case_text: approach the question as to what amounts to sham by reference to a passage which appears in the joint judgment of Gleeson CJ and Gummow and Crennan JJ in Raftland Pty Ltd v Federal Commissioner of Taxation [2008] HCA 21 ; (2008) 82 ALJR 934 at paras 33 36: [33] It was not contended by the appellant that the amounts referred to above were misappropriated. Yet it is central to the argument for the appellant that they were amounts to which the E & M Unit Trust and, through that trust, its beneficiaries were entitled. The apparent discrepancy between the entitlements appearing on the face of the documents and the way in which the funds were applied gave rise to a question whether the documents were to be taken at face value. In various situations, the court may take an agreement or other instrument, such as a settlement on trust, as not fully disclosing the legal rights and entitlements for which it provides on its face. If that be so, the parol evidence rule in Australia identified with Hoyt's Pty Ltd v Spencer does not apply. [34] One such case is where other evidence of the intentions of the relevant actors shows that the document was brought into existence "as a mere piece of machinery" for serving some purpose other than that of constituting the whole of the arrangement. That, in essence, is the respondent's case with respect to the [2008] HCA 21 ; 246 ALR 406 at 417 alleged existence of the "present entitlement" of the trustee of the E & M Unit Trust to the income of the Raftland Trust. [35] The term "sham" may be employed here, but as Lockhart J emphasised in Sharrment Pty Ltd v Official Trustee in Bankruptcy the term is ambiguous and uncertainty surrounds its meaning and application. With reference to remarks of Diplock LJ in Snook v London and West Riding Investments Ltd , Mistily LJ later identified as one of several situations where an agreement may be taken otherwise than at its face value, that where there was a "sham", the term, when "[c]orrectly employed", denoted an objective of deliberate deception of third parties. [36] The presence of an objective of deliberate deception indicates fraud. This suggests the need for caution in adoption of the description "sham". However, in the present litigation it may be used in a sense which is less pejorative but still apt to deny the critical step in the appellant's case. The absence of a present entitlement within the meaning of s 100A(1)(a) of the Act may appear from an examination of the whole of the relevant circumstances, and these are not confined to the terms of the Raftland Trust instrument. One of the cases to which their Honours refer, at para 33 in the passage quoted, is Hadjiloucas v Crean [1988] 1 WLR 1006. In particular, their Honours draw attention in their joint judgment to remarks made by Mustill LJ at page 1019, with reference to earlier remarks as to sham, made by Diplock LJ in Snook v London and West Riding Investments Ltd [1967] 2 QB 786 at 802. What Mustill LJ had to say was this: [I]t is necessary to distinguish between three situations in which, aside from any question of rectification, the court may take an agreement otherwise than at its face value. The first exists where the surrounding circumstances show that the arrangement between the parties was never intended to create any legally enforceable obligation. The second is the case of the "sham", in the sense in which that word has been used in numerous cases, including Snook v London and West Riding Investments Limited (1967) 2 QB 786 at 802. Correctly employed, this term denotes an agreement or series of agreements which are deliberately framed with the object of deceiving third parties as to the true nature and effect of the legal relations between the parties. The third situation is one in which the document does precisely reflect the true agreement between the parties, but where the language of the document (and in particular its title or description) superficially indicates that it falls into one legal category, whereas when properly analysed in light of the surrounding circumstances it can be seen to fall into another.


case_outcome: followed

case_text: The principles of construction of a patent specification are well-settled. The general approach is summarised by the Full Court of the Federal Court in Jupiters Ltd v Neurizon Pty Limited (2005) 65 IPR 86 at [67] and [68]. It is not necessary to repeat the Full Court's comments here. 118 In the event that I am incorrect and the document does anticipate all the integers of Claims 7 and 18, the issue is whether the novelty destroying disclosure was made "publicly available" before the priority date: s 7(1) of the Act . NSI bears the onus of establishing that the document was made publicly available: see Jupiters Ltd v Neurizon Pty Ltd (2005) 65 IPR 86 at 118. If this is established, then, in order to uphold the validity of the patent, the University must establish that it did not consent to the disclosure of the document: s 24(1)(b) of the Act . In this case, I am satisfied that the document was not made publicly available and also that the University did not consent to it being publicly disclosed.


case_text: In constructing a patent claim, the ordinary meaning of the language selected to define the claim is of prime importance: see Baygol Pty Ltd v Foamex Polystyrene Pty Ltd (2005) 64 IPR 437. Although a claim must be understood in the light and context of the whole specification, as a general rule, the words of a claim are not to be altered by a gloss taken from the body of the specification and essential integers are determined by a common sense assessment of what the words of the claim convey in the context of the existing published knowledge at the time: see Rehm Pty Ltd v Websters Securities Systems (International) Pty Ltd (1988) 81 ALR 79 at 92; Kimberley-Clark Australia Pty Ltd v Arico Trading International Pty Ltd [2001] HCA 8 ; (2001) 207 CLR 1. It is not legitimate to narrow or expand the boundaries of an anomaly as fixed by the words of a claim by adding words drawn from other parts of the specification: see Flexible Steel Lacing Co v Beltreco Ltd (2000) 49 IPR 331 at [74]. In addition, claims are not to be construed by reference to the actual intentions or opinions of the inventor: see Sartas (No 1) Pty Limited v Koukourou & Partners Pty Ltd (1994) 30 IPR 479 at 485-6.


case_title: Rehm Pty Ltd v Websters Securities Systems (International) Pty Ltd (1988) 81 ALR 79


case_title: Kimberley-Clark Australia Pty Ltd v Arico Trading International Pty Ltd [2001] HCA 8 ; (2001) 207 CLR 1


case_title: Flexible Steel Lacing Co v Beltreco Ltd (2000) 49 IPR 331


case_title: Sartas (No 1) Pty Limited v Koukourou & Partners Pty Ltd (1994) 30 IPR 479


case_outcome: referred to

case_text: It is, however, necessary to guard against an unduly strict literal approach since, in some circumstances, such an approach may be inappropriate. By way of illustration, see Catnic Components Ltd v Hiller and Smith Ltd [1982] RPC 183 at 242 per Lord Diplock. That case illustrates circumstances in which the strict literal approach was considered by the House of Lords to be inappropriate. 44 With these principles in mind, I turn now to the construction of the claims in the present case. 45 The construction question in the present case focuses on Claim 7 of the Complex Patent. As discussed above, Claim 7 is a claim for a complex and not a product or a method for a product. It claims a monopoly for: "(7) A stable soluble alkaline calcium phosphate complex, which has been formed at a pH greater than 7, including phosphopeptide stabilised amorphous calcium phosphate or a derivative thereof wherein the said phosphopeptide includes the amino acid sequence Ser(P)-Ser(P)-Ser(P)-Glu-Glu." 46 Professor Dawes explains Claim 7 in this way. He points out that a "complex" is a combination of two or more components in which there is an interaction between the components. The calcium phosphate complex in this claim is alkaline. This means that, as it exists, it has a pH of more than 7. There is an additional integer that the calcium phosphate must be formed at a pH greater than 7. This goes to the manufacture of the complex, which must retain a pH greater than 7 after creation and when examined. The phosphopeptide referred to is a chain of amino acids which has phosphorylated amino acids. The phosphopeptides stabilise calcium phosphate in a non-crystalline form by inhibiting it from converting into a crystalline form and precipitating out of solution. Amorphous calcium phosphate is usually not stable as it tends to convert to crystalline forms of calcium phosphate. Amorphous calcium phosphate is bio-available in that it can dissolve and release calcium and phosphate for depositing on teeth. The calcium and phosphate ions, due to their size, can diffuse through surface enamel over a sub-surface caries lesion. The pores on the surface enamel are larger than the charged ions and will not impede the diffusion of calcium or phosphate ions through the enamel. By contrast, crystalline forms of calcium phosphate present in the mouth under normal oral conditions cannot diffuse into the teeth, because the crystals are too large to diffuse through the pores in the enamel. These forms of calcium phosphate are therefore not bio-available. 47 The case for NSI is that, as a matter of language, the subject of the claim is the "complex" referred to, which is defined in the claim. NSI says that the complex is required to be "stable", "soluble", "alkaline", to "include calcium phosphate" - which is "formed at a pH greater than 7" - and to "include phosphopeptide which stabilises amorphous calcium phosphate or a derivative thereof". 48 In my view, the last descriptor referred to by NSI does not accurately reflect Claim 7. The final element of Claim 7 refers to phosphopeptide stabilized amorphous calcium phosphate or a derivative thereof. It is the stabilized amorphous calcium phosphate or derivative which is included and not merely the phosphopeptide. The expression is a composite. 49 NSI also submits that the phosphopeptide must include the Cluster Sequence. NSI says that it is common general knowledge among relevant addressees that phosphopeptides containing the amino acid Cluster Sequence are derived from proteins and, in particular, caseins.


case_text: The University's case on infringement does not depend on any principles of purposive construction. Instead, the University claims that each of the integers of Claim 7 are literally present, in combination, in each of the NSI Products. The question of infringement is largely determined by reference to the proper construction of the claim: see Olin Corporation v Super Cartridge Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 246 per Gibbs J. 73 NSI says that, if the University's construction of Claim 7 is correct, the NSI Products do not infringe the claim because there is no evidence that they include the relevant form of amorphous calcium phosphate, namely, stable, soluble and alkaline calcium phosphate. On the other hand, NSI says that, if its construction of Claim 7 is correct, the NSI Products do not infringe the claim because the complexes are not formed by using phosphopeptides deliberately extracted, isolated and purified. Further, to the extent that the phosphopeptides are created after formation of a complex of casein, calcium and phosphate, they are not formed by the phosphopeptide stabilising amorphous calcium phosphate as required by Claim 7. 74 It is therefore necessary to consider the evidence. 91 This test calls for consideration of whether the prior disclosure incorporates all of the integers of any of the claims: see Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [128] - [152] . That is, the prior disclosure must reveal the totality of the invention and the antecedent information and must be such that a person of ordinary knowledge of the subject would perceive, understand and be able to practically apply the invention without needing to do experiments or obtain further information before the invention can be made useful: see Hill v Evans (1862) 4 De GF & J 288 per Lord Westbury LC; Olin Corporation v Super Cartridge & Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 261 per Stephen and Mason JJ. In other words, the principal issue is whether the content and effect of the claimed anticipation is sufficient to destroy the element of novelty in the invention: see Pfizer-Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [311] - [324] . 209 Section 40 of the Act requires that a complete specification must be clear, succinct and fairly based on the matter described in the specification. NSI submits that the Complex Patent specification does not comply with these requirements. In Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58 ; (2004) 217 CLR 274 at [69] , the High Court formulated the relevant question as being whether there has been a real and reasonably clear disclosure in the body of the specification of what is then claimed so that the invention is broadly or in a general sense described in the body of the specification. Another way that the question can be posed is to ask whether the claim travels beyond the disclosure in the specification: Olin Corporation v Super Cartridge Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 240 per Barwick CJ.


case_text: The test for anticipation is whether use of a product or process in accordance with the prior disclosure would constitute an infringement of the claim. If the answer is in the affirmative, then the claim has been anticipated and is invalid for lack of novelty: see Meyers Taylor Pty Ltd v Vicarr Industries Ltd [1977] HCA 19 ; (1977) 137 CLR 228 at 235 per Aickin J; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [125] .


case_text: The test for anticipation is whether use of a product or process in accordance with the prior disclosure would constitute an infringement of the claim. If the answer is in the affirmative, then the claim has been anticipated and is invalid for lack of novelty: see Meyers Taylor Pty Ltd v Vicarr Industries Ltd [1977] HCA 19 ; (1977) 137 CLR 228 at 235 per Aickin J; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [125] . 91 This test calls for consideration of whether the prior disclosure incorporates all of the integers of any of the claims: see Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [128] - [152] . That is, the prior disclosure must reveal the totality of the invention and the antecedent information and must be such that a person of ordinary knowledge of the subject would perceive, understand and be able to practically apply the invention without needing to do experiments or obtain further information before the invention can be made useful: see Hill v Evans (1862) 4 De GF & J 288 per Lord Westbury LC; Olin Corporation v Super Cartridge & Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 261 per Stephen and Mason JJ. In other words, the principal issue is whether the content and effect of the claimed anticipation is sufficient to destroy the element of novelty in the invention: see Pfizer-Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [311] - [324] . 92 Of particular importance is whether the disclosure has been sufficiently clear. That is, the disclosure must contain clear and unmistakable instructions as to how to use the claimed invention: see Pfizer Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [314] ; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [140] and [153]. In documentary anticipations, the insistence upon clear and unmistakable instructions does not require the equivalence of language between the claimed invention and the disclosure. What matters is what is taught by the material: Evans Medical Ltd's Patent [1998] RPC 517 at 576 per Laddie J.


case_title: Hill v Evans (1862) 4 De GF & J 288

case_text: This test calls for consideration of whether the prior disclosure incorporates all of the integers of any of the claims: see Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [128] - [152] . That is, the prior disclosure must reveal the totality of the invention and the antecedent information and must be such that a person of ordinary knowledge of the subject would perceive, understand and be able to practically apply the invention without needing to do experiments or obtain further information before the invention can be made useful: see Hill v Evans (1862) 4 De GF & J 288 per Lord Westbury LC; Olin Corporation v Super Cartridge & Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 261 per Stephen and Mason JJ. In other words, the principal issue is whether the content and effect of the claimed anticipation is sufficient to destroy the element of novelty in the invention: see Pfizer-Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [311] - [324] .


case_text: This test calls for consideration of whether the prior disclosure incorporates all of the integers of any of the claims: see Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [128] - [152] . That is, the prior disclosure must reveal the totality of the invention and the antecedent information and must be such that a person of ordinary knowledge of the subject would perceive, understand and be able to practically apply the invention without needing to do experiments or obtain further information before the invention can be made useful: see Hill v Evans (1862) 4 De GF & J 288 per Lord Westbury LC; Olin Corporation v Super Cartridge & Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 261 per Stephen and Mason JJ. In other words, the principal issue is whether the content and effect of the claimed anticipation is sufficient to destroy the element of novelty in the invention: see Pfizer-Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [311] - [324] . 92 Of particular importance is whether the disclosure has been sufficiently clear. That is, the disclosure must contain clear and unmistakable instructions as to how to use the claimed invention: see Pfizer Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [314] ; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [140] and [153]. In documentary anticipations, the insistence upon clear and unmistakable instructions does not require the equivalence of language between the claimed invention and the disclosure. What matters is what is taught by the material: Evans Medical Ltd's Patent [1998] RPC 517 at 576 per Laddie J. 151 At the outset, it is necessary to describe the attributes of the skilled addressee and the relevant patent area. The skilled addressee is a legal construct and is assumed to be a person, or team, who is "not 'particularly imaginative or inventive'": Pfizer Overseas Pharmaceuticals v Eli Lilly and Co [2005] FCAFC 224 at [288] per French and Lindgren JJ. This does not mean that the addressee is a technician or person with only practical and non-academic qualifications. In fields such as chemistry, the addressee can be a person or group with high level qualifications and a capacity for original research: Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 ; (2002) 212 CLR 411 at [30] . The test formulated by the majority in Alphapharm at [53]-[54] is whether the addressee would directly be led, as a matter of course, to pursue one avenue in the expectation that it may well produce the claimed result. Their Honours referred to the approach taken by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboraties Ltd [1970] RPC 157 at 187-188. His Honour framed the question in terms of whether a notional research group, at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of a chemical, would be led directly as a matter of course to try a particular substitution in the expectation that it might well produce a useful alternative to, or better drug than, the existing drug or a body useful for any other purpose.


case_text: Of particular importance is whether the disclosure has been sufficiently clear. That is, the disclosure must contain clear and unmistakable instructions as to how to use the claimed invention: see Pfizer Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 at [314] ; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [140] and [153]. In documentary anticipations, the insistence upon clear and unmistakable instructions does not require the equivalence of language between the claimed invention and the disclosure. What matters is what is taught by the material: Evans Medical Ltd's Patent [1998] RPC 517 at 576 per Laddie J.


case_text: The acts or prior publication said to anticipate the invention must be publicly available, that is, they must be communicated to a member of the public without any restraint as to the use of the information by the recipient: see Arrow Pharmaceuticals Ltd v Merck & Co Inc (2004) 213 ALR 182 at [99]. A similar test was outlined by Drummond J in Stanway Oyster Cylinders Pty Ltd v Marks (1996) 35 IPR 71.


case_title: Stanway Oyster Cylinders Pty Ltd v Marks (1996) 35 IPR 71


case_text: The relevant parts of the document are, to some extent, contradictory. However, the emphasis in the document is on the efficacy of a solution made at pH 7. In my view, having regard to the above, a skilled reader would be left confused by the document as to the pH at which the complex is manufactured. As stated in General Tyre & Rubber Co v Firestone Tyre and Rubber Co Ltd [1972] RPC 457 at 485-486, it is not sufficient that the prior disclosure contains a direction which is capable of being carried out in a manner that would infringe the patentee's claim, but is at least as likely to be carried out in a way which would not infringe the claim. The references to pH in the document cannot be described as "clear and unmistakable directions" as to how to produce the complex. Professor Reynolds gave evidence that the type of information in the document is not sufficient to enable the manufacture of the product. Mr Quigley, in cross-examination, referred to discrepancies between the information in the Information Package and the process actually employed during the production trials by the CSIRO. The evidence of Mr Nunn was that the information in the document would not enable the manufacture of the Calpep product without more information. 117 Accordingly, it cannot be said that the document anticipates the integers of Claims 7 and 18.


case_title: Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR

case_text: I am satisfied that the document was made available to a limited body of persons in circumstances where it appeared, on the face of the document, that it had the quality of confidence about it. It appeared that the document was communicated for limited purposes and imported an obligation not to disclose it and suggested to the reader that its disclosure would amount to a breach of confidence: see Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73 ; (1984) 156 CLR 414 at 437-438. 120 Section 24 of the Act provides that for the purpose of deciding whether an invention is novel, the Court must disregard information made publicly available without the consent of the patentee through any publication by another person who derived the information from the patentee. 121 NSI contends that the Information Package was made publicly available and that the evidence demonstrates that the Information Package was sent from Professor Reynolds' office to a number of prospective third party licensees in about May 1996, including Dr Barnett of SmithKline Beecham, Ms Finidori of Synthelabo in France, Dr Nelson of Consumer Health Care in the United States, Mr Markowitz of the Block Drug Company in the United States, Mr Faller of Procter & Gamble in the United States, Mr Ziemkiewicz of Chesebrough Ponds in the United States and Mr Garland of NZP in New Zealand.


case_outcome: cited

case_text: In Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited [1980] HCA 9 ; (1980) 144 CLR 253 at 292, Aickin J defines "common general knowledge" as: "that which is known or used by those in the relevant trade. It forms the background knowledge and experience which is available to all in the trade in considering the making of new products, or the making of improvements in old, and it must be treated as being used by an individual as a general body of knowledge." 165 The University submits that Dr Mackinlay's evidence must be approached with some caution because it is unclear precisely what his knowledge was before March 1997. This is because it is unclear what Dr Mackinlay personally knew before March 1997 and what facts he assumed or additional knowledge he gained by reading articles provided to him by his instructing solicitors. The University also submits that Dr Mackinlay's views could have been influenced by hindsight because he was given a copy of the Complex Patent early in the litigation. Taken in isolation, this is not a decisive objection. However, the authorities show that it is a matter that goes to the weight to be given to Dr Mackinlay's evidence and points to the need to exercise a degree of caution when considering his evidence: see, for example, Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited [1980] HCA 9 ; (1980) 144 CLR 253 at 293-294 per Aickin J. 166 NSI asserts that the claims lack the necessary inventive step because it was common general knowledge as at March 1997 that the Cluster Sequence was present in casein and that it served to bind calcium phosphate. It is contended that this knowledge, when taken with the 1958 paper by Reeves and Latour entitled "Calcium Phosphate Sequestering Phosphopeptide from Casein" ("the Reeves and Latour article"), would make the invention obvious to the skilled addressee. 167 Subject to my comments above regarding the skilled addressee, the principal relevant skilled addressees include Dr Mackinlay and Dr McKinnon.


case_text: At the outset, it is necessary to describe the attributes of the skilled addressee and the relevant patent area. The skilled addressee is a legal construct and is assumed to be a person, or team, who is "not 'particularly imaginative or inventive'": Pfizer Overseas Pharmaceuticals v Eli Lilly and Co [2005] FCAFC 224 at [288] per French and Lindgren JJ. This does not mean that the addressee is a technician or person with only practical and non-academic qualifications. In fields such as chemistry, the addressee can be a person or group with high level qualifications and a capacity for original research: Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 ; (2002) 212 CLR 411 at [30] . The test formulated by the majority in Alphapharm at [53]-[54] is whether the addressee would directly be led, as a matter of course, to pursue one avenue in the expectation that it may well produce the claimed result. Their Honours referred to the approach taken by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboraties Ltd [1970] RPC 157 at 187-188. His Honour framed the question in terms of whether a notional research group, at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of a chemical, would be led directly as a matter of course to try a particular substitution in the expectation that it might well produce a useful alternative to, or better drug than, the existing drug or a body useful for any other purpose. 152 In approaching the question of obviousness, it is necessary to assess the inventiveness of the invention and not simply to examine each integer in isolation. In Alphapharm , the majority said at [58]: "The tracing of a course of action which was complex and detailed, as well as laborious, with a good deal of trial and error, with dead ends and the retracing of steps is not the taking of routine steps to which the hypothetical formulator was taken as a matter of course." This observation is pertinent to the present case. Mere verification or discovery is not an invention. An invention may be made by a brilliant sudden insight or act or by a slow and laborious approach: see In re Farbenindustrie AG's Patents (1930) 47 RPC 289 at 322 per Maugham J. Obviousness is not determined by asking whether a particular avenue of research is worth a try. 179 In addition, Professor Reynolds gave evidence of the lengthy research and experimental process and the detailed steps taken by him over 18 years to arrive at the invention, taking account of different stages and streams of research in relation to the formation of complexes at various pH values to increase the yield, the extensive trial and error involved and the consideration of documents teaching away from the invention. These elements are important considerations in relation to the question of obviousness: see Alphapharm at [53]. 180 Dr Mackinlay was asked by NSI to describe, by way of a hypothetical research project ("the HRP"), how he would have gone about developing a chemical entity that would take advantage of the interaction between casein and calcium phosphate and have the maximum amount of calcium phosphate bound. This was based on the assumption that it was part of the common general knowledge that calcium phosphate binds to casein. 181 The University levelled several criticisms at the HRP. First, the University submitted that Dr Mackinlay's opinion was affected by hindsight. Secondly, it contended that the HRP assumed part of the inventive process. Thirdly, it was submitted that Dr Mackinlay proceeded on the wrong test of obviousness by having regard to whether "straightforward" or "routine" steps could be taken to make the invention. 184 In relation to the second issue it can be seen from the parameters of the HRP that it assumes part of the inventive process, namely, the recognition of a desirable outcome. The desirable outcome was an advanced treatment for dental caries using calcium phosphate and casein. The University submits that, because of this assumption, the HRP lacked a "context", in the sense that the end goal was a given. The University also refers to the approach outlined by the High Court in Alphapharm at [53]. In this case, the High Court stated that the question is whether the person or group would be led directly as a matter of course to try the claimed invention in the expectation that it might well produce a useful result. This indicates the importance of context in providing a useful result. The research is then evaluated in the light of a given purpose, result or direction. Dr McKinnon said that he would want to know about the purpose or context of a HRP before embarking on it. He said that, without this information, he would not have embarked on the HRP engaged in by Dr Mackinlay because it lacked direction and definition. 185 In relation to the third issue, the University submits that Dr Mackinlay proceeded on the basis that the making of adjustments in relation to pH, temperature, ionisation and concentration were "routine" and that this disclosed an erroneous approach to the question of obviousness. The correct and different test that was accepted in Alphapharm at [53] is whether a person would be led directly, as a matter of course, to try the claimed invention in the expectation that it may well produce a useful or better alternative to the product that existed previously. 186 Finally, it is submitted by the University that the outcome of the HRP does not correspond with the terms of the invention because it does not refer to the form of the amorphous calcium phosphate and omits an important integer of Claim 7. 187 In my view, there is cogency in these submissions by the University and I accept them. I do not give any significant weight to the HRP on the question of obviousness.


case_text: At the outset, it is necessary to describe the attributes of the skilled addressee and the relevant patent area. The skilled addressee is a legal construct and is assumed to be a person, or team, who is "not 'particularly imaginative or inventive'": Pfizer Overseas Pharmaceuticals v Eli Lilly and Co [2005] FCAFC 224 at [288] per French and Lindgren JJ. This does not mean that the addressee is a technician or person with only practical and non-academic qualifications. In fields such as chemistry, the addressee can be a person or group with high level qualifications and a capacity for original research: Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 ; (2002) 212 CLR 411 at [30] . The test formulated by the majority in Alphapharm at [53]-[54] is whether the addressee would directly be led, as a matter of course, to pursue one avenue in the expectation that it may well produce the claimed result. Their Honours referred to the approach taken by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboraties Ltd [1970] RPC 157 at 187-188. His Honour framed the question in terms of whether a notional research group, at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of a chemical, would be led directly as a matter of course to try a particular substitution in the expectation that it might well produce a useful alternative to, or better drug than, the existing drug or a body useful for any other purpose.


case_text: In approaching the question of obviousness, it is necessary to assess the inventiveness of the invention and not simply to examine each integer in isolation. In Alphapharm , the majority said at [58]: "The tracing of a course of action which was complex and detailed, as well as laborious, with a good deal of trial and error, with dead ends and the retracing of steps is not the taking of routine steps to which the hypothetical formulator was taken as a matter of course." This observation is pertinent to the present case. Mere verification or discovery is not an invention. An invention may be made by a brilliant sudden insight or act or by a slow and laborious approach: see In re Farbenindustrie AG's Patents (1930) 47 RPC 289 at 322 per Maugham J. Obviousness is not determined by asking whether a particular avenue of research is worth a try.


case_text: It should be noted that the statement by the University is in the form of a submission as to the legal effect of the amended patent claim and it must be considered in that context. The statement involved a consideration of the state of the prior art. It is settled law that an applicant for a patent can make submissions to the Patent Office as to the proper construction or effect of a claim, and this will not be found to have been a false suggestion or representation simply because such a submission may later be held to have been incorrect: see ICI Chemicals and Polymers Ltd v Lubrizol Corp Inc [2000] FCA 1349 ; (2000) 49 IPR 513 at [91] . 207 Insofar as the representation is based on belief, it has not been shown to be a false belief or one which is not reasonably held. On the contrary, the conclusions that I have reached on the issues of novelty and obviousness meet the submissions of NSI. 208 In closing addresses, NSI sought to raise other questions that were not pleaded. I do not consider that these should be entertained. However, in any event, in my view, they do not affect the conclusion that I have reached in any way.


case_text: Section 40 of the Act requires that a complete specification must be clear, succinct and fairly based on the matter described in the specification. NSI submits that the Complex Patent specification does not comply with these requirements. In Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58 ; (2004) 217 CLR 274 at [69] , the High Court formulated the relevant question as being whether there has been a real and reasonably clear disclosure in the body of the specification of what is then claimed so that the invention is broadly or in a general sense described in the body of the specification. Another way that the question can be posed is to ask whether the claim travels beyond the disclosure in the specification: Olin Corporation v Super Cartridge Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 240 per Barwick CJ.


case_title: Stuart v Alexander (1981) 37 ALR 161

case_text: The University refers to authorities that support the proposition that there must be a basis in fact for comparative advertising and to publish comparative claims to ensure that the comparison is accurate: see Stuart v Alexander (1981) 37 ALR 161 at 163 per Lockhart J; Makita (Aust) Pty Ltd v Black & Decker (A'asia) Pty Ltd (1998) 18 IPR 270 at 280; Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) 14 IPR 293 at 299 per Burchett J. In Colgate Palmolive Pty Ltd v Rexona Pty Ltd (1981) 37 ALR 91, the Court held that it is misleading conduct to make comparative efficiency claims that imply they were made on a scientific basis when, in fact, there is no proper scientific basis for making those claims. That case related to a claim in respect of an ingredient in a toothpaste. A comparison may be misleading by omission of a material fact that would be necessary to render the comparison fair and it can be misleading for a corporation not to put forward sufficient information to dispel the possibility that a recipient may be misled. In some circumstances, it may be misleading to make a statement implying that there is an adequate foundation in scientific knowledge to justify it when, taken in context, the scientific statement does not provide a proper foundation, for example, see Sterling Winthrop Pty Ltd v Boots Co (Australia) Pty ltd (1995) 32 IPR 361 at 365 and the cases cited therein.


case_title: Makita (Aust) Pty Ltd v Black & Decker (A'asia) Pty Ltd (1998) 18 IPR 270


case_title: Duracell Australia Pty Ltd v Union Carbide Australia Ltd (1988) 14 IPR 293


case_title: Colgate Palmolive Pty Ltd v Rexona Pty Ltd (1981) 37 ALR 91


case_title: Sterling Winthrop Pty Ltd v Boots Co (Australia) Pty ltd (1995) 32 IPR 361


case_text: It may follow that there is little practical difference between asking whether Ms Coe's employment caused her disorder or whether it was a contributing factor. As Mason CJ said in March v Stramare at 514, it is for the plaintiff to establish that his or her injuries are caused or materially contributed to by the defendant's conduct: see also Chappel v Hart [1998] HCA 55 ; (1998) 195 CLR 232 at [27] per McHugh J.


case_outcome: distinguished

case_title: Comcare v Mooi (1996) 69 FCR 439

case_text: The third ground is that the Tribunal failed to complete the exercise of its jurisdiction. This is related to the second ground and is said to arise because, having found that Ms Coe suffers from a psychiatric illness, the Tribunal should have asked itself whether the condition was contributed to by her employment: see Comcare v Mooi (1996) 69 FCR 439 9 Ms Coe brought a separate proceeding, NSD 577 of 2007, by way of an appeal to the Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (' AAT Act '). That step was taken because the Registry had, several days earlier, rejected the filing of an application for judicial review. Counsel for Ms Coe accepts that the appeal does not raise a question of law, so that proceeding NSD 577 of 2007 must be dismissed. 10 The Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act ") makes provision for payment of compensation by Comcare to Commonwealth employees in respect of an injury that results, inter alia , in the employee's incapacity for work: see s 14 of the SRC Act . 36 The Tribunal concluded its analysis of the psychiatric evidence with the following observations: "[49] Finally, Mr Vincent who appeared for Ms Coe emphasised that it did not matter whose diagnosis we found (for example that of Dr Dinnen, Dr Barrett, or Ms Clark), it was a question of the connection with her work which was important. As set out above, we are not satisfied on the evidence that her psychiatric condition is relevantly caused by her employment." [50] He also argued that we could make a finding that Ms Coe satisfied the test set out in Comcare v Mooi (1996) 69 FCR 439. However, as we are satisfied that Ms Coe suffers from a psychiatric illness, it is not necessary to address that matter." 37 The Tribunal's description at [43] of Dr Skinner's diagnosis was taken from her report. There, Dr Skinner stated that Ms Coe suffers from an anxiety disorder with agoraphobia which was probably present prior to the explosion. 38 However, it is clear from cross-examination of Dr Skinner before the Tribunal, that she did not consider that the pre-1979 anxiety disorder was a clinical condition. This is to be seen from the following passages of the transcript:- "MS KELLY: Dr Skinner, I'm just curious I don't quite follow in your report at page 11 you say that she has an underlying condition and dependent personality. I understand the dependent personality, but you're saying there that she has an underlying anxiety condition. The way I read that, you're saying that she had that prior to 1979? --- Yes, I'm not saying a disorder but it seemed that she was a rather shy, nervous sort of person. I'm not saying it's everybody has anxiety and I thought she's a bit more anxious than most people. ... MR VINCENT: Senior Member Kelly was asking you about your diagnosis on page 11 and specifically where you say, 'Has an underlying anxiety condition'. As I've got your answer, you said, 'Not an anxiety disorder'? --- Yes. Not an underlying anxiety disorder? --- Yes. Is that right? --- Yes. Well, isn't what you actually said in the previous paragraph 'Ms Coe suffers from an anxiety disorder'? --- Well, I was talking about presently, you know, in the answer to --- This was probably sorry. This was probably present prior to the 1979 accident? --- Yes, I probably should have said that it was yes, I probably should have said the tendency was there, rather than it being present. I don't think it was a disorder. I'm sorry, I don't think it was a disorder prior to 2002. She describes being more functioning better before that." 66 The Tribunal recorded Mr Vincent's submission at [50] that it could make a finding that Ms Coe's condition satisfied the test stated in Comcare v Mooi . 67 In that case, Drummond J said at 443 that the expressions used in the SRC Act to define the various forms of mental conditions that can amount to compensable injuries do not appear to be used in a technical medical sense. 68 His Honour was of the view, at 443-444, that it is unnecessary for a worker's condition to be identified with the label of a recognised mental condition. However, he went on to say at 444: "But it is, I think, essential for such a worker to be able to demonstrate that, having regard to his circumstances, he is in a condition that is outside the boundaries of normal mental functioning and behaviour." 69 The Tribunal's reasons for coming to the view that it was not necessary to deal with Comcare v Mooi are perhaps elliptical. 70 However, I see no error of law in its failure to address this question. This is because the evidence of Dr Skinner, which the Tribunal accepted, was inconsistent with a finding that Ms Coe's condition prior to 2002 was outside the boundaries of normal functioning and behaviour as stated in Comcare v Mooi . 71 Even if it did satisfy that test, it was unnecessary for the Tribunal to consider it further because of its finding that Ms Coe's psychiatric condition was not "relevantly caused" by her employment. 72 I propose to order that the application be dismissed with costs. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 11 October 2007 Counsel for the Applicant: Mr M Vincent Solicitor for the Applicant: Stacks/Forster Counsel for the Respondent: Mr B Kelly Solicitor for the Respondent: Sparke Helmore Date of Hearing: 27 June 2007 Date of Judgment: 11 October 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1564.html


case_text: Mr Vincent argued that the Tribunal failed to consider a submission, worthy of consideration, that Ms Coe's employment was a contributing factor to her disorder: Dennis Wilcox Pty Limited v Commissioner of Taxation (1983) 19 ATR 1122 at 1130. In my opinion, this ground of review falls under the same head as failure to address a claim. Accordingly, I must dismiss it.


case_outcome: applied

case_text: The observations of Burchett J in Dodds v Comcare Australia (1993) 31 ALD 690 at 691 are apt. His Honour described a concession made by a medical expert. He went on to say that it did not destroy the doctor's opinion on the balance of probabilities that there was no continuing disability. He said: "The tribunal was entitled to accept and act upon [the doctor's] opinion, and not his doubt."


case_title: Dornan v Riordan (1990) 24 FCR 564

case_text: It is well established that this provision is not breached by a failure to deal with every argument that has been raised or with every possibility. It is enough that the findings and reasons deal with the substantial issues upon which the decision turned and that they do so in a way which clearly exposes the reasoning process: Dornan v Riordan (1990) 24 FCR 564 at 567-568; Hawkins v Comcare [2001] FCA 726 ; (2001) 115 FCR 127 at [60] .


case_text: Accordingly, I reject the submission that the Tribunal failed to ask itself the correct question, and that it failed to consider Ms Coe's claim: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 197 ALR 389 at [24] ; NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2005) 219 ALR 27 at [55] ff.


case_text: It has been held that the requirement that a person's employment be "a contributing factor" to an injury is not as stringent as a requirement that it be "the real, the effective or the proximate cause of the injury": see Favelle Mort Limited v Murray [1976] HCA 13 ; (1975-76) 133 CLR 580 at 598.


case_outcome: discussed

case_text: That case was decided before the High Court rejected the "but for" test as the sole or determinative test of causation and adopted the approach that in civil cases causation is to be determined by applying a common sense test: March v E & M H Stramare Pty Limited [1991] HCA 12 ; (1991) 171 CLR 506. 53 It may follow that there is little practical difference between asking whether Ms Coe's employment caused her disorder or whether it was a contributing factor. As Mason CJ said in March v Stramare at 514, it is for the plaintiff to establish that his or her injuries are caused or materially contributed to by the defendant's conduct: see also Chappel v Hart [1998] HCA 55 ; (1998) 195 CLR 232 at [27] per McHugh J.


case_text: Departure from the language of the statute under consideration carried with it the risk of falling into error: see eg Minister for Immigration and Ethnic Affairs v Guo [1997] HCA 22 ; (1997) 191 CLR 559 at 572.


case_text: Moreover, the High Court has observed that s 430(1)(c) of the Migration Act 1958 (Cth), which is in similar terms to s 43(2B) of the AAT Act , requires the Tribunal to set out the findings of fact it did make, not those it did not make. The section merely obliges the Tribunal to set out its findings on those questions of fact which it considered to be material: Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [68] . 46 It is true that the Tribunal identified the appropriate diagnosis of Ms Coe's psychiatric condition as a subsidiary issue in the proceeding. It is also true that the Tribunal failed to express in its own words any finding as to the diagnosis. But it is implicit in what it said about Dr Skinner's evidence that it did make a finding. It recorded Dr Skinner's diagnosis of anxiety disorder with agoraphobia and said it preferred that evidence to the evidence of Dr Dinnen and Dr Synnott. 47 In my opinion, the Tribunal's reasons were in accordance with its statutory obligations under s 43(2B). This is because the issue before it was whether Ms Coe's psychiatric condition was "relevantly caused" by the explosion. Plainly, the Tribunal made and set out its findings on the questions of fact it considered to be material to its decision on that issue. It found that causation was not established and its reason for the finding was that it preferred Dr Skinner's evidence to that of Dr Dinnen, particularly her analysis of Ms Coe's medical history and her consideration of the fact that more contemporaneous psychiatric reports disclosed no symptoms of any psychiatric disorder.


case_title: NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2005) 219 ALR 27


case_title: Wade v Comcare [2002] FCA 305

case_text: See also the observations of Spender J in Wade v Comcare [2002] FCA 305 at [24] . 63 The effect of what the Tribunal said at [48] was that it accepted Dr Synnott's evidence insofar as it supported the view that Ms Coe's disorder was not related to the injury suffered in the explosion. In that way, it considered the question of whether the explosion was a contributing factor. It did not accept that hypothesis.


case_title: APN News & Media Limited [2007] FCA 770

case_text: There was some discussion of the provision of the implementation agreement under which HPAL has agreed to pay a "break fee" not exceeding $3 million if the scheme does not proceed. The break fee is less than one per cent calculated on the transaction value. This topic was addressed by Lindgren J in APN News & Media Limited [2007] FCA 770 , in particular at [43], [46]-[49] and [55]. Although there is no affidavit evidence along the lines of that referred to by Lindgren J at [55], I would infer that there had been arm's length negotiations between the parties because each of the parties is independently represented by experienced firms of solicitors. 7 It is true, as Mr Oakes points out, that there may be some cases in which the requirements referred to by Lindgren J at [55] would need to be dealt with; for example where the acquirer had a substantial shareholding in the target company. That is not the case here and that issue does not need to be further considered by me today. 8 I am satisfied that the orders proposed to be made today are in accordance with the existing and usual practice and I propose to make orders in terms of the short minutes of order which have been handed up to me this morning. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 11 October 2007 Counsel for the Plaintiff: Mr M Oakes SC Solicitor for the Plaintiff: Minter Ellison Date of Hearing: 5 September 2007 Date of Judgment: 5 September 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1570.html


case_text: Mr Oakes pointed out that there are no novel jurisdictional or procedural issues that fall within the disclosure principle described by Barrett J in Re Permanent Trustee Co Ltd (2002) 43 ASCR 601 at [7]. Nevertheless, Mr Oakes drew my attention to a number of aspects of the scheme. I am satisfied that the structure of the scheme which was explained fully to me this morning addresses the "performance risk" raised in authorities of the court. See, eg. Investa Properties Limited [2007] FCA 1104 at [18] - [19] . Reference is there made to a number of earlier decisions on this question. I am also satisfied that the issue referred to in [27] of Investa , namely, the "vesting free of encumbrances" term is sufficiently addressed.


case_title: Peplin Limited [2007] FCA 1387

case_text: In accordance with the practice referred to by Gyles J in Peplin Limited [2007] FCA 1387 at [2] , I will not reproduce the submissions but I will mark them as MFI 1 and direct that they remain with the papers so that they may be available for inspection by any interested party. 3 Mr Oakes has taken me through the scheme booklet and the evidence in some detail this morning. I am satisfied from what he told me from the bar table and from what appears in the written submissions that all the relevant statutory conditions for convening the meeting have been satisfied. Briefly, the scheme is proposed between HPAL, which is a company providing outsourced business services, inbound and outbound communication management, results processing and information management services, and its shareholders. 4 HPAL is listed on the Australian Securities Exchange ('ASX'). The proposal is that HPAL shareholders will transfer their shares to Salmat Document Management Solutions Pty Limited (the Salmat bidder) which is a subsidiary of Salmat Limited (Salmat). That company is a leading "one-to-one communications business" which is also listed on the ASX. The consideration provided in the scheme is for a cash consideration or for an exchange of shares in Salmat. The ratio of the Salmat shares which would be provided as the consideration is between 0.5040 and 0.5784 Salmat shares. This is subject to a scale-back and a formula as set out in the scheme documentation.


case_title: Re Permanent Trustee Co Ltd (2002) 43 ASCR 601


case_outcome: related

case_text: this case I am in the rather extraordinary position of hearing in August 2006 a judicial review application in relation to a decision of the Refugee Review Tribunal (the Tribunal) made on 31 May 1999 concerning an application for a protection visa made on 13 August 1997. The explanation lies in the fact that the prosecutor was permitted to join a class action in the High Court of Australia in Muin v Refugee Review Tribunal; Lie v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601. On 25 November 2002, the High Court granted leave to a group of persons including the prosecutor to file an application seeking an order nisi. The draft order nisi, which was attached to the affidavit of a solicitor who acted for the applicant at that time, was directed to both the Minister and the Tribunal. However, the ground isolated in the draft order nisi attacked the decision of the Tribunal to affirm the refusal of the delegate of the Minister to grant the applicant a protection visa. The draft order nisi alleged that the decision was invalid as the Tribunal failed to afford the applicant/prosecutor natural justice because the applicant/prosecutor had not been given an opportunity (or at least an adequate opportunity) to prepare and present favourable material at hearing or an adequate opportunity to respond to unfavourable material. This matter, along with many others, was remitted to this Court by the High Court in 2003. In December 2004, the applicant provided submissions to this Court which included five so called grounds in support of an argument as to why an order nisi should be issued. The first ground was that the Refugee Review Tribunal erred in law in failing to weigh the credibility of the applicant's evidence correctly according to law. It is apparent from the oral submissions of the applicant today that that is the burden of his complaint. He has referred to various pieces of evidence which he says were before the Tribunal but which was not properly weighed or considered by it. That ground is doomed to failure. It has not been demonstrated that the Tribunal failed to have regard to any claim of a significant nature by the applicant. The assessment of the credibility of the applicant and the evidence presented by him was a matter for the Tribunal. No arguable error of law has been raised in relation to that matter. The second, third and fourth grounds refer to sections of the Act which came into force after the Tribunal's decision, albeit, in the case of s 424A, the day after. Such complaints as are made about notification of the handing down of the decision would not lead to its setting aside, even if correct.


case_text: no stage, either whilst he was represented or later, has the applicant been able to point to any material in the very detailed reasoning of the Tribunal that is based upon something of which he was not aware. It is submitted by counsel for the Minister that the Tribunal has in its reasons indicated in various places that adverse material was put to the applicant, and that is correct. I cannot, of course, conclude that every piece of adverse material was put to the applicant but it is clear that a great deal of it was and no particulars have been given of anything which was not. It is very likely, it seems to me, that in any event the substance and thrust of the adverse material was put to him (see NAOA v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 241 , particularly at [25]). The gravamen of the claim on behalf of the applicant, who is from Pakistan, was based upon his membership of the party known as the Pakistan People's Party (PPP). This party was one of the principal political parties of that country at the relevant time and the gist of the country information, (which it appears from the reasons of the Tribunal was put to the applicant,) was to the effect that PPP members would not, generally speaking, be persecuted for taking , an active interest in politics.


case_text: is also submitted on behalf of the Minister that the Tribunal found, as one separate limb of its reasoning, that the applicant could relocate to another part of Pakistan, such as Karachi, where his father resided and he claimed to have resided without incident. Based upon the principles in Randhawa v Minister for Immigration, Local Government and Ethnic Affairs (1994) 52 FCR 437, the Tribunal determined it would not be unreasonable to expect the applicant to relocate to an area of Pakistan other than his local district or the Punjab if he retained a subjective fear of harm in that place. There seems to me to be substance in the argument that that finding was based upon material which had been identified as having been put to the applicant. In my opinion, there is not even an arguable case made by the applicant for prerogative relief of the kind sought and there will be no order nisi or relief granted. I would only add that, as I said in opening, it is extraordinary that a matter such as this should be dealt with after such a long delay. It is quite unsatisfactory. It is not part of my function to go into the reasons for that delay, manifold as they are, but they plainly involve delay on the part of a number of public authorities, perhaps including the Court. I am not sure what scope there is for some reconsideration at ministerial level of the position of persons such as this who have been part of the Australian community for something like nine years. It is not something I can make any order about. I refuse to grant an order nisi. The application is dismissed. The applicant is to pay the respondents' costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 1 September 2006 The Applicant appeared in person Counsel for the Second Respondent: Ms S McNaughton Solicitor for the First, Second and Third Respondents: Australian Government Solicitor Date of Hearing: 29 August 2006 Date of Judgment: 29 August 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1202.html


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


case_text: There would normally be much force in this submission. After all, it may just be a question of degree as to whether there will be a finding of contribution or a finding of no causation because of the actions of an applicant: see eg Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 138. However, for the purposes of proper case management, I consider it will assist in the further conduct of this proceeding to make a decision now on this issue, particularly as I have come to a clear view on the matter. In any event, my later consideration of the applicability of Pt IVAA of the Wrongs Act necessarily includes a consideration of this issue.


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


case_text: However, even if Pt IVAA applies to these proceedings according to its own terms, I am of the view that Pt IVAA is not picked up by s 79 of the Judiciary Act because the Commonwealth Legislation "otherwise provides". In my view, the operation of the Commonwealth Legislation would so reduce the ambit of Pt IVAA of the Wrongs Act that the provisions of the Commonwealth Legislation are irreconcilable with it: Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553 at [78] to [83] per Gleeson CJ and Gummow J, and at [135] per Gaudron J; Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39 ; (2000) 203 CLR 136 at [17] per Gleeson CJ, Gummow and Hayne JJ, at [53] per McHugh J, and at [106] per Callinan J; Macleod v Australian Securities and Investments Commission [2002] HCA 37 ; (2002) 211 CLR 287 at [22] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ.


case_title: Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334


case_text: It was argued by the respondents that just as other provisions of the Wrongs Act could apply based upon the operation of s 79 , there was no reason to form a different view in relation to Pt IVAA , and reliance was placed upon the authority of Bialkower v Acohs Pty Ltd (1998) 83 FCR 1. That case concerned the applicability of Pt IV of the Wrongs Act . Under Pt IV , contribution between defendants and third parties does not detract from the ability of a plaintiff to seek full damages or compensation against a defendant. A plaintiff is entitled to his or her full entitlement even though the defendant seeks contribution from another person. On the other hand, Pt IVAA will impact upon the ability of a plaintiff to obtain relief against a particular defendant. The defendant has the benefit of the limitation on liability. The considerations affecting the operation of Pt IVAA in my view are therefore entirely different to the considerations affecting the operation of Pt IV of the Wrongs Act as considered in Bialkower 83 FCR 1. 25 It is therefore necessary to consider the specific provisions of Pt IVAA relied upon by the respondents. 26 The first matter to determine is whether Pt IVAA of the Wrongs Act is applicable in any event having regard to its own terms. 41 I need not delay considering this question any further, as the respondents can rely upon Pt IV of the Wrongs Act in seeking contribution from KPMG. Unlike Pt IVAA , Pt IV does apply to these proceedings by reason of the operation of s 79 of the Judiciary Act (see Bialkower 83 FCR 1). Of course, the respondents accepted that it is a requirement that KPMG owe a duty of care to the applicant to avoid the relevant economic loss if reliance is to be placed upon Pt IV of the Wrongs Act . 42 I now turn to the operation of O 15A r 6. It is convenient to deal with one preliminary matter, although it is unnecessary to do so in light of my conclusion that Pt IVAA has no application in these proceedings. KPMG submitted that O 15A r 6 had no application because there was no basis for the respondents to rely upon Pt IVAA of the Wrongs Act in support of the contention that they may have a right to obtain relief from KPMG. I do not accept that submission. If the respondents could rely upon Pt IVAA of the Wrongs Act so as to limit their liability to the applicant, the respondents must in the first instance be able to identify the existence of a concurrent wrongdoer within the meaning of s 24AH of the Wrongs Act . The alleged concurrent wrongdoer must then be joined as a party to the proceeding (see s 24AI(3)) , and will be a defendant within the meaning of s 24AE of the Wrongs Act . The respondents would then be able to rely upon any reduction in liability. The respondents before me would be able to seek, inter alia, declaratory relief against KPMG to the effect that KPMG is a concurrent wrongdoer within the meaning of s 24AH. It seems to me that any joinder of KPMG in these circumstances gives rise to the right to obtain relief by the respondents against the potential concurrent wrongdoer, namely KPMG, within the meaning of O 15A r 6. It does not matter that KPMG has no liability in monetary terms to the respondents, just that the respondents may have the right to obtain relief from KPMG, in the events postulated, by way of declaration. There would clearly be a controversy between the respondents and KPMG, as there would be between each of them and the applicant. 43 In any event, as I have already indicated, in relation to the claims brought by the applicant against the respondents, the respondents may have a right to obtain contribution from KPMG pursuant to Pt IV of the Wrongs Act . There would be no question that the right to recover contribution within the meaning of Pt IV of the Wrongs Act would constitute a right to obtain relief against KPMG, irrespective of what the position may be if reliance could only be placed upon Pt IVAA of the Wrongs Act .


case_text: Of course, there are other policy considerations that may impact upon whether the court should deny the duty of care alleged here, namely the impact of prolonged and multiple actions against auditors, the availability of other civil and criminal proceedings against auditors, and the public interest in ensuring there are auditors ready and willing to perform their duties at a reasonable cost. These matters were raised in Esanda [1997] HCA 8 ; 188 CLR 241 at 282 to 289 per McHugh J. They are matters which need to be considered, but none in my view are of sufficient weight in the context of my inquiry to conclude that the facts and elements relied upon by the respondents could not give rise to a duty of care as alleged. It is still not possible to identify precisely a line of demarcation between the cases of pure economic loss in which damages are recoverable and those in which they are not recoverable, but I am not satisfied, even adopting the test under s 31A of the Federal Court Act, that this is a case where damages may not be recoverable: see generally Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146.


case_title: Bradley v Eagle Star Insurance Co Ltd [1989] 1 All ER 961


case_title: British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30


case_outcome: considered

case_text: It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor & Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst & Young [1997] 2 SCR 165 at [37]. 53 In addition it was argued by KPMG that where audit reports are prepared pursuant to a statutory regime, the existence of potential civil and criminal liability under the relevant regime weighed against the further recognition of a separate duty to avoid economic loss owed by auditors to third parties, and the regime may be a determinative indication that audit reports were prepared for a statutory purpose rather than for the purpose of reliance by investors. Reference was made to Caparo v Dickman [1990] 2 AC at 652 to 653 and 661; Hercules Management [1997] 2 SCR at [49] to [57].


case_title: CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad (2001) 187 ALR 279


case_text: In view of the definition of "damages" in s 24AE of the Wrongs Act , Pt IVAA would apply to the claims such as those made in these proceedings. I note that the definition includes "any form of monetary compensation". In my view, Pt IVAA would also apply to a claim for a sum certain (contrast with Commonwealth Bank of Australia v Witherow [2006] VSCA 45 at [10] to [11] although the extended definition of "damages" does not seem to have been discussed). 18 There are no proportionate liability provisions in the old Corporations Act . Proportionate liability provisions were introduced into the amended Corporations Act by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) ('CLERP Act'), Sch 3(4), which commenced on 26 July 2004: see s 2(1) of the CLERP Act. They are contained in Div 2A of Pt 7.10 and apply only to conduct done in contravention of s 1041H (which prohibits misleading or deceptive conduct in relation to a financial product or a financial service). They do not apply to ss 945A and 947C(2)(e) of the amended Corporations Act . Nor do they apply to s 1012A of the amended Corporations Act . Accordingly, there is no provision of the old Corporations Act or the amended Corporations Act which applies a proportionate liability regime to the causes of action pleaded by the applicant. 19 The proportionate liability provisions in subdiv GA of Div 2 of Pt 2 of the ASIC Act were introduced by Sch 3(2) of the CLERP Act, and apply to claims for damages under s 12GF for conduct done in contravention of s 12DA. They do not apply to the cause of action pleaded by the applicant under s 12DB of the ASIC Act. 40 For the reasons set out above, Pt IVAA cannot be relied upon by the respondents for the purposes of seeking relief against KPMG. If reliance could be placed upon Pt IVAA of the Wrongs Act , it was argued by the respondents that the existence of a duty of care being owed by KPMG to the applicant to avoid the relevant economic loss, as distinct from some other relevant party, may not be required. In my view, having regard to the language of ss 24AH(1) and 24AI (1), the operation of s 24AJ , and the fact that the loss or damage referred to in s 24AH(1) is not divisible in terms of causation, it seems to me that the concurrent wrongdoers must each have committed the relevant legal wrong against the applicant. This conclusion seems to be implicit in the reasoning of the Court of Appeal in Witherow [2006] VSCA 45 , although the issue does not appear to have been addressed specifically.


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


case_text: It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor & Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst & Young [1997] 2 SCR 165 at [37]. 54 It was also contended by KPMG that to the extent the respondents relied upon the concept of "vulnerability", this was misconceived because there was here a potential indeterminate liability and an ability by the investors (including the applicant) to protect themselves. Further, it was contended that the concept of "vulnerability" may not be used to circumvent the historical preconditions to a claim for negligent misstatement against auditors as set forth in such cases as Esanda [1997] HCA 8 ; 188 CLR 241, when these preconditions establish the minimum threshold of "vulnerability" in factual situations in which they apply . 55 In considering these contentions, it is important to appreciate the context in which I am considering the issue of whether a duty of care as alleged by the respondents arises. My task is to determine, on this aspect, whether a duty of care may exist in the context of the principles I have identified previously in these reasons relevant to the application of O 15A r 6. 56 In this context, I have come to the conclusion that the facts and elements relied upon by the respondent may give rise to the alleged duty of care to avoid pure economic loss, such facts and elements being "salient features" which may give rise to the alleged duty. 57 On the basis of the material before me, I have not come to the view that the alleged duty of care is ill-founded or doomed to fail, or that, in adopting the test to be applied in considering an application under s 31A of the Federal Court Act, the potential cause of action could be dismissed or struck out. I do not accept that Esanda [1997] HCA 8 ; 188 CLR 241, and the other cases referred to by KPMG, lay down any preconditions to liability of auditors where we are not dealing with a claim for negligent misstatement and where the concept of vulnerability may become relevant and where all the salient features of the case need to be examined. No one salient feature is decisive, and all the facts and circumstances relied upon need to be considered. It can be accepted that auditors do not owe a duty as alleged merely by virtue of their acting in the capacity as auditors. However, more is relied upon by the respondents namely the facts and elements referred to earlier. 60 The concept of vulnerability is now an important requirement in providing a basis for a duty of care to avoid economic loss. It cannot be said that the decision in Esanda [1997] HCA 8 ; 188 CLR 241 should not be considered in light of the concept of vulnerability. Both these propositions follow from the passage in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2004) 216 CLR 515 at [23] (footnotes omitted): Since Caltex Oil , and most notably in Perre v Apand Pty Ltd , the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. So, in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiffs' land. In Hill v Van Erp , the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords , the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company. 61 As was observed though, in Esanda [1997] HCA 8 ; 188 CLR 241 the financier could itself have made inquiries about the financial position of the company to which it was to lend money, this being relevant to "vulnerability". 62 In Esanda [1997] HCA 8 ; 188 CLR 241 the appellant was a sophisticated investor well able in the circumstances to protect itself. It at least had a capacity to consider the investment, whereas in this proceeding the complaint is that the vulnerability arises after the making of the investment, where the investor arguably has no ability to look after itself. The concept of the ability to protect oneself is always relative and will depend upon many factors and circumstances. These are yet to be fully investigated in this proceeding. 68 Of course, there are other policy considerations that may impact upon whether the court should deny the duty of care alleged here, namely the impact of prolonged and multiple actions against auditors, the availability of other civil and criminal proceedings against auditors, and the public interest in ensuring there are auditors ready and willing to perform their duties at a reasonable cost. These matters were raised in Esanda [1997] HCA 8 ; 188 CLR 241 at 282 to 289 per McHugh J. They are matters which need to be considered, but none in my view are of sufficient weight in the context of my inquiry to conclude that the facts and elements relied upon by the respondents could not give rise to a duty of care as alleged. It is still not possible to identify precisely a line of demarcation between the cases of pure economic loss in which damages are recoverable and those in which they are not recoverable, but I am not satisfied, even adopting the test under s 31A of the Federal Court Act, that this is a case where damages may not be recoverable: see generally Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146. 69 As I have said, I am considering the question of whether a duty of care may arise in the circumstances contended for by the respondents. Esanda [1997] HCA 8 ; 188 CLR 241 may well be an authority which raises many difficulties for the respondents, but it does not stand in the way of the possibility in the circumstances of this proceeding that a duty of care to avoid pure economic loss exists.


case_text: In support of the contention of the respondents that the provisions of Pt IVAA of the Wrongs Act should be seen as complementary, reliance was placed upon s 5E(1) and 5E (4) of the Corporations Act . Even if otherwise applicable to the Commonwealth Legislation, s 5E(1) and 5E (4) themselves cannot be of any assistance to the respondents in this regard. They deal with not excluding or limiting the concurrent operation of any State law provided there is no direct inconsistency. For the same reasons as indicated in Gordon v Tolcher [2006] HCA 62 ; (2006) 81 ALJR 507 at [30] , s 5E can have no impact in the present proceeding. Of its own force, the Wrongs Act can have no application in this proceeding without the aid of s 79 of the Judiciary Act . 36 Therefore, Pt IVAA of the Wrongs Act cannot be relied upon by the respondents in this proceeding. 37 Finally on this issue, I mention that in the applicant's written outline, reference was made to s 109 of the Constitution although this matter was not further elaborated upon by the parties. In view of my conclusions, the operation of s 109 does not need any specific attention by me.


case_title: Harris v Newcastle-upon-Tyne Health Authority [1989] 2 All ER 273


case_title: Hercules Management Ltd v Ernst & Young [1997] 2 SCR 165


case_text: It was accepted by the respondents that if the relief being sought was pursuant to s 82 of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act ') then the position would be clear, and the plea of contributing fault sought to be relied upon the respondents could not be maintained based upon the authority of the High Court of Australia in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41 ; (2002) 210 CLR 109. I & L Securities [2002] HCA 41 ; 210 CLR 109 is binding authority for the proposition that the loss that can be claimed under s 82 of the Trade Practices Act cannot be apportioned between contributing causes, and that once the causal link is established between the injury and the contravention, the measure of the loss for which s 82 provides, to which the person bringing the action is entitled, is the amount of the loss or damage sustained and not some lesser amount. Further, s 87(1) does not confer a discretion to reduce or modify an award of damages made under s 82(1). 7 The issue before the court in that case was one of statutory construction of the Trade Practices Act . Similarly, the question here is one of statutory construction of the Commonwealth Legislation. 8 It was contended by the respondents that there is a relevant distinction between the provisions of the Trade Practices Act referred to by the court in I & L Securities [2002] HCA 41 ; 210 CLR 109 and the various provisions that are now relied upon by the applicant in this matter, so that the plea of contributing fault could be maintained, or at least was not clearly untenable. The respondents sought to rely upon the difference in wording of the Trade Practices Act and the Commonwealth Legislation. 9 In my view the difference in wording is not sufficient to take away the force of the court's reasoning in I & L Securities [2002] HCA 41 ; 210 CLR 109 . The use of the words "because", or "as a result of" found in the old Corporations Act (for instance) seems to me to be relevantly equivalent in their context to the word "by" in the Trade Practices Act , which was a focus of the attention of the court in I & L Securities [2002] HCA 41 ; 210 CLR 109. 10 Further, just as a relevant purpose of the Trade Practices Act is to proscribe misleading and deceptive conduct and, in aid of that purpose, to provide for compensation by an award of damages to a victim of such conduct, so here the Commonwealth Legislation similarly makes the respondents, if found liable, legally responsible for the whole of the loss. 11 As Gleeson CJ said in I & L Securities 210 CLR at [33]: The relevant purpose of the statute was to proscribe misleading and deceptive conduct in circumstances which included those of the present case. In aid of that purpose, the statute provided for compensation, by an award of damages, to a victim of such conduct. The measure of damages stipulated was the loss or damage of which the conduct was a cause. It was not limited to loss or damage of which such conduct was the sole cause. In most business transactions resulting in financial loss there are multiple causes of the loss. The statutory purpose would be defeated if the remedy under s 82 were restricted to loss of which the contravening conduct was the sole cause. What is there, then, in the justice and equity of the particular case that might lead to a conclusion that the respondent should not be regarded as legally responsible for the whole of the loss, even though the contravention was a cause of the whole of the loss? Upon what principle might such responsibility be diminished? In a financing transaction, a lender takes security to protect itself against the risk of default by the borrower. One aspect of that risk is that the lender might have failed adequately to assess the borrower's capacity to service the debt. I cannot see why, as a matter of principle, such failure by a lender should be treated, in the application of s 82 , as a factor which diminishes the legal responsibility of a valuer by negativing in part the causal effect of the valuer's misleading conduct. The statutory rule of conduct found in s 52 , when applied to the relationship between a valuer and a prospective lender, gives rise to a legal responsibility in a case such as the present which extends to the whole of the loss of which the valuer's misleading conduct is a direct cause. Further, as Gaudron, Gummow and Hayne JJ observed at [50]: If the causal link between injury and contravention is established, the measure of the compensation for which the section provides, and to which the person bringing the action is entitled, is the amount of the loss or damage sustained, not some lesser amount. In particular, it follows from the decision in Henville v Walker that there is nothing in s 82(1) , in other provisions of the Act, or in the policy of the Act, to suggest that a claimant's carelessness may be taken into account to reduce the amount of the loss or damage which the claimant is entitled to recover under s 82(1). Finally, as McHugh J stated at [102]-[104]: But there was one indivisible loss in this case. It might be just and equitable to hold that HTW should be held responsible for only two-thirds of that loss. But in terms of causation doctrine and in the absence of a statutory power of apportionment, it is liable for the whole loss. The approach of Williams J accords with apportionment cases involving contributory negligence. But, in the absence of any power in the Act to apportion responsibility for loss or damage under s 82 , it is not open to a court to make such an apportionment in making an award under s 82. HTW contends that, unless the approach of Williams J is adopted, the policy of the Act to control smart practices and encourage fair trading would be frustrated. It submits that the construction for which I & L contends would encourage a sophisticated, commercial lender, to treat the Act as providing a form of mortgage guarantee insurance. However, as I said in Henville , the policy behind the legislation is furthered if the party whose conduct contravenes the legislation bears the entire loss. Moreover, relief under s 82 is available not only for breaches of s 52 but for breaches of other provisions in Pt V as well as those in Pt IV of the Act and Pts IVA , IVB and s 51AC after the amendments. The reasoning adopted by Williams J would be likely to lead to inconsistencies in applying s 82 across such a broad spectrum of regulatory provisions. Moreover, it is unlikely that rejecting the construction that Williams J placed on s 82 will have the consequences predicted by HTW. Intentionally refusing to make proper inquiries when advancing loan funds will usually be held to be a voluntary act that breaks the chain of causation between the breach of the Act and the lender's loss. A loss caused by the intentional conduct of the applicant will not ordinarily be characterised as a loss caused "by" the contravening conduct of the respondent. 12 In the same way, the contributing fault plea is contrary to the express purpose of the Commonwealth Legislation. The Commonwealth Legislation aims to regulate corporate and individual behaviour by prescribing rules of conduct and ascribing consequences for breaches of those rules of conduct. To allow the contributing fault plea would be to allow an interpretation of the Commonwealth Legislation contrary to its purposes in exactly the same way as reasoned by the court in I & L Securities [2002] HCA 41 ; 210 CLR 109. 13 It is to be observed that the Commonwealth Parliament has introduced contributing fault provisions focusing on the conduct of an applicant in the Corporations Act 2001 (Cth) (' Corporations Act ') that would, if here applicable, found a basis for a contributing fault plea: see eg s 1041I(1B). However, Parliament has not extended those provisions to cover ss 945A and 947C (2)(e) of the amended Corporations Act (which are the corresponding provisions to ss 851 and 849 respectively of the old Corporations Act ) or to cover s 1012A of the amended Corporations Act . Thus, Parliament has enacted express statutory contributing fault mechanisms into some but not all parts of the amended Corporations Act . Parliament has also enacted a contributing fault mechanism into s 12GF of the ASIC Act (s 12GF(1B)), which applies to conduct in contravention of s 12DA (but not s 12DB) of the ASIC Act. 14 It was contended by the applicant that these amendments confirm that a plea of contributing fault is not available under the Commonwealth Legislation. In respect of ss 851 and 849 of the old Corporations Act and s 1012A of the amended Corporations Act it was contended that the position has been maintained by the subsequent legislative changes, whereas the introduction of an express provision allowing for contributing fault in s 12GF of the new ASIC Act showed (it was contended) that it was not envisaged such a plea of contributing fault was available under s 12DB of the ASIC Act. I do not consider it necessary to consider the impact of these subsequent amendments, as I have come to a clear view as a matter of construction of the Commonwealth Legislation. In any event, it may not be appropriate to interpret the applicable legislation by reference to amending provisions: see generally Pearce & Geddes, Statutory Interpretation in Australia (6 th ed, 2006) p 97 et seq.


case_title: John Holland Services Pty Ltd v Terranora Group Management Pty ltd [2004] FCA 679


case_title: John Robertson & Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65


case_title: Leighton Contractors Pty Ltd v Page Kirkland Management Pty Ltd [2006] FCA 288


case_title: Macleod v Australian Securities and Investments Commission [2002] HCA 37 ; (2002) 211 CLR 287


case_text: Ultimately, the question of whether discovery should be ordered is a matter involving the exercise of judicial discretion. The discretion is to be exercised having regard to the particular circumstances of each case: see Paxus Services 99 ALR at 733 to 734; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549 at [27] .


case_text: The respondents accepted that it was unlikely that the applicant itself relied upon or was induced to take any act by reason of statements made by KPMG in its audit reports. I should indicate at the outset, contrary to the submission of KPMG, that this concession does not necessarily preclude an entitlement to relief. The potential cause of action against KPMG concerns not simply negligent misstatement; rather it involves allegations of negligent execution of an audit involving alleged negligent conduct. In these circumstances a duty of care to avoid pure economic loss may arise, based on vulnerability, without actual reliance on the part of an applicant: see eg Moorabool Shire Council v Taitapanui [2006] VSCA 30 ; (2006) 14 VR 55 at [37] to [43] per Maxwell J and the cases referred to therein and [179] per Ormiston and Ashley JJA.


case_title: Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553