case_text: conclusions reflect the passage quoted with evident approval by Heerey J in Australian Competition and Consumer Commission v Nationwide News Pty Ltd (1996) 36 IPR 75 at 85 from the decision of the United States Supreme Court delivered by Hugo Black J in Federal Trade Commission v Standard Education Society [1937] USSC 142 ; 302 US 112 (1937) at 115: The fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.


case_outcome: cited

case_title: Federal Trade Commission v Standard Education Society [1937] USSC 142 ; 302 US 112 (1937)


case_outcome: referred to

case_text: my view, it is appropriate to make a declaratory order in respect of the contraventions I have found to be established. It will be in the form proposed by the ACCC. The facts that the contraventions occurred notwithstanding Harris Scarfe's efforts to comply with the TP Act over quite some time, and that they occurred notwithstanding in particular the 2004 undertaking and the 2006 undertaking, indicate to my mind that it is appropriate to make the declaratory order sought, as relevant to the contraventions, rather than permit Harris Scarfe to provide yet another undertaking to the ACCC. Moreover, and perhaps more importantly, the acceptance of a s 87B undertaking is within the discretion of the ACCC. It does not appear that the Court has power to oblige the ACCC to accept such an undertaking: Trade Practices Commission v Cue Design Pty Ltd (1996) 85 A Crim R 500 ; Australian Competition and Consumer Commission v Monza Imports Pty Ltd [2001] FCA 1455. The ACCC is not prepared to do so in respect of these contraventions. Even if it could be obliged to do so, contrary to the decisions referred to, I would not impose upon the ACCC the acceptance of yet a further s 87B undertaking. Then, rather than there be no formal recording of the contraventions, I would make the relevant declaratory order sought.


case_title: Australian Competition and Consumer Commission v Monza Imports Pty Ltd [2001] FCA 1455


case_text: form of injunctive order is quite specific. It is not generic, in the sense that it simply prohibits conduct which the TP Act prohibits: see BMW Australia Ltd v Australian Competition and Consumer Commission [2004] FCAFC 167. It captures the form of advertising in the sale catalogue which has led to the contravention. Such conduct occurred notwithstanding Harris Scarfe's compliance program, and the considerable effort and expense which Harris Scarfe had in the past put into trying to avoid conduct in contravention of ss 52 and 53 of the TP Act. An injunction in those terms should therefore deter Harris Scarfe from engaging in such conduct during the period of its currency: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 268.


case_text: Scarfe, since the conduct giving rise to the contraventions, has introduced and developed its Advertising Rule Book. It appears to address the circumstances giving rise to the present contraventions. However, as in any substantial retail organisation with an extensive product range, there may be scope for different views about the way such a document should be construed or applied. So too is there such scope, notwithstanding a compliance program and its Compliance Manual and its Advertising Rule Book and ongoing training, for oversight or error. The fact that Harris Scarfe committed the contraventions despite the extensive external and internal structures and resources it utilised to avoid contravening the TP Act provides reason to specifically prohibit the offending advertising style. The steps taken by Harris Scarfe to avoid such contraventions in the future may provide a reason not to make any injunctive order (cf Australian Competition and Consumer Commission v Wizard Mortgage Corporation Ltd [2002] FCA 1317 ( Wizard Mortgage ) per Merkel J at [22]). However, having regard to the past history including the 2004 undertaking, and the 2006 undertaking, my conclusion on balance is that it is appropriate to make the injunctive order in the terms sought. The corrective advertising sought by the ACCC is said to match the placement of the advertising in the sale catalogue giving rise to the contraventions. In my view, there is no real purpose in making such an order in the present circumstances. The injunctive order will prevent the form of advertising which gave rise to the contraventions. There is no evidence of any consumer having suffered loss as a result of the contravening conduct. There was a significant period after the sale catalogue was published before these proceedings were instituted, and a further period has since elapsed. In those circumstances, it is difficult to see how the proposed corrective advertising would serve any useful purpose: see Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 ; St Lukes Health Insurance v Medical Benefits Funds of Australia [1995] FCA 1314 per Northrop J at [34]; Wizard Mortgage per Merkel J at [27]; Signature [2002] FCA 3. In Australian Competition and Consumer Commission v Telstra Corporation Limited (ACN 051 775 556) [2007] FCA 2058 , Gordon J summarised the principles concerning the issue of whether corrective advertising should be made. Her Honour said at [4]: Section 86C of [the TP Act] confers power on the Court to make an order for corrective advertising. Corrective advertising may have a number of purposes: (1) to protect the public interest by dispelling an incorrect or false impression that has been created as a result of misleading or deceptive conduct ( Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 ; (2003) 135 FCR 1 at [49] (Full Court) and ACCC v Wizard Mortgage Corporation Ltd (2002) ATPR 41-903 at [27]) especially where all of the misleading or deceptive conduct arose out of advertisements and other public statements and promotions; (2) to alert consumers to the fact of the misleading or deceptive conduct and inform them that they might have some remedy if they relied upon any of the misleading or deceptive conduct: Medical Benefits Fund [2003] FCAFC 289 ; (2003) 135 FCR 1 at [54] ; (3) as an "aid in the enforcement of the primary orders and the prevention of repetition of the contravening conduct": ACCC v Real Estate Institute (WA) Inc (1999) 95 FCR 114 at 133 per French J, cited with approval in Medical Benefits Fund [2003] FCAFC 289 ; (2003) 135 FCR 1 at [51] .


case_text: purpose is not to add to Harris Scarfe the possible exposure to contempt of court if it commits a further contravention such as those which have been established. It is to add the additional incentive, or deterrence, of quite specific injunctive orders to prevent the re-occurrence of the offending conduct, albeit in the context of voluntary action already taken by Harris Scarfe which makes the risk of such re-occurrence quite small. It will, however, be limited in time to a period of three years: Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693 ; (2004) 207 ALR 329 at [45] .


case_text: corrective advertising sought by the ACCC is said to match the placement of the advertising in the sale catalogue giving rise to the contraventions. In my view, there is no real purpose in making such an order in the present circumstances. The injunctive order will prevent the form of advertising which gave rise to the contraventions. There is no evidence of any consumer having suffered loss as a result of the contravening conduct. There was a significant period after the sale catalogue was published before these proceedings were instituted, and a further period has since elapsed. In those circumstances, it is difficult to see how the proposed corrective advertising would serve any useful purpose: see Hospitals Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 ; St Lukes Health Insurance v Medical Benefits Funds of Australia [1995] FCA 1314 per Northrop J at [34]; Wizard Mortgage per Merkel J at [27]; Signature [2002] FCA 3.


case_title: St Lukes Health Insurance v Medical Benefits Funds of Australia [1995] FCA 1314


case_text: have not overlooked that, in Australian Competition and Consumer Commission v Telstra Corporation Limited [2004] FCA 1132 , Gyles J granted an injunctive order for five years. His Honour discussed that question at [5]. In my view, however, the period of three years, acting as a reinforcement in the manner I have described, is appropriate to enable the advertising practices of Harris Scarfe to have been cemented so as to thereafter carry little or no risk of like contravening conduct. The orders for corrective advertising and refinement of Harris Scarfe's compliance program are founded upon s 86C of the TP Act. It relevantly provides: (1) The Court may, on application by the Commission, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in contravening conduct. (2) The orders that the Court may make in relation to the person are: (a) ... (b) a probation order for a period of no longer than 3 years; and (c) ... (d) an order requiring the person to publish, at the person's expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order. (3) ... (4) In this section: "Probation order" , in relation to a person who has engaged in contravening conduct, means an order that is made by the Court for the purpose of ensuring that the person does not engage in the contravening conduct, similar conduct or related conduct during the period of the order, and includes: (a) an order directing the person to establish a compliance program for employees or other persons involved in the person's business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening, similar conduct or related conduct; and (b) an order directing the person to establish an education and training program for employees or other persons involved in the person's business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to the contravening conduct, similar conduct or related conduct; and (c) an order directing the person to revise the internal operations of the person's business which lead to the person engaging in the contravening conduct.


case_text: Australian Competition and Consumer Commission v Telstra Corporation Limited (ACN 051 775 556) [2007] FCA 2058 , Gordon J summarised the principles concerning the issue of whether corrective advertising should be made. Her Honour said at [4]: Section 86C of [the TP Act] confers power on the Court to make an order for corrective advertising. Corrective advertising may have a number of purposes: (1) to protect the public interest by dispelling an incorrect or false impression that has been created as a result of misleading or deceptive conduct ( Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 ; (2003) 135 FCR 1 at [49] (Full Court) and ACCC v Wizard Mortgage Corporation Ltd (2002) ATPR 41-903 at [27]) especially where all of the misleading or deceptive conduct arose out of advertisements and other public statements and promotions; (2) to alert consumers to the fact of the misleading or deceptive conduct and inform them that they might have some remedy if they relied upon any of the misleading or deceptive conduct: Medical Benefits Fund [2003] FCAFC 289 ; (2003) 135 FCR 1 at [54] ; (3) as an "aid in the enforcement of the primary orders and the prevention of repetition of the contravening conduct": ACCC v Real Estate Institute (WA) Inc (1999) 95 FCR 114 at 133 per French J, cited with approval in Medical Benefits Fund [2003] FCAFC 289 ; (2003) 135 FCR 1 at [51] .


case_text: principles were applied by Moore J in Australian Competition and Consumer Commission v Prouds Jewellers Pty Ltd (No 2) [2008] FCA 476. In the light of the injunctive order proposed to be made, and in the particular circumstances, I do not think any of those three purposes would usefully be served now by corrective advertising. The public interest is adequately protected by the injunctive order, in effect reinforcing the voluntary action taken by Harris Scarfe. The absence of any identified consumer who suffered loss as a result of the contravening conduct makes it quite unlikely now that corrective advertising would alert any particular consumer to the possibility of a remedy. And I have already indicated the injunctive order itself is to aid in preventing a repetition of the contravening conduct.


case_text: advertising may, of course, raise public awareness as to the type of conduct that may contravene the TP Act, as well as the outcome of the particular case: see per Lee J in Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [21] . That case involved orders, including corrective advertising, proposed to be made by consent. In the particular circumstances, I do not consider that factor in the overall balance warrants the making of orders for corrective advertising. Consumers are unlikely to be further exposed to such contravening conduct on the part of Harris Scarfe for the reasons already given. Competitors will no doubt become aware of the outcome of this case, and take account of its reasons in their further advertising. Hence, consumers more generally are also not likely to benefit from corrective advertising specific to Harris Scarfe's contravening conduct unless, first, a competitor engaged in similar conduct and the connection between that advertising and the corrective advertising specific to Harris Scarfe was made. I therefore decline to order corrective advertising. The final package of orders sought by the ACCC under s 86C involve Harris Scarfe being required to revise and review its internal operations in relation to its compliance with the TP Act. Specifically, the package of orders would require: (1) Harris Scarfe to appoint a senior employee as its "Internal Review Manager"; (2) Harris Scarfe, on the recommendation of its Internal Review Manager, to retain an appropriately qualified and experienced Independent Reviewer (a person not previously involved in the design or implementation of the compliance program); (3) the Independent Reviewer to review the compliance program and the process of producing the sale catalogue to determine why the contraventions occurred, and to recommend steps to be taken, including revision of the compliance program, to ensure similar or related conduct does not occur in the future; (4) Harris Scarfe to provide a copy of the Independent Reviewer's report to the ACCC; (5) Harris Scarfe to implement the Independent Reviewer's recommendations as it "considers reasonably necessary" to ensure it does not engage in the contravening conduct or any similar or related conduct in the future; (6) Harris Scarfe to report to the ACCC of the steps it has taken pursuant to (5) or to report that it has decided not to implement any of those recommendations. Then, if the ACCC did not agree with Harris Scarfe's actions, the ACCC is to be given the right to apply to the Court "regarding the adequacy of any step taken by Harris Scarfe to review its internal operations". Presumably, the expectation is that the Court would then be asked to determine whether some further orders in relation to Harris Scarfe's internal systems should be directed by the Court.


case_outcome: considered

case_text: The cases have, in addition, referred to other matters as relevant in the determination of the appropriate pecuniary penalty. French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152, a Full Court of Burchett, Carr and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, and a Full Court of Black CJ, Lee & Goldberg JJ in J McPhee & Son (Aust) Pty Ltd v Australian Consumer and Competition Commission (2000) 172 ALR 532 identify, not exclusively, as further factors relevant to the determination of penalty: (a) The size of the contravening company; (b) The degree of power the company has, as evidenced by its market share and ease of entry into the market; (c) Whether the conduct was systematic, deliberate, or covert; (d) The period over which the conduct occurred; (e) The effect on the functioning of the market and other economic effects of the conduct; (f) Whether the contravention arose out of the conduct of senior management or at a lower level; (g) Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and discipline, or other corrective measures in response to an acknowledged contravention; and (h) Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention. 83 In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152, French J said: 'The principal, and I think probably the only object of the penalties imposed by s 76 , is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.'


case_text: The cases have, in addition, referred to other matters as relevant in the determination of the appropriate pecuniary penalty. French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152, a Full Court of Burchett, Carr and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, and a Full Court of Black CJ, Lee & Goldberg JJ in J McPhee & Son (Aust) Pty Ltd v Australian Consumer and Competition Commission (2000) 172 ALR 532 identify, not exclusively, as further factors relevant to the determination of penalty: (a) The size of the contravening company; (b) The degree of power the company has, as evidenced by its market share and ease of entry into the market; (c) Whether the conduct was systematic, deliberate, or covert; (d) The period over which the conduct occurred; (e) The effect on the functioning of the market and other economic effects of the conduct; (f) Whether the contravention arose out of the conduct of senior management or at a lower level; (g) Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and discipline, or other corrective measures in response to an acknowledged contravention; and (h) Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention. 84 As the Full Court of Burchett, Carr and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at pp 294-295: 'The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that a contravention would pay, and detection lead merely to a compliance program for the future.' 110 I give very great weight to that circumstance, and note the comments by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at p 291: 'There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.' 111 In my judgment, this case is not a clear case where the Court should depart from the figures agreed by properly informed and legally assisted parties with different interests in the outcome of these proceedings. 112 For the above reasons, I make the declarations as agreed by the parties, and I make following orders: 1. Jurlique International, Jurlique Distribution, J & J Franchising and Jurlique Spa, whether by itself or its directors, servants, agents, employees or otherwise howsoever, be restrained, within Australia and in respect of agreements for supply between Australia and places outside Australia, for a period of 5 years, from: 1.1 inducing, or attempting to induce, a person not to advertise or sell products under the 'Jurlique' brand, supplied to the person directly or indirectly by that respondent at a price less than a price specified by that respondent; 1.2 entering into an agreement, or offering to enter into an agreement, for the supply of products under the 'Jurlique' brand, to a person being an agreement one of the terms of which is, or would be, that the person will not sell the products at a price less than a price specified, or that would be specified, by that respondent; 1.3 withholding supply of products under the 'Jurlique' brand, to a person (other than a person who within the preceding year has sold products obtained from the respondent at less than their cost to the other person, not being by way of genuine seasonal or clearance sale or with consent of the respondent) for the reason that the person has sold or is likely to sell, or has not agreed not to sell, the products supplied to him or her by that respondent at a price less than the price specified by that respondent as the price below which the products are not to be sold; or 1.4 using in relation to products under the 'Jurlique' brand, supplied, or that may be supplied, by that respondent to a person, a statement of price that is likely to be understood by the person as the price below which the products are not to be advertised or sold. 2. Each of Jurlique International, Jurlique Distribution, J & J Franchising and Jurlique Spa be restrained, within Australia and in respect of agreements for supply between Australia and places outside Australia, for a period of 5 years, from being directly or indirectly knowingly concerned in or party to a corporation engaging in the conduct set out in pars 1.1 to 1.4 above in relation to the supply of skincare, cosmetic or herbal medicine products, or products under the 'Jurlique' brand. 3. J & J Franchising, whether by its directors, servants, agents, employees or otherwise howsoever, be restrained, within Australia, for a period of 5 years, from making, arriving at or giving effect to any contract, arrangement or understanding: 3.1 with another corporation that supplied Jurlique treatments (other than an agreement to supply Jurlique treatments jointly, or an agreement with a related entity); 3.2 which contains a provision that has a substantial purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for Jurlique treatments supplies or offered for supply by any of the parties to the contract, arrangement or understanding in competition with each other. 4. Dr Klein be restrained, within Australia and in respect of agreements for supply between Australia and places outside Australia, for a period of 5 years, from being directly or indirectly knowingly concerning in a corporation which supplies to another person skincare, cosmetic or herbal medicine products, or products under the 'Jurlique' brand: 4.1 inducing or attempting to induce that other person not to sell those products at a price less than a price specified by that corporation; 4.2 entering into an agreement, or offering to enter into an agreement for supply of products to that other person one of the terms of which agreement is that the other person will not sell the products at a price less than that specified by the corporation; 4.3 withholding the supply of the product to that other person (other than a person who within the preceding year has sold products obtained from the respondent at less than their cost to the other person, not being by way of genuine seasonal or clearance sale or with consent of the respondent) for reason that the other person has sold or is likely to sell, or has not agreed not to sell, the products at a price less than a price specified by the corporation as a price below which the goods are not to be sold; or 4.4 using in relation to those products a statement of price likely to be understood by that other person as a price below which the products are not to be sold. 5. Dr Klein be restrained, within Australia, for a period of 5 years, from being directly or indirectly knowingly concerned in, or aiding, abetting, counselling or procuring, a corporation that supplies health treatment service making, or arriving at, or giving effect to any contract or arrangement or understanding (other than an agreement to jointly supply such services, or an agreement with a related entity), which contains a provision that has a substantial purpose or effect or likely effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices charged for the services supplied or offered for supply by any of the parties to the contract, arrangement or understanding in competition with each other. 6. Jurlique International pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $1,000,000 in respect of its contraventions of s 48 of the Trade Practices Act 1974 (Cth) and of its ancillary involvement in contraventions of that section alleged in pars 76 to 79 of the statement of claim, occurring after 14 August 2000; 7. Jurlique Distribution pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $1,400,000 in respect of its contraventions of s 48 of the Act alleged in pars 80 to 83 of the statement of claim, occurring after 14 August 2000; 8. J & J Franchising pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $700,000 in respect of its contraventions of ss 45(2)(a)(ii) and 45 (2)(b)(ii) of the Act and of its ancillary involvement in contraventions of s 48 alleged in pars 84 to 87 of the statement of claim, occurring after 14 August 2000; 9. Jurlique Spa pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $100,000 in respect of its ancillary involvement in contraventions of s 48 of the Act alleged in par 88 of the statement of claim, occurring after 14 August 2000; 10. Dr Klein pay to the Commonwealth of Australia, within 21 days of the date of this order, a pecuniary penalty in the amount of $200,000 in respect of his ancillary involvement in contraventions of ss 45(2)(a)(ii) , 45 (2)(b)(ii) and 48 of the Act alleged in pars 89 to 95 of the statement of claim, occurring after 14 August 2000; 11. The seal of the Court be affixed to the judgment and the reasons for judgment given in this proceeding for the purpose of s 83 of the Trade Practices Act 1974 (Cth); 12. Jurlique International, Jurlique Distribution, J & J Franchising and Jurlique Spa pay the applicant's costs of and incidental to these proceedings as against them in the agreed amount of $125,000, within 21 days of the date of this order; 13. Dr Klein pay the applicant's costs of and incidental to these proceedings as against him in the agreed amount of $20,000, within 7 days of the date of this order. I certify that the preceding one hundred and twelve (112) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate: Dated: 8 February 2007 Counsel for the Applicant: Mr Simon Couper QC Solicitor for the Applicant: Australian Government Solicitor Counsel for the 1st-4th Respondents: Mr Patrick O'Shea SC Solicitor for the 1 st -4 th Respondents: Minter Ellison Lawyers Counsel for the 5 th Respondent Solicitor for the 5 th Respondent Mr Andrew Musgrave King and Company Date of Hearing: 10 October 2006 Date of Judgment: 8 February 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/79.html


case_title: J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532

case_text: The cases have, in addition, referred to other matters as relevant in the determination of the appropriate pecuniary penalty. French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152, a Full Court of Burchett, Carr and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, and a Full Court of Black CJ, Lee & Goldberg JJ in J McPhee & Son (Aust) Pty Ltd v Australian Consumer and Competition Commission (2000) 172 ALR 532 identify, not exclusively, as further factors relevant to the determination of penalty: (a) The size of the contravening company; (b) The degree of power the company has, as evidenced by its market share and ease of entry into the market; (c) Whether the conduct was systematic, deliberate, or covert; (d) The period over which the conduct occurred; (e) The effect on the functioning of the market and other economic effects of the conduct; (f) Whether the contravention arose out of the conduct of senior management or at a lower level; (g) Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and discipline, or other corrective measures in response to an acknowledged contravention; and (h) Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.


case_text: The parties acknowledge that what is known in criminal law as the 'totality principle' should apply; namely that the total penalty for related offences ought not to exceed what is appropriate for the entire contravening conduct involved. The applicability of the 'totality principle' to penalties for contraventions of the Act was accepted by Burchett J in Trade Practices Commission v TNT Australia Pty Ltd & Ors (1995) ATPR 41-375 at 40,169. 53 While all the factors referred to above have to be considered in the context of the circumstances of a particular case, some of those factors are of particular relevance in the assessment of appropriate penalties in the present case.


case_text: The contravening conduct is in connection with premium skin care products. Approximately three quarters of the Jurlique Products sold in Australia by value of retail sales are skin care products. The remaining quarter of Jurlique Products sales by retail value relate to hair care, essential oils, and tincture products. Skin care products were the subject of the decision Australian Competition and Consumer Commission v Dermologica Pty Ltd (2005) 215 ALR 482 (' Dermologica '), and it is right to note that the Commission considers the objective of general deterrence to be of particular importance in relation to the skin care product industry. 55 However, it is also relevant to note that Jurlique Products comprise a small proportion of total skin care product sales in Australia, but their share of premium skin care products is larger. 56 The majority of the contraventions by the Jurlique Companies involve specialist retailers, including the company outlets, franchise outlets, and the Jin Hsing Company. The contravening conduct concerning price lists also involves pharmacies and salons. 99 It is relevant in this context to refer to Dermologica . The report indicates that Dermologica, in the financial year 2001/2002, had sales of nearly $15 million and profit before income tax in the order of $1.2 million. In the present case, in the 2003/2004 financial year, the Jurlique Companies' revenue was four times larger than Dermologica's income in 2001/2002, and the Jurlique Companies' profit before tax was considerably higher than Dermologica's. 100 As to the degree of market power of the Jurlique companies, I have already referred to the lack of market power of Jurlique in the market of premium skin care products. The joint submissions of the parties acknowledge at par 119: 'Jurlique is not alleged to have market power against its competitors. Jurlique's share of sales is low in the skin care product industry however Jurlique Products are highly differentiated and offers one of only a few ranges of products claiming to have natural ingredients and to be made in Australia. Customers' perception of a brand's image, which is expensive to create and maintain through advertising and marketing, differentiates Jurlique Products from many competitors' products. Accordingly, some customers are willing to pay more for particular skin care products based on their perception of image.' 101 However, it is also relevant to note the submission at par 120 that: 'The Jurlique Companies engaged in resale price maintenance conduct against Jurlique Franchisees in circumstances where the threat to remove stock from their stores would have destroyed their investment in a franchise store. Because Jurlique Franchisees made a substantial investment in each franchise store, Jurlique Companies had significant power in respect of its Jurlique Franchisees.'


case_text: In Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896, Smithers J made plain so long ago as 1978, ' the principal object of the imposition of a penalty under s 76 is deterrence '.


case_text: Concerning general deterrence, Pincus J, as long ago as 1990, commented in Trade Practices Commission v Sony (Aust) Pty Ltd & Ors (1990) ATPR 41-053 at 51,691: 'When one finds deliberate breaches of the price maintenance provisions of the Trade Practices Act ... after years of attempts to enforce compliance with these provisions, one can only suspect that the penalties have not been taken very seriously. Their deterrent effect has been insufficient.'


case_text: More recently, in 2001, Finkelstein J said in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (2001) ATPR 41-815 at par 13: 'If general deterrence is the principal object of imposing a penalty, the number of cases that still come before the court, and the seriousness of the conduct that is involved in some of them, suggests that past penalties are not achieving that object. For a penalty to have the desired effect, it must be imposed at a meaningful level. Most antitrust violations are profitable. Accordingly, the penalty must be at a level that a potentially-offending corporation will see as eliminating any prospect of gain.'


case_text: In relation to general deterrence in the context of price fixing (where there is a clear and demonstrable nexus between the contravening conduct and the infliction of loss or damage on consumers), Selway J in Australian Competition and Consumer Commission v McMahon Services Pty Ltd (2004) ATPR 42-031 at par 15 said: 'Once it is understood that deterrence, and particularly general deterrence, is the primary principle in the imposition of penalty for price fixing, then at least two conclusions flow from that. First, it means that penalties for collusive price fixing will need to be substantial and significant. This is, of course, reflected in the size of the maximum penalty upon corporations of $10 million. However, it also follows logically from the principle. Collusive price fixing, particularly between tenderers is difficult to detect. Public enforcement often only occurs with "a tip from an affected party or an insider" (See Marshall & Meurer, "Bidder Collusion and Antitrust Law: Refining the Analysis of Price Fixing to Account for the Special Features of Auction Markets" (2004) 72 AntiTrust Law Journal 83 at 101). Given these difficulties and the potential for large profits from such practices there is a chance that those in the market place might be prepared to factor the risk of a low penalty into its pricing structure as a 'business cost'. That would be inimical to the statutory purpose of ensuring that the practices do not occur. The penalty must be sufficiently high that a business, acting rationally and in its own best interest, will not be prepared to treat the risk of such a penalty as a business cost.' 88 Because the Act defines resale price maintenance as a per se contravention, the Act requires the Court to apply similar considerations to the conduct in the calculation and imposition of appropriate penalties for the resale price maintenance. 89 There is, of course, a need to consider the capacity of a contravening party to pay in the calculation of the appropriate penalty, while also giving effect to the primary obligation of the Court to impose a penalty which satisfies the requirement of general deterrence.


case_text: Goldberg J in Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 said at par 39: 'The penalty imposed must be substantial enough that the party realises the seriousness of its conduct and is not inclined to repeat such conduct. Obviously the sum required to achieve this object will be larger where the Court is setting a penalty for a company with vast resources. However, as specified deterrence is only one element and general deterrence must also be achieved, consideration of the party's capacity to pay must be weighed against the need to impose a sum which members of the public will recognise as significant and proportionate to the seriousness of the contravention.' 91 Next, it is important to note that the resale price maintenance conduct occurred over a long period of time. The first instance in the pleadings was in 1991, with the last conduct, the subject of these proceedings, being in 2003. The majority of the conduct the subject of the contraventions occurred during 1999, 2001 and 2002. These proceedings were filed on 14 August 2006. Within the six year time frame prior to the institution of these proceedings there are more than 30 resale price maintenance contraventions of the Act. That conduct affected Jurlique franchisees and retailer outlets throughout Australia and also involved international customers, both within Australia and overseas. 92 Dr Klein, during the period of the relevant contraventions for penalty, was the most senior executive and owner of the Jurlique Companies. He set the policy on discounting, was directly involved in aspects of the drafting of Jurlique Franchise Agreements, in negotiating the schedules and terms with franchisees, and he had direct contact with the stores. He was involved in all aspects of the contravening conduct. The other contraventions did not involve ongoing conduct.


case_text: Company, in fact, received all but $350,000 of $3,500,000 from the plaintiffs on the basis of the charge. Those funds would not have been advanced had the charge not been made. Those funds were received by the Company for its benefit, and therefore, for the benefit of unsecured creditors, including employees. On one view, the unsecured creditors, therefore, would have derived a windfall benefit by the inadvertence that led to the delay in giving notice of the charge. It is not unfair or inconsistent with the general policy of the law and the rights of creditors that they might be deprived of that windfall gain (see Craig Mostyn & Co v Old Valley Pty Ltd [2004] FCA 1083 ; 139 FCR 477 at [52] ). In all of the circumstances, I consider that it is appropriate to accede to the plaintiffs' application. Accordingly, I propose to make orders as sought by the plaintiffs. The plaintiffs have joined the Company and the administrators as defendants. The plaintiffs are seeking orders in the nature of an indulgence. It is appropriate, therefore, that the plaintiffs should pay the defendants' costs. The plaintiffs do not oppose such an order. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 14 August 2009 Counsel for the Plaintiffs: Mr D Robinson SC Solicitor for the Plaintiffs: Holding Redlich Solicitor for the Defendants: Sparke Helmore Date of Hearing: 14 August 2009 Date of Judgment: 14 August 2009 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2009/990.html


case_outcome: applied

case_text: appeal was fixed for hearing on 27 August 2009. On the preceding day, 26 August 2009, the High Court of Australia delivered judgment in Minister for Immigration and Citizenship v SZKTI [2009] HCA 30 ( SZKTI ) by which the High Court allowed an appeal from a Full Court of this Court in SZKTI v Minister for Immigration and Citizenship [2008] FCAFC 83 ; (2008) 168 FCR 256 ( SZKTI (Full Court decision)). Contemporaneously, the High Court heard an appeal in Minister for Immigration and Citizenship v SZLFX [2009] HCA 31 ( SZLFX ) because a common issue of statutory construction was involved in the two appeals. The reasons given in SZKTI were also applicable to SZLFX and the Minister's appeal in the latter case was also allowed. In the present case the Federal Magistrates Court based its decision the subject of the present appeal on the decisions of Full Courts of this Court in SZKTI (Full Court decision); Minister for Immigration and Citizenship v SZLFX [2008] FCAFC 125 ; and SZKCQ v Minister for Immigration and Citizenship [2008] FCAFC 119 ; (2008) 170 FCR 236. The first two of those three cases were the subject of the appeals to the High Court referred to above. The consequence of the High Court's reversals of the Full Court decisions in SZKTI and SZLFX is that the present appeal by the Minister must be allowed. As will appear below, it was after the Federal Magistrate reserved judgment that the three Federal Court Full Court judgments were delivered, and his Honour based his decision favourable to SZKJT on them and not on the grounds which SZKJT had raised. His Honour allowed the parties an opportunity to make further submissions on the s 424 issue the subject of the three Full Court decisions. The Minister did so, submitting (at [41], [42]) that for any one of several reasons, s 424(2) of the Act was not engaged. For reasons that appear below, the appropriate order is that the matter be remitted to the Federal Magistrates Court for determination of the outstanding issues. SZKJT is a citizen of the People's Republic of China (China). He arrived in Australia on 17 April 2006 and applied for a protection visa on 22 May 2006. SZKJT's claims were to the effect that he had had to pay certain fines and debts, and had been active in questioning Chinese authorities in respect of "donations" that he and others had had been compelled to pay. He claimed that as a result of a belief by Chinese authorities that he had encouraged his fellow villagers not to pay these donations, he had been harassed, detained and physically abused by those authorities. He claimed that he had encouraged local people also to protest, and that, as a result, he had been questioned by police, who he had heard were planning to detain him again. On 9 August 2006 the Delegate refused to grant the visa. In SZKTI the High Court has held that the power to "get" information referred to in s 424(1) of the Act is to be distinguished from the power to "invite a person to give additional information" referred to in s 424(2) , and that exercise of the former power does not attract the constraints that are attached to an invitation to a person to give additional information referred to in s 424(2) by ss 424(3) , 424B and 441A . The conclusion is inescapable that the Federal Magistrates Court erred (through no fault of its own) in its finding of jurisdictional error. That finding was founded on the proposition that the telephone call and the written inquiry of DFAT did not comply with ss 424(3) , 424B and 441A . It suffices to say that the effect of the High Court decision in its application to the facts of the present case is that the Tribunal was at liberty to get the information in question from the friend and from DFAT without complying with those provisions. I do not think that [47] of their Honours' reasons for judgment was intended to confine the ratio decidendi to the getting of information over the telephone. It is not necessary to explore other issues, although I note in passing that the inquiries made by the Tribunal of the friend and of DFAT were first time inquiries of those sources and could not be characterised as invitations to them to provide information additional to information that they had previously given to the Tribunal; cf SZLPO v Minister for Immigration and Citizenship [2009] FCAFC 51 ; (2009) 255 ALR 407 at [99] , [100]; SZKTI at [4].


case_outcome: distinguished

case_text: is not necessary to explore other issues, although I note in passing that the inquiries made by the Tribunal of the friend and of DFAT were first time inquiries of those sources and could not be characterised as invitations to them to provide information additional to information that they had previously given to the Tribunal; cf SZLPO v Minister for Immigration and Citizenship [2009] FCAFC 51 ; (2009) 255 ALR 407 at [99] , [100]; SZKTI at [4].


case_title: Re Spargos Mining NL (1990) 3 ACSR 1

case_text: "contrary to the interests" provision now contained in subpar (d) of s 232 has a separate and distinct area of operation from the "oppression" provisions in subpar (e) of s 232. The manner in which a company is being administered and in which its affairs are conducted may fall within the category of conduct contrary to the interests of the company's members as a whole although it may not be described as oppressive, unfairly prejudicial to, or unfairly discriminatory against members of the company: Turnbull v National Roads & Motorists' Association Limited [2004] NSWSC 577 ; (2004) 50 ACSR 44 at 52, 57; Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 ; (2008) 66 ACSR 359 at 400. (See also Re Spargos Mining NL (1990) 3 ACSR 1 at 42; Shelton v NRMA Limited (2005) 51 ACSR 278.) An example of such conduct may be found where a company is formed for the purpose of undertaking particular activities but the directors and management disregard those activities and direct the company into different commercial areas. In the course of final submissions Senior Counsel for the plaintiff submitted that the Council ought to be condemned for its failure to meet the expectations of its members. However, s 232 is not a punitive provision but rather a remedial provision: Re Spargos Mining NL (supra) at 44. The remedy to be granted under ss 232 and 233 is not to punish or to condemn but rather to remedy and end such oppression as has existed or such conduct which has arisen. Senior Counsel for the plaintiff explained the concerns of the plaintiff in response to a question I put to him when he drew my attention to the fact that in the audited financial statements for the year ended 30 June 2008 there was a significant variation in the figure shown as the surplus between the draft financial statements and the final financial statements. The Income Statement in the draft financial statements showed a net surplus for the period ended 30 June 2008 of $666,448 whereas the Income Statement in the final financial statements showed a net surplus of $1,074,464 for the same period. I asked Counsel how he put the variation on the issue of oppression. Counsel responded: "Your Honour, it doesn't constitute oppression in itself, the clause starting with the financial records, but it's consistent with a company that's not paying attention to its objectives and its data, which is included to have good governance and financial controls. We say it's consistent with an organisation that simply isn't effectively pursuing its objectives and properly conducting its affairs. But in itself, it doesn't constitute oppression and as it doesn't disclose insolvency it isn't a ground we rely upon for winding up. We don't pursue winding up. But, your Honour, it's also consistent with a course of conduct with not providing documents which ought to have been provided. When they're requested they're still not provided, let alone within a reasonable time. So, it's consistent with the other complaints we make and supportive of the proposition that confronted with the failure to properly conduct the company and pursue its objects and involve members in the way that had been contemplated and then failure to disclose financial information to establish the basis upon which it could fund the activities it was supposed to pursue or any budget for the business plans that had been produced, Mr Szental was really left ... He either walked away, saying well it doesn't matter that this company is not being conducted properly, it doesn't matter that it's not pursuing its objectives, it doesn't matter that the demand side policies aren't being developed and advocated. It doesn't matter that there's a process by which there is a selection of representatives not based on any procedure or structure to participate in briefings and advocacy. He could do that, that would be an easy thing to do. Or he could do it really as the only effective form of proceeding that he could bring, which is this proceeding, to attempt to remedy those deficiencies, which is what he's done." Mr Szental's concerns were understandable but they do not warrant a finding of oppression. Further, by the commencement of the final hearing the substantive matters complained of by the plaintiff had been attended to by the Council. That consequence gives rise to the question as to whether it is open to a court to grant relief under s 233(1) when the conduct complained of, although in existence at the time the proceeding was filed, is no longer continuing as at the date of the trial or thereafter.


case_text: "contrary to the interests" provision now contained in subpar (d) of s 232 has a separate and distinct area of operation from the "oppression" provisions in subpar (e) of s 232. The manner in which a company is being administered and in which its affairs are conducted may fall within the category of conduct contrary to the interests of the company's members as a whole although it may not be described as oppressive, unfairly prejudicial to, or unfairly discriminatory against members of the company: Turnbull v National Roads & Motorists' Association Limited [2004] NSWSC 577 ; (2004) 50 ACSR 44 at 52, 57; Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 ; (2008) 66 ACSR 359 at 400. (See also Re Spargos Mining NL (1990) 3 ACSR 1 at 42; Shelton v NRMA Limited (2005) 51 ACSR 278.) An example of such conduct may be found where a company is formed for the purpose of undertaking particular activities but the directors and management disregard those activities and direct the company into different commercial areas. An essential feature of the "oppression" provisions in subpar (e) of s 232 is whether or not there has been commercial unfairness. The manner in which the Court should approach the issue whether there has been commercial unfairness was conveniently identified by Tamberlin J in Shelton v NRMA Limited (supra) as follows at 284 5: "It is not practicable to delineate the numerous ways in which oppressive conduct may be established. The court will generally look at the overall course of conduct and consider whether it is so unfair that reasonable directors would not consider it fair. If directors exercise a power so as to impose a disability or burden on a member that is unfair according to ordinary standards of reasonableness and fair dealing, then such conduct may be described as oppressive. The question is one of fact and degree for the Court to determine, having regard to the view the directors have formed themselves, and allowing for any special skill or knowledge possessed by the directors. The test of unfairness is objective: see Wayde v NSW Rugby League Limited [1985] HCA 68 ; (1985) 180 CLR 459 at 472 (" Wayde ") per Brennan J; Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573. The court should not take a narrow approach to cases of oppression. It is necessary for the court to come to a conclusion that there has been conduct unfairly prejudicial to or unfairly discriminatory or oppressive to a member before it makes an order to this effect: see John J Starr (Real Estate) Pty Ltd v Andrew (Australasia) Pty Limited (1991) 6 ACSR 63 , and the authorities there collected at 65-67."


case_title: Turnbull v NRMA Limited [2004] NSWSC 577 ; (2004) 50 ACSR 44

case_text: "contrary to the interests" provision now contained in subpar (d) of s 232 has a separate and distinct area of operation from the "oppression" provisions in subpar (e) of s 232. The manner in which a company is being administered and in which its affairs are conducted may fall within the category of conduct contrary to the interests of the company's members as a whole although it may not be described as oppressive, unfairly prejudicial to, or unfairly discriminatory against members of the company: Turnbull v National Roads & Motorists' Association Limited [2004] NSWSC 577 ; (2004) 50 ACSR 44 at 52, 57; Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 ; (2008) 66 ACSR 359 at 400. (See also Re Spargos Mining NL (1990) 3 ACSR 1 at 42; Shelton v NRMA Limited (2005) 51 ACSR 278.) An example of such conduct may be found where a company is formed for the purpose of undertaking particular activities but the directors and management disregard those activities and direct the company into different commercial areas.


case_text: "contrary to the interests" provision now contained in subpar (d) of s 232 has a separate and distinct area of operation from the "oppression" provisions in subpar (e) of s 232. The manner in which a company is being administered and in which its affairs are conducted may fall within the category of conduct contrary to the interests of the company's members as a whole although it may not be described as oppressive, unfairly prejudicial to, or unfairly discriminatory against members of the company: Turnbull v National Roads & Motorists' Association Limited [2004] NSWSC 577 ; (2004) 50 ACSR 44 at 52, 57; Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 ; (2008) 66 ACSR 359 at 400. (See also Re Spargos Mining NL (1990) 3 ACSR 1 at 42; Shelton v NRMA Limited (2005) 51 ACSR 278.) An example of such conduct may be found where a company is formed for the purpose of undertaking particular activities but the directors and management disregard those activities and direct the company into different commercial areas. The proposition that the purpose of granting a remedy under ss 232 and 233 is to bring to an end the conduct or oppression of which complaint is made was explained by Giles JA in Campbell v BackOffice Investments Pty Ltd (supra) at 386 7: "The predecessors to ss 232 and 233 were introduced in the United Kingdom as s 210 of the Companies Act 1948 (UK), as a means of giving an aggrieved shareholder a remedy when winding-up on the just and equitable ground would be too harsh. They enabled orders by which the oppression came to an end with the shareholder remaining a shareholder (as in Re H R Harmer Ltd [1958] 3 All ER 689; (1959) 1 WLR 62) or came to an end through the shareholder being brought out as a shareholder (as in Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324 ; [1958] 3 All ER 66 ( Scottish Cooperative )). That legislation was adopted in Australia, and has since been significantly amended to the form earlier set out. There are more widely available statutory remedies, but historically the point of granting a remedy is to bring an end to the oppression as Powell J said in Re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588 at 620; 2 ACSR 553 at 566 "if it be possible, to bring the 'oppression' to an end without recourse to a cure the effects of which would, in many cases, be worse than the disease"." See also per Basten JA at 397; Young CJ in Eq at 430. Given that the purpose of granting a remedy under ss 232 and 233 is to bring to an end the conduct complained of, what is the situation if that conduct, in existence at or prior to the commencement of the proceeding, has terminated by the time of trial? The general trend of authority is that it is open to a court to grant relief under s 233(1) of the Act notwithstanding the fact that at the time of the trial or the making of an order the conduct or oppression complained of is not continuing. A considerable number of authorities in this context were considered by the members of the Court in Campbell v BackOffice Investments Pty Ltd (supra). I consider that the appropriate approach to take is that expressed by Giles JA in Campbell v BackOffice Investments Pty Ltd (supra) at 389: "In my opinion, it is not necessary that the conduct complained of be continuing at the time the court considers making an order. Rather, claimed relief founded on conduct which is no longer continuing may be refused, but will not always be refused, in the exercise of the discretion, and the discretion adequately allows for the logicality to which Hamilton J referred [in Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35 ]."


case_text: JA relied on the decision of the Privy Council in Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] 4 All ER 164 as authority for the proposition that "neither the occasion nor the purpose of an order under s 233 need involve continuing oppressive conduct" (at 404). However, Young CJ in Eq took the view (at 432) that "the authorities still require one to show continuing oppression at the date of hearing unless one is complaining about an act in the past of a director or other controller of the company which has a continuing effect". As the Council had attended to the substantive matters complained of by the plaintiff by the commencement of the final hearing, there is no conduct which needs to be the subject of an order or relief to operate prospectively. In any event, I do not consider that the relief sought by the plaintiff is an appropriate form of relief either in the circumstances of this case or for the purposes of satisfying s 233 of the Act. The relief sought by the plaintiff is that an independent person from one of the major four accounting firms be appointed to prepare a report to the members of the Council as to the Council's compliance with its obligations under the Memorandum of Understanding and the Information Memorandum, as to the adequacy of the Council's financial records and its solvency, and as to the extent and adequacy of the policies, mechanisms and procedures of the Council concerning corporate governance, reporting to the board and financial record-keeping, budgeting, forecasting and reporting. Further, the plaintiff seeks that the independent person provide recommendations as to what changes should be made to such policies, mechanisms and procedures. There are a number of criticisms or objections to this form of order of relief. Such relief leads nowhere. It does not resolve or remove the conduct complained of by the plaintiff or the acts upon which it relies for the purpose of complaining about the conduct of the Council's affairs. The matters upon which the independent person is required to report are not solely accounting or financial matters and extend beyond his or her probable expertise and experience. In particular, compliance with the Council's obligations under the Memorandum of Understanding and the Information Memorandum are not matters appropriate for determination by an accountant.


case_text: Council then submitted that in seeking an order that will not remove oppression the plaintiff had commenced and continued the proceeding as a means of obtaining some advantage for which the proceeding was not designed or some collateral advantage beyond what the law offered: Williams v Spautz [1992] HCA 34 ; (1992) 174 CLR 509 at 526 7. The Council contended that the plaintiff's true purpose in bringing the proceeding was to obtain findings from the court for potential distribution to members of the Council. The Council relied on the following passages in Mr Szental's cross-examination: "But isn't your position in this litigation that you want the court to order an independent report to be provided to the members and then you want the members in some fashion to consider that report?---I think an independent report from the court or the court findings would carry different weight to the proposition that you've been putting, which is basically that I am a sole dissenting member of the board, and I think that it would carry an independence and a weight that possibly I could never muster. It would also - - - Though really it is sorry?---And it would make findings that there are actual deficiencies. So really is the object of this exercise to get court findings rather than an independent report? ---The object of this exercise is to bring to the attention of the members that the management of the industry association up till now has been far from adequate and not in their best interests. I mean I have nothing to gain out of this other than to try and improve the benefits. I led three-quarters of the members through the BCSE into this merger and I have an obligation to them and I'm trying to fulfil that obligation by trying to inform them that what they signed on for isn't what they got." I do not accept the Council's submission. The plaintiff has brought the proceeding in order to have the manner of the conduct of the Council's affairs changed. It seeks to achieve this result by seeking certain relief a report by an independent accountant to the members of the Council in relation to particular aspects of the conduct of the Council's affairs. For reasons to which I shall refer, I do not consider that that form of relief is appropriate in the circumstances of this case or that it will achieve a result of the type contemplated by ss 232 and 233. But that conclusion does not mean the plaintiff has been motivated by an improper purpose in commencing the proceeding. Its purpose in bringing the proceeding is to end a course of conduct. Accepting Mr Szental's evidence that the plaintiff commenced the proceeding to obtain findings by the Court which it could distribute to members does not mean an abuse of process. Rather, it means that the means by which the plaintiff is seeking to achieve its purpose is misguided and inappropriate. The discretion committed to the Court by s 233 is very wide and unconstrained. In an appropriate case, a particular type of conduct of the affairs of a company might be eliminated or terminated by directing a particular person to report on particular aspects of the conduct of a company's affairs to its members or by a Court making particular findings as to the manner in which the company's affairs have been conducted.


case_text: plaintiff may be misconceived as to whether the relief it seeks will end the conduct or oppression of which it complains. That misconception does not mean that it is seeking an improper collateral advantage in bringing the proceeding. The advantage sought by the plaintiff in the proceeding is to terminate the manner in which the Council's affairs have been conducted in a number of respects. Section 232 gives the plaintiff the opportunity to seek relief within the range of relief provided in s 233 of the Act. The appropriate relief to grant in any given case is a matter for the Court and the court must tailor that relief so as bring to an end the impugned conduct: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413 ; (1998) 28 ACSR 688 , 742. As I noted in par [21] above, I do not propose to make specific findings in relation to the numerous complaints made by the plaintiff. A number of the issues raised by the plaintiff were acknowledged by the Council with the addendum that they had been rectified and remedied by the time the proceeding commenced. I have referred to some of these issues in par [47] above. The power to grant relief under s 233 is very wide and the specific types of orders set out in s 233(1) are inclusive rather than exclusive. However, in considering what remedies should be made available to a party seeking relief under ss 232 and 233, it is necessary to consider the appropriateness of the remedy as at the time of the trial, and not simply at the time the application to the Court for relief was filed. Notwithstanding the width of the discretion in s 233 as to the relief which may be granted, the relief to be granted should be such as to terminate or remove the oppressive conduct or the conduct which is contrary to the interests of the members of the company. As Young J put it in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413 ; (1998) 28 ACSR 688 at 742: "The flavour of the section also is that the court is only to give the remedy which removes the oppression. Note the remedy in fact given in Re H R Harmer Ltd [1959] 1 WLR 62 at 68. Thus it is not enough merely to find oppression and then proceed to find some remedy that might bring peace to the company generally. The court should only grant the remedy that removes the oppression found."


case_text: In Billingham; Re WM Ritchie (Aust) Pty Ltd [2007] NSWSC 325 , Barrett J made an order under s 509(6) upon an application by the liquidators of a company. His Honour observed that at [3] that the application was made in circumstances where the liquidators had completed their administration and distributed the surplus to the members. The liquidators were unaware at all material times that the creditors had instituted proceedings in the District Court of South Australia. They sought an extension of the registration of the company for a period of approximately six months and his Honour made an order in those terms. 10 Barrett J observed at [11] that a court's jurisdiction under s 509(6) cannot be exercised after the expiration of the period of three months of the lodgment of the liquidator's final return. The effect of what his Honour said at [11] is that an order under the subsection can only be made once. Accordingly, a party requesting an order will need to arrive at a period sufficient to enable the purpose for which the order is made to be achieved. 11 Here, the plaintiff seeks an extension for two years. At first sight, that seems to be a period which might be thought to be excessive, however, bearing in mind what Barrett J said about the limitation upon the power to make such an order, I have come to the view that I ought to extend the registration of the company for the full two-year period as sought by Ms Soars of counsel for the plaintiff. 12 In coming to this view, I have heard from counsel for the first and second defendants; he does not oppose the extension for that period of time. Also, I have before me a letter from ASIC which states that ASIC does not consider it necessary to make submissions in regard to the application. ASIC never consents to, nor opposes the making of orders sought pursuant to s 509(6) of the Act. Accordingly, I propose to make orders in terms of the short minutes of order provided by the plaintiff, which I will sign and date and place with the Court papers. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 27 January 2009 Counsel for the Plaintiff: J A Soars Solicitor for the Plaintiff: Robert James Lawyers Counsel for the First & Second Defendants: P Doyle Gray Solicitor for the First & Second Defendants: B Bilinsky & Co, Solicitors Date of Hearing: 19 December 2008 Date of Judgment: 19 December 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/1974.html


case_text: The application is not made by the liquidator, but it is made by the plaintiff as an interested party. There is authority in a decision in Kerol Pty Ltdv Vergeld Engineering Pty Ltd (in liquidation) (unreported, Supreme Court of South Australia, Burley J, 30 April 1998) that a creditor is an interested party within the terms of s 509(6). The application in that case was quite similar to that which is made in the present proceedings. 7 In Kerol , Judge Burley said that the subsection confers a discretion on the Court to defer the dissolution of the company in two circumstances, one of which is that the continued existence of the company is necessary in order to effect some proper purpose. In that case, the proper purpose was the maintenance of proceedings in the District Court against the company by the plaintiffs. Here it is the continuation of the proceedings in this Court in which the plaintiff seeks to recover its debt in the amount, as I have said, of approximately $182,000. 8 I do not see that the present circumstances are materially different from those which existed in Kerol. Moreover, as Judge Burley said, the other circumstances in which the discretion to defer dissolution may be exercised arise where the interested party needs to make an application in relation to the administration of the liquidation. Here it may be necessary for the liquidator to seek to recover a part of the surplus from the members. That is a further reason for me to exercise my discretion to make the order.


case_text: In purporting to create a contractual obligation by the former member in favour of a third party whether the member voted for or against the scheme or did not vote that clause appears to stretch the effect of an arrangement between a company and its members a long way. However, Lindgren J considered such a clause in Re APN News 62 ACSR 400; 25 ACLC 784; [2007] FCA 770 at [57] [63] with approval and took the same course in Re Investa Properties Ltd [2007] FCA 1104 at [21] . In Mincom Ltd v EAM Software Finance Pty Ltd (No 3) [2007] QSC 207 Fryberg J considered such a clause at [20] [29]. His Honour was persuaded to change the initial adverse reaction which he had expressed in Mincom Ltd v EAM Software Finance Pty Ltd (2007) 61 ACSR 266; (2007) 25 ACLC 163; [2007] QSC 37 at [39] . In this field, it is acknowledged that uniformity of decision is important to avoid unnecessary uncertainty. As I cannot be satisfied that the other decisions are clearly wrong, I should follow them. If, on confirmation of the scheme, a party raises the issue so that an argument with a contradictor takes place, it is possible that a different result would occur. Even if that were so, the scheme could be confirmed without the relevant clause (cf Re WebCentral Group Ltd (No 2) (2006) 58 ACSR 742; [2006] FCA 1203).


case_title: Mincom Ltd v EAM Software Finance Pty Ltd (No 3) [2007] QSC 207


case_text: My attention has been drawn to several aspects of the scheme which have, in the past, caused debate. I am satisfied that there is no relevant performance risk for shareholders. The break fee, no shop and no talk obligations are within reasonable bounds and in accordance with authority ( Re APN News & Media Ltd (2007) 62 ACSR 400; (2007) 25 ACLC 784; [2007] FCA 770 at [25] [55]). There is no complication in relation to the scheme itself by reason of the existence of the options which are to be dealt with by another mechanism. 8 The following clause caused me some concern. "8.2 Scheme Shareholders' agreements and representations (1) The Scheme Shareholders agree to the transfer of their Orion Shares in accordance with the Scheme. (2) The Scheme Shareholders are taken to have warranted to M2 and Orion that all their Orion shares (including any rights attaching to those shares) which are transferred under the Scheme will, at the date of transfer, be fully paid and free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, and that they have full power and capacity to transfer their Orion Shares together with any rights attaching to those shares." 9 In purporting to create a contractual obligation by the former member in favour of a third party whether the member voted for or against the scheme or did not vote that clause appears to stretch the effect of an arrangement between a company and its members a long way. However, Lindgren J considered such a clause in Re APN News 62 ACSR 400; 25 ACLC 784; [2007] FCA 770 at [57] [63] with approval and took the same course in Re Investa Properties Ltd [2007] FCA 1104 at [21] . In Mincom Ltd v EAM Software Finance Pty Ltd (No 3) [2007] QSC 207 Fryberg J considered such a clause at [20] [29]. His Honour was persuaded to change the initial adverse reaction which he had expressed in Mincom Ltd v EAM Software Finance Pty Ltd (2007) 61 ACSR 266; (2007) 25 ACLC 163; [2007] QSC 37 at [39] . In this field, it is acknowledged that uniformity of decision is important to avoid unnecessary uncertainty. As I cannot be satisfied that the other decisions are clearly wrong, I should follow them. If, on confirmation of the scheme, a party raises the issue so that an argument with a contradictor takes place, it is possible that a different result would occur. Even if that were so, the scheme could be confirmed without the relevant clause (cf Re WebCentral Group Ltd (No 2) (2006) 58 ACSR 742; [2006] FCA 1203).


case_title: Re Investa Properties Ltd [2007] FCA 1104


case_title: WebCentral Group Ltd (No 2) (2006) 58 ACSR 742 [2007] FCA 1203


case_title: Downes v Cottam, In re Beddoe [1893] 1 Ch 547

case_text: are exceptions to the rule that the company's assets should bear the costs. Broadly speaking, if the liquidator acts unreasonably, recklessly or even negligently and his conduct leads to the unnecessary incurring of costs, those costs ought to be paid by the liquidator: In re Beddoe; Downes v Cottam [1893] 1 Ch 547; Mead v Watson (2005) 23 ACLC 718. In deciding whether the liquidator is acting unreasonably it is necessary to have regard to s 545 of the Corporations Act . Subsection (1) provides that "a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property". (There are certain exceptions in relation to lodging of documents with ASIC: see s 545(3).) The effect of the section is that, apart from lodging certain documents, a liquidator is not required to do anything if he cannot recover his expenses. It means the liquidator commits no wrong in failing to carry out any duties.


case_title: Marseilles Extension Railway and Land Company, In re (1885) 30 Ch D 598

case_text: is a general rule that in a proceeding by or against a liquidator the real party to the action is the company and the company's assets are responsible for the costs: In re Marseilles Extension Railway and Land Company (1885) 30 Ch D 598. Of course if the liquidator is the plaintiff he will be ordered to pay the costs of the successful defendant but has an indemnity for those costs. If this were not the rule a liquidator would be in an impossible position. He would only bring an action if it were bound to succeed. He might not resist claims brought against the company unless they were clearly hopeless. There is also the risk that good people would be deterred from taking on the responsibility of acting as a liquidator: Re Wilson Lovatt & Sons Ltd [1977] 1 All ER 274.


case_title: Mead v Watson (2005) 23 ACLC 718


case_title: Wilson Lovatt & Sons Ltd, Re [1977] 1 All ER 274


case_outcome: related

case_text: 1 May 2009, his Honour delivered Reasons for Judgment ( Ackers v Austcorp International Ltd [2009] FCA 432) but did not make any orders giving effect to those reasons on that day. Thus, in form, Austcorp seeks leave to appeal from reasons, not orders. Ordinarily, this is a course of action which the Court will not permit (see Baxter Healthcare Pty Limited v Comptroller-General of Customs (1997) 72 FCR 467 at 483 and the cases cited by Burchett J at 483; and see also Secretary, Department of Social Security v Lowe [1999] FCA 705 ; (1999) 92 FCR 26 at [16] (pp 33 34)). However, in the present case, it is not necessary for me to decide whether leave to appeal from his Honour's reasons should be granted. This is because, subsequent to 1 May 2009, his Honour made various orders on three separate occasions consequent upon the delivery of his reasons on 1 May 2009. During the course of argument before me, Austcorp made clear that it wished to challenge all of the substantive orders made by his Honour after 1 May 2009 by whatever means were considered by the Court to be appropriate. Subject to one matter to which I shall refer shortly, Counsel for the respondents to the present application did not oppose leave to appeal being granted to Austcorp nor did she oppose the making of other appropriate orders to regularise Austcorp's appeal.


case_outcome: followed

case_title: Baxter Healthcare Pty Limited v Comptroller-General of Customs (1997) 72 FCR 467


case_text: observation made by his Honour at [4] of his reasons extracted at [19] above seems to me, with respect, to be correct. In general terms, the Court should approach claims such as those made in the proceedings below in accordance with the principles articulated by the High Court in Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60 ; (2004) 218 CLR 592. Of necessity, such an approach requires a careful consideration of all of the relevant circumstances in each individual case, many of which will be different as between one case and another even where some features in play may, at first blush, appear to be common. The approach which his Honour took and the findings which his Honour made will be under challenge in Austcorp's appeal. For this reason, I expressly refrain from expressing any views about any of those matters at this stage. Two points emerge from his Honour's reasons. These are: (a) In his reasons, his Honour made clear (as is undoubtedly correct) that he was dealing only with the cases of Mr Owers, Ms Tan-Bounkeua and the Lucianis; and (b) His Honour regarded each of the claimants in the three cases with which he was dealing as having an individual claim as distinct from a claim based upon a joint right of some kind. It is obvious that his Honour has not determined on a final basis the whole of, or any part of, any of the cases brought by the remaining applicants. His reasons make this clear as does the form of the orders which he has so far made. No judgment or order has yet been made by which the effect of his reasons has been carried across to any of the other cases encompassed within the proceedings below. Indeed, having programmed and having heard argument directed to determining what consequences (if any) for the other cases might flow from his Honour's reasons of 1 May 2009, his Honour expressly declined to decide the question and referred that question to mediation. His Honour has also expressly refrained for the time being from determining what effect (if any) an alleged agreement concerning the so-called "test cases" might have on the cases of the remaining applicants in light of his Honour's reasons of 1 May 2009. Whilst it may well be the case that the primary judge's reasons might influence the conduct of Austcorp and the remaining applicants in relation to settlement and/or in relation to the future conduct of the cases of the remaining applicants, neither the reasons of the primary judge nor the orders which he has made so far purport to extend the effect of the judgment which his Honour has given in any legally binding way to the cases brought by the remaining applicants against Austcorp. Counsel for Mr Owers and Ms Tan-Bounkeua did not suggest otherwise. Rather, her submissions focussed upon the effect of an order made by his Honour on 7 December 2007 which was said to have been made pursuant to O 29 r 2 of the Federal Court Rules and upon the effect of an agreement said to have been made early in the life of the proceedings below between the applicants, on the one hand, and Austcorp, on the other hand. Counsel for Mr Owers and Ms Tan-Bounkeua submitted as follows: (a) There is only one set of proceedings below constituted by the Further Amended Statement of Claim filed on 18 August 2008; (b) By a consent order made on 7 December 2007, the primary judge ordered that the entire cases (including all questions of liability and quantum) of each of five named applicants and all cross-claims associated with those particular cases be determined separately from and prior to "... all other questions and issues in the proceedings ". (Plainly, the reference to "... all other questions (etc) ..." was a reference to the entire cases of each of the applicants in the proceedings below who remain active in those proceedings rather than to some separate question or issue which is said to arise in one or more of those cases); (c) These five separate cases were to be, in some sense or another, " test cases ". The suggested meaning of that expression is illuminated by a submission made by Counsel for Mr Owers and Ms Tan-Bounkeua in the present application as follows: That description was quite deliberate and represented the understanding of both the Court and the parties, namely that, because of the significant number of "common issues" such as the questions of: The objective meaning of the representations contained in certain common written material; Whether there were reasonable grounds for making those representations; Whether they were misleading or deceptive; Whether Austcorp itself made those representations, the determinations made in the Test Cases on those issues would bind all of the Applicants in the single set of proceedings (ie not just the Nominated Applicants under the Consent Orders) as well as Austcorp International Limited. It was then submitted that this so-called understanding was reflected in some formal contract made amongst some or all of the parties to the proceedings below and that this contract "... was reviewed by the primary judge and placed on the Court file "; (d) Two of the five "test cases" were settled before the commencement of the hearing conducted by his Honour which led to his reasons delivered on 1 May 2009. The three which remained were heard and determined by his Honour in his reasons of 1 May 2009 and by the orders which he has subsequently made; (e) In light of the primary judge's reasons, the O 29 r 2 order made on 7 December 2007 and his Honour's understanding of the so-called agreement made between the parties, the primary judge has given his imprimatur to the complexion placed on events by Counsel for Mr Owers and Ms Tan-Bounkeua summarised in subpar (c) above when, on 9 June 2009, he made observations to the effect that somehow his findings in the reasons published on 1 May 2009 might constitute a basis for further findings that, as between the remaining applicants below and Austcorp, various issue estoppels arise. These observations were made on 9 June 2009 in the context of his Honour considering how to deal with the question of costs arising from the reasons published on 1 May 2009 and the costs of the hearings leading to the publication of those reasons as well as how to deal with the cases of the remaining applicants; and (f) The procedure adopted below was perfectly regular, having been the subject of some implied leave pursuant to O 6 r 2 of the Federal Court Rules . Alternatively, it was submitted that, if leave pursuant to that rule had not already been granted, it should now be granted. These submissions have not persuaded me that I am obliged to make the joinder order sought by the respondents nor do they persuade me that it would be sensible to do so were it a matter within my discretion. As matters presently stand, his Honour's 1 May 2009 decision is plainly confined to the cases of Mr Owers, Ms Tan-Bounkeua and the Lucianis. His Honour has had under consideration the question of whether the reasons and findings which underpin that decision should be carried across in some way to the cases of the remaining applicants but has expressly refrained from making any orders that might be thought to have that effect. His Honour has not yet accepted that either the orders made by him on 7 December 2007 or the alleged agreement amongst some or all of the parties below is sufficient to lead to such orders inevitably being made. It seems to me that his Honour has done no more than suggest that the application of good commercial sense might lead the parties to agree to extend some of his findings to the cases of the remaining applicants. The proceedings below have not been constituted as representative proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth) ( the Federal Court Act ). Nor, in my view, has any leave yet been granted by the Court (whether expressly or impliedly) to the applicants in the proceedings below to proceed to conduct those proceedings in accordance with O 6 r 2 of the Federal Court Rules . The order made by his Honour purportedly pursuant to O 29 r 2 of the Federal Court Rules does no more than purport to decide that the five nominated cases be heard separately from and before the remaining cases encompassed within the Statement of Claim. It does not attempt to deal with the question of what consequences (if any) might flow from a decision in those five cases insofar as the cases of the remaining applicants are concerned. Nor could it do so.


case_text: those orders finally determine all of the substantive rights underpinning the cases brought by Mr Owers and by Ms Tan-Bounkeua (other than in respect of costs), his Honour's orders are final orders and Austcorp has a right to appeal from those orders pursuant to s 24(1) of the Federal Court Act. It does not need leave to appeal (see Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20 ; (1981) 147 CLR 246 at 248, per Gibbs CJ and at 253 254, per Mason J; and see also Sanofi v Parke Davis Pty Ltd (No 1) [1982] HCA 9 ; (1982) 149 CLR 147 at 152 153, per curiam).


case_text: I do not think that O 29 r 2 of the Federal Court Rules is directed to or contemplates the making of an order for the trial of a separate question in the terms of the order made in the present case. In substance, the proceedings below, as originally constituted, comprised at least 48 separate cases (and perhaps more, having regard to the fact that there were multiple respondents originally in the proceedings below) rolled up into the one Statement of Claim. I make no comment at the moment as to whether this approach to the litigation of multiple but separate claims is permissible. However, I wish to make clear that nothing in these reasons should be taken as approval of such an approach. Order 29 r 2 of the Federal Court Rules is not directed to hiving off one case from one or more other cases but rather is directed to the expeditious determination of separate questions or issues which can be appropriately identified within the one case. It is simply not apt to be deployed to decide the whole of three or five separate cases before and separately from another 43 or so cases. This view of O 29 r 2 is supported by the reasoning of the English Court of Appeal in Radstock Co-Operative & Industrial Society v Norton-Radstock Urban District Council [1968] Ch 605 , [1968] 2 All ER 59, [1968] 2 WLR 1214. For these reasons, I think that the only basis upon which any part of the reasons delivered by the primary judge on 1 May 2009 could conceivably be held to bind the remaining applicants in some way is if the agreement alleged to have been made amongst the parties early in the life of the proceedings below adequately and effectively operates to render part or all of those reasons binding upon the parties in all of the cases of the remaining applicants or if the parties make an agreement to similar effect in the future. It is impossible for me at the moment to express any sensible views as to the effect of this alleged agreement. It is true that there are indications in the materials tendered before me to the effect that the parties to the proceedings below do regard themselves as being obliged to some extent to translate or extend in some way the ultimate findings of the Court in the three cases with which his Honour has already dealt into the cases of the remaining applicants. However, it is highly undesirable that I should express any views at all as to the effect of the so-called agreement, especially when the evidence before me as to the making of the agreement was scant to say the least and when the existence and the effect of this alleged agreement were not matters which were litigated before me in the present application. The primary judge has not made any orders which give effect to this alleged agreement or which extend the operation of any part of the reasons delivered by him on 1 May 2009 or the findings made by him to any of the cases of the remaining applicants. There can be no doubt that the cases of Mr Owers, Ms Tan-Bounkeua and of each of the remaining applicants are separate cases and have not been brought in the one proceeding in order to agitate some joint right or entitlement. It has not been submitted to me that the joinder of the remaining applicants is necessary in order to activate whatever agreement has been reached amongst the parties concerning some extended operation of his Honour's reasons and findings or that the joinder of those parties is a condition either to the making of that agreement or to its performance. For these reasons, I do not think there is any justification or proper basis for adding the remaining applicants as parties to Austcorp's foreshadowed appeal. The joinder of the parties would not, of itself, have the effect claimed by Counsel for Mr Owers and Ms Tan-Bounkeua. The only live cases which have been finally determined by his Honour are the cases brought by Mr Owers and Ms Tan-Bounkeua. The cases of the remaining applicants have not yet been heard nor have they been determined. It is for Austcorp, the present respondents and the remaining applicants to determine what steps any one or more of them may wish to take in an endeavour to extend his Honour's reasons and findings or, indeed, the reasons and findings of the Full Court in due course, in the cases which his Honour has decided and finalised by judgments, to the cases of the remaining applicants. Whether this can sensibly or properly be done at all is a matter which I leave open. No reliance was placed by Counsel for Mr Owers and Ms Tan-Bounkeua on O 52 r 14 of the Federal Court Rules . It may be thought that, by reason of the agreement alleged to have been made amongst the parties, the remaining applicants have a sufficient interest in the appeal or are affected by the relief sought in the foreshadowed Notice of Appeal. However, the existence, operation and effect of that alleged agreement has not been litigated before the primary judge. It seems to me that there may well be significant difficulties in deciding what impact or effect (if any) that alleged agreement has on the cases of the remaining applicants in light of his Honour's reasons and findings and in light of the reasons and findings of the Full Court in the event that an appeal is filed and ultimately determined by the Full Court. The obvious general interest which the remaining applicants have in the progress of the so-called "test cases" is not sufficient to engage O 52 r 14 of the Federal Court Rules . His Honour's reasons and the orders which his Honour has made in order to give effect to those reasons finally determine each of the three cases with which his Honour dealt (save for costs). Only two of them remain as live cases since the Lucianis have settled their case.


case_title: Sanofi v Parke Davis Pty Ltd (No 1) [1982] HCA 9 ; (1982) 149 CLR 147


case_title: Secretary, Department of Social Security v Lowe [1999] FCA 705 ; (1999) 92 FCR 26


case_text: application before this Court under s 104 is an application in the original jurisdiction of the Court. Having regard to the powers conferred upon the Court under s 197 of the Act, it is plain that it is not necessary on appeal under s 104 to determine whether the decision of the Registrar was correct when made. In that sense, the appeal proceeding is a hearing conducted "afresh" or de novo (like an appeal proceeding under s 56 of the Act: N.V. Sumatra Tobacco Trading Company v British American Tobacco Australia Services Limited [2008] FCA 1542) on material properly placed before the Court ( Blount Inc. v Registrar of Trade Marks [1998] FCA 440 ; (1998) 83 FCR 50 at 58-9; [1998] FCA 440 ; 40 IPR 498 at 506; Soncini v Registrar of Trade Marks [2001] FCA 333 ; (2001) 109 FCR 548 ; 51 IPR 411 ; Ostrowski-Meissner v Registrar of Trade Marks (2006) 69 IPR 291 at [7] and [8]). Section 197 is in these terms: On hearing an appeal against a decision or direction of the Registrar, the Federal Court may do any one or more of the following: (a) admit further evidence orally, or on affidavit or otherwise; (b) permit the examination and cross-examination of witnesses, including witnesses who give evidence before the Registrar; (c) order an issue of fact to be tried as it directs; (d) affirm, reverse or vary the Registrar's decision or direction; (e) give any judgment, or make any order, that, in all the circumstances, it thinks fit; (f) order a party to pay costs to another party. The second application is an application by FCN as applicant for an order that TFN provide security for FCN's costs of and incidental to the appeal proceeding. That application although conceded by FCN to be novel, is made, it is said, on the footing that although FCN is the applicant in the proceeding, TFN ought to be regarded for all practical purposes as the prime mover or aggressor having initiated the application for removal of the trade mark before the Registrar. FCN says its appeal arises out of that "proceeding" and is responsive to it in the sense that FCN is exercising a right of appeal derivative of that proceeding. Therefore, it is said, s 56(5) of the Court Act in conjunction with Order 28 of the Federal Court Rules contemplates that an order for security for costs might be made against a respondent before this Court, who is (or was) an "applicant" in a proceeding before the Registrar of Trade Marks. That result is said to follow because Order 28, r 1 provides that references to an applicant (for the purposes of that Order) "extend to any person who makes a claim for relief in any proceeding" (Order 28, r 1). Secondly, FCN's application is said to be supported by the powers conferred on the Court by s 197 of the Act to make any order that in all the circumstances the Court thinks fit (s 197(e)). FCN says s 197 should be read in conjunction with s 222 of the Act which confers power upon the Registrar of Trade Marks in these terms: 222. If a person who neither resides nor carries on business in Australia: (a) ... (b) applies to the Registrar under Part 9 for a trade mark to be removed from the Register; the Registrar may require the person to give security for the costs of the proceeding and may, if security is not given, dismiss the proceeding. FCN says that the Court in hearing and determining an appeal under s 104 must be taken to have the same powers conferred upon it as those conferred under s 222 upon the Registrar or alternatively the empowering provision of s 197 confers sufficient power to enable an order to be made directing TFN to provide security for FCN's costs of and incidental to the hearing, assuming the relevant discretionary factors are made out. Principal among those for the moment are said to be that TFN ought to be characterised as the prime mover or aggressor and secondly, TFN is a partnership foreign to the jurisdiction with no assets within the jurisdiction. TFN says that FCN's application for security is misconceived because s 56 of the Court Act and Order 28 of the Federal Court Rules only contemplate orders for security for costs against an applicant or appellant or a person who "makes a claim for relief in any proceeding" (Order 28, r 1). TFN says it makes no claim for relief in this proceeding and the reference in Order 28, r 1 can only be a reference to a proceeding in the Court. Thus, there is no power to make an order against a respondent who makes no claim upon an applicant. Secondly, s 222 of the Act confers power upon the Registrar and only the Registrar, in the circumstances of the section and is not a provision which confers power on the Court. Thirdly, FCN's notice of motion is confined to an order sought under s 222 and does not, in terms, rely upon s 197. Fourthly, s 197 is directed to the powers of the Court in the hearing and determination of an appeal and does not confer power to make an order for security for costs. The power to do so in a s 104 proceeding before the Court is, it is said, determined by the Court Act and the Federal Court Rules . TFN's application for security TFN says in reliance upon an affidavit by Mr Anthony Bennett sworn 12 December 2008 that FCN is a company that operates a website described as "The Food Channel". By FCN's website material it describes itself as a company founded in 1997 that utilises the internet and television as the medium for distributing multimedia productions to promote a range of services and products in a range of regions. TFN says that FCN is a company which has one issued share of $1.00 in paid up capital and Mr Lawrence is the only shareholder. TFN says that searches fail to reveal any significant assets held by FCN. Further, TFN says that The Food Channel website does not identify the entity conducting the business nor the business premises.