poor, and that the funds provided by Tom Cameron and Tony to TSM in July 2005 had been exhausted, in February 2006. At this time, Tony was looking for potential investors, which he discussed with me. At no time during January to April 2006 did I formally tell Tony that I believed TSM was insolvent. Based on the value of its stock at hand, which I considered was saleable and able to be realised within a short period of time (i.e. a couple of months) I did not consider that TSM was insolvent at that time, and I told Tony this on a number of occasions. ..."


case_text: The jurisdiction to make such an order is undoubted. The Court will protect witnesses who have given evidence from subsequent victimisation or harassment: see Attorney-General v Butterworth [1963] 1 QB 696. This position has been followed in many jurisdictions including Victoria: see R v Wright (No1) [1968] VR 164.


case_text: On 9 May 2007 Ryan J made orders granting injunctions based on findings of contraventions of the Trade Practices Act 1974 (Cth) against the respondents: Australian Competition and Consumer Commission v Nuera Health Pty Ltd (In Liquidation) [2007] FCA 695. The conduct of the respondents was of the most appalling nature. It involved exploiting the families of persons suffering from terminal cancer and defrauding them of substantial amounts of money. 2 Since Ryan J's order the respondents have persistently harassed the witnesses by sending them strange documents couched in pseudo-legal medieval language, including demands for some $294 million. Understandably, this has caused great distress to the witnesses and has revived their tragic memories. 3 The Australian Competition and Consumer Commission now seeks injunctions against those of the respondents who are individuals, that is, Paul John Rana, Christopher James Rana and Michael Lee Rana, to restrain them from communicating in any form whatsoever with the witnesses in relation to the subject matter of the proceeding or any other legal proceeding, from sending them documents of the kind mentioned and from demanding any payment of money from the witnesses.


case_title: R v Wright (No1) [1968] VR 164


case_title: Carringbush Corporation Pty Ltd v ASIC (2008) 26 ACLC 506

case_text: question arises under s 468(1) of the Corporations Act 2001 (Cth): Carringbush Corporation Pty Ltd v ASIC [2008] FCA 474; (2008) 26 ACLC 506. Put in simple terms, the following distributions occurred in the 2001 income year. CEPL as trustee of the CU Trust distributed the entire income of the trust to or for the benefit of a discretionary unit holder, DCE Holdings Pty Ltd ("Clark Holdings") as trustee of the David Clark Family Trust (the "Clark Family Trust"). Clark Holdings distributed the income so received to David Clark Enterprises Pty Ltd ("Clark Enterprises") as trustee of the David Clark Enterprises Trust (the "Enterprises Trust") and Clark Enterprises distributed the income of the trust to David Clark and Helen Clark in equal shares as beneficiaries of that trust. By s 97 of the 1936 Act, the assessable income of David Clark and Helen Clark includes a 50% share of the net income of the Enterprises Trust and in the event that the taxpayers are not able to establish that the CU Trust estate suffered previously unapplied net capital losses extinguishing the net capital gain arising out of the disposal of the Gladstone properties in the 2001 income year, the net income of the Enterprises Trust will also include a significant part of the net capital gain (discounted by 50%) made by the CU Trust in the 2001 income year. Accordingly, the first question to be determined in these proceedings is whether the applicants have discharged the onus of establishing that in the 1988 income year, the trustee of the CU Trust acquired the Rothwells shares.


case_text: Federal Commissioner of Taxation v Commercial Nominees of Australia Ltd (1999) 43 ATR 42; (1999) 167 ALR 147, Lee, Emmett and Gyles JJ at [51] observed that: [A] trust estate ... will be that property the ownership of which is divided between trustee and beneficiary. The trustee will always be ascertainable. However, the class of beneficiaries, while identifiable, will not necessarily be closed and all beneficiaries may, of course, not be ascertainable. The Full Court recognised at [49] that since lack of continuity in the identity of the trustee from income year to income year would not prevent losses (in this case capital losses) in earlier years being available as deductions from assessable income in a later year, "criteria must be established for determining when there is sufficient identity of the trusts involved to warrant such deductions being allowable". In framing the criteria, the Full Court said this: [52] The trust obligations of the trustee and the corresponding rights of the beneficiaries may vary from time to time, in accordance with law. Similarly, the property that is the subject of such obligations and rights will not be static. Parts of the property might be distributed so as to cease to be subject to trust obligations. Further property may accrue as income or by further settlement so as to become subject to obligations where previously that additional property was not. [53] However, at any given time it will be possible to identify the property that is the subject of the trust obligations and in respect of which the rights of beneficiaries exist. It is the income which accrues from that property, less outgoings from that property, that go to make up the taxable income of the trust estate or fund. ... [54] The [ITAA 1936] then imposes a liability either on the beneficiaries or, in some cases, on the trustee in a representative capacity. "Superannuation fund", as that term is defined in the SIS Act and the [ITAA 1936], contemplates a continuing regime regulating the manner in which a fund may be added to and the manner in which payments may be made from it. So long as one can identify a continuity of that regime, that will be sufficient. [55] Thus, in order to determine whether losses of particular trust property are allowable as a deduction from income accruing to that trust property in a subsequent income year, it will be necessary to establish some degree of continuity of the trust property or corpus that earns the income from the income year of loss to the year of income. It will also be necessary to establish continuity of the regime of trust obligations affecting the property in the sense that, while amendment of those obligations might occur, any amendment must be in accordance with the terms of the original trust. [56] So long as any amendment of the trust obligations relating to such trust property is made in accordance with any power conferred by the instrument creating the obligations, and continuity of the property that is the subject of trust obligation is established, there will be identity of the "taxpayer" for the purposes of s 278 and ss 79E(3) and 80(2), notwithstanding any amendment of the trust obligation and any change in the property itself. The Full Court at [55] observed that in order to determine whether earlier losses of trust property are allowable as deductions from income (or capital gains) accruing to trust property in a subsequent income year, it will be necessary to establish some degree of continuity of the trust property or corpus that earns the income or capital gain from the income year of loss to the year of income. Secondly, there must be continuity of the regime of trust obligations affecting the trust property and while those obligations might change, continuity remains if the amendments are made in accordance with the terms of the trust instrument, in the proper exercise of the powers so conferred. It follows that if some degree of continuity of trust property is made out and continuity in the regime of trust obligations is established, there will be sufficient identity of taxpayer in the sense that the hypothetical representative trustee taxpayer on behalf of the trust estate that incurred the loss is the hypothetical taxpayer of the trust estate that made the net capital gain.


case_text: the High Court in Federal Commissioner of Taxation v Commercial Nominees of Australia Ltd (2001) 75 ALJR 1172 considered the re-settlement analysis undertaken by the Full Court, Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ, observed at [36] that, as the Full Court and the Administrative Appeals Tribunal had held, the question of the availability of the deduction was one of continuity to be considered, in that case, in the context of a superannuation fund which, of its nature, may be expected to undergo change. The Court at [36] said this: The question is whether the eligible entity which derived the taxable income in the year ended 30 June 1995 is a different entity from the eligible entity that incurred losses in the earlier years. If, as the appellant contends, it is a different entity, there is a question as to what happened to the original entity. The three main indicia of continuity for the purposes of Part IX are the constitution of the trusts under which the fund (if a trust fund) operated, the trust property , and membership . Changes in one or more of those matters must be such as to terminate the existence of the eligible entity, or to produce the result that it does not derive the income in question, to destroy the necessary continuity. The trusts under which the fund operated in 1994-95 were constituted by the original trust deed in 1988 as varied by the exercise, in 1993, of a power of amendment. The property the subject of the trusts did not alter at the time the amendments took effect. Persons who were members of the fund before the amendments remained members of the fund after the amendments. The fund, both before and after the amendments, was administered as a single fund, and treated in that way by the regulatory authority. [emphasis added] Although the Court framed those three indicia of continuity "for the purposes of Part IX " of the 1936 Act in the context of a superannuation trust, the notion of continuity in the trust estate that derived the income or made the capital gain and that incurred the loss on revenue account or suffered the capital loss also determines the availability of the allowable deduction or the application of previously unapplied capital losses. There is no reason to believe that these three indicia of continuity do not equally apply to trust estates for the purposes of Division 6 of Part III of the 1936 Act and the 1997 Act. The Commissioner contends that the arrangements of June 1993 brought about a break in continuity firstly in the trust fund; secondly, in the trustee's interest in the trust estate; and thirdly, in the interests of the beneficiaries in the trust fund. Continuity in the Trust Fund Mr Denoon and Mr Clark intended however that the CU Trust continue in operation. It was necessary for Mr Clark's purposes that it do so. Both men proceeded on the footing that Mr Denoon "hoped" to be able to make a matching contribution to the CU Trust by 30 June 1995. In the period between 24 June 1993 and 30 June 1995, they investigated potential property development projects to be undertaken by the CU Trust for the long term, during the period of Mr Denoon's consultancy. The question that arises is whether the suspension arrangements and the effect upon the administration of the trust by CEPL from 24 June 1993 brought about changes in the interests of the unitholders, that is, the rights attaching to membership of the trust, so as to destroy the necessary continuity in the trust fund that made the capital gain in the 2001 income year and that which suffered the capital loss in the 1993 income year. Did the changes terminate the existence of the CU Trust or produce the result that it did not make the capital gain in question? Federal Commissioner of Taxation v Commercial Nominees of Australia Ltd (2001) 75 ALJR 1172 at [36]. The points along the continuum were these. The Rothwells shares were acquired in the 1988 financial year. They rapidly lost value. They were sold by the trustee on 26 May 1993 giving rise to a CGT disposal and a capital loss. On 24 June 1993 the suspension arrangements were put in place pending the realisation of either an expectation or a hope of Mr Denoon's matching contribution. By 27 July 1994, Gemridge had made it plain to the trustee that it could not make a matching contribution and on 27 June 1995 the trustee agreed to the transfer of the Denoon units to Clark Holdings. The transfers were signed on 26 April 1996. In 1997, the Gladstone properties were acquired and in the 2001 income year the CU Trust realised a capital gain upon the disposal of those properties. All of the units in the CU Trust on 26 May 1993 were held by the Denoon interests. By the arrangements of 24 June 1993, 50% of those units were transferred to the Clark interests. The Denoon interests retained 50% of the issued units although the joint venture arrangements placed the rights attaching to those units, in practical terms, in suspension.


case_text: right of indemnity Carringbush enjoyed out of trust assets in respect of liabilities incurred in performing the trust confers upon the trustee a "beneficial interest" in the trust assets: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367 per Stephen, Mason, Aickin and Wilson JJ. However, the right of indemnity Carringbush enjoyed was in any meaningful sense, illusory as the trust fund consisted of significant accumulated losses ultimately rendering the trust in terms of any activities, dormant. Mr Clark was not prepared to make a contribution to the trust fund that would be immediately susceptible to the former trustee's indemnity claim and thus there would not have been any future contribution in respect of which the liability of the original trust estate to the former trustee became altered. Whilst the deed purported to extinguish the beneficial interest of the trustee by discharging or extinguishing the underlying right of indemnity and thus alter an aspect of the beneficial interests in the trust assets, the measure of that right was, in all practical senses, valueless having regard to the state of the trust fund. The Commissioner contends that the right of indemnity as it subsisted in the trustee prior to extinguishment meant that the trust property was valueless to the unitholders and the extinguishment changed that "state of affairs" by enhancing the value of the assets from the perspective of the unitholders and freeing the trust estate (including future contributions) from any claim. Thus, the trust property was fundamentally altered. The trustee of the trust may be replaced. The second break in continuity is said to arise out of the discharge of the trustee's right of indemnity on the footing that the discharge altered the trustee's interest in the trust estate. The trustee's right of indemnity constitutes a beneficial interest in the trust assets: Octavo Investments Pty Ltd v Knight (supra at [107] of these reasons). The right of indemnity continues notwithstanding the trustee's retirement from office and creditors of the trustee are entitled to be subrogated to the trustee's right of indemnity. The new trustee takes the trust property subject to the right of indemnity of its predecessor in office. The right of indemnity is consistent with the right of reimbursement conferred by s 59(4) of the Trustees Act 1925 (NSW) which applied to the CU Trust. The Commissioner says that the right of indemnity conferred as a matter of law is not capable of being excluded from the trust instrument: Kemtron Industries Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] 1 QdR 576 at p 585. The Commissioner contends that the waiver of the right of indemnity was not brought about by any authorised amendment of the Trust Deed. Two things are said to flow from this. Firstly, the waiver of the former trustee's right of indemnity brought about a material change in the rights and obligations attaching to the trust property which was inconsistent with the continuity of the trust estate for tax purposes. Secondly, the release of the former trustee's right of indemnity is properly understood as an agreement which gave rise to a new trust in the same terms as the CU Trust absent the term as to indemnity and thus a new trust was brought into existence for the purposes of the general law.


case_text: second break in continuity is said to arise out of the discharge of the trustee's right of indemnity on the footing that the discharge altered the trustee's interest in the trust estate. The trustee's right of indemnity constitutes a beneficial interest in the trust assets: Octavo Investments Pty Ltd v Knight (supra at [107] of these reasons). The right of indemnity continues notwithstanding the trustee's retirement from office and creditors of the trustee are entitled to be subrogated to the trustee's right of indemnity. The new trustee takes the trust property subject to the right of indemnity of its predecessor in office. The right of indemnity is consistent with the right of reimbursement conferred by s 59(4) of the Trustees Act 1925 (NSW) which applied to the CU Trust. The Commissioner says that the right of indemnity conferred as a matter of law is not capable of being excluded from the trust instrument: Kemtron Industries Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] 1 QdR 576 at p 585. The Commissioner contends that the waiver of the right of indemnity was not brought about by any authorised amendment of the Trust Deed. Two things are said to flow from this. Firstly, the waiver of the former trustee's right of indemnity brought about a material change in the rights and obligations attaching to the trust property which was inconsistent with the continuity of the trust estate for tax purposes. Secondly, the release of the former trustee's right of indemnity is properly understood as an agreement which gave rise to a new trust in the same terms as the CU Trust absent the term as to indemnity and thus a new trust was brought into existence for the purposes of the general law.


case_text: In Dean-Willcocks v ATTT Investments Pty Ltd (1999) 17 ACLC 1310, an application was made under s 477(2A) for the Court's approval of an arrangement by which a secured creditor of the company would inject funds in exchange for a particular asset. There was no dispute about the monies owing. Young J held that the Court had no jurisdiction to grant approval under s 477(2A) because what was proposed was not a compromise of a debt, and that the proper course, if the liquidator wanted to pursue the matter, would be for him to seek directions under s 479(3). In Tietyens 31 ACSR 1, Weinberg J held that he lacked jurisdiction under s 477(2A) but gave directions under s 479(3).


case_text: Cases in which a liquidator has applied under both s 477(2A) and s 479(3) include HIH [2004] NSWSC 5 , QBE 56 ACSR 687, Re Gate Gourmet Australia Pty Ltd (in liq) (2005) 23 ACLC 834; Foyster v Foyster Holdings Pty Ltd (in liq) [2003] NSWSC 925 , and Re United Medical Protection; Application of Lombe Ltd (as prov liq) (2003) 46 ACSR 98.


case_text: As Barrett J observed in HIH Insurance Ltd and Related Matters [2004] NSWSC 5 ( HIH ) at [12], it appears that in some cases a strict approach has not been taken to the jurisdictional question posed by the expression "a debt to the company". In some cases, Judges have granted approval under s 477(2A) without discussion of the jurisdictional question. It can be just as important to decide that a compromised claim is not one of a debt to the company as to decide that it is. In Spalla v St George Motor Finance Ltd (No 7) [2006] FCA 1177 , for example, a challenge was made to a compromise entered into by a liquidator on the ground that approval under s 477(2A) had not been obtained, and Kenny J had no hesitation in holding that the submission failed because it was "based on a misunderstanding as to what constitutes a 'debt' under the relevant section" (at [143]). 26 In HIH [2004] NSWSC 5 at [12] and QBE Workers Compensation (NSW) Ltd v GJ Formwork Pty Ltd (2006) 56 ACSR 687 ( QBE ) at [4]-[5], Barrett J said that where there is room for argument about whether a claim is one of a debt to the company, the court should err on the side of treating the claim as a debt rather than decline to grant approval under s 477(2A). His Honour pointed out that the opening words of s 477(1) have the effect of making the power to compromise contained in para (d) of that subsection subject to subss (2A) and (2B). It follows that if it transpired that a claim was, indeed, one of "a debt to the company" within subs (2A), a compromise of it without approval of the Court, of the committee of inspection or of a resolution of the creditors, would lie outside the power of the liquidator. 28 Be all this as it may, as Barrett J acknowledged in HIH [2004] NSWSC 5 , if the claim is "unquestionably" not a debt, the correct approach is to dismiss any application under s 477(2A) as unnecessary (at [12]). 36 Cases in which a liquidator has applied under both s 477(2A) and s 479(3) include HIH [2004] NSWSC 5 , QBE 56 ACSR 687, Re Gate Gourmet Australia Pty Ltd (in liq) (2005) 23 ACLC 834; Foyster v Foyster Holdings Pty Ltd (in liq) [2003] NSWSC 925 , and Re United Medical Protection; Application of Lombe Ltd (as prov liq) (2003) 46 ACSR 98.


case_text: Applications by liquidators for confidentiality orders in respect of compromises for which they have sought Court approval have been considered in McGrath re HIH Insurance Ltd [2005] NSWSC 731 and Re JN Taylor Holdings Ltd (in liq) [2007] SASC 193. The administration of justice, including the just and efficient winding up of a company, requires that proper compromises be facilitated rather than obstructed. Apart from the requirement of leave, Mr Hamilton would have been entitled to bargain for and reach agreement upon a confidentiality régime in respect of the compromise that he has reached with Mr Parsons and CBI. He and they would have been entitled, in particular, to preserve their negotiations and agreement against disclosure to Mr Yii.


case_text: The meaning of the word "debt" can be affected by its context. There is a line of authority to the effect that the expression "a debt to the company" in s 477(2A) bears its familiar meaning of a sum of money that is either immediately payable, or that, by reason of an existing obligation, will become payable in the future ( debitum in praesenti , solvendum in futuro ): Luxtrend [1997] 2 Qd R 86 ; Re Tietyens Investments Pty Ltd (in liq) (Receiver and Manager appointed) (1999) 31 ACSR 1 ( Tietyens ) at [92] [94]; and see Austin R P and Ramsay I M, Ford's Principles of Corporations Law (13 th ed, LexisNexis Butterworths, 2007) at [28-260] p1412. Accordingly, claims by liquidators to recover amounts paid away by the company under voidable transactions have been held to lie outside the predecessor provision of s 477(2A), namely, s 477(2A) of the Corporations Law : Luxtrend [1997] 2 Qd R 86 ; Nambucca Investments Pty Ltd v Snoco Ltd [1999] NSWSC 211 at [2] . In Tietyens 31 ACSR 1 a claim of equitable damages based on accessorial liability for breaches of trust, the primary cause of action being a claim based on Barnes v Addy (1874) 9 Ch App 244, was similarly held not to be a claim of a debt to the company.


case_text: In HIH [2004] NSWSC 5 at [12] and QBE Workers Compensation (NSW) Ltd v GJ Formwork Pty Ltd (2006) 56 ACSR 687 ( QBE ) at [4]-[5], Barrett J said that where there is room for argument about whether a claim is one of a debt to the company, the court should err on the side of treating the claim as a debt rather than decline to grant approval under s 477(2A). His Honour pointed out that the opening words of s 477(1) have the effect of making the power to compromise contained in para (d) of that subsection subject to subss (2A) and (2B). It follows that if it transpired that a claim was, indeed, one of "a debt to the company" within subs (2A), a compromise of it without approval of the Court, of the committee of inspection or of a resolution of the creditors, would lie outside the power of the liquidator. 29 According to the Points of Claim, the present claim is based exclusively on the voidable transaction provisions of the Act, as those provisions apply to two specific payments made by Newpage. The facts of the present case are very different from those that were before Barrett J in HIH and QBE . 30 In HIH and QBE , the liquidator also sought and obtained a direction under s 479(3) of the Act that he was justified in entering into the compromise (in HIH the approval sought and obtained was founded on s 477(2B), as well as on s 477(2A)). 31 Section 479(3) of the Act provides: The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up. 32 When recommending the removal of the necessity of approval of the exercise of a liquidator's powers, the Harmer Report stated (at [610]) that the creditors would still have power to give directions to which a liquidator must have regard (the then s 379 of the Companies Code, and now s 479 of the Act), and that the actions of a liquidator could be reviewed by the courts (the then s 538 of the Companies Code , and now s 1321 of the Act). Section 379 of the Companies Code which the Report cited, like s 479 of the Act, also provided in subs (3) for a liquidator to apply to the Court for directions. 36 Cases in which a liquidator has applied under both s 477(2A) and s 479(3) include HIH [2004] NSWSC 5 , QBE 56 ACSR 687, Re Gate Gourmet Australia Pty Ltd (in liq) (2005) 23 ACLC 834; Foyster v Foyster Holdings Pty Ltd (in liq) [2003] NSWSC 925 , and Re United Medical Protection; Application of Lombe Ltd (as prov liq) (2003) 46 ACSR 98.


case_title: Re Gate Gourmet Australia Pty Ltd (in liq) (2005) 23 ACLC 834


case_text: It must be remembered that there is a distinction between s 477(2A) and s 479(3): where the claim is of a debt to the company of more than $20,000, the liquidator lacks power to compromise the debt in the absence of "approval", and s 479(3) does not empower the court to grant powers to a liquidator. The different role of directions under s 479(3) of providing guidance and protection to the liquidator appears from the judgments in Re GB Nathan and Co Pty Ltd (in liq) (1991) 24 NSWLR 674, 679-680; Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85 ( Spedley ); State Bank of New South Wales v Turner Corporation Ltd (1994) 14 ACSR 480 at 483.


case_title: Re JN Taylor Holdings Ltd (in liq) [2007] SASC 193


case_text: The history of the requirement that certain compromises by liquidators be approved by the Court, by the committee of inspection or by a resolution of the creditors was referred to by Moynihan J in Re Luxtrend Pty Ltd (in liq) [1997] 2 Qd R 86 ( Luxtrend ) at 87. The position under the 1961-62 cooperative régime and under the 1981 cooperative "Code" scheme, as well as under the Corporations Law in its original form in 1991, made the liquidator's power of compromise generally subject to a requirement of the approval of creditors or of the court, subject to an exception in the case of a debt of not more than a certain monetary limit: see ss 236(1)(d) and 236(2)(i) of the Companies Act 1961 (NSW) (in which the monetary figure was ₤300), ss 377(1)(d) and 377(2)(j) of the Companies Code (in which the monetary limit was $20,000), and ss 477(1)(d) and 477(2)(j) of the Corporations Law in their original form (where, again, the monetary limit was $20,000, and compromises of debts to the company being calls and liabilities for calls also required approval regardless of the amount). That is to say, the position was structurally the converse of the present one. 22 It was s 73 of the Corporate Law Reform Act 1992 (Cth) (No 210, 1992) that amended s 477 of the Corporations Law by omitting the general requirement of approval. An exposure draft of the Bill for that Act and an Explanatory Paper were released early in 1992. The Explanatory Paper stated (at [931]) that the proposed amendments implemented a recommendation of the Harmer Report (Australian Law Reform Commission Report 45: General Insolvency Inquiry (1988)). The Harmer Report had recommended (at [608] [610]) that the powers of a liquidator generally be exercisable without the need for approval of creditors or the court, subject to exceptions in the cases of the power to compromise debts above a prescribed amount, and the power to enter into long term commitments. The expansion of the liquidator's powers to act without approval was recommended on the basis of the competence and qualifications of persons who act in the capacity of liquidator. 23 The Harmer Report's recommendations were reflected in the omission of the general requirement of approval from subs (1) and the insertion of a requirement of approval in new subss (2A) (debts to the company of more than any prescribed amount exceeding $20,000, and if none was prescribed, $20,000), and (2B) (agreements that may end or be performed beyond three months after they are entered into). 24 The meaning of the word "debt" can be affected by its context. There is a line of authority to the effect that the expression "a debt to the company" in s 477(2A) bears its familiar meaning of a sum of money that is either immediately payable, or that, by reason of an existing obligation, will become payable in the future ( debitum in praesenti , solvendum in futuro ): Luxtrend [1997] 2 Qd R 86 ; Re Tietyens Investments Pty Ltd (in liq) (Receiver and Manager appointed) (1999) 31 ACSR 1 ( Tietyens ) at [92] [94]; and see Austin R P and Ramsay I M, Ford's Principles of Corporations Law (13 th ed, LexisNexis Butterworths, 2007) at [28-260] p1412. Accordingly, claims by liquidators to recover amounts paid away by the company under voidable transactions have been held to lie outside the predecessor provision of s 477(2A), namely, s 477(2A) of the Corporations Law : Luxtrend [1997] 2 Qd R 86 ; Nambucca Investments Pty Ltd v Snoco Ltd [1999] NSWSC 211 at [2] . In Tietyens 31 ACSR 1 a claim of equitable damages based on accessorial liability for breaches of trust, the primary cause of action being a claim based on Barnes v Addy (1874) 9 Ch App 244, was similarly held not to be a claim of a debt to the company.


case_text: It must be remembered that there is a distinction between s 477(2A) and s 479(3): where the claim is of a debt to the company of more than $20,000, the liquidator lacks power to compromise the debt in the absence of "approval", and s 479(3) does not empower the court to grant powers to a liquidator. The different role of directions under s 479(3) of providing guidance and protection to the liquidator appears from the judgments in Re GB Nathan and Co Pty Ltd (in liq) (1991) 24 NSWLR 674, 679-680; Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85 ( Spedley ); State Bank of New South Wales v Turner Corporation Ltd (1994) 14 ACSR 480 at 483. 35 Whether under s 477(2A) or s 479(3), the Court does not enter upon the commercial merits of the compromise. Rather, its concern is with such matters as "lack of good faith, some error in law or principle, or real and substantial ground for doubting the prudence of the liquidator's conduct" ( Spedley 9 ACSR 83 at 85-6 (a s 479(3) directions case)).


case_text: The meaning of the word "debt" can be affected by its context. There is a line of authority to the effect that the expression "a debt to the company" in s 477(2A) bears its familiar meaning of a sum of money that is either immediately payable, or that, by reason of an existing obligation, will become payable in the future ( debitum in praesenti , solvendum in futuro ): Luxtrend [1997] 2 Qd R 86 ; Re Tietyens Investments Pty Ltd (in liq) (Receiver and Manager appointed) (1999) 31 ACSR 1 ( Tietyens ) at [92] [94]; and see Austin R P and Ramsay I M, Ford's Principles of Corporations Law (13 th ed, LexisNexis Butterworths, 2007) at [28-260] p1412. Accordingly, claims by liquidators to recover amounts paid away by the company under voidable transactions have been held to lie outside the predecessor provision of s 477(2A), namely, s 477(2A) of the Corporations Law : Luxtrend [1997] 2 Qd R 86 ; Nambucca Investments Pty Ltd v Snoco Ltd [1999] NSWSC 211 at [2] . In Tietyens 31 ACSR 1 a claim of equitable damages based on accessorial liability for breaches of trust, the primary cause of action being a claim based on Barnes v Addy (1874) 9 Ch App 244, was similarly held not to be a claim of a debt to the company. 37 In Dean-Willcocks v ATTT Investments Pty Ltd (1999) 17 ACLC 1310, an application was made under s 477(2A) for the Court's approval of an arrangement by which a secured creditor of the company would inject funds in exchange for a particular asset. There was no dispute about the monies owing. Young J held that the Court had no jurisdiction to grant approval under s 477(2A) because what was proposed was not a compromise of a debt, and that the proper course, if the liquidator wanted to pursue the matter, would be for him to seek directions under s 479(3). In Tietyens 31 ACSR 1, Weinberg J held that he lacked jurisdiction under s 477(2A) but gave directions under s 479(3).


case_title: Re United Medical Protection; Application of Lombe Ltd (as prov liq) (2003) 46 ACSR 98


case_text: As Barrett J observed in HIH Insurance Ltd and Related Matters [2004] NSWSC 5 ( HIH ) at [12], it appears that in some cases a strict approach has not been taken to the jurisdictional question posed by the expression "a debt to the company". In some cases, Judges have granted approval under s 477(2A) without discussion of the jurisdictional question. It can be just as important to decide that a compromised claim is not one of a debt to the company as to decide that it is. In Spalla v St George Motor Finance Ltd (No 7) [2006] FCA 1177 , for example, a challenge was made to a compromise entered into by a liquidator on the ground that approval under s 477(2A) had not been obtained, and Kenny J had no hesitation in holding that the submission failed because it was "based on a misunderstanding as to what constitutes a 'debt' under the relevant section" (at [143]).


case_title: State Bank of NSW v Turner Corporation Ltd (1994) 14 ACSR 480


case_text: The applicant referred to Adelaide Brighton Cement v AWU [2002] FCA 601 , when faced with similar issues, von Doussa J, after considering Davids Distribution noted at [18]: The degree of specificity in a notice sufficient to enable the employer to take appropriate defensive action must be judged against the nature of the employer's undertaking and the way in which that undertaking operates. In that case, as here, the employer operated 12 hour day and night shifts and was left not knowing at what time on what day it would need to allocate labour to maintain its operations. His Honour found there was a serious question to be tried that the notice of industrial action failed to meet the requirements of s 170MO(5) (now 441 (6) of the Act ).


case_outcome: referred to

case_title: APRA v CPSU & Anor, 21 June 2000, Print S7131

case_text: In upholding the validity of the notice, the Vice-President adopted the approach taken by the Full Bench of the Commission in APRA v CPSU (Print S7131) . That case was an appeal from a decision of Polites SDP and concerned the validity of a notice of initiation of bargaining periods and, in particular, whether, by including an additional employee organisation in the notice, the notice thereby was invalid. Polites SDP had held that the inclusion of another organisation of employees in the notice did not serve to invalidate the notice as between the initiating party and the negotiating party. He also held, assuming that he was wrong concerning the validity of the notice, on that ground, that the inclusion of the other organisation of employees could be severed from the other provisions of the notice and for that additional reason ought not to be regarded as invalidating the notice between the initiating party and negotiating party at [32]. 23 The Full Bench, without more, merely adopted the reasons of Polites SDP in these respects: APRA v CPSU (Print S7131) at [22]. 62 The applicant contended that: (i) protected industrial action can only occur during a bargaining period: ss 435(1) and (2). The Protected Action Notice indicates that employees will take industrial action "in respect of the notice of bargaining period BP 2007/8". The Initiating Notice was directed to 3 "other negotiating parties" (the applicant, the AMWU and CEPU) and stated that the respondent intended to try to make a collective agreement with the other negotiating parties. The particulars (at paragraph (b) of the Protected Action Notice) confirmed that the proposed collective agreement sought in the bargaining period was one binding the applicant, the respondent, CEPU and AMWU; (ii) there is no provision in the Act which allows a union to initiate a bargaining period in pursuit of a multi-union agreement. Where a union initiates a bargaining period the only other negotiating party is the employer: s 423(3) and (4). The ability to initiate a bargaining period with more than one union is confined to employers: s 423(4)(c). A defect of this kind is no mere technicality. The effect of a bargaining period is to modify existing legal rights. A union that is a negotiating party may take protected action: s 435(2). Severance is not possible because it will substantially alter the nature of the proposed collective agreement sought in the bargaining period (as confirmed by the particulars). The inclusion of the CEPU and AMWU as "Other Negotiating Parties" was not a "slip". Both the particulars and the factual matrix in which the notice was served confirm that the respondent intended to negotiate an agreement with the applicant and the other 2 unions. The expired CSBP Agreement was an agreement between the applicant and the 3 unions and, since April 2006, the applicant and the 3 unions had been negotiating a new agreement to replace the expired agreement. Further, even if the references in the Initiating Notice to the AMWU and CEPU could be severed, it is seriously arguable that the notice would only then be valid so that a bargaining period would not come into effect for a further 7 days: s 427 of the Act ; (iii) whereas a challenge to the validity of the Initiating Notice was rejected by Lawler VP in LHMU v CSBP Limited [2007] AIRC 112 , PR976150, at [17]-[18], and a similar challenge under the pre-reform Act was rejected by a Full Bench of the Commission in APRA v CPSU & Anor , 21 June 2000, Print S7131 at [12], [14], [21]-[22], those decisions should not be followed. The point which arises in this case, and which was not addressed in those decisions, is not merely that the CEPU and AMWU have been erroneously named as negotiating parties in the respondent's notice. It is that the proposed collective agreement referred to in the Initiating Notice was particularised as, and was intended to be, an agreement between the respondent, the applicant and the CEPU and AMWU and that, by reason of s 423(4)(d) , a union cannot initiate a bargaining period under the Act which would entitle it to take protected industrial action in support of a multi-union agreement; (iv) under s 435(2) of the Act , industrial action organised or engaged in during the bargaining period may be protected action but only if it is organised or engaged in for the purpose of supporting or advancing claims made in respect of "the proposed collective agreement": s 435(2). The "proposed collective agreement" is that to which the bargaining period is directed [s 423(3)]: Trinity Garden Aged Care & Anor v ANF , 21 August 2006, PR973718, at [43]. Accordingly, if the Initiating Notice is held to be valid, the result will be that the respondent will seemingly be entitled to take protected industrial action to cause the respondent to make an agreement with the respondent, the CEPU and the AMWU. Such an outcome is inconsistent with s 423(4)(d) which clearly evinces an intention that if a bargaining period is to be initiated in pursuit of a multi-union agreement (with the possibility that industrial action will then be taken in support of such an agreement), it must be initiated by the employer; (v) the contrast with s 423(4)(c) , which expressly allows for more than one organisation to be a negotiating party where the initiating party is the employer, is telling. This is not a curious result. It is quite easy to envisage why Parliament would not have wished to give unions the ability to take industrial action to cause an employer to enter into a multi-union agreement, irrespective of the wishes of the employer. It is quite possible that Parliament considered the employer was best placed to determine whether a multi-union agreement was suited to the needs of the particular business and therefore that the employer should not be pressured into making a multi-union agreement if it did not wish to. The fact that, in the present case, the applicant is prepared to negotiate a multi-union agreement is not to the point. What is at issue is the capacity of the respondent union to initiate a bargaining period in pursuit of a multi-union agreement; and (vi) if, as appears from s 435(2) , a union cannot initiate a bargaining period in pursuit of a multi-union agreement, there is at least a serious question to be tried that the respondent's Initiating Notice was invalid such that no bargaining period was initiated and the proposed industrial action will be unprotected and unlawful.


case_text: It is no answer, in the applicant's submission, to say simply that the only express temporal requirement in s 441(6) is that the notice specify the day when the action will begin. The authorities indicate that the purpose of the sub-section will not be met unless the action is described with sufficient specificity to enable the recipient of the notice (usually but not always the employer) to take appropriate defensive measures and the degree of specificity required will vary according to the nature of the employer's undertaking and the way it operates. It referred to AFMEPKIU v ACI Mould Manufacturing [1999] FCA 1859 (Goldberg J) at [25]-[28] (serious question that notice was invalid because it failed to state the end date of proposed action). 89 The respondent submitted that the Protected Action Notice is unambiguous in that the employees in question are those who are members of the respondent and who work as process technicians: there is no uncertainty as to whether the notice relates to some or all of those employees as it obviously relates to all of them. 90 The respondent then contended that the Protected Action Notice specifies that industrial action in the form of the Stoppage will commence on 6 April and that whilst it does not specify the time it will commence, the Act does not require this to be done. Section 444(6) merely requires written notice of "the day" when the intended action will begin.


case_text: I am satisfied that I have such power: DG Whelan Rentals Pty Ltd v Australian Building Construction Employees' and Builders Labourers' Federation (1982-83) 46 ALR 339 at 346-347 and 349; Amcor Packaging (Australia) Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2001] FCA 874 at [14] .


case_text: The respondent, without any additional submissions, later, by email, referred the Court to the following further decisions: Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Limited [2006] FCA 1039 ; Blagojevch v Australian Industrial Relations Commission [2000] FCA 483 at [13] et seq; Miller v University of New South Wales [2002] FCA 882 [68] et seq especially [74], [79].


case_title: Blagojevch v Australian Industrial Relations Commission [2000] FCA 483


case_title: Bogaards v McMahon (1988) 80 ALR 342

case_text: In further written submissions provided during the morning of 4 April 2007 the respondent contended that issue estoppel is not limited in its operation to issues decided by a court exercising judicial power but extends to other tribunals. It relied upon The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59 ; (1972-3) 130 CLR 353 at 452 per Gibbs J where his Honour considered the case of Stiftung v. Rayner & Keeler Ltd (No. 2) (1967) 1 AC 853 and also Stephen J at 460; Barwick CJ at 402, McTiernan and Menziess JJ agreeing. It referred also to the discussion by Pincus J in Bogaards v McMahon (1988) 80 ALR 342 at 350 et seq.


case_text: The applicant relied upon Woodside Petroleum (WA Oil) Pty Ltd v AIMPE [2005] FCA 403 where a similar issue arose. The notice of intended industrial action served by the union in that case did not make clear whether employees would perform critical safety functions including monitoring of the power supply. The seriousness of the safety issues raised weighed heavily in the balance of convenience: [2005] FCA 403 at [16] - [17] . The applicant also referred the Court to Burswood Resort (Management) Ltd v ALHMWU [1999] FCA 1443 (Carr J) at [13]-[14] (serious question to be tried as to whether "stoppages of work" refers to some or all employees); Burswood Resort (Management) Ltd v CEPU [2004] FCA 909 (Nicholson J) at [12]-[14].


case_title: Burswood Resort (Management) Ltd v CEPU [2004] FCA 909