case_text: There is force in Citigroup's submission that Australian law does not recognise a fiduciary duty to make full disclosure. The strong weight of judicial authority is that fiduciary duties are proscriptive rather than prescriptive; accordingly, a fiduciary does not have a positive duty to disclose information: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer at [74] per McHugh, Gummow, Hayne and Callinan JJ; Aequitas at [283] [287] per Austin J; Dresna Pty Limited v Linknarf Management Services Pty Limited (In Liq) [2006] FCAFC 193 at [132] per Gyles J; P & V Industries Pty Limited v Porto (No 2) [2007] VSC 64 at [29] per Hollingworth J.


case_outcome: referred to

case_text: The sufficiency of disclosure may depend on the sophistication and intelligence of the person to whom disclosure is required to be made: see Farah Constructions Pty Limited v Say-Dee Pty Limited [2007] HCA 22 at [107] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. 297 The authorities which deal with time charging by solicitors reveal a special instance where a solicitor has a conflict between his or her own interest in earning fees, and the duty to the client. A central question in these proceedings is whether the principles stated in the authorities on solicitors apply where the alleged fiduciary relationship is not one of the established categories. 355 Citigroup did not obtain Toll's express consent to trade on its own account in the context of its advisory role in the Patrick takeover, but in my view informed consent is to be implied from Toll's knowledge of Citigroup's structure and method of operations. Toll's experience and "core competency" in mergers and acquisitions must also be taken into account in determining this question: see Farah at [107] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. 356 Although Mr Chatfield would have preferred Citigroup not to trade on its own behalf, he knew that Citigroup was a large financial conglomerate which did not act exclusively for Toll. He also knew that Citigroup had a proprietary trading desk which could operate for the benefit of Citigroup so long as knowledge of Toll's confidential information did not leak to the proprietary traders. 357 It is true that Mr Chatfield did not turn his mind to the question of whether Citigroup would suspend its proprietary trading during the period of the mandate, but the effect of his evidence was that he accepted that Citigroup could trade for third parties or for itself, so long as it did not use Toll's confidential information.


case_text: The distinguishing or over-riding duty of a fiduciary is the obligation of undivided loyalty: see Gibson Motorsport Merchandise Pty Limited v Forbes [2006] FCAFC 44 ; (2006) 149 FCR 569 at [11] per Finn J; Beach Petroleum at [201] per Spigelman CJ, Sheller JA and Stein JA; Bristol and West Building Society v Mothew [1998] Ch 1 at 18 per Millett LJ. 291 This duty embodies "the twin themes" of preventing undisclosed conflict of duty and interest (or of duty and duty), and of prohibiting misuse of the fiduciary position: see Chan v Zacharia at 198-199 per Deane J; Gibson Motorsport at [12] per Finn J.


case_text: Citigroup's advice was given to Toll which was a person who was, or was "likely to become, an interested party" in Patrick: see Reg 7.1.29(3)(c)(i). In my view, in this context "likely" means a real and not remote chance: see for example Global Sportsman Pty Limited v Mirror Newspapers (1984) 2 FCR 82 at 87 per Bowen CJ, Lockhart and Fitzgerald JJ; Boughey v The Queen [1986] HCA 29 ; (1986) 161 CLR 10 at 21 per Mason, Wilson and Deane JJ. It seems to me that Toll's past record of success in takeover bids, its core competence in the field, and the planning and effort which went into this bid made it likely, even as at 8 August 2005, that Toll would become an interested party within the meaning stated in the authorities.


case_text: In Hadid v Lenfest Communications Inc [1999] FCA 1798 at [817] , Lehane J observed that advisers may, and often do, have fiduciary obligations.


case_outcome: followed

case_title: Hannes v Director of Public Prosecutions (Cth) (No 2) [2006] NSWCCA 373 ; 60 ACSR 1

case_text: It seems to me that the case must fail unless I find that Mr Manchee made the supposition in precisely those terms. This is because the authorities establish the central importance of the identified information to the statutory scheme: see R v Hannes [2000] NSWCCA 503 ; (2000) 158 FLR 359 at [26] [27] per Spigelman CJ. Reference has also been made to the level of precision required in formulating the charge: see Hannes v Commonwealth Director of Public Prosecutions (No 2) [2006] NSWCCA 373 ; 60 ACSR 1 at [377] , [415] per Barr and Hall JJ.


case_text: That view is supported by both Australian and English authority: see Chan v Zacharia [1984] HCA 36 ; (1984) 154 CLR 178 at 196 per Deane J; News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Noranda Australia Limited v Lachlan Resources NL (1988) 14 NSWLR 1 at 17 per Bryson J; Woolworths Limited v Kelly (1991) 22 NSWLR 189 at 225 per Mahoney JA; Kelly v Cooper [1993] AC 205 at 213-214 per Lord Browne-Wilkinson. See also Henderson v Merrett Syndicates Limited [1994] UKHL 5 ; [1995] 2 AC 145 at 206 per Lord Browne-Wilkinson.


case_outcome: cited

case_text: This approach to construction has been adopted in relation to s 128 of the Securities Industry Act 1980 (NSW), the successor to s 75A of the Securities Industry Act and precursor to s 1002A of the Corporations Act 1989 : see Hooker Investments Pty Limited v Baring Bros Halkertson & Partners Securities Limited (1986) 10 ACLR 462 at 467-468 per Young J; R v Rivkin [2004] NSWCCA 7 ; (2004) 184 FLR 365 at [126] [127] per Mason P, Wood CJ at CL and Sully J. As Young J said in Hooker Investments v Baring Bros, at 468, information goes further than knowledge and: "may include a rumour that something has happened with respect to a company which a person neither believes nor disbelieves". 537 In my view it follows from what was said by McInerney J in CCA v Green , by Young J in Hooker Investments v Baring Bros and by Barr and Hall JJ in Hannes v DPP that information can be non-specific and that what is drawn from it by way of inference is also included within the statutory definition of information. Moreover, the information, whether in the form of a hint or a rumour, must be communicated orally or by conduct, for example by observation of the words or conduct of others. 538 It also seems to follow from this that an inference may be a supposition or a matter of supposition, and therefore falls within the definition of information in s 1042A. The supposition would therefore be that which the person drew from the hint or other non-specific information received from another. 539 It was submitted on behalf of Citigroup that the legislative history shows that the inclusive definition of "information" in s 1042A of the Corporations Act was not intended to extend the ordinary meaning of the word "information" to encompass uncommunicated thought processes.


case_text: In Hospital Products Limited v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 at 97, Mason J said that where a contractual relationship provides the foundation for the erection of a fiduciary relationship, the contract regulates the rights and liabilities of the parties. His Honour went on to say that the fiduciary relationship, "if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to", the contractual terms. 18 How then, to use the language of Mason J in Hospital Products , can a fiduciary relationship be superimposed upon the mandate letter in the face of clear language which excludes it? 21 Citigroup disputes the applicability of ten of the eleven propositions propounded by ASIC. It submits that because the mandate letter provides so precisely that no fiduciary relationship exists between Citigroup and Toll, there is simply no scope for the mandate to accommodate a fiduciary relationship. It submits that the propositions put forward by ASIC to overcome this difficulty have no application particularly when the fiduciary relationship is not one of the 'per se' relationships referred to in the authorities: see for example Hospital Products at 96 per Mason J. 22 The substance of Citigroup's answer to the claim is that the duty of a fiduciary to obtain the informed consent of a client has no application here because it presupposes the existence of an antecedent fiduciary relationship. No such pre-existing relation is claimed to have been created. 23 Citigroup also relies, to the extent necessary, upon events preceding (and post-dating) the execution of the mandate letter, as demonstrating Toll's knowledge of, and informed consent to, Citigroup's proprietary trading in Patrick shares. These events include the submission by Citigroup to one of the Toll companies, Toll Transport Pty Limited ('Toll Transport'), and subsequent execution, of a Custodian & Nominee Appointment Agreement dated 23 June 2005. That contract deals with the acquisition by Citigroup of a discreet pre-bid stake in Patrick for and on behalf of Toll. This contract contained express disclosure of Citigroup's right to trade as principal in Patrick shares. 270 As Gaudron and McHugh JJ observed in Breen v Williams [1995] HCA 63 ; (1996) 186 CLR 71 at 106, "Australian courts have consciously refrained from attempting to provide a general test for determining when persons [...] stand in a fiduciary relationship". It may be, as their Honours said, that the term "fiduciary relationship" defies definition. This is because of the difficulty of stating a comprehensive principle suitable for application to different types of relationships that carry different obligations: see Hospital Products at 69 per Gibbs CJ; News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 538 per Lockhart, von Doussa and Sackville JJ. 271 The courts have recognised certain classes of persons as falling within established categories of fiduciary relationships. Examples of these include trustee and beneficiary, agent and principal, solicitor and client, director and company, employee and employer, and partners: see Hospital Products at 68 per Gibbs CJ, at 96 per Mason J. 272 Apart from the established categories, perhaps the most than can be said is that a fiduciary relationship exists where a person has undertaken to act in the interests of another and not in his or her own interests but all of the facts and circumstances must be carefully examined to see whether the relationship is, in substance, fiduciary: see Hospital Products at 71-72 per Gibbs CJ; News Limited at 541 per Lockhart, von Doussa and Sackville JJ. 276 In Hospital Products, Mason J observed at 97 that "contractual and fiduciary relationships may co-exist". His Honour said that if a fiduciary relationship is to exist between parties to a contract, the fiduciary relationship must conform to the terms of the contract. He went on to say that: "The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction." 284 The same principle will usually apply to financial advisers and corporate advisers. Each will owe fiduciary obligations to the client because each undertakes to act in the client's interests and not solely in its own interests: see Aequitas at [310] per Austin J. This is consistent with the principle stated by Mason J in Hospital Products at 96-97. 286 Vulnerability of the client is one of the indicia of the fiduciary relationship. But this would appear to flow from the special opportunity of the adviser to abuse the expectation of loyalty: see Breen v Williams at 134 per Gummow J; Aequitas at [313] per Austin J; cf News Limited at 541 per Lockhart, von Doussa and Sackville JJ; Hospital Products at 97 per Mason J. 288 The scope of the fiduciary duties will vary and is to be determined according to the nature of the relationship and the facts of the case: see Hospital Products at 69 per Gibbs CJ, 102 per Mason J. 390 Moreover, there is force in Citigroup's submission that the alleged conflict of interest is too remote. There must be "a conflict or a real or substantial possibility of a conflict": see Hospital Products at 103 per Mason J. In fact , Mason J went even further at 104, quoting the statement of Judge Learned Hand in Phelan v Middle States Oil Corporation (1955) 220 F (2d) 593 at 602-603 that the conflict rule does not apply: "... not only when the putative interest, though in itself strong enough to be an inducement, was too remote, but also when, though not too remote, it was too feeble an inducement to be a determining motive".


case_outcome: distinguished

case_title: Kelly v Cooper [1993] AC 205

case_text: That view is supported by both Australian and English authority: see Chan v Zacharia [1984] HCA 36 ; (1984) 154 CLR 178 at 196 per Deane J; News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Noranda Australia Limited v Lachlan Resources NL (1988) 14 NSWLR 1 at 17 per Bryson J; Woolworths Limited v Kelly (1991) 22 NSWLR 189 at 225 per Mahoney JA; Kelly v Cooper [1993] AC 205 at 213-214 per Lord Browne-Wilkinson. See also Henderson v Merrett Syndicates Limited [1994] UKHL 5 ; [1995] 2 AC 145 at 206 per Lord Browne-Wilkinson. 315 The scope of any duty, and the extent to which the existence of Chinese walls may protect against an allegation of breach would be determined not only by the express terms of the contract but also by any implied terms: see Kelly v Cooper at 213-215 per Lord Browne-Wilkinson. 359 I do not consider that the circumstances of the present case are identical with those of Kelly v Cooper where the Privy Council held that there was to be implied in a contract with a real estate agent, a term that the agent was free to act for other principals selling similar properties. Such a term was implied because the practice is notorious and it would otherwise be impossible for the estate agents to perform their ordinary business functions: see Kelly v Cooper at 214 per Lord Browne-Wilkinson. 360 In my opinion, there is nothing in the relationship of investment banker/financial advisor and client which requires a conclusion that it is an inherent part of the business of investment banking for the banker to engage in trading in its client's target's shares. 361 But, in my opinion, in the particular circumstances of this case, for the reasons given above, Toll had sufficient knowledge of the real possibility of proprietary trading by Citigroup to amount to informed consent. 362 Citigroup relied upon the concession made by Mr Chatfield in cross-examination that if on 19 August 2005 Citigroup had told him it had engaged in proprietary trading "it wouldn't have made any difference" to the decisions which Toll made: see [232] above. 363 ASIC sought to meet this by submitting that a fiduciary who has not obtained informed consent does not escape the consequences of that failure by showing that the information which was not disclosed would not, as a matter of fact, and with hindsight, have affected the client's decision.


case_title: Lac Minerals Limited v International Corona Resources Limited (1989) 61 DLR (4 th ) 14

case_text: Lockhart, von Doussa and Sackville JJ considered that these remarks contain an important question "if not the question": see News Limited at 541. La Forest J also agreed with Professor Finn's remarks in Lac Minerals Limited v International Corona Resources Limited (1989) 61 DLR (4th) 14 at 26.


case_outcome: considered

case_text: ASIC's answer to this conundrum is to be found in eleven propositions to which I will refer later. At the heart of them is the proposition that where the inclusion of a particular term in a contract between a fiduciary and client would create an actual or potential conflict of interest between the fiduciary and the client, the fiduciary must obtain the client's informed consent to the inclusion of that provision. This approach to the question builds, in large measure, analogically upon principles applicable to solicitors: see in particular the observations of Mahoney JA in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 435-436. 20 The gravamen of ASIC's case is that for the exclusion of the fiduciary relationship in the mandate letter to be effective, it was incumbent upon Citigroup to draw Toll's attention expressly to the effect of the exclusion, that is, that it permitted Citigroup to trade in Patrick shares on its own account, in potential conflict with the interests of Toll. 298 A solicitor who wishes to enter into a time charging costs agreement with the client must make full disclosure to the client of all the implications of such an agreement: see Foreman at 435-437 per Mahoney JA; Re Morris Fletcher v Cross' Bill of Costs [1997] 2 Qd R 228 at 243 per Fryberg J; McNamara Business & Property Law v Kasmeridis [2007] SASC 90 at [28] [31] per Doyle CJ. 300 In Foreman , Mahoney JA said at 435 that fiduciary obligations, including full disclosure, exist not only in the carrying out of an agreement already made between a solicitor and client "but also in respect of the making of it." 301 Mr Walker submitted that this observation by Mahoney JA indicates that the disclosure obligation applies to the making of a contract where a person who would otherwise be in a fiduciary relationship seeks to exclude fiduciary obligations in the terms of the contract. 302 However, I do not consider that this submission provides an answer to the conundrum presented by the apparent exclusion of the fiduciary relationship in the present case. There are two reasons for this. 304 Indeed, in Foreman at 435, Mahoney JA specifically pointed out that a solicitor is in a fiduciary position vis-à-vis the client and/or in a position of influence. Hence the need for the solicitor to give the client advice that would enable a proper understanding of the operation and effect of a time based costs agreement: see McNamara at [28] per Doyle CJ. 344 This submission is said to be based upon the principles stated in the authorities dealing with time charging by solicitors: see Foreman and the other authorities referred to at [298] [300] above. ASIC submitted that the principle is not limited to solicitors and applies generally to all fiduciaries. 345 However, for reasons given above at [303] [306], I do not consider that this principle applies in the present case. In particular, even if the principle stated by Mahoney JA in Foreman is of general application to fiduciaries, it cannot apply unless the fiduciary is within an established category or is subject to fiduciary obligations before entering into the contract. 346 To hold otherwise would be to say that a person who is not a fiduciary may nevertheless owe an obligation which flows from a fiduciary relationship. That could hardly be correct.


case_text: The effect of the Australian and English authorities referred to above is that where a fiduciary relationship is said to be founded upon a contract, the ordinary rules of construction of contracts apply. Thus, whether a party is subject to fiduciary obligations, and the scope of any fiduciary duties, is to be determined by construing the contract as a whole in the light of the surrounding circumstances known to the parties and the purpose and object of the transaction: see Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 ; (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Lion Nathan Australia Pty Limited v Coopers Brewery Limited [2006] FCAFC 144 ; (2006) 156 FCR 1 at [46] per Weinberg J. The same approach applies to exclusion clauses: see Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82 ; (1986) 161 CLR 500 at 510 per Mason, Wilson, Brennan, Deane and Dawson JJ; Andar Transport Pty Limited v Brambles Limited [2004] HCA 28 ; (2004) 217 CLR 424 at [122] per Callinan J.


case_text: There is no precise formula for determining whether fully informed consent has been given; it will be a question of fact in all the circumstances of each case: see Maguire v Makaronis [1997] HCA 23 ; (1997) 188 CLR 449 at 466 per Brennan CJ, Gaudron, McHugh and Gummow JJ; see also CBA v Smith at 393 per Davies, Sheppard and Gummow JJ.


case_text: A solicitor who wishes to enter into a time charging costs agreement with the client must make full disclosure to the client of all the implications of such an agreement: see Foreman at 435-437 per Mahoney JA; Re Morris Fletcher v Cross' Bill of Costs [1997] 2 Qd R 228 at 243 per Fryberg J; McNamara Business & Property Law v Kasmeridis [2007] SASC 90 at [28] [31] per Doyle CJ. 299 This principle applies whether or not the costs agreement is made before the solicitor is instructed: see Symonds v Raphael [1998] FamCA 165 ; (1998) 148 FLR 171 at 186-187 per Baker and Burton JJ; see also McNamara at [38] per Doyle CJ. The reason given in those authorities for the proposition that the solicitor must make full disclosure even before the contract of retainer is that the fiduciary relationship may arise before the solicitor is actually retained: see United Dominions v Brian at 11-12 per Mason, Brennan and Deane JJ. 303 First, the authorities dealing with solicitors' costs agreements have, as their foundation, the Court's inherent jurisdiction over solicitors and the fiduciary nature of the solicitor and client relationship as an established fiduciary category: see McNamara at [29] per Doyle CJ. 304 Indeed, in Foreman at 435, Mahoney JA specifically pointed out that a solicitor is in a fiduciary position vis-à-vis the client and/or in a position of influence. Hence the need for the solicitor to give the client advice that would enable a proper understanding of the operation and effect of a time based costs agreement: see McNamara at [28] per Doyle CJ.


case_text: A person may be in a fiduciary relationship as to some aspects of the relationship but not others: see New Zealand Netherlands Society 'Oranje' Incorporated v Kuys [1973] 2 All ER 1222 at 1225-6 per Lord Wilberforce; see also Noranda Australia v Lachlan Resources at 15-17 per Bryson J. Thus, a bank which gives its customers financial advice in the course of a transaction that includes an advance of money to the client may be in a fiduciary relationship with the client in its role as adviser. The bank may be expected to act in its own interests in ensuring the security for the loan but it will undertake fiduciary obligations to the client if it creates an expectation that it will advise in the customer's interests on the wisdom of the investment: see Commonwealth Bank of Australia v Smith (1993) 42 FCR 390 at 391 per Davies, Sheppard and Gummow JJ. 295 In order to be exonerated, a fiduciary must give full and frank disclosure of all material facts: see Kuys at 1227 per Lord Wilberforce. Consent need not be given expressly; it may be implied in all the circumstances: see Woolworths v Kelly at 212 per Samuels JA, at 234 per Mahoney JA; see also Our Lady's Mount Pty Limited (as trustee) v Magnificat Meal Movement International Inc (1999) 33 ACSR 163 at [128] per Muir J.


case_text: As Gaudron and McHugh JJ observed in Breen v Williams [1995] HCA 63 ; (1996) 186 CLR 71 at 106, "Australian courts have consciously refrained from attempting to provide a general test for determining when persons [...] stand in a fiduciary relationship". It may be, as their Honours said, that the term "fiduciary relationship" defies definition. This is because of the difficulty of stating a comprehensive principle suitable for application to different types of relationships that carry different obligations: see Hospital Products at 69 per Gibbs CJ; News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 538 per Lockhart, von Doussa and Sackville JJ. 272 Apart from the established categories, perhaps the most than can be said is that a fiduciary relationship exists where a person has undertaken to act in the interests of another and not in his or her own interests but all of the facts and circumstances must be carefully examined to see whether the relationship is, in substance, fiduciary: see Hospital Products at 71-72 per Gibbs CJ; News Limited at 541 per Lockhart, von Doussa and Sackville JJ. 275 Lockhart, von Doussa and Sackville JJ considered that these remarks contain an important question "if not the question": see News Limited at 541. La Forest J also agreed with Professor Finn's remarks in Lac Minerals Limited v International Corona Resources Limited (1989) 61 DLR (4th) 14 at 26. 279 That view is supported by both Australian and English authority: see Chan v Zacharia [1984] HCA 36 ; (1984) 154 CLR 178 at 196 per Deane J; News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Noranda Australia Limited v Lachlan Resources NL (1988) 14 NSWLR 1 at 17 per Bryson J; Woolworths Limited v Kelly (1991) 22 NSWLR 189 at 225 per Mahoney JA; Kelly v Cooper [1993] AC 205 at 213-214 per Lord Browne-Wilkinson. See also Henderson v Merrett Syndicates Limited [1994] UKHL 5 ; [1995] 2 AC 145 at 206 per Lord Browne-Wilkinson. 286 Vulnerability of the client is one of the indicia of the fiduciary relationship. But this would appear to flow from the special opportunity of the adviser to abuse the expectation of loyalty: see Breen v Williams at 134 per Gummow J; Aequitas at [313] per Austin J; cf News Limited at 541 per Lockhart, von Doussa and Sackville JJ; Hospital Products at 97 per Mason J. 287 The subject matter over which any fiduciary obligations will extend must be determined by the character of the venture or undertaking: see Birtchnell v The Equity Trustees, Executors and Agency Company Limited [1929] HCA 24 ; (1929) 42 CLR 384 at 408 per Dixon J; United Dominions v Brian at 13 per Mason, Brennan and Deane JJ; News Limited at 539 per Lockhart, von Doussa and Sackville JJ. This is to be ascertained from the terms of the agreement and the course of dealing between the parties: see News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Australian Breeders Co-operative Society Limited v Jones (1997) 150 ALR 488 at 514 per Wilcox and Lindgren JJ; Beach Petroleum NL v Kennedy [1999] NSWCA 408 ; (1999) 48 NSWLR 1 at [194] per Spigelman CJ, Sheller JA and Stein JA. 323 In Chan v Zacharia , Deane J said in plain terms at 196 that the parties to a partnership agreement could provide "that any fiduciary relationship between the partners was excluded." The observations of Mahoney JA in Woolworths v Kelly at [225] were to the same effect. His Honour said that fiduciary duties could be "varied or released" by contract. Also, in News Limited , a Full Court of this Court (Lockhart, von Doussa and Sackville JJ) said at 539 that whether there are any fiduciary obligations at all may depend on the terms of the contract.


case_text: That view is supported by both Australian and English authority: see Chan v Zacharia [1984] HCA 36 ; (1984) 154 CLR 178 at 196 per Deane J; News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Noranda Australia Limited v Lachlan Resources NL (1988) 14 NSWLR 1 at 17 per Bryson J; Woolworths Limited v Kelly (1991) 22 NSWLR 189 at 225 per Mahoney JA; Kelly v Cooper [1993] AC 205 at 213-214 per Lord Browne-Wilkinson. See also Henderson v Merrett Syndicates Limited [1994] UKHL 5 ; [1995] 2 AC 145 at 206 per Lord Browne-Wilkinson. 285 A person may be in a fiduciary relationship as to some aspects of the relationship but not others: see New Zealand Netherlands Society 'Oranje' Incorporated v Kuys [1973] 2 All ER 1222 at 1225-6 per Lord Wilberforce; see also Noranda Australia v Lachlan Resources at 15-17 per Bryson J. Thus, a bank which gives its customers financial advice in the course of a transaction that includes an advance of money to the client may be in a fiduciary relationship with the client in its role as adviser. The bank may be expected to act in its own interests in ensuring the security for the loan but it will undertake fiduciary obligations to the client if it creates an expectation that it will advise in the customer's interests on the wisdom of the investment: see Commonwealth Bank of Australia v Smith (1993) 42 FCR 390 at 391 per Davies, Sheppard and Gummow JJ.


case_text: In order to be exonerated, a fiduciary must give full and frank disclosure of all material facts: see Kuys at 1227 per Lord Wilberforce. Consent need not be given expressly; it may be implied in all the circumstances: see Woolworths v Kelly at 212 per Samuels JA, at 234 per Mahoney JA; see also Our Lady's Mount Pty Limited (as trustee) v Magnificat Meal Movement International Inc (1999) 33 ACSR 163 at [128] per Muir J.


case_text: There is force in Citigroup's submission that Australian law does not recognise a fiduciary duty to make full disclosure. The strong weight of judicial authority is that fiduciary duties are proscriptive rather than prescriptive; accordingly, a fiduciary does not have a positive duty to disclose information: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer at [74] per McHugh, Gummow, Hayne and Callinan JJ; Aequitas at [283] [287] per Austin J; Dresna Pty Limited v Linknarf Management Services Pty Limited (In Liq) [2006] FCAFC 193 at [132] per Gyles J; P & V Industries Pty Limited v Porto (No 2) [2007] VSC 64 at [29] per Hollingworth J.


case_title: Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451


case_text: Moreover, there is force in Citigroup's submission that the alleged conflict of interest is too remote. There must be "a conflict or a real or substantial possibility of a conflict": see Hospital Products at 103 per Mason J. In fact , Mason J went even further at 104, quoting the statement of Judge Learned Hand in Phelan v Middle States Oil Corporation (1955) 220 F (2d) 593 at 602-603 that the conflict rule does not apply: "... not only when the putative interest, though in itself strong enough to be an inducement, was too remote, but also when, though not too remote, it was too feeble an inducement to be a determining motive".


case_text: Cases dealing with claims brought by former clients of solicitors and accountants to restrain the firm from acting against it show a willingness by the courts to accept the concept of Chinese walls as a means of quarantining information within the firm: see Bolkiah at 237-238 per Lord Millett; Photocure ASA v Queen's University at Kingston (2002) 56 IPR 86 at [61] per Goldberg J.


case_text: In Australia, the duty of loyalty is proscriptive rather than prescriptive in nature: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer v Duke Group Limited (In Liq) [2001] HCA 31 ; (2001) 207 CLR 165 at [74] per McHugh, Gummow, Hayne and Callinan JJ. 375 There is force in Citigroup's submission that Australian law does not recognise a fiduciary duty to make full disclosure. The strong weight of judicial authority is that fiduciary duties are proscriptive rather than prescriptive; accordingly, a fiduciary does not have a positive duty to disclose information: see Breen v Williams at 113 per Gaudron and McHugh JJ, 137-138 per Gummow J; Pilmer at [74] per McHugh, Gummow, Hayne and Callinan JJ; Aequitas at [283] [287] per Austin J; Dresna Pty Limited v Linknarf Management Services Pty Limited (In Liq) [2006] FCAFC 193 at [132] per Gyles J; P & V Industries Pty Limited v Porto (No 2) [2007] VSC 64 at [29] per Hollingworth J. 376 It may follow that Brennan J's observations in Daly are to be confined in the manner discussed by Austin J in Aequitas at [287]. ASIC asserted that Daly was referred to by the High Court in Pilmer without disapproval at [70]; but I do not consider that their Honours' remarks amounted to a clear acceptance of the reasoning of Brennan J. However I do not need to consider this question because in my view the claim fails at a factual level. 391 Support for the view that the interests identified in the present case were too remote is also to be found in the remarks of the majority in Pilmer at [83] per McHugh, Gummow, Hayne and Callinan JJ. Their Honours said that it is not sufficient to say generally "that there was a hope or expectation of future dealings". Most professional advisers would hope, as their Honours said, that the proper performance of the task would lead the client to retain them again.


case_text: A favoured technique for dealing with conflicts of interest which arise from the carrying on of business by large financial institutions is the use of Chinese walls. They are widely used by institutions in Australia, the United Kingdom, the United States and Canada: see Prince Jefri Bolkiah v KPMG [1998] UKHL 52 ; [1999] 2 AC 222 at 238 per Lord Millett; see also Law Commission Consultation Paper at [4.5]. 309 Chinese walls are a means of restricting the flow of information between different departments of the same organisation: see Bolkiah at 238 per Lord Millett; see also Law Commission Consultation Paper at [4.5.1]. 310 In Bolkiah at 238, Lord Millett described Chinese walls as a technique for "managing" conflicts of interest. The use of this word is significant because it suggests that Chinese walls do not eliminate conflicts; they are no more than a technique for managing conflicts of interests which continue to exist. 316 Cases dealing with claims brought by former clients of solicitors and accountants to restrain the firm from acting against it show a willingness by the courts to accept the concept of Chinese walls as a means of quarantining information within the firm: see Bolkiah at 237-238 per Lord Millett; Photocure ASA v Queen's University at Kingston (2002) 56 IPR 86 at [61] per Goldberg J. 317 The relief sought in those cases turned upon the question of whether there was a risk of disclosure or misuse of confidential information. Lord Millett said in Bolkiah at 237-238 that there is no rule of law that Chinese walls are insufficient to eliminate the risk of disclosure but the Court should restrain the firm from acting unless satisfied that effective measures have been taken to prevent disclosure. 318 Thus, the question of whether Chinese walls are effective will be a question of fact in each case, although Lord Millett emphasised that the wall must be "an established part of the organisational structure", not created ad hoc : see Bolkiah at 239. The same approach must be taken in determining whether Chinese walls constitute adequate arrangements for the management of conflicts of interest within s 912(1)(aa) of the Corporations Act . 319 In Bolkiah, Lord Millett at 238 drew upon the observations in the Law Commission Consultation Paper to illustrate the type of organisational arrangements which would ordinarily be effective: see also Law Commission Consultation Paper at [4.5.2]. These are: − the physical separation of departments to insulate them from each other; − an educational programme, normally recurring, to emphasise the importance of not improperly or inadvertently divulging confidential information; − strict and carefully defined procedures for dealing with situations where it is thought the wall should be crossed, and the maintaining of proper records where this occurs; − monitoring by compliance officers of the effectiveness of the Chinese wall; − disciplinary sanctions where there has been a breach of the wall. 448 Nevertheless, as I have said above at [310], [318] [319], in Bolkiah , Lord Millett referred to Chinese walls as a technique for managing conflicts of interest and he described the types of organisational structures that would ordinarily be effective. 449 Mr Monaci's statement of evidence set out in great detail the measures which Citigroup has in place. These appear to me to comply with the requirements stated by the UK Law Commission and adopted by Lord Millett in Bolkiah . I will not repeat the evidence but the paragraph numbers of Mr Monaci's statement which describe the arrangements are as follows: − physical separation by departments, [85] [94]; − educational programmes, [95] [106], especially [103] and [105]; − procedures for dealing with crossing the wall, [109] [116]; − monitoring by compliance officers, [117] [123] and [131] [144]; − disciplinary sanctions, [100]. 450 Mr Monaci also referred in other parts of his statement to Citigroup's policies and procedures for the identification and management of conflicts of interest that arise in its business. He referred to some of the written policies which apply to Citigroup's Australian operations. They were set out at [147] of his statement. 451 Mr Monaci said at [149] that Citigroup's written policies are available to all employees and regular training is provided. He said at [150] that the written policies make clear that employees must be alert to the possibility of conflicts and "escalate any issues in relation to actual, apparent or potential conflicts of interest."


case_text: The phrase "carries on or may carry on the business" must be construed in context so that it is consistent with the language and purpose of all of the provisions of the statute: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1988) 194 CLR 355 at [69] per McHugh, Gummow, Kirby and Hayne JJ. I also accept that the phrase is to be construed in light of the modern corporate practice of carrying on business as a corporate group. 433 But the difficulty which arises is, how can it be said that Virgin, as a 62.4% owned subsidiary of Patrick, carried on the business of that entity. ASIC submitted that to say so would be to find that Virgin, a listed company conducting the business of an airline, was carrying on the business of its major shareholder, Patrick, a listed company carrying on the business of a stevedore. 434 Subparagraph (c)(ii)(A) must be read with s 20 of the Corporations Act which provides as follows: "A reference in this Act to a person carrying on a business, or a business of a particular kind, is a reference to the person carrying on a business, or a business of that kind, whether alone or together with any other person or persons." 438 I have therefore come to the view that, applying the approach to construction stated in Project Blue Sky , Virgin can be said to have been carrying on the business of Patrick, notwithstanding that it was not carrying on the whole of that business. I reject ASIC's submission that the "business" that Patrick had in relation to Virgin is properly characterised as "the business of owning 62.4% of Virgin Blue". 439 It also follows from this that Virgin shares are not "other financial products" and therefore that the advice did not fall within Reg 7.1.29(3)(c)(iii) of the Corporations Regulations . 440 On this finding, the exemption contained in Reg 7.1.29(3)(c) would have been engaged so that Citigroup would not have been providing financial services to Toll for the purpose of s 912A(1)(aa) of the Corporations Act .


case_text: The question of whether a matter is "readily observable" is one of fact. Observability does not depend on proof that persons actually perceived the information; the test is objective and hypothetical: see R v Firns [2001] NSWCCA 191 ; (2001) 51 NSWLR 548 at [88] per Mason P. 547 Where the information is a "matter of supposition", the question of whether it is generally available depends on whether the supposition is capable of being made or drawn by other investors based on readily observable matter or information that has been made known in the manner stated in s 1042C(1)(b)(i) of the Corporations Act : see s 1042C(1)(c). 548 ASIC called Mr Sisson to give expert evidence. However, his first report dated 31 October 2006 did not deal with the question of whether the "information" relied on by ASIC was generally available. Mr Sisson did address the question briefly in a later report dated 16 March 2007, in reply to the evidence of Citigroup's expert, Mr Richard Mews. 551 However, in my view, the test applied by Mr Sisson as to whether the information was generally available was not in accordance with that which has been recognised by the authorities. There are two reasons for this. First, the test of whether material is readily observable is not whether the particular matter was widely observed but whether it could have been: see R v Firns at [88], [91] per Mason P; see also Hannes v DPP at [626] per Barr and Hall JJ. 552 The second reason is that s 1042C(1)(c) of the Corporations Act does not appear to involve a consideration of whether the market has had a reasonable time to absorb the information: see the analysis of the extrinsic material in [55] [56] of the judgment of Mason P in R v Firns . His Honour was of the view that Parliament's intention was not to "penalise individual initiative and diligence." 553 Thus, it seems to me that Mr Sisson's evidence on this question must be rejected. The effect of what he did was to ask whether it was generally available by considering the question of whether it was generally known. 554 Nevertheless, it does not follow that I must find that the information was generally available. Citigroup submitted that I should make this finding upon the basis of the evidence of its expert, Mr Mews. But I am not satisfied that Mr Mews' evidence establishes the proposition for which Citigroup contends.


case_text: It seems to me that the case must fail unless I find that Mr Manchee made the supposition in precisely those terms. This is because the authorities establish the central importance of the identified information to the statutory scheme: see R v Hannes [2000] NSWCCA 503 ; (2000) 158 FLR 359 at [26] [27] per Spigelman CJ. Reference has also been made to the level of precision required in formulating the charge: see Hannes v Commonwealth Director of Public Prosecutions (No 2) [2006] NSWCCA 373 ; 60 ACSR 1 at [377] , [415] per Barr and Hall JJ. 558 The position seems to me to be analogous to that which was referred to by Spigelman CJ in R v Hannes at [254] [257]. Here the supposition that Citigroup was acting for Toll in relation to the Patrick takeover was one essential part of the "information" on which the claim was based. As Spigelman CJ said at [257], if it was generally available, one would expect to find it in the contemporaneous reports. Yet no such evidence was available, even in the form of speculation or rumour. 559 Mr Mews and Mr Sisson agreed that when one is considering whether information in the form of a deduction is generally available, the analogy of a jigsaw puzzle is apt. But as Mr Sisson said, if all pieces other than those from a small area are removed, as Mr Mews appears to have done, it is relatively easy to fit the remaining pieces together to reach the desired conclusion. 560 Counsel for Citigroup pointed to the evidence of Mr Harvey to support a finding that the information was generally available. Mr Harvey was called by ASIC to give evidence on its behalf.


case_text: This approach to construction has been adopted in relation to s 128 of the Securities Industry Act 1980 (NSW), the successor to s 75A of the Securities Industry Act and precursor to s 1002A of the Corporations Act 1989 : see Hooker Investments Pty Limited v Baring Bros Halkertson & Partners Securities Limited (1986) 10 ACLR 462 at 467-468 per Young J; R v Rivkin [2004] NSWCCA 7 ; (2004) 184 FLR 365 at [126] [127] per Mason P, Wood CJ at CL and Sully J. As Young J said in Hooker Investments v Baring Bros, at 468, information goes further than knowledge and: "may include a rumour that something has happened with respect to a company which a person neither believes nor disbelieves".


case_text: So too in Re Dwyer v Lippiatt; Dwyer v Backpackers R US.Com Pty Limited (2004) 50 ACSR 333, White J found that a person who was not a director and who described himself as a consultant, was an "officer" within subparagraph (b)(i) of the definition because he was intimately involved in all the important decisions affecting the corporation. Her Honour said at [68] there could be no doubt about the person's importance to the "drive and direction" of the company and that it was likely he also fell within the other limbs of the definition.


case_text: In Re HIH Insurance Limited (in prov liq) ; ASIC v Adler [2002] NSWSC 171 ; (2002) 41 ACSR 72 per Santow J, a question arose as to whether Mr Adler, who was a director of the parent company but not of the subsidiary, was an "officer" of the subsidiary company. Santow J held that he was an officer of the subsidiary under subparagraphs (b)(i) and (b)(ii) of the definition. 493 The reason Santow J found that Mr Adler was an officer was that as a director of the holding company and a member of its investment committee, he participated in decision making as to how the funds of the HIH group were invested. His Honour said it was for this reason that Mr Adler was a person whose decisions clearly affected the whole or a substantial part of the business of the subsidiary as well as someone with the capacity to affect significantly the subsidiary's financial standing: see at [73] [75].


case_text: A solicitor who wishes to enter into a time charging costs agreement with the client must make full disclosure to the client of all the implications of such an agreement: see Foreman at 435-437 per Mahoney JA; Re Morris Fletcher v Cross' Bill of Costs [1997] 2 Qd R 228 at 243 per Fryberg J; McNamara Business & Property Law v Kasmeridis [2007] SASC 90 at [28] [31] per Doyle CJ.


case_text: It is true, as Frankfurter J said in Securities and Exchange Commission v Chenery Corporation 318 US 80 (1942) at 85, that "to say a man is a fiduciary only begins the analysis": see the citation in Beach Petroleum at [185] per Spigelman CJ, Sheller JA and Stein JA. But it is otherwise where the parties acknowledge that they are not in a fiduciary relationship. In my view, those words mean what they say and should be enforced accordingly, unless the mandate letter was vitiated as a matter of law.


case_text: It is difficult to see that the words of the mandate letter have anything other than their plain meaning. Citigroup was retained solely as an adviser to Toll, as an independent contractor and not as a fiduciary. The engagement of Citigroup as an "independent contractor and not in any other capacity" suggested that the parties had in mind the distinction between independent contractors and employees or agents; see for example Stevens v Brodribb Sawmilling Company Pty Limited [1986] HCA 1 ; (1986) 160 CLR 16 per Mason, Wilson, Brennan, Deane and Dawson JJ. Thus, these words also point against the assumption of any fiduciary capacity.


case_text: This principle applies whether or not the costs agreement is made before the solicitor is instructed: see Symonds v Raphael [1998] FamCA 165 ; (1998) 148 FLR 171 at 186-187 per Baker and Burton JJ; see also McNamara at [38] per Doyle CJ. The reason given in those authorities for the proposition that the solicitor must make full disclosure even before the contract of retainer is that the fiduciary relationship may arise before the solicitor is actually retained: see United Dominions v Brian at 11-12 per Mason, Brennan and Deane JJ.


case_text: Their Honours said in Beach Petroleum at [444] that Brickenden is not authority for the general proposition that in no case involving breach of fiduciary duty may a court consider what would have happened if the duty had been performed. This is because Brickenden is now to be understood in light of the decision of the House of Lords in Target Holdings Limited v Redferns [1996] 1 AC 421. Their Lordships there said at 439 that causation is to be determined using commonsense and hindsight: see Beach Petroleum at [432] per Spigelman CJ, Sheller JA and Stein JA. I respectfully agree with the views of the Court of Appeal.


case_text: The effect of the Australian and English authorities referred to above is that where a fiduciary relationship is said to be founded upon a contract, the ordinary rules of construction of contracts apply. Thus, whether a party is subject to fiduciary obligations, and the scope of any fiduciary duties, is to be determined by construing the contract as a whole in the light of the surrounding circumstances known to the parties and the purpose and object of the transaction: see Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 ; (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Lion Nathan Australia Pty Limited v Coopers Brewery Limited [2006] FCAFC 144 ; (2006) 156 FCR 1 at [46] per Weinberg J. The same approach applies to exclusion clauses: see Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82 ; (1986) 161 CLR 500 at 510 per Mason, Wilson, Brennan, Deane and Dawson JJ; Andar Transport Pty Limited v Brambles Limited [2004] HCA 28 ; (2004) 217 CLR 424 at [122] per Callinan J.


case_text: ASIC also points to events pre-dating the execution of the mandate letter as part of its case. However, a difficulty arises because of its disavowal of any fiduciary relationship pre-dating the actual execution of the mandate letter: cf United Dominions Corporation Limited v Brian Pty Limited [1985] HCA 49 ; (1985) 157 CLR 1 at 11-12 per Mason, Brennan and Deane JJ. 25 A central part of ASIC's case is that Citigroup was required, as a financial services licensee, to have in place adequate arrangements for the management of conflicts of interest: see s 912A(1)(aa) of the Corporations Act . According to ASIC, conducting proprietary trading without having obtained Toll's informed consent to the proprietary trading, amounts to a breach of this subsection. 26 ASIC does not concede that, as a matter of statutory construction, s 912A(1)(aa) applies only where a licensee and its client are in a fiduciary relationship. However, Mr Walker SC, for ASIC, did concede that for the purposes of the present case, ASIC's contention that Citigroup contravened s 912A(1)(aa) depends upon the success of ASIC's submission that the parties were in a fiduciary relationship. 27 Even if Citigroup did owe fiduciary duties to Toll, the question of whether s 912A(1)(aa) was engaged depends upon a number of questions of statutory construction. The principal questions are whether Citigroup was providing "financial services" within the meaning of s 766A(1) and "financial product advice' within the meaning of s 766B(1) of the Corporations Act , as well as whether any such services were exempt services within Reg 7.1.29(3) of the Corporations Regulations 2001 (Cth). 28 ASIC seeks to argue the conflicts claim on three further bases. These are, first, a contravention of s 1041H of the Corporations Act , second, breach of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) and third, breach of s 12CA of the ASIC Act . However, each of them depends upon acceptance of ASIC's contention that Citigroup owed fiduciary duties to Toll. 287 The subject matter over which any fiduciary obligations will extend must be determined by the character of the venture or undertaking: see Birtchnell v The Equity Trustees, Executors and Agency Company Limited [1929] HCA 24 ; (1929) 42 CLR 384 at 408 per Dixon J; United Dominions v Brian at 13 per Mason, Brennan and Deane JJ; News Limited at 539 per Lockhart, von Doussa and Sackville JJ. This is to be ascertained from the terms of the agreement and the course of dealing between the parties: see News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Australian Breeders Co-operative Society Limited v Jones (1997) 150 ALR 488 at 514 per Wilcox and Lindgren JJ; Beach Petroleum NL v Kennedy [1999] NSWCA 408 ; (1999) 48 NSWLR 1 at [194] per Spigelman CJ, Sheller JA and Stein JA. 299 This principle applies whether or not the costs agreement is made before the solicitor is instructed: see Symonds v Raphael [1998] FamCA 165 ; (1998) 148 FLR 171 at 186-187 per Baker and Burton JJ; see also McNamara at [38] per Doyle CJ. The reason given in those authorities for the proposition that the solicitor must make full disclosure even before the contract of retainer is that the fiduciary relationship may arise before the solicitor is actually retained: see United Dominions v Brian at 11-12 per Mason, Brennan and Deane JJ. 305 This points to a limitation of the principle to those who fall within an established category of fiduciary relationship or, at very least, to those who carry fiduciary obligations before the execution of the contract, as in United Dominions v Brian. 306 The second reason why the principle is not applicable in the present proceedings is that ASIC's case was that the fiduciary relationship between Citigroup and Toll arose from the mandate letter. ASIC specifically eschewed any suggestion that the fiduciary relationship arose prior to the execution of the mandate letter on 8 August 2005. 307 It follows that there is no place in these proceedings for the application of the principle that a person who is already subject to fiduciary obligations must obtain the client's fully informed consent to the exclusion or modification of those obligations.


case_text: A different formulation of the test is to be found in the judgment of Hutley JA in Walden Properties Limited v Beaver Properties Pty Limited [1973] 2 NSWLR 815 at 846-7. However, his Honour's remarks are explained by the learned authors of Equity Doctrines and Remedies (4 th ed, Butterworths LexisNexis, 2002) at [5 120].


case_text: That view is supported by both Australian and English authority: see Chan v Zacharia [1984] HCA 36 ; (1984) 154 CLR 178 at 196 per Deane J; News Limited at 539 per Lockhart, von Doussa and Sackville JJ; Noranda Australia Limited v Lachlan Resources NL (1988) 14 NSWLR 1 at 17 per Bryson J; Woolworths Limited v Kelly (1991) 22 NSWLR 189 at 225 per Mahoney JA; Kelly v Cooper [1993] AC 205 at 213-214 per Lord Browne-Wilkinson. See also Henderson v Merrett Syndicates Limited [1994] UKHL 5 ; [1995] 2 AC 145 at 206 per Lord Browne-Wilkinson. 295 In order to be exonerated, a fiduciary must give full and frank disclosure of all material facts: see Kuys at 1227 per Lord Wilberforce. Consent need not be given expressly; it may be implied in all the circumstances: see Woolworths v Kelly at 212 per Samuels JA, at 234 per Mahoney JA; see also Our Lady's Mount Pty Limited (as trustee) v Magnificat Meal Movement International Inc (1999) 33 ACSR 163 at [128] per Muir J. 323 In Chan v Zacharia , Deane J said in plain terms at 196 that the parties to a partnership agreement could provide "that any fiduciary relationship between the partners was excluded." The observations of Mahoney JA in Woolworths v Kelly at [225] were to the same effect. His Honour said that fiduciary duties could be "varied or released" by contract. Also, in News Limited , a Full Court of this Court (Lockhart, von Doussa and Sackville JJ) said at 539 that whether there are any fiduciary obligations at all may depend on the terms of the contract.


case_outcome: applied

case_text: to the stricture present in relation to the granting of leave, found in s 459S(2) of the Act, there is some difference of judicial opinion evident on the authorities as to the meaning and effect of the word "material" which appears in that subsection. A convenient summary of the authorities, and the differences of views, is to be found in Grant Thornton Services (NSW) Pty Limited v St. George Wholesale Distributors Pty Limited [2008] FCA 1777 (hereafter Grant Thornton ), where at paras 19 - 22, Perram J, states: However, it seems to me that I should accept that the authorities show that "material" means that an applicant, under s 459S , must show that the debt in respect of which it is seeking leave is pivotal to the question of solvency. That is, the defendant must demonstrate that if the debt exists then the company will be insolvent and if the debt does not exist, then the company will be solvent. In my opinion, that is the better reading of the reasons of Spigelman CJ in Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 at 674 [56]. I accept that, at first blush, paragraph [53] can be read the other way, however, for two reasons I do not think that passage should be so interpreted. First, it is apparent, for the reasons given by the Chief Justice in that judgment at 673-674 [47]-[51] that the evident statutory intention which underpins s 459S is very much directed to diminishing, rather than expanding, the circumstances in which debts are to be debated. Put another way, as the Chief Justice demonstrated in that case, the previous situation which obtained prior to the introduction of the predecessor to s 459S , where it was common, frequent and unwelcome for debates about debts to take place at the time of the winding up petition, was to be expunged by that provision. It is consistent with that interpretation, or that understanding, of the intention underpinning 459S to interpret materiality in a way which is circumscribed. Secondly, the learned Chief Justice indicated at 671 [36] that he did not propose to follow the decision of the Full Court of the Supreme Court of Western Australia in Bayview Holdings Pty Ltd (in liq) v Zan Holdings Pty Ltd (unreported, Supreme Court of Western Australia, Ipp, Wallwork and Steytler JJ, 19 October 1998). The Full Court had there adopted a somewhat liberal approach to materiality. It seems to me that a fair reading of the reasons of the Chief Justice is that the proper approach to materiality is the narrow one. For completeness, it should be noted that in my opinion two justices of this Court have approached the matter on the more narrow view and have certainly thought themselves to be implementing the position in Switz: see HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd (2002) 44 ACSR 169 at 184 [53] per French J; Web Wealth Pty Ltd v Helimount Pty Ltd [2006] FCA 1376 at [43] - [45] per Besanko J. That would be sufficient for me to feel obliged to approach the matter on the same basis. Mr Davidson drew my attention to a decision of White J in Radiancy (Sales) Pty Ltd v Bimat Pty Ltd [2007] NSWSC 962 ; (2007) 25 ACLC 1216 where at 1226 [64] his Honour said this: The question is not whether the debt demanded by Radiancy (Sales) is determinative of Bimat's insolvency. The question is whether it is material to proving the company is solvent. If the debt is owed, the company is undoubtedly insolvent. If it is not owed, the company may be solvent if Mr Colosimo's evidence as to the payment of creditors is accepted. Accordingly, s 459S(2) is satisfied in relation to the grounds that Radiancy (Sales) is not a creditor, or that the alleged debt is genuinely disputed. Reflecting upon the evident intent of s 459S(2) , the reasons for judgment of Spigelman CJ in Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 (hereafter Switz's case), and those of Perram J in Grant Thornton and the other authorities to which his Honour refers in the passage quoted, it seems to me that I, too, ought, with all respect to those who may have a different view, to adopt the more narrow view of materiality. Section 459S is in the nature of a safety net. That is not to say in any way, though, that it is a substitute for, or an invitation for agitation in respect of a debt which ought to have been the subject of an application for the setting aside of a statutory demand.


case_text: 459S has been the subject of considerable attention by the courts. As I understand the authorities, their effect is that the ground of opposition proposed must be such that it was actually not available to be asserted according to the facts and circumstances which existed at the time of the winding up: see, in this regard, Perpetual Nominees Ltd v Masri Apartments Pty Ltd (No 2513/04) [2004] NSWSC 551 ; (2004) 49 ACSR 719 at pages 722 to 723, para 9. In other words, the effect of s 459S is to prevent a party opposing a winding up application on a ground that the company could have relied on, for the purposes of setting aside a statutory demand, but did not so rely. If that ground was actually available, the prohibition in s 459S would be engaged.


case_title: Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661


case_text: Both Grounds 1 and 2 really seem to involve a contention that the learned Federal Magistrate should have conducted a merits review of the Tribunal's decision. This is the very thing which the Magistrate could not do (see Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1 ; (2000) 168 ALR 407 , (2000) 74 ALJR 405 at [67] ). 36 The third point concerns Mr Rogers. This is a new point. It was not argued before the Federal Magistrate. Her Honour could not have committed jurisdictional error in failing to consider it. 37 However, it seems fairly clear that the appellant attended the hearing before the Tribunal and was given every opportunity to deal with the concerns which the Tribunal had and, indeed, with the proceedings generally. It also seems likely that the handwritten fax dated 28 November 2007 was probably sent after the Tribunal's decision had been signed, although before it was delivered. In any event, the appellant became aware of the decision at about the time that the decision was delivered or very soon after. He also completed the necessary formalities to change his contact details with the Tribunal on 11 December 2007. He appears to have suffered no prejudice as a result of the facts and matters he put to me concerning Mr Rogers. 38 I am unable to see what relief could be granted to the appellant based upon the submissions which he has made and the evidence upon which he has relied in respect of Mr Rogers. 39 In summary, it seems to me, therefore, that there is no error in the reasoning of the Federal Magistrate which can be reviewed by this Court. Accordingly, I propose to dismiss the appeal with costs.


case_title: Elliott v Minister for Immigration and Multicultural Affairs [2006] FCA 67

case_text: The applicant asserts that this is supported by the construction of the provision given by RD Nicholson J, at first instance, in Elliott v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 67 at [38] and [40] (cited at [18] and [19] of the applicant's submissions). The Minister noted that Elliott did not concern the issue raised in the present case. The Minister submits that the excerpts cited by the applicant do not support the applicant's submission; the applicant has omitted the final sentence of [38] which would, in part, serve to undermine the construction proffered. RD Nicholson J said at [38]: 'The question which the Tribunal was required to answer in relation to subreg 1.15(1)(c)(ii) was whether the applicant had an overseas near relative with whom he had not had contact within a reasonable period before making the application. In the case of the applicant, the question was referrable to his mother and/or half-siblings.' (Emphasis added) 16 In Elliott , the applicant had claimed that he had not had contact with any of his relatives. The Tribunal was not satisfied of this. Viewed in this light, this would suggest, as the Minister contends, that the same question needed to be asked of each of the applicant's overseas near relatives. This construction is borne out by what RD Nicholson J goes on to say at [40]: 'Approaching the reasons of the Tribunal in accordance with the injunction of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shang Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 271-272 not to construe such reasons too finely, it is a fact that the Tribunal stated the following in the course of its reasons: "In order to satisfy subregulation 1.15(1)(c)(ii) the visa applicant must not have had any contact with an overseas near relative within a reasonable period before making the application." "The visa applicant has claimed that he did not have any contact with either his mother or half-siblings in the United Kingdom within a reasonable period before making his application on 17 October 2002." "Based on the evidence before it, the Tribunal is not satisfied that, on the balance of probabilities, the visa applicant had not had any social contact with his mother or half-siblings within a reasonable period before making his visa application." On the face of these statements they support a conclusion that the Tribunal understood the question posed by subreg 1.15(1)(c)(ii). In themselves they belie the contention of the applicant that the Tribunal applied the policy with disregard to the requirements of the Act.' 17 Moreover, the Minister submits that the Tribunal does not ask the correct question by asking itself whether there is an overseas near relative among the relevant three with whom the applicant has not had contact. According to the Minister, the correct question is whether the applicant has had contact with an overseas near relative; the same question must be asked of each overseas near relative. Therefore, the Minister submits, the contact the applicant had with the mother and sister both residing in Afghanistan prevented the applicant from meeting the criteria for the visa. 18 This construction, the Minister submits, is supported by the operation of s 23 of the Acts Interpretation Act 1901 (Cth) ( Contra. applicant's submissions at [21]), which provides: 'In any Act, unless the contrary intention appears: (a) ... (b) words in the singular number include the plural and words in the plural number include the singular.'


case_text: The Minister submits that the Tribunal may refer to the Procedures Advice Manual 3, noting the observations of the Full Court in Elliott v Minister for Immigration and Multicultural Affairs [2007] FCAFC 22 ; (2007) 156 FCR 559 at 567, [23] [24]. Although not directly referred to by the Tribunal in this instance, Procedures Advice Manual 3 provides with regard to the effect of reg 1.15(1)(c)(ii): 'CONTACT WITH ONRS IN A DIFFERENT COUNTRY (INC. AUSTRALIA) 18.1 Ineligibility In regards to regulations 1.15(1)(c)(ii), an applicant is ineligible if they or their spouse (if applicable) has had contact with their ONR within a reasonable period before making the visa application. The regulation is worded so that it is up to the applicant to show that they and their spouse have not had any contact with their ONR/s.' (Emphasis in original) 22 This, the Minister submits, in particular the last line of the excerpt, would seem to support this construction. 23 The proposition that the requirement in reg 1.15(1)(c)(ii) is satisfied, in the case of an applicant who has two or three overseas near relatives, if the applicant has not had any contact with one of them within the relevant period, even if he has had regular contact with the other or others during that period, would, in my view, undermine the whole basis of the 'remaining relative' concept for a Subclass 115 visa. Read in context, that is, read in the context of reg 1.15 as a whole, the basis of the concept is that the visa applicant must not have more than three overseas near relatives even if he had not had contact with any of them during the relevant period: reg 1.15(1)(d); or if he has three or a lesser number of overseas near relatives, he only satisfies the requirement of reg 1.15(1)(c)(ii) if he has not had contact with any of them within the relevant period.


case_title: Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 192 ; (2005) 145 FCR 564

case_text: As to the second contention, at [23] of his submissions, the applicant contends that the evidential burden on the applicant and the absence of language intending disqualification, mean that the matters at reg 1.15(a) (e) take on qualifying factors. To support this proposition the applicant cited French J (with whom Finn and Hely JJ agreed) in Minister for Immigration & Multicultural & Indigenous Affairs v Hidalgo [2005] FCAFC 192 ; (2005) 145 FCR 564 at [12] . In Hidalgo , the Court was construing reg 1.15(1)(c)(i) which provides that remaining relative visas were only available to those applicants who 'usually resided in a country, not being Australia' that was different from a country in which their overseas near relative lived. French J said at [12]: 'In my opinion, reg 1.15(1)(c)(i) is intended to apply to the circumstance in which an applicant for the relevant visa has an overseas relative in another country. It is concerned with their geographical relationship when they both reside outside Australia. It is not a regulation which is intended to bring in, by a sidewind, a disqualifying criterion for the grant of such a visa based upon the circumstance that the applicant happens to have her only usual residence in Australia. In the event that the applicant usually resides in Australia only, then the criterion under reg 1.15(1)(c)(i) simply does not apply because the circumstances to which it is intended to apply do not arise.' (Emphasis added) 20 The Minister submits that the above passage makes clear that the applicant's contention that French J's remarks are of wholesale application to the regulation per se is untenable. First, French J was referring to reg 1.15(1)(c)(i) and secondly, the Minister submits that his Honour's observations are limited to the facts of the case to be decided.


case_title: Jones v Dunkel (1959) 101 CLR 298

case_text: The appellants contend that the primary judge has mis-applied the rule in Jones v Dunkel (1959) 101 CLR 298 and that the primary judge has relied upon the evidence of Mr Breed in reaching conclusions about the evidence of Mr Tracy and matters going to Mr Tracy's credit. Further, the appellants say that they have been denied procedural fairness as they were not provided with an opportunity to cross-examine Mr Breed in respect of his affidavit tendered in evidence by the respondents. These matters concerning Mr Breed are said to involve errors of law affecting fact-finding and give rise to arguable grounds of appeal. Mr Lynch gives emphasis to these matters particularly the contended denial of procedural fairness in the opportunity to cross-examine Mr Breed, in his oral submissions in support of the stay application. Mr Lynch says that the appeal is not frivolous and raises arguable grounds. He says that if the first and second respondents resist the stay of the orders on the cross-claim on the ground fundamentally that the appellants have failed to reach the threshold of an arguable ground of appeal, the challenge to the findings on credit and their relationship with the evidence of Mr Breed raises at least an arguable ground of appeal. 19 The notice of appeal recites 63 grounds of appeal. It is not useful in these reasons to recite all of the grounds of appeal nor is it useful to undertake an analysis of the merits of any of them. It is useful however to identify the focus of the grounds of challenge in exercising the discretion in relation to the stay of the orders on the cross-claim, in particular. 20 By grounds 1, 2, 7, 14, 17, 18, 21, 23, [23 again], 26, 27, 28, 31, 32, 34, 37, 38, 43, 44, 45, 46, 49, 52, 54, 55, 58 and 60, the appellants contend that the primary judge reached findings which are against the weight of evidence. By grounds 5, 7, 8, 9, 10, 12, 13, 20, 25, 30 and 36, the appellants contend for errors of law in the reception into evidence of Mr Breed's affidavit, the denial of an opportunity to cross-examine Mr Breed (procedural unfairness), the refusal to draw an adverse inference against the first and second respondents in accordance with Jones v Dunkel and errors of law in reliance upon the affidavit in relation to particular findings. By ground 3, the appellants say that the adverse finding on credit based upon a failure to adduce evidence of a serious accusation is unreliable because the appellants did not plead such an allegation and were not obliged to adduce evidence of it. By ground 4, the appellants say that credit findings concerning Mr Tracy which rely upon allegations by him of the use by the first respondent of a particular pesticide are unreliable and made in error as the particular allegation was not pleaded against the first respondent. 21 By grounds 15 and 15A, the appellants say that the primary judge erred in law by finding that the first respondent when authorising the provision of a valuation dated 1 June 2004 to Mr Tracy, did not contravene s 52 of the Act on the basis that the valuation mentioned financial years not crop years. 22 By grounds 22 and 23, the appellants contend that the primary judge erred in law in concluding that the contended failure to disclose particular matters was misleading or deceptive.


case_text: The second criticism is this. The respondents say the appellants have not established that any loss or damage was suffered and thus the cause of action fails. The criticism is put on this basis. In the action, each applicant claimed loss particular to that applicant ([12] herein). Oddly, the appellants by Order 3 of the notice of appeal all seek judgment against the first and second respondents for the aggregate damage of $3,208,705.20. That seems to be an inconsistent position. The respondents say that there was no dispute on the evidence that the first appellant completed the orchard purchase contract ( i.e. the Tiaro and Bundaberg Orchards), paid $3.1 million on settlement and borrowed $150,000.00 from the vendor (as part vendor finance) to complete settlement. The contract was signed by Mr Tracy on 16 January 2005 and completed by Citrus Queensland on 21 March 2005. The appellants as applicants at trial sought to establish, it is said, the "current value" of the orchards rather than the value at the date of contract or perhaps settlement. Thus, the appellants failed to strike the difference between the reliance price paid under the contract and the Kizbeau "real" or "true" or "intrinsic" value of the orchards at acquisition ( Kizbeau Pty Ltd v W G & B Pty Limited [1995] HCA 4 ; (1995) 184 CLR 281 ; Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3 ; (1986) 160 CLR 1 ; HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640) taking account of all known matters relevant to that comparison at the date the assessment was carried out ( HTW Valuers [39]-[41], Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ).


case_title: Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3 ; (1986) 160 CLR 1


case_title: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640


case_text: The third appellant also claimed trading losses as damages. The respondents say that there are two fatal problems with that claim. First, the evidence did not establish that the claimed trading losses were suffered as a direct consequence of contravening conduct in the sense contemplated by Sheppard, Wilcox and Pincus JJ in Netaf Pty Ltd & Anor v Bikane Pty Ltd [1990] FCA 35 ; (1990) 92 ALR 490 at 494 and secondly, the third appellant was in any event insolvent from incorporation and its guiding mind, Mr Tracy, had little experience in the industry on the evidence and findings at trial. 29 The appellants say that these observations about damages and evidence going to true value or otherwise at a relevant date were ultimately not the subject of thorough analysis by her Honour as her Honour elected not to deal with damages having made findings on other matters with the result that the application was to be dismissed.


case_text: The third criticism is this. The respondents say that the appellants cannot succeed in the claim against Mr Strahley based upon s 75B of the Act because the relevant integers were not properly pleaded and thus the claim failed at the threshold. The respondents say the appellants failed to formulate a case which met the requirements of the section as understood and explained in Yorke & Anor v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 per Mason ACJ, Wilson, Deane and Dawson JJ and Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 per Heerey, Sundberg and Dowsett JJ. Nothing can now remedy that difficulty.


case_title: Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1


case_text: Section 56 of the Federal Court of Australia Act 1976 confers a broad discretion on the Court to make an order for security for costs ( Bell Wholesale Co. Pty Ltd v Gates Export Corporation (1984) 2 FCR 1 per Sheppard, Morling and Neaves JJ; Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46 per Burchett J; Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 per French J at 515) including an order for security in an appeal. The appellants concede that an order for security ought properly be made requiring the appellants to provide security. The appellants further concede that there is a jurisdiction to order security for costs prospectively and also power to order security for costs already incurred such as costs associated with the making of the application for security for costs. Having said that, the appellants contend that any order for security ought, in this case, to operate only prospectively. The first and third appellants are not in a position to be able to pay the first and second respondents' costs of the appeal if they are unsuccessful on appeal. On 9 August 2005, Sunstate Citrus (the third appellant) entered into a Deed of Company Arrangement. Recital A of the Deed records that on 23 June 2005, Mr Tracy [the director] resolved to the effect that in his opinion the company was insolvent or likely to become insolvent at some time in the future and that Mr Hambleton be appointed as administrator under Part 5.3A of the Corporations Act 2001 (Cth). Moreover, on 8 November 2006, Mr Tracy swore an affidavit in the respondents' application for security for costs in relation to the principal proceeding in which he said that neither the first nor third applicants [appellants] "has sufficient funds to provide that security either by 4pm tomorrow or at all". In the course of evidence during the trial, Mr Tracy conceded that the first applicant [appellant] did not have sufficient assets to meet any judgment ordered against it. Mr Tracy also conceded that as to the third applicant "it too has no assets". At trial, Mr Hambleton gave evidence that in his view there was "a strong prospect" that the third appellant had been "insolvent from incorporation". Plainly enough, there is no prospect of the third appellant paying any orders for costs against it and there seems little likelihood of any satisfaction from the first appellant. The respondents inevitably look to the individual, Mr Tracy, the second appellant for their costs should they be successful in the appeal. The second appellant is already subject to a substantial order for costs and neither the first nor the second appellant will be able to discharge those orders. Mr Tracy has not filed an affidavit in the proceeding by which he seeks to establish his capacity to satisfy existing costs orders or costs to be incurred except to say this. The appellants contend that $50,000.00 should be provided by way of security. Presumably, the appellants are in a position to provide that amount and will do so quickly in order to enable the appeal to proceed. The real question is what is the appropriate amount to properly secure the interests of the respondents?


case_title: Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46


case_title: Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497


case_text: Having regard to the field of issues, the substantial body of material likely to comprise the appeal books, the retainer of senior and junior counsel on the appeal, the likely preparation time and number of likely sitting days (say three and one half days, i.e. four fee days), I propose to discount Mr McLelland's estimate of $198,240.00 and order the appellants to provide security for the first and second respondents costs of the appeal and the notice of motion for security for costs, in an amount of $105,000.00. I am satisfied that the application for security was made promptly and was reasonable in all the circumstances. I am satisfied that it is appropriate to provide security for the costs of the motion. Such an application is not uncommon and if promptly made an applicant for security is reasonably entitled to the costs incurred in making the application. A respondent to an appeal confronting at least two parties with no capacity to meet the costs a respondent will incur, will quite understandably seek to protect its position by making an application for security. The quantum of the security to be provided is ultimately a matter for the exercise of discretion ( Bruce Pie & Sons Pty Ltd v Mainwaring (1985) 1 Qd R 401 per McPherson J; Procon (GB) Ltd v Provincial Building Co. Ltd (1984) 2 All ER 368; see generally Sagacious Procurement Pty Ltd v Symbion Health Ltd [2007] NSWCA 205). Having reviewed the schedule of items annexed to the affidavit of Mr McLelland and the commentary prepared by Mr Graham, I am satisfied that the discount applied to the costs Mr McLelland assesses as likely to be incurred is appropriate notwithstanding that it represents a discount of 45% of the claimed costs.


case_title: Procon (GB) Ltd v Provincial Building Co. Ltd (1984) 2 All ER 368


case_title: Sagacious Procurement Pty Ltd v Symbion Health Ltd [2007] NSWCA 205


case_text: The principles influencing the exercise of the discretion are these. Order 52, r 17(1) suggests by its language a broad discretion, unlimited, in the Court to order a stay notwithstanding that an appeal shall not operate as a stay of execution or of proceedings under the judgment appealed from ( Powerflex Services Pty Ltd v Data Access Corporation (1996) 137 ALR 498 , Burchett J). The starting point however, is to recognise that the discretion, although importantly broad, is a true exception , conditioned by demonstrated circumstances, to the general proposition that an appeal does not operate as a stay. That is because the judgment appealed from is prima facie assumed to be correct and a person put to trial in a controversy rather than enjoying the benefit of performance or settlement is entitled to enforce the orders which when made reflect the position inter-parties according to law. However, consistent with Powerflex and Alexander v Cambridge Credit Corp. Ltd (receivers apptd) [1985] 2 NSWLR 685 per Kirby P, Hope and McHugh JJ at 694, it is sufficient but also necessary that the applicant for a stay demonstrate "a reason" or an "appropriate case" to warrant the exercise of discretion in the applicant's favour. Otherwise, judgments of the Court in its original jurisdiction might be treated as merely provisional. A reason tipping the balance in favour of an applicant in an appropriate case will take account of whether the applicant has discharged an onus of demonstrating that a stay order, in the terms proposed, is "fair to all parties" ( Alexander v Cambridge Credit at 694F) having regard to the balance of convenience ( i.e. the balance of risks and irremediable harm) and the competing rights of the parties ( Alexander v Cambridge Credit at 694G). For example, is there a risk that should a stay be ordered, the appellants will dissipate or transfer assets that might otherwise have answered the judgment? Should a stay be conditioned on the payment of money into Court, a payment of some monies to the judgment creditor or the provision of security for the judgment debt? 40 "Fairness" will be, in part assessed, by an applicant demonstrating that the benefit of a successful appeal will be taken away in every practical sense or rendered nugatory, if no stay of the primary order(s) is granted. Such a consideration has been described as a "substantial factor" influencing the discretion to order a stay ( Alexander v Cambridge Credit at 695D). Weighed in the balance is a preliminary non-speculative assessment of whether the appellant by the grounds of appeal has raised an arguable case. Such an assessment however is designed to be "protective" of the judgment creditor in the sense of being undertaken to test whether the appeal has "been lodged without any real prospect of success and simply in the hope of granting a respite against immediate execution upon the judgment" ( Alexander v Cambridge Credit at 695F). These principles have been applied in Powerflex v Data Access Corporation ; Starborne Holdings Pty Ltd v Radferry Pty Ltd & Ors [1998] FCA 548 ; Henderson v Amadio Pty Ltd (No. 3 ) (1996) 65 FCR 66 and other cases in this Court. The assessment of the prospects of success of the appeal by reference to such a test reflects a low threshold of arguability. In Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372 , French J put the notion of an appeal reflecting an arguable prospect of success in these terms: In saying so, I accept that the very findings which underpin [it] are under challenge in an appeal which is not frivolous, that is to say, an appeal which has an arguable prospect of success.


case_title: Alexander v Cambridge Credit Corp. Ltd (receivers apptd) [1985] 2 NSWLR 685


case_text: "Fairness" will be, in part assessed, by an applicant demonstrating that the benefit of a successful appeal will be taken away in every practical sense or rendered nugatory, if no stay of the primary order(s) is granted. Such a consideration has been described as a "substantial factor" influencing the discretion to order a stay ( Alexander v Cambridge Credit at 695D). Weighed in the balance is a preliminary non-speculative assessment of whether the appellant by the grounds of appeal has raised an arguable case. Such an assessment however is designed to be "protective" of the judgment creditor in the sense of being undertaken to test whether the appeal has "been lodged without any real prospect of success and simply in the hope of granting a respite against immediate execution upon the judgment" ( Alexander v Cambridge Credit at 695F). These principles have been applied in Powerflex v Data Access Corporation ; Starborne Holdings Pty Ltd v Radferry Pty Ltd & Ors [1998] FCA 548 ; Henderson v Amadio Pty Ltd (No. 3 ) (1996) 65 FCR 66 and other cases in this Court. The assessment of the prospects of success of the appeal by reference to such a test reflects a low threshold of arguability. In Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372 , French J put the notion of an appeal reflecting an arguable prospect of success in these terms: In saying so, I accept that the very findings which underpin [it] are under challenge in an appeal which is not frivolous, that is to say, an appeal which has an arguable prospect of success.


case_title: Henderson v Amadio Pty Ltd (No. 3 ) (1996) 65 FCR 66


case_text: In exercising the discretion to grant a stay or fashion the particular terms of intervention, the Court would ordinarily only impede the enforcement of its orders pending appeal so far as is necessary to ensure that orders which might ultimately be made by the Court on appeal can be given effect without leaving residual injustice in the hands of the party ultimately successful, as a residue of the first instance orders being performed, absent a stay. That is why the Court gives particular attention to whether an appeal might be rendered nugatory by the refusal of a stay and whether an appellant would be irremediably prejudiced if the stay were not granted yet its appeal ultimately upheld ( Cook's Construction Proprietary Limited v Stork Food Systems Australasia Pty Ltd [2008] QCA 322). The risk that an appeal may be nugatory must be balanced against the risk of prejudice to the party who succeeded at first instance if execution of the judgment is stayed ( Sevenhill Holdings Pty Ltd v Musovic per French J). On the question of a nugatory appeal, the Queensland Court of Appeal (Keane JA; McMurdo P and White AJA agreeing) in Cook's Construction v Stork Food Systems considered that even if the refusal of a stay were, in the circumstances of that case, to lead to the receivership or liquidation of the appellant, substantive rights could nevertheless be pursued by the receiver or the liquidator.


case_text: "Fairness" will be, in part assessed, by an applicant demonstrating that the benefit of a successful appeal will be taken away in every practical sense or rendered nugatory, if no stay of the primary order(s) is granted. Such a consideration has been described as a "substantial factor" influencing the discretion to order a stay ( Alexander v Cambridge Credit at 695D). Weighed in the balance is a preliminary non-speculative assessment of whether the appellant by the grounds of appeal has raised an arguable case. Such an assessment however is designed to be "protective" of the judgment creditor in the sense of being undertaken to test whether the appeal has "been lodged without any real prospect of success and simply in the hope of granting a respite against immediate execution upon the judgment" ( Alexander v Cambridge Credit at 695F). These principles have been applied in Powerflex v Data Access Corporation ; Starborne Holdings Pty Ltd v Radferry Pty Ltd & Ors [1998] FCA 548 ; Henderson v Amadio Pty Ltd (No. 3 ) (1996) 65 FCR 66 and other cases in this Court. The assessment of the prospects of success of the appeal by reference to such a test reflects a low threshold of arguability. In Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372 , French J put the notion of an appeal reflecting an arguable prospect of success in these terms: In saying so, I accept that the very findings which underpin [it] are under challenge in an appeal which is not frivolous, that is to say, an appeal which has an arguable prospect of success. 41 In exercising the discretion to grant a stay or fashion the particular terms of intervention, the Court would ordinarily only impede the enforcement of its orders pending appeal so far as is necessary to ensure that orders which might ultimately be made by the Court on appeal can be given effect without leaving residual injustice in the hands of the party ultimately successful, as a residue of the first instance orders being performed, absent a stay. That is why the Court gives particular attention to whether an appeal might be rendered nugatory by the refusal of a stay and whether an appellant would be irremediably prejudiced if the stay were not granted yet its appeal ultimately upheld ( Cook's Construction Proprietary Limited v Stork Food Systems Australasia Pty Ltd [2008] QCA 322). The risk that an appeal may be nugatory must be balanced against the risk of prejudice to the party who succeeded at first instance if execution of the judgment is stayed ( Sevenhill Holdings Pty Ltd v Musovic per French J). On the question of a nugatory appeal, the Queensland Court of Appeal (Keane JA; McMurdo P and White AJA agreeing) in Cook's Construction v Stork Food Systems considered that even if the refusal of a stay were, in the circumstances of that case, to lead to the receivership or liquidation of the appellant, substantive rights could nevertheless be pursued by the receiver or the liquidator. 44 Although the respondents contend that four grounds of criticism of the appeal ([24]-[32]) demonstrate that the appeal can not succeed and no arguable ground of appeal has been articulated, the grounds of appeal do not fall into the class of case described in Alexander v Cambridge Credit Corporation or Sevenhill Holdings v Musovic , notwithstanding the difficulties the appellants confront. In other words, the appellants have raised contentions that are other than frivolous. It is true that many of the grounds of appeal challenge findings of fact as against the weight of evidence. Similarly, the grounds of appeal call into question the findings of the primary judge on questions of credit in circumstances where the primary judge had the benefit of assessing the evidence of Mr Tracy and Mr Strahley in the context of all the evidence. Nevertheless, the appellants are entitled to seek to persuade the Court on appeal, that the various challenged findings ought not to have been made or that errors of law were made in the treatment of particular topics such as reliance or any of the other matters framed by the notice of appeal. In so observing, of course, I make no comment about the merits or otherwise of any particular matter raised by any of the grounds of appeal. 45 However, the first appellant has no capacity to pay the judgment debt or costs. No protective mechanism has been put forward by Mr Tracy or the first appellant to ensure that any stay order is "fair to all parties". Mr Tracy has not offered any undertaking on behalf of the first appellant not to charge or encumber any of its assets pending appeal and no security is offered over any assets of Mr Tracy. There is no proposal to pay the judgment sum or any part of it into Court. The absence of any such proposal is no doubt due to the incapacity of the first appellant to be able to do so and a disinclination in Mr Tracy to suggest any other mechanism for a supervised investment account. 46 The appellants' principal discretionary consideration urged upon the Court is that a refusal of a stay with any consequential payment of monies (particularly the deposit monies) to the first respondent would occur in circumstances where the first appellant has no reasonable confidence of repayment if ultimately successful. The appellants however have not demonstrated that residual injustice will arise by complying with the orders at first instance should the appeal be successful. In that sense, the appellant has not demonstrated that the appeal will be rendered nugatory by a refusal of a stay. Inconvenience in satisfying the judgment debt or, alternatively, the prospect of changes in the administration of the first appellant either by reason of receivership or liquidation does not of itself render an appeal nugatory.


case_title: Hurren v Hurren [1971] VR 459

case_text: is also to ignore that each is governed by the verb "confined" and the preposition "in". The Tribunal looked (at para 16) to the definition of confine when used as a verb in the Australian Concise Oxford Dictionary. That meaning is, if anything, even clearer in the main work, "To shut up, imprison, immure, put or keep in detention": Oxford University Press 2009, Oxford English Dictionary (Oxford University Press, Oxford, 2009) http://dictionary.oed.com viewed 17 June 2009. In Hurren v Hurren [1971] VR 459 at 464, Anderson J considered that the more sensible meaning to give to the expression "confined in", as used in the presently analogous sense of "confined in ... an institution" was "the commonly accepted meaning of actual physical restriction in a place of confinement". His Honour had been pressed with, but rejected, a submission that a person of unsound mind subject to a confinement order but on release from the institution concerned was nonetheless to be regarded as "confined in ... an institution". In my opinion, the expression carries a like meaning in the context of para (a) of the definition of "interned".


case_text: of contextual relevance in construing "or other place" is para (b) of the definition of "interned". Having been directed by a post surrender order to remain within a designated surrender area it is no misuse of language to describe Mr Collett as having been "restricted within specified limits". He did not though ever "reside" within that specified area. In Levene v Inland Revenue Commissioners [1928] UKHL 1 ; [1928] AC 217 at 222, Viscount Cave LC said, "... the word 'reside' is a familiar English word and is defined in the Oxford English Dictionary as meaning "to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place." It is used in that familiar way in para (b) of the definition of "interned". What that indicates, in my opinion, is that, in para (a), "or other place" does not mean just any place however vaguely delineated and irrespective of whether it has geographic or man-made limits so as to permit "confinement". Places without any particular limit other than that of arbitrary specification are the province of para (b) of the definition. That paragraph requires that the restriction be as to "residing" there. The spending of two hours in the designated surrender area did not residence make. Paragraph (b) did not originally feature in Mr Collett's submissions but assumed some transient interest in the course of submissions. In the result, and rightly, no application was made on behalf of Mr Collett further to amend the notice of appeal so as to rely upon satisfaction of that paragraph of the definition of "interned" as an alternative basis for eligibility. Reference was made on Mr Collett's behalf to the physical proximity of German troops, as close as 50 metres away. I accept that an "other place" might be constituted by a place without any obvious physical limit other than that supplied by enemy sentries. On the facts as found, that is not this case.


case_text: the result then, for the reasons given, the meaning of the definition of "confined in ... other place" in para (a) of the definition of "interned" is tolerably clear without recourse to secondary materials. On the face of the 2007 Budget Measures Act alone, that Parliament is authorising a compensation payment but not employing the term "prisoner of war" in so doing gives one pause for thought about the intended purpose of the payment. When one looks at the eligibility criteria as defined it would be an odd result for someone who, though briefly and technically a prisoner of war, was never subject to the deprivations of imprisonment to be eligible for a compensatory payment. I have reflected upon whether the construction I prefer impermissibly introduces the adjective "physically" to qualify the expression "confined in". In Gauntlett v Repatriation Commission [1991] FCA 498 ; (1991) 32 FCR 73 at 77, Pincus J offered the following salutary, cautionary reminder, "[T]his is not the first time in which the respondent Commission has implied in argument that provisions of this sort could not possibly have been intended to produce such anomalies as, literally read, seem to follow from them; but it is the constitutional function of parliament, and not that of the judges, to correct any anomalies thought to arise from applying the plain language of legislation". It would be just as impermissible to introduce the qualifying adjective "constructively". This, in essence, was a vice in Mr Collett's submissions. There is no need for the qualifying adjective "physically". The latter sense is already present reading the definition of "interned" as a whole and in context.